Tag Archives: debtwatch

Australia Only OECD Nation With Rising Debt

11 Mar

From Marketwatch:

Australia’s seemingly bulletproof economy could soon face fallout from high debt levels and purportedly misguided policies designed to pump up asset prices, according to an outspoken skeptic of the nation’s housing boom.

Economist Steve Keen of the University of Western Sydney, who claims* to have accurately foreseen the global financial crisis, said he’s been dismayed by what he sees as a growing nationwide housing bubble stoked by government efforts to forestall economic pain.

Keen points to a first-time homebuyer subsidy program, various other stimulus programs, and a 4-percentage-point reduction in interest rates — policies introduced in the wake of the 2008 crash and which he termed “The Boost” — as having helped fueled a new housing boom and a 6% rise in mortgage debt last year.

“The Boost has … given Australia a dubious distinction when compared to the rest of the OECD. Yes, we are the only country that avoided a technical recession; but we are also the only country where debt levels are rising once more compared to GDP, rather than falling” …

*Proof of Professor Keen’s “claim” can be independently verified in this research paper, which references a handful of economists who did predict the GFC in advance.

UPDATE:

On April 15th through 23rd, I will be joining Professor Keen in his 230km “Keenwalk” from Parliament House to Mount Kosciuszko, in protest against Australia’s property mania that has been driven directly by insane – and in my personal opinion, immoral – Federal Government and RBA policies.

Please consider joining us, for the whole trek or even just 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 will support the wonderful charity Swags For Homeless.

Thanks!

Home Loans Slump Most In A Decade

10 Mar

From the Sydney Morning Herald:

The number of home loans plummeted by 7.9 per cent in January, the biggest fall since June 2000, after the phasing out of last year’s first-home buyers’ grant boost and interest rate rises sapped demand.

January’s result follows a revised 5.1 per cent drop in December, the Australian Bureau of Statistics reported, citing seasonally adjusted figures. Economists had been predicting a 2 per cent increase in January.

As usual, over the “long run” we again see that the predictions of mainstream economic “experts” are wrong.

This result underlines what contrarian economists such as Professor Steve Keen have been warning for several years.  That the government and Reserve Bank of Australia have, together, fuelled a massive bubble in property prices.  Rudd Labor’s doubling of the First Home Owners Boost, and the RBA’s slashing of interest rates in late 2008, have encouraged tens of thousands of borrowers to take on ever greater levels of debt. In the process, these buyers armed with cash handouts from the government and tempted by record-low interest rates, have bidded up the already record-high prices of Australian real estate.

Now that the FHOB has been withdrawn by a debt-laden government, and interest rates are beginning to rise, immediately we see a dramatic fall in demand for the loans that support Australia’s unprecedented housing bubble.

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