The red book of consumer anguish

From Westpac’s fantastic Red Book of consumer attitudes:

― The Westpac–Melbourne Institute Index of Consumer Sentiment fell 5.7% in Dec from96.6 in Nov to 91.1. The fall takes the Index to its lowest level since Aug 2011 when it briefly slipped below 90, and prior to that, since the tail-end of the GFC.

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― Daily responses indicate the surprisingly weak Q3 national accounts was the main negative infl uence in the month. However, disillusionment about the Budget and a continued sharp slide in Australia’s commodity prices and the AUD would also have weighed on sentiment.

― These themes were apparent in responses to additional questions on news recall, which showed very high recall on these topics which were viewed as overwhelmingly unfavourable.

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― The survey detail showed sharp declines in consumers’ near term expectations for the economy, their own family finances and assessments of ‘time to buy’. Consumers in WA reported a particularly spectacular sentiment plunge.

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― Updates on the ‘wisest place for savings’ question show how a significant further shift back towards risk aversion with 64.8% nominate ‘deposits/super’ or ‘pay down debt’ vs 51.3% this time last year. The mix resulted in an 11.5ppt rise in the Westpac Risk Aversion Index – our measure that combines these responses into a single gauge of risk aversion – taking it to the highest level since Mar 2013.

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― CSI±, our modified sentiment indicator that we favour as a guide to actual spending, also fell heavily in Dec, down 5.6%. Current levels of the CSI± point to per capita spending falling at –1%yr, implying growth of just over 0.5%yr in aggregate consumer spending.

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― The sub-index on ‘time to buy a major item’ fell steeply, down 11.8% to be well below its long run average. The fall is disturbing given that this component is typically quite stable and has a close link with actual spending. That said, the Dec decline may be partly due to the falling AUD rather than a sharp shift in buyer attitudes.

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― Consumers’ optimism around the housing market continues to evaporate. The index tracking assessments of ‘time to buy a dwelling’ fell 10.8% to the lowest reading since Nov 2010. This marks a notable break lower from the 110-120 range that has prevailed through most of the year. Readings for NSW and Vic were particularly weak.

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― The Westpac-Melbourne Institute Consumer House Price Expectations Index fell 8.3% to be down 22.5%yr. Despite this clear shift, expectations are still positive overall, meaning more consumers expect house prices to rise than fall over the next 12mths. The index is also still comfortably above its low in Jun this year and well above the lows recorded in 2011-12.

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― The Westpac-Melbourne Institute Unemployment Expectations Index increased 4.4% to 159.5 (a higher level indicates more consumers expect unemployment to rise). This is the second highest read since the GFC and just shy of the 160 mark – over the last 40yrs, reads above 160 have only been seen in the GFC and during the recessions in the early 90s and early 80s.

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― The Dec survey included extra questions on holiday travel plans. The results show slightly fewer Australians expect to travel these holidays: 32.5% vs 32.9% this time last year.

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Comments

  1. the only way to save the planet and human specie is to end consumerist economy.

    I’m afraid that this cannot be done by self-imposed rules. Total collapse of our economic and political systemic seems to be the only way.

      • At least doctorX has a believable plan that doesn’t include: “let’s cut interest rates…it has never worked before, but maybe we just haven’t cut them low enough”.

      • actually this view is the optimistic one. Alternative scenarios seem to be much worse.

        various societies survived collapses of political and economic systems many times throughout history and almost every time that produced better systems.

      • If you are addressing me then go reread what I write before making silly allegations. This ‘H&H the uber-dove’ nonsense is tiresome.

        If you see a plan in DX then that’s a call for the white coats.

        You crashnics are every bit as bad as the housing spruikers.

      • This ‘H&H the uber-dove’ nonsense is tiresome.

        Don’t forget Lorax the housing spruiker!

        Absolutely ridiculous. MB newbies should go back and read comments from three years ago.

      • “You crashnics are every bit as bad as the housing spruikers.”

        I disagree – they are far worse. At least a spriuiker knows he’s making a sales pitch, these guys actually believe their rubbish.

      • these guys actually believe their rubbish.

        Wow! From the horses mouth, you’re classic Fraser

        What’s an uber-dove? If it’s Uber for racing/carrier pigeons I’m interested

      • It’s okay being an uber-dove even a bear hawk knows the difference between what is likely to happen and the fantasies of what should happen.

        Being an Uber-X Dove is the problem, all the other doves call you a Randian nut job for leaving the safety of the flock, ask about your licence and insurance arrangments and Gordon Samuels wants to sue you.

      • I know it’s your business but just bagging people….hmmmm.

        I agree DoctorX – only to need to park at Southland (or any major shopping centre) each and every weekend, and especially Christmas, to know we’re utterly, utterly fked.

      • Peter, you haven’t exactly helped the situation by barracking for higher house prices during the blowoff phase. Downplaying the risks as seen by Murray, Stevens – pretty much everyone in Canberra except Joe Hockey.

      • @ sweeper & gunna –

        really? I told you that house prices would rise when I saw interest rates beginning to fall appreciably. It was elementary but you guys didn’t want to hear that at the time.

        Turns out that I was correct.

        When did being correct equal spruiking? do you think that some of you might just be a bit “soft”

      • It’s not your predictions that are the problem.
        It’s the endless barracking for higher prices; your perverse defence of combined NG/CG concessions, and more recently your focus on the supply side distraction. I hope you are prepared to accept some criticism if their is a crash..

      • Peter,

        I realise that in your whack or be whacked world of forum trolling the point is to get a reaction to cut and paste back to Peters parallel property universe.

        As far as I am concerned I have never said yet I thought house prices wouldnt continue to rise. What I have said (and with more conviction of late) is that the factors pushing house prices higher arent sustainable, come with an economic cost, and lead ultimately to a crash.

        People like you are talking up a tumor in the body of the Australian economy – it hasnt been excised, and the patient is still alive, so far so good.

        What I (inter alia) am saying is that it gets too large for the host eventually, or metastasizes (probably both), and then at an economic level we can have the chemo and radiation and probably the operation to go with it.

        But there has never been a better time to buy, I’m sure

      • “…….these guys actually believe their rubbish”

        There you have it – the typical property obsessed response from an obfuscating sh*t stirring troll from the other side……

        Nice reply Gunnamatta – sums it up perfectly.

      • OK lets clear up a few points.

        gunna I have never cut and paste your comments, and if I did I would credit them as your work. Frankly I don’t even read many of your comments. They are largely “obese” and lacking in real content. I would rather read China Bob and even Mig – he at least gives me a laugh.

        sweeper – OK I’m not in favour of house prices crashing, but if you read my comments I have explained why the removal of NG won’t have the effect that you are counting on. It’s an explanation rather than a cheer squad routine.

        You guys could take a lesson from pilots and artists. Pilots report problems and their own errors so that all can learn from their experience. Artists examine their mistakes and learn from them – everyone else pretends that there was no mistake and they sweep their stuff ups under the carpet.

        It’s almost New Year – time for a little self examination I think. If you got it wrong, why did you get it wrong.

        Do you really understand the issues at hand.

        Were your initial expectations reasonable in the first place.

        When you get a quiet moment to reflect.

      • @pete yes you did: the RBA wanted this way (refer speeches), it made cash ever more unattractive and debt ever more attractive- translating to specufesting and increased prices on houses.

        Old “starter” houses in my area are up by more than 35% over the last 3 years (another $250k) – on top of already ridiculous prices.

        No sympathy from many here though- the data above is ignored over opinion and highly inequitable ideals. Lower mortgage rates (and saving rates) and sustainence of current nominal prices is still preferred.

        Proud bearhawk, not crashnik.

      • And your comments re macro prudential. Disgrace.

        Gunna sums it up perfectly. You can’t see that something which benefits you is destroying the whole economy. Right now it is preventing rate cuts when we really need them.

      • There you go again.

        So Murray, Stevens, Treasury, Grattan institute are all wrong… And you’re right. Ok, put your model on the table, tell us your econometric credentials.

        Stop talking this crap. Nobody buys it.

      • sweeper – when the removal of NG was first discussed here it was claimed that the savings for the government would be $8B – that was later changed to $5B and the other day I saw that it had been downgraded by the Grattan Institute to $2b.

        I would say that their “guess” is getting closer to my expectations.

        Comments on macroprudential – I’ve seen the standards tightened up behind the scenes – it was quite noticeable from my perspective so I have constantly said they have been in place for some time.

        There will be some tweaking, as there always is. I half expect the big four will need to raise more for capital buffers but I don’t see that as a game changer. Non bank and small banks who already hold higher capital ratios, currently offer loans at lower rates than the big four, so it will only affect the profit (ROE) of the big four rather than the market as a whole.

        Banks have proven to be expert at finding extra profits from somewhere to make up what they lose in regulatory changes. Not that I particularly like the banks, but I know what they can do.

        The social worth of high housing prices isn’t something that I have commented on, but I see no social or economic benefit in a housing crash. I’m good with the slow melt meme, but I just don’t see it happening at the moment, but over a decade or two it should. No guarantees though.

      • I have to concede that I was wrong and I should have listened to Fraser & Rumples last year — seeing that “Time to buy v turnover” oscillate so closely to trend I realise now what they were talking about growth still trending.

      • ‘gunna I have never cut and paste your comments, and if I did I would credit them as your work. Frankly I don’t even read many of your comments. They are largely “obese” and lacking in real content. I would rather read China Bob and even Mig – he at least gives me a laugh.’

        Peter you are a straight out bullshitter

        I have it on utterly undeniable authority (which I believe anyone going to Peters parallel property universe can see) that there are literally hundreds of comments made by me here subsequently loaded there, most of which are loaded at a point shortly after you have made a comment here. That is on top of whole posts taken from here and loaded up there word for word (HnH and UE’s work, and I am told the links pages). If you aren’t the person doing so I have not the slightest doubt you are central to the process.

        I don’t generally read many of yours either Peter, assuming as soon as I see your moniker that the comment underneath will be a laxative exhortation or defence of higher real estate prices, generally made with a view to inciting a reaction, invariably openly dismissive of either the wider economy, or those not taking part in real estate speculation. More disturbingly I have observed blatant falsity in some of them – notably your assertions that the FIRB process was somehow foolproof in terms of ensuring that those without a visa basis to do so could buy Australian real estate, and your assertions that large sums of money couldn’t be brought into Australia without a question being asked by Austrac, as well as your assertion that a foreign national could access Australian mortgages without visa approval.

        ‘They are largely “obese” and lacking in real content.’

        That doesn’t surprise me one iota. There are reams of research out there demonstrating that the average person is capable of reading about 3 paragraphs and has a standard vocabulary of about 120 words, and switches off after that. I assume you are closer to that nirvana than many of the other readers and commenters here. Don’t feel bad about it.

        I do rant sometimes, and indeed the other day a 4 thousand word rant ended up actually posted here, indeed on the very likelihood of RE continuing as is until it cant and then leaving us with the crash we need to have, and chalked up 100 odd comments from punters who presumably did read all or some of it. While I don’t think it particularly good prose it was written with a view to getting people to think about the RE – wider economy nexus, whereas I tend to the view that you write only with a view to exhorting that in which you have a pecuniary interest – or for that ritualistic form of psychic masturbation known only to those who are desperate to have an argument and ‘whack’ [recall using that expression do you?] someone. I hope the earth moves for you too.

        Finally I would note that you only ever comment on the free to public postings, leading me to the view that you don’t actually contribute anything to this site apart from comments exhorting that in which you have a pecuniary interest. While I can certainly understand that others may not wish to subscribe to MB, I think that those that don’t and run a line of spruiking to exhort their own bottom line need to be identified, lest others consider they may be altruistically contributing to the discussion in some way….

    • Yeah, that’s not going to happen with any help from politicians.

      Looks as though it will happen through the economy’s own volition.

      • Yep, HnH is great for questioning the status quo, but he is not a truly divergent thinker in economic terms. He does not depart that far from conventional thinking, it seems to me. “Crashniks” are simply factoring environmental restraints into economic thinking … something that no major economists seem to be doing to any extent yet (Grantham?).

      • Christ. I do that as well, hate GDP, believe in the Club of Rome. I just happen to believe in markets too.

        The crashnics are a housing obsessed bunch of crackpots.

        It has nothing to do with anything else.

      • The crashnics are a housing obsessed bunch of crackpots.

        Thank you. So its official now?

        Lunatics the lot of them. We may well end up like Ireland or Spain, but to actually desire that outcome is madness.

      • But it’s perfectly rational to cheer on collapsing AUD when you concede we make nothing? Hmmmm

      • But we need to make something, we need to earn a living in the world, and the only way to restore our competitiveness is through an extended currency depreciation.

        We don’t need a housing crash, banking collapse, financial crisis and sovereign crisis.

        The idea that you can somehow jack up rates to support the currency (and Australia’s import binge) when our terms-of-trade are disappearing into a black hole is beyond absurd.

      • But you’re cheering it on, and bringing forward the recession you claim you need to avoid, nutter! All you’re doing is keeping bank profits humming, good show.

      • my post was not about house prices whatsoever.

        House prices are just imaginary numbers financed by imaginary money used to pay something existing. House prices do not affect our survival on this planet at all (house prices just help the old exploitation story)

        Under current economic paradigm even with lower rates, GDP growth, affordable housing we are doomed.

        I understand why economist ignore this: what on Earth will they be qualified to do in the world with different economic model?

    • Dude, the planet will most likely go on well after we’re done and dusted as a species. I agree though that our civilisation is probably toast, as is the future of many other species.

      As for avoiding total collapse, there is a cruel irony to it all. We’re blessed with enough intelligence, understanding of risk and self awareness to see what we’re doing, but not enough (it seems) to actually stop ourselves from overshooting the planet’s limits to sustain us. Of course you change the political and economic system, but I suspect see things are merely reflect our nature (both good,and bad). I hope I’m wrong, but I see little evidence that we (as a species) can live sustainably.

      • Too right Rob, planet has seen extinction events come and go. Atlas didn’t shrug, we’re still here.

      • As for avoiding total collapse, there is a cruel irony to it all. We’re blessed with enough intelligence, understanding of risk and self awareness to see what we’re doing, but not enough (it seems) to actually stop ourselves from overshooting the planet’s limits to sustain us.

        The difference between intelligence and wisdom.

        Of course you change the political and economic system, but I suspect see things are merely reflect our nature (both good,and bad). I hope I’m wrong, but I see little evidence that we (as a species) can live sustainably.

        I disagree. Most of this overconsumption is being driven by a relative minority of greedy individuals – who happen to be in power – manipulating the world to their favour.

  2. Man that “time to time buy a dwelling” v turnover plot has compressed insanely! And created a damping effect with it naturally.

    • Yep, if you look at the attitudes by state it looks as though the boom may be over in NSW and Vic in 2015.

      • Every market changes the trajectory eventually Mig. What this doesn’t measure though is the attitude of foreign buyers.

        We are starting to see them buying development land in Brisbane. What they intend to do with that land is something that I don’t know yet.

        A DA doesn’t last forever.

      • Whether or not the boom is over the really interesting bit will be the commentary and the responses by RBA, APRA and the government to the ending of the boom.

        Not only are their ‘conventional’ options more limited it is going to be harder to build a compelling story about why they should make people feel confident.

        It sounds like Joe may haved decided to come ‘clean’ with MYEFO. If he does a lot of people will be suffering economic meme whiplash with their Christmas turkey.

        Everything can be fixed provided the government (and ALP) and the RBA and APRA free themselves from the loony dogma they have been clinging to for the last 17 years (in particular Flawse – yes it has been going on longer than that.).

        The summer break is an excellent time to reset a nations expectations. Booze and sun will ease the adjustment.

        Come Australia Day in January the nation can be ready to get to work!

      • Nup, I’m siding with history Pete and calling 2017 as the next peak. The last four mining booms (starting late 60’s) without fail had housing booms lagging by four years. Since mining topped out in 2013, I suspect this charade will continue until 2017. The conditions seem to support it – more rate cuts likely, foreign buying still strong. Government intervention through MP and foreign purchasing inquiries are just hot air.

        There’s still a 40% hit coming, no matter how you analyse it……..rents, incomes, even charting past recoveries and gradients!

    • Its definitely rolled over. Foreign buyers can’t be happy about the fall in the AUD since they “invested” in Aussie real estate.

      • Are you suggesting foreigners should “buy the dip” Pete?

        I can’t see the AUD roaring back anytime soon, and local demand is unlikely to be great with a grim domestic economy. Yes, despite even lower interest rates!

      • No mate not suggesting that at all. The Chinese buyers are not buying for traditional reasons so it’s really difficult to predict what they will do. They mostly just want to get their money out and a profit isn’t the primary motive. So normal methods of market evaluation don’t apply to that group.

      • Well, buying Australian real estate has just become significantly cheaper for investors from overseas.

        If that’s the case, don’t expect the real estate crash too soon.

      • The effect of a falling $AUS depends on the reasons a foreign buyer is ‘investing’.

        If you are trying to get stolen money that is the ‘product of corrupt behaviour’ away from the clutches of pursuing authorities then you might be very happy if you only lose 40% due to depreciation of the $AUS.

        Considering some our most sophisticated companies, regulators and commentators believed the ‘china booms for decades’ story, why wouldn’t foreign investors be any different. Real investors are likely to be waking up to the implications of the end of that story.

        Of course the carry trade will continue as the world still seems obsessed that they can export their way to health on the back of manipulated currencies and as long as our useful idiots in Canberra keep opening the door to those capital flows they will keep flowing.

        So as long as we remain prepared to sell off our industries, land, resources, existing housing and claims on our future dwindling income, capital will keep flowing.

        As Prime Minister Abbott made clear, what is important is that holders of Australian assets can sell to the highest bidder no matter who they are.

        Very appropriate that the great sell off of Australia will be co-ordinated by a guy in budgie smugglers.

      • My good friend has been doing a lot of deals with his chinese counterparts… They see falling dollar as an opportunity. Right or wrong thats from the horses mouth or should I say dragon…

    • Meh, sampling error: the specufestors have drawn down on another year of unearned equity mate and are now holidaying o/s so can’t be reached for survey.

  3. Ah, yes. The Crashniks! Further to H&H’s piece by Oliver Wyman today, here’s what the same person ‘predicted’ back in 2012 ( later than the 2011 that H&H refers to above)

    “Once the Chinese economy began to slow, investors quickly realised that the demand for commodities was unsustainable. Combined with the massive oversupply that had built up during the boom, this led to a collapse of commodities prices. Having borrowed to finance expensive development projects… some of the world’s leading mining companies were suddenly the focus of a new debt crisis. In the same way that the sub-prime crisis led to a plethora of half-completed real estate development projects in the US, Ireland and Spain…growth in both developed and emerging markets suppressed, the world once again fell into recession…The final phase of the crisis saw the US, UK and European debt mountains emerge as the ultimate source of global systemic risk. Long-term sovereign yields had been gradually rising during the last few years, but analysts had assumed that this was because of increasing inflationary expectations. With the advent of the new commodities lending crisis, rising sovereign yields were suddenly being attributed to the deteriorating solvency of the sovereigns. Their high debts, combined with increasing refinancing costs, made it apparent that the debt burden of many developed world sovereigns was unserviceable. It was judgement day for sovereigns. Those sovereigns that were highly indebted and needed to roll over large amounts of short-term debt were forced to either restructure their debts or accept bailout money from other healthier sovereigns. This period…, was the single biggest rebalancing of economic and political power since World War II. The final irony in the tale was that the large sovereign exposures that the banking system had built up as a result of the new liquidity buffer requirements left the banking system, once again, sitting on the edge of the abyss.”

    • Many thanks for the timely reminder Janet……

      It still remains a debt problem….nothing has been fixed at all considering the debt burden has increased exponentially since this crap originally hit the fan a few short years ago…..

      It is now seems a universal case of….SSShhhhhh don’t mention the debt….

      The system is now beyond repair, historically low interest rates will guarantee that a recovery does not gain traction.

      Crashniks……cool man….kinda groovy even.

      • Yeah spot on Bob.

        Plus: never underestimate the power of government..
        .*incompetence
        *corruption
        *manipulation
        *being incapable of learning from past mistakes.

      • Athalone, I would be heartened if it were only government subject to those defects, but the large private debt in this country, the behaviour of the private sector and the general public, tends to suggest that government is just the icing on a particularly steaming sludge cake of national incompetence.

      • Could someone please clarify – is a crashnik someone who wants a housing crash or someone who thinks there is going to be a housing crash? Or is it both?

    • Private debt dwarfs sovereign debt manifold, at the moment, the biggest issue is creditability, not solvency.

      So the next question is will the adjustment be made by the private banking system [for their benefit] or the public banking system [for citizens benefit].

      Mean while this is perfict cover for far right wing ideologues to shrink government down to a stub which is their utopian agenda.

      Skippy… autonomous monetary sovereigns can not go insolvent to debt nominate in their own currency. See America.

      • No data replied Skippy

        Just an abundance of common sense.

        The debt burden is beyond salvation.

        We go one of two ways – deflation as default becomes the norm or run away inflation as we try to reduce the debt burden through currency debasement.

        There is not going to be any other viable option that will be achievable – we have gone too far…

      • @Bob Sickle,

        Common sense is not data, its ideological bias, its also quite blind to counter intuitive reality’s.

        So until you can show me the data you use to support your opinions, its just hand waving or worse intentional pettifoggery.

        Skippy… it not too hard really, which then begs the question of why easily sourced material is not offered. R&R tried the same and it bit them in the ass, now look at their reputation.

        PS. Common sense… phulezzz… that might work with starry eyed freshmen who have a bad case of halo effect and low critical thinking skills.

      • its ideological bias, its also quite blind to counter intuitive reality’s.

        Gold! Because data is has any use what so ever without being interpreted? Never tire of your fantasies skip….

        Oh — you want data?

        Mitsubishi UFJ’s lending unit earned 36 percent of its gross profit outside of Japan in the year ended March, up from 23 percent three years earlier, company data show. Sumitomo Mitsui got 33 percent of its banking profit from abroad last fiscal year, an increase from 23 percent in 2010. Mizuho obtained 29 percent of operating profit from overseas customers last year and aims for 33 percent in the year ending March 2016, according to an earnings presentation.

        Japans banks are lending o/s instead of at home, why is that? Debt appetite have anything to do with it?

        http://www.bloomberg.com/news/2014-08-27/japan-s-biggest-banks-break-glass-ceiling-for-foreign-managers.html

      • “Common sense… phulezzz… that might work with starry eyed freshmen who have a bad case of halo effect and low critical thinking skills”

        Thanks for the shitty insult Skippy………

        The data is everywhere but finding data you can actually trust is up to the individual…..it comes with experience, critical thinking and one hell of a lot of personal research….lots of it !

        Best to rely on your own personal gut feelings rather than some re-cycled bullshit that is stuffed down the publics throat and treated as fact.

        Enjoy your day……….

        🙂

      • Hey leave Skippy alone!

        The roo just loves to box.

        Not sure why he was giving you guys a hard time anyway

        “…So the next question is will the adjustment be made by the private banking system [for their benefit] or the public banking system [for citizens benefit…”

        Was that really a question Skip?

        I know the answer to that without a bunch of historical references to the Chicago Debt Set.

        The adjustment will be by the private banking sector for their benefit.

        Probably in the form of some MUTANT QE for the People (ie MMT).

        Just dribble out enough cash to allow the peasants to pay their interest payments and keep honouring their banking systems debts but not actually threaten the primacy of the central bank guaranteed private bank love fest.

        One other possibility is that the neo-liberal ideologues (our common enemy) go mental at the thought of anything other than austerity as the cure for all ailments and keep their feet on the brakes until the model collapses in a heap or…. perhaps more likely starts a big war.

        In that case true public banking may emerge from the ashes.

        But this may take a while to come to pass as super debt only becomes a super problem when the credit controllers lose their nerve and stop giving free money to anyone (whilst they keep giving it to their FIRE/banking buddies the show can drag on for ages).

      • The inability too or decision not too provide any data, which then can be analyzed is duly noted.

        “Best to rely on your own personal gut feelings” – Bob Sickle

        No thanks Bob, GW Bush burnt that homily to the ground. BTW anyone working in the markets “working on emotive ***feelings***’ is a compete barking mad idiot, that will have their face ripped off sooner than later. Hope your not a financial planner – adviser, tho that is about the standard these days.

        mig-i,

        The OP was about inflation or hyper inflation to be more correct.

        “athalone
        December 15, 2014 at 7:50 am

        If they don’t go down the insolvent route, they choose 15% inflation for the next 20 years.”

        You link has zilch to do with that OP as hyper inflation is about trade shocks in the first order of causality. Next Abes neoliberal policy’s [loose monetary w/out fiscal] will do more long term damage [non-low productive] than a period of upper bound inflation.

        All of you should have clearly known I was referring to historical parallels i.e. where one could marry up environmental observations and tie them to the current time line. Its the wading through all the side of the mouth statements, foot dragging, and chasing butterfly’s, that I find irksome.

        Skippy… its parallel is religious debate e.g. no need for critical thinking nor intellectualism… there.

        .

      • @Pfh007,

        There are changes occurring in America, amongst other places. These early political changes will wash in the next few election cycles, how far the pendulum swings is the question.

        MMT is actually the public option where as Keen et al is working a more private option.

        Ergo… Ev’bal Dick –

        “Circular firing-squad. I’ve had the same thought.

        But what intrigues me even more is this one sentence you quoted, which stood out for me when I watched that clip of Cheney: “There was no effort on our part to keep him from that.” Effort on OUR part, he says. The hint of cheney’s power and of that power behind the throne as a shared power. And we might read into that the power to withhold info, if the chose to. So yes, throwing bush under the bus in more than one way. Putting him down while also calling him complicit.”

        ”Effort on OUR part, he says.”

        Skippy…. when both party’s are having such a hard time fielding a presidential candidate out side the party fundamentalists [small voter pop] you know things are about to get interesting. A lot of stored potential for blow back… eh.

      • athalone,

        Over 50 with probably 5x+ your experience.

        Skippy…. more butterfly, foot dragging, yet not a hint of backing up your statements. Hope you don’t apply this kind of ethos to your day job.

        edit. your brand of QTM is quite obvious, hence the myopia, hence the religious quality of your desires.

      • @ skippy – Well debt was deliberately transferred from the public to the private, but that’s going to take a long time to rebalance, or do you have some contrary thoughts on how it may be accelerated?

      • skippy
        Did my homework…no over-50’s kangaroos.

        “When I was a child, I talked like a child, I thought like a child, I reasoned like a child.
        When I became a man, I put the ways of childhood behind me”

        It’s Time skippy.

      • Peter Fraser,

        The work out is geopolitical because of derivatives. In Americas case the FDIC can’t go BK and then there’s the resolution facility. Warren is getting out front on the financial issues w/ others [don’t like her FP tho].

        Case in point Citi has been down size but, its major share holder is that prince from Saudi, so things get politically complicated. Then we have so called lefty Soros with his head on fire about whats going on in the old Soviet satellites and is spending huge amounts via his NGOs et al to leverage.

        That some think the so called PTB are one big happy family and in total control is patently absurd. Look a Bill Gross, I remember him in the 80’s, personally, the last few years has not been kind to him or others from back in the day. Most are pitching tents somewhere.

        skippy…. the collapsniks just want to burn everything down so their Phoenix will arrive, its like a case of the second coming, always around the corner and if’n you pray hard enough it will come… sadly the string pushing QE did not revitalize things and now their [politicians] freaked out because they might have to discharge their civil duty’s [put their neck on the block] and not pander to their benefactors. Yet its like watching paint dry…

      • athalone,

        If you don’t have the data then your statement is invalid.

        Skippy… kids do say the damnedest things, they say…

      • Bwaaahahahahaha!!!!! Skip begging for data… and when I present it?

        mig-i

        ,The OP was about inflation or hyper inflation to be more correct.

        Bwaaaahahahahahaha!!!!!

      • skippy

        We had a mild iteration of these times between 1973 and 1983 with average inflation of 11.4% per year, such that a basket of goods costing $100 in 1973, cost $294 in 1983.

        Check RBA inflation calculator.

        It will be much worse this time because of the huge comparable debt.

        You were calling my experience:
        * shipwrecked at 18 years old in 1970
        *dental surgeon 1975-2012… 34yrs of that private practice
        * substantive captain regular army 1975-1979
        * husband to one wife 38 years (the real clincher)
        *helped my wife raise 2 great children
        * small help to Legacy as Legatee 2007 to present
        *currently care for 2 grandchildren 2 days per week

      • You’re about 7 months into that 38th year right Nordstrum? (or is Nordstrom – I apologise for memory mangling) — I have to give it to you, you boomer dog you, making it count past retirement is impressive. Enjoy a beer on me mate!

      • Thanks skippy – I’m not given to prayer or burning things down, so I’ll opt for the long term solution.

        Cheers

      • athalone,

        Per your inflation comment circa 70s.

        That’s called the Volcker treatment, you do understand the causality for that right. Hint is was not excess money in the QTM way.

        In America at the same time it was due to Eisenhower not taxing to fund the Vietnam war [ideological -political reasons], which then over heated the economy, hence Volker jacking up interest rates as another mechanism to archive the same effect as taxing.

        The big bonus out of this all this is it provided cover for attacking wages an unions, which then could be funneled off and redistributed to the C-Suite et al [check productivity to wages since the mid 70s for evidence]. A process that has not stopped since then imo.

        http://www.epi.org/publication/ib330-productivity-vs-compensation/

        FYI one should not confuse industry pricing or margin antics with inflation in the CPI way.

        In Australia at that time, you have the issue of wages increasing to fast which can cause big problems so to bleed it off the same tool is used. That’s how it works.

        I did not refer your expedience out side the financial – political – economic sphere as it has no bearing on the matter.

        Skippy…. the Zimbabwean type of hyper inflation is due to trade shocks and not the quantity of money problem. Bimetalism was walking wounded after the GD, next to dead due to the cold war and dead as a door nail with Nixon. We have not had that kind of banking system for a long time. Stop thinking like we do, it helps imo.

        All of this is common knowlage.

      • @Peter Fraser
        December 15, 2014 at 1:30 pm

        @ skippy – Well debt was deliberately transferred from the public to the private, but that’s going to take a long time to rebalance, or do you have some contrary thoughts on how it may be accelerated?

        Skip here… ZRIP has got the fed stuck at the moment and that was a saver bailout. The only fix is to get money into the hands that need it the most, that’s a political issue and not the feds, hence the friction.

        Cheers.

      • The only fix is to get money into the hands that need it the most,

        What ridiculous handwaving, now you’ve got butterflies coming out of your mouth.

        Got any data to back that up or should we just hold hands and pray with you skip?

      • Mig-i,

        Yes, a JG, which is supported by FDR style policy’s getting people into work. Although a more comprehensive lay out on both a regional and local level i.e. people don’t have to leave home to travel far, its not like we don’t have lots of things that need to be done.

        Or would your rather more loss of social cohesion and increasing social destructive behavior.

        Skippy… it might even start a labour market… whom knows.

      • JG and FDR style policies is hand-waving not data. You do know that FDR style policies got a real happy boost when Europe started demanding war materials, right?

      • The point is – effect – which can be empirically observed and not a product of deduction by philosophical reasoning [aka the kinda thing religions have for century’s].

        The data is there in the historical record, common knowlage. That Lippmann’s benefactors took umbrage or bemoaned the new found freedoms citizens were enjoying, is another story of its self.

        Just the link above to hourly compensation vs productivity is one example. Another one I linked not long ago was CEO to wage ratios, still better is the post GFC link showing the income distribution over decades, but, especially post GFC and where its aggregated too.

        Form you I get some dudes middle ages times festival blog post or a helping hand to the liquidation of the middle classes, wonder where that will end up… ????

        Skippy… best part is its utopian free…

      • Yeah some dudes medieval festival blog in which he chronicles the establishment and evolution of the free-markets that took place therein — but you say it has never existed, and that there is no evidence it has.

        All those data-points you refer to have nothing to do with JG or FDR style policies “of getting the money into the hands that need it most”, that is your fantasy that you wish to sell to us and wish to sell it be imbued it with some form of mythical “social democracy”, and then you say there’s not such thing as rational it all a trope. Well I can see why….

      • Delusional as compared to a model that uses one human agent, that is described only as rational [what ever that means] and then proceeds to expand its activity 7 billion times.

        That is considered irrefutable even when compared to observational evidence.

        Mig-I when one is studying religious opinions, bundled up in one bound and confuses it with a descriptive of reality – anything… who is delusional and who is rational.

        Skippy… Know wonder some pine for the dark ages.

    • “Over 50 with probably 5x+ your experience”

      Now I know for sure you are totally full of shit Skippy…..

      We all have differing opinions, we all have a different take on things based on our own personal experiences and from where we source our data.

      ” Hope your not a financial planner – adviser, tho that is about the standard these days”

      See….can’t help yourself – you are at it again. It is a bad habit mate and in the end it will send you blind….

      • “Now I know for sure you are totally full of shit Skippy…”

        Your amazing powers of deduction are only superseded by the lack of hard data used to deduce monetary – market events.

        Skippy… one wonders if synapses are located in ones gut or other unusual location. Cheers.

        PS. all starting from the request for data, which immediately is met with devolution. A simple yes or no would have sufficed imo.

    • The constant and obsessive focus on housing is understandable, but can get tedious.

      I see the housing bubble as merely one more artifact of the current global era of easy money policies. No doubt this era will pass when the current shaky system of fiat money collapses. Until then, don’t expect little things like macroprudential rules, or the abolition of negative gearing, to make much difference 😯

  4. Well I missed the start of discussions today, lively comments already and what a day its going to be.
    Off shore, in the planets largest economy we have the DOW down about 315 points, a reasonable correction the likes we haven’t seen for a while, and in this little backwater of Aussie we have Joe H underwater to the tune of another 10 billion to a record deficit, the largest since records began. (as the climate change followers always like to add as a rider ) And just to remind all, Joe doesn’t have a snorkel.
    If you believe the sharpest knives in the draw are the equities market investors, and some of the dullest are the property market speculators, the sharpest guys are pulling their money, and their confidence out. How that pans out over time for the property dullards is speculation but Doctor X and TMarsh are probably correct. Going to be an interesting day.WW

    • I’m with you WW – I reckon this will be an entertaining week and a prelude to an even more entertaining 2015.

      Thanks for the years worth of commentary HnH, have a good break.

      • Gunna, I would like to catch up with you early next year, I have a rail line project I could really use your advice on. Thanks for your wisdom this year, and be safe over Xmas.WW

        • No worries WW. I know sweet FA about rail, although I like long rail trips. But if you want to chew them over avec moi, count me in!

      • Well, I didnt plan on having a seige thrown in to the mix.
        The rail project. trains run on rail track, trains have improved, track, mostly is still as it was constructed in the 1880’s. I have come up with a new type of rail track and manner of installation. It has global application, but your IB background and knowledge of the far east , plus I approve of the bandoliers, makes you a good candidate for the future team. Patent applications are ready to be submitted but I will wait till the end of Jan, until i can get hold of persons to speak to.
        The first you may hear of it publicly may be the design of the track for the brisbane to melbourne link. my email is [email protected]. WW

  5. Nominations for the MB Village Idiot of 2014 anyone?

    I have someone in mind! 10,000 posts a day, and no wiser.

    • To whom could you possibly be referring? 😀

      Not grasshopper, our furry little friend with the fuzzy hair and even more fuzzy opinions?

    • Just a youngish coder Lorax .. I see these guys everyday , and was probably just like him once.

      He’ll learn .. Just take a bit more life experience to get there. A bit more thought before commenting every 3 minutes, googling something, then posting would be nice, but that’s youthful enthusiasm.

    • Whut? I find your this continuous portrayal of him utterly disgraceful. As if you have made seminal contributions to the debates here.

      • Meh its a thing, I take no offence… as for the googling something and posting that’s a completely farcical interpretation — I already know what I’m googling and the thought that got me there, I use google as a ready library because I’ve already consumed all that information before.

        Apparently the speed of thought isn’t a constant, and for some its like watching molasses run….

    • At least there’s no malice in those 10,000 posts.

      On the other hand, there’s a poster on this site who scornfully refers to those who aspire to home ownership (i.e. household formation, family, etc) as the ‘I wanna house crowd’.

      Makes one’s skin crawl.

      • No malice in his posts! I suppose his references to “boomer scum” are dripping with the milk of human kindness. 😀

      • dripping with the milk of human kindness

        Alas no, they’re dripping with the bloody tears of a life spent observing them in the wild…

      • Mate, I’ve been called a housing spruiker!

        Just because you don’t want the RBA to engineer a housing crash, doesn’t make you a housing spruiker.

        There is a grey area between the crashniks and Peter Fraser you know.

        If you aspire to home ownership, it won’t happen with a housing apocalypse. Look at youth unemployment in Spain!

      • @Lorax isn’t a spruiker.

        It is frustrating that there’s 2 decades+ of evidence that home ownership is falling whilst prices grow at hyper rates (that is > inflation, savings, wages, etc).

        It is also interesting about the terminology “crash”, when really it is mean reversion to fair value / truly affordable prices (40-50% nominal reduction from current).

        Why anyone does not want truly affordable housing and the cultural shift away from RE worship is a mystery to me.

        The one that I really find hilarious is the slow melt brigade believing it is still possible! FFS have you not seen what has happened to prices over the slashing cycle? It has failed, and this must be realised by now.

        Younger generations are unable to set proper roots from the status quo and failure of things like slow melt, meanwhile they age. A swift crash is the best chance anyone has, primarly due to time.

      • At least there’s no malice in those 10,000 posts.

        Maybe not, but there’s more than enough hyperactive belligerence, contempt, ridicule, scorn, obfuscation and misdirection to give a good approximation.

        In. Every. Bloody. Post.

    • rob barrattMEMBER

      Whoa Lorax! Cat fight! We need to go 1 of 2 ways here :

      1) Add some more fuel (assuming absolutely no names): – e.g.
      I need a professional opinion here: Can a (still) empty vessel suffer from latent narcissistic personality disorder?
      or
      2) Hose it all down – e.g.
      Another saucer of milk ladies?

      I’m stuck. More contenders please.

      • No empty vessels are what the nation has to look forward to in terms of earnings…

        … I could say something unkind but as a boomer you don’t need any help…