Steve Keen finally admits he was wrong!

Full article by Chris Joye: http://www.businessspectator.com.au/bs.nsf/Article/Rory-Robertson-Hawkish-pd20090901-VFV9Q

Key paragraphs reproduced below...

Steve Keen of the University of Western Sydney, who shot to fame last year with his predictions – relentlessly reiterated on 60 Minutes, the 730 Report, Lateline and so on – that Australian house prices would fall by 40 per cent while unemployment would shoot through the roof to “depressionary” levels...

But he is the first to admit that he was perhaps a bit out of his depth when it came to house prices...

Stevie himself has been forced to acknowledge the rather adverse reality he now faces. In his latest blog posting, he comments that the resilience of Australian house prices “will also almost certainly guarantee that I'll be walking (and running) to Kosciuszko under the first half of the bet with Rory Robertson”....

But Stevie also appears confused. He seems to be labouring under the misapprehension that he made not one, but two bets. I noticed this when he referred to the “first half of the bet with Rory”. To the best of my knowledge there was only one bet and certainly no “second half”. And Steve lost that bet if Australian house prices recovered their previous 2008 peak and did not fall by more than 20 per cent.

Unsurprisingly, that is exactly what has happened...

Australian home values are now 1.8 per cent above their previous peak...

When Steve made his call in 2008, which he was happy to relentlessly repeat on-the-record for a breathless media, the public rightly took him to mean that Australian house prices were heading south within the frame of reference of the GFC.

And one should not complain about the influence of the government’s fiscal stimulus—my blind poodle could have forecast that the government was going to undertake countercyclical measures to minimise the impact of the global downdrafts on the domestic economy.

It’s like saying, If the RBA had not cut rates by 40 per cent and the government had not decided to shift the budget into deficit, I might have been right!


Chris Joye is right. And Steve Keen is doing exactly what lots of bears are now doing. He is saying 'I would have been right, if it weren't for X, Y and Z'.

Well, sorry Steve (and bears), but you were wrong. Many sensible investors and economists rightly predicted that interest rates would be slashed and that the government would not stand by and simply watch the economy crash.

Don't bet against the house! As expected, the 'powers that be' stepped in to rescue the economy, avoiding a recession, and ensuring that a healthy housing market was maintained. Their intervention worked. House prices are surging across the board now, not just in the FHB market but also mid and upper end property values are rising. Auction clearance rates are very high, finance commitments (a leading indicator) are soaring, and housing credit growth is accelerating for the first time in several years.

Cheers,

Shadow.
 
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myself? Yes, in this timeframe. But i still think its coming.

Its easy to get a big head in hindsight tho.

Can someone point me to posts where it is said that stimulus etc will save the housing market.

I have always said tho that i think the 40% fall prediction was and is extreme.

Any other bears want to admit they got it wrong...?

yieldmatters, nonrecourse...
 
Well....that was a no brainer...it was a very bold prediction for prices to drop 40%!....as I have said before this has never happened and it will never will for the whole MARKET. Though there are places at the high-end which have dropped 50% at times....but these are isolated cases rather than the norm.

Now all we need is Ed Karan to capitulate........

I guess the "Bears" are feeling that the "Barbarians" have entered the city....all is lost and a route is in sight of the dark forces!;)
 
Now all we need is Ed Karan to capitulate........

Actually he already did. There is a thread on another forum that I won't link to where he also accepts he was wrong. Just search for the most recent thread by user 'EDK'.
 
He is saying 'I would have been right, if it weren't for X, Y and Z'.

And Collingwood would have won the premiership in 1977 if Phil Carmen wasn't suspended, and the 1979 GF if the boundary umpire had called the ball out of bounds when the ball was in row 6 and the 2002 GF if Rocca's goal was actually given a goal not a behind. As in life and football, what if's are everywhere.

I guess he has admitted he was wrong, which is something that many cannot do.
 
Well...that is great news! Searched...can't find it....

If my forecasts of interest rate rises in Oct./Nov. comes to fruition...I should become a psychic!;)

Can't see property falling much thought....the pent up demand is just too much in Sydney and Melbourne.:D

Actually he already did. There is a thread on another forum that I won't link to where he also accepts he was wrong. Just search for the most recent thread by user 'EDK'.
 
The stimulus and rate cutting is exactly what I and others predicted would happen. For some reason Keen seemed to think it either wouldn't happen, or wouldn't work.

I always found Keen's position to be slightly bipolar. On one hand he said property would crash by 40%. On the other hand he said interest rates would be slashed to zero! Wrong on both counts, but regardless I could never understand how he thought property prices in Australia would crash 40% in a ZIRP environment. Considering we had mortgage rates almost at 10% in 2008, and prices still didn't crash, what did he think would happen when rates were slashed?

He seems to forget that Australia has one of the highest population growth rates in the world, along with a massive shortage of housing (as demonstrated by Chris Joye recently, and by myself many times in the past on this and another forum). The bears tend to overlook these factors while repeating their mindless mantra that 'property prices must crash'.

At the end of the day, Keen and the rest of the bears are wrong again. I myself have said that Australia may have a property crash sometime in the future, possibly in the next cycle. But it was never going to happen in this cycle. The fundamentals are just not aligned to a property crash right now.

The GFC was a minor blip in Australia's upward trajectory. A second boom is coming. It has already started. Most likely this will grow into a construction-led housing boom, one that will lift Australia's GDP to record levels once again.

Perhaps we will have a crash after this next boom, but only if the fundamentals line up to create the right environment for a crash.
 
To be fair, there actually are two bets in place based on this email from Rory Robertson to Steve Keen:

Rory Robertson said:
From: Rory Robertson [mailto:Rory.Robertson@macquarie.com]
Sent: Wed 3/06/2009 4:12 PM
To: Steve Keen; Christopher Joye
Subject: RE: That’s not a knife…

Steve…please check your calculations…40% drop from 131 peak is 78.6
on abs index…that’s when I would walk.

If that 131 level is regained in any period of time after a fall of less
than 20%…doesn’t touch as low as 104.8… then you have committed to
walk.


recall that down 20% to down 40% is no-man’s land…

writing “I’m willing to gamble that 131 was the peak” seems bizarre to
me…it’s a matter of fact that 131 was the peak…the obvious and only
peak that matters..we now are betting on the trough that follows…you
say 78.6 or lower, I say higher than 104.8…

talk about what might happen AFTER 131 regained short time or long time
is beside the point (perhaps “a trivial peak to peak with a minor
trough”)…

having said that…if abs or chris’s index ever falls 40% from its peak
level in 2008 – over any number of decades – I will walk…


rdgs,
rory
What Rory basically said was that the main game bet was about the ABS stat regaining 131 without dropping to 104.8 (20% drop) then Steve Keen loses and walks. But Rory followed up at the end by basically offering a second bet with no downside for Steve, but offering to walk at any point in the future if the ABS stat ever reaches 78.6 (40% drop from the 2008 peak).

I think his offer of a second long running bet is the bit that Steve is now clinging to as possible future redemption having now apparently lost the primary bet and conceded.

Cheers,
Michael
 
Lets keep it accurate. Bears don't just think a crash will occur. They just think growth will not be present. Big difference mate.

Can you show me your posts (pre stimulus) that predicts a price boom due to stimulus.

Also, i'd be interested to read your comments re my post in a thread called "has anyone read this article"? where i made 2 points refuting house price growth due to lack of supply/excess demand.

My post in this thread:

http://www.somersoft.com/forums/showthread.php?t=55050&highlight=article
 
Lets keep it accurate. Bears don't just think a crash will occur. They just think growth will not be present. Big difference mate.

I guess different bears think different things.

Keen expected a 40% crash, right?

Can you show me your posts (pre stimulus) that predicts a price boom due to stimulus.

I would, except all my 'dangerous words' were deleted from that forum when they banned me (3500 posts all gone!). Apparently my evil prose tended to shatter their D&G illusion. :D

(And we're not allowed to post links to that forum anyway).

Also, i'd be interested to read your comments re my post in a thread called "has anyone read this article"? where i made 2 points refuting house price growth due to lack of supply/excess demand.

My post in this thread:

http://www.somersoft.com/forums/showthread.php?t=55050&highlight=article

No worries, I'll have a look. I haven't been around for well over a month so I have a lot of threads to catch up on! :)
 
He's one bear. And an extreme one. But he did give it a time frame of 10 years i think.

And i was referring to this forum. I have not yet logged onto the other forum, yet signed up. Don't intend to.


I guess different bears think different things.

Keen expected a 40% crash, right?

I would, except all my 'dangerous words' were deleted from that forum when they banned me (3500 posts all gone!). Apparently my evil prose tended to shatter their D&G illusion. :D

(And we're not allowed to post links to that forum anyway).
 
40% Australia wide crash was never going to happen.

I do however have respect for Keen for accepting publicly defeat. He has faced the music, unlike so many of the bears we had on SS who will now just fade away without posting again, or come back as 'new' users to start the whole D&G prediction game all over again. :rolleyes:
 
Steve Keens mistake was to ignore the politics of recession. A common mistake for academics. No offense intended.

He thought like in 1930's the Gov woudl say NO, no intervention, let the bad ones die. In 2009's the Gov did everything they could to bail out those who bet wrong (sub-prime, ABC Learning, etc) . The world govs essentially underwrote the work economy.

Whilst SK lost I dont know if we all won? I wonder if the 2008 recession has simply been postponed?

The irony is, what we do in "little old Aus" makes no diff. If China was tanking now, we would be all be stuffed stock market wise and unemployment would be soaring.

Again, we are the lucky country. Very little people, lots of natural resources and farmland.

My 2 cents.

Peter
 
Is he walking (or running) from University of Western Sydney to the top of Mt. Kosciusko?

Or just from Charlotte's Pass or Guthega?

The guy's prediction caused me a bit of grief when a concerned relative (who had lent me money at one stage in 2009...though quickly repaid) was urging me to sell based on his advice in TV land.
 
Well at least he has the guts to admit it.

Most of us knew he was good for a laugh.:D

Will he do it?

Regards JO
 
Again, we are the lucky country. Very little people, lots of natural resources and farmland.

Little people who don't eat a lot so we can export more? Using fewer resources because the houses can be smaller - gosh that's an aspect of our economy I hadn't considered before :D ;).

kaf
 
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