If he didn't scare the crap out Rudd in 2008, Rudd would probably not react with the largest stimulus among developed countries and house prices today would be significantly lower than in 2008.
You know that Keen saved your property bull ass, but you cannot forgive him because he scared the crap out you so you sold in panic in 2008 just before the boom?
According to this, the the US stimulus was larger than Australian in 2009. How come the US stimulus did not "save" US house prices? Oh I forgot - Its different here...except when its the same...expect when its different.....yawn...
His predictions certainly wrong, his outlook probably not.
As Cat points out, should we not hear alternative ideas in case it scares people?
I don't think people are against hearing his ideas - just the wrong sensationalist predictions. I have read his ideas in the past and they make a lot of sense. We have been taking on a large amount of debt to buy houses. But to then go and tell everyone house prices will collapse 40% is where it gets disputed. Uneducated bears keep quoting it as if it is a proven theorem and thus to correct these bears, we need to show why the 40% crash prediction has flaws ...
Do this make me a bull? Well, I have always maintained that I believe house prices can and will rise roughly in line with CPI over the long term. To the extreme bears, I will be branded a bull but to property spruikers, that is decidedly bearish.
See SK is an academic - his job is to attempt to boil the world down into an econometric model so that precise calculations of what will happen can be made. The sheer impossibility and hubris of this is not important, his job is to attempt to advance knowledge in this way. All academics get hot for their pet theories and many will defend them by making rash statements, because they are trying to change the mainstream of opinion about a certain issue, which requires you to shout loud and take extreme positions or just be ignored.
Even if you present it rationally "my model suggests that house prices could drop as much as 40% over time" becomes "Professor says houses prices will crash 40%!!!!".
OTOH the job of mainstream economic analysts e.g. Bloxham, Evans, Savanth, James is to make predictions which are not too divergent from each other as none wants to stand out as having got it wrong. If they all get it wrong, thats fine because thats to be expected. In addition, their analysis has to fit well with what their business strategies are. So it doesnt make a lot of sense for them to trash a particular asset class or whatever, when another part of their business is trying to sell people that product. Therefore, they will make nice cooing noises and be on the cautious side of careful, but with a bullish slant because ultimately their bosses dont make any money if everyone gets all pessimistic. There is absolutely no incentive for these people to identify potential problems, and so they dont for the most part.
There are some free-thinking big-bank analysts around, but they tend to be in short supply.
So the point is, do you listen to the people with a vested interest in a given outcome who all parrot the same line, and all get it somewhat right with their very cautious predictions, but who strangely never seem to see the big events coming? Or do you listen to people who are actually analysing the big picture independently and trying to work out macro-directions? They will often be wrong, but it will be people like that who spot the game-changers, not the paid minions of the bank.
Oh and any Bears who parrot SK predictions as "truth" are even worse. I haven't seen many do that though.
Catweasel rarely get a hot and sticky about a forum post. It thinks a emotional receptor of a Catweae just been the triggered.
Its a shame that so many bear posts on this forum is just whinging and making up rubbish to pass off as fact.
Your posts today are much better Trojan it would seem you have learnt your lesson, well done.
It must be made up rubbish being passed of as fact like this!....
I do know someone who sold their 2 unit apartment after the announcement of the doubling of FHOG and then rented for 6 months before buying a house at a much higher price bracket.
Just one other thought - you and Strindberg have been saying that if a bear predicts prices crashing to a certain level, but the crash is delayed and the bubble grows even bigger, that prices would still need to fall back to that same level for the bear to be right (i.e. a bigger crash than first thought).
But if the prediction is based on prices falling to achieve a certain rental yield, for example, then any increase in rents during the delay would do some of the leg work in bring prices back to predicted value.
..I see, you are saying that if prices don't fall at all but rents rise 40% then Steve Keen's prediction of a 40% price fall will be correct.
Give it up - you're making yourself look silly.
That's not what I'm saying at all. I crash implies falling prices. And I wasn't specifically talking about Steve Keen.
Here's an example:
Say I predict house prices will fall 40% starting now. But instead, prices rise 5% over the next year. If I understand correctly, you and Shadow have been saying I would need to increase the size of my predicted fall for my original claim to be correct.
What I was trying to say is that, if my prediction was based on rental yield (which it happens to be), and rents have also risen by 5% during that year, then house prices would still be over-valued by the same margin, still requiring a 40% fall.
By the way, the insults creeping into your posts towards me are unnecessary.
That's not what I'm saying at all. I crash implies falling prices. And I wasn't specifically talking about Steve Keen.
Here's an example:
Say I predict house prices will fall 40% starting now. But instead, prices rise 5% over the next year. If I understand correctly, you and Shadow have been saying I would need to increase the size of my predicted fall for my original claim to be correct.
What I was trying to say is that, if my prediction was based on rental yield (which it happens to be), and rents have also risen by 5% during that year, then house prices would still be over-valued by the same margin, still requiring a 40% fall.
By the way, the insults creeping into your posts towards me are unnecessary.
Apologies for the perceived insult. I was illustrating my point by taking what I interpreted to be your idea to its logical conclusion. It's a habit I have. The 'silly" remark was made on the misunderstanding that you were using this argument to defend Steve Keen. I withdraw it.
Having read the above, it seems in that scenario you would not be predicting a house price fall of 40% at all, and you shouldn't be calling it as such.
What you would be predicting is a rental yield rise of 66.6% (the yield rise as a result of a 40% house price fall acting alone).
Of course, such a rise in yield can be achieved through a combination of price falls and rent rises.
However, I fail to see why you think present yields are too low. The current yields are such as to make owning cheaper than renting for most of the roughly half of owners who own outright even without capital gains. It's folly to just look at the early years for the minority of home owners who have large LVR mortgages. Ownership is cheaper than renting for almost all owners over a reasonable term with the current rental yields.
There is nothing new about rental yields being below mortgage interest rates. It's always been like that in Australia - there's a chart below - further earlier data can be found in Stapledon's thesis confirming the message. Mortgage rates seem to vary between 50% and 200% more than rental yields - check the period around 1990.
If you are waiting for rental yields to rise by 66% to say 7% it may happen but past experience indicates that it would be associated with much higher interest rates.
Australia's rental yields are not particularly low by international standards and are higher than most of Europe. There's a quote from another post of mine below:
Quote:
All have lower rental yields than Australia's 4.11%:
Cyprus 4.10% Italy 4.06% Estonia 3.99% Switzerland 3.96% Finland 3.94% Germany 3.73% Luxembourg 3.56% Lithuania 3.53% Spain 3.41% France 3.26% Malta 3.25% Czech Rep. 3.09% Greece 2.36% Andorra 2.24% Monaco 1.73% Cambodia 3.26% Hong Kong 3.23% Singapore 2.94% India 2.76% China 2.66% Taiwan 1.57% Israel 3.31% Lebanon 3.30%
I think that covers most of Europe and perhaps the majority of the worlds population.
According to this, the the US stimulus was larger than Australian in 2009. How come the US stimulus did not "save" US house prices? Oh I forgot - Its different here...except when its the same...expect when its different.....yawn...
if you like that stimulus how about this chart:
BTW. do you know what economic, fiscal and housing stimulus means?
You misunderstand - I actually DO thank SK for scaring Rudd and causing all that stimulus - I benefited enormously from it!
by selling PI at the bottom?
Quote:
The house I BOUGHT in late 2008 went up in value by a large amount - today it would cost me at least another $150k - $200k to buy the same house.
so you sold investment property and a house you lived in at the bottom and than you spent all money on new house that you live in (you don't benefit in any way from $150k price increase of new home)
Quote:
SK didn't scare me, I listened to what he had to say but recognised him for what he was - an ex-socialist and second rate (late starter) academic who was media-whoring himself on the back of sensationalist predictions in order to make a few bucks from increased doom and gloom book sales and appearance fees etc.
so is he second grade or late starter? those two are not related in any way. There were many first grade late bloomers ans even more second grade prodigies
Quote:
Given that at 53 he needed a mortgage 3.5 times his salary to own a unit in Surry Hills it's no wonder really?
I see, somebody is first grade scientist only if he owns expensive property. Price of the house is the only measure of somebody's abilities and successes?
It must feel good to know you are "first grade" because you "own" a house in Mosman.
Thanks God Paris Hilton bought an expensive house, otherwise she would be "second grade" in your eyes.
How does $8000 housing tax credit work? The $789 billion economic stimulus package passed by Obama government in 2009, contained a key housing stimulus bill designed to help first time home buyers in order to revive the US housing market. If you are a potential home buyer and moreover if you are a first time home buyer (i.e. if you have not owned or purchased a principal residence in the past 3 years) this housing stimulus can help you provide a refundable tax credit of 8000 USD. This $8000 incentive, earlier meant to help those buying a house in 2009, has now been extended to 2010 as well.
Wow - you could even get assistance if you owned a house 3 years prior....
So why wasn't the US housing market saved? I guess its just different here....
Yes I think that chart refers to total stimulus - where as mine clearly showed 2009 stimulus.
So, you are saying USA spend 5.6% of GDP for stimulus in 2009 and 2.7% during the period between 2008-2011?
does this sounds right?
do you know what that 5.6% is? stimulus package that was announced in 2009 and still not spent.
Quote:
You know...the year Australian property was "saved?"
is it saved or "saved"? good you used quotes to reflect reality.
Quote:
So why wasn't the US housing market saved? I guess its just different here....
you still do not know why? not because they were different US housing was not saved in 2009 because their bubble burst two-three years earlier - nothing can save housing from it's own burst.
On the other hand, with all the effort and the largest stimulus in our history and developed world, we managed to "save" our housing from bubble burst in USA, not our burst.
Do you think that extreme effort will be enough to save our housing from our own burst? :lol:
So, you are saying USA spend 5.6% of GDP for stimulus in 2009 and 2.7% during the period between 2008-2011?
does this sounds right?
do you know what that 5.6% is? stimulus package that was announced in 2009 and still not spent.
Yes - your data seems dodgy (UBS). I'll stick with the IMF. Either way, it is clear the US has housing stimulus (a point you seemed not to know).
Quote:
you still do not know why? not because they were different US housing was not saved in 2009 because their bubble burst two-three years earlier - nothing can save housing from it's own burst.
but but but Aussie housing was falling in 2008 too - just like USA. So it was't bursting then, but is now? Or is it busting then and is again now?..oh I can't keep up. Your contorted logic is impressive if not humorous.
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