Kiwi Courage and Aussie Apathy

Flattr this!

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.

Bookmark the permalink.

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.