A dangerous game at Woolies and Coles. Slashing the price of pre-mixed spirits might appeal to marketing managers at the retail liquor giants but it is the kind of silly move that they will end up regretting.

It is deliberately provocative to governments concerned as the impact these products have on excessive alcohol consumption. It is just asking for governments to re-regulate the liquor industry. Retailers, like manufacturers, should realise that while they might be legal drug pushers, they are still drug pushers.

I hate the weeks leading up to budgets. The worst political season of the year is upon us 00 the weeks leading up to the annual budget when the media is full of real and totally imagined stories about what may or may not be done to us all. It is a field day for the fair dinkum spinners and the out and out rumour mongers. Better to block your ears and avert your eyes at any mention of what the budget will contain.

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And prepare yourself to ignore, after the budget is delivered, all the predictions about what future growth rates will be and the impact they will have on eventual budget deficits or surpluses.

Taking no notice of S&P. If you wondered what the professional money managers think of ratings agencies then have a look at this little graph of what happened overnight our time to the interest rate on 10 year US Treasury notes:

Down went the rate (or, if you prefer, up went the price) after Standard & Poors put the United States on what it called “negative outlook” and said the chances are rising that the country will lose its prized AAA status.

Comments Paul Krugman on his blog:

I think the financial press is being even denser than usual on this one. If S&P warns that US bonds might not be safe, and the price of those bonds rises, you really have to wonder how anyone can write with a straight face that this warning caused other market movements. And it’s much worse to have this implausible theory reported as a settled fact.

Something to really worry about. If trying to interpret the signals given by markets is your go then something real for you to worry about is what is happening to Greek interest rates. There are the rate is going up at an alarming pace:

While the yield on 10 year bonds is now up to 14.55%, the two year yield is now up to 20.3%. The experts explain that the curve is inverted because investors expect to wake up one morning and own longer maturity debt at lower rates. This possibility hits the price of the 2 year bond more than the 10 year. (See Extend and Pretend Greek Style at Calculated Risk.)

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Peter Fray
Peter Fray
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