BIS: Macroprudential is awesome

More egg for the faces of Australia’s captured regulators today with the Bank of International Settlements (BIS) – the central banker’s central bank – confirming that clear and structured macroprudential tightening is a bit of a Bobby Dazzler:


Previous studies have shown that limits on loan-to-value (LTV) and debt-to-income (DTI) ratios can stabilise the housing market, and that tightening these limits tends to be more effective than loosening them. This paper examines whether the relative effectiveness of tightening vs. loosening macroprudential measures depends on where in the housing cycle they are implemented. I find that tightening measures have greater effects when credit is expanding quickly and when house prices are high relative to income. Loosening measures seem to have smaller effects than tightening, but the difference is negligible in downturns. Loosening being found to have small effects is consistent with where it occurs in the cycle.

Well blow me down with a  feather! Works especially well when “when house prices are high relative to income.”

More here for you, Capt Glenn and Wayne Byers.


Houses and Holes


  1. AFR “RBA sounds alarm on property speculators”.
    About time!
    Mind you, having helped build the pyre and tip copious amounts of diesel onto the construction, calling “Fire!!” and looking for ‘who done it’ is a bit hypocritical…..

    • We used diesel! It doesn’t combust like petrol ( I don’t know about Avgas! but I have seen petrol used on things like “Ridiculousness” when the children have it on), and when you’re burning a 20ft high pile of old shelter-belt, you need a controlled burn, not an explosion.
      Having said that, maybe the RBA has used Avgas….in which case….stand back…..

  2. Sack Stevens and Ellis and Lowe. They have had their turn. They have had 10yrs. They were warned repeatedly. They recklessly and deliberately cut without protection. This giant speculative mal-investment bubble is their legacy.

    Sack them. Move on.

  3. what amazes me is most of these idiots have been doing this line of work for 20 plus yrs, yet their main concern now is just looking after their own job.
    I would love to know what these guys tell mates at bbq’s as it’s highly likley the reverse of what what they state publically.
    It’s such a fk disaster how the public service are no longer independant thinkers, like back 30 yrs ago.

  4. ceteris paribus

    Calling regulators “captured” is speculation until there is evidence of such capture.

      • ceteris paribus

        I am ready to hear who is leaning upon whom, when, how and with what leverage. And I am talking about “leaning”, not “lobbying”.

        Otherwise, it’s a dry argument.