Jan31
I’m giving two talks at Swinburne University of Technology on Thursday February 4th. The information below is reproduced from the flyer for the event developed by regular blog contributor Matt Mitchell, who has arranged the talks:
12.00pm – 2.00pm: DebtWatch : Observations and reflections on the educative role of modern media
- Dr Keen will discuss his experience using his Debtwatchblog on which he posts regular articles for discussion and the role of this media in both educating the public and stimulating debate among economists, students and lay people around economic theory and practice.
- Target Audience: Educators using online resources and those interested in emerging media.
2.30pm – 3.30pm: Have we dodged the iceberg?
- Dr Keen will describe the causes of the Global Financial Crisis, and the role of debt in that crisis, as well as proposing some courses of action to deal with the effects of this crisis.
- Target audience: staff in the Economics and related discipline areas.
Matt would be delighted to have other blog members attend, and the event is open to the general public. So please make it along if you can. The venue for both talks is LA101 at the Lilydale Campus of Swinburne University of Technology.
For further details, please contact:
- Matt Mitchell: 9215 7140, mmitchell@swin.edu.au; or
- Debbi Weaver: 9215 7204, dweaver@swin.edu.au
I hope to see some of you there. Closer to the date I hope to publish a retrospective on the development of the blog. Some feedback from members about the blog experience–which I can use in the talk–would be appreciated.
I think that not enough public attention is paid to the structural issues of the tax system in Australia. The simple fact is that if you save cash you are punished, after tax and inflation the real saving rate is lucky to be break-even. Obviously this depends on your personal situation and how actively you swap banks to catch the best rate.
So what is one to do with their hard saved Aussie Pesos? Stocks are already shoved down your throat via compulsory superannuation. Yes, you can elect safer cash options there but with projected returns in the prospectus being somewhat lower than stocks in the long-term (again according to the prospectus) what young-ish person would bother. Just seems like a way to get even further behind the curve. Plus, stocks seem pretty volatile lately so giving it a wide berth with your real money (not that super stuff that is 30 years from being accessible) seems prudent right now.
That leaves property, seems an easy choice really for a few reasons. Firstly, govt support for 1st home buyers (although greatly reduced lately), but generally the govt has shown it is willing to get in and support this market when things look shakey. Secondly, govt are spruiking a big Australia, concentrated in mega-cities. Thirdly, Australia is the economic miracle of the world…apparently; jobs for all who really want to work…..apparently.
Well – where is this going I hear. Simply Australia is living in system that promotes debt and risk as the way to get ahead. Only problem is that lots of that debt is from overseas and this is what the man in the street does not understand, and won’t when things derail and we see the Aussie Peso get hammered, stock market crash and “home-owners” realising they rent from a bank afterall.
As for personal bias, yes I have my own – I firmly believe that if you study (postpone earnings) work hard (put in the hours and become valuable) and save hard then you should not have to over-commit financially to a fibro miles from the city taking public transport that is seriously cramped. The Aussie lifestyle my parents afforded on blue collar wages is not attainable for me and my six figure salary. How does one make sense of that? I sure hope there is a crash, or look out USA here I come….I hear they have some cheap houses there!
Construction starts were up sharply yesterday.
Rising prices and sharp increase in construction activity to me supports the undersupply story. Naturally if the market was undersupplied rising prices and increasing construction is exactly the two things which I would expect to see.
So now undersupply may turn into oversupply but we are not quite there yet in terms of meeting population growth demand, but for mine it should be another -ve factor on house prices in 2010. March quarter HPI will be a crucial one to watch, because it will absorb both the decrease in FHOG and all the interest rate rises thus far, and coming off a mini boom as well.
Richard Koo (Nomura) on paytv channel this morning – he worked for the Fed under Greenspan.
During that time he mentioned the word “bubble” in association with their housing markets a couple of times.
Response from colleagues – shock and horror, and – “shhhh! you can’t say those words in this building!!”
All indications are that our reserve bank has developed the same culture.
There are none so blind as those who do not want to see.
bb,
“Again – look at the developers today. If they cant make money, how can prices reflect a bubble?”
There is a lot of effort being expended to hold property prices up and we should not underestimate those forces. Federal and state Govts are hard at work creating policies to hold property prices up.Other effects include the resources sector strength and immigration- both interstate and from overseas. Rudd’s plans for the massive increase in Australia’s population underpin ongoing elevated property prices.
I don’t discount Steve’s work, but in actuality the Govt holds many many cards when it comes to property prices. This issue is not at all about economics IMHO.
So developers may be feeling the pinch. Perhaps they have yet to make the adjustment to slower volumes of business- I cannot say.It could be that the obcene profits they have previously enjoyed are taking a breather or healthy competition is just naturally eroding their margins for now. But I suspect we are simply treading water there. Demand is entrenched through Policy and will remain so until that changes.
There are none so blind as those who do not want to see.
Blinder still are people who think that they see.
Blindest of all are people who once thought they saw something and filter their vision based on desperately needing to feel like they were right.
Those who do not see anything see everything.
Those with the greatest vision are unobstructed by yesterday’s ideas.
TITINT
H4A – I do like paradoxes
Fed and RBA? I don’t know, Fed I will give to you so first category. RBA, I like their roll with the punches approaches. For example the rate pause to see how the rate rises so far have played out. To me this kind of statement is an admittance that you don’t really know exactly what the effects are and are learning as you go along. Which is exactly what I think the approach should be because no one can pretend they know exactly what they are doing when it comes to the economy and if they do, well that tells me something about how much they really know…
TITINT
I like your response, and tend to agree. I think more than anything their recent rate rises were to gain back a bit of fire power if they need it – but it was a risky move – especially if this bout of risk aversion worsens and they use up their insurance fairly promptly. It could lead to perception problems.
And as a non-economist, I’ve learnt a lot from reading Steve’s views on the turf war in the field and the dominance of one strand over others. Having been in a similar situation professionally – problems between scientists working in animal health and veterinarians – I have an appreciation of the “blindness” that can come about through competitive issues and ego rather than genuine reason and argument.
re: 77
“The Aussie lifestyle my parents afforded on blue collar wages is not attainable for me and my six figure salary. How does one make sense of that? I sure hope there is a crash, or look out USA here I come….I hear they have some cheap houses there..”
bubble-o,
I hear’ya , man , but you’d be jumping from the frying pan into the fire if you come to the U.S. The economic policies that are responsible for your current situation were polished to perfection here , and I see little evidence that Obama will succeed in changing things much , assuming he even wants to.
At least you’ve got Steve pounding away at the status quo , and I’d bet on Rudd over Obama as being more open to changing course. Maybe not , though.
It’s ironic. I’ve given thought to moving there. Now , I dunno.
It seems that every acre of Anglo-Saxon geography is buried in neoclassical crap.
re:85
Goldi,
Agree that the USA is probably the fire, although considering Australian obesity levels I would say we are in a deep fryer rather than a lightly oiled pan!
Anglo-Saxon-world to my mind does have a bit of a superiority complex. Australia IMHO is too far from the rest of the world to really look at itself objectively, and that underpins our own “bubble”, constantly telling itself it is “special” or “different”. It is easy when you are miles away from anyone else. This may seem silly to my fellow Aussies, but as someone who has spent a few years globe-trotting it strikes me as a key part of the psyche downunder. At some point Australia will hit the skids and it will look at Big Daddy America for support. It will realise that China is not its new guardian, but a foster parent with a closet of dirty linen.