As you may know, the House of Representatives Standing Committee on Economics, Finance and Public Administration has arranged an Inquiry into home loan lending practices and processes, to which I have been invited. The submissions have just been released; click on the link to access them.
My submissionÂ is here for speedy reference. Apologies to all for the absence of posts recently, but if can be allowed some Aussie vernacular here, I’ve been busier than a blue-arsed fly in recent weeks, and (now you’ll have to allow a very inept mixing of metaphors!) won’t get my head above water for some weeks yet.
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I have now posted the PDFs of my June and July reports; hopefully in the next week or so I’ll get a chance to post the text to the blog as well. Apologies again for the slowness here, but conferences and the sudden press coverage on debt worries!
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This is basically an apology for a slow update rate on the blog right now. I have had two conference trips separated by exam marking and student supervision loads; and I’m sitting in a conference right now. I have two Debtwatch reports to post, updates to do to the Charts page, and plenty of press coverage details to add, plus at least one comment to reply to. They will be forthcoming I hope by Friday.
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Prior to the NASDAQ crash in early 2000, American commentators were fond of describing their economy as being in a “Goldilocks” phase–with all economic indicators being “just right”.
That phrase dropped out of circulation after April 2000, but a level of complacency still ruled when that stock market crash appeared to have little impact on the real economy.
Complacency dramatically left the building today, with the release of the Bank of International Settlement’s (BIS) 77th Annual Report.Â The BISÂ turns the Goldilocks story around, and sees it not from Goldilocks’ perspective, but from that of the Bears. Just as the Bears’ domestic idyll was disturbed by Goldilocks the Home Invader, the apparently neat global financial system has been put at risk by out of control speculative lending.
It’s not yet the main topic of debate between Liberal and Labor, but some of the arguments in Debtwatch have at least made their way into Hansard courtesy of a speech by Laurie Ferguson. The full extract from the speech is shown below.
“This makes a mockery of the claim by the Prime Minister that we have never been better off. Whilst the Howard government crows about the success in the economy, which was largely inherited from Labor and fuelled by the raw materials demands of India and China, there is an alternative reality of an out-of-control personal debt spiral. Steve Keen from the University of Western Sydney writes:
Jessica Irvine from the SMH has written an excellent piece with this headline in today’s SMH. I’ve linked it on the blog roll, but it’s linked here too for quick reference.
Â My Debtwatch report will be very brief this coming month: I’m off to the USA tomorrow for some conferences, and I’m “under the gun” to produce papers and presentations to suit. I also won’t be available for comment at the time of the RBA’s next meeting–which is of course highly unlikely to move rates in either direction.
I regularly peruse, and enjoy, the “All Men Are Liars” blog at the SMH on-line. Today’s post there is on a topic dear (in every sense of the word…) to this blog. I recommend checking it out–and engaging in the debate, if you have time (I’ve just posted a quick comment):
Suckers: slave to your mortgage
Will Budget tax cuts fuel inflation?Â (click here for the MP3 file)
PM — Wednesday, 9 May , 2007Â 18:14:52
Reporter: Stephen Long
MARK COLVIN: Now, will the tax cuts in the Budget cause inflation?
Some leading economists argue that the Reserve Bank could be forced to lift interest rates down the track because Government spending and tax cuts will increase consumption and prices.
But others disagree. They argue that debt levels are so high that many people will be handing their tax cuts straight to the bank.
Stephen Long from ABC News brought to my attention the fact that the Reserve Bank of New Zealand appears to be contemplating a return to regulating lending.
This is only hinted at at present, but it represents a major shift in Central Bank thinking–and a welcome one, from a debt-deflationary point of view.
I’m interviewed about it on PM tonight; in the meantime, here are some relevant excerpts from the Reserve Bank of New Zealand: Financial Stability Report, May 2:
This is another non-debt post. I’ve just heard Costello describe tonight’s budget as an “Education Budget”. There was a welcome “equity” bequest to universities, to fund infrastructure and research: but there was also a shallow “shell and pea” trick in the allocation ofÂ funding for University places.
The complicated CGS banding system–which determines what theÂ GovernmentÂ provides per student, and varies depending on the discipline being studied–is being rationalised from 14 bands to 7. In 6 of those new bands, the amount being given in 2008 is slightly more than the highest amount given to the previous bands. For instance, the four bands of Maths, Behavioural Sciences, Education and Computing are being amalgamated into one band; the highest funding level per student in 2007 was $8,057 for Computing, and the lowest $5,381 for Maths; the new funding level is $8,217–a 2% rise for Computing, and a 52% increase for Maths.