This reeks of desperation. We're close to the tipping point now.
Quote:
The esteemed four don’t necessarily agree all the time, but were unanimous in their view that there is no housing bubble in Australia.
On Monday, Jeremy Lawson, one of Australia’s top economic experts, said the housing market is 20 per cent to 30 per cent overvalued and has left households vulnerable to a big international economic shock.
Mr Lawson is the global chief economist of Standard Life,and was previously a senior economist at the RBA and the OECD. In 2007 he advised then opposition leader Kevin Rudd.
“Certainly no bubble,” said Mr Hogan.
“The perceived expensiveness of our property market is as much as anything a social issue, affordability issues. We simply don’t have the speculative credit element there to describe it as a bubble. Low-income earners getting heavily leveraged was the problem in the United States we don’t have that issue here,’’ he added.
Mr Blythe said that for it to be a real bubble you’d need to see that increase in prices being driven by debt, but that’s not happening. “No bubble. Housing credit’s running at the bottom end of the range the last 30 years. You need to see banks easing their lending standards as they chase more dubious borrowers that’s certainly not happening and you need a general expectation that house prices are going to keep rising forever. Now there is an element of that I think.”
Mr Oster was equally unequivocal: “no bubble’’. He thinks the problem with Australia, should one emerge, will lie in unemployment. “If unemployment in our models gets to around 8 or 9 per cent then you get the same problem as you’ve got everywhere else but we’re undersupplied, interest rates are low, we think unemployment’s gone up but nowhere near 9 per cent, so no bubble.”
Mr Evans said that if you look at the growth in incomes over the last 15 years, “it’s sort of kept pace with the growth in house prices. I think you get bubbles when house prices run well ahead of income growth we just haven’t seen that”.
What do you expect these vested interests to say, there is a bubble and their banks are sitting on time bombs?
I have spoken to two of them privately and pretty much neither really had any idea about the true state of the housing market.
When one mentioned to me that housing investment loans were only taken out by those who could afford them, I gave him the stat from the ATO that the average income for claiming neg gearing was $78k. He was literally red faced and gobbing for air and had no answer.
Frankly none of these guys have any decent data and the information they do chose to look at suits their own view.
Hogan did raise an interesting point about finance being lowest in years.
I find this hard to believe but would love some hard stats to prove the error.
There is an Australian Banking & Finance shindig in Melbourne tomorrow where we get to hear from these 4 all over again.
Not bothering going cos I know it will be the same old rubbish.
This reeks of desperation. We're close to the tipping point now.
What do you expect these vested interests to say, there is a bubble and their banks are sitting on time bombs?
I have spoken to two of them privately and pretty much neither really had any idea about the true state of the housing market.
When one mentioned to me that housing investment loans were only taken out by those who could afford them, I gave him the stat from the ATO that the average income for claiming neg gearing was $78k. He was literally red faced and gobbing for air and had no answer.
Frankly none of these guys have any decent data and the information they do chose to look at suits their own view.
Hogan did raise an interesting point about finance being lowest in years.
I find this hard to believe but would love some hard stats to prove the error.
There is an Australian Banking & Finance shindig in Melbourne tomorrow where we get to hear from these 4 all over again.
Not bothering going cos I know it will be the same old rubbish.
Slippery - are you Jim?
If we are in a bubble there would be lots of economists calling it now - but who and where are these economists calling a bubble?
If they aren't prepared to put their reputations where their mouths are then they don't really believe it.
Any expressed market opinion is my own and is not to be taken as financial advice
If we are in a bubble there would be lots of economists calling it now - but who and where are these economists calling a bubble?
If they aren't prepared to put their reputations where their mouths are then they don't really believe it.
Hmmmm.
I think you will find that in recent bubble episodes Cassandras were a distinct minority.
Why? Because they are on the tit either working for banks ( no explanation needed) or media outlets that benefit from advertising dollars.
Why would it be any different here?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
I think you will find that in recent bubble episodes Cassandras were a distinct minority.
Why? Because they are on the tit either working for banks ( no explanation needed) or media outlets that benefit from advertising dollars.
Why would it be any different here?
There were a stack of them in the USA, Ireland, the UK and here pre GFC so why are they not around now?
Shadow will be here soon with a list of them, and a list of the economists who have called bubble since the GFC - but not one calling a bubble now - not even traditional bear analysts.
Why not?
Any expressed market opinion is my own and is not to be taken as financial advice
There were a stack of them in the USA, Ireland, the UK and here pre GFC so why are they not around now?
Shadow will be here soon with a list of them, and a list of the economists who have called bubble since the GFC - but not one calling a bubble now - not even traditional bear analysts.
“It is not too difficult to identify a housing bubble in the making, based on simple indicators such as the P/E (price/earnings) ratio and the price-to-income ratio. This is what a few analysts did, such as The Economist magazine, which stated in 2002 that Ireland’s real estate market had been ‘displaying bubble-like symptoms in recent years’ and estimated that it was then overvalued by 42 per cent. However, the Irish media were almost without exception cheerleaders for the booming property market, only dampening their enthusiasm months after prices had started to decline in late 2007 and 2008.”“One way to illustrate this claim is simply to count the number of references in the press to the notion of a ‘bubble’ in the housing market before and after the crash. The figure [below] shows this for the Irish Times, Ireland’s newspaper of record. It can be seen that before 2008-2009, there were comparatively few articles that even mentioned that the market might be in bubble territory. On average, the newspaper had 5.5 times more articles on the bubble per year in 2008–2011 than in 1996–2007. For the newspapers Irish Independent and Sunday Independent, which boast a high readership, it was even worse: they had on average 12.5 times more articles mentioning the bubble in 2008–2011 than in 1999–2007. And that doesn’t mean that such articles published before the crash warned of a bubble—very, very few did, and many only talked about it to attempt to reassure readers that in fact, it didn’t exist.”
As for the States : Roubini, Schiff, Schiller. Anyone else?
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Like I said in that tweet though it's impossible to call the top. I merely started that I appreciated the Kouk laughing off bubble talk, as denouncrments from high profile 'left' wing economists and political commentators like himself and Bernard Keane will keep it going a little longer and higher, guaranteeing my time at the bank as a contactor a little longer and thus allowing me to save a bigger deposit.
I also likened these people to Turkeys before Christmas - this is a typical behavioral trait of people before a bubble bursts. That, along with an arrogant disdain towards naysayers, and a sense of imperviousness in the face or worsening economic data.
Veritas
27 Aug 2014, 12:51 AM
Michael Lewis covers it well in the Big Short.
Great book, as was Liar's Poker.
Have you read Flash Boys? Also good, although it gets pretty technical in parts.
"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.
Like I said in that tweet though it's impossible to call the top. I merely started that I appreciated the Kouk laughing off bubble talk, as denouncrments from high profile 'left' wing economists and political commentators like himself and Bernard Keane will keep it going a little longer and higher, guaranteeing my time at the bank as a contactor a little longer and thus allowing me to save a bigger deposit.
I also likened these people to Turkeys before Christmas - this is a typical behavioral trait of people before a bubble bursts. That, along with an arrogant disdain towards naysayers, and a sense of imperviousness in the face or worsening economic data.
OK - that's interesting.
I think that most economists are slightly left leaning, and that's probably because they can see the downside of unfettered capitalism. There are not many far right wingers amongst them, none that I can think of.
I don't think that you will see a lot of pain in Australia until interest rates start to rise substantially - borrowing rates of maybe 7% or more and that won't happen until we see inflation that the RBA isn't prepared to look through.
The GFC was far bigger than we all initially thought and IMHO we will be in a funk for a couple of decades. How long will it take to finish your contract with the bank?
They might have more work for you. You could buy affordable housing in Brisbane or Adelaide or Hobart but you won't get any work in finance there, as I understand it all of their programming work is in Sydney.
Any expressed market opinion is my own and is not to be taken as financial advice
Ah Yes, no bubble, that's what all the vested interests where saying EVERYWHERE around the world prior to collapsing. But the real experts were telling them it will collapse and why, it was no rocket science.
Australia's housing bubble is recognised as one of the biggest housing bubbles in the world.
I have seen it described on wikileaks, as the biggest bubble of any asset kind ever.
Now for these clowns saying there is no bubble.
If there was no bubble and they thought there was no bubble and that it was just complete fantasy, as every other bull thought prior to collapse, then why would they even entertain such stupidity and fantasy with a response.
They were forced to respond, because the public is now becoming educated on the real state of things, they relize , its not different here and that our economy is headed down the tubes fast, and that its only a matter of tiime now.
We had the same so called experts and vested interest saying the same thing , exactly the same things as the bulls say here, just prior to it all collapsing and still being propped up six years on to prevent further collapse. See what the real expert was saying to them, see how he was the minority, being ridiculed and laughed at. Does this sound like anybody you know below......
They might have more work for you. You could buy affordable housing in Brisbane or Adelaide or Hobart but you won't get any work in finance there, as I understand it all of their programming work is in Sydney.
That's his conundrum — finding high-paying employment and affordable housing in the same location.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
"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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