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The RBA's Property Problem - The ABC does Macroprudential
Topic Started: 24 Oct 2014, 03:45 PM (671 Views)
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“We’re keeping a close eye on the build-up of credit to investors in the housing market. Not to owner-occupiers per se. And certainly not to first home buyers. They are not the issue. As we have said, we are in discussions with APRA about whether there is more to be done to reinforce sound lending standards” - Glenn Stevens
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Glenn Stevens
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Just to add to my earlier comments. Yes, these sorts of tools and, in fact, any regulatory tool really, has the potential for distributional things or affecting particular interests. Any supervisory tool, potentially has that problem and we have seen, as readers will know, in the case of New Zealand, the issue of the first home buyers who are typically more highly leveraged than repeat buyers. I think the government there felt the need to kind of help them a bit when these tools all came in, so you always get these potential distributional issues with any regulatory tool ... that’s just the way it is.

This brings me to the other lever I raised at my speech on the 30th anniversary of the float, where I raised the idea that the central bank hasn’t totally put away the idea of intervening in the foreign exchange market to stem the dollars rise or even try to push it down a bit. What I was trying to do there was to give an explanation of the way we thought about intervening and hadn’t done it in this episode so far. It’s a very big episode. In many respects, it’s quite unlike other episodes of the high exchange rate we’ve had in the floating period. It has been very persistent. There has been a very powerful fundamental driver behind it and when we thought about intervention, we have thought about it occasionally over these last several years, we thus far felt it wasn’t appropriate because of the nature of the event. So I wanted to explain that but not have people take from that explanation the message, “Well, they never will.” We haven’t and I think for good reason, to date, but that doesn’t mean we’re saying never. And I just wanted that to be understood.

To the extent that what I or others here have been saying has nudged the exchange rate down of late, I’m not sure we should take all that much credit, because I think the truth is that, in these markets, what happens elsewhere in the world and particularly what the Fed might or might not do or say, you know, all those things matter quite possibly more than anything we say. But to the extent anything we’ve said has had some effect at nudging it down, I would regard that as probably nudging the market in the direction of the medium term equilibrium and therefore not inappropriate. But I don’t harbour the illusion that mere words are all powerful.

They’re certainly not.
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Glen are you kidding me here. And good to see my tax dollars being wasted. Don't seem to do a lot for all that money we pay you. Another shocking abuse by the government and extent to which our money is wasted. To we really need to pay so many to do so little. Do we even need the reserve, just another made up croc to waste our hard earned money on. A sick joke really.

You want to enteratin the idea that your jibbering has brought the dollar down. Nothing at all to do with the constant bullshit flowing out of the fed about how they will be lifting rates glen ? Not even a mention of that. With is the reason not anything you think you said. China slowing along with our increasing unemployment hay have helped too. But no ,no mention of the obvious reason, just pat yourself on the back.

So in the meantime you think pricing Australians out of home ownership to sell to foreign investors who want another IP is the way to keep your pay packets moving forward while further destroying the economy.

You do understand the rising house prices and debt is a guarantee of future economic decline as more money is directed away from the economy .

It would appear you guys have no basic concepts of real economic growth and have not learned one single thing from the GFC and countries that pumped a housing ponzi for decade after decade only to see the end result. Prices in California are 20% cheaper than 2004, and that's with all this stimulus and rates at zero for over six years now, and there economy is still stuck in limbo. And remember one very important thing, our wages are more than double theirs, and they cannot compete. Spells our future out loud and clear when it comes to economic prospects. And they did not have negative gearing pumping prices even further again and I'm not sure if they had the superfund leverage like we did .

Why are you not talking about jobs growth here and addressing youth unemployment and to create jobs, to pay for this housing in future,why is this not even mentioned. The reason is, you have no answers, so now we are doing another Ireland, record overbuilding as the real overall economy declines on a level never seen before in our history, not even close. Industries and buisinesses that have supported generation after generation into home ownership are now closing down, hard and fast as we have no answer for dirt cheap as a in labour.

So now ,like Ireland, we are seeing around 10% of our workforce in construction, it reached about 12% in Ireland before it went bang. We don't need any more construction jobs to reach 12% here. We just need more jobs losses , from manufacturing, the closure of ford and holden for one, more mining jobs losses or in all the other struggling sectors of the economy and we will see consrruction jobs at 12%. But it would appear we will be getting more co struction jobs anyway, it shows a severe further unbalance in the making. Where the jobs that are supposed to support these houses ,whether it be buying or renting from investors, are dissapearing ,yet this unbalance is becoming wider again.

No problems here right Glen ? Some more jibberish will hold the obvious off a while longer right.

Maybe you could open your mouth and the dollar might drop another
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Bit hard when you have to deal with reality right Glen ?

I want a refund..... :lol
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Timo
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Glenn Stevens
29 Oct 2014, 08:15 AM
Just to add to my earlier comments. Yes, these sorts of tools and, in fact, any regulatory tool really, has the potential for distributional things or affecting particular interests. Any supervisory tool, potentially has that problem and we have seen, as readers will know, in the case of New Zealand, the issue of the first home buyers who are typically more highly leveraged than repeat buyers. I think the government there felt the need to kind of help them a bit when these tools all came in, so you always get these potential distributional issues with any regulatory tool ... that’s just the way it is.

This brings me to the other lever I raised at my speech on the 30th anniversary of the float, where I raised the idea that the central bank hasn’t totally put away the idea of intervening in the foreign exchange market to stem the dollars rise or even try to push it down a bit. What I was trying to do there was to give an explanation of the way we thought about intervening and hadn’t done it in this episode so far. It’s a very big episode. In many respects, it’s quite unlike other episodes of the high exchange rate we’ve had in the floating period. It has been very persistent. There has been a very powerful fundamental driver behind it and when we thought about intervention, we have thought about it occasionally over these last several years, we thus far felt it wasn’t appropriate because of the nature of the event. So I wanted to explain that but not have people take from that explanation the message, “Well, they never will.” We haven’t and I think for good reason, to date, but that doesn’t mean we’re saying never. And I just wanted that to be understood.

To the extent that what I or others here have been saying has nudged the exchange rate down of late, I’m not sure we should take all that much credit, because I think the truth is that, in these markets, what happens elsewhere in the world and particularly what the Fed might or might not do or say, you know, all those things matter quite possibly more than anything we say. But to the extent anything we’ve said has had some effect at nudging it down, I would regard that as probably nudging the market in the direction of the medium term equilibrium and therefore not inappropriate. But I don’t harbour the illusion that mere words are all powerful.

They’re certainly not.
Go and lobby the Government to get rid of negative gearing pretend Glen or go back to sleep.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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