Some academic slams H&H bubble fetish

Advertisement

It’s always a pleasure being quoted in the wider media, on the rare occasion that it happens, even when it’s from some bloke named Raymond da Silva Rosa, a professor of finance at the University of WA Business School at the AFR :

Animal spirits reign unchecked in Australia with reports of bubbles forming in the share, property and bond markets. However, the general frothiness belies the selective naming of bubbles.

…No one is calling the industry experts at BREE delusional because it’s hard to predict price movements. But imagine the derision property investors would have attracted if house prices had fallen by even half of 40 per cent over the same period.

Actually we don’t need to imagine; there are already media stories with headlines such as “The Dumbest Bubble in History”….

…The problem is that supply has failed to keep pace for a variety of reasons to do with planning laws and the not-so-vested interests of existing property owners in keeping prices high.

These are not easy issues to resolve. It’s far more expedient to call the high prices a bubble and shake one’s head in wonder.

Well, crikey, that’s my headline and post, though as usual I remain the phantom menace, unnamed and hideous!

Of course, this is the first time I’ve been accused of being “selective” in naming bubbles, having played a lone hand in destroying the credibility of BREE and supporting the supply bottlenecks argument as well.

Advertisement

One can hardly accuse me of failing to unpack the underpinning of the Australian property bubble after 10k posts on this site!

The only selectivity going on here is Mr Raymond da Silva Rosa’s research.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.