“Experts” circle wagons to repel Dent

Look, I know the Unconventional Economist has already covered Mr Dent’s visit to Australia and I have to agree with everything he said in that regard. But I feel the need to bring our reader’s attention to the hilarious debacle that was the “expert” Australian response to Mr Dent’s accusations as presented by Koshie on Sunrise yesterday morning.

Craig James’s “expert” response: Australia’s population is growing, and we don’t have huge tracks of land that are empty, and we don’t have empty houses and therefore an oversuply problem. It’s always about demand and supply.

Mark Bouris’s “expert” response: The next 6-12 months is a good time to buy, if Dent is right then it is a good time to buy, affordability is what keeps house prices where they should be, what is making house prices tough at the moment is the high interest rate environment, when interest rate fall house prices will be affordable again and it is a good time to buy because house price will maintain a “stable structure”

Ingrid Just’s ( from Choice ) “expert” response: Householders and home owners aren’t spending becuase of this sort of talk. Mums and dads are listening to this and that is why they are saving. Retailers are saying that no one is buying and it is because of conversations like this one.

Pascoe’s “expert” response: He is out here selling a book, no one is going to buy it if he claims says Australia is fine. Steve Keen at the start of the GFC said housing would fall by 40%. He was wrong. During the last recession we had 20 years ago house, when we had double digit unemployment and massive unemployment, housing held its value.

Pascoe was correct, Dent is selling his book. But if this is seriously the best expert economic commentary that Channel 7 can muster in response to claims that demographics and credit dynamics are about to place significant downward pressure on house prices then surely we are all doomed. None of these responses even passed the most basic of logic tests, and I am not even sure that Mark Bouris was speaking English.

Pascoe’s comment that Dent was simply talking his book were made even more amusing when Mark Bouris later turned up on Lateline batting for the opposition:

You couldn’t make this stuff up.

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Comments

  1. “tracks” of land SHOULD read “tracts of land” , as in Monty Python’s. “But dad, I don’t love her!!” “But she’s got HUGE tracts of LAND”.

  2. Bouris: “The aspirational middle Australia, that strongly responded to fiscal stimulus by buying houses during GFC period [], they got the country back up and running.”

    I wonder how much truth is to this assertion. Are government freebies to loan buyers the reason we escaped GFC? I thought it was China and resources. Can someone enlightened throw more light on this?

      • Bouris is right about the strong response to FHB stimulus.

        He’s wrong to assume that the Gov’t can continue to rely on this pool of potential investors to prop up the housing market.

        • runalltheway,

          The question is not whether there was a strong response to FHB stimulus, but if this strong response benefitted/boosted overall economy in long term.

          • You are both right cool. & run.

            The FHVB gave the govt. an enormous ‘bang for it’s buck’ and is largely responsible for Australia’s fair sailing over the last few years but by throwing mare petrol into the debt-engine. i.e. almost the worst type of short-term can-kicking behavior that has only made the problem that much worse

          • Bouris’s comments on Lateline Business state pretty clearly that debtors are the ‘backbone of the economy’ A pretty twisted appeal to the Oz psyche that loading up on debt is an heroic action for one’s country. Debtors, apparently, are honorary diggers – fighting for our standard of living! Now they are at risk of having their throats slit. Dear govt – can we please mint a new medal with citation??
            Bouris is evidently a stuffed goose.

  3. I’m glad to see that at least one of the experts mentioned confirmed that availability of massive, unsustainable levels of debt are required to keep housing afloat by saying the already low price of debt needs to be further cut to entice more to take it on to buy houses with.

  4. “Steve Keen at the start of the GFC said housing would fall by 40%. He was wrong.”
    Michael Pascoe.

    This is a pet hate of mine.

    How can these imbeciles expect to be taken seriously when they can’t even get their most basic facts right?

    Steve Keen forecast (under dubious circumstances, if you read the transcript of the debate at the time) that house prices would fall by 40% over a 10-15 year period, starting (I recall) 2Q/08.

    He is NOT wrong (yet)- he cannot possibly BE wrong for about another
    12 years.

    If these “experts” can’t get such a simple fact straight, what hope that they can grasp the complexities of what is happening in the world at the moment?

    • Steve Keen forecast (under dubious circumstances, if you read the transcript of the debate at the time) that house prices would fall by 40% over a 10-15 year period, starting (I recall) 2Q/08.

      Yep. The median house price in Brisbane is already 12% below peak in real terms and other states such as Victoria and SA are just 12 months behind. With another 12 years to go Keen is well on his way to being proven right.

    • Excellent note, Julius. Unfortunately the same experts around the world have very strong opinion on some other much greater forecaster on global economy. They don’t read, they just hate and oppose like republicans.

    • Mate, I think you are defending an indefensible. He made a bet on the price fall during GFC and admitted his wrong prediction by walking miles up the hill. Though Steve still insists on the likelihood and the magnitude of price fall in the future, without a proper timeframe, with all due respect, it’s as good as a prediction of share market would crash in the future. Likewise Dent made his forecast on demographic and spending, somehow, now it is a ‘ right’ forecast about GFC and housing. Don’t you just like the ‘fact’.

  5. Pascoe: “…. During the last recession we had 20 years ago house, when we had double digit unemployment and massive unemployment, housing held its value.”

    …might it be because the house price vs income ratio was only half of what’s today?

  6. lmfao… thats pure gold, i wonder what Kochie was thinking when he got home and watched lateline? the mind boggles

  7. Unemployment rising means both sides will be twitchy about a BIG Australia and lots of migration.

    People who look good in hard hats and drive big Tonka trucks should be fine but it wont take long before the ‘… They are taking kids jobs line… ‘ starts getting a run.

  8. Oh I need to go have a bath…I feel so dirty…two bank spruikers telling us housing will be AOK…

    Geez that footage will be worth gold i a few years. BAd luck Pascoe, Craig James and Bouhris…you are all going to be ashamed of that little montage very shortly!

      • Quite a lot of people in the USA saw it coming, for years before 2007. Not that any of them have since been appointed to Treasury or the Federal Reserve Bank…..

        There is a lot less excuse for Australians, given the example of the USA and other countries around the world. I have been shaking my head in disbelief as Aussies pumped their bubble up again, and again, and again – AFTER 2007 in the USA.

        • But Phil, Australia’s different. Our housing never goes down. They blame the data soon. Look at the CBA’s recent “we’ll beat any rate” trying to pump it up again. When official rates fall as they will soon, we’ll seen the pumping start again across the board. It’s pretty sad for those who are being sucked in.

        • Excuse me, is this really the same Christopher Joye who in 2003 helped author the PM’s Home Ownership Taskforce Report, and who said the following in “The Australian” in August 2003:

          “……there is an affordability problem in Australia, but it has nothing to do with income levels, interest rates or a dearth of exploitable land. Rather, it is the result of oppressive local and State government regulations (often imposed with the enthusiastic support of proximate communities) that severely constrict the stock of low-cost properties and, when combined with ever-growing demand, artificially inflate the price of housing……

          “…….. we believe that several innovative steps can be taken to improve the availability of housing without resorting to subsidies, and which would contribute to a striking reduction in the costs of home ownership right across the country. The overall objective here is to accelerate the approval and land release process so as to promote private-sector investment in the production of affordable housing…….”

          (End of quote)

          When did he go over to the dark side?

  9. I’d say the average Joe has no ability to join the dots on these people’s vested interests therefore this panel of “experts” probably trumped Dent’s “doomsaying” because we’ve all seen these “experts” on TV before, and stuff. Sadly, most people don’t read Macrobusiness or similar stuff.

    • Unfortunately this is very true. The average public is very susceptible to name calling and so on. All they want is someone vindicating their investment decisions and who would you trust; an American forecaster or three Australians on TV?

      Pascoe mentioning the bet Steve made was a bit underhanded. In all honesty that bet was the worse thing he could of done – he is now a precedent for these guys. They have an out now; no analysis required. What’s worse is that any one with an economic mind can see who has the better theory of what is most likely to happen.

      That women saying its because of doom and gloomers that people aren’t spending just shows the level of these commentators. People aren’t spending because they are paying down debt – simple.

      Oh well we can always count on the government to save our housing investments. So maybe they’re right in a very bad way.

  10. What does it take to be called an “housing expert” on national TV? Either have a vested interest in house prices going up Or be just be plain obnoxious.
    .
    Craig James is employed by a bank that has a massive mortgage loan book.
    .
    Mark Bouris has setup a non-bank home lending business.
    .
    Choice has the “Big Switch” venture on mortgage refi.
    .
    And Pascoe launches into an unprovoked personal attack on Dent and Keen.

    • i was about to say the same thing, so much vested interest on the couch.

      In a two horse race, my money is on self interest every time

  11. You can make it up – this is the problem in being a delusional bull, instead of being an empirical realist.

    Once your meme of “everything is fine” starts to crumble (even just at the edges with some minor concerns) you have to start thinking of even more delusional ideas to back your empirically falsified case.

    Pascoe’s gross misunderstanding of household debt serviceability and the comparison of our economies in 2011 and 1993 is astounding. It proves that being in the business a long time does not equal wisdom gained from experience.

    • Pascoe’s ludicrous comparison was also a highlight for me – somehow Household Debt vs GDP isn’t a factor worth considering, even when it’s 100% now vs 30% then.

      And I started to panic when I couldn’t make sense of anything Bouris was saying – if the target demographic was Sunrise viewers and I couldn’t understand him….did this mean I wasn’t even up to watching Sunrise?

      Imagine my relief when I read ‘and I am not even sure that Mark Bouris was speaking English’.

      • I’d be more inclined to believe these experts if it wasn’t for the slight note of panic and fear behind the mostly nonsensical replies.

    • endrortsonhousing

      That group of experts was a hall of mirrors of baby boomers parroting each others opinion based on the extremely comfortable ‘Australia is different’ life they have enjoyed.

      Still you would think the shame of the US ‘experts’ predicting happy days at the beginning of their housing crash would have caused them to think just a little bit about the business as usual drivel!

  12. But if this is seriously the best expert economic commentary that Channel 7 can muster in response to claims that demographics and credit dynamics are about to place significant downward pressure on house prices then surely we are all doomed

    Surely it’s not all that bad that Channel 7 can’t muster up some enlightened nuanced comment. Watch your own hyperbole.

  13. NOT A ''TRUE BELIEVER''

    Many markets in Australia have already fallen well over 40% and the only reason they haven’t fallen more is because there are no buyers at all, at any price and there won’t be any for a long time because the chain of fools had been broken. One thing for sure; irrespective what elegant rationales the “intelligensia” come up with, Australia will not enp up with the most expensive housing in the developed world !

    That I will guarantee.

  14. I watched this clip online yesterday and was astounded by the responses. In summary:

    CJ: “Australia is different”

    One of the most dangerous quotes in finance. We’ll see…

    MB: “we are in an expensive interest rate environment”

    Compared to what? GFC slasher rates? 4.75% official interest rate only seems high because we have FOUR times the quantity of oustanding debt paying that rate than we did 20 years ago. A low rate x alot of outstanding debt = stretched serviceability.

    IJ: “these conversations are the reason people are saving”

    (My favourite of the lot, but it’s a tough call). Absolute bollocks. People are having these conversations because they have come to the realisation that society is maxed out on debt and the asset that underpins that debt no longer looks like a one way bet. The debate reflects reality, it doesn’t cause it.

    MP: “housing values held up in the early 90s recession”

    Just to make a statement that our housing market holds up in a recession while ignoring starting valuation is plain ridiculous.

    Simply unbelievable that this stuff is broadcast as ‘expert’ opinion.

  15. I wonder what was left on the cutting room floor after Mark Bouris’ interview with Lateline?

    Perhaps he was doomsaying as part of lobbying for reduced interest rates to bring forward more demand, and the Lateline editors left that bit out?

  16. Craig James’s “expert” response: “It’s always about demand and supply.”

    Yeah, yeah, it’s Mabo, it’s the Vibe, it’s about justice and the right thing to do, eh, Craig??

    There is a comedy in the Australian housing market waiting to be written, surely, or was that ‘The Castle’; talk about reality imitating art…

  17. That was very entertaining. Lucky Australia doesn’t have large tracts of land! I predict that clip will be legendary on youtube in a couple of years time, like the one where everyone laughs at Peter Schiff or where Jim Kramer is telling everyone not to sell Lehman.

  18. Why did they even bother with Ingrid from Choice. She should stick to comparing which bog roll is the softest and turning that into a story on TT/ACA.

    Cheers

    Ben

  19. …if you can’t dice luck round to collection ,as a Monopoly Expert..then seems surrounding Chess Champions to get across…could be seen as, just another NO-dice ,moment..

    Thanks DE…JR

  20. Pascoe’s choice of answer is an interesting one, as it seems to imply that he’s expecting australia to go into a recession

  21. The debt bubble continues to grow and the Australian public are not stupid. We have enjoyed a decade of growth based on spending money we don’t have.

    The experts answer to growing debt is to BUY MORE.
    Business cannot expect to have consistent growth and
    promote personal debt for their own benefit.

    Shut up and keep shopping is not the answer to the growing problems facing our economy. It’s time to spend only what you have and tear up the credit card.

  22. My acquiantance with my latest subject in studies has me looking over the FSR law and the associated AFSL and PDS regimes.

    Boy……lenghthy, mind-boggling restrictive, severly penalitous. I could go on but I think that gets the point across.

    As for these “experts”, where is their disclaimer, what is the context of spruiking, where is the outline of risks, where is the danger highlighting the fact that “considering 90%LVR” as normal is insanity (10% loss means you have lost it all)

    We have adverts for ill-effects of smoking, drink-driving, CFD trading, gambling. Wether an individual looks over them is another issue.

    As for these vested interests – Australia is Different. (shrug/)

  23. Of ask the people with something to sell on that program, Dent offering has to be piddling in comparison.

    And even after you have coughed up the $30, ar least he isn’t trying ti shove it down your throat like some debauched spieler desperate to save their waterfront home in Seaforth.or Palm Beach.

    I laughed so hard I threw up last weeks lunch!

      • Switzer is a terrible anchor. He’s basically there to bounce the interviewee’s argument off. A good anchor knows what questions to ask to get the most solid responses from the interviewee in the broader context of the discussion.

        Switzer sounds like an infomercial interviewer.

  24. Bouris comments about the 2008/09 FHB cohort makes them look like a bunch of heroes. You’d swear he doesn’t see any economy in Australia except for bloody houses (sadly he’s almost right…)