Philip Soos, a researcher at Deakin University’s School of International & Political Studies and author of the paper Bubbling Over : The End of Australia’s $2 Trillion Housing Party posses the question if economists are ignoring our property bubble?
In an article published today and titled Are economists ignoring Australia’s property bubble?, Soos writes :
This [.com bubble] was followed by an US$8 trillion housing bubble, which saw an 86% run-up in housing prices between 1996 and 2006, climaxing with a spectacular crash that nearly bought down the entire banking and financial system in the US.
Again, economists either missed or denied the existence of a housing bubble, though many fundamental indictors clearly pointed to this reality.
In Australia, our $2 trillion housing bubble has seen prices rise by 127% from 1996-2010, and every fundamental indicator is off the chart.
But while it seems logical to conclude that Australia’s property bubble will inevitably burst, very few observers seem willing to do so.
(Our readers don’t have trouble spotting the bubble)
He believes economists continually get it wrong due to “equilibrium economics” or neoclassical theories, widely practiced in government, industry and research institutes. Other leading economists are biased due to conflicts of interest which require them to promote economic fact such that houses double every 7 years and we have a shortage of houses.
Literally three months before the peak of the housing bubble in the US, the two leading economists in that country, Alan Greenspan and Ben Bernanke, testified before Congress that a bubble didn’t exist. If they couldn’t see it, what hope do Australia’s economists have?
» Are economists ignoring Australia’s property bubble? – The Conversation, 20th September 2011.
show where economists ever got it right. They dont have a clue and are just overpaid morons.
Just read that Wayne Swan has been named world’s top finance minister….. bahahahahaha, what were all the others from Greece or something? Australia has skidded along purely by luck, and sooner or later luck does run out.
So IMF now says we are in for it this time, won’t escape GFC-II, the new debt….
http://www.theage.com.au/business/sharp-drop-for-economy-imf-warns-20110920-1kjn6.html
I’m not worried, always have a back up plan I say, so when I’m broke I’ move in with Yoda, I think he needs a new under study anyway. Keep that spare room vacant my little long eared Kermit as I may need it.
You do have to wonder if all the scare tactics aren’t for some greater reason, like making everyone dump assets and move to cash so someone can quietly step out of the shadows and pick them up for a few cents. Super is looking very bad now, thank god I moved mine to a capital protected account, return is low, but at least I know the cash is still there.
Continuing to eat like a king, top class meats and vege going quite cheap now as many of the locals where I live are struggling. Enjoyed three P.house steaks for only $5 this week, not mention some other classy cuts of meat and fish. Something is really wrong, I mean wrong, when I can do this now for more than a year and a half. Clothing, cheap as too, about the only thing not cheap is fuel and car related items.
Houses have fallen quite hard in my area, starting to see the “below cost” listing appear, also the dead “price negotiable” giveaway is also a common feature.
Should you be able to keep your job and interest rates actually fall you’ll be in a powerful position, assuming you haven’t previously loaded up on too much debt.
No debt in this household. Anyway, better finish eating my crayfish.
ANNOUNCEMENT – THE ANNUAL YODA AWARD FOR BEST ECONOMY CRASHER
Yoda has awarded the first annual prestigious award to none other than our MR WAYNE SWAN.
Congratulations Wayne, executed with complete confidence and well placed resilience. D*ckhead !