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The Today Tonight seg­ment has been delayed till this evening (Wednes­day Feb­ru­ary 4th)–which is a pity in a way because I will also be speak­ing at a pub­lic forum tonight at Cir­cu­lar Quay organ­ised by the Prop­erty Knowl­edge Forum: An excerpt from the pro­mo­tional flyer:

ARE WE HEADING FOR A DEPRESSION?

When will the bot­tom hit? Are we in store for 40% drops in prop­erty or has the recov­ery already begun?

It is almost impos­si­ble to escape the neg­a­tiv­ity sur­round­ing the global eco­nomic cri­sis. While many experts pre­dict the worst eco­nomic cri­sis of our time oth­ers point to pos­i­tive indi­ca­tors such as pop­u­la­tion growth, sup­ply short­age and dif­fer­ences to the US and for­eign mar­kets. Is the government’s stim­u­lus mea­sures poised to com­bat what appears to be an inevitable period of eco­nomic tur­moil or are we indeed enter­ing into a depres­sion where prop­erty prices may drop as far as 40%? Three of Australia’s lead­ing thought lead­ers in prop­erty will help shed some light on the sub­ject, in what is promised to be an engag­ing and inter­ac­tive evening not to be missed!!

Speak­ers: DR STEVE KEEN, UWS Asso­ciate Pro­fes­sor School of Eco­nom­ics and Finance (“As seen on 60 min­utes”)

LOUIS CHRISTOPHER Adviser Edge Head of Prop­erty and Real Estate Com­men­ta­tor for Seven’s Sun­rise

NICK COMMISSO North­pac Con­struc­tions Prop­erty Devel­oper 20+ years indus­try expe­ri­ence

Time: Wednes­day, 4 Feb­ru­ary 2009, 6:45-8pm

Venue: Bridge Bar — Level 10, 2 East Cir­cu­lar Quay / 3 Mac­quarie St, Syd­ney (access lift near Dendy)

The organ­is­ers have a decent crowd, but they’ve emailed me that they were “won­der­ing if you have any peo­ple that are inter­ested in com­ing on the night- we want to get as many to the event on the night as pos­si­ble and in that respect do you have any oth­ers that are inter­ested in com­ing?? Num­bers are good but we just need as many as pos­si­ble??  The tick­ets will be com­pli­men­tary of course.”

So if any read­ers of the blog would like to attend, please email the organ­is­ers at info@propertyknowledge.com.au.

And maybe set your recorder to catch the pro­gram on Today Tonight. I think you’ll find Eric Aarons’s rec­ol­lec­tions of the Great Depres­sion fas­ci­nat­ing.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • sphinx

    I watched it over here:
    http://au.video.yahoo.com/watch/4431991/11880793

    great work!

    Btw, I was also in the sem­i­nar the day before. enjoyed it immensely. 🙂

  • ueber­baer
  • BrightSpark1

    fred

    That trea­sury bond issue (200G$) is needed to cover the cur­rent acount defecit. While the libs have crowed about sur­plusses, his­tor­i­cally low unem­ploy­ment, and no debt. We have had unbro­ken cur­rent account deficits for 33years, sold most national assets, had real lev­els of unem­ploy­ment which in an his­tor­i­cal con­text were sim­i­lar to the great deprs­sion and we have “racked up” a moun­tain of national debt.

    Even tak­ing the debt free gov­ern­ment into account the coun­try as a whole is deep in debt. Our retail sec­tor has been, and is depen­dent of a steady flow of cargo from over­seas, Check any shop. 

    We have not been pay­ing for this for the past 33years. We have been “free trad­ing” insol­vent. Even in a min­er­als boom we needed to bor­row to cover the short fall the banks did this but they are all suss now. The gov­ern­ment needs to take over and take on this debt (if it can find a lender) from over­seas. This to keep the show on the road a lit­tle longer, and get us deeper in debt.

    So this pack­age is really dou­ble pronged, stim­u­lus and bor­row. Inspite of what Turn­bull says the max­ing of the credit card is not down to the stim­u­lus but 33years of mis-man­age­ment by both par­ties and slav­ish adher­ence to neo­clas­si­cal eco­nomic the­ory.

    Var­i­ous econ­o­mists have even won nobel prizes for caus­ing this mess.

  • The Out­back Ora­cle

    Brightspark…G’day 🙂 You are sooooo wrong!!!!! hehe if I knew how to put a wink in there i would!
    We have run one Cur­rent Account Sur­plus in 50 YEARS!!! I think 1971 from mem­ory!!!!

    It’s so much worse than you think. It’s been some­thing like 53 years or more of mis­man­age­ment!

    Steve…
    Why is every­one ignor­ing the press­ing impli­ca­tions of the Exter­nal Account? I haven’t watched your videos yet but i don’t see you men­tion it in any seri­ous way. It doesn’t get a men­tion in these pages. I know from our cor­re­spon­dence years ago you realise the impli­ca­tions. Do you think it is just too much for the aver­age moronic Econ­o­mist and politi­cian to grasp at all?
    Have Howard and Costello done a suf­fi­ciently good snow job on every­one that talk­ing about the Exter­nal account is just too damned hard and too dif­fi­cult a mes­sage to get across? I know every­one i talk to about it says “What the hell are you talk­ing about? You’re wrong! We run a huge sur­plus!”

  • Fred

    Spark,

    Seems to me the fact that the Gov­ern­ment “has to issue bonds to cover the deficit” is part of the bank­ing system’s con on all of us.

    Here’s my sim­ple way of think­ing about it (after read­ing this web­site and a num­ber of other sources). In a nor­mally func­tion­ing cap­i­tal econ­omy every invest­ment oppor­tu­nity would be taken up and there wouldn’t be any­thing a Gov­ern­ment could do with printed money that wouldn’t severely dis­tort the mar­ket place. Exam­ple, bank gets bailout money uses it to unfairly com­pete with the other good banks, or road­ing con­trac­tor gets a Gov­ern­ment hand­out and puts the com­pe­ti­tion out of busi­ness.

    But there are ways (surely) a gov­ern­ment could spend money (by just print­ing it) run up a deficit and not have to pay any­thing back, and not need to raise a bond. It just needs to find an oppor­tu­nity that has been missed by nor­mal com­merce, and these must be around, in times like these.

    So for exam­ple, the Gov­ern­ment could print some cash and con­tract some builders to build some houses, when the houses are con­structed, there’s a bunch of con­trac­tors with money in their pockets/bank accounts and the Gov­ern­ment has an asset on it’s bal­ance sheet, worth exactly what it cost to build them. So there is extra money in the sys­tem, and the Gov­ern­ment deficit equals the cost of build­ing the houses. Where’s the rule that says the Gov­ern­ment then has to “raise the money” from the bank­ing sys­tem to “Pay” for the houses, which it had already “paid for” by pay­ing the con­trac­tors. I sup­pose the think­ing goes like this. There’s extra cash in the bank­ing sys­tem, this would be infla­tion­ary, there­fore the Gov­ern­ment has to issue bonds to soak it up again.

    But here’s what could hap­pen instead, or as well. The houses are a good invest­ment (impos­si­ble for the Gov­ern­ment to find in nor­mal times) and they are rentable, they are rented out, money goes into the Government’s cof­fers and starts extin­guish­ing the debt, or alter­na­tively, the Gov­ern­ment could sell them and extin­guish the debt that way.

    The oppo­site could hap­pen, they aren’t rentable and can’t be sold, it’s a white ele­phant, the Gov­ern­ment was sold a pup. Now that type of stim­u­lus has to be paid for.

    So the point I am mak­ing is that are “good” deficits and “bad” deficits. Good ones result in an asset on the bal­ance sheet (that should be sold), and no need to raise a bond. In nor­mal cir­cum­stances there shouldn’t be any invest­ment that the gov­ern­ment could do bet­ter than pri­vate enter­prise. What I am say­ing is that right now there must be some, and these would be legit­i­mate tar­gets to just print money to employ peo­ple to do (I can think of a few). The chal­lenge is to find these.

    So my ques­tion is that when the Gov­ern­ment deficit is men­tioned is it net of an increase in assets.

  • Otto C.

    Hello Out­back Ora­cle,

    You are quite right, it is rare to hear any­body talk about the exter­nal account, and when Howard and Costello have told us time and again how well they man­aged the econ­omy (even Peter Costello’s mem­oirs recently pub­lished bear the sub­ti­tle “The Age of Pros­per­ity”), the exter­nal account does not get a men­tion. As best as I can tell it is not men­tioned once in Costello’s book. 

    In past years I bought the argu­ment that the Con­ser­v­a­tive par­ties are bet­ter eco­nomic man­agers than Labor, but I now won­der whether there is that much of a dif­fer­ence between them. In a sense it could be said that the pre­vi­ous Coali­tion gov­ern­ment squan­dered oppor­tu­ni­ties to put Aus­tralia in a stronger eco­nomic posi­tion, firstly because along with other nations it con­tin­ued a weak reg­u­la­tory regime that allowed exces­sive debt and sec­ondly because we let the resources boom pass with­out strength­en­ing our exter­nal account.

    I recently read that on a per capita basis only Spain and Greece have a worse bal­ance of cur­rent account deficit than Aus­tralia and there are many with a sur­plus, includ­ing coun­tries that are resource poor.

    I also read some­where (maybe on Steve Keen’s Debt­watch) that net for­eign debt on cap­i­tal account reached $450 bil­lion near the end of the Howard-Costello years, 2 ½ times greater than when they took office.

    Then there is that arti­cle by Michael West on 17th Novem­ber 2008 in the SMH that refers to a Mer­rill Lynch global eco­nomic report that ranks Aus­tralia as the riski­est coun­try out of 60 coun­tries stud­ied. Now I admit I don’t know how valid these find­ings are, but even if we’re just below aver­age it isn’t good enough.

    Just before the last elec­tion in 2007 I pro­duced a chart show­ing the DJIA and All Ordi­nar­ies since Fed­er­a­tion in 1901 and as expected there was a close cor­re­la­tion between the two indices; I fig­ured that the stock­mar­ket is as good a mea­sure of the broader econ­omy as any. I then over­layed the peri­ods when Con­ser­v­a­tive and Labor gov­ern­ments were in office. This showed that, apart from part of the Hawke-Keat­ing reign, when­ever Labor was in office the Dow (and the AOI) was on the low side. It’s obvi­ously impos­si­ble for Aus­tralian politi­cians to influ­ence the US econ­omy, so it could be argued that the per­ceived poor eco­nomic per­for­mance by Labor gov­ern­ments is a fal­lacy. Per­haps the influ­ence that any gov­ern­ment has on eco­nomic per­for­mance is over-rated?

  • Otto C.

    On re-read­ing my post­ing above, I’d like to mod­ify the ques­tion at the end:

    Per­haps the influ­ence that any Aus­tralian gov­ern­ment has on eco­nomic per­for­mance is over-rated, because the main dri­vers of the Aus­tralian econ­omy may be the global envi­ron­ment, par­tic­u­larly that of the the US, China and Japan?

  • The Out­back Ora­cle

    Thanks for your sup­port­ive com­ments Otto. Some­times i get lonely out here!!! BTB also cheers me up.
    Source RBA Sta­tis­tics Gross For­eign Assets and Lia­bil­i­ties
    Num­bers in BILLIONS
    March 1996 around the time of the elec­tion of the Howard gov­ern­ment Gross for­eign Assets $189.40 GF Lia­bil­i­ties $461.8 Net lia­bil­i­ties (my deduc­tion) $272.4 BILLION
    Dec 2007 (Rudd elected) Net lia­bil­i­ties $671.6 BILLION
    Sept 2008 (las num­bers avail­able) net lia­bil­i­ties $709.6 BILLION

    All this going on dur­ing the great­est resources boom of all time, We should be a CREDITOR coun­try like Nor­way!!!
    You can see that it is a dis­as­ter who­ever is in power.

    Mate…not too sure what the Stock mar­ket has to do with Eco­nomic performance!!!!!!!!All you have to do is announce to the world you will sell them any­thing they want.…bingo.…

  • The Out­back Ora­cle

    Sim­i­larly CAD — The CAD when Howard came to power the 12 month CAD to June 1996 was $21.607 BILLION (we thought that was bloody awful!)The CAD to June 2008 (Howard fin­ished DEC 2007) was $70.211 BILLION.…that is $70,211,000,000 every bloody year!

    We just have a bunch of psy­chopaths on both sides of the House…none of them give a damn about any­thing but their own bloody egos.

    As I said i can no longer find stats on for­eign own­er­ship of Aus­tralian resources and busi­nesses. The last num­bers i saw pub­lished were about 12 years ago. I have sought assis­tance in var­i­ous forums on that stat but noone has ever come up with anything…so if any­one has any­thing I’d appre­ci­ate the details.

    As to politics…I am by birth and incli­na­tion ‘con­ser­v­a­tive’ but.……it’s all just a total dis­grace…

  • BrightSpark1

    G’day Ora­cle, fred, and Otto C.

    I see the exter­nal account as a sep­a­rate and impor­tant issue that I believe is, if not the cause of the cur­rent prob­lem, would have resulted in the same deba­cle soon. The adverse con­se­quences are immense. Inter­nal mon­etery mat­ters are impor­tant but com­pared to the CAD pale into insignif­i­cance

    As we are talk­ing of Marx I like to talk of his con­cept of “means of pro­duc­tion” and I see it not as a cor­po­rate asset but the prop­erty of a nation state and its indi­vid­ual peo­ple. This because much of it can­not be owned by a cor­po­ra­tion. I refer to com­mon infra­struc­ture, edu­cated peo­ple, and an edu­ca­tion sys­tem includ­ing uni­ver­si­ties pub­lic and pri­vate.

    Aus­tralia has “traded” away the very sub­stan­tial capa­bil­i­ties (means of pro­duc­tion) that we pos­s­esed in the sev­en­ties, and racked up a moun­tain of debt in doing so, caus­ing an enor­mous dou­ble loss. Sure we still have the schools and uni­ver­si­ties but the engi­neer­ing and sci­ence fac­ul­ties are dec­i­mated with stu­dents, for sev­eral decades, prefer­ing to study, law, com­merce, eco­nom­ics, and social sci­ences instead. We can no longer reli­ably main­tain our tech­no­log­i­cal infra­struc­ture.

    The time delay to re-estab­lish this will be huge as will the cost.

    This dou­ble effect has been caused because neo­clas­si­cal econ­o­mists have ignored the cur­rent account imbal­ances (described as a prob­lem by J.M.Keynes), because the idiots think that every­thing is “in equi­lib­rium”. This inspite of expo­nen­tially increas­ing CADs in our men­di­cant coun­tries. They have no logic and no maths, any­thing under­go­ing con­tin­ual expon­tial increase is by def­i­n­i­tion in no state of equi­lib­rium they are idiots. 

    Ora­cle, I am begin­ing to under­stand your psy­chopath the­ory, they show the same unaware­ness of logic and maths that par­al­lels the typ­i­cal psychopath’s (and the neo­clas­si­cal economist’s) unaware­ness of social val­ues. Hav­ing, like a can­cer only a short sighted aim of self sat­is­fac­tion. Their idiocy is bound­less how­ever, I do not think that they are enjoy­ing the cur­rent sit­u­a­tion.

    Could I add two other coun­tries which have had con­tin­u­ous CAD’s Ice­land and Turkey.

    Ora­cle, my pol­i­tics are sim­i­lar to yours, hav­ing grown up in a fam­ily that admired Men­zies. I am not sure that I do not still have a soft spot for him but the rest, both sides of the house, … a total dis­grace. Your com­ments help me realise that I am not alone.

    Otto if they have no influ­ence, what use are they? A com­petant Aus­tralian gov­ern­ment could have at least cam­paigned against the mess on world forums long before this hap­pened! They could have taken con­trol of some of Aus­tralia des­tiny! — nah they are all use­less wastes of space.

  • Bull­turned­bear

    Great dis­cus­sion Bright, Out­back, Otto and Fred,

    One of the best feeds in a long time. I would like to add that I fear that we are get­ting very close to the time where we have to pay the piper. Increas­ingly the World wants their money back.

    Most banks and financiers are gone in Aus­tralia now. Only 4 to 7 gen­uine com­peti­tors remain. Sun­corp is dying. I believe their Cor­po­rate spin is very dif­fer­ent to real­ity. The rea­son the banks are gone is because they were not able to keep rais­ing for­eign bonds. The strongest have sur­vived so far.

    The prob­lem that I see is this. The big 4 Aus­tralian banks raise up to 50% of their fund­ing (to stay in oper­a­tion, not growth) from over­seas. The for­eign tap is being turned off, because the World has just lost a big chunk of its liq­uid assets in the last 18 months. What cash the World has left is stay­ing at home (wher­ever that is) in increas­ing amounts.

    All through­out the year (every year) the banks are rolling and rene­go­ti­at­ing their bonds with over­seas pur­chasers. As risk aver­sion and loss in over­seas mar­kets rise. There will come a time when Aus­tralian banks can no longer roll their bonds on com­mer­cial terms and in large enough vol­ume. The Oz Gov­ern­ment will step in to fill the gap ini­tially. The num­bers are too large for the Gov­ern­ment to fill the gap on a large scale though. Hence the sys­tem will col­lapse.

    I hope the Gov­ern­ment is aware of the risky game they are play­ing. As it becomes clear that with­out the for­eign money our banks are insol­vent. The Gov­ern­ment risks swap­ping pri­vate for­eign debt for gov­ern­ment debt. What a crap sit­u­a­tion. If on the other hand they let the banks sink or swim, the for­eign debt would be defaulted on.

    Very painful process, but much bet­ter on the other side.

  • Fred

    Hor­some “Is it fea­si­ble to pro­pose a gov­ern­ment pol­icy which con­cen­trates on acquir­ing a sig­nif­i­cant num­ber of assets that have been bor­rowed against, which in turn will have a sig­nif­i­cant num­ber of mort­gages paid back in full. Would spend­ing $42 bil­lion on a pol­icy like this help soften the blow instead of fuel­ing it? Sorry in advance if this doesn’t make sense.”

    One of the pri­mary func­tions of the Gov­ern­ment is to pro­tect the prop­erty rights of it’s cit­i­zens, and that includes money in the bank, and as far as I can tell it’s the only rea­son why taxes are col­lected (because oth­er­wise it would just be print­ing money to cover it’s spend­ing degrad­ing the intrin­sic value of the money held by the cit­i­zens). Well if they are chuck­ing printed money at the bank­ing sys­tem for no obvi­ous real return or asset then isn’t that a breach of trust?

    Mort­gage Backed Secu­ri­ties are like that (assets with a mort­gage over them), and I wouldn’t be sur­prised if the Gov­ern­ment has already bought some off the banks to help them out. If they are such a good deal, then why can’t the banks sell them to some­one else? Oh they tried that already :).

    If you are going to inject 42 Bil­lion then why not bypass the banks, invite bids, from any­one, to build a (real) asset to be owned by the Gov­ern­ment, only pro­viso is that it has to be able to show a return, and not involve huge amounts of for­eign exchange. The result­ing asset is then sold by the Gov­ern­ment, to extin­guish the debt (which was only paper money in the first place). Result the real econ­omy is stim­u­lated directly. The Gov­ern­ment effec­tively becomes a banker (of first resort).

  • Fred, I recall that the govt set aside $4B for buy­ing mort­gage secu­ri­ties for mid-tier insti­tu­tions. See

    http://www.news.com.au/couriermail/story/0,23739,24407699–952,00.html

  • The Out­back Ora­cle

    Fred…do your­self two lit­tle flow of funds charts. If i knew how to do it I would post one.
    In teh first one you would have say US$50 Bil­lion com­ing in from over­seas, which is changed to A$ by teh banks and lent out into the econ­omy. We then buy a whole lot of stuff..including a whole lot of imported stuff..so we have to pay USD 50 Bil­lion over­seas. We have it because we vrought it in before.
    Now if we don’t get the USD 50 Bil­lion from over­seas and instead print, the only thing on the chart has changed is the money com­ing in and instead we have a print­ing of the equiv of USD50B going into the econ­omy. All things else being equal. we import all the same stuff which leaves us USD$50B worth of stuff we have imported we can­not pay for!!! We can’t pring USD! (Well N Korea had a go!) You see Econ­o­mists and Ana­lysts every­where are ignor­ing the exter­nal account. You have just made the same error IMHO :-)Costello ignored the exter­nal account! KRUDD and Waybe Duck are now ignor­ing the exter­nal account along with every sup­posed ‘guru’ (aka moron) on MSM.
    There is an exter­nal account whether we like it or not
    There is no way out!!!

  • Fred

    Out­back — agreed, there is that pro­viso, it would depend on what the money was spent on and if it involved a high pro­por­tion of over­seas funds then that would have to be paid back and it would be self defeat­ing. Infra­struc­ture spend­ing is only part of the answer, the other part has to be pro­vid­ing local small scale devel­op­ment fund­ing where peo­ple can apply for fund­ing of local small scale projects. There will be plenty of ideas out there.

  • BrightSpark1

    G’day Fred and Out­back

    Fred
    It doesn’t mat­ter what it is spent on it has not pro­vided a means of earn­ing the for­eign cur­rency to enable repay­ment. This fiasco started 33 years ago when we were more capa­ble with bet­ter tech­no­log­i­cal involve­ment and earn­ing capac­ity. Since then (libs and labor) have fur­ther crip­pled us.

    I call it the Keat­ing Howard cargo cult hypoth­e­sis.

    Note that we (in some­ones imag­i­na­tion per­haps) have some oblig­a­tion to pay inter­est on and per­haps even pay back the prin­ci­ple of these over­seas loans. Or so hope the cred­i­tors.

    But we still needed to bor­row more even in a min­ing boom, and even needed to bor­row the inter­est. There is a word for the prac­tice of bor­row­ing to pay the inter­est “insol­vency” and this coun­try has been this for at least 33 years.(Perhaps 50 Out­back?) I think Min­sky called this Ponzi finance. 

    Howard and Costalot crowed and crowed about their pre­cious “sur­plus” but this was the gov­ern­ments sur­plus the coun­try was always in deficit, bor­row­ing much more to meet pay­ments, like some failed bro­ken down tycoon. They also sold off all the fam­ily (national) “sil­ver”.

    We could not earn enough even in a min­ing boom, we have dein­dus­tri­alised, we have turned our back on tech­nol­ogy, we now have no way to pay the inter­est, and, the prin­ci­ple. The cred­i­tors are real­is­ing that we and big brother USA (and as a con­se­quence they) are broke.

    JMKeynes realised that this type of imbal­ance had occurred in and may have caused WD1. He pro­posed a solu­tion to ensure that is couldn’t hap­pen again, they ignored him because of their stu­pid­ity. So now we have WD2

    If some Engi­neers did some­thing as stu­pid as this they could look for­ward to a long spell in jail. These peo­ple (neclas­si­cal econ­o­mists) got bonuses!

    We need a func­tion­ing indus­tri­alised econ­omy like we had in 1970. At that time we could fair trade inter­na­tion­ally and earn the money to pay for imports.

    Vale the cargo cult.

  • Fred

    Float­ing exchange rates (automagic — I like that) and lift­ing restric­tions on cap­i­tal flows, were com­par­a­tively recent, and allowed indi­vid­u­als to bet against gov­ern­ments (eg. Soros) allowed the rise of hedge funds, so I can’t see why there has to be a Govt guar­an­tee on whole­sale deposits, it should be “buyer beware”. We have a stand­off “if we go down we are going to take you all with us” unless you pro­vide a guar­an­tee. Call their bluff I say.

    4 Bn to buy mort­gage backed secu­ri­ties, cou­ple of com­ments, why has the mar­ket for these has “dried up”, what are they really worth and sec­ond (I’m not sure whether these are sold like a bond and the repay­ments are treated like a coupon pay­ment or whether they are sold at a cash value) but either way they are (ie can only be) less than the face value of the under­ly­ing loans right? So that would mean — surely — a need for either addi­tional equity or reserves. If the RB was pay­ing for these at “fair mar­ket value” why aren’t other par­ties buy­ing them. And here’s another way of look­ing at this, if I’m bor­row­ing money at a rate, and lend­ing to oth­ers at a higher rate, and then sell some of the loans I’ve (worked so hard to) made then there’s a third party clip­ping the ticket on the way through. What’s up with that? I’m sure the prac­ti­tion­ers call it spread­ing the risk, I have good abil­ity to sell loans, another party has a bet­ter abil­ity to raise cap­i­tal cheaply.

    If the RB has money to spend buy­ing assets, how about seed­ing some start up com­mu­nity invest­ment banks focussed on get­ting peo­ple into work.

    Indus­tri­alised Econ­omy” A lot has changed, it’s impos­si­ble to com­pete with with Asian rates and con­di­tions, Henry Ford got it right when he said that the worker on the pro­duc­tion line has to be able to afford what is made on that pro­duc­tion line.

  • The Out­back Ora­cle

    http://www.crikey.com.au/Business/20080421-RBA-puts-11billion-into-mortgage-securities-Whats-up.html

    The RBA pro­vided $2.35 Bil­lion in REPOS on mort­gage backed secu­ri­ties up to the end of April last year. The banks were already jammed then and couldn’t lend. So I’ve heard about enough of the rub­bish that our Banks are so strong and well reg­u­lated.
    One pre­sumes that the RBA will just roll the REPOS over when they are due to be repaid!! Noth­ing like a few debts we can’t repay to keep try­ing to “sus­tain the unsus­tain­able”

  • The Out­back Ora­cle

    Brightspark

    On the ‘re-indus­tri­al­is­ing’ issue your com­ments on the dec­i­ma­tion of Sci­ense and Engi­neer­ing fac­ul­ties is spot on. For exam­ple in my day, at UQ we grad­u­ated (mem­ory fades a bit:) ) about 70 Grad­u­ates. Last year the Fac­ulty produced.….7.

    We are so busy edu­cat­ing Social Sci­ense grad­u­ates and peo­ple qual­i­fied to be “Life Coaches” or some such c..p. I won­der that they have the hide to call most of it “edu­ca­tion”

    Bring back “Tech­ni­cal Col­leges” instead of all this “Uni­ver­sity” rub­bish!

  • nanks

    The hous­ing issue is not sim­ple for buy­ers now. In our area of Bris­bane prices have dropped about 20%. I am bas­ing this on look­ing for a house for the last 18 months. So I can com­pare very sim­i­lar houses from then and now and a 20% drop is about right for houses that have actu­ally sold (as against prices asked for/removed from market/ put up as rentals). I still think another 20% fall is likely how­ever if you are buy­ing to live in it for 10 or 20 years and the right place turns up now.… maybe it is worth wear­ing that drop. It could be another year before some­thing else turns up and rentals here run at about $30K per annum.
    You might pick the bot­tom of the mar­ket, but there might be noth­ing you want at the bot­tom.

  • BrightSpark1

    Out­back

    About edu­ca­tion and the tech­ni­cal col­leges. One thing that has gone unher­alded and un-noticed are the changes in the TAFE col­leges through­out the coun­try. They are no longer involved in Tech­ni­cal and Fur­ther Edu­ca­tion but in “Train­ing”. The engi­neer­ing TAFE schools are in the final process of clo­sure, and the trade schools have been reduced to train­ing and assess­ing sim­ple skills. They call it “Com­pe­tency” based train­ing where the “com­pe­tency” is a noun mean­ing “skill” in old speak.

    The for­mer lib­eral fed­eral gov­ern­ment set up ten “Skills Coun­cils” and attached them to ten indus­try groups not even aware that a par­tic­u­lar trade or para-pro­fes­sion has always found employ­ment in more than one indus­try. They even assigned one skills coun­cil the “indus­try” of “inovation”,“Inovation and Busi­ness Skills Aus­tralia”. Yet another skills coun­cil has wri­iten a “Diploma in Research”. I could write a book about it. I will try to post some details for down­load.

    The prod­ucts of these skills coun­cils are called “train­ing pack­ages” and these are very lim­ited in detail so the qual­ity of the “train­ing” will vary from trainer to trainer. Also in most cases they pro­hibit an edu­ca­tion com­po­nent.

    Again the soft skills have also taken over, the “tech­ni­cal” has gone.

    The TAFE elec­tri­cal engi­neer­ing school that was the largest in the coun­try in the 1970’s is clos­ing down com­pletely in june 2009.

    I fear that the era of the incom­pe­tent trades­man is upon us.

    Tafe col­leges are now life skills train­ing places, not tech­ni­cal col­leges.

    We are going to need revi­talsed engi­neer­ing fac­ul­ties at Uni­ver­si­ties and com­plete replace­ment TAFE engi­neer­ing and trade schools. That is unless K.Rudd can arrange the con­tin­u­a­tion of the free cargo drop from China, but even if he can do that, vital infra­struc­ture will fail for lack of exper­tise.

    Cheers

  • BrightSpark1

    Fred
    Yes it is impos­si­ble to com­pete with the rates and con­di­tions in Asia, that is why this coun­try in in debt to the tune of 600 bil­lion dol­lar and we need to increase this at the rate of 80 bil­lion per year to go on liv­ing like we have been. 

    We need pro­tec­tion from this garbage the world just can­not go on with cargo drops to the west with debt accu­mu­la­tion that has no chance of being repaid. The time to pay the piper has arrived.

    The deputy PM has uttered words about “free trade” and she means “tar­iff free”, not really free, because she knows no bet­ter.

    The opo­si­tion leader has railed against the debt accu­mu­la­tion caused by the res­cue pack­age liken­ing it to the Whit­lam gov­ern­ments debt accu­mu­la­tion when the Howard gov­ern­ment accu­mu­lated 400 bil­lion dol­lars debt far more than Whit­lam even in real terms. He seems to think that “Aus­tralia” com­prises only the fed­eral gov­ern­ments because he knows no bet­ter.

    We need bet­ter informed poli­ti­tions, heaven help us!

  • Fred

    Buy­ing RMBS, as of April last year to improve liq­uid­ity, so how’s that going? Surely the prob­lem with the RB buy­ing these things is that their value drops in a falling inter­est rate envi­ron­ment and here we have a clear case of con­flict of inter­est. Buy­ing these things at the same time as con­trol­ling the lever that deter­mines the value of them. And the other thing pay­ing 7.85% where are the mar­gins!