Economics debate Keen vs Shadow

[keithj]

I think you're wrong here. Can you prove this statement?

Rudd unveils $10.4b stimulus plan October 14, 2008

....including...

- $1.5b for first home buyers.

...and 6 weeks later the bet was made....

Thursday, November 27, 2008 Rory Robertson vs Steve Keen - Who's going to climb Kosciusko?

Robertson also makes the point that IRs had already fallen by 300bps & he was expecting another 100bps to 4.25% the following week.

 

[devo76]

No. Shadow is saying the Keen made his predictions with full knowledge of the massive govt. stimulus and i'm saying i think that's incorrect.

Not sure what you're saying.

Well keiths reply has taken away my need to respond but my point is the argument from many was that Keen would have been right if the government did not get involved. They did as most expected so now the argument has moved to less relative points.

 

[Shadow]

Keen, like many bears at the time, believed that all the stimulus in the world wouldn't help. The bears thought that the 40% crash was set in stone and nothing could stop it. Keen also expected the RBA to slash interest rates to zero, and yet he still expected house prices to crash by 40% despite this. Keen severely miscalculated the fundamentals supporting house prices in Australia. But at least he did the decent thing and sold his own home, so that he now suffers the same financial disadvantage as those bears who followed his bad advice.

 

[boz]

the long term view of Keen is not far off reality. His view is pretty much what is happening in greece and Portugal now where debt can't be sustained anymore and deflation kicks in, surely home prices in those countries are not going to hold up for long.
we'll see in the next few years how things will play out for the major countries. Don'tt hink it will be possible to nationalise all private debt...
I am waiting a downgrade in UK sovereign debt any day now...

 

[dan c]

Don't forget, Keen also predicted zero percent interest rates and 15% unemployment. So he wasn't wrong on one prediction. He was wrong on three.

 

[kum yin lau]

Hi boz, I don't get it. You say Keen's pov is 'not far off reality'.

Are you suggesting that we all live in Greece or Portugal or UK?

Or that Australian home prices will be like the 3 countries above?

KY

 

[boz]

Hi boz, I don't get it. You say Keen's pov is 'not far off reality'.

Are you suggesting that we all live in Greece or Portugal or UK?

Or that Australian home prices will be like the 3 countries above?

KY

Portugal, greece and UK don't have the commodity and resources Australia have and at present and probably for sometime in the future are very valuable.
But apart of that the total debt (private + public) of Greece is just over 200% of GDP while portugal a bit more around 230% GDP Australia is running close to probably around 180-190% of GDP (and rising fast). So, if Greece and Portugal have a debt problem Australia is potentially vulnerable too.

 

[kum yin lau]

hi boz, now you're shocking everyone. Last I heard, Aust govt was running on a surplus though I was not happy with the way Johnny achieved it.

Surely Kevin hasn't squandered that much that it's become 180% GDP?

And to throw in some more confusion. There's a perception that FHB are all on perilously high LVRs. Let's check it out. A low end house 3BR 2 Bathrm type in my part of Oz rents for $280-300 pw

That's $15600 p.a. It supports a loan of around $240000

That is the DEBT that every young person HAS to carry if he wants a roof over his head.

It's entirely reasonable then to multiply every person between 20 and 45 by $240000 to reach a figure for our housing commitments.

I think that makes the debt figure more understandable & believable.

KY

 

[boz]

Mish is saying the same thing as I am trying to explain here

...
The thing about stimulus plans is governments can throw money at problems, but they do not really get to decide exactly where the money goes in the global economy.

The US wanted housing and jobs, it got increases in equities, commodity prices, and gold instead.

China being a command economy can do a bit better at throwing money where it wants, but China cannot control the resultant property bubbles in Canada or Australia.
...

I am not the only one that think the future of Australia is not in Australia's hands (not that I always agree with Mish's writing)

Edit: the public debt in Australia is probably just around 20% of GDP if you include the gov mortgage backed loans. The private debt is over 180% of GDP and that would include mainly home loans, business loans and personal borrowings. This is important because when you compare australia to other country you can see what is the potential impact on interest rates to consumer spending

 

[evand]

oops! i stand corrected. Thanks.

Rudd unveils $10.4b stimulus plan October 14, 2008

....including...


...and 6 weeks later the bet was made....

Thursday, November 27, 2008 Rory Robertson vs Steve Keen - Who's going to climb Kosciusko?

Robertson also makes the point that IRs had already fallen by 300bps & he was expecting another 100bps to 4.25% the following week.