A follow up to this morning’s post is required. What a prize statement from David Murray yesterday:
“What bothers me most is that we’re not allowed to have a debate about how debt and deficit should work their way through the cycle, given the character of our economy.”
That could be a subheading to the MB masthead. So, let’s examine for minute why we’re not “allowed” to talk about the role of debt and deficit in the economy in the hope of helping Mr Murray through his loneliness.
It all boils down to one simple fear that can explained by every local real estate agent in the nation: don’t talk down the property market. This is the one ring that finds them and in the darkness binds them:
- politicians only want prices to rise because anything else will threaten their power;
- regulators are both captured and terrified of being responsible for popping the bubble and are in so deep that they see no alternative to going further in;
- banks pump out relentless streams of propaganda to reinforce the notion that nothing is amiss;
- both halves of the media duopoly are hooked on the balance-eating ice of real estate advertising. Domain is worth as much as the rest of Fairfax combined. As their business models erode it only gets worse;
- the rest of the services economy giants that make up 70% of the economy benefit directly from the wealth effects and know that without them life sucks, see the 2010-12 period;
- the punters are in it deep!
The bubble has engulfed the economy, business, politics, social structures, even culture as the “fair go” becomes a comical anachronism. There is nobody left to talk about debt, other than a dark side of bloggers, a few visionary individuals and a large swath of disenfranchised youth. Welcome to the dark side, Mr Murray!
