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  • tidal reports : third wave group
    corporate misinformation More specifically we have been highlighting the misrepresentation of data by the Commonwealth Bank of Australia for the purposes of hiding the very clear bubble the Australian property market finds itself in first post Fudging the Filed under tidal reports Tagged with australia government real estate treasury Tidal Report 19 Sep 2010 Psychology of a housing market Posted by Tracey Watts on September 19 2010 12 Comments Issue 89 Last week we discussed the controversy surrounding the Commonwealth Bank s rather misleading presentation to international investors on Australia s residential housing market Fudging the data In that report we explained the most obvious fiddle the use of differing sets of data to erroneously suggest that Australian house prices when Filed under tidal reports Tagged with australia japan psychology real estate sentiment united states Tidal Report 12 Sep 2010 Fudging the Data Posted by Tracey Watts on September 12 2010 Leave a Comment Issue 88 It will be interesting to see if a story that was broken this weekend by Kris Sayce editor of Money Morning Australia attracts much mainstream media attention this week The basis of the story is a presentation lodged with the ASX by the Commonwealth Bank of Australia entitled Australian residential Filed under tidal reports Tagged with australia banks debt demographia report kris sayce steve keen Tidal Report 4 Sep 2010 The Great Ignored Posted by Tracey Watts on September 4 2010 Leave a Comment Issue 87 On August 23 2010 the ABC Four Corners program ran a documentary that attracted a great deal of attention The documentary called Overdose The Next Financial Crisis dramatically warns that the stimulus measures taken by the various governments around the world are leading us towards an inevitable global financial collapse Filed under tidal reports Tagged with johan norberg overdose peter schiff Tidal Report 29 Aug 2010 Bernanke confounds again Posted by Tracey Watts on August 29 2010 2 Comments Issue 86 US stock markets rallied strongly on Friday in response to a revision in second quarter GDP growth from 2 4 per cent to 1 6 per cent A big downward revision received positively How can this be Well economists had been ahead of the game and previously revised their GDP growth expectations Filed under tidal reports Tagged with alan kohler ben bernanke david rosenberg deleveraging economy gdp karl denninger united states Tidal Report 21 Aug 2010 The crisis has not been contained Posted by Tracey Watts on August 21 2010 Leave a Comment Issue 85 The markets have been nervous and undecided all week with disappointing economic news being met with sharp falls There is growing evidence that the world economy is not recovering with an increasing number of mainstream reports warning of danger ahead Last week we discussed the increasing recognition as reflected in Filed under tidal reports Tagged with australia currency debt europe greece mike shedlock saxo sovereign debt speigel tony abbott united states Tidal Report 15 Aug 2010 Double Bubble Trouble Posted by Tracey

    Original URL path: http://www.thirdwavegroup.com.au/category/tidal-report/page/2/ (2013-02-03)
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  • The story silver tells . . . : third wave group
    economy expands than when it contracts The underlying reason for both of these conditions is that a positive trend in social mood causes investors to buy creditors to lend consumers to borrow and spend and producers to increase production while a negative trend in social mood causes investors to sell creditors to withdraw consumers to save and producers to curtail production Silver has an even more pronounced relationship to economic cycles than gold does Figure 1 shows the history of silver prices and economic conditions going back 40 years to 1970 Economic expansions are denoted on the chart as clear areas recessions as shaded bars Notice that all of silver s strong price gains came during economic expansions Then observe that all seven recessions since 1970 have coincided with falling silver prices Finally note that all four crashes in silver those of 1973 1980 1982 and 2008 came during recessions Keep in mind that official statistics from the National Bureau of Economic Research on economic change are imprecise My guess is that the turns in the economy were actually closer to the turns in silver than these shaded bars indicate What happens when there is an inflationary recession Apparently it doesn t matter Silver did not go up during the recession of 1974 1975 which was inflationary On the contrary it had its first modern day collapse of 43 Gold did rise during that time but primarily because it had recently been released from four decades of government price fixing and was still making up for lost time That event cannot recur in today s environment because the price of gold floats continually adjusting to investors moods and outlooks No doubt gold bulls will argue that an inflationary recession can happen again and it can But since both metals recently soared during a period of economic expansion it seems more likely that a change toward recession will have the same relationship to prices that it has had in the past 40 years What s more gold and silver were decoupled from April to October this year just as they were from March to December 1974 When that decoupling ended gold dropped 50 in less than two years To summarize if you are bearish on the economy you should be bearish on silver and if you are bullish on silver you should be bullish on the economy Taking the time honored but repeatedly wrong stance being bearish on the economy but bullish on silver would be to buck the historical odds This chart has something more to say Silver lost nearly half its value from April to September 2011 This very event suggests that another economic contraction is approaching or is already at hand Category general posts Tags economy psychology robert prechter silver social mood Comments One Response to The story silver tells Whatever says December 28 2011 at 2 33 pm This chart has something more to say Silver lost nearly half its value from April to September 2011 This

    Original URL path: http://www.thirdwavegroup.com.au/general/the-story-silver-tells/comment-page-1/ (2013-02-03)
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  • Is the end game in sight for Greece? : third wave group
    all deposits in the Greek banking system I call it a Bagehot intervention but of course Walter Bagehot would never have recommended bailing out an insolvent borrower Without a credible intervention this process almost always ends the same way There is in my opinion a very high probability that within weeks or months at most Greece will be forced to freeze bank deposits as a prelude to leaving the euro Mexico in 1994 and Argentina in 2001 chose the Christmas New Year holiday season to announce their devaluations Will Greece follow suit If history repeats itself footballer Andrew Demetriou once pointed out I should think we can expect the same thing again And it probably won t end there In my opinion the real risk for Europe in that case becomes a contagion of deposit withdrawal not immediately but at the first sign of trouble in their home countries As households from Italy Spain Ireland Portuguese and other vulnerable countries read every day about hardships faced by Greek families and those it will be noted who trusted the authorities were the worst hit what will they do I know what many of my wealthy Spanish friends are already doing They are moving their deposits to safer havens I suspect that in other countries too anyone who can afford to withdraw money from the domestic financial system is at least thinking of doing so If this process accelerates it may be very hard to maintain domestic confidence in the local banking systems anywhere If Greece gets worse in the next few weeks Europe had already better have a plan about what steps it will take to defend banks in peripheral Europe Once Greece goes even the least sophisticated households in other countries will know what the consequences for depositors will be Deposit withdrawals after all are one of the kinds of actions that different sectors of the economy will take to protect their interests in the face of a crisis even though this behavior increases the likelihood of the crisis This is simply part of the logic of sovereign financial distress declining credibility causes stakeholders to act in ways that reduce credibility further What s more deterioration in the political process is part of financial distress at the sovereign level Remember as Keynes pointed out back in 1922 that resolving these kinds of crises is always political it is about which sector of the economy or class ends up paying for the adjustment Workers can pay in the form of high unemployment and declining wages the middle class can pay by having its savings inflated away private businesses can pay in the form of confiscatory taxes and expropriation creditors can pay through forced debt forgiveness and so on but ultimately someone must pay Politics becomes about deciding which groups will be forced to foot the bill Historical precedents suggest that political fault lines are likely to develop as different groups organizes politically to protect themselves We will probably see this happen

    Original URL path: http://www.thirdwavegroup.com.au/general/is-the-end-game-in-sight-for-greece/comment-page-1/ (2013-02-03)
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  • Descending the Slope of Hope : third wave group
    In the end the denial confirmed the bail out Sir Humphrey usually knows how such things actually work So of course Merkel s denial struck me as especially interesting I don t want to sound too glib or too jokey but I wonder if there has ever been a forced devaluation that wasn t preceded by ringing assertions from presidents and central bank governors that under no circumstance would the currency ever devalue What is all the more interesting is that I recently discovered that the quote never believe anything until it is officially denied doesn t originate with the writers of the British TV comedy Apparently it can be traced to at least as far back as Otto von Bismarck who was born not too far from where Angela Merkel grew up Never believe anything until it is officially denied the Iron Chancellor warned us For those interested in understanding the only real options avavilable to Europe the entire Michael Pettis article is essential reading So if Germany s Iron Lady is now denying that the euro will fail can its failure be far off It depends I guess on what we mean by failure If any important reversal in the structure and membership of the euro is a failure then it will almost certainly fail but I suppose there are many ways the euro project can be transformed without quite calling it a failure At the end of last month Hans Olaf Henkel for example the former head of the Federation of German Industries had an interesting OpEd in the Financial Times In his piece he says Having been an early supporter of the euro I now consider my engagement to be the biggest professional mistake I ever made But I do have a solution to the escalating crisis Instead of addressing the true causes politicians prescribe painkillers The euro patient suffers from three discrete diseases as a result of the financial crisis many banks are still unstable the negative effects an overvalued euro has on the competitiveness of the south including Belgium and France the huge level of debt of some eurozone countries It would be misleading to proclaim there is an easy way out But it is irresponsible to maintain there is no alternative There is The end result of plan A defend the euro at all cost will be detrimental to all Rescue deals have led the eurozone on the slippery path to the irresponsibility of a transfer union If everybody is responsible for everybody s debts no one is Competition between politicians in the eurozone will focus on who gets most at the expense of the others The result is clear more debts higher inflation and a lower standard of living The eurozone s competitiveness is bound to fall behind other regions of the world As a plan B George Soros suggests that a Greek default need not be disorderly or result in its departure from the eurozone But a Greek default or departure

    Original URL path: http://www.thirdwavegroup.com.au/general/descending-the-slope-of-hope/comment-page-1/ (2013-02-03)
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  • Article – Today’s Keynesians have learnt nothing : third wave group
    sell off And it is not just inflation that bond investors fear Foreign holders of US debt and they account for 47 per cent of the federal debt in public hands worry about some kind of future default The Keynesians say the bond vigilantes are mythical creatures The anti Keynesians notably Harvard economics professor Robert Barro say the real myth is the Keynesian multiplier which is supposed to convert a fiscal stimulus into a significantly larger boost to aggregate demand On the contrary supersized deficits are denting business confidence not least by implying higher future taxes And so the argument goes round and around to the great delight of the financial media as the dog days of summer set in In some ways of course this is not an argument about economics at all It is an argument about history When Franklin Roosevelt became president in 1933 the deficit was already running at 4 7 per cent of GDP It rose to a peak of 5 6 per cent in 1934 The federal debt burden rose only slightly from 40 to 45 per cent of GDP prior to the outbreak of the second world war It was the war that saw the US and all the other combatants embark on fiscal expansions of the sort we have seen since 2007 So what we are witnessing today has less to do with the 1930s than with the 1940s it is world war finance without the war But the differences are immense First the US financed its huge wartime deficits from domestic savings via the sale of war bonds Second wartime economies were essentially closed so there was no leakage of fiscal stimulus Third war economies worked at maximum capacity all kinds of controls had to be imposed on the private sector to prevent inflation Today s war like deficits are being run at a time when the US is heavily reliant on foreign lenders not least its rising strategic rival China which holds 11 per cent of US Treasuries in public hands at a time when economies are open so American stimulus can end up benefiting Chinese exporters and at a time when there is much under utilised capacity so that deflation is a bigger threat than inflation Are there precedents for such a combination Certainly Long before Keynes was even born weak governments in countries from Argentina to Venezuela used to experiment with large peace time deficits to see if there were ways of avoiding hard choices The experiments invariably ended in one of two ways Either the foreign lenders got fleeced through default or the domestic lenders got fleeced through inflation When economies were growing sluggishly that could be slow in coming But there invariably came a point when money creation by the central bank triggered an upsurge in inflationary expectations In 1981 the US economist Thomas Sargent wrote a seminal paper on The Ends of Four Big Inflations It was in many ways the epitaph for the Keynesian

    Original URL path: http://www.thirdwavegroup.com.au/general/article-today%E2%80%99s-keynesians-have-learnt-nothing/ (2013-02-03)
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  • Australian banks vulnerable . . . still : third wave group
    will be far far wider as the idiotic market finally grasps what we have been saying for two years that you can t have your cake and eat it or said otherwise that when you onboard corporate risk to the sovereign someone has to pay the piper Yet there is one place where that has not happened so far there is one place that has been very much insulated from the whipping of the market and one place where banks are potentially in just as bad a shape as anywhere else in Europe That place is Canada As the chart below shows which is a ranking of global banks by tangible common equity lowest first of the banks with a TCE ratio of under 4 a whopping 30 are those situated in Canada the same place where nobody thinks anything can go wrong and which has been completely spared from the retribution of the bond vigilantes Something tells us Canadian sovereign CDS not to mention Canadian bank CDS are both about to go quite a bit wider How do Australia s banks rate on the Tangible Common Equity TCE scale Better But not that much better Take note dear reader Here we are about to see a classic example of how our Treasurer wilfully cherry picks from International Monetary Fund reports Here s what The Goose recently had to say about the IMF s latest report The IMF has just completed a regular review of Australia s finances The Treasurer Wayne Swan reported the results He said the IMF had noted our resilient financial system Australia s banks are well capitalised prudently managed and among the highest rated in the world Mr Swan said The IMF notes that banks have improved their capital positions and reduced their reliance on short term foreign funding and that they are well placed to ride out any future financial turbulence in offshore markets he added Wayne has as usual gilded the lily and put words in the mouth of the authorities he quotes And he just happened to conveniently forget what else the IMF wrote emphasis added 17 Bank profits have recovered and the return on equity for the major banks is now around pre crisis levels Capital adequacy has improved driven both by increases in capital and declines in risk weighted assets Common equity as a share of tangible assets has also risen to nearly 5 percent for the four large banks Oops A TCE of nearly 5 is not exactly streets ahead of the Canadian banks Moreover nearly 5 is actually worse than the 5 42 TCE of Italian bank Intesa Sanpaolo see ZH chart above whose shares have been under attack and subject to multiple trading halts in the last fortnight to save it from collapse 18 Challenges remain however Banks may be tempted to take on riskier strategies in an environment of structurally lower credit growth Household debt remains high 150 percent of disposable income and a rise in mortgage

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  • What does this chart tell you? : third wave group
    the USA The goverment stimulus has provided a table top to the classic bubble graph I firmly believe that Australia is similar all every aspect of the econamy as that of other countries that have already had a housing crash ongoing We will suffer the same fate 60 falls over the next five years The housing crash will be the cause of job losses and a stock market crash not the other way around Reply peter forrest says August 12 2011 at 8 22 pm Australia here we come 30 drop in the next 12 18 months Reply Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia

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  • david rosenberg : third wave group
    received positively How can this be Well economists had been ahead of the game and previously revised their GDP growth expectations Filed under tidal reports Tagged with alan kohler ben bernanke david rosenberg deleveraging economy gdp karl denninger united states subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate recession robert prechter sentiment sovereign debt steve keen stimulus stockmarket super profits tax technical analysis terry mccrann undersupply united states archives November 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March

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