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Foreign interest in Aussie debt peaks; The great capital flight begins
Topic Started: 25 Sep 2015, 10:25 AM (7,402 Views)
Andrew Judd
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Sydneyite
26 Sep 2015, 02:56 PM
the action of the government spending creates the ESA reserves required for the banks to bid on all the new bonds that are issued, always.
The Australian financial system is not working like that. The only way the bonds can be sold is by accessing the existing pool of money. Perhaps I am misunderstanding what you are saying? The MMT version of reality is just a misrepresentation.
Edited by Andrew Judd, 26 Sep 2015, 03:35 PM.
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Rastus2
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Andrew Judd
26 Sep 2015, 03:11 PM
If you select a quote you can create pretty well any meaning you want

Strindberg said

surplus AUD (with effect on ex rates) could only arise from such a process if the sellers could sell back to the RBA/Treasury - which they cannot do. Foreigners selling their bonds on the secondary market makes no difference to the supply and demand for AUD regardless of residency of the participants.

I fail to see your point.

His claim in what i quoted is still wrong... the preceeding scentence does not reverse that error.
Edited by Rastus2, 26 Sep 2015, 03:31 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Andrew Judd
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OK. Earlier I failed to make it clear that my earlier belief about selling bonds creating surplus currency was wrong and Strindberg was correct, so when you began mocking Strindberg I pointed out (again) he was correct - to emphasise I was in agreement with him on that.

And that is all i have to say on it

Edited by Andrew Judd, 26 Sep 2015, 03:33 PM.
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Rastus2
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Andrew Judd
26 Sep 2015, 03:27 PM
OK. Earlier I failed to make it clear that my earlier belief about selling bonds creating surplus currency was wrong and Strindberg was correct, so when you began mocking Strindberg I pointed out (again) he was correct.

... except, he was wrong in the part I quoted...

If the chinese sell large amunts of au bonds, it will have an impact... he claims it would not.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Andrew Judd
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Rastus2
26 Sep 2015, 03:33 PM
... except, he was wrong in the part I quoted...

If the chinese sell large amunts of au bonds, it will have an impact... he claims it would not.
The chinese can probably see plenty of opportunities of moving money out of bonds into something like iron ore or gas production or any number of things that Australia has an abundance of.
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Rastus2
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Andrew Judd
26 Sep 2015, 03:50 PM
The chinese can probably see plenty of opportunities of moving money out of bonds into something like iron ore or gas production or any number of things that Australia has an abundance of.
So what ?
It has nothing to do with his claim...


If the chinese decide to sell large amounts of au bonds, do you agree with strindberg that it would not have any impact ?

I think it's wrong...
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Andrew Judd
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Rastus2
26 Sep 2015, 04:00 PM
So what ?
It has nothing to do with his claim...


If the chinese decide to sell large amounts of au bonds, do you agree with strindberg that it would not have any impact ?

I think it's wrong...
Selling large amounts of bonds is likely to push up the interest rates required to sell new bonds unless here are other forces driving them down
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Rastus2
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Andrew Judd
27 Sep 2015, 12:31 AM
Selling large amounts of bonds is likely to push up the interest rates required to sell new bonds unless here are other forces driving them down
Yes,

And Stringcheese has magically not returned to this thread after his claim :re:

Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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John Frum
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Sydneyite
26 Sep 2015, 02:56 PM
Currently on both the secondary bond market and on the futures markets bond yields are falling / face value of bonds are rising. This doesn't really fit in with your theory now does it? I mean especially the futures - if people in the market believed that what you are saying is likely to happen, the the futures yields would be *rising* now already - especially for the further dated expires, as opposed to falling, as all the banks and o/s investors rushed to hedge their positions against your projected outcome.
How accurately did FX and VIX futures predict current stockmarket volatility or strength of the USD? Why the hell should I care about a yield curve at a time like this?

Quote:
 


I think you have an over-simplified view of the mechanics of the government bond market - suggest digging up some threads on this by b_b.


The only reason I would want to look up b_b's posts is if I wanted to see a poor example of someone trying to poo-pooh another's argument by bamboozling everyone with pomposity and technical jargon.

Quote:
 
Essentially no foreign money is needed to keep the bond market liquid, the action of the government spending creates the ESA reserves required for the banks to bid on all the new bonds that are issued, always.
Which they want to do because it is less desirable to be holding excess ESA funds vs government securities. So foreign investors participating or not in future bond issuance is neither here nor there with respect to what drives the yields higher or lower


This is a perfect example of b_b bullshit, you're making reference to an esoteric clearing process to form some vague argument about endless liquidity and the irrelevance of foreign buyers to yields. I can just imagine the reaction should Glenn wriggle his way out of a bond crisis by spouting nonsense like this.

Talk straight or GTFO.

.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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Foxy
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Zero is coming...

John Frum
25 Sep 2015, 10:25 AM
One of the narratives I've noticed from property bulls on this forum over the last couple of years is the idea that the RBA still has "plenty of firepower left" i.e. will be able to cut rates, buy currency, bonds, do whatever it takes to keep property prices rising at current levels, so enjoy the ride and house prices to the moon etc etc.

As a counter-argument I've been suggesting that this firepower is non-existant - that only big currencies like the euro and the us dollar have the financial gravitas to make these kinds of manipulations. My argument runs more along the lines that the aussie dollar is at it's core still the pacific peso, and as bigger western nations begin their fiscal tightening cycle we will see a massive wave of capital flight that will sink our dollar into the 50's, force up yields on bonds and ultimately mortgage interest rates, precipitating a housing crash of epic proportions.

Well behold, we now have dramatic evidence that this process is beginning in earnest:

http://m.smh.com.au/business/markets/foreign-holdings-of-australian-government-bonds-may-have-peaked-20150923-gjt1da.html
On house prices,
The people can not really be blamed for this.

What other "investment" can the average Joe make??


So the smart rich people say well "average Joe" when he has a little spare cash will invest in a house. What else can the simpleton do??

So the smart monkey buys what the simple monkey has to buy.

Now the games begin.

The dumb monkey will end up buying the property when it is at it's peak, the smart monkeys will then be sitting on a beach waiting, tick tock.

Have fun boys and girls.

Peter

https://www.youtube.com/watch?v=YedqV4Gl_us
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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