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Forum: Australian Bubble Forum

Forums->Australian Bubble Forum->Interest Rates...

bps	Interest Rates...
	The US housing bubble burst during historically low interest rates and with credit standards still getting looser. Is the opposite true? Australia has been increasing its interest rates over the past 4 or 5 months and tightening its lending standards and its housing sales and prices continue to accelerate.
	on: Tue 02 of Mar, 2010 [02:03 UTC] reads: 3004

Posted messages Messages 10 20 30 All Style Plain Threaded Headers Only Sort Newest first Oldest first Find author message hojusaram  Re: Interest Rates... on: Tue 02 of Mar, 2010 [03:16 UTC] bps. You are neglecting to mention the 14K - > 40K FHBs were paid by various government entities and the flow on effect this had. Interests rates where just a part of the equation. Ease of credit was the main story not interest rates. author message bps  Re: Interest Rates... on: Tue 02 of Mar, 2010 [04:26 UTC] Being a little cynical here, but my point is that US Housing collapsed during an easing of credit, ours did not and we also had an easing of credit. (we are different). Also we have had three interest rate rises, a tightening of LVR and latest figures shows our prices, competition and auction clearance rates all rising. January and February 2010 up up and away for home sales and prices. author message Macster  Re: Interest Rates... on: Tue 02 of Mar, 2010 [05:30 UTC] RBA have just raised rates 25 points. Link: http://www.smh.com.au/business/rba-raises-interest-rates-20100302-pfez.html?autostart=1 author message pb123  Re: Interest Rates... on: Tue 02 of Mar, 2010 [06:00 UTC] Hi bps I dont believe interest rates can prick a bubble. If some one believes that house prices are going to rise 10 percent every year on an average, then they might not mind paying 6 or 8% interest rates every year on an average. Perception of an increase in the asset value that exceeds interest payments, combined with perception of increase in rentals and fears of being left out in the market ,push most people to take up debt no matter what the interest rates are. Interest rates are too blunt , if the RBA tries to curb the demand side through higher rates , look what happens on the supply side. Investors start paying higher interests which they pass on to consumers, so now you have higher rentals or higher production costs. In my view bubbles burst when the private sector cannot take any more debt. The government can try to offset such deflation by it going into deficit and trying to stiumale the private sector to take on more debt, but we have seen in US and Japan that govermments are ineffective in controlling asset price deflation through stimulus. author message CrackersKeenan  Re: Interest Rates... on: Tue 02 of Mar, 2010 [06:15 UTC] bps: If it was that easy to just pass on interest rate rises to the renter, why wouldn't landlords have done that before the rates went up and pocket the extra money as income? author message danmm78  Re: Interest Rates... on: Tue 02 of Mar, 2010 [07:44 UTC] 1. Of course interest rates can prick a bubble. After Argentina defaulted on its debt, their rates were >100% for a couple of years. Death to all speculators. If interest rates are high enough to exceed the income of the borrower they inevitably default, but rest assured they will sell a long time before this. Further point - just because interest rates are blunt instruments doesn't mean they can't burst a bubble. Higher interest rates discourage business investment and decrease employment, and although these are undesirable side-effects they unquestionably contribute to bursting the bubble! 2. Landlords can't pass extra costs on in rent. If you look at the bubblepedia homepage you'll see that half of renters pay more than 30% of their income in rent. Stress them further, and renters have a capacity that owners do not: they can move. Rent has to be paid from income, and if rents are put up beyond incomes, renters will move in with other renters, back with family, into caravans, or just become homeless. Fees that can't be paid, won't be paid. QED. For historical interest, there is very little correlation between interest rates and rents. Higher rates = landlords going broke. 3. The US housing market crashed because (among other things) investors lost confidence in securitisation. The mortgagees were unable to keep making payments, the banks were unable to keep selling their RMBS rubbish, and new lending would have had to remain on their balance sheets. Essentially the banks ran out of creditworthy new borrowers, and suckers to buy their securities, resulting in a credit contraction. If housing credit had kept expanding their prices would still be going up. author message bps  Re: Interest Rates... on: Tue 02 of Mar, 2010 [10:38 UTC] So my question then is, what will burst the Australian house price Bubble? author message CrackersKeenan  Re: Interest Rates... on: Tue 02 of Mar, 2010 [11:40 UTC] @ bps: Even when things have been really clearly bubbles (dotcom would be one of those) it's hard to predict what might trigger them bursting. Usually it's an unforseeable event. Some negative thing happens which finally tips things, though it's hard to predict exactly what that will be. My personal experience is more with shares, which are highly liquid and where a sale can be made in seconds, without leaving your couch. The bursts in share market bubbles can catch on as an instant panic. I don't think we'd see such a drop-off-a-cliff with houses - people will spend a lot more time deliberating over whether to sell. One possible outcome is that prices are flat for a long time. Another is that we are not correct about houses being over valued... author message hojusaram  Re: Interest Rates... on: Tue 02 of Mar, 2010 [12:06 UTC] bps, in my opinion the bubble is already bursting. It just depends on where you live as to whether you can see it yet. But I prefer to call it a "collapsing pyramid" more than a bursting bubble because it better describes what it is . The issue for the pyramid to keep growing is that people at the bottom need to be able to ( and want to ) pay ever increasing prices for houses. Before the FHBG boost the pyramid was beginning to collapse because people could not( or would not ) take on more debt. The FHBG boost gave the pyramid a new leg up basically by conning people into buy a house based on bogus money ( and therefore bogus demand ). The FHBG boost has now finished, so the ponzi money has disappeared at the bottom end, and interest rates are slowly increasing. This means there are now less people willing ( or able ) to take on debt. This in fact is a double whammy for property because ,as the king of loans said the other day, it has brought forward demand , so people paid too much , and now there is no new demand. So the irony is it may be that the thing that finally collpases the pyramid was the thing the govt tried to keep it up with, the FHBG boost itself. So where to from here.. Well I would expect to see a bit more secondary market action for a month or two to come because of the flow-on effect from the ponzi money. But after that I think there will be a very sharp decline. This of course will not be uniform so there will be places that still look ok, but overall I think it will start collapsing. And because there are now a large number of new buyers with large debt and high LVRs ( some are probably already underwater ) the problem is very bad if there is even a small correction. Once the correction begins it is hard to stop , falling prices leads to less credit availabiity which leads to more falling prices. My question is what will the govt try next ?? author message bps  Re: Interest Rates... on: Tue 02 of Mar, 2010 [12:33 UTC] Thank you hojusaram and CrackersKeenan? for your well thought out responses and insights, it is complex, confusing and hard to predict, that is evident and it seems that we can not even look to overseas to forecast what will happen in Australia, looks like we really are different. author message chooky  Re: Interest Rates... on: Tue 02 of Mar, 2010 [14:48 UTC] The US housing market crashed once their society changed their views about property as an investment. The same will happen here but overseas investment may inflate the bubble before people change their beliefs. Greed knows no bounds so silly people who think they are investors will keep finding money to push up house prices.A change in view or sentiment or beliefs or however they look at houses as an investment is the the thing to watch for. The only rule of bubbles is HE WHO PANICS FIRST WINS. The bigger the bubble the bigger the panic. author message HolderOffer  Re: Interest Rates... on: Tue 02 of Mar, 2010 [21:12 UTC] ABC's 7:30 report 2nd March 2010 provides 2 stories relevant to this thread http://www.abc.net.au/7.30/ - Yale University economist Robert Shiller - talking about bubbles and the things that MAY make them pop. - Australian houses among the least affordable in the world - keep this one on file as there are some comments that will be open to ridicule (FHB's admitting they can only JUST affort repayments at current interest rates, and NOT HAVE CHILDREN! - Tim Fletcher RE Agent prices WILL go through the roof - Tim Lawless RP Rismark - It's different here, we don't have a sub-prime market, supply and demand... - you get the picture) author message TPL001  Re: Interest Rates... on: Tue 02 of Mar, 2010 [21:26 UTC] Good point, chooky. While objective parameters (interest rates, prices, demand, supply) are most important, it is the internal evaluations of individuals that matter. And they cannot be independent of the stated objective data. The god of greed, who cries more, is never satisfied; individuals will adjust their internal estimations as they respond to external data. Psychologically, it is difficult to come up with a hard and fast rule that links internal and external valuation. Price does not equal value. The external factor that is constantly ignored is credit expansion. If all and sundry create multifarious buffers to stave off the inevitable pay back, then the god of greed will continue her cry. (Our fearless federal and state leaders certainly know how to banish economic fear - by socialising the problem, that is, you and I must pay for the greed of others through higher prices, which produces capital consumption. It will be interesting to see what happens to the view on property after the next fed and Victorian state elections.) It is only when credit contraction begins to bite — and it (is or) will! — that each looks to their own backyard or wallet or pocketbook. (Just ask Bernanke, who is now on record stating that the Fed will not print money to pay of US debt!) The same thing happened in the great Mississippi Scheme - the first sells out on the sly, then a few follow, then it is a torrent! In fact, prior to the first wave of panic, some smart cookies exchanged their inflated paper money for gold (which we cannot do today - fiat money is a state monopolised cartel) and sent it overseas. Credit contraction is revealed as lower LVRs, a higher cash rate, higher mortgage rates, reduction in the supply of credit through banks and, ironically, through a reduction in fiscal largesse (e.g. a reduction in handouts, RMBSs). It is a kick in the solar plexus of the wider economy. Moreover, housing is a durable but deteriorating consumption good. I have the image of the housing market being equivalent to the computer/PC market - prices should be in decline. If credit was constrained, as it used to be, then individuals would look at housing as a habitation for families, not as a speculative investment. But it is hard to do battle with the god of greed. author message bps  Re: Interest Rates... on: Wed 03 of Mar, 2010 [07:00 UTC] Thus it seems that the bubble will only burst when the greater fool pool has been exhausted and this may be a very very long time in Australia as this pool has been increased by the population of the world. What an absurdity opening up our housing market to every country on the planet. What can we do to end this despicable policy, how can we put it on the agenda in this election year? Was this not a part of the stimulus package, is there now end date? author message chooky  Re: Interest Rates... on: Wed 03 of Mar, 2010 [12:03 UTC] BPS Nice to see somebody asking what we can do .I have an idea but it needs a fair bit of development.I propose we put up a post that asks people to put up lists of all the things that all three levels of governments do to keep pushing up house prices. The list should be in point form that can be used as a sound bite not a half page because pollies have short attention spans.WE can have lists of things that can be done to ease house prices.Some good person on this site may even edit and consolidate the lists . With a good list of points in your hand it is easy to contact your local pollie, state federal and council and ask questions. Simple questions like ,House prices are still going up and your government has done this and this to make matters worse WOT ARE YOU DOING ABOUT IT.Of course don't ask them what they are going to do about(they will talk round in circles ) we want to know right now.Any body who wants to could down load a list maybe give a few to their friends and make a call or write a letter or send a blog.Remember gov policies had a hand in creating this mess and the opposition's job is to oppose. If anybody is interested let me know. author message kodiak  Re: Interest Rates... on: Wed 03 of Mar, 2010 [21:18 UTC] The US property bubble didn't burst by a general "come to Jesus" moment. It burst because people who were uncreditworthy had their adjustable rate mortgages switch from teaser rates overnight to new rates after 17 federal reserve rate hikes. The process of securitizing these bad loans with not so bad loans caused downgrades in rmbs and eventually the GFC. There is still very much a perception that housing, the stock market and economy will recover in the US today. Having recently been to NYC, South Florida and LA, I can tell you that the light at the end of the tunnel is that of an approaching train. Everyone on this site is wrong about the situation in Australia (myself included) due to the fact that early is wrong. Make no mistake that there is a gigantic bubble here - even worse than the US in many respects. Patience, grasshoppers. author message erutangis  Re: Interest Rates... on: Wed 03 of Mar, 2010 [21:43 UTC] I reckon that until we have a large shock I think the most likely outcome is stagnation like we saw in 2008. When the shock comes it will be early 2009 again. The questions is what the pollies will do. author message hojusaram  Re: Interest Rates... on: Wed 03 of Mar, 2010 [23:31 UTC] Kodiak said "The US property bubble didn't burst by a general "come to Jesus" moment. It burst because people who were uncreditworthy had their adjustable rate mortgages switch from teaser rates overnight to new rates after 17 federal reserve rate hikes" Yes , and is some regards that is what is happening here. People where conned that they could afford a house at bubble prices because the interest rates were artificially low and the govt paid their deposit for them.. I don't know about you but that sounds dangerously close to creating an Oz sub-prime generation. The difference here is that the govt created artificial demand via the FHBG boost on top of an already existing bubble, in the US the sub-prime market was created by the banks themselves because they didn't think they would wear the default risks, which turned out to be true in many cases thanks to the dodgy FED. In the US the tax credit didn't come till after the fact. I think this will be a big difference in the end, because the FHBG boost attracted the last fools all at once ( right at the peak of the bubble ) Backwards sign said "I reckon that until we have a large shock I think the most likely outcome is stagnation like we saw in 2008. When the shock comes it will be early 2009 again. The questions is what the pollies will do." Well I am already seeing a correction happening , all of the new listings in my area are coming on at about $50K less than the pre-Xmas prices, I am seeing heaps of new listings every day and very few of them are getting any interest. The number of properties on the market over 2 months is now 400% of what it was last Sept and now sits at 121 for my postcode. I don't think it will take as long to see a shock because the FHBG boost created a huge spike in artificial demand and prices. That will fall away quickly and when it does huge number of FHBs ( and therefore banks loan books ) will be at risk very quickly. author message kodiak  Re: Interest Rates... on: Wed 03 of Mar, 2010 [23:55 UTC] I agree with everything in the post above. The demand pulled forward with ridiculous LTVs and unearned collateral in the form of grants used as down payments combined with virtually mortgage in Australia being an "ARM" looks very much like subprime. I also think that it will take a whimper rather than a bang to take it down, as rising interest rates make discretionary incomes smaller relative to inflation in asset prices. Even if the ball didn't get rolling in housing, recession would be imposed by the imbalance of housing costs relative to other industries that rely on our spending. I've been inside a bubble before and it isn't even obvious to most people even after it has started to deflate. This has already started. If prices are going up, it could be a parabolic blowoff top. Watch the sales, lending and inventory figures. author message hojusaram  Re: Interest Rates... on: Thu 04 of Mar, 2010 [02:35 UTC] http://www.businessspectator.com.au/bs.nsf/Article/THE-DISTILLERY-Double-bubble-pd20100304-37U5K?OpenDocument&src=sph I read a good piece from BS this morning "THE DISTILLERY: Double bubble".. Some paragraphs in respect to housing, saying basically what we have been saying, and pointing out that stimulus effects everything.. I don't know why people ( especially economist ) can't see this, and are then suprised by the huge fall off a cliff things take when the ponzi cash dissapears. Heavens to Betsy. This column will simply observe that house prices reached unprecedented multiples of income in the last cycle and are now threatening to go higher still. And even in Stutchbury’s own terms the boom is based upon easy money – this time fiscal – the First Home Buyers’ Grant (FHBG). We might also note that it was coupled with the lowest cost of mortgages in fifty years. Let’s call a spade a spade. The FHBG was, in the long run, a calamitous policy. It has re-inflated the great Australian housing bubble, underpinned it with moral hazard and badly compromised monetary options. Bailing out the banks’ liabilities, liberalising foreign investment for housing, unhinging immigration and the other stimulus measures were enough. A historic opportunity to de-risk the Australian economy was missed. This is made all the more clear by David Bassanese of The Australian Financial Review who argues today that “ ...everywhere you look in the December quarter national accounts, you find Rudd’s fingerprints ... the 10.9 per cent gain in business investment ... we can largely credit to small business tax incentives ... the boost to school infrastructure, which helped public investment spending rise by 10.2 per cent. Overall public demand ... grew by 3.9 per cent ... sharp falls in residential private construction flattened out ... helped out by government grants for building projects in private schools.” Importantly, Bassanese even sees “ ... crowding out of private home building activity” as a result of this stimulus boom. And another point I find amusing , which I have mentioned before around the basic lack of financial educuation ( and some basic maths ) in OZ education system that may have actually averted some fools taking an insane leap into a sea of debt. "If we learned anything form the GFC it is not to trust financial advice, and John Durie of The Australian analyses where new regulation to protect small investors is headed. “Myriad studies have revealed that 50 per cent of Australian adults don't understand what 50 per cent means. "" author message bps  Re: Interest Rates... on: Thu 04 of Mar, 2010 [04:57 UTC] I think all these spruiker articles appearing on the front pages of our newspapers lately like the SMH one today “Demand but no supply as prices head north” is only bolstering the bubble argument. Its great advertising for the property bears. When you read the article you think why would I pay that much for that??? Or is that just me? Also did you see the latest figures on property out of NZ, looks like the kiwis have wised up first. author message dpmartin43  Re: Interest Rates... on: Thu 04 of Mar, 2010 [05:24 UTC] If a shortage of housing is to blame for Sydney’s rising prices can somebody please explian this? from RPData: “Ermington Area Profile The size of Ermington is approximately 5 km². It has 8 parks covering nearly 9% of the total area. There are 3 schools and 6 childcare centres located in Ermington. The population of Ermington in 2001 was 9,873 people. By 2006 the population was 7,684 showing a population decline of 22% in the area during that time. The predominant age group in Ermington is 40 – 49 years. Households in Ermington are primarily couples with children and are likely to be repaying over $2000.00 per month on mortgage repayments. In general, people in Ermington work in a non-specific occupation. In 2001, 58% of the homes in Ermington were owner-occupied compared with 60% in 2006. Currently the median sale price of houses in the area is $530,000″ 22% decline in population but prices on the up??? BTW I used to live in Ermington and I can confirm the place is a dump…Not even one decent pub and no train… author message hojusaram  Re: Interest Rates... on: Thu 04 of Mar, 2010 [06:44 UTC] We dpmartin43 that is why it is called a bubble... There is no logic behind this. I , like others on this site, have always beleived the shortage of housing was a myth, along with foreign investors it is just part of the RE propoganda engine. Every other country around the world that has had a property collpase were told by their property "experts" that low supply and high foreign demand were the cause of higher prices. This was all rubbish, the reality is that people were lied to and conned that there was any extra demand at all. It was all made up by hype. The same thing has happened here to the FHBs, and they will ultimately pay the price. Because now the low end demand has gone... and in a couple of months time the ponzi demand at the secondary market will be gone as well... And then it will all collapse.. author message Macster  Re: Interest Rates... on: Thu 04 of Mar, 2010 [06:59 UTC] The thing about the foreign buyers as I've said before is that they'll sellout and bail faster than they poured money into Aussie property. I know the level of effect they've had on the market is debatable, but the fact is, many of them don't live in the house(s) they own, they don't have any sentimental or emotional attachment to the house(s), for the most part it's just a glorified piggy bank for their money and if it starts leaking, they won't hesitate to pull their money right back out. It very much has the potential to backfire severely, especially at the higher end of the porperty market. author message hojusaram  Re: Interest Rates... on: Thu 04 of Mar, 2010 [07:22 UTC] Yep they will leap out as fast as they came in.. Once it begins the ride to the bottom will be quick and ugly. Some more funny stuff in regards to foreign investor and demand horse pucky. Here his some great quotes from a US property "experts" on the florida condo market pre-bubbble collapse. "Ron Shuffield, president of Esslinger-Wooten-Maxwell? Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely. "I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat." Same tribe different country.. And here is a little funny I found from a US site made in 2005.. It all looks far too familiar. author message chooky  Re: Interest Rates... on: Thu 04 of Mar, 2010 [14:14 UTC] hojusaram Did you call the bust of the bubble in 2 months. Do you think that 50% of Australians don't know what 50% means. You say that the bubble is not logical but you apply logical conclusions as to what will happen. Steve Keen keeps saying that Neo Classical Economic assume that people make Informed logical decisions yet all evidence suggest that that people are not rational epically when it comes to money. I see that that you think that we have all been told big fibs by the real estate peop. Check out your local land supply because buildings come and go but land is what matters If you you think that more land or units wont decrease the price of houses as you have said please explain how you have come this conclusion.I have been in boom towns that went bust and towns that just grew and grew . You talk about money and logic yet this is nothing to do with the bubble.I have asked you to suggest positive things to do Do you want to help. or do you want to sling of about 50% of the population author message squirrell  Re: Interest Rates... on: Thu 04 of Mar, 2010 [17:51 UTC] bps et al, the whole spruiker argument re massive demand is indeed a red herring. I agree that there is to some degree increasing pressure on houses. The real question though is WHAT PRICE DOES THAT JUSTIFY? Spruikers never address this. eg if we have a 2% rise in population, does this really justify a 17% rise in prices in melbourne, where prices were already very high and new homes are still being built even if not enough. My basic argument is as follows: 1) RENT is set by supply v demand v incomes. 2) PRICE is set by supply v demand v income v SPECULATION/FEAR/GREED. If we go back 15 years we find price rises have far outstripped rent rises, so we can assume speculation and greed make up a large component of existing prices. How long this will last we can only guess. But when it costs me 470 per week to rent a house in Hathorn valued at 1.2 million, i know I am 1200 per week better off renting. What will happen in the short term to cap gains is anybody's guess, but in the long term some correction will undoubtedly occur. author message TPL001  Re: Interest Rates... on: Thu 04 of Mar, 2010 [21:58 UTC] hojusaram (Re: Interest Rates... on: Thu 04 of Mar, 2010 12:35): Economists I reckon are made of different stripes: (1) Business economists, who are pragmatic and work for outfits (banks, consultancies, etc) who have to make a buck (read: a profit) for a living - they are pragmatic and dose their Neoclassical economic theory with a touch of market-place reality. I once heard Alan Oster, the chief economist of the NAB, state to a room full of economics' PhDs? and academics at the ANU (a number of whom had developed compex macro-mathematical models of the economy) that his trade as a business economist was a combination of statistics and intuitive pragamatism. This is laughable in the face of the precision of those mathematical models. However, at least he was being honest. Generalities aside, nobody knows what tomorrow will bring. There are some clever cookies who can do accurate predictions in specific markets; more power (or cash!) to them. (2) Neoclassical academic economists ascribe strong rational impulse to individual decision making. A good deal of their theorems are still useful (particularly micro-economics), but they stagger belief when that can state stupid things with a straight face - such as money is neutral, interest rates are neutral, investors can afford to pay high prices on mortage payments if it constitutes on average a certain portion of their income. It sounds reasonable; however, most of the ones that make a noise are macro-economists. Aggregate numbers are simply that - totals. You can produce a model which shows correlation between one aggregate and another, but correlation is (as the saying goes) not causation. (3) There are the rest of the academic schools' of thought: Austrians, Marxists, Post-Keynesians?, Institutionalist, etc Causation is the key. Though some do not like it, the individual is the primary cause of economic demand. People will still act rationally but make erroneous choices. It may be correct for a person to purchase a high-priced item, which in their own eyes will provide satisfaction, but still make an error in their calculation. This is still a rational decision. The end of that decision may prove more costly that the perceived and projected benefit. A ubiquitous one, common to all, is the cost of money - interest rates. When states can manipulate interest rates and control the quantity of money, then we are blinded to the reality of the market demand for and supply of money. Individuals and firms must act in the context of current market rates; investment and consumption decisions are acted on today in light of those rates. (It is ironic that Neoclassical economics has a rigorous theory of the firm, but an almost vacant theory of the entrepreneur.) If the state continuously proffers that it can offer low rates in perpetuity, then it socialises the matter, landing the populace with the burden and offering cheap credit through the fractional reserve banking system. Isn't any wonder that some libertarians are now calling on the peoples of Iceland and Greece to default on repayments - the state and the banking system are the culprits; they encouraged easy money and credit; let them pay. The quantity theory is bunk. Marginal economics considers the price paid per unit for an item as reflective of supply and demand. That is why anecdotal evidence is useful. It is also useful to known about totals - total supply of housing versus total demand for housing. It is, however, what individuals are willing to pay per marginal unit; this reflects value, because value is subjective, whereas prices are objective. Don't confuse the two. Just look at the situation in Detroit - houses selling for $1, $100, $5000; and these are much bigger than the average three-bedroom house in urban Australia. Demand has taken a hit, due to people fleeing the area, therefore value declines and so do objective prices. author message hojusaram  Re: Interest Rates... on: Thu 04 of Mar, 2010 [23:51 UTC] >hojusaram Did you call the bust of the bubble in 2 months. No I said that it the pyramid has already started to collapse and it will become quite obviously within two months. It is obvious to me now >Do you think that 50% of Australians don't know what 50% means. There are a high proportion of people who cannot do basic mahematics in this country. Ask lots of people to tell you what is the lowest fractional value of 9/21 is and be suprise that people can't tell you that is it 3/7. Or ask them what 40% of 40% is ?? And when I said this I said it in a way that suggests there is a problem with education in this country. So to start to fix the problem we need better economic and mathematic education in Australia. That is something that WE CAN DO. >You say that the bubble is not logical but you apply logical conclusions as to what will happen. Actually what I said was that people aren't logical. The bubble is very logical. Easy credit = asset bubbles. (asset bubble * X years) = (price at max credit availability) price at max credit availability + Ridiculous govt handout + low interest rate + asset bubble = huge unsustainale spike in bubble. huge spike in bubble - low interest rates - Riduculous govt handout = Property price crash and lots of new fools underwater. I have explained this above and in other places. I don't think I need to go through it again in detail. >Steve Keen keeps saying that Neo Classical Economic assume that people make Informed logical decisions yet all evidence suggest that that people are not rational epically when it comes to money. Not sure your point... Dr Keens point is that Neos have many bizarre ideas about money , including bizarre equil theory and that debt does matter. This has nothing to do with whether people are logical or not ??? >I see that that you think that we have all been told big fibs by the real estate peop. Check out your local land supply because buildings come and go but land is what matters If you you think that more land or units wont decrease the price of houses as you have said please explain how you have come this conclusion. Actually I never said that releasing more land won't decrease the price of houses, that is simply supply vs demand , I am not sure where you got that from. What I said was that the RE propoganda machine has convinced people that we have a shortage to scare people into believing we have a supply problem, this is a myth. And is the same rubbish told to EVERY OTHER nation by its RE "experts" to justify the asset bubbles existence, along with mythical numbers of overseas buyers. >I have been in boom towns that went bust and towns that just grew and grew . You talk about money and logic yet this is nothing to do with the bubble.I have asked you to suggest positive things to do Do you want to help. or do you want to sling of about 50% of the population Firstly I wasn't slinging off at anyone. I was suggesting that education was a factor in why australians are convinced about a every increasing asset bubble and why vunerable young australias are taking on ever increasing levels of ridiculous debt to try to get on board. Secondly I am not actually sure what any of us can do to help out. There are many people on this site that believe that we can alter public policy and other such things. However I believe that the housing myth is so ingrained into the Oz mindset and the govt obviously cares more about Baby Boomers and the RE industry than it does about young australians, that the only thing that will probabky work now is a huge correction. This will hit the RESET button and bring the country back to reality. So the question is what are YOU going to do about it ?? Instead of mis-reasding my posts and slinging off at me ? author message chooky  Re: Interest Rates... on: Sun 07 of Mar, 2010 [15:54 UTC] Gee hojusaram I wasn't misreading your posts or slinging of at you. I was having a go at you . ( and then it will all collapse)your words 4th march ,I think you said in a couple of months but anyhow I don't care what you think about that.You found it amusing to quote John Durie that 50% of Australian adults don't know what 50% means and apparently you have asked lots of people about fractions and they have not got a clue ,is that amusing too. Read your own posts you contradict your self all the time and I find that amusing.I bet you cant wait to post another half page and tell us what fools we are . What am I going to. I am going to canvass Nicole Johnston councilor for Tennyson ,Scott Emerson member for Indooropilly and Graham Perrett my federal MP to see if I can do anything to help lower house prices. As you are not sure what any of us can do help out maybe you could teach maths, you might learn something . author message hojusaram  Re: Interest Rates... on: Mon 08 of Mar, 2010 [03:16 UTC] >Read your own posts you contradict your self all the time and I find that amusing.I bet you cant wait to post another half page and tell us what fools we are . Not sure exactly where I contradicted myself, or where I called anyone a fool. But I am not going to repeat myself again , my message is obviously lost on you, I am sure others have worked it out. >What am I going to. I am going to canvass Nicole Johnston councilor for Tennyson ,Scott Emerson member for Indooropilly and Graham Perrett my federal MP to see if I can do anything to help lower house prices. As you are not sure what any of us can do help out maybe you could teach maths, you might learn something . Actually I have taught maths in the past as a tutor for high school students. It is quite rewarding actually thanks for the tip. In regards to talking to Pollies you obviously have more faith than me. Our politicians and their policies are part of the problem, they care about the short term and their own tenure not the people they supposedly represent. You can see others on this site asking questions about what they will do next to keep property prices up not down. Talking to them about fixing housing is like asking a cocaine dealer for help in fixing the drug problem. Good luck, you are obviously passionate about it .. Hope it goes well for you.

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