Round up of Commentary on Macro Business

The Half Weekly Round up from our Aussie Cousins – at Macro Business

 

I am going to trial a twice weekly round-up of some tidbits from Macro Business Super Blog. The round-up would be posted every Wednesday and Sunday (time of day dependent on work and days off) here at VOAKL with the index also updated at the same time for more full length commentary from the respective bloggers over there. Hopefully the round-up gives some brief complimentary material to what gets reported in The NZ Business Herald and The National Business Review.

 

Here we go with the first round-up:

Are bulk commodities in a bear market? by 

Are bulk commodities approaching the end of their golden run seen over the last decade. If prices for these essential commodities do fall out and take a one way trip down; the political, economic and social consequences in Australia could get pretty bad (especially all that money from the mining boom drys up). This also translates here to NZ; if our biggest trading partner falls into bad health, we are going to be taken along for the ride also downwards. I do wonder though, kiwis going to Aussie for “better opportunities” are going to get whacked super hard and limp back home to NZ when it gets real tough over the ditch. Remember nothing lasts and the good times always come to an end. 10 years worth of Kiwi exodus might just come back home to NZ – and that is going to hurt us with a flood of people and labour supply.

Budget hits foreign property investors again by 

Removal of CGT discount for non-residents

The Government will remove the 50 per cent capital gains tax (CGT) discount for non-residents on capital gains accrued after 7:30pm (AEST) 8 May 2012. The CGT discount will continue to be available for capital gains accrued prior to this time where non-residents can then choose to obtain a market valuation for assets as at 8 May 2012.

This rule will largely impact non-residents individuals holding interests in Australian real property.

I wonder which of our NZ political parties would do that here first. Ouch for Melbourne who already suffered from a buggered housing market.

MacroBusiness Morning by 

Hey do we get that kind of commentary here and lots of pretty graphs? Interesting morning read up though on the international economy.

Shale gas hype: Subprime 2.0 by 

In short; shit if this does a Subprime on us and go tits up. The consequences to that would really nail the USA still reeling from the Global Financial Crisis ongoing from 2008. While the Shale Gas, Oil and Coal boom in the USA is all go and giving the US a nice recovery situation – hell if that goes bust to which no Democrat or Republican president would be able to cope with. From Global Financial Crisis to Gas Fracking Crisis, it will hurt (and hurt the Australians too):

The following is by Yves Smith and is cross-posted from Naked Capitalism. It has some important implications for Australia’s own gas boom, not all of them bad. 

If my RSS reader is any guide, most of the press about shale gas has focused on two issues. First, shale gas is in considerable supply, cheap to produce, and burns far cleaner than other fossil fuels. Second, shale gas does not look so hot environmentally, all in. Fracking can pollute ground water (and potable water is our most scarce resource) and releases enough methane to make shale gas as detrimental as coal. Still, it has been treated as the Great Hope for America’s energy woes, a way to turn the US into an exporter, and maybe it will cure cancer too. Obama touted 100 years of shale gas reserves, and manufacturers envision an American revival based on cheap fuel.

The problem is that the good part of this story is largely wrong. Shale gas supplies are overestimated, and it is not as cheap as it has been touted to be. The big reason is that shale gas wells, unlike oil wells, peter out really quickly. The result is that the viability of shale gas as a solution to America’s high energy consumption level is only on an interim basis. Shale gas is more likely to be a stopgap, a 25 year solution rather than a 100 one.

As with the housing bubble, analysts and journalists who understand the economics are giving clear warnings, but they don’t seem to be getting much of an audience. For instance, Jeff Goodell in Rolling Stone wrote in March:

You can read the rest at Macro Business Super Blog

Gas gets expensive by 

And for some bad news on Liquid Natural Gas projects in Australia. Seems cost over runs and over-expectations are hitting a few LNG investments in QLD. What is more the rock bottom prices enjoyed from LNG of recent could be on a one way trip – UP! This would be of particular bad news New Zealand on a few fronts:

First being we are looking at build a nice big LNG terminal somewhere in NZ with the aim of building a virtual pipe line of LNG Tankers (boats), terminals and feeder pipelines across the land to capitalise on cheap QLD and Indonesian Natural Gas (our native supplies are running low at the moment). However if cost over runs seen in QLD are anything to go by, OR that the price of LNG goes up as it predicted to do (and the Shale Gas saga I mentioned above does not inspire confidence right about errr now) – well that was one arsed piece of investment we in NZ just made. Thank goodness for our 300-1000 year supply of coal that can be turned readily into: petrol, synthetic natural gas, kerosene for aircraft, diesel, heating oil and electricity – with bugger all effects to the environment. Now just need Solid Energy to get bloody proactive and build those synthetic plants I have been calling for since oh 2008?

 

And now for your Australian Budget Round-Up

 

Budget bets on private borrowing by 

And our government gets accused of borrowing and hoping. Seems our Aussie Cousins are not better:

Last night Wayne Swan handed down his fifth Australian federal Budget. You can find his speech here.  It was very much a labor Budget with the focus on middle and low income earners, but framed in the context of a push for surplus in one year from a deficit position of over $40 billion. If you have a spare week or two the full Budget documentation is available here.

The Budget forecasts a very sharp turn around in the deficit position from $44.4bn ($3.0% of GDP) for 2011-12, to a very small surplus of $1.5bn for 2012-13. This prediction is based on overall growth and household expenditure returning to “normal”. Back in November the Mid-Year Economic and Fiscal Outlook the deficit was forecast at $37.1 billion however there continues to be weaker than expected revenues based on a number of factors. These include:

  • a large amount of capital losses dampening Capital Gain Tax receipts;
  • Weaker GST receipts due to “disleveraging” consumers and the high AUD
  • Mining capital expenditure writeoffs and a weak non-mining economy which has lowered company tax receipts.

 

Sounds more ambitious than NZ Government Finance Minister Bill English’s aspirations of returning us to surplus by 2014-2015. Although “household expenditure returning to “normal;”” I think consumers paying down debt both here and in Aussie is going to be happening for a little while longer yet folks as we finally learn to “Live within our means.” So Australian Treasurer Wayne Swan is really hoping on some (private) borrowing.

 

Housing lobby gets no Budget relief by 

To put it aptly:

Well it didn’t take long, the Federal Budget has only just been released (it’s 9.00pm Tuesday as I write this post), and already the Housing Industry Association (HIA) is complaining that the Government didn’t offer incentives aimed at reinvigorating Australia’s ailing home building market:

You can read the rest at Macro Business Super Blog.

However boo-bloody-who to the HIA, shesh from reading the post over at MB they sound like that guy from Westfield NZ having a whine to Auckland Council about their rates (and some of us having a crack at their crap land use and management policy). However the Aussies seem to be having the same debate we are over Housing Policy including taxation and CGT.

Needless to say as Leith put it vested interests in Australia, just like we have vested interests here when it comes to the: Auckland, Long Term, and Unitary Plans. Least the Aussie budget did not bow over to the HIA where as ours is yet to be seen or desired.

 

Well that is the first Macro Business Round Up here at VOAKL. The next round up will be on this Sunday evening.

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