Christopher Joye becomes an Austrian School advocate

W

WinstonWolfe

Time for RBA reform?
Christopher Joye
Published 9:07 AM, 23 Sep 2010 Last update 9:50 AM, 23 Sep 2010

This is a very telling (and tedious) article from the Joye.

If you cut through the self indulgent verbosity, Joye is saying the RBA should be allowed to adjust the cash rate to prevent asset price bubbles...and although he has tried to disguise it, the only significant asset bubble around is the residential property bubble. (The share and commercial property booms were reined in by net yields).

Unbelievable.....This galah has denied there's a resi bubble or the risk of a bubble for the last 5 years.
 
It's looooooong too.

Like WW said, Joye argues for the RBA to change monetary policy to prevent a problem (Joye says) we don't have, or are likely to have.
 
well the 'bubble' mantra is alive and well, but i don't know if anyone can confrim or deny anything yet.

the risk of the bubble is definitely there, though. if he is deny that, then he obviously has a conflict of interest somewhere.
 
dan c said:
Like WW said, Joye argues for the RBA to change monetary policy to prevent a problem (Joye says) we don't have, or are likely to have.
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see this makes me think that the CBA and the RBA are still in cohorts since ye olde days - the CBA are spruiking property overseas without ASIC lifitng an eyebrow and the RBA are officially saying there's no bubble, nor any risk of it.

there's some structure behind the scenes here that we're not seeing.
 
Aaron Sice said:
there's some structure behind the scenes here that we're not seeing.
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let's not forget Joye's close association with the RBA. they use his rpdata/rismark data service.

To my mind, Joye is starting to jaw bone for the RBA, saying what the RBA won't say as bluntly.

Let's also keep in mind the ABS's overhaul of CPI calculation. This is another step by the elites to interfere with asset price inflation.


IMO, this is only an issue because the govt, rba, and mainstream economists are neo Keynesian, and have arrogantly denied how excessive credit and asset price bubbles magnify the amplitude of the economic cycle. The Austrians and the Chicago School have recognized this for decades.
 
Aaron Sice said:
well the 'bubble' mantra is alive and well, but i don't know if anyone can confrim or deny anything yet.
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maybe the answer will present clearly within non performing loans when Stevens raises rates 100 points above the long term median.



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but the pattern means nothing WW - the numbers on the side do.

none of them have touched 2% - not exactly a falling sky scenario.
 
WinstonWolfe said:
Time for RBA reform?


Unbelievable.....This galah has denied there's a resi bubble or the risk of a bubble for the last 5 years.
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I think for the last 2 years from prices paided 24 months ago up until sales within the last 6 weeks in the area's i watch and have investments in the 800k --1.4 mill range some of those houses that were bought for 950k 2008 and full reset inside and from roof down reno can't get offers above 900k when the properties owe the title holders-banks 1.3 mill before they have 20 cents in their back pocket,i know a few people in this boat everything works well in a upward nonstop upward10 year market..willair..
 
willair said:
can't get offers above 900k when the properties owe the title holders-banks 1.3 mill before they have 20 cents in their back pocket,i know a few people in this boat everything works well in a upward nonstop upward10 year market..willair..
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Confirms my view the banks are happy to lend up to 20% above what the market can realistically sustain. As long as they get their cut back, what do they care what happens to owner equity.

This house was bought for 1040k in feb. The builder buyer did a reasonable reno and put it to auction late August. He got a bid of 1550, knocked it back, and it was listed at 1650 the next day. a few days later it dropped to 1625. We thought it was worth 1400 based on sales over the last 12 mths.

This house was auctioned 2 weeks ago and was obviously passed in. I didn't go. They were asking 1600 in March. We offered 1575 in April and they knocked it back. Then they came back and said they'd take it. We went cool on the market in that time.

Spring seems to have slowed on the north side Will. Several REAs I believe told me winter was strong.

The RBA interest rate jaw boning, and now Crhis Joye and CBA, will be annoying the REAs.
 
WinstonWolfe said:
Confirms my view the banks are happy to lend up to 20% above what the market can realistically sustain. As long as they get their cut back, what do they care what happens to owner equity.

This house was bought for 1040k in feb. The builder buyer did a reasonable reno and put it to auction late August. He got a bid of 1550, knocked it back, and it was listed at 1650 the next day. a few days later it dropped to 1625. We thought it was worth 1400 based on sales over the last 12 mths.

This house was auctioned 2 weeks ago and was obviously passed in. I didn't go. They were asking 1600 in March. We offered 1575 in April and they knocked it back. Then they came back and said they'd take it. We went cool on the market in that time.

Spring seems to have slowed on the north side Will. Several REAs I believe told me winter was strong.

The RBA interest rate jaw boning, and now Crhis Joye and CBA, will be annoying the REAs.
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The last thing the Gillard Government would want is the Australian Property Market to implode,every area within the inner 10 klm's in Brisbane are different i'm only talking about the few people that i still know that reno resell up the property ladder in inner Bris all have come to a complete standstill,one i know listed then bought in the 1.2 mill range 2 months settlement and could not even get an offer on the first one:rolleyes:,now there are trying to lease the place are not takers just markets within markets..willair..
 
willair said:
The last thing the Gillard Government would want is the Australian Property Market to implode,
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I don't think it will implode. But I don't see it going anywhere in the foreseeable future. A lot of vendors are still expecting 7%+ pa, as are many REAs.

I think the median for Bris will be <=5% for some years.
 
Well i can handle 9% I/R on mortgages, 11% on margin loan and im very highly geared.

So ill join the other 99% of people with performing loans
 
WinstonWolfe said:
I don't think it will implode. But I don't see it going anywhere in the foreseeable future. A lot of vendors are still expecting 7%+ pa, as are many REAs.

I think the median for Bris will be <=5% for some years.
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Hard to determine what will happen it will just come back too the normal rules,if you have something that someone else wants to develop at your asking price then the property will always sell,i have only had one letter from a buyers agent-real estate agent over the past six months on any properties we control,prior too that there was several each month just different market,always good to get those offers from agent acting:rolleyes: for the buyers who run under Company names and try and find people that don't know that the property is on 2 blocks ect,keeps you sharp because one you do a quick search under their trading name most we find are 70% delisted or not companies at all:)..willair..
 
WinstonWolfe said:
Confirms my view the banks are happy to lend up to 20% above what the market can realistically sustain. As long as they get their cut back, what do they care what happens to owner equity.
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they should care because if GS are stealing the equity out of the American system, and GS being an advisory to CBA.....and CBA wanting to pump the market up to OS investors.....
 
5% p.a. capital growth is enough to justify buying a PPOR on solely financial grounds at least in the instance that you have a substantial deposit. Nothing worse than paying rent after tax and seeing your investment income taxed to hell when all you have to do is buy a house and avoid tax on your savings and avoid those pesky post tax expenses!

But I would have thought that if 5% p.a. was to set in as the "new paradigm" this would be enough to put many investors off for future purchases, if their LVR's were greater than .75 at any rate. Again I suppose if you have cash a house is as good a place as any it would seem even at 5% p.a. capital growth for it to sit when you add in 4% rental yield and take out 2% costs. But whether buying them with leverage still works is the important question? Of course when the income comes as cap growth beyond 7% p.a. buying with banks money and taking the hit to your taxable income through the process all works and taking the rental growth over time, but is 5% p.a. sustainable?

With investors making up such a large part of the Australian (indeed anywhere) market would this not perhaps preclude 5% p.a. from being a possible scenario. i.e. we are either in fifth gear or slow grinding reverse when it comes to Australian housing. I can see 5% p.a. or even less being sustainable in some situations of course if rental yields were closer to 6 or 7% this is well and truly sustainable and 0% capital growth is sustainable if rental yields compensate but they do not in most cases.

I am quite doubtful when it comes to a stagnation and I think the government is also doubtful stagnation is a sustainable situation for Australian housing, having brought in demand side stimulous even when things seemed to be quieting down let alone falling.

Bit of a lucky dip as to whether the next lot of stimulous will target investor demand >> improvements to NRAS perhaps or whether it will target FHB >> FHOGBoosts. Of course I hope it goes to builders / developers in the form of new build tax cuts and land release, but I suspect this would not help the sustainability of a stagnant market either only bring more stock onto the market.
 
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