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I'd see it in reverse. If somebody knows enough to make money trading why would they tell you how they do it? This isn't the case. They were effectively bailed out by the government - they were very heavy users of the government guarantee on wholesale markets.

You are right - what you are saying is prices are set at the margin. Based on those prices at the margin other people who weren't at the margin felt richer and borrowed against the house to buy things.

You judge people's smarts by their net worth!!!?? And you think Macquarie is a successful Australian company!!!!???? I had to throw my head sideways to avoid throwing up on the keyboard! :eek::eek:

I'm not disputing where it is coming from (debt) - I am disputing where it is going! Lots of pools, renos, 4WDs, holidays etc etc. "equity mate!"

I thought Rory was pretty soft on the academic front. He just sidestepped the discussion on debt to GDP and attacked Keen's wrong forecasts over the last 12 months. 12 months is nothing in the world of economics. Rory comes across to me as just a short term trader type. Rory's worst line...

Relative to wages - yes - always difficult. Relative to the price of everything else - BIG NO - they were much cheaper back then. House prices in real terms are UP enormously. There is no disputing this - it is a fact. So as a buyer from the 90s you participated in the much higher real...

I wouldn't say "well" short. In nominal terms down from the peak around 32% right? Inflation of about 10% over that time so you are north of 40% in real terms. Remember too a 40% decline is the reversal of a much bigger gain on the way up (~60%). Still - sounds like you are technically...

Try it in real terms. (i.e. after CPI is backed out).

If individually everybody takes that self centred approach then collectively we are doomed.

Yep - I guarantee it. But even if we're not alive, actually giving 2 ****s about the next generation would be great. We don't see much of it these days - it's all about me, me, me.

Go Gen Y !!! The only way Gen Y won't be robbed by the ignorant generations above them is to not participate. I appluad those that stay out of the market and spend their money on worthwhile things like food, drink and travel. (I'm not Gen Y by the way).

We can afford to pay the interest until the interest is equal to our GDP. It would sort of suck though that at that point we would not even have enough money left to eat. I'm sure it won't get that bad - the rest of the world will see through our tricks well before then and stop financing us.

But the government, rba, etc don't actually produce anything. So their tricks will shift wealth around for a while (from the future to the present, from first home buyers to existing home owners, from the rest of the world to Australia) but eventually the game runs out of steam and somebody...

Unfortunately the whole of Australia does replicate the actions of people in this forum! But fair point though. The property market economics section can easily drift into global macro economics which can be a bit over the top.

What does government debt have to do with it? (typo maybe?)

Chris Joye argues our big 4 banks should show a home bias to their activities because they have an implicit government guarantee. I wonder if he would apply that logic to the rest of the world that Australia relies on so heavily? Most of the worlds banks are currently either government...

The assets (house values) supporting the debt is rock solid so we don't need a guarantee. The guarantee makes the assets rock solid. Something circular here ---- hhhhhmmmmmm

Why did we need to do it though? I thought our housing assets were rock solid? Can't international investors see that? Isn't it obvious to them? ;)

Wholesale bank funding guarantee The RBA had an impact in saving the property market (lower rates) but the number 1 influence by far was the wholesale bank funding guarantee. It was not something I expected. The whole property market is absolutely dependent on the flow of credit to keep...

Must save this one.