This is often treated as a “how long is a piece of string?” question, but The Economist has performed a great public service by allowing an easy comparison of the length of this piece of string across many countries and over time.
Check it out yourself. For Australian readers, house prices today are almost 2.5 times what they were in real terms in 1986; and our price bubble (in CPI-deflated terms) turns out to be smaller than some countries (notably Belgium’s) but larger than the USA’s and UK’s.
I recommend that you finish the year with a look at the News from 1930 blog, which is providing some “year in review” commentary on 1930 now–including these details on the market highs and lows. Obviously some things were much worse in 1930 than today–notably industrial production and the stock market:
Market highs and lows:
Dow industrial average high of 294.07 Apr. 17; low 157.51 Dec. 16. Rail average high of 157.94 Mar. 29; low 91.65 Dec. 16. Utility average high of 108.62 Apr. 12; low 55.14 Dec. 16.
Last weekend’s Sunday Telegraph pointed out a new record for Australia: our ratio of household debt to GDP is now higher than the USA’s. I’ve written the following commentary on this dubious “gold medal” (or is it really lead?) for the ABC’s The Drum.
In all the self-congratulations over how Australia has managed to sidestep the GFC, an inconvenient truth has been overlooked: the crisis was caused by too much debt, and Australian households have had a stronger and longer love affair with debt than even the Americans.
Eric was taken with my advocacy of what I called “Engineer Capitalists” (in contrast to the financial spivs who dominate business today in the USA) in my interview on The Keiser Report, and wanted me to elaborate for his audience. The interviews have been posted to YouTube (see below).
For Australian viewers, there was an interesting report in today’s Sunday Telegraph on the level of mortgage debt in Australia, which now exceeds 100% of our GDP–higher than America at 95.5%.
Mike Shedlock (“Mish” as he is known to all) has written an excellent piece on the deflation-inflation debate, focusing on the Achilles Heel of the latter–the fact that it is based on the belief that we live in a “fractional reserve banking” monetary system. He offered to let me cross-post here, and I’ve reproduced it in its entirety below (there’s only one point I’m not sure on–the comment that there are no reserve requirements for savings accounts. From my reading of the footnotes to Table 12 in this Federal Reserve paper, that’s true of corporate accounts but not individual ones).
Mike (“Mish”) Shedlock’s site MISH’S Global Economic Trend Analysis provides regular, incisive and down to earth commentary on the US and global economies, and his site is one of my first ports of call when I want do take a more critical look at any US data that appears to be more dissembling than informing.
Mish has made a rare appearance on Yahoo’s Tech Ticker–another regular favourite of mine–to pull apart the most recent apparently positive developments in the US uemployment rate.
If you haven’t yet acquainted yourself with Mish, then I suggest you watch this video (also embedded below) with Aaron Task from Tech Ticker, and then check out Mish’s blog.
This is too good not to spread: Senator Bunning berates Bernanke at his confirmation hearing. What Bunning lacks in oratory he more than compensates in forthrightness and integrity. One phrase alone is worth hearing: “We [should] punish failure not reward it”.
I first realised that the world faced a serious financial crisis in the very near future in December 2005, as I prepared an Expert Witness Report for the NSW Legal Aid Commission on the subject of predatory lending.
My brief was to talk about the impact of such contracts on third parties, since one ground to overturn a loan contract was that it had deleterious impacts on people who were not signatories to the contract itself. I was approached because the solicitor in the case had heard of my academic work on Hyman Minsky’s “Financial Instability Hypothesis”.
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