Market economists have spent the past few months searching each major data release for confirmation of their hope that the economy is returning to growth and that a ‘sustainable recovery’ is underway.
Most currently argue that the fundamentals in Australia are good – low unemployment, a strong recovery in equity markets (notwithstanding the 14 per cent sell-off in the past month), a significant number of companies’ results beating expectations and so on.
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Alan Kohler wrote at the time in Business Spectator that ‘flee’ was too strong a word for what was happening – housing lending was continuing to fall in both number and value terms, but investors were continuing to borrow strongly and prop up the market. However, he did suggest that a price plateau in housing looked likely.
Jim Stanford, the author of the popular Economics for Everyone (from which the cartoon to the left is taken), and I spoke at a double bill on the global debt crisis for the venerable Sydney institution “Politics in the Pub” last night.
We had a full house for an provocative evening on why the Dismal Science is neither necessarily Dismal, nor anything close to a Science, and why the debt crisis is still with us.
Revere Award for Economics for the 3 economists who warned the world
For Immediate Release
13 May 2010
Keen, Roubini and Baker win Revere Award for Economics
Steve Keen (University of Western Sydney), receiving more than twice as many votes as his nearest rival, has been judged the economist who first and most cogently warned the world of the coming Global Financial Crisis. He and 2nd and 3rd place finishers Nouriel Roubini (New York University) and Dean Baker (Center for Economic and Policy Research) have won the Revere Award for Economics. The award, sponsored by the Real World Economics Review Blog is named in honour of Paul Revere and his famous ride through the night to warn Americans of the approaching British army.
The Keen Walk to Kosciuszko was a fabulous experience—as Matt Carroll (one of the organizers) put it, it was “the best holiday ever”. That’s not to minimize the effort involved: covering 235 kilometres on foot in 8 days is no mean feat. But the combination of great company, personal success for all involved in an impressive physical challenge, lovely scenery, excellent weather, and a cause that united a remarkable group of people, made The Walk far more pleasure than pain.
As we head towards the federal election, the term ‘housing shortage’ will be trotted out again and again by politicians. Their rhetoric will rely on the deeply ingrained received wisdom that Australia has a ‘housing shortage’, and no politician will want to do the hard work of differentiating between a genuine shortage in housing stock (which we don’t have) and a shortage of ‘affordable housing’ which we do have.
And why won’t they acknowledge this distinction? Simply, because admitting that it is only the prices of houses that are dysfunctional, and not simply the supply, would be too much even for their loyal voters.
After Australian house prices rose 20 percent in one year, everyone’s talking a bubble. Channel Ten’s new(ish) avant-garde current affairs program asked for my perspective on the day the RBA yet again increased interest rates.
After leading in with the news and a feature on Neil Roberston, the 26-year-old Australian snooker player who won the World Championship, the story on house prices began 4 minutes and 5 seconds into the video below.
The news that the Rudd Government was rolling back its changes to Australia’s foreign investment rules on housing came as we were still on The Walk. Just prior to starting it, I received a note from Dr John Daffy, with the following letter from him to the PM attached. I asked John whether I could publish his letter on the blog, and he agreed.
Just as the absence of statistics on foreign purchasers means we’ll never really know the impact they had on the market, we’ll probably never know how many individuals like Dr Daffy sent similar letters to their MPs and the PM; but judging from the rapid backflip on that policy, there must have been plenty.
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