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Big four major bank economists deny the obvious housing bubble; It's not true until it's been officially denied, and now it has
Topic Started: 27 Aug 2014, 12:10 AM (7,476 Views)
Ex BP Golly
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Which one is the smart guy?
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WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Veritas
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noopsy05
27 Aug 2014, 10:47 AM
If there was a housing crash all of you bears would still be wrong because you called it 10 years ago, and price would only drop to around 2009 price...
So what?

That would still mean buying now would be ill advised.
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
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Dr Watson
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Ex BP Golly
27 Aug 2014, 01:16 PM
Which one is the smart guy?
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None of them.

The major bank economists have always been a pack of superfluous turkeys.

They are marketing devices — they throw a few darts at the board, come up with some numbers, and then provide quotes to journalists which in turn gets their employer's name in the newspaper.

The lot of them can go and get f---ed.
Edited by Dr Watson, 27 Aug 2014, 01:29 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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stinkbug
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Veritas
27 Aug 2014, 01:17 PM
So what?

That would still mean buying now would be ill advised.
True.

In the same way, NOT buying now is ill advised if prices are going higher.

Realistically, no-one has a crystal ball. You have to do what suits your situation, your goals and your risk tolerance.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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zaph
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Ex BP Golly
27 Aug 2014, 01:16 PM
Which one is the smart guy?
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The photographer!!
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peter fraser
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zaph
27 Aug 2014, 01:30 PM
The photographer!!
The smartest one was Saul, not because he is a smarter economist, but he was smart enough to take himself out of the spotlight.
Any expressed market opinion is my own and is not to be taken as financial advice
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herbie
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Dr Watson
27 Aug 2014, 09:24 AM
That's his conundrum — finding high-paying employment and affordable housing in the same location.
What Oz needs is FIFO bankers ... :)

Then again, I guess we could always just outsource them/send the jobs offshore maybe? LOL!

PS: Callam Pickering is NEVER gunna get inta bankers' heaven while he keeps coming out with this sorta stuff ... :) :

"Australian banks have binged on mortgage lending over the past couple of decades, reaping record profits year-after-year, which has resulted in Australia possessing one of the highest levels of private debt in the developed world."

http://www.businessspectator.com.au/article/2014/8/27/australian-news/what-banks-arent-telling-you-about-housing-market?utm_source=exact&utm_medium=email&utm_content=880806&utm_campaign=kgb&modapt=
Edited by herbie, 27 Aug 2014, 03:13 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Catweasel
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Catweasel say a gurus shape mind of mouse,

and can gain the disciples,

through beloved media.

And it can see in the sandpit,

in a maelstrom or pot-pourri of beliefs,

as it frantically scratch around for verification of its existence.

Even if have swag of mouse house,

and small mountain of service to its bank master,

another mind exist,

which based on a observe of its behavior,

like a fine young undergrad at a Penn the State.

More wisdom than armchair soapbox with internet connection.

The Media has such a huge impact on the way people behave throughout our society. What we see on the TV or internet has such a huge impact on how we determine what is right and wrong throughout society. When it comes to stories on the news, the way the media tells specific stories impacts the way we see the situation. Everyone is going to have their own opinions about certain cases but when it comes to how it’s told through the media one cannot help but see a different side. The impact the media has is more impactful than one may think. Society is constantly being influenced by the power of the media. Whether it be buying a new purse because one of you favorite celebrities tweeted about it or hearing the weather on the radio. The media impacts how we make decisions without us really being aware of it.

There are tons of different ways the media can impact how we see others. For instance social media can really influence this, because more often than not you learn a lot of things about a person from what they post on social media. More often than not, social media can impact the way we see people in a negative way. I think it influences us in a bad way because we constantly judge people based on what they put on the Internet. Media also has a huge impact through the news stories as well as Reality TV shows. Reality television has a huge impact on the way we see people, it shows how people will do almost anything in order to be on TV.

The Media completely impacts the way people act and see themselves. In todays society there is such a high standard on how to act and the media is definitely the root of those standards. A lot of cases are with the models in magazines that have the perfect body; those media outlets really influence how people see themselves. That is why it is so important to not let the media influence how you view yourself because itreally could mess with your own self-esteem. I believe that this is a huge negative to the advancements in media today because people are constantly comparing themselves with what they see in the media and that is not healthy.

Due to the growing advancements in media today I believe the world has had such a huge impact through media. We are able to connect to different countries and learn about other cultures so easily today. The media has had a huge impact on educating people about other cultures and that creates us to learn about the world. For example through international TV stations we can watch international shows and compare it to what we see in the United States. The media has such a positive impact on the way we see the world because it helps connect us to other cultures that we might not be educated on.

Media today is such a huge part of everyday life. I can’t remember the last time I went a day without looking on social media. Even though the advancements in media outlets today is so incredible there are also a number of downsides that we must be careful of when using media sites. It is important to stay true to yourself when you post on social media and especially when you watch TV shows. You have to remember that TV shows are not real and it is never an accurate display of what is really going on in the world. The power of media is endless but it is important to always remember what really matters in the world and we can live without the influence of media.

http://sites.psu.edu/samanthamorrisleap/2014/07/30/the-impact-of-media-today-bank-point-assignment/
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Ollie
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For a bit of fun, I thought that it was worth evaluating each of the banks’ arguments to determine whether they hold water. First up is the ANZ’s Warren Hogan:

“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.


Sure. We don’t have the same degree of low income earners gearing into property as the US had – they are priced-out. Rather, what Australia does have is an unprecedented binge by so-called investors chasing capital growth. ATO statistics also show clearly that property investors have become increasingly speculative in Australia, effectively willing to pay their property investment a dividend in the hope that it repays them with capital growth. Whereas investors in aggregate broke more or less even on their properties up until 2000, they have since been willing to take on large income losses. And both the number and proportion of negatively geared investors has ballooned. How is this not by definition exceedingly speculative?

Next up, Michael Blythe from CBA:

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.”

This is a dumb way to measure risks. Essentially Blythe is saying that present credit growth is not a concern because outstanding housing credit is huge and at its highest level in history. Rubbish. It is precisely why mortgage lending is a concern. Moreover, the stock of outstanding mortgage debt is growing at well over twice the pace of wages. That is, mortgage debt has grown by 6.4% in the year to June versus wages growth of only 2.6%. Accordingly, the ratio of mortgage debt to household incomes will continue to rise to fresh all-time highs.

Next up is NAB’s Alan Oster:

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.”

May I remind Mr Oster that unemployment in the US was only around 5% when its housing bubble burst. Moreover, it did not hit 8% until February 2009 – long after the economy had plunged into recession. I also bet none of the US banks so-called “models” ever predicted such an outcome. The outlook for Australian employment isn’t exactly great either, given the ongoing unwind of the biggest mining investment boom in Australia’s history and the shuttering of Australia’s car industry by 2017.

Finally, here’s Westpac’s Bill Evans:

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”.

I call bullshit. 15 years ago (June 1999), Australian housing values were only 4.4 times total employee incomes. As at March 2014, they were 6.4 times incomes – a 46% increase – and are climbing quickly towards a new all-time high. Further, let’s not forget that the outlook for income growth stinks, with Treasury forecasting that real per capita gross national income will grow at its lowest rate for at least 60 years over the next decade, dragged down by the falling terms-of-trade.

Methinks our bank economists protest too much!
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Trojan
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Dr Watson
27 Aug 2014, 09:24 AM
That's his conundrum — finding high-paying employment and affordable housing in the same location.
Funny that. Living where the high paying jobs are means you have to compete for housing with other highly paid earners.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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