Kiwi Courage and Aussie Apathy

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Com­pare the fol­low­ing two state­ments, and see if you can guess who the speak­ers are, when they made these speeches, and what they announced in them:

[We are] con­cerned about the rate at which house prices are increas­ing and the poten­tial risks this poses to the finan­cial sys­tem and the broader econ­omy. Rapidly increas­ing house prices increase the like­li­hood and the poten­tial impact of a sig­nif­i­cant fall in house prices at some point in the future. This is par­tic­u­larly the case in a mar­ket that is already widely con­sid­ered to be over-valued.” (Speaker One).

… Some com­men­ta­tors have taken the view that the prop­erty mar­ket dynam­ics are wor­ry­ing. My own view, thus far, has been that some rise in hous­ing prices is part of the nor­mal cycli­cal dynamic, that it improves the incen­tive to build, and that a price rise revers­ing an ear­lier decline prob­a­bly isn’t some­thing to com­plain about too quickly. More­over, credit growth, at between 4–5 per cent per annum to house­holds, and less than that for busi­ness, does not sug­gest that ris­ing lever­age is so far feed­ing the price rise. Hence it has been a lit­tle too early to sig­nal great con­cern.” (Speaker Two)

The for­mer is Graeme Wheeler, the gov­er­nor of New Zealand’s Reserve Bank, on August 20th, in a speech in which he announced the intro­duc­tion of con­trols on Loan to Val­u­a­tion Ratios.

The lat­ter is Glenn Stevens, the gov­er­nor of Australia’s Reserve Bank, more than three months later (Octo­ber 29), in a speech in which he announced bug­ger all.

Fig­ure 1: Banks get­ting back to their old tricks – St George adver­tis­ing 95 per cent LVR loans, George St Syd­ney, Novem­ber 2013 

Graph for Kiwi courage and Aussie apathy

To read more, click here.

About Steve Keen

I am a professional economist 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 debts accumulated in Australia, and our very low rate of inflation.
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7 Responses to Kiwi Courage and Aussie Apathy

  1. Bhaskara II says:

    Check out NZD/AUD and NZD/USD at:

    NZD/AUD is how many AUD you get for a NZD.

    The New Zealand dol­lar has been gain­ing on both.

  2. koonyeow says:

    Let’s hope Wheeler is spar­tan as I expect him to be intim­i­dated by com­mer­cial banks.

  3. eoghankan says:

    I hope that no-one has missed the “worm” which started to turn in Man­ches­ter Uni­ver­sity a few weeks ago, as fea­tured in the Guardian today. Real progress at last?

  4. Steve Hummel says:

    Also posted in reply to the post on Real World Eco­nomic Review blog here:

    Great idea! What these aca­d­e­mics are sug­gest­ing is tak­ing the per­spec­tive of Wis­dom which is pre­cisely what eco­nom­ics and every human sys­tem actu­ally needs at this time. Wis­dom is inter­dis­ci­pli­nary and inclu­sive. It inte­grates and syn­the­sizes. The ulti­mate result of Wis­dom is the renewal and tran­scen­dence of cur­rent struc­tures not their elim­i­na­tion. This may take time and con­tem­pla­tive “effort” on the part of an indi­vid­ual, but for sys­tems and their poli­cies it is instan­ta­neous, enabling and encour­ag­ing. There­fore, sys­tem­i­cally, it is not cor­rect to see it as a long or labo­ri­ous process. Luck­ily for us all the con­tem­pla­tion has been done a long time ago. Con­se­quently all that is really nec­es­sary is to take the most pow­er­ful con­den­sa­tions of that Wis­dom and craft poli­cies that accu­rately reflect them. Iron­i­cally, the biggest stum­bling block to this may be the con­ser­v­a­tive and cau­tious mind­set of sci­ence itself. But if sci­en­tists under­stand that Wis­dom in no way rejects sci­ence but rather inte­grates and syn­the­sizes it with the psychological/spiritual per­spec­tive in the inter­est of a greater whole per­haps we can avoid any delay at a time when human­ity faces coa­lesc­ing crises.

  5. Steve Hummel says:

    The step by step process of wise mon­e­tary and eco­nomic the­ory:
    Cost Accounting/money Economics/relationships between cor­rect data Philosophy/symmetry Wisdom/ethical inte­gra­tion of Phi­los­o­phy and policy

    In other words col­lect the basic data, deci­pher it’s eco­nomic mean­ing, under­stand the sym­met­ri­cal philo­soph­i­cal frame­work of nature and then inte­grate all of the data, rela­tion­ships and under­stand­ings so as to cre­ate wise policies.

    The process of look­ing and seeing…internally and exter­nally: Col­lect, deci­pher, inte­grate, syn­the­size, under­stand, align and apply thought and deed/philosophy and policy/cause and effect in a humanly eth­i­cal way.

    Very curi­ously, the above are actu­ally the process of BOTH ACQUIRING Wis­dom AND DOING Good sci­ence. Which implies that Wis­dom is indeed an inter­nal sci­ence. It is also a mind­set which in fact encom­passes and com­bines BOTH sci­ence AND intu­ition. The lat­ter is also the hall­mark of true sci­en­tific breakthroughs.

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  7. koonyeow says:

    Great arti­cle, eoghankan.

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