FHB Boost is Australia’s “Sub-prime Lite”

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The First Home Own­ers Boost (as it is offi­cially known) has cer­tainly given the Gov­ern­ment bang for its buck. By spend­ing roughly $200 mil­lion of its own money to date, it has added about $3 bil­lion to the hous­ing mar­ket. But the addi­tional $2.8 bil­lion has come from increased mort­gage debt taken on by those most vul­ner­a­ble to a seri­ous eco­nomic down­turn, at a time when the lat­est “unex­pected” increase in unem­ploy­ment indi­cates that, like it or not, the global down­turn is com­ing our way.

James Galbraith: No Return to Normal

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James Gal­braith has writ­ten a very good analy­sis of the cri­sis and why the poli­cies being fol­lowed in the USA (and, by impli­ca­tion, here) will not work.

I repro­duce some extracts here to give you a flavour of the arti­cle, but I rec­om­mend a read of the full paper in the Wash­ing­ton Monthly–thanks to blog mem­ber War­ren Raft­shol for bring­ing it to my atten­tion. The empha­sis added to some points is mine.

It’s just a flesh wound…”

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It seems we’ve moved from Stan­ley Kubrick to John Cleese. Rory Robertson’s reply to my “Rory Robert­son Designs a Car” post reminds me of one of my many favourite scenes from Monty Python, the fight between King Arthur and the Black Knight:

King Arthur: [after Arthur’s cut off both of the Black Knight’s arms] Look, you stu­pid Bas­tard. You’ve got no arms left. 

An interview on BNet Australia

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Bnet Aus­tralia has just posted an inter­view with me by Phil Dobbie.

The inter­view is linked here, and I’ve also tried to post it to my pod­cast feed using a new Word­Press plug in.

Can sub­scribers to the Debt­watch pod­cast please let me know whether this turns up in their iTunes, etc.? I don’t get any con­fir­ma­tion of whether the post­ing suc­ceeds or not.

Debtwatch No. 32: Is Rudd the new Whitlam?

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 A quick quiz: when did Australia’s biggest pri­vate debt bub­ble burst?

A young Gough Whitlam

A young Gough Whitlam

If you con­sider the rate of increase of debt, the cor­rect answer is “in mid-1973″. The bub­ble started to expand a year before Whit­lam  came to power, and its col­lapse dur­ing Whitlam’s term was the real–but at the time, unappreciated–cause of the eco­nomic cri­sis that undid his government.