Comments on: FHB Boost is Australia’s “Sub-prime Lite”

By: A monkey off my back | Steve Keen's Debtwatch

A monkey off my back | Steve Keen's Debtwatch — Wed, 12 May 2010 05:40:36 +0000

[...] of supporting house prices–see “Rescuing the Economy or the Bubble?” and “FHB Boost is Australia’s “Sub-prime Lite”“), in what was billed as “Economic futures: two views”. In the middle of his [...]

By: Lies Damned Lies and Housing Statistics | Centre For Economic Stability

Mon, 22 Mar 2010 07:38:53 +0000

[...] months by the artificial stimulus imparted by the doubling of the First Home Buyers Grant (see FHB Boost is Australia’ s “ Sub-prime Lite”); but the downside risks to Australian house prices could be every bit as big as those that apply [...]

By: Final T-Shirts | Steve Keen's Debtwatch

Final T-Shirts | Steve Keen's Debtwatch — Mon, 15 Mar 2010 03:39:44 +0000

[...] housing market when it was first introduced, and again when the scale of take-up of the Boost was first reported. My first post was the only one to draw a response from a Government Minister to any of my [...]

By: Lies, Damn Lies and Housing Statistics in Australia | Australian Real Estate and Property

Wed, 27 Jan 2010 00:32:15 +0000

By: Lies Damn Lies and Housing Statistics | Australian Real Estate and Property

Lies Damn Lies and Housing Statistics | Australian Real Estate and Property — Wed, 27 Jan 2010 00:17:00 +0000

By: Do you think the cessation of the FHG will have a big impact?

Do you think the cessation of the FHG will have a big impact? — Tue, 21 Jul 2009 14:11:13 +0000

[...] fact that a lot of FHO jumped into the market. There is a nice graph on this post by Steven Keen: FHB Boost is Australia’s “Sub-prime Lite” | Steve Keen's Debtwatch I also read this recently: [...]

By: Jim

Jim — Wed, 20 May 2009 07:06:57 +0000

Steve, Here are another two articles that just surfaced warning of the same potential problems you have outlined. The first article makes exactly the same analogy that you did:- "Australia was (is) in danger of losing this treasured bank status because of our own version of sub-prime." How our banks went too far - Robert Gottliebsen Bad banking turns crazy - Robert Gottliebsen

By: Jim

Jim — Wed, 22 Apr 2009 23:35:30 +0000

Steve,
Some members of the press are finally starting to come onboard. This economics writer could not have put it any better “Seemingly unaware of the false economy, first-home buyers have engaged in a game of mutually assured destruction”:-

http://www.smh.com.au/opinion/its-bricks-and-slaughter-out-there-20090421-adxz.html?page=-1

By: Steve Keen’s Debtwatch No. 33 April 2009: Lies, Damned Lies, and Housing Statistics | Steve Keen's Debtwatch

Mon, 06 Apr 2009 10:10:23 +0000

By: The Outback Oracle

The Outback Oracle — Sat, 04 Apr 2009 03:52:46 +0000

Robert, I’m not Steve, but in my opinion, it is possible you might be correct, although Steve’s take is that it is damned near impossible to print enough money to fill the hole. I doubt an L shape would describe what will happen in your scenario.
There has to be some engineering model, of increasing oscillations of instability, that would describe what will happen if you are correct.
The possibility that Obama, Bernanke, Geithner, Brown, Rudd, Duck et al will get this “just right’ is infinitesmally small. There are two issues. Even if you had a clue what you were doing, the chances are almost nil. The fact that this lot have no idea how we got here in the first place, makes a successful outcome absolutely impossible.

So, under your scenario, we will have another ramp up of debt, and a monstrous breakout on the inflation side. When interest rates rise in response to that, even if they remain in real after tax terms negative, everything will get smashed again even worse than this time. In another forum, in response to my comments it was described to me this way
Imagine a kid on a bike who starts to get the wobbles
Wobble! Wobble! Wobble! WOBBLE! SPLAT!

It is better illustrated if you can increase the size of the font for each wobble!