Xie vs Swan on Australia as Spain

The Australia/Spain analogy seems to have caught the imagination of global media. Another debate has emerged between Wayne Swan and Andy Xie on CNBC:

Australia’s Deputy Prime Minister and Treasurer Wayne Swan has denied that Australia’s economy is at risk of a Spain-like economic crisis, calling the thesis put forth by the former chief Asia-Pacific economist for Morgan Stanley, Andy Xie “absurd”.

“It’s absurd – the Australian economy and its economic fundamentals are very strong. On a yearly basis we are growing at 4 percent – we are going to grow faster than any other developed economy this year and next…Let’s go through the fundamentals – bringing our budget back to surplus in 2012-2013, low unemployment, strong job creation over time, a record investment pipeline in resources – half a trillion (dollars). What planet does he live on?” he added.

Xie, an independent economist with sometimes controversial views, argues that Australia is at danger of becoming the next Spain due to its reliance on foreign demand, especially from its biggest trading partner China, which he believes is decelerating faster than headline growth numbers suggest.

Australia’s economy is heavily reliant on the mining sector, which accounts for 7 percent of gross domestic product (GDP) and half of the country’s total export earnings.

“In Spain it was government bonds that attracted foreign money. Foreigners flooded Spanish bonds because they had high interest rates and were very attractive. That foreign money pumped up a property bubble,” Xie told CNBC Asia’s “Cash Flow“.

In the case of Australia, investors have been rushing to invest in the mining sector. Xie believes the bursting of Australia’s mining boom could unwind that flow of money with disastrous consequences.

To top it off, house prices in some Australian cities have grown close to 10 percent annually in the past decade, leading to a wave of borrowing against home valuations. Household debt in the country has been around 150 percent of disposable income since 2006.

As China’s demand for resources declines, Xie says that could have a knock-on effect on the property market.

“As global commodity prices come down, mining will decline and the property bubble will burst,” he said, adding that a property crash will take down the county’s banking system as well.

…But Swan argues Australia’s flexibility to lower interest rates further alongside its strong fiscal position, with low levels of public debt at 8.9 percent of GDP, ensures that the economy is well positioned to weather a downturn.

However, Xie says that Spain’s government also ran surpluses prior to the crisis – earning more in tax revenue than it was spending.

“During the (property) bubble, the Spanish government (also) ran surpluses. The economy was very strong but it (started) losing competitiveness and that’s what we’re seeing in Australia today.”

Houses and Holes
Latest posts by Houses and Holes (see all)


  1. Not sure if the comparison to Spain is apt. While both countries have/had high foreign debt, there is a fundamental difference in that Australia is a currency issuer and Spain a currency user. While the risks to the banks of a housing crash are there, unlike Spain our country cannot ‘run out of money’ and has the stabilising effect of a floating exchange rate to buffer against any downturn in the economy and/or the banking sector.

    • Actually we can run out of money. The “buffer” provided by the floating exchange rate has been greatly exaggerated.

    • Correct Spain is much more like Queensland,they cant print money ie they have to pay it back!or get a subsidy from someone who can.
      At the moment the money is voting that we are a very good credit compared to our money printing brothers.
      However the money can change its mind in a hurry.

    • “there is a fundamental difference in that Australia is a currency issuer and Spain a currency user”
      It works OK as long as your currency is wanted by foreigners. We run a chronic CAD. Our currency would have been totally unwanted and a basket case many a long year ago but for the fact we have been selling assets.
      Xie’s point is that foreigners may no longer want our assets. In which case no one will want our currency because there will be nothing they want to buy with it.
      So the path of collapse will be different. Spain has just had very high unemployment. Being a Euro user has, so far, meant it hasn’t had inflation. We will get inflation. It won’t be tackled so we will get very very high inflation. If we were to tackle the inflation we would be Spain.

      The floating exchange rate buffer is sooo much BS. It hasn’t been the floating exchange rate that has buffered us it has been the fact we have lots of naturally given assets that we have been able to flog to foreigners to fund our over-consumption/under-production.

      • flawse…The suggestion in your note is that miners are somehow flogging our naturally given assets. They are producers too, with genuine expenses, paying real bonafide taxes and employing and bidding up salaries of Australian workers. They also commit capital for very long periods of time that we would prefer that governments didnt. Additionally they compete with other mining industries in other countries that would like to be as efficient as us.
        One doesnt have to look much further than Chevron who has a 20 billion dollar blow out in the Gorgon gas project, when the US gas price is falling through the floor and BHP is threatening to supply gas to Asia.Mining is a very long term risky business worthy of higher than normal profits.

        • BobT…No. That is not what I’m saying.

          I too am quite disturbed about the attitudes to mining in here as if it is some sort of plague on our house. It isn’t. Nor is it the cause of the very over-valued dollar.

          We have, in turn, flogged off our industries, our food chain, then our mines. We haven’t had savings because of constantly negative RAT rates so every time we want to develop something we have no capital. We have to get foreign companies to come in and develop the mines. Then even further where there has been Aus ownership of mines we have sold them. Our mining industry is about 80% owned by foreign interests. The food chain is almost 100% foreign owned between the farm gate and the retailer. We are now contemplating selling some companies that will virtually make that 100% which could be a disaster especially for the meat industry. Now, against Barnaby’s objections we are starting (again) to sell the farms. Barnaby doesn’t realise we HAVE to sell the farms to pay for our consumption.

          • Dam…not sure which direction you are coming from 🙂

            Re Super
            Super doesn’t matter diddly squat if we allocate ourselves super than allocate ourselves increased wages and earnings to cover it and/or the Govt goes into deficits. In that case we don’t have real savings just a pea and thimble trick.

      • That’s exactly right. The currency has to be wanted by foreigners. This idea that because the currency floats, Australia can’t face a BoP crisis is rubbish.

        The RBA is committed to an inflation target. So if capital flows reversed suddenly, the dollar collapsed and inflation expectations unanchored, they would actually have to sell foreign exchange and withdraw AUD.

        • ‘Yeah! We’ve always been a CAD country…what are you talking about?’

          As another always succinctly puts it in here ‘what could possibly go wrong?’

    • “As global commodity prices come down, mining will decline and the property bubble will burst,” he said, adding that a property crash will take down the county’s banking system as well.

      Sigh, my recurring nightmare. Those of us who have not immersed ourselves in the bubble often have a lot of money in aforesaid banks.

      • Aren’t our deposits guaranteed though?

        Let shareholders lose all their equity, deposits should be sacrosanct.

        • MattR
          Like any guarantee you have to read the small print.
          Repayment of lost deposits under $250,000 are guaranteed by the government but I understand will be made from the sales of the assets of the bankrupt banks, so savers might have to wait many years to get their full monies back.
          If anyone has a different understanding I would be glad to hear it.

        • Government guarantees are paid for with tax increases so in that sense the guarantee is worthless unless you live overseas and don’t pay Australian tax.

      • If only you could buy an asset that had intrinsic value and is treated like a curency…..hmmmmm. Reckon parking your surplus money in Gold and silver is going to play out a lot better than keeping in the bank

      • As an aside, I just thought Personal Financial Management included printing off at the end of every trading day the balances of one’s Trading & Transaction & “Savings” Accounts. 😉

  2. Spain also spent billions upon billions on silly ‘green’ schemes that made the economy less efficient, less competetive and pushed power prices through the roof.

    What does that remind anyone of?

      • Yeah I guess you’re right, spending billions making the economy less efficient has probably helped both economies…

        • MattR, this is a macro economics blog.. not some RW cattalaxy sh!te.

          So It would be helpful if you could quantify and back your assertions with data, instead of using rhetoric with a liberal sprinkling of the weasel words such as “billions upon billions”, “gubmint” , “waste”, “green tape”, “red tape”, “productivity killing”, “anti-business” & “union thugs”.

          Matt Taibbi has a Tom Friedman contest to produce the best metaphor remixes.

          Maybe we should have a contest along similar lines on who can produce the best faux libertarian outrage machine.

          • Hahaha, righto kiddo. Very funny coming from someone who’s entire MO is ad hominem.

            Anyway here you go:


            Each green job created in Spain cost Spanish taxpayers $770,000. Each Wind Industry job cost $1.3 million to create.

            For every 4 jobs ‘created’ in the Green economy, 9 were lost in the actual economy.

            Etc etc… keep in mind that is just one study.

            Also, I am not saying it’s the ONLY factor, just one of many. I brought it up because the thread is about comparisons between Spain and Australia. Given the facts a reasonable person would agree that this qualifies no?

          • Ok, You are getting there.. now can you produce similar “research” for Australia? It is not really a comparison otherwise.

          • S&P & Andy Xie made fair macro level comparisons – between the external debt & demand situations, budget situation et al between Aus and Spain.

            Are you suggesting that we are heading in the same direction as Spain on our energy policies?
            .. Or..
            You just don’t know?

            Which is it?

            As soon as someone does it I’m sure it will get posted somewhere.

            From the above response, I suspect it is the 2nd answer – you just don’t know and are drawing a very long bow.

            I am not saying our energy policy is perfect – In fact, we had a couple of blog posts last week, on where we are going wrong, incl one from SoN.

          • @Mav

            I don’t believe MattR is “getting there” at all.

            If you take a look at the study he cited, it has been thoroughly discredited by several researchers, who, to put it kindly, have credibility that extends beyond the AGW denier crowd. And, surprise! surprise!, the author of MattR’s study is on Exxon-Mobil’s teat.

            Who wudda thunk it?

            For much more, try this link:


          • “Getting there” in a broad sense, in that MattR is going beyond his usual talking points and at least posting links to his dubious sources, so that it can be debunked in a constructive and dare I say, scientific manner.

          • LOL, It seems Prof Gabriel Calzada did appear on Fox News, on Glenn Beck show, no less.

            Sorry, I don’t watch Fox News and hence miss out on a lot of knowledge.

          • @Mav

            Surprisingly, even though Calzada and his study passed muster on Fox News, neither cut the mustard at the Wall Street Journal. From the journal:

            But the study doesn’t actually identify those jobs allegedly destroyed by renewable-energy spending. What the study actually says is that government spending on renewable energy is less than half as efficient at job creation as private-sector spending. Specifically, each green job required on average 571,000 euros, compared with 259,000 euros in “average capital per worker” in the rest of the economy.

            So how does that translate into outright job destruction? It’s simply a question of opportunity cost, the paper says: “The money spent by the government cannot, once committed to “green jobs”, be consumed or invested by private parties and therefore the jobs that would depend on such consumption and investment will disappear or not be created.”

            On paper, that makes sense. But Spain’s support for renewable energy came out of existing tax revenues—there were no special levies on corporate activity designed to underwrite clean energy.

            The money the government has spent on clean energy may have edged out other government spending, but it’s hard to see how it could have edged out private-sector spending, especially when the Socialist government there has reduced corporate income-tax rates, most recently this past January.

            And just where did that study come from? Professor Gabriel Calzada is the founder and president of the Fundacion Juan de Mariana, a libertarian think tank founded in 2005. He’s also a fellow of the Center for New Europe, a Brussels-based libertarian think thank than in recent years apparently accepted funding from Exxon Mobil.

          • Mav as I already stated, the thread is about the similarities between the two economies. Spain has (had?) a fairly large ‘green’ economy, it is quite clear that this has contributed to their current situation. It has made their economy and energy policy inefficient. Facts are facts.

            “From the above response, I suspect it is the 2nd answer – you just don’t know and are drawing a very long bow.”

            A wise man learns from the mistakes of others, the rest of us have to be the others. The fact is, “green” schemes have cost nations billions and jobs. I’m sure you could dig up budget figures to see how much they have cost us this year alone. I’m not going to your research for you, even if I thought you could be convinced by facts that don’t suit your world view.

            I love the way you talk about Fox News and act like watching it and being on it somehow discredits someone. That is classic ad hominem (something you are extremely good at mind you). Maybe you should start watching it, you might actually learn something (personally I don’t watch it as it’s all US content).

            glen5875, I always laugh when warmists claim a study has been ‘discredited’. No, it hasn’t, but keep telling yourself that if it helps you sleep. Your argument basically sums up to “nuh uh!”

          • Right Glen, so all it does is challenge the ‘job destroying’ aspect of the paper? It still costs twice as much for a “green” job as a real job and all those “green” jobs are paid for entirely by the government.

            There justification? Oh the previous government lowered taxes so it’s all good! Money was accounted for!

            Yeah, totally “dubunked” right there. Lol…

            I mean, inefficiency? Increased energy costs? Increased government debt? Who cares. It was paid for already!

          • MattR, now that there is enough linked material here for everyone to read and make up their own minds as to the validity of your assertions, I am outta this thread.

            Hasta La vista, baby 🙂

          • MattR says:

            Spain has (had?) a fairly large ‘green’ economy, it is quite clear that this has contributed to their current situation. It has made their economy and energy policy inefficient.

            Lordy! Lordy! What is it like to live in a defactualized world?

            The Spanish ‘green economy’ is based almost entirely on windmills. The EROEI of windmills compares favorably to that of domestically produced oil and gas in the United States (which is growing inexorably more inefficient by the day), and has the potential to be significantly higher. See Figure 10 here:


            Live in your fact-free world if you wish, but here’s a report by the Government of Navarra that tries to set the record straight:

            After 20 years of development, 65% of the electrical energy we
            consume in Navarre originates from renewable energies. At this
            moment there are 993 MW of wind and almost 100 MW of
            photovoltaic power, among others, installed in Navarre.
            An article was published recently which has placed a doubt in renewable energy’s ability to create employment; it states that it destroys employment, and therefore, is a factor in the social
            impoverishment of a country. As I will demonstrate, this statement is completely untrue. In Navarre, the development of renewable energies, and above all wind energy, has created wealth, employment and technological development, and I can assert that this can be achieved in any other region or country.

            Our region’s GDP is among the three highest in Spain,
            participation by the industrial sector is 12 points higher than the entire country’s, and for many years Navarre has had
            unemployment rates inferior to Spain’s. Before the beginning of the current world crisis our region enjoyed full employment. Now, after the strong economic and employment crisis that affects Spain in particular, Navarre maintains itself as the Spanish region with the
            least unemployment….

            In view of these conclusive numbers, can it be stated that the development of green energies creates unemployment? The conclusion is the opposite. Between 2002 and 2006, employment in renewable had increased 183% in Navarre, with an impressive reduction in total unemployment. Employment for young and qualified individuals (only 18% of the five thousand jobs created are low skilled).

          • Just think what the Navarrans could have achieved if they’d skipped all that green crap. 😉

          • I found this television interview of Calzada in AGW-denier mode. He does this by using a rhethroical strategy frequently used by AGW deniers, which is to admit that global warming does exist, but then assert that a consensus does not exist amongst scientists as to whether it is manmade or not:


            Calzada’s assertion is, at best, a distortion, and at worst an outright lie, as Naoimi Oreskes explains in this Science Network presentation:


    • They have some good new infrastructure built in the last decade. Makes getting around on holidays pretty easy!

      • Europe can’t seem to get much right but at least they build really good roads. Australian roads with no speed limit ala the autoban anyone?

        Nah, would have our nanny statists panties twisting to the breaking point.

          • “God I hate libertarians”

            Spoken like the true totalitarian.

            Thank God you are nowhere near power Lorax- I have no doubt you would have all dissent and independent thought in chains. For our own good of course.

            You ought to be ashamed of yourself.

          • See what I mean. Thoroughly unpleasant people.

            May you exercise your “freedom” to not wear seat belts while texting at 160km/h to maximum effect.

            (And lets hope you don’t take our half-a-dozen law-abiding citizens while doing so)

    • So did Germany, and it propelled them into a really good position with many businesses frontrunners in their field.

  3. What was Spain´s gov´t debt prior to 2008?
    Interesting, last night I had dinner with my girl friends cousin and his wife. They are both doctors living in Spain. They have had their incomes drastically reduced around 50%. They have been saving for a number of years and recently wanted to purchase a house, they found a house, went to the bank to withdraw their money and were told…that there money is not available…not available for three years…earning 1% interest a year…we are talking about alot of money. Interesting the bank said they would lend them money now…apparently 1 million Spanish people are in the same situation…not being able to withdraw there money.

    • Thanks nicolas. That was always my question about the Govt guarantee of savings. Sure you would get them but when?

      • I’m sure it took 20+ years after the great bust in the 1890s.

        There have been hundreds of bank failures in the US over the last few years. It would be interesting to know whether there were any delays for depositors there. I recall legally flimsy descriptions of the time expected for deposit funds to be repaid from the scheme there…….’as soon as possible’ etc.

        • I tried to google answers to your questions. Didn’t get any answers but discovered that none of us here are gloomsters at all. We are an optimistic, chirpy lot. There are some real merchants of gloom with their advice on deposits etc on the web. Can’t say I’d trust those sites for advice.

          • http://www.fdic.gov/consumers/banking/facts/payment.html

            When can I expect to receive my money?
            Federal law requires the FDIC to make payments of insured deposits “as soon as possible” upon the failure of an insured institution. While every bank failure is unique, there are standard policies and procedures that the FDIC follows in making deposit insurance payments. It is the FDIC’s goal to make deposit insurance payments within two business day of the failure of the insured institution.

            As little as two business days! Again, some on the ground, real life experience would be interesting.

    • Diogenes the CynicMEMBER

      This always happens when the banks are in trouble. They don’t actually believe it is your money – it is their money which you have given them for safekeeping. The people of Argentina banging their drums outside banks is the most vivid recent image of this very occurrence.

      Everyone should have a small store of cash for expenses outside of a bank just in case. Look at hurricane Sandy credit cards did not work as the electricity was down, point of sale EFT did not work, ATMs did not work, bank branches were closed you could only use cash to buy what you needed.

    • By your explanation it sounds like what your friends did was buy into the whole preference shares, a legal bank scam that is as old as the hills. A really good long term deposit will get you in Spain NMT 3% (but a couple of years ago significantly less) so many naive depositors (not a million but many tens of thousands) flew like moths to a flame to “guaranteed” (not by the FROB) deposits that promised 4-5%. Problem is your capital is tied to the value of the bank not to mention the onerous exit penalties. If they are lucky they may get their original capital, but if its one of the cajas they are in for a major haircut. Morale of the story, if you don´t understand the product, do not buy it.

  4. Wayne Swan conveniently ignores private debt – our economy is different, blah, blah, blah. If I see him talking on the TV or hear him on the radio, it makes me want to puke.

    • When Swan and his team bail out the banks (for the good of the public of course), public debt to GDP will be no where near 8.9% of GDP try 90% of GDP. Swan struggles with this concept just like the RBA.

      • Private debt is 160% of GDP and coupled with falling asset prices and the deposit guarantee it could get worse than 90% to save the banks. It is irritating that everyone bangs on about public debt only when it is the total national debt that actually matters.

        • Yeo lg. Also irritating when they say everything is OK because Govt doesn’t yet owe much as a % of GDP. As you say it is the totality that matters.

          • I was being dramatic, the truth is somewhere in between. Debt is not just the debt, it is the bets placed on the debt that also unwind. That is more than 15xDebt.

    • I’m not one to hate. But the feeling of visceral distaste, nay loathing, that I experience on seeing or hearing He Who Cannot Speak Without Lying Sans Blinking does prompt me to wonder.

  5. Andy Xie reminds me of one of those naysayers during the tech bubble. They were wrong for a very long time — five years or more — until they were very right in a hurry.

  6. Yes we are like Spain in 2006-2008 in that we run a nice big CAD and have world class property ‘investment’. But I don’t understand how anyone can still talk about the EU’s problems without mentioning the systemic problems a monetary union introduced. And also how it prevents a necessary currency depreciation- imagine how much the Peso and Drachma would be worth now?

    So Xie is basically saying there’s a bubble funded by foreign capital in mining investment. Isn’t this getting cause and effect mixed up? ie. capital will flee because of a China slowdown and not the other way around?

    • Alex I raise the issue of China’s massive holdings of USD just in trying to figure how this will play out.
      As I’ve posted before I think China will become more and more urgent about buying real assets with the 2.6T USD they hold. So I’d expect a continuing flow of China’s USD our way buying up assets which will allow us to continue to live beyond our means in a highly distorted economy.
      Note we are talking what WILL happen not what OUGHT happen.

    • I’ve read this issue of debt issued in your own currency being different to debt issued in another countries currency so many times that it almost has an element of truth to it. But fundamentally I still cant see the difference.

      Take for example the concept of creating $AUD. Traditionally we would say that this is the sole right of the RBA, but is there any real difference between an $AUD hedged position backed with USD fiat currency (effectively created by any bank as a simple debit / credit entry).

      The only difference I can see is the hedge. So, it appears that, the ability / guts to forward hedge the AUD/USD exchange rate is then the ONLY impediment to anyone creating as many $AUD as anyone could possible want.

      With the above in mind: what assets really back today’s AUD currency hedges? we certainly saw that wrt Lehman that their outstanding hedges were worth many times the sum of their assets and market cap. I believe it is widely acknowledged that the Martingale and Copula formulas used to calculate these risks have a fundamental flaw wrt accurate calculation of correlated anomalies in the “long tail”.

      Given the facts presented above, it seems to me that practically anyone can create $AUD, they simply need to also create a corporate shell that they are prepared to let die if the trade suddenly shifts against them.

      Is there something I don’t understand?

  7. Let’s go through the fundamentals – bringing our budget back to surplus in 2012-2013, low unemployment, strong job creation over time, a record investment pipeline in resources – half a trillion (dollars). What planet does he live on?” he added.

    Doesn’t Swan see the writing on the wall here, that relying on one industry to carry us on forever is inherently a stupid idea? Or is he only concerned with the statistics that will get him to the next election?

    • The next election? That’s a bit long term for an Australian politician. Think in terms of tonight’s news, or at most the end of the next sitting week and you’d be closer to the mark.

  8. Wayne Swan: another exemplar of the perverse consequences of politics in a democracy – economic ignoramuses ending up in a position of far too much responsibility, and millions of people suffering the consequences.

    Michael Cullen was Finance Minister in NZ for 9 years; 20 years before, he had been lampooned by his colleagues of that day, as the least fiscally and economically literate person in the cabinet. It was said that he couldn’t even balance his own cheque book. Of course he presided over 9 years of bubble conditions in NZ, with “bubble revenue” accumulating to government. What did he do with this revenue? Spent the lot, and committed to ongoing programs of spending as if this revenue was a new “norm”.

    Of COURSE Spain’s government had years of “bubble revenue” before their bubble burst. As did Ireland’s. As did Britain while Gordon Brown was Finance Minister. FFS, why would any Finance Minister in the world TODAY, not be well versed in these realities? How good is Wayne Swan? How good is any “Finance Minister” in a socialist government?

    • How good is Wayne Swan? How good is any “Finance Minister” in a socialist government?

      To be fair, the build up of bubble conditions and ‘new norm extraordinary tax receipts’ occured under the watch of Mr Low Altitude Flyer himself, Peter Costello.

      It’d be hard to paint him a socialist.

      • And am I wrong or am I the only person noticing the deafening silence of the coalition whenever pronouncements of this nature are made? At least they’re not too hypocritical about it. They realise that they presided over (cheered on) the nation’s households running up their credit cards and now Labor has to try to keep the all the plates spinning. I suppose it’s too much to expect of the current Labor crop to be honest about the situation and actually address the problems rather than desperately put off the crash. Sigh.

        • As has been mentioned, particuarly in regards to Glenn Stevens, it’s probably not prudent to say ‘Right everyone, we’re f*cked, head for the exits’.

          If they placed primacy over ‘don’t let it fall ina heap’, then this is similar to what you’d expect.

          State governments trying to re-ignite stap duty receipts, and a beholden fairfax is what throws a spanner into the designs of the government and the RBA.

        • I don’t think the coalition actually recognises that such high level of private debt is bad (nor does Labor). I think they both still subscribe to the “consenting and informed adult decisions” theory.

          • Exactly! Coalition, all of them, don’t have a clue.

            THen can we really blame the politicians?
            Every economic advisory body to the Govt can’t see it…Treasury, RBA none of them. Then we have every Bank economist and MSM ‘guru’. Throw in the whole University Economic community bar Steve Keen. Even Steve ignores the problems lurking in the external account (unless his tune has changed of late).

      • I appreciate the comments. The two mainstream political parties in most Anglo nations, are “conservative” and “socialist”, even if the terms might seem somewhat nominal some of the time. I respect Winston Churchill’s principle of always calling the “Labour” party “the socialists”, because that is basically the side of the political spectrum they are on.

        I stand by what I say, that the “socialist” politicians are on average, less intelligent about economics. Not that even many “conservative” politicians are much better.

        It is true that the bubble conditions in Australia first began to build up under Howard/Costello, but back then there was far more excuse for anyone to not understand the phenomenon. By the way, I do regard the Key government in NZ as similarly culpable to Rudd/Gillard in Australia, for basically doing nothing about housing affordability. However, NZ’s bubble has not continued inflating anything like Australia’s, and the bubble revenues for Govt are certainly long gone.

        Labor in Australia bear responsibility for “addressing” the affordability problem with measures that pumped the bubble up further. At least the Key Govt in NZ has not done that, and has admitted there is a problem with the supply side, and has been waving a rhetorical stick at the local government sector, and has been threatening blunt regulatory reform. This has possibly helped dampen the expectations of the speculator class.

        • Phil
          ‘Bubble’ conditions have been building since 1959. The Costello/Howard era was just the blow-off which still continues.

    • Australia has a relatively low proportion of government compared to most OECD countries.

      This “socialist government” rhetoric is not soundly based.

      It is a mixed economy heavily dominated by the private sector on many measures eg sectoral debt, sectoral contribution to GPD, sectoral employment.

      • Explorer
        If I were picking an economic model to follow there aren’t many OECD countries I’d pick to follow! Most are recklessly in debt.

  9. 1st thing I was told in banking – how does this bloke make money out of this?

    Answer that question and you’ll know the drivers behind his comments, that goes for both.

    Would you be a used car from anyone ex Morgan Stanley?

  10. Last of the Western Playboys?

    The portends of reduced housing/politico ability (power) or willingness (courage) in the conduct of our national affairs to our national interest or affairs is becoming obvious.

    The new triple bottom line.

    Screw the population through house price infation.

    Screw the population through the mining boom.

    Screw the population through the dissapation/expropiation of their superannuation funds.

    “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.” John Maynard Keynes, 1931

    The demogaphic portion:

    All of our old/hardmen, the warriors have either passed on or are in a minorty of authority.

    We are ruled by the matriarchial family wise (personally), who have loved and lost too much. Brothers, husbands, children and lovers in the Wars to Finish All wars.

    Peace is a small price to pay, regards the alternative.

    The money man is dead and is not coming back.

    It is only bricks and mortor.

    These are words of experience, wisdom to the young and admonishment to the gung-ho (me), by the matriarchs.

    They were twenties/thirty gals in the last century.

    Do not let your society fly apart at the expense of anything.

    There is nothing as disastrous as a rational investment policy in an irrational world. John Maynard Keynes

    “In politics it is necessary either to betray one’s country or the electorate. I prefer to betray the electorate.” Charles De Gaulle

    David and Co plus the many varied and erudite ripostes, thank you for what you do for whom you do it.

    A questionable remark, wrongly interpreted is the difference between flowers and flames.

  11. “In politics it is necessary either to betray one’s country or the electorate. I prefer to betray the electorate.” Charles De Gaulle

    Whew ain’t that the truth!!!!! The problem is NOT the politicians. It is US.

  12. “Portugal is not Greece”
    “Spain is not Greece”
    “The US is not Greece”
    “Italy is not Greece”

    and now it’s

    “Australia is not Spain”.

    Sounds familiar, doesn’t it ?