Survey on Australian House Prices
Apr18
on April 18, 2011
at 9:38 am
I have been asked to post a survey to gauge interest in a potential financial product related to Australian house prices. If you are interested in such a product, please click here to take this survey.
Discussion (175) ¬
Hmmm,
If it worked I might consider buying a house. I would look very carefully at the counter-party risk. They would need very deep pockets to insure Australian house prices.
they would probably hedge by somehow shorting a property index or highly correlated shares, maybe using the proceeds to buy puts and pocketing the difference.
not long ago they were talking about property derivatives to stop potential buyers from being priced out of the market, highly ‘creative’ stuff.
I guess there are vested interests on both sides of the spectrum.
Steve, would you please give us a little background — who is asking, what’s the aim, etc — before we click to an external web page that seems to be hosted by a survey company.
Hi GG,
The survey is something I put together with an online survey company, so there’s no problem there.
The product itself may be developed by a company called BBN Asset Management:
http://www.bbnasset.com.au
I’ve been corresponding with and meeting with them for over a year now. The aim is to produce a product that gives a guarantee of capital preservation, but also benefits from downside to bank shares.
The firm has wanted to develop this product for some time, and saw my website as a way to reach the potential market. In return they will pay a fee to the Centre for Economic Stability (half of which will then be a donation to Swags for Homeless [www.swags.org.au]) based on the takeup of the product.
The product would only be available to Australian residents, given the licence under which BBN Assets operates.
I think it is slightly deceptive to ask questions and then ask for personal details as a recruitment device. It should be cleaner at the outset. Not really market research society rules.
Further to Steve’s comment:
Many investors have expressed their concerns about the sustainability of Australian house prices. BBN is simply trying to gauge interest from those investors in a potential financial product aimed at hedging the risks of falling house prices and preserving the value of investment portfolios. We are considering a variety of strategies and a final structure will be determined when the extent of investor interest becomes clear. If a product eventuates, all of that would be detailed in a Disclosure Document.
I’m no expert noah, so I could easily have got that wrong.
However if you answer that you’re not interested in the product, then no personal details are requested.
Steve, BBN,
I understand that this is a serious proposal coming from serious people to develop a derivative financial product. The reason I did not complete the “survey” is very simple — I might be interested in such a product in the future but I am reluctant to provide my personal details to a company which does not specify upfront how it complies with the privacy regulations:
http://www.privacy.gov.au/materials/types/guidelines/view/6849
Here is an example how this issue can be handled:
http://www.jpmorgan.com/pages/privacy
As an IT professional I might be obsessed with privacy and information security issues but I think that there may be good reasons have that attitude.
Fair enough AK,
Tony Jovevski, the principal of BBN, has said he appreciates your concerns here and he will send a reply on this point shortly.
Not sure if you will post my entry but I had to get it off my chest… possible reality check ?…
I have been reading this site for a few years. It used to be a standout place for some straight talking (at times over my head), but ‘stick it to them’ quality based arguments confirming the insanity of current house prices — and the greed based sheep who have caused/contributed to it.
Then there was ‘the bet’ that wasn’t a bet and watching Steve try to explain what happened which made us all uncomfortable.
Then, and, in my view the biggest insult to our intelligence (or lack of…), this site/Steve approving/pushing for a house ‘buyers strike’ — a thinking man might see this as ensuring certain predictions and timings come to pass with a little ‘helping hand’? — amazing stuff — was I the only one who noticed this?
And now, in the final act to destroy in remaining respect, it’s readers can protect/increase their wealth by investing in a hedge product which ensures your participation in the housing bubble madness is protected — so we are now part of the problem rather the the cure…
I thought I would never see this sort of thing on this site..
I firmly believe we have a housing price bubble however this site has lost all credibility and I will not be returning. It has lost the plot…..
@Alangreenspin
“And now, in the final act to destroy in remaining respect, it’s readers can protect/increase their wealth by investing in a hedge product which ensures your participation in the housing bubble madness is protected – so we are now part of the problem rather the the cure…”
For what it is worth I totally agree.
Disclosure: I am not Australian. I believe that (amongst many things) that money is a promise put into numeric form. The banking system essentially created a situation where a whole load of promises that could not be kept were created. This was done by several means, some fraudulent and some which are not considered fraudulent but nevertheless were.
Promises that cannot be kept need to be broken since else someone is forced to keep a promise that cannot be kept. Given the nature of our money system this “forcing” can be placed upon people who were not signatories to the contract.
In fact there is a case in UK law that states that if a contract is unsound then it becomes void even though one of the parties did not know this.
I want to write more but I have promised myself to try to stop getting into “details”.
And then we have “nonsense” like this to contend with…
http://transitionculture.org/2011/04/15/a-chat-with-the-nation-and-just-how-much-energy-is-in-a-litre-of-petrol/
How about this for an idea?
I give somebody who has a mortgage 5,000 AUD who then gives it to the bank under the following condition. The bank is told that it has to offer that 5,000 AUD to another person who has a mortgage and that person is told that he can only accept it if he will use it as a payment on hs mortgage. The bank thus gets the 5,000 AUD again and is told that it has to offer it to another mortgage holder on the same terms.
After this has been done 100 times you will see that 100 people have had their amount outstanding reduced by 5,000 AUD and the 5,000 AUD is still available.
Rinse and repeat the number of times desired. Problem sorted.
Fraud: How it is done, er, ad continuum — by the FedRes
http://jessescrossroadscafe.blogspot.com/2011/04/how-far-can-fed-go-in-manipulating.html
It now must be clear to everyone here that the economic, fiscal, political, monetary, financial situation with the World’s socio-economy has reached the sate of total and utter desperation and panic. Australia just follows but the UK and the US both are in the worst position, Yes, far worse that Europe even with Finland rising in opposition.
The University of Texas just took delivery of USD1b in Gold bars. The BRICS are dumping the USD. Japan has major problems denied and China tightens while RBA — as always — protects the Banks under the direction of “leadership”.
A Governing body is elected by its peoples in democratic principles where the objective is understood to be that those elected will represent those electing.
Don’t hold your breathe.
The Global Dark Age (demographically expressed) is now far nearer and undaunted by the sticks and stones being through at it by the barbarians of our shores with their bones and back room fancies. I believe that the housing issues in Australia are now mute; it doesn’t matter — it is too late.
Expect some new smoke and mirrors from Canberra but look for the smoke signal that become more urgent now as the mid 2011 period arrives.
Housing is a cockroach industry and tomorrow it will be forgotten replaced by desperations at personal levels.
Sad, but true.
Georges Seurat
I agree mostly with Alangreenspin April 19, 2011 at 12:18 am and
sirius April 19, 2011 at 5:37 am:
The strength of this site is economics and not politics. It serves the truth and exposes lies and deceptions. To continue, we need to avoid conflicts of interest which could compromise the purpose.
This is a bet against the bubble, AlanG, not a participation in it.
I will explain later since I am very short for time now, but I am amazed that you have interpreted this potential produce as oriented to maintaining the bubble.
I am too busy to reply to these comments now, with an interview coming up at ABC News 24 about the US debt downgrade. Briefly however this survey was discussed at a recent committee meeting of the centre for economic stability and endorsed there. I also believe that we have to be engaged in politics against bad policies, since they are a cause of the economic situation we are in. That was a reason for forming the Centre in the first place–and if the website and organisation of that had been complete, this would have been posted there.
I agree with Steve, wholeheartedly; please remember where you are — as guests:
If one cannot be allowed to demonstrate one’s theses in practical terms then it is all worthless and just theoretical, academic rumbling. As we can clearly see, Dr. Bernanke is trying to prove his thesis playing with the Global Economy — trouble there, is that the US system is totally corrupted all down the pipe, and more. The whole of the US is a — now — transparent corrupted and manipulated, financial horror show — that serves only vested interests.
And, BTW, this Blog *is* Steve Keen — and that is who I am here to witness in action.
Steve: I will you to do what you think best and I will respect that while at the same time, reserve the right to disagree. We should be able to do this with collegiality and constructively.
” Science is the soul of our existence,
the generative impulse of humanity.
If it were not for the slow progress of science,
we would be but primitive beings clad in animal skins.
Aye, let us go forth.
does the centre for economic stability believe it is stabilising to leverage into short market positions?
@ Lyonwiss April 19, 2011 at 10:00 am | #
“The strength of this site is economics and not politics.”
Au contraire:-
I believe that: that which is playing out on the World stage shows clearly, indisputably, and without question precisely the opposite; that is to say, that what passes for or is interpreted as “economics” across the Global this day, from the inner sanctums of Central Banks to heavy investors; institutional and otherwise, hedge funds, bullion banks, mints, “puts” etc., etc., is mainly pure “politics”.
‘ship of fools’ — indeed!
The Great Collapse: Just in from ShadowStats aka John Williams
http://www.shadowstats.com/article/hyperinflation-special-report-2011#_Toc287944624
/quote
Great Collapse Nears
The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Such will encompass a complete collapse in the purchasing power of the U.S. dollar; a collapse in the normal stream of U.S. commercial and economic activity; a collapse in the U.S. financial system as we know it; and a likely realignment of the U.S. political environment. Outside timing on the hyperinflation remains 2014, but there is strong risk of the currency catastrophe beginning to unfold in the months ahead. It may be starting to unfold as we go to press in March 2011, but moving into a full blown hyperinflation could take months to a year, beyond the onset, depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve.
/quote off
Note the Chart below:
Steve,
thanks for explaining the background to the survey.
Alangreenspin,
You are accusing an economist who does not hold a policy-making position of attempting to burst the largest bubble in Australian history, which is quite nonsensical given that the problem is institutional. If Steve was the RBA governor and then made a nation-wide address concerning the property bubble, perhaps then he would be able to have some effect.
What Steve is attempting to do is provide a respectable and commonsense analysis of the crazy economic theory that in turn justifies insane policies such as the FHOG, negative gearing, securitization and financial deregulation, which is the cause of the bubble.
While I don’t like financial wizardry of any sort, it is understandable that Steve needs funding for his Centre.
I don’t see why hedging against the fallout from the housing bubble constitute as being “part of the problem”. The mechanism to hedge (or short the market) makes the market freer and fairer. If the rise of the housing bubble is a wealth transfer, then shorting/hedging is the corresponding reverse wealth transfer. That’s fair and square. Furthermore, the ability to hedge helps to limit the damage wrecked on the economy. Remember in 2008, when shorting was banned and what was the result? The ASX fell by an unprecedented 8% in one day.
I also don’t see anything wrong with Steve Keen encouraging members to take part in activist campaigns like GetUp. The whole point of FHO strike is to save potential FHO from the coming catastrophe. Some may interpret it as trying to ‘lend’ a helping hand to ensure that the ‘prediction’ comes true but that’s simply not true. Since the housing market is a bubble, it is destined to crash, whether any ‘helping hands’ are there or not. ‘Helping hands’ only served to hasten the timing of crash. If you know a crash is inevitable, then it is your moral imperative to warn and persuade as many as possible to stay away.
Talking about ‘helping hands’, the FHOG is another type of ‘helping hand’ to delay the inevitable.
As I say Banker deceit, stealth and total vile corruption is ubiquitous and pervasive and has the full support of “leadership”.
From H & H
http://macrobusiness.com.au/2011/04/another-ponzi-trick-exposed/
“Surprisingly, the average bank cost-of-living assumption is seven per cent lower than the poverty index, 14 per cent lower than our barebones budget, and even more for our adjusted [living costs, based on] ABS survey [data], says the report.”
These guys are good and worth following: imo