Count du Monet

18 Jul 2012, 11:48 AM

Now tell me how a flat market works for investors who depend on capital growth?

Ben D

18 Jul 2012, 11:46 AM

I disagree with you there. Both Keen and Flannery base the positions on well researched facts. I would expect that as the research and facts change with time then their positions would change accordingly.

those

18 Jul 2012, 01:27 PM

So, if we had a bell curve of expected price % changes in 5 years vs number of people who think that is the change that will happen, the range would probably sit more in the negative range down to about 40% and say 10% in the positive range? But with a large number of people in the 10% to -10% range with but with maybe a small number of people in the -10 to -30 range and then spike of uber-bears in the -40% range.

So if the extreme views are the outliers in that curve, doesn't it mean there are a large number of people who share the uber-bullish view that prices will rise by 10% over the next 5 years.

I'm not saying any of my figures are accurate, but just throwing this out there as an alternative way of looking at things.

Who has the actual bell curve? I want to see it.

those

18 Jul 2012, 01:27 PM

So, if we had a bell curve of expected price % changes in 5 years vs number of people who think that is the change that will happen, the range would probably sit more in the negative range down to about 40% and say 10% in the positive range? But with a large number of people in the 10% to -10% range with but with maybe a small number of people in the -10 to -30 range and then spike of uber-bears in the -40% range.

So if the extreme views are the outliers in that curve, doesn't it mean there are a large number of people who share the uber-bullish view that prices will rise by 10% over the next 5 years.

I'm not saying any of my figures are accurate, but just throwing this out there as an alternative way of looking at things.

Who has the actual bell curve? I want to see it.

Shadow

18 Jul 2012, 09:55 AM

Interesting observation.

Joye seems to be quite successful and wealthy, with senior positions in large profitable organisations at a young age.

Whereas Keen is an associate professor, and still renting at close to retirement age. He appears to have very little wealth.

Of course, wealth and success are not always the best indicators of intellect, so let's look at their track record for predictions.

Joye's predictions, while not perfect, have been a lot closer to the mark than Keen's predictions.

Of course, that is partly because Joye doesn't make wild and spectacular predictions - they are usually middle of the road and quite moderate.

Keen has made many wild predictions and bad calls about the Australian housing market and economy.

They have all been wrong (see below). Can you think of any predictions about Australia that Keen has got right? Any?

01 - In 2006, Keen said we may already be in a recession
02 - In 2006, Keen said the Australian Debt/GDP ratio would exceed 160% by 2007
03 - In 2006, Keen said Australia will be in recession long before our Debt/GDP ratio falls
04 - In 2008, Keen said interest rates would be at 2% by 2009, and ZIRP by 2010
05 - In 2008, Keen said we would have double digit unemployment (up to 20%)
06 - In 2008, Keen said we would have a severe recession, possibly a depression
07 - In 2008, Keen said house prices would be down 40% within 'a few years'
08 - In 2008, Keen admitted he was hopelessly wrong on house prices after losing a bet with Rory Robertson
09 - in 2008, Keen sold his Sydney home at a cyclical low point, just before prices rose 20%
10 - In 2010, Keen predicted an accelerating rate of decline in Australian house prices
11 - Between 2008 and 2011, Keen claimed the Australian property bubble began in 1964, 1983, and 1988
12 - In 2008, Keen said his biggest regret was not buying property at the start of the property bubble in the 1970s

kennyjaiz

18 Jul 2012, 01:30 PM

I disagree with timmy, but for a different reason. Steven Keen, like Tim Flannery, had been debating about their respective topics for a long time. When you are consistently being attacked, you can't help but to be on the defensive foot. There were certainly various occasions where Steve talked about Keynesian and Neo-Classic economic theories, and their flaws. And when new information surfaced, he did revise his prediction. That's a sign of an academic.

On the other hand, I disagree with you because I understand where timmy is coming from. Steve was portrayed in a certain light in the media, while I have no idea if the media portrayal of Steve is accurate, he was perceived as an alarmist. He is simply using his credential as an academic to further his personal cause - that is to warn the public of what he believed to be imminent. No theory or well-researched fact can be proven 100%, it can only be supported by evidence, or rejected. In this case, Steve's hypothesis was infact failed to be supported - despite the "well-research facts". Well-intentioned he may be, the prudence quality of an academic is diluted, which often happens when you mix conflicting roles in society.

Ben D

18 Jul 2012, 02:47 PM

I am not sure exactly your're are disagreeing with me about?

Quote:

 

A true academic is always open to other points of view and welcomes more information.

kennyjaiz

18 Jul 2012, 03:48 PM

I responded to your comment, which was a general disagreement to timmy's sentiment that:



An academic tend to be more balanced/objective when presenting their positions. Steve's position was not balanced. That's probably because they did not adopt the persona of academics. Steve was adopting the persona of a whistle-blower and a hero. In the case of Steven Keen, he conducted his research, which informed his own position. "Anchor and adjust" theory would suggest that once an individual have formed his/her initial opinion, while making incremental judgement with new information, the adjusted position will likely be biased toward the anchor (i.e. the initial position), as opposed to what the new information represents.

Ben D

18 Jul 2012, 04:50 PM

Ok. But don't you think if the levels of debt in australia changed and house prices corrected more Keen would begin to change his position?

kennyjaiz

18 Jul 2012, 05:33 PM

I'm not sure I accept your premise, but I may have misunderstood your statement.
Your question, I assume is predicated on the fact that Steven's theory/position - loosely based on Minsky's theory - is correct all along:
1, The level and composition of debt in Australia is excessive
2, The house prices in Australia are unsustainable
3, The high debt level compounded with unsustainable house prices will have catastrophic implication on the Australian economy and more specifically the property market.
4, The impact would be at least 40% nominal drop in property value, within a specific time-frame.
There are other economic factors inherent in the assumption (e.g. level of government stimulus, unemployment rate, etc), but I don't list them.

If there was a change of debt level and as a result, house prices corrected, is actually not a change in position. It is merely the observation of the predicated theory in action.

E.g. If a scientist's position/theory is that when someone slams an open door, would result in a loud bang.
Just because the door is now shut, does not change the scientist's position. The position is still that, if someone opens the door again, and slam it again, you will hear a loud bang.

However, if it is the case, that I slammed an open door, I did NOT hear a loud bang.
A scientist, when presented with conflicting fact, would revise his/her hypothesis.
The new position should be that slamming an open door, is not likely to lead to a loud bang.

Similarly, if the "unsustainable" debt level at the time of Steve's bet with Rory did NOT result in a 40% nominal drop in property value. He would have to revise his/her position, which he did.

Apologies if I have over-complicated a simple question.

Quote:

 

PROFESSOR STEVEN KEEN: ..........However, I think ultimately the most senseless prices are our house prices; they have to fall.
PROFESSOR STEVEN KEEN: I can see us going into a serious increase in unemployment, a serious economic slowdown.
........
So the only thing they can do to control their situation is to cut back drastically on retail spending; and that will of course mean the retail sector is the first one to collapse.
PROFESSOR STEVEN KEEN: I was saying even when the first rates were being talked about the last quarter of a per cent cut that I expected the reserve be down 2 per cent at the end of 2009 and probably zero by 2010.
........
PROFESSOR STEVEN KEEN: Best case scenario is a recession more severe than 1990 and lasting one and a half times as long.
Worst case is something up to the level of the Great Depression which was 20 per cent unemployment and lasting up to a decade.

kennyjaiz

18 Jul 2012, 05:33 PM

I have over-complicated a simple question.

Ben D

18 Jul 2012, 12:37 PM

Not sure what you mean by them refusing to acknowledge any kind of research that is contrary to their beliefs. If you have anything you can post to support this I'd by keen to read it. Same with anything showing that they have not presented something fully and truthfully.

Ben D

18 Jul 2012, 06:22 PM

This.
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