The ABS House Price Index Data will published at 11.30am today. My Mortgage Accelerator data indicates that it will show a further rise in house prices—though at an anaemic level of either below or barely above CPI inflation.
The correlation coefficient between these two series is 0.853.
Recent economic data from both the UK and US should have taken the wind out of the sails of those in the Anglosphere who – despite clearly contradictory evidence from mainland Europe – continue to argue that fiscal tightening is needed for economic growth is to recover.
The UK, which has followed a fiscal austerity path right from the election of the Conservative-Liberal coalition government in mid-2010, recorded a 0.3 per cent fall in the last quarter of 2012, while the US recorded a 0.1 per cent fall (mainly on the back of declining government expenditure). Getting the government sector out of the way and letting the private sector rip clearly isn’t going according to script, even when you can’t blame Brussels for the policy.
One of the beauties of the modern age is that documents that once would have been either inaccessible, or taken years of sleuthing to locate, are now readily downloadable from the Web. One such set of documents is the transcripts of the meetings of the Federal Open Market Committee (FOMC) in 2007, all of which have now been released.
Everyone who wants to understand why we’re now mired in a permanent economic slump should read these documents—not because it will explain the slump itself, but because it confirms that those who were supposed to ensure that such calamities didn’t occur were clueless about the approaching crisis. Jim Cramer famously ranted precisely the same message at the time, and copped a lot of flak about it, but he was dead right—and the transcripts prove it.
Last week, several newspapers ran a story in which the Labor Opposition criticised the New South Wales Liberal government because the number of first home buyers had plunged after the first home owner’s grant was ended for existing homes. A photo of acting Opposition leader Linda Burney looking out sternly and sincerely accompanied the article, as she intoned in The Sydney Morning Herald’s text that the Liberals had abandoned first home buyers:
“The acting Opposition Leader, Linda Burney, said this decision and the axing of stamp duty exemptions for first home buyers of existing homes from December 31, 2011, meant the New South Wales government had ‘abandoned first home buyers’.
A friend just copied me the attached image. Apropos of current events. I can’t resist sharing it.
I am now in an industrial dispute with the University of Western Sydney over two matters: a charge of “Serious Misconduct” which they leveled at me during the unsuccessful campaign to stop UWS abolishing our Economics degree; and their failure to act on my application for a Voluntary Redundancy within the time required by UWS’s Enterprise Agreement.
There will be a hearing at the Fair Work Commission at 2.30pm at 80 William Street Sydney. I would be delighted to see readers of this blog there. This feature by Michael Janda on the ABC’s The World Today gives a good overview of the dispute.
As a public figure, I’m quite accustomed to seeing my name and face in the media. But it was still quite a surprise to load The Sydney Morning Herald’s site on Monday last week and see my craggy visage staring back at me from the front page:
The reason was Peter Martin’s article “A Keen eye on the global economy: how our forecasters fared”, which reported the results of the Melbourne newspaper The Age’s annual survey of economic forecasters.
This article begins with a tweet from the US economic blogger Noah Smith, who posts at Noahpinion:
Here we go, I thought – yet another mainstream attack on my non-mainstream economics. But why on earth would he see Minsky – my simulation program for modelling the economy as a fundamentally monetary system – as basically absurd? Because “DSGE modelling is so much better”, perhaps? Or because there are so many other good system dynamics programs already, why produce another one?
In the last four decades, there have been only a handful of central bank and Treasury papers that I thought genuinely added to human knowledge. The economic-oriented departments within governments have in general been even more dominated by neoclassical orthodoxy than academic departments – and for good, bureaucratic reasons.
The usual suspects are talking up the prospects for Australian property prices as the New Year approaches, with permabull and Australian Property Monitors senior economist Andrew Wilson forecasting 3–5 per cent growth nationally, and BIS Shrapnel managing director Robert Mellor calling for between 2 and 8 per cent growth for Sydney.
Such calls range from just equal to, to well above, the expected rate of consumer price inflation. So they’re a return to the usual property mantra that house prices always rise faster than consumer prices because of the “fundamentals” of (a) a rising population and (b) tight supply.
