Tag Archives: debtwatch

Keenomics. It’s A Movement. You Should Join It.

21 Sep

Behold, dear reader!

Behold! the only economist in the nation – and indeed, one of only a dozen economists on the planet – to have predicted the GFC (that has never gone away).

Behold! the winner of Real-World Economics Review‘s “Revere Award” for the economist who first and most cogently warned of the global collapse.

Australia’s own Associate Professor Steve Keen.

Author of “Debunking Economics” (2nd edition release in London in October 2011).

A contrarian economic genius … who has fewer good words for the economics ‘profession’ than even your humble blogger!

And a great bloke.

Far too great a bloke to insult him by calling him an “economist”, in fact.

Here’s Steve being interviewed on Sky Business News a couple of days ago.

Very well worth your while to listen.

Carefully.

Readers may be interested to learn that your humble blogger has recently become involved with Dr Keen’s new Center for Economic Stability … his new organisation with the goal of developing a whole new ‘brand’ of economics.

One based on something really important, that modern ivory-towered economists understand very little about.

Reality.

If you’ve never come across Steve’s work before, then you can begin to catch up by visiting his world famous blog, Steve Keen’s DebtWatch.

More exciting news to follow regarding the Center for Economic Stability in the near future.

It’s a movement. You should join it.

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Joyce: Gillard Set To Outspend Rudd

25 Jun

Media Release – Senator Barnaby Joyce, 25 June, 2010:

Rudd borrows $95 million a day, Julia set to break record

Senator Barnaby Joyce today said that the new Labor Government has a lot of work to do to get this country back on track.

“The new appointee of the faceless factional bosses, Prime Minster Gillard, has already stated that she wants to get the Government “back on track”, and it certainly is a long way off-track at the moment” said Senator Barnaby Joyce, Shadow Minister for Regional Development, Infrastructure and Water today.

When this Government came to power Australia’s gross debt was $59 billion. It is now $147 billion. This Government has spent $88 billion in 935 days. This is a new record for Australian Prime Ministers.

“This Government has been an unmitigated disaster for our country, and even the Labor party now agrees. They have been racking up debt on the national credit card at $95 million a day.

“Every day of the Rudd Government, that money could have built almost 500 km of sealed country roads or repaired and refurbished over 100 bridges in regional Australia. Instead, thanks to Julia Gillard and her team we have overpriced trinkets at the back of school yards. .

“If the new PM really wants to get this great country back on track, she needs to stop this reckless and wasteful spending. The budget that the Deputy Prime Minister handed down less than two months ago forecast borrowing of $150 million a day for the next financial year. Gillard is already on track to smash Rudd’s record and things look like getting worse before they get better.”

“Australia can’t afford another term of pandemonium from the Labor party.”

More Information – Matthew Canavan 0458 709 433

House Prices Tipped To Implode

3 May

While Barnaby may not have spoken about private debt, it is arguably the great threat to Australia’s economy.  The first to suffer from excessive debt burdens are the thousands of overextended First Home Buyers.

From The Australian:

Australia is in the midst of an unsustainable housing bubble that could burst at any time, warns the man who predicted the global credit bust of 2007.

Edward Chancellor, of US investment bank GMO, says the Australian economy is yet to emerge from the global financial crisis, despite the widespread belief it has escaped the worst of it ahead of the rest of the world.

Mr Chancellor, whose Crunch Time for Credit? was published in 2005, estimates Australian house prices are more than 50 per cent above their fair value – a once in 40-year event. “If house prices were to revert to their historic long-term average (ratio of average price to average income) they would fall quite considerably,” he told The Australian.

He described Australia’s banking system as a “cartel” and said luck rather than skill had allowed the Australian economy to fare better in the global financial crisis than other developed economies.

“My view is Australia had a private sector credit boom just like the US and the UK and it had a real estate boom,” he said.

“Those are the facts and you can’t paper over them.

“In this environment, house prices rose last year and that seems to me to actually have exacerbated the problem.

“The problem is the bubble and that hasn’t gone away.”

A key area of concern for Mr Chancellor was first-home buyers. As interest rates rose, the ratio of their mortgage repayments to their income would rise to very high levels, he said.

“It’s the rising interest rates, particularly with real estate bubbles, that tend to generate the collapse,” he said.

Another potential trigger was China, particularly if the demand for iron ore, coal and liquefied natural gas were to collapse.

“We would see the Chinese demand for Australian commodities as being potentially vulnerable,” Mr Chancellor said.

UPDATE:

The latest housing data says that our housing bubble – fuelled by years of easy credit, the First Home Owners Grant, and propped up during the GFC by Rudd Labor’s doubling of the FHOG – is now running out of control.

From The Australian:

Australia’s established house prices soared 20 per cent in the 12 months to March, deepening fears that a house-price bubble would emerge, and at the same time clearing the decks for a further rise in interest rates tomorrow.

The annual rise in house prices was the fastest ever recorded by the Australian Bureau of Statistics data series, which began in mid-2002. A rise of 4.8 per cent over the fourth quarter of 2009 was the second-biggest quarterly increase.

“This is a shocker,” said Rob Henderson, head of Australian economics at National Australia Bank. He added that the Reserve Bank of Australia now needed to get more aggressive, and acknowledge the need for a restrictive policy stance.

An Incredible Experience

28 Apr

Well, the KeenWalk is over. And what an incredible experience it was! I can honestly say that I have never before had the pleasure of meeting so many truly wonderful, warm-hearted, intelligent, fascinating people in one place and time.

You can find some of my thoughts about the journey – and the reasons and purpose behind it – on the KeenWalk website, along with those of other fellow travellers.

And now, after a couple days to catch up on essentials, it’s back to the “business” of debt. So much of importance has happened in world markets while I’ve been away – Goldman Sachs, Greece, the IMF, Rudd Labor’s backflip on Foreign Investment rules for property purchases – one hardly knows where to begin!

KeenWalk To Kosciuszko

15 Apr

From today through April 23rd, I am joining Professor Steve Keen on his 230km “Keenwalk” from Parliament House to Mount Kosciuszko, in protest against Australia’s property (and debt) mania that has been driven directly by the ill-conceived policies of successive Federal Governments, the RBA, and Australia’s high risk, mortgage-loaded banking system.

Please consider joining us for an afternoon section of the walk.

If you’d care to assist a genuinely worthy cause, then please consider sponsoring Professor Keen, or indeed myself. Funds raised are supporting the wonderful charity Swags For Homeless.

On my return – hopefully still upright and with all joints intact! – I will be back here collating more news stories from around the world, showing that Barnaby Is Right.

Thanks!

Aussie Banks To Cut Lending, High Risk

11 Apr

From the Sydney Morning Herald:

Banks could be forced to curb sales of mortgages after a feeding frenzy on housing over the past 18 months has seen their exposure to the property market hit record levels.

Last month, BHP Billiton’s outgoing chairman and former head of the National Australia Bank, Don Argus, likened the big banks to ”giant building societies”, accusing them of neglecting business lending to chase the mortgage market.

Of the big banks, the Commonwealth has the most concentrated exposure to the property market – 65 per cent of its lending book is tied up in mortgages. For Westpac and St George combined it is 62 per cent.

ANZ and NAB, which traditionally have a bigger exposure to business lending, have pumped up their mortgage exposure – it accounts for more than 50 per cent of their Australian loans books.

Could Australia experience a property crash, just like those in the USA, UK, Ireland, Spain … in fact, like most of the Western world?

Professor Steve Keen, the only Australian economist to forecast the Global Financial Crisis, believes our property bubble must burst too. It is just a matter of time.

Thanks to the Rudd Government’s doubling of the First Home Owners Boost, tens of thousands of (mostly) younger Australians were suckered into huge mortgages when interest rates were at their lowest.  Now, with household debt levels at an all-time high, the experience of so many other nations says that our bubble will burst too.

“If you do not manage debt, debt manages you”.

Barnaby is right.

Greek Debt Woes Rising

8 Apr

From the Associated Press:

European stock markets fell Wednesday amid mounting concerns about Greece’s debt crisis while U.S. shares drifted lower as the Dow Jones industrial average fell short of breaking above 11,000.

Once again, Greece took center stage as investors continued to fret about the country’s ability to pay off its debts — the ten-year spread between Greek and Germany bond yields stood at 4 percentage points, having earlier hit 4.12 percent, its highest level since the euro was introduced in 1999. The spread is also way up on the 3 percent level when the EU agreed on an aid program that would involve the International Monetary Fund.

“All of this puts a question mark over longer term debt sustainability as well as the threat of contagion elsewhere in the eurozone,” said Neil Mackinnon, global macro strategist at VTB Capital.

With fiscal retrenchment due in Greece, as well as Portugal and Spain, there are also mounting concerns that the debt crisis will weigh on eurozone economic growth for a long time yet, particularly as lower demand for German goods could squeeze the eurozone’s biggest economy.

“This does not look like a sensible strategy and will likely end up in economic slump for the eurozone generally alongside the risk of deflation,” said Mackinnon.

Worries about the strength of the eurozone economy were stoked further on Wednesday with the news that economic growth ground to a halt in the last three months of 2009 as output stagnated in Germany and contracted once again in Italy.

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