by Kris Sayce on June 30, 2009
If you missed yesterday’s Money Morning on ‘Born Again Keynesians’ (BAKs) love-affair with the Output Gap, then take a quick read now. You can click here for it.
You’ll need to read it as a primer for the following item. And don’t forget, you can now leave comments on the Money Morning website, as ‘Nick99′ already has for yesterday’s story.
Now you’ve read the primer I won’t need to give any further background.
But I will mention this, yesterday was a torrid day for your editor. We just couldn’t get our pea-sized brain around the idea of Actual GDP and Potential GDP. We’re still none the wiser. Sure, we understand that ‘potentially’ an economy can produce more if it’s at full capacity, but the problem is where do you draw the line?
Is the ultimate potential GDP where you have 100% employment and every business and consumer is using every form of new technology to improve their productivity?
If not, then the concept of Potential GDP must be a subjective number. It is therefore subject to manipulation and inaccuracies as various BAKs feed in their own economic modeling to extract the result they’re after.
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by Kris Sayce on May 21, 2009
“Oh, where were you when we needed you?” your editor wailed at his newspaper this morning.
“Why oh why didn’t you speak up before?” we lamented.
“It’s too late now. You should told everyone about this months ago.”
The reason for our despair this morning?
Page 24 of today’s Australian Financial Review, and the headline “Yields rise ahead of expected glut.”
The article quotes JPMorgan head of fixed income Jeff Herbert-Smith, “Globally, we are seeing bond yields move up and in Australia, the supply pressures are putting weight on the market.”
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by Kris Sayce on May 1, 2009
This morning, sad news from across the Pacific Ocean. US car maker Chrysler has filed for chapter 11 bankruptcy protection. We thought a poem would be in order. Written in the style of EJ Thribb…
So. Farewell
Then
Chrysler Motors.
You made cars
For 83 years.
But they were
Rubbish
And no-one bought them.
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by Kris Sayce on April 30, 2009
Yesterday your editor sent assistant publisher Joanne Ha, and Swarm Trading technical analyst Gabriel Andre out to the local coffee shop.
We armed them with a pencil, paper, a tape-recorder and the task of coming back with some of the basics of foreign exchange trading.
They came back almost an hour later with much more material than we expected. Therefore today’s Money Morning will be completely handed over to them.
For the record, Gabriel enjoyed a skinny milk hot chocolate (sans marshmallow), and Jo’s poison was a skinny latte with one sugar.
But before I hand over the reins, I did promise a visit to the Money Morning Mailbag. But there isn’t enough room today. So we’ll print a selection of them tomorrow. Also, we’ll go through the NAB and ANZ half-year results.
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by Kris Sayce on April 29, 2009
We’ve spent a lot of time looking at property recently. There’s good reason for that. There are two bubbles left yet to burst in major economies.
One of them is the bond bubble in the US. The other is the property bubble in Australia.
Part of the reason for both is due to a massive increase in credit. In Australia part of the increase in credit has come from ‘free money’ from government bribes. Something we’ve consistently warned is distorting the market and priming the bubble even further.
You may think then, that the announcement late last week by finance minister Nick Sherry on tougher lending standards would meet our approval.
Actually, when we think about, you probably wouldn’t think that at all – you just know we’d be against it.
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