Bullhawk down!

Another of the bullhawks, Paul Bloxham, today concedes that his August rate hike call is wrong. Bravo!

However, Mr Bloxham nicely demonstrates the maxim that there’s no better defense than a good offense, dedicating much of his conference call to hammering Westpac’s Bill Evans and his rate cut call.

Click here for the conference call.

As usual, there is no mention of housing, deleveraging, the dramatic change in savings behaviour, and the historic departure of real retail sales from trend is explained away in a manner befitting Adam Carr. Moreover, like most other commentators, rather than engage with Bill Evans’ assessment that a European crisis is going to force rate cuts through another external shock, he simply glosses over that tidbit and focuses on Futureboom!, which is, of course, going to cause rate rises.

Then, weirdly enough, he agrees that in the event of a Eureopean crisis, the RBA will cut!

I’m confused.

Houses and Holes
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Comments

    • my apologies. These economic “wizzkids” like Bloxham, Carr and Joye all seem to share Pelulance as a key charater trait. When their analysis is proved to be wrong instead of gracefully admitting the obvious and moving on they go on the attack and try to belittle others who dont shre their ill conceived veiws. Not a good way to aproach markets i would think. Is that better?

  1. Is it coincidence that the younger generation of economists seem keener to hold onto their predictions / ego?

    Evans might be derided, but seems to have enough experience to know when to change tack.

      • Perhaps they are of the view that it is better to take “a view” and be wrong, than to be half right some of the time…

        • No a large number of them take a view and are wrong, but then go back and rewrite history to say they predicted it 😛

        • Why not be super-confident…its not as if anyone is held accountable for their errors in the world of financial journalism in Australia.

          Gittins, Kohler, Gotti, Carr, James…all of them should have had their names trashed due to their failure to explain the 2008 credit crisis and predict what was going to happen.

          Look at the way Keen has been treated when compared to the Bullhawks who have been floundering since 2008 to get a single call right.

          It pays to bluff your way through the media by being overly-confident.

  2. Even if Bill is correct, this is hardly going to be “good” news. It’s being touted as a drop in rates, but that will only be the official cash rate. If/when Europe goes bum up, inter-bank lending will grind to a halt will it not? That’s hardly a recipe for lower mortgage rates…….

    • Forgive my cynicism but this is what we heard in 2008. “When rates fall it will be very bad news”.

      But it wasn’t, really. The RBA cut rates too low and held them there for too long and the Government intervened with RBMS buyouts and bank guarantees and just to make sure everything was hunky dory they turbo chraged the housing market with First Home Owner Bribes. Consequently it was a great time for housing in the latter days of 2008 and all through 2009 when all the contrarians thought our housing market and economy was only 12-18 months behind the US.

      If Europe goes belly up the RBA knows to slash, the Government will lend their AAA rating to guarantee bank liabilities and we’ll see another round of stimulus, some of it undoubtedly aimed at residential real estate. It’s a well rehearsed number by now.

      So, in the event of a European financial crisis why would it be any different to our GFC experience?

        • Thanks David. I’d be very interested to hear your thoughts. In my adult lifetime I’ve been through two confidence shaking crises (post Sept 11 and the GFC) and in both instances all that seemed to happen was the cost of housing went crazy and everyone saw their super set back a few years.

      • I agree , it should get to a point where even the ZIRP wont have an effect on the economy. In that sense there is some more room for private sector debt growth. In 2008 the economy could tolerate a 9% interest rate now it cant tolerate 7%. As we keep piling more debt we will get to a point where the ZIRP becomes ineffective.

      • Because this time the rest of the developed world is out of stimulus ammo and China risks a meltdown if it stokes investment much more.

        Sure Aussie government debt is low and it offers a cushion for stimulus ala MMT, but there is still the lurking current account deficit that would need to be funded in an extremely risk averse environment.

        Despite all the bullish China hype, the lack of ASX outperformance is a clear sign foreign investors see sizeable local risks which will be magnified in another crisis.

        Then there is the consumer/investment confidence issue which is essentially the critical factor in sustaining ponzi finance.

        Another crisis and it will be shattered for a generation.

  3. We live in interesting times!!
    .
    On the blue corner, we have Chris Joye, Adam Carr and Bloxo suggesting a rate cut is out of the question as we have high inflation, “full” employment..blah blah..blah.
    .
    On the red corner, we have Bill Evans, Gotti, and the YBR guy (his name slips off my mind) who argue that their private focus group polling indicate a rate cut is absolutely imperative to save the universe(Well..their universe..at least).
    .
    PS: I urge Chris Joye to play the ball and not the man.. It was rude of him to indirectly call Bill and Gotti “bloody nancies” yesterday 🙂

    • I think you should distinguish between Bill Evans and Gotti. Evans has made a well reasoned call based upon a European crisis.

      Gotti has ridden in at the last minute to take credit for things he’s hardly mentioned and promote the interests of folk like Harry Triguboff in a call for immediate rate cuts.

      Those are VERY different beasts.

      • Yes, I agree. But Bill Evans was merely reiterating what some “loony fringe bloggers” on MB have been saying for nearly 6 months now.
        .
        It is just this “issue” only goes mainstream when “mainstream economists” fight each other.

      • “Evans has made a well reasoned call based upon a European crisis”

        i think Evans (WBC) has made a well reasoned call but is using EU as a red hearing. WBC knows full well that the housing sector is turning down and will drag the economy down with it but they can’t admit it. Since WBC helped blow the housing bubble and have vehemently denied its existance they can now hardly turn around and say yes, we have a housing bubble that is deflating, we shouldnt have lent all that money to people who cant afford to pay it back and no there isnt actually a housing shortage either.

        The Eu and the carbon tax are how the WBC plans to avoid taking any blame for the property market collapse.

        • Great post GB…I agree that Euro is being used an ‘event’ that has forced them to reconsider their bullish forecasts earlier in the year.

          The truth is, not one mainstream commentator has managed to properly explain the debt burden Australian consumers are faced with and how this is likely to play out (without any massive international financial crisis).

        • I agree. Surely the Australian debt situation can collapse under its own weight. An external shock will only provide an excuse to blame something else.

          • Yes, its 2008 all over again.

            We will not learn our lesson if the Bullhawks can blame their misprognosis on a European Black Swan event…just like we didnt learn from 2008 because we thought it was all abotu greedy wall street bankers

  4. Birdy Num Nums

    It seems more like he is saying he was wrong about August because he didn’t take into account the stupidity of others. In other words he remains bullhawkian but acknowledges that rate decisions are in the hands of lessor mortals who lack his brilliance.

  5. You will find that Bloxham is a disciple of the “If it wasn’t for this rain, it would be dry” School of Economic analysis.
    Just another clod…