The self fulfilling prophecy of Steve Keen

[Humphrey]

MC heres the issue, hindsight is a fabulous thing as is time-scale. Keen will never say he was wrong with his predictions just his timing even if that timing is 10 years off and two booms occurred in the mean time.

I can tell we are not on the same page but perhaps atleast in the same book.

My issue is the amount of lob sided coverage. If Keen was simply one of many economists being interviewed then I wouldnt give a hoot but its not the case.

So again using your argument against you. Given before the media was wrong in ONLY covering the consensus view and shunning the minority view doesnt the same logic apply now? i.e. its wrong to ONLY cover the minority view and shunning the consensus view?

Ultimately the consensus view is right more times than not.. if it wasnt then over time the minority view would become the consensus view. Given Keen has ALWAYS been the minority view for over 30 years is proof in itself he has been wrong more times than right.

In the end of the day no view should be discounted all views should be covered however ultimately the consensus view should be always have more coverage.

Take immigration for example should P.Hanson have the same air-time as immigration experts about views and what should be done? Ofcourse not shes extreme but she should have her say (once) and thats it. The same applies to Keen.

There you go. Bold is my emphasis.

If Keen has in fact been sayng the same thing for 30 years then it would appear that he has been wrong every time. Unless he predicted a certain time for this to happen or for certain events or economic/market conditions to prevail before this happened.

So do you have any evidence that the consensus is right more times than not, or that the consensus view should be given more time than other views?

 

[tcocaro]

This is just so bloody absurd mate. Your argument is that the minority view is right more times than not?? is that what your trying to saying?

Look no offense but (personally) I have no interest in this topic anymore, the debate (in my view) has descended to the lowest common denominator and enough is enough.

No offense but i hope you don't mind if i politely ignore your posts along with MC and the rest of the clan.

Not trying to be insulting but perhaps someone else can happily debate with you just not me.

Enjoy your weekend.

There you go. Bold is my emphasis.

If Keen has in fact been sayng the same thing for 30 years then it would appear that he has been wrong every time. Unless he predicted a certain time for this to happen or for certain events or economic/market conditions to prevail before this happened.

So do you have any evidence that the consensus is right more times than not, or that the consensus view should be given more time than other views?

 

[Humphrey]

This is just so bloody absurd mate. Your argument is that the minority view is right more times than not?? is that what your trying to saying?

In regards investing I'd say that Yes, the consensus is often wrong. How do you think that booms and busts occur? I can recommend some books on the history of booms and busts for you if you like. These things have been happening for 100's of years and it appears that they are primarily based on a type of herb behavior (aka consensus view) fueled by fear and greed.

Look no offense but (personally) I have no interest in this topic anymore, the debate (in my view) has descended to the lowest common denominator and enough is enough.

You seem to take this approach quite often as soon as someone questions your opinions.That, of course, is your prerogative.

In my opinion, one of the great things about forums is that people do actually challenge ideas and present conflicting view point. If you are going to make statements such as

"Ultimately the consensus view is right more times than not.. if it wasnt then over time the minority view would become the consensus view"

then I'll say "prove it". If you have any evidence of this then I'd love to see it and if it's valid then I'll agree with you. But if you don't have any evidence to support this then I guess that it's just one of those "facts" that people create on-the-fly to support their ideas.

No offense but i hope you don't mind if i politely ignore your posts along with MC and the rest of the clan.

I think that I'll survive somehow. But thanks for your concern.

EC

 

[Bill.L]

Hi all,

Ethann, This bit of yours......

There is some good information that buying volumes are highest near the top of a bull market and selling is strongest near the bottom of a bull market. (Source: A Random Walk Down Wall Street by Dr Burton Malkiel).

............is ridiculous.

For every buyer there is a seller and vice-versa.

Markets stop going higher at market peaks, because there are more willing sellers at the high prices than buyers. The sellers accommodate all that the buyers can throw at them.

At market bottoms buying is strong as it overcomes all that the last sellers are offering.

bye

 

[urchin]

Hi all,

Ethann, This bit of yours......



............is ridiculous.

For every buyer there is a seller and vice-versa.

Markets stop going higher at market peaks, because there are more willing sellers at the high prices than buyers. The sellers accommodate all that the buyers can throw at them.

At market bottoms buying is strong as it overcomes all that the last sellers are offering.

bye

aren't you sort of contradicting yourself? of course, in every completed sale, there is a buyer for every seller and vice versa, but that is not what ethan is saying, nor is it what you yourself are saying in the sentence immediately following.

i think what ethann is referring to is what is commonly called capitulation. on the top and on the bottom. the peak hits when the last holdouts give in and just buy and to hell with the price, and the bottom appears when the last holdouts cave in and sell and to hell with the price.

the recovery from the bottom occurs after this point when, as you point out, sellers start to pick up some of the slack...

 

[Humphrey]

Hi all,

Ethann, This bit of yours......



............is ridiculous.

For every buyer there is a seller and vice-versa.

Markets stop going higher at market peaks, because there are more willing sellers at the high prices than buyers. The sellers accommodate all that the buyers can throw at them.

At market bottoms buying is strong as it overcomes all that the last sellers are offering.

bye

Not sure about ridiculous

If you look at bid and offer depth, Buy or Sell sides can be heavily skewed one way or the other. i.e. a lot more buyers than sellers or vice versa. So volume of buyers can greatly exceed volume of sellers or vice versa.

In my understanding, managed funds don't need to buyers/sellers on the other end of the transaction as the transaction takes place between the buyer/seller and the fund itself. So volumes can go where-ever the market dictates... unless of course they freeze their redemptions when there's a run on. Seems that with managed funds in Aust at the moment there is a much larger volume of sellers than buyers. Perhaps the general consensus is becoming that it's time to get out of them.

 

[freddie]

.....
Keen has something to back up his claims. I haven't seen you even try to argue against it, yet you'll happily dismiss his views? If we're going to have a thread about Steve Keen, what about looking at his work? Can we talk about that for a bit? I can point out the bits I disagree with?

* and incidentally, he didn't qualify it with probabilities as you've suggested Keen should do. He didn't say "there is a slim chance that we will face a depression worse than the 1930s". Should he have? He just said "that's NOT going to happen".

Very surprised that this site tolerates Max Carnage here. He spends a good deal of time on GHPC (currently as Scary - previously as Foundation et al) joining in whole threads dedicated to ridiculing this site and posters here. He's probably the prime mover over there in the giggle and gossip about SSters.

 

[Max Carnage]

Big sale despite Keen's gloom

Deal … Steve Keen in his apartment with real-estate agents.
Photo: Janie Barrett

Jonathan Chancellor Property Editor
October 25, 2008

THE doomsayer economist Steve Keen - who has forecast that property prices could fall by 40 per cent over the next few years - has accepted a $526,000 offer for his Surry Hills apartment.

Its much-anticipated selling price - in the middle of the buyer's guide estimate - represents a 9.5 per cent hike on its $480,000 purchase price in 2006.

Accordingly, the unit wasn't snapped up by the Herald columnist Gerard Henderson, who cheekily offered 40 per cent below the asking price. Henderson made the offer in the spat that followed his article in which he described Keen as Australia's leading doom-celeb economist.

Keen's two-bedroom Chalmers Street unit was passed in at auction two weeks ago. There were three registered bidders at the auction who made bids at $500,000 and $505,000.

There was an initial higher post-auction offer of $515,000.

The accepted $526,000 offer - which is scheduled to be exchanged next week - was made by new buyer interest.

The University of Western Sydney associate professor in economics had been advised by McGrath estate agent Simon Exleton to expect between $500,000 and $550,000. The flat's $480,000 purchase price in 2006 by Keen and his former partner was $70,000 more than its $410,000 sale in 2005.

Keen's worst-case prediction is a repeat of the Great Depression, lasting for 10 years; his best-case is a recession worse than that in the early 1990s. A Macquarie Bank interest rate strategist, Rory Robertson, recently disparaged Keen's credentials as a property forecaster, saying they "would have been stronger if he had chosen to auction his apartment a year ago, rather than this month".

http://www.smh.com.au/news/national/big-sale-despite-keens-gloom/2008/10/24/1224351544016.html

 

[boomtown]

A 40% discount to $526k is $315k.

How much would his apartment rent for?

 

[Max Carnage]

Looks like $500/wk to $600/wk.

 

[boomtown]

Lets assume $550 pw. At $315k thats a 9.07% gross yield. Sounds good to me.

 

[gman65]

9% avg IR x say $380k loan = $34k x 2yrs + $elling costs =

As an economist, I think he should know he's coming out backwards from this deal.

 

[Max Carnage]

Lets assume $550 pw. At $315k thats a 9.07% gross yield. Sounds good to me.

Me too. I'll be buying Docklands apartments when we get there.

 

[Humphrey]

Lets assume $550 pw. At $315k thats a 9.07% gross yield. Sounds good to me.

Only problem is that he sold for $526k.

I've been wondering about this 40% idea. What ever way you look at it it seems high. IF prices fell more for higher priced properties, and fell less for cheaper properties, then an average drop of 20% would seem within the bounds of possibility. Haven't got the data or time to do a proper analysis of this.

Another way of looking at the 40% idea is what if property stayed absolutely flat. How many years of zero average growth would equal 40%?

 

[Max Carnage]

Another way of looking at the 40% idea is what if property stayed absolutely flat. How many years of zero average growth would equal 40%?

At 5%pa inflation, 10.
At 2.5%pa inflation, 20.
At 0%pa inflation...

The man believes the mid-term future will be dominated by deflation. I guess that's why he doesn't plan to wait for inflation to reduce the price by 40%.

Think Japan circa 1990.

 

[wylie]

I wonder what he will rent?

 

[Kennethkohsg]

Dear All,

1. I now believe that Associate Professor Steven Keen's words cannot be taken seriously as he talks one thing and does another thing.

2. Despite his own pessimism for the Australian housing markets and adverse gloomy outlook projections, yet Steven Keen and his partner have recently bought the apartment unit for A$480,000 in 2006, from its previous owners who first bought the same apartment unit for A$410,000 in 2007.

3. Steven Keen was previously offered a higher post-auction of A$515,000 yet he choose to decline;- even though he personally claims that he believes that the housing prices in Australia will soon crash down by some 40%.

4. Is real truth and personal integrity not highly valued and regarded in Australia presently such that an University economic professor like Steven Keen, should stoop so low in his own actions and words?

5. Likewise, Kevin Rudd as the Australian Prime Minister, and Wayne Swan, as the Australian Treasurer, seem to show similar behaviours by not being 100% honest and truthful with the Australian Peoples as their national leaders and elected representatives regarding their own actual decision-making for the unlimited Deposit Guarantee and/or for failing to properly disclose the actual reasons why they have failed to personally consult or/and has specifically excluded the RBA Governor's attendance for the Cabinet Meeting to make this important monetary policy, in the first place, when Ken Henry, as the Treasury Secretary, was allowed to attend the same meeting, in person?

6. Why was RBA Governor not officially included in the said Cabinet Meetings and not properly consulted in person when the Treasury Secretary was included and properly consulted in person, in the first place?

7. Consequently, likewise as in Steven Keen's case, I also suspect that Keviv Rudd's real actions speaks louder than his own words , in this case too.

8. For your further comments and discussion, please.

9. Thank you.

regards,
Kenneth KOH

 

[Max Carnage]

3. Steven Keen was previously offered a higher post-auction of A$515,000 yet he choose to decline;- even though he personally claims that he believes that the housing prices in Australia will soon crash down by some 40%.

Did you read the article I posted above at 4.04pm Kenneth? It says they accepted an offer of $526k. In that case, the decisions not to sell at auction for $505k and not to sell post-auction for $515k were sensible. They received a higher offer later and took it.

Which part of this indicates that he "talks one thing and does another thing"?

 

[Max Carnage]

What's next? "Can't be trusted because he's trying to talk the market down for his own gain"? You watch, I'll bet we see a dozen examples of this in the near future.

 

[myla]

Did you read the article I posted above at 4.04pm Kenneth? It says they accepted an offer of $526k. In that case, the decisions not to sell at auction for $505k and not to sell post-auction for $515k were sensible. They received a higher offer later and took it.

Which part of this indicates that he "talks one thing and does another thing"?

hello,

the fact he had a mortgage for the past 2 or more years,

Debtwatch, he has been part of the whole talk, yes thats right
thanks
myla