It’s the end of the year and in the spirit of Auld Lang Syne I should not let the moment pass with recapping MB’s superb first year.
It’s difficult to prioritise the successes but one of the most prominent has been to bring accountability to the Australian housing narrative. From the early months of the year, it was no longer possible for the housing spruikers to spout “arguments” without rigorous examination (and most often debunkage). I think it fair to say that by doing so with reason and sound economic principles, MB empowered the broader media to question its reliance on the same questionable sources and arguments. Of course, it has been MB as well that has been proven most right in its forecasts for a slow melt in house prices all year.
The principle reason we were able to render this successful housing forecast was that the MB understanding of the Australian economy was well ahead of just about everyone. As bank and official economists persistently forecast a blowoff mining boom, MB held the line that Dutch disease and consumer deleveraging would condemn the economy to slow growth.
The most entertaining manifestation of this assessment was the struggle fought against an aggressive group of young turk economists we dubbed the “bullhawks” (half housing bull and half interest rate hawk). Through the middle of the year, Chris Joye, Paul Bloxham and “Mad” Adam Carr generated an extraordinary inflation panic that proved to be bogus, as we foresaw. This flerd (flock+herd) of soaring bullhawks were at the centre of a unanimous mainstream push for higher interest rates. MB stood against such arguments on the basis that weakening housing markets would soon put paid to the “boom” and inflationary pressures. We were right and our forecasts for interest rates proved spot on all year.
These same insights into the economy also enabled us to correctly forecast that the Australian Budget was a work of fiction, a fact played out recently in the $20 billion black hole announced in the MYEFO. Not to mention our consistent (and seemingly exclusive) understanding that the Federal government is now the lynch pin of the private banking system via implicit guarantees. A truth that was ultimately reflected in rating agency reassessments, as well as fiscal cuts.
Another area of discussion about the Australian economy that MB has pioneered is its broken macroeconomic settings. The nation’s dependence upon a dated model of private debt expansion, as well as its chosen management strategies for the mining boom, have locked us into a paradigm that is, over time, leading to the selling off of assets to fund the current account deficit and the hollowing out of the economy’s productive capacity. I can’t say that this discourse has received broader traction but we will persist so that when the commodities boom ends there is a record of thought to hold to account policy makers and the vested interests they often serve.
But it wasn’t just in the economy and housing that MB excelled this year, it was also in reading broader capital markets. The MB line on the equity market, that we are trapped in a bear market with intense volatility, has also proven right on the money. The same is true of our forex forecasts, in which we called both the rise and ultimate top for the Australian dollar, as well as its ongoing fall. We also had terrific success in forecasting turning points in major commodities markets, including iron ore and gold.
But perhaps the greatest surprise to me has been MB’s international success. We set out to provide Australians with a world class new media business and economics portal, yet as it happened, we also developed a strong following of international peers and readers. Throughout the year, we were linked into the global blogosphere and have been regularly referenced at the world’s most prestigious blogs, including those attached to world leading newspapers like the Wall Street Journal and the Financial Times. The title of this very post is, in fact, drawn from a description of MB by the FT mid year, “the superb MacroBusiness”. Delusional Economics appearance in Martin Wolf’s column just this past week was an amazing and well deserved highlight. I know of no other Australian writer or economist to have achieved such a level of endorsement.
Then there was our coverage of the major world economies. Our analysis of Europe has been ground breaking and has led the world press. We were one of the first to forecast a European recession and still reckon a US recession is also in the offing, hinging on European outcomes. We also offered comprehensive coverage of China’s great struggle to reign in credit growth as well as its toying with an inflationary bust, though the outcome there remains uncertain. Whilst the broader media blathered about decoupling and exceptionalism, we forecast that Australia would be drawn into all of it, which is now broadly accepted.
But the ultimate success of MB this year is, surely, you. MB’s traffic has grown non-stop all year (and is still growing). We have reached a point of critical mass that enables us to sell advertising, most especially since you, the audience, are very high calibre – young, smart and wealthy.
More to the point, the MB community is a triumph of contemporary media, where the collective mind expressed through the comment forum is infinitely superior to the stale monologue delivered from the know-it-all grey beard of yesteryear’s newspapers.
My toast is to you, MB readers.