"The greatest shortcoming of the human race has been its failure to understand the exponential function"
Zero Percent Interest Rate - Steve Keen
- Thread starter ermen
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Shadow i keep telling you.. graphs, figures, actuals or even reality itself are not relevant. Random comments are a much more effective method in arguing your point it seems.
The price of fish is $1.30.
The price of fish is $1.30.
Is there some point you would like to make?
Too obtuse for you tcoc? I thought a picture was worth a thousand words? I was pointing out the folly of exponential extrapolation and how the expectations of those who did so in the past have been dismally underwhelmed by reality! And if prices fall, such people continue to fit long-term exponential functions to historical data and continue to be disappointed with the results.
Why would you model future growth based on one variable only? And why would you choose time as that variable when it has been repeatedly demonstrated that it is not time that prices have historically responded to, but rather a range of factors that have changed over time?
True - I should try to learn from <the other forum> - how's this?
Property crashed in Japan so the same will happen here tomorrow because we are just the same as America. After all the UK population growth rate of 0.4% didn't save them so the same will happen in Australia even though our growth rate is 1.6%. All the evil specufestors will soon dump their empty negatively geared tax havens as soon as interest rates get high enough and then property will crash and rents will also crash and we will have a severe depression where all the specufestors are burnt at the stake and renters will rule the world forever! Carnage baby - carnage! Stock up on guns and canned food guys - the Armageddon is approaching! Aaaargh - the sky, it's coming straight for me!
I don't think he bought a falling asset, he bought a place to live in.
You couldn't walk down a neighborhood street asking people how their appreciating (or falling) asset is going.
And yes, its doing my head in.
You couldn't walk down a neighborhood street asking people how their appreciating (or falling) asset is going.
And yes, its doing my head in.
But who would be stupid enough to buy a falling asset (according to him). Actually, I think we did a couple of years ago but that is another story, and the rules were changed on us.
Anyone else finding these Keen threads are doing their head in
You forgot to include the (impossible to argue against point) - "but its possible, why cant it? I am sure people in Japan doubted it too? and in the states... look at them now."
Someone stupid like tcocaro will then start raising things like (population growth, demand & supply and the stats showing different TODAY)
and then someone will reply....
and so on...
This topic has "done my head in" have you ever seen a dog chase its tail?
Someone stupid like tcocaro will then start raising things like (population growth, demand & supply and the stats showing different TODAY)
and then someone will reply....
and so on...
This topic has "done my head in" have you ever seen a dog chase its tail?
theres something called renting. No one in their right mind buys a house to live in or otherwise if they are convinced for the next 10 years they will see 40% of their equity disappear.
This is the excuse he is using NOW to sell his house in order to rent.
Evand seriously feel free to argue Keens position on anything except this. Its seriously so blatantly hypocritical that you arguing in his defense only makes any rational person laugh.
Seriously, think about it for a second. Its completely absurd what hes done and his decision NOT to sell will be used (rightly or wrongly) to discredit EVERYTHING he says...
This is the excuse he is using NOW to sell his house in order to rent.
Evand seriously feel free to argue Keens position on anything except this. Its seriously so blatantly hypocritical that you arguing in his defense only makes any rational person laugh.
Seriously, think about it for a second. Its completely absurd what hes done and his decision NOT to sell will be used (rightly or wrongly) to discredit EVERYTHING he says...
Hi Folks! I'm back!
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Whoops, slight temporal dislocation issue there...
I know how we can settle this! To the DeLorean!
Or we could just resort to mockery and caricature? Yes? That's how adults interact isn't it, when somebody disagrees with them?
..
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Whoops, slight temporal dislocation issue there...
I know how we can settle this! To the DeLorean!
Or we could just resort to mockery and caricature? Yes? That's how adults interact isn't it, when somebody disagrees with them?
hahahahahahahaaha - now is that maniacal laugh caused by this thread or the howling southerly that's been blowing for 4 days now .... ?
fwiw - i agree with tcocaro re keen, but i am more afraid of the majority of aussies who know no better and believe him - like the sister in the sixty minutes "property doom and gloom" thread who took his worst case predictions as gospel.
Nope, I meant the people he wants to buy his apartment are going to be buying a place that even the owner says will fall in price by 40%.
Ummmm...MC just pointed out (I imagine for the upteenth time) the blindingly obvious flaw in Shadow's graph as evidence for his proposition. Shadow then ignores the facts. Now, his view about property prices may be right, it may be wrong...the graph is simply not evidence for the former and, if it is the primary basis for his views, is support for the latter.
I have the same drama with some of my younger staff.
If you think you can extrapolate historical data from today forward to some point in the future:
- pick a data point half way back from where you are now
- run your "predictive model"
- ask yourself if it is even close to today's actual result
- if not...back to the drawing board.
Logic is about not fooling yourself..and you are the easiest person to fool.
We can also do some calculations on where Steve Keen's decision to buy the place has led him.
Steve said in May this year on the ABC that he had a debt of 3.5 times his GROSS income. The implication of the level of his repayments is gobsmacking. Mortgage rates at the time he said this were about 9%. I don’t know his precise age but I assume he’d like to pay it off by the time he’s 65.
So, back in May, if he was aiming to pay it off within 15 years at a flat repayment (based on 9% and him being 50), those repayments would be about 43% of his gross income. Alternatively those repayments would be a staggering 54% of his gross income if he was 55 and wanted it paid by the time he’s 65.
No wonder Australia has what Steve Keen calls dangerous debt levels - with people like him around. Certainly contributed his share.
Hi guys
I have a perspective on the debt to GDP, debt to household income, in general debt to anything statistics being bandied around in all discussions about current generation profligacy with debt.
The issue is I use debt for both my investments and day to day living expenses. I put all expenses, if possible into my credit card to earn flying credits but settle the balance by the end date of the credit. I imagine many people are taking up monthly debts for similar reason. This is the modern age of online usage and evolution of dependency upon the credit card for convenience and security (I have low amounts of cash on my person).
Now does the debt ratios often referred in D&G analysis make allowance to filter out what debt represents nowadays or consider that by itself such credit debt is unilaterally bad?
F
I have a perspective on the debt to GDP, debt to household income, in general debt to anything statistics being bandied around in all discussions about current generation profligacy with debt.
The issue is I use debt for both my investments and day to day living expenses. I put all expenses, if possible into my credit card to earn flying credits but settle the balance by the end date of the credit. I imagine many people are taking up monthly debts for similar reason. This is the modern age of online usage and evolution of dependency upon the credit card for convenience and security (I have low amounts of cash on my person).
Now does the debt ratios often referred in D&G analysis make allowance to filter out what debt represents nowadays or consider that by itself such credit debt is unilaterally bad?
F
If he was on say $150k gross, that would make his mortgage around $525k. Is that dangerous and out of the question for Sydney properties? I guess it is bad debt, but still?
Francesco, I have always thought of this too - many people use credit cards to pay their monthly expenses, which earns them points but keeps their salaries in their mortgage offset account. Then the whole lot is paid off by the due date.
Hi TF,
Nobody can accurately extrapolate anything and I certainly don't claim to.
My chart shows the current trend line based on all data currently available.
Of course if we omit some of the available data as you suggest, then the trend line will change, but why not base it on all the available data?
Based on all available data, prices in Sydney are currently under trend (obviously this would be the case considering that those prices have gone backwards for half a decade).
Does this guarantee that prices will rise in the future? Of course not. But it does make it more likely that they will.
If it suits you better to omit some data when forming your opinions, then please feel free to do so. In fact, you could extrapolate only the past five years data for Sydney and then you would have a nice pleasing crash to look forward to. Wouldn't that be fun?
However, I prefer to work with ALL the available data, and will continue to plot my charts accordingly.
Cheers,
Shadow.
Now does the debt ratios often referred in D&G analysis make allowance to filter out what debt represents nowadays or consider that by itself such credit debt is unilaterally bad?
Debt is good if it is used to increase real productivity. But when used to increase the price rather than the productivity of existing assets it just doesn't make sense.
I take it you've never studies statistics at all then?
Think about what you're saying. The implication here is that the further prices have already risen (ie the higher they are today), the further they are likely to rise in the future. Does this really make any sense as a conclusion?
I would say that if prices were $250k today they would be more likely to rise to $500k in a decade than prices at $420k today are to rise to $840k in a decade. That makes sense to me.
can you apply point 3 to what you have been saying? Can you apply point 3 to anything Keen has said? Given you cannot can you please proceed to point 4.
Ummmm...MC just pointed out (I imagine for the upteenth time) the blindingly obvious flaw in Shadow's graph as evidence for his proposition. Shadow then ignores the facts. Now, his view about property prices may be right, it may be wrong...the graph is simply not evidence for the former and, if it is the primary basis for his views, is support for the latter.
I have the same drama with some of my younger staff.
If you think you can extrapolate historical data from today forward to some point in the future:
- pick a data point half way back from where you are now
- run your "predictive model"
- ask yourself if it is even close to today's actual result
- if not...back to the drawing board.
Logic is about not fooling yourself..and you are the easiest person to fool.
Think about what you're saying. The implication here is that the further prices have already risen (ie the higher they are today), the further they are likely to rise in the future. Does this really make any sense as a conclusion?
No, you've got this backwards as usual. I'm saying that the further prices have already fallen, the more likely they are to rise in the future. For example, prices in Sydney have fallen 15% in real terms over 5 years, while prices in the rest of Australia boomed during that period. That is (one of the reasons) why I think prices in Sydney are more likely to rise, than prices in the rest of Australia.
To me, the nominal base value is irrelevant to whether prices can double. After all, what is this value based on but an arbitrary value assigned to a unit of currency. Is a house valued at 1 Million Zimbabwean dollars more or less likely to double in value than a house valued at 1 Thousand Australian dollars? Stupid question, right? There is no sensible answer. It does not matter what the nominal base value is - this has got nothing to do with whether prices can or can't double.
In your example above, the $420k house could easily double in one year if the government inflates the money supply sufficiently. The base value is irrelevant.
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