Cross Kouk blames all but himself

From our old friend the Kouk, who MB served up a shellacking for much of the last two years for his uber-aggressive bullishness, hawkish interest rate forecasting and surplus-drive budget ruminations:

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Kouk officially forecast four rate rises for last year. Here is another sample of his musing from only 10 months ago:

The question now being discussed with gusto within the RBA is whether a 2.5 per cent cash rate is appropriate.

The answer is obviously a resounding no given the facts that inflation is picking up, exports are booming, consumer spending is strong, dwelling construction is hitting record highs and now that the labour market is on the brink of registering solid jobs growth.

If the additional information of massive house price growth, rising commodity prices and a low Australian dollar are thrown into the mix, the RBA decision to hike is a no-brainer and one that should be implemented very soon.

It must also be noted that global economic conditions are strong, with the US growth momentum solid, China easing policy to soften the risks it is confronting, while India and the Eurozone are reversing the poor news from 2013.

My hunch is that the RBA will be acting to hike interest rates in May. Arguably it should have hiked already, but a few month delay in the inevitable is neither here nor there. The RBA probably needs a bit of time to keep softening up the market for such a move but the reversal of views from Westpac and others on interest rates will help the RBA in this task.

By this time next year, the cash rate is set to be about 100 basis points higher than now – at around 3.5 per cent which is likely to coincide with the Aussie dollar back near parity.

Had the RBA followed his advice, the economy would now be in its worst post-war recession.

To his credit, Kouk eventually listened to MB’s “cutting and pasting” and was one of the first to join dovish MB forecasts for interest rates.

It’s very much OK to change your mind on stuff but rewriting history is poor form.  It’s himself that the Kouk should be cross with.

David Llewellyn-Smith


  1. There’s little doubt that “the economy would now be in its worst post-war recession” if interest rates had risen ( My view, as you may remember is that the RBA should have – just like the RBNZ). But guess what.? That recession is coming anyway. The only matter for future debate will be ” Could we have changed course, by raising rates, and brought the inevitable on earlier, and avoided a recession that is less deep than ‘worst’?” Now…we’ll never know….

      • Quite so. And so have I.
        But I’ll suggest that Australia would have been far better off from heron in had The Kouk been proven right ( on % rates); and you wrong. But that’s not what this blog is about. It’s yours, and your reading of the economy is why we all come here each day. Well done ( again..!!) 🙂

      • I’d prefer the Irish Central Bank version of MP to NZs

        But really anything would be better than the free for all we are still experiencing.

      • Ah, yes. NZ macro. That has seen “New Zealand property prices have reached a new record high….The previous price record was seen in March 2014.” That bastions of success. Imagine that kind of result + 1.5% cash rate. Anyway, as Flawse wrote many year back, “Its not what should happen, but what will happen” that sees us where we all are today – poorly lead by regulators who have no idea of where to go, except further down the path of economic failure.
        Low interest rates have encouraged a huge amount of local and foreign production over-capacity. It will take decades to absorb it all, even if China doesn’t slow. Higher % rates might have curtailed that deflationary misallocation in Australia. Instead…you, we all joined in.

      • Kouk’s song

        Open your eyes,
        Look up to the skies and see,
        I’m just a poor boy, I need no sympathy,
        Because I’m easy come, easy go,
        Little high, little low,
        Anyway the wind blows doesn’t really matter to me, to me.

  2. That “still losing money” comment is pathetic.

    Still, I miss the Kouklax days when he was at his nuttiest.

    • Yeah, Kouk ‘changed his mind’ when he was proven to be totally wrong!

      What an embarrassment.

      The guy has no credibility left and can be safely ignored….except for his novelty value.

      • Koukoulas told me personally in 1997 that the AUD was going to parity with the USD. It then went to USD0.50ç

        He couldn’t get a clue during the clue mating season in a field full of horny clues if he smeared his body with clue musk and did the clue mating dance. ❗

    • Yeah imagine if you were as wrong as he has been but stuck to the ‘everything is awesome’ script – telling idiots what they want to hear?


      Or a job in sell side equity strategy…

      • Hasn’t he been posting? I wouldn’t know … I’ve kill-filed all his posts. I don’t see them 😎

        Perhaps he took my advice to get a job and save money so he can retire early like moi?

      • @R2M sorry but having a job and saving is an express lane to the poor house for most… unless you save a 5% deposit and leverage like crazy in to specufesting.

      • Or go overseas and make a better salary in a lower tax environment like I did, running a closed corp and working as a consultant

    • I think the Kouk will be partially right on that call – there is a lot of supply coming since prices have risen.

      The Kouk was spectacularly correct on his house price call a couple of years ago. Some of his budget calls are coloured by his political allegiances.

      He got some calls wrong, he got some right – much like other forecasters.

  3. So an economist got some calls wrong. Big deal, being wrong makes up 50% of their job. MB is really good but I don’t enjoy these interest rate pissing contests.

    • “Big deal, being wrong makes up 50% of their job.”

      So why do they have jobs if tossing a coin would be just as accurate?

  4. “To his credit, Kouk eventually listened to MB’s”

    From my observation The Kouk listens to the data (not MB) and waits for it to turn before changing his mind. This tends to result in reasonable short term forecasts, but throws his long term forecasts (I would suggest MB is the other way around, not so great on short term forecasts, but longer term trends & themes can be quite accurate).

      • I wouldn’t agree with that, it just results in his forecasts being more accurate on a short term basis and as I understand it he actively trades (his Twitter feed indicates so), so having a higher degree of accuracy on weekly to monthly basis is more useful than over years.

    • “From my observation The Kouk listens to the data (not MB) and waits for it to turn before changing his mind.”

      From my observation he can switch from “Australia is has the world’s greatest economic future as far as the eye can see” to “OMFG the sky is falling and the sun will never rise again” within 24 hours.

  5. mine-otour in a china shop

    The Kouk and everyone else needs to get themselves down to Grong Grong to get the forecasting view of the common Australian Man.

    They are angry at Economists over there but have a really good pub dartboard to forecast the ABS unemployment data….

  6. Cheap shots like that show what a grub the kouk is. Too much time spent dwelling in the filthy ALP circles. The guy isn’t fit to call himself an economist. Not that economists have a good reputation. He is a political advisor who shells out economic advice without having a clue about how economies function. The media should starve him of oxygen because he masquerades as an independent commentator but he is an ALP mouthpiece.

    • “The media should starve him of oxygen because he masquerades as an independent commentator but he is an ALP mouthpiece.”

      I assume the media should also starve most of The Australian’s opinion pages for related reasons (but opposite allegiances)?

  7. Where is the evidence lower rates are flowing through to the non-housing economy since 2012 ? The RBA doesn’t have to cut rates to pressure our dollar further down, anyway. It’s clear they have the power in the market to jawbone it below around 80c forever and a day with a few choice phrases indicating concerns about growth and an open mind to easing. Deteriorating terms of trade, slowing Chinese demand, lower commodity prices, and worsening employment will keep one boot on the dollar, and the RBA is going to need to ensure there is enough yield differential to prevent a free-fall.

    This country needs almost complete structural and cultural reform which incentivises investment outside of housing and mining, and gives a greater profit share to labour. We don’t not need ower interest rates in the absence of serious macro-prudential controls which will just fuel more housing investment insanity. Bring house price inflation under control as a matter of priority. If it means temporarily nationalising a couple of banks and putting a few thousand mortgage brokers and real estate agents out of work, so be it.