David Murray warns of 1890s housing crash depression

God bless David Murray. Somehow this goes virtually unreported today:

The chairman of the government’s Financial System Inquiry, former Future Fund chairman David Murray, yesterday sounded a further alarm on the housing boom, saying a crisis on the scale of the 1890s great property collapse could not be ruled out. “What people should do is look at the 1890s, which was caused by a housing land boom,” he told The Australian. “To say it won’t happen and simply ignore it is wrong.”

Half of the nation’s banks closed their doors following the 1890s crash. “Many people say a crisis has a low probability of ­occurrence, but the problem with that view is that whatever the probability, the severity can be very high if it occurs,” Mr Murray, who is also a former Commonwealth Bank chief executive, said. “It shouldn’t be allowed to grow … it’s too big a risk to take.”

…Mr Murray called for the government to implement the FSI’s recommendation to ban superannuation funds from borrowing. The inquiry saw the ability of self-managed super funds to take on non-recourse loans to invest in residential property as a threat to stability, a view shared by the Reserve. It was the only recommendation from the inquiry rejected by the Abbott government.

Here’s the chart:


I’ve noted many times the sad truth that if you bought property near the 1890s peak then it took you seventy years to break even. But let’s look as well today at the economic fallout, from the RBA:

In Australia, real GDP fell by around 10 per cent in the first year of both depressions – that is, 1892 and 1931 respectively.5 However, the depression of the 1890s was substantially deeper and more prolonged than the depression of the 1930s (Figure 1). Real GDP fell by a further 7 per cent in 1893, coinciding with the collapse of the banking system. Growth returned in subsequent years, although it was moderate and erratic. It was not until 1899 that the level of real GDP had surpassed the previous peak set eight years earlier. In contrast, during the 1930s depression, growth resumed in 1932, and by 1934 the level of real GDP had surpassed the previous peak of 1930. Because of the relatively high rate of population growth during the 1890s,6 the 1890s depression was even deeper than the 1930s depression in terms of real GDP per capita (Figure 2). Real GDP per capita fell by around 20 per cent over the 1890s, compared with a fall of only about 10 per cent over the 1930s.

The corollary of a deeper, longer depression is more substantial and sustained deflation. Figure 3 shows that, from 1891 to 1897, retail prices fell by more than 20 per cent. By comparison, the fall in the 1930s episode was smaller at around 15 per cent, and over a shorter period – from 1930 to 1933. Figure 3 also shows that there was a large fall in retail prices from 1890 to 1891, before the downturn in output. This was due almost entirely to falls in house rents which constitute 40 per cent of this retail price index. As we mention in Section 3.2, the property market turned down in the late 1880s and was an important factor leading to the collapse of the financial system.

It seems reasonable to assert that the rise in unemployment and the fall in employment would have been worse during the 1890s than during the 1930s. However, this is difficult to establish because comparable data on unemployment in the 1890s and 1930s depressions are limited. Statistics on the employment status of trade union members indicate that unemployment peaked at almost 30 per cent in 1932; no comparable data exist for the 1890s depression. One series that is available in both periods is the unemployment rate for members of the Amalgamated Society of Engineers, Australia. This indicates that although the peak rate of unemployment was higher in the 1930s depression (almost 26 per cent in 1931 compared with 16 per cent in 1894), unemployment returned to pre-depression levels more rapidly as the economy recovered.

What caused the 1890s boom and bust?

The investment boom of the 1870s and 1880s was driven by a number of factors. Extremely high rates of population growth during the 1870s and 1880s helped to drive rapid real GDP growth – output was expanding rapidly through the application of imported capital and labour to the development of many previously unexploited resources and investment opportunities. However, productivity growth was not especially strong. That is, output per capita grew consistently, though not that rapidly – from 1861 to 1891, GDP per capita grew on average about 1 per cent per annum, compared with an average of almost 3 per cent per annum in the 30 years following the Second World War. A very high demand for housing was driven by population growth and bolstered by wealth accumulated in the agricultural sector and in the gold fields flowing back into the major cities. Underlying these developments in the private sector, governments were increasing spending on infrastructure such as railways and communications.

Therefore, it is not surprising that investment in the 1870s and 1880s was dominated by construction activity. The strength of construction over this period cannot be overemphasised since it represented the biggest building boom in Australia’s history (Figure 8). Much of it was concentrated in urban centres, especially Melbourne which was undergoing rapid expansion and was the focal point for speculation in the property market which eventually spread to other colonies (Boehm 1971). From 1875 to 1891, building activity as a share of GDP averaged around 14 per cent, compared with an average of only 9 per cent from 1920 to 1930.28 It would not be an overstatement to claim that this level of activity over the 17 years to 1891 represented the most extravagant of building booms. Even though population growth provided a fundamental reason for the construction boom of the 1870s and 1880s, building activity remained high even after the rate of population growth slowed markedly towards the end of the 1880s.29 This by itself was a source of instability.

That sounds eerily familiar, I know. When the commodities tide went out so did the immigration and foreign-funded debt that fueled the building and the result was calamitous:

In order to provide a rough approximation to movements in property prices we attempted to exploit data on the aggregate capital value of ratable properties in Melbourne and Sydney. Movements in this measure reflect changes in prices, as well as changes in the volume and quality of properties – both of which we would expect to be on an upward trend or at least not likely to decline rapidly. Figure 9 compares aggregate capital values over the two depression episodes for the cities of Melbourne and Sydney.32 Figure 9 suggests that price rises over both boom periods and in both cities were of similar orders of magnitude. However, this finding is at odds with contemporary and historical accounts of the two cycles.

Note that the calamity was bought on by peak-to-trough fall in house prices of only one third.

So, what would be the difference today? Not enough is the answer. In both previous depressions monetary and fiscal policy were constrained as deleveraging seized the country. According to the RBA, the 1890s depression was much worse largely because the damage to the banking system was worse, thanks to its being much less stable:

Although there was a boom of sorts leading up to the 1930s depression, the same factors which led to financial instability during the 1880s were more muted, or operating in the opposite direction during the 1920s. For example, the rise in the share of bank credit to GDP was smaller and started from a lower base; the share of building activity in GDP was much lower, although there was still a sizeable increase in property prices; the ratio of trading bank advances to deposits was rising only slowly from a low base and capital inflows were not sustained at the same levels, nor for as long, as during the 1880s; a greater proportion of bank assets were being held in the form of government securities during the 1920s; and in contrast to the 1880s, trading banks were increasing both capital and retained earnings at a faster rate than their total assets.

It’s a moot point which comparison would make more sense today. Probably 1930s owing to the previous collapse of the non-banking sector in the GFC which has shifted most the debt to more stable savings banks.

The other major difference today is that we have a floating currency versus the gold standard of the past two depressions. The 1930s did see a 30% devaluation of local currency versus the standard which also helped cushion the shock. I put it to you that the fall would be more like 50% from today’s levels.

That means at least some of the shock would be absorbed, or transferred, from nominal to real prices and we would not only see an enormous crash in household wealth but also a gigantic and one off crash in living standards as everything imported literally doubled in price overnight. It is the equivalent of an enormous pay cut as inflation halved household’s purchasing power.

The odds of this happening are much higher than anyone really cares to divulge. In fact, given today’s uber-concentrated external reliance upon China and steel input prices, there is a certain inevitability to it. The major question is what time frame will it happen in? If it transpires over ten years of iron ore and coal deflation then it is possible to manage via a lost decade or two of no growth – which we’ve now seen for five years. But if that external correction comes suddenly, like for instance if China suddenly hit a debt and building brick wall, then it’s on like Donkey Kong as the terms of trade collapse triggers a housing bust and global repricing of Australian risk.

You really should read the full RBA history. And when you’re done start planning how to invest your wealth outside of Australia.

The MB Fund will launch in one month to aid you in that (it is 80% international assets at launch).

Register your interest today (if you have not already).

Houses and Holes


      • darklydrawlMEMBER

        Failed – classic comment. Was thinking the same thing. It really is a new paradigm.

      • @Failed…

        “confusing and abstruse sign off”

        I’ve unpacked this before, yet some are want to make demands.

        Its simply a reflection of something I acknowledge with regards to groups i.e. a group back in the day went to south Africa to inform villagers of condom use. At the end of the day they would set up a crude film screen [white sheet] and show a little movie depicted in a village life back drop. In one specific instance the villagers reaction whilst the movie was playing resembled a cracking peter sellers or burns flick. This was quite disconcerting for the team trying to inform the silly villagers about the correct use of condoms and its benefits.

        When one team member was able to find out what all the levity was about they were dumb struck…. having not grown up watching video media they had never been – conditioned – to view it properly [environmental conditioning]. They were in hysterics about a chicken running around everyone in the film, as they had never viewed such an observation from the camera lens view or that of the directors eye.

        disheveled…. its sorta like the movie Arrival and the kangaroo metaphor thingy…. don’t get me started on observer bias and how it relates to time and space or spacial dynamics….

  1. matthew hoodMEMBER

    So what will do well in a depression. I have been told by different people who lived though the 1930’s that a good debt free farm went well. Thoughts.

    • Tassie TomMEMBER

      If you’ve got $5 million for a debt-free farm I think you’ll do well whatever debt-free assets you own (and $5 million is about what you need for a farm that’s big enough to support its capital and make a decent return). By the way, this same farm could probably be picked up for $2 million half-way through the depression – as long as your deposits don’t get frozen or take a “haircut”.

      • HadronCollision

        too soon, treibs. drive round up there, no laughing matter

        btw, the pasture land is fine now. n

      • bolstroodMEMBER

        @treibs & Hadron Collision
        Your right, it is no joke.The East coast of the continent from Gladstone to Coff’s Harbour is suffering major flooding. I was out doing volunteer clean up in North and South Lismore today.The devastation to property and people is immense. It’s still raining, the huge piles of damaged furnture, and house hold goods remain sodden and uncollected. Soon it will present a health hazard. SES and Fire brigade reinforcements are only now arriving.
        The lady whose house I took my pressure cleaner to was in deep shock, had no transport, she and friends who tried to help at the height of the flood lost 3 cars between them. She woke on friday to find the water up to the floor of her raised house.
        The Lismore CBD is a disaster area.Job losses will be huge as many businesses will not reopen.Many could not afford the flood insurance.I have lived on the Northern Rivers for 45 years, seen and experienced many floods, but, this one was different.The rainfall was the heaviest , the speed of the flood caught authorities and everyone else by surprise.
        This was Climate Change induced, as was the summer heat we have all experienced.But you will not read that in the MSM or hear it from our politicians
        Today I read in the SMH that the Adani Carmichael coal mine, that will be the biggest in the world, has been granted unlimited and unregulated access to the Great Artesian Basin. Jobs , jobs , jobs is the cry of state and federal pollies, although Adani admits that the project will create only1400 jobs.But how many climate catastrophe’s will the coal from the mine create, and how many jobs in other places will be lost?
        Having gutted the CSIRO and the Climate Commission who do our “governing representatives ” turn to for guidance on Climate Change? On the face of it Macolm Roberts, One Nation Senator, Coal mine manager and Climate Change denier.The man who gained a Senate seat with just 78 first preference votes.

      • Guns and pitchforks.

        Marc Faber answered it the best. During the Great Depression everything got hammered and the only thing that didn’t was confiscated. Spread the risk and expect the govt to steal whatever share it needs to get the economy back on track.

    • ErmingtonPlumbingMEMBER

      Well if you can’t afford a debt free farm, I recommend a good assortment of firearms with plenty of amo, several large attack dogs,… both for protection and to breed for supplemental income and, most importantly of all, a carefully cultivated network of friends and family who live close by and are prepared to get medieval when required.

      That should just about ensure your able to get by.

    • High risk / high reward is cryptocurrency. Case in point is Venezuela, where the hyperinflation of the Bolivar has led to USD

      • and bitcoins being used to buy black market items like toilet paper.

        Sorry, system crashed when trying to write my last comment.

  2. The MB fund might benefit from having a guide or even a system for people to divert super through SMSF , I am a bit put off by audit prices accounting etc. Are MB able to find a good deal for such services using possible scale to crack a better deal.

  3. So by looking at the per capita graphs, I’ll guess that when it comes, the government will fix it with the old trick of opening the immigration floodgates.

    Perhaps a doubling of immigration to 500,000 per year will restart the economy and build a Big Australia?

    • I don’t think it’s that simple though. If word gets out that Australia’s economy is shitting the bed, rising unemployment, etc. then who would willingly still try to migrate there? Especially with other opportunities (Canada) available?

    • The limitations of that approach are already becoming very apparent.

      Turning Sydney into a Sardine Tin and Mellbourne into an overstuffed phone booth carry growing political risks as pollies start to realise promising fixes that work quickly win more votes than bullshit promises of “we just need to live in smaller shoe boxes and do infrastructure smarter”.

      And that is without the growing problem of how do you expand the population only with people who have spending capacity but dont need:

      1. Jobs
      2. Social security
      3. infrastructure
      4. govt services

      Selling empty apartments to offshore buyers who do not come and live in them is a sweet deal. We make a sale and avoid the problems of someone new living in them and requiring a jobs etc.

      Even Uni students are ok as they are buying services and dont really need jobs beyond some retail jobs they can be fleeced doing.

      But permanent immigrants are a problem as they are staying and they and their offspring will need 1 – 4 above.

      Eventually unemployment due to immigration starts rising as the construction industry and manufacturing industry (killed by an $AUD bloated on offshore borrowings by the banks and the govt) start shedding jobs or simply cannot absorb the rate of new bodies looking for jobs.

      The politics of ponzi are becoming toxic. People are getting fed up with

      1. Foreign buying of property – even if building empty apartments create jobs

      2. High housing prices due to a lack of new supply that is free of foreign buyer (offshore and temporary resident) competition. Keep in mind that temporary resident foreign buyers can also buy existing property. 25% of property transactions in NSW between July 2016 and February 2017 involved a foreign buyer and that was AFTER the new foreign buyer surcharges were introduced to ‘cool’ demand.

      3. Rapid immigration placing increasing upward pressure on the unemployment rate.

      4. Congestion in transport and services like schooling, health etc.

      And they have not even cottoned onto the fact that this was all constructed with massive growth in external public and private liabilities.

      A debt bomb of mammoth proportions.

      Plus dont think our debtors will allow us to go the devaluation route without first pawning just about every remaining decent asset we own.

      • Good points, 007, but they are valid if you believe that politicians actually care about fixing the problem. They don’t, and they don’t have to. They only have to appear to be fixing it – we’ll see some crackdowns on boat people as a distraction, while increased immigration is used to help re-inflate asset prices.

      • GibboB,

        I assuming the pollies don’t care about anything other than their own neck – and their future income sources.

        They will keep doing what they are doing now – run the ponzi pumps and run deflection by calling everyone who object xenophobe and/or racist.

        It all depends on if and when that technique stops working and they believe that the public have now had enough.

        That is not happening yet but there are as they say some green shoots. The mood change change quickly and hard – we are a herd specie 🙂

      • It all depends on if and when that technique stops working and they believe that the public have now had enough.

        2 years ago there was virtually no mention of housing affordability in main stream media or the parliament. Now, it’s the topic du jour (and I do credit MB for assisting in this). The immigration ponzi is getting more and more understood by people and would not be surprised to see it widely and objectively discussed over the next 2 years (even in parliament)..

    • Not only will the government be forced to cut immigration, the market dimensions of it will also crash as unemployment skyrockets. Folks don’t emigrate into depressions.

      • I disagree, Australia with the free medical, education etc will always be attractive to people from countries less fortunate that don’t have these free services. To millions of people around the world, migrating to Australia is like winning the jackpot, job or no job.

      • J Bauer,

        Correct, there will always be takers for a ticket to Oz. However, not even the government wants immigrants that have no skills or cash. Preferrably they have both and demonstrate it by buying a bit of paper from one of education factories.

        But there are more than enough folk around the world who invest a couple of hundred grand in buying entry.

        There will always be customers for the great immigration ponzi racket.

      • I think J Bauer points are valid. The desire to get to Aust is high, and the number of interested people is more than we can handle. I think HnH is being logical but that doesn’t mean it will play like that.
        Aust voters would take the bait of some Laberal election promise to cut immigration. ANd of course the cut wouldn’t actually be enacted, and of course nobody would check.

      • if we increase immigration, even from the elevated levels it is at now, how do we reconcile that we are plundering the type of individuals that source country needs to increase its own living standards? what merit is there in Australia continuing to plunder the engineers and doctors of the 3rd world knowing full well that this holds back those 3rd world countries from improving themselves? thoughts?

      • None Travis, but our elected leaders couldn’t give a shit about their own people, why would they care for others?

      • By living in Australia you’ve already hit the jackpot. IMHO when the next crisis begins, you really won’t want to be anywhere else. During those years we would probably have to spend a lot more on Defence to militarise our northern borders – for obvious reasons.

      • can we stop the whole “erryone wanna move here” garbage. Lets get it right “erryone from a shithole thats marginally to much worse than Australia, wants to move here”. Hopefully when the BBC axes neighbours, even Brits will no longer be fooled into coming here….

      • And also, take a look at a chart of immigration into Oz in 2008. When the GFC hit, immigration into Oz dived hard. It rebounded a year later when the recovery began.


        HnH is right. During a big downturn immigration falls off big time. It only comes back when the recovery is visibly under way.

        I agree with David Murray and have thought for sometime an 1890s style depression is coming where high debt, high speculation and the gold rush boosted Oz. This time we had China and the commodities boom plus high debt and speculation – very similar… An 1890s style depression would bring a 10 year depression. There would be very low immigration during this time at the same time as a property bubble bursting/ Mining bust 2.0/auto sales crash.

        We would be in the thick of a massive downturn on all fronts. It’s not the best situation but with private debt increasing from below 30% of GDP to over 200% today – there are consequences…

      • If history is guide, early 90s recession, the immigration intake will collapse. There was an immigration spike in the late 80s that mirrored the boom at the time, but the numbers collapsed as soon as the recession we had to have hit, they may have even gone net negative for a year if I remember correctly.

      • Collapse in demand to immigrate or collapse in numbers due to the doors being shut?

        That is a big difference.

        We will definitely see the latter if employment collapses but that still does not preclude enough to soak any excess housing – of which in Sydney and Melbourne there is little.

      • I don’t believe their was any change in immigration policy at the time, so I believe it was a drop in numbers wanting to come, that meet the criteria.

        I think it would take a politically untenable drop in immigration standards to maintain or increase numbers in the face of a recession.

      • ZIRP? Phil?

        The record low target rates and mortgages rates have NOOOOOOTHING to do with any of this – that is just some old Austrian myth.

        Lucky Phil did not even mention goosed interest rates as a factor so it could not possibly be a factor. I think I need to read a Luci Ellis speech to help me calm down – I feeel the vapors coming on.

      • Try Functional Finace and the Federal Debt – Abba P. Lerner

        disheveled…. the Austrians should have never enabled the whole RE mess with the property thingy and anti tax zealotry….. oh…. and enabling all the financialization by wonky deductive axioms….

    • That might work if migrants become a new source of borrowers that will inject ‘new money’ into the economy. I the circumstances discussed the reality in my view is that aggregate incomes will just be sliced and diced even more along with the tax burden of mass migration. Budgets will be more disciplined (by markets) than in the past.

    • Look, as f**ked up as the Aus immigration system may be, it does not offer pathways for immigrants who have no cash or skills. Forget the fringe fraud activities around 457s which result in a few hundreds of immigrants. The other 200k+ pa is coming either as skilled workers, or to pay for an education, to then try to find a job and stay.

      That approach can’t survive a recession, people will stop coming. They won’t come if there are no jobs, and if they come as students, they wont be able to find jobs and will have to leave (with the exception of some hardcore survivors, but how many wealthy Indians or Chinese really want to live on welfare, if they could live relatively wealthy lives in their own countries). But its chicken and egg. If the recession does not come, people keep coming and loading more and more weight into the bubble so its worse when it does pop.

  4. Tassie TomMEMBER

    Brilliant article. I’d like to add a couple of things about the 1890s.

    Back in the 1880s there were different sorts of banks:
    – Savings banks, which invested depositors money primarily in local and international government or semi-government bonds.
    – Commercial banks, which primarily lent depositors’ (and bondholders’) money to business.
    – Building societies, which primarily lent depositors’ money to fund property development. The building societies often were the property developers – they built the houses and then sold them off.
    – Land banks – depositors could literally invest their deposits in an institution which would buy land, hoping that it increases in value.

    I’m not sure where credit unions fit in here.

    In the 1890s the savings banks hardly missed a beat, the commercial banks took a pretty hard whack – many “closed their doors” for months to years but most “reopened” them at some stage and depositors got their money back (eventually), and most of the building societies and land banks collapsed pretty quickly with depositors never seeing their money again.

    Another point is that Victoria and NSW were different colonies in the 1880s – effectively different countries with different financial systems. Victoria had a much bigger boom & subsequent bust than NSW. The house price chart for NSW is very inaccurate – no good records were kept, and it is based on government valuations (hence the cliffs and plateaus as the government re-valued property). It is thought that the “official valuation” overshot what people were actually paying in the late 1880s as the government deliberately overvalued property in pursuit of greater revenue from property taxes.

    Not many working class men in the 1880s held bank loans against property, so even if their money in the bank got frozen, then how did they go bust? Two reasons:

    1) Many working class men were shareholders in various property/ land/ infrastructure companies. Back then, most shares were “partly paid” – similar to the Telstra share offerings. Effectively all these shareholders were “geared up”, because the unpaid portion of the shares was considered an asset by the companies. When the companies got in trouble they put out a “call” for the remaining portion of their shares to be paid, and the shareholders were legally obliged to pay this. If they could not (and this was almost inevitable, especially if their deposits were frozen), then they were bankrupted.

    2) Employment and deflation, especially wages deflation. The most striking example is the advent of “sweatshops” in the 1890s. Textiles (sweaters) that used to be produced by wage owners in factories were contracted to individuals, who would sew them at their homes for a price per sweater. You would get “home factories” with many people crowded into a cottage making clothing and receiving very little. The “sweatshops” then pillaged employment from the remaining factories (think 457 visas or Bangladesh-produced Vs Australian-produced fashion). The working poor (and destitute poor at this) was a major issue.

    • Great commentary TT.
      One of the banks that stayed open post 1893 crash, Union Bank, which became part of ANZ in 1947 (?) was managed in Australasia by a David Finlayson. In his obituary from THE AUSTRALASIAN INSURANCE AND BANKING RECORD. FEB. 21, 1916, it says —

      In Australia the early portion of the eighties was marked by progress in the development of the country succeeded on
      the one hand by the fall in prices for wool and other articles of Australian production, the fall being part of the worldwide movement in prices at that period, and on the ether hand by the development of Australian public and private borrowing, which a few years afterwards was carried to fatal excess. As to the true character of the speculation of the later
      eighties his judgment was thoroughly correct, and in the reaction of the earlier nineties he was well prepared for the storms which arose. His capacity for handling a dangerous situation was most conspicuously displayed in May, 1893. when he refused to observe the five days’ moratorium proclaimed by the Victorian Government. In this he considered that the Victorian branch of the bank could not be permitted to remain closed while the branches in other parts of Australia and New Zealand and the London head office were open; and as the Victorian Government refrained from the extreme step of applying force majeure the bank remained open through- out. Not only in this incident, but in the whole conduct of affairs during the crisis and the long period of depression by which it was succeeded Mr. Finlayson’s judgment was of the highest value…

      • two plus twoMEMBER

        Thanks for the tip DC. I just purchased a copy (Melbourne University Press website sells it in e-pub format if anyone’s wondering).

      • Funny you should mention this David. I actually bought a first edition copy last week! Expect it to turn up in the post today.
        I stumbled on it through doing some research about my local area in Coburg via an old heritage survey which referenced “The Land Boomers”. Being a bit trigger happy I got it on ebay only to discover you can buy it new from Penguin or Melb Uni.

        (For those mildly curious I was reading up on “Glencairn” located at 6 Craigrossie Ave).

      • I just ordered my paperback copy of the book, It’s coming over the nullabor by Camel train to Perth. True 1890s style delivery, probably take as long too. Looking forward to reading it.

      • Thanks for the reminder of this book. And have got hold of a hardback on abebooks. Got a sight of it as part of an undergrad module on history of urban life. Pretty sure it it didn’t get a look in on the major of aussie eco history. Going back to 1984 here.
        The greatest read though was Jane Jacobs “life and death of great american cities”. A paasionate defence of people friendly urban design. 50 years on and not surpassed (far as i know)

    • Thank you TT. In terms of managing/preventing this, it’s hard. To jump to the last Irish property crash, all it took was two quarters of property price drops. Neither quarter was a big drop. However, once investors growth expectations were adjusted, they piled out causing a rush for the exits. My take on this is that any policy that tries to let air out of the bubble, no matter how gently, will crash a market with a significant proportion of investors. Here we are. Will China come to our rescue?

      • C.M.BurnsMEMBER

        china is flat-out preventing their own crash which would bring down the global economy for a decade, they won’t be saving us this time

      • It was also the GFC that hit Ireland’s bubble hard, once that goose was cooked it was all over.

  5. boomengineeringMEMBER

    On the bike this morn,reflecting that I have been putting too much emphasis on availability of credit for this mess, then imagined if there were as many houses as grains of sand in Aust. No amount of finance or money lending could cause a bubble, certain tulips were rare, It’s the combination of many facets that cements the deal.

    • Credit is everything to this bubble.

      Elements like regulation, NG, CGT etc etc are not present in other parts of the world that also have housing bubbles. The common thread in ALL cases is cheap money. I don’t mean to be rude but if you believe otherwise, you’re deluded.

      • with you there Dom, the unrestricted ability to pay (credit) for something that is relatively fixed in it’s supply makes prices go to the moon. Availability of credit (supply of credit) is the fuel for sure. I do advocate that other reasons are present to explain the demand to buy a house, on a society wide basis (some massive psychological issues going on ie. need to be validated etc).
        Edit: using drugs in inner US cities as an example, there would be no street drug pushers (banks giving credit) if there firstly was not buyers creating demand (society age related expectation to be validated by being a home owner). Drug dealers don’t stand on street corners if there are no buyers.

  6. For years I talked about the first Great Depression. It was really the first GFC that marked the beginning of the end for the first experiment in globalism. The know it alls of the IYI professional class would give me a stupid look of contempt mixed with confusion. Now they are rediscovering history ’cause they read it in the papers – twenty years too late. Wankers.

    • The GFC had nothing to do with globalism… that distinction had to do with decades of privatization and increased financialization forwarded by ideologues…

      disheveled…. the GFC could have been head off during Bushes tenure [FBI pointing out the fraud… cough endemic control fraud] but Bush was advised it was a bad move with the gulf war thingy and GDP thingy…

  7. If this eventuates then we are all in f*ckd. Banks going bankrupt etc… no safe haven exists if you want to keep living in Australia surely. Take your money out of the banks and put it under the mattress?

    • And those with mortgages will likely have their debt forgiven and get to keep the property.

      • Totally agree with this – it’s unfortunate but if this scenario did eventuate it’s the property owners that win out…unless the banks take possession of the homes I guess.

      • Hasn’t happened in the other countries that have had bubbles, so why would that be the case here? Ultimately the idea will be to shield the banks which means: loss or property by borrowers who can’t pay; 2) sale of nonperforming loans to the government; 3) resale of mortgages to hedgies; 4) in parallel banks will create their own real state divisions to offload the good stuff while the chaff is bundled for sale to foreign hedgies. They will never let you keep it.

      • I wonder if people who put their German SUV on the mortgage will get to keep that as well.

      • I’d be fucking livid if this came to be. How can the reckless be forgiven and the savers shafted so badly???

      • Highly unlikely they get to keep the house(s). There is no way a German pension fund sitting on a mortgage bond is going to let that happen, they are going to want to see the house sold and proceeds used to reduce their loss ratio. They will have the power of the courts behind them so highly unlikely the over indebted get away with it.

      • Tassie TomMEMBER

        Well …. you might just be right.

        We live in a democracy, don’t we? So if enough voters were bankrupted by the whole capital:debt ratio readjustment, then one political party or another (or a third) might just change the laws of physics to keep/ gain power.

        It would be a very popular policy among those bankrupted, which would be a very large bloc of voters. Probably the Number 1 vote-determining issue among this cohort.

    • Banks are talking about being cashless by 2020 so they have it all in the banks……. Mattress cash might be worthless?

    • if you are worried about a haircut to your bank account and being bailed in try investigating the merits of these two ideas: (1) take out a bank cheque (or multiple cheques) in your name and don’t deposit until haircuts have been implemented (easy to store and secure) and/or (2) get a safety deposit box (insured) and deposit actual physical cash into the box, unwind this once haircuts have been implemented
      thoughts ?

      • The thought of bank cheques entered my mind. I’m sure they would be able to wiggle their way out of paying them…also, if the bank is “gone” then the paper the cheque is written on is worthless. The cash in a safety deposit box is not bad but then you need to time that one properly in terms of losing interest. Also, safety deposit box at a bank which is insolvent – wonder if they have recourse to the contents.

        A mate of mine has been squirelling away gold in a safety deposit box….btw

      • Was thinking gold or getting it offshore, or in shares (& hope they’re the right ones) till after the haircut.

      • This is why I own 4 classic cars, because yes their value will drop but they will always have some form of intrinsic value (or floor) somewhere in the world. Gold is another good hedge IMO, and foreign currencies / banks or even stocks in a foreign firm.

        I don’t think we’ll see bail in, here in Australia however.

      • bolstroodMEMBER

        I have seen it written here on MB that the government guaruntee on bank deposits is $250,000 per deposit,and capped at $20billion per institution.
        If that is the case,your deposit at a smaller Credit Union with a deposit base of less than $20 billion would be safer than in a large bank with a deposit base of more than more than $20B.

  8. The reason we were spared such volatility in the decades after the 1930’s?

    Automobile based urban footprint expansion, making the supply of land competitive for the first time and anchoring land prices in the same way that global trade and transport system efficiency has rendered most resource markets truly competitive.

    Stop the automobile based urban footprint expansion and make the supply of land monopolistic instead of competitive, and we are back to pre-1930 structural conditions again.

    This is a conceptual slam-dunk and it is an indictment on the establishment’s “experts” that nobody gets this.

    • Yes, Phil.

      Housing is driven by reasonable commutes to work. When this is on foot, the practicable distances are very small. The 1890’s boom was driven by rail expansion that made much more land commutable. The motor car enlarged it much further, but the big change was rail.

      There will be another land/commute revolution: driverless cars. They will be much faster, clean and commuters can read a book or email in transit. They will bring a lot more land into commutable distances from work.

      First, Oz will have a giant land bust and discover risk and caution.

      • Jumping jack flash

        +1 dc.

        Rediscovery of risk and caution is right.

        They will need to fix the feedback mechanisms too. At the moment debt-induced asset price inflation is masking the risk of cheap debt. The cheap debt is secured against something that keeps rising in value. At face value, risk mitigated.

        This is just one of the many, many loopholes that have been created or discovered to allow people to get insanely rich, instantly, from a mountain of someone else’s debt, “safely” secured against property.

    • ErmingtonPlumbingMEMBER

      “it is an indictment on the establishment’s “experts” that nobody gets this”

      Yes +1000
      Thank a plutocrat ouned Media for our misinformed electorates also.

    • “This is a conceptual slam-dunk and it is an indictment on the establishment’s “experts” that nobody gets this.”

      Ohh many ‘get it’.

      This is by design, not accident.

      When citizens can stop and examien this of course they would fight it. However, too many citizens are fighting distraction to do so. They fund useful idiots for a reason.

    • It’s just another reason we need to decentralise away from cities. Plenty of nice areas to live in Australia, if only there was employment in those areas also!

      • And it doesn’t have to be “way out in the wops”. “Edge cities” and satellite cities are a perfectly natural, free-market, efficient phenomenon.

        “The Woodlands” near Houston, is a perfect example.

        Daybreak, Utah, is another example of a master planned community from the famous urbanism advocate Peter Calthorpe, who grudgingly accepted finally that low-cost greenfields was the only place he was going to be able to put his ideas into practice!

        As Alex Anas said in an excellent paper, “…To the extent that Transit Oriented Development and the New Urbanism are perceived as anti-sprawl tools, they may be wrongly promoted. But these tools of modern planning have an important role to play in serving niche markets. Planners may do better to view them as mechanisms that will promote efficient polycentric land uses…”

        Anas also says: “…theoretical models of urban areas with polycentric and dispersed employment show that more sprawl, not less, is often needed to offset the negative externality of unpriced congestion and improve efficiency. Planners, like urban economists devoted to the monocentric model, have long viewed sprawl as something that should be reduced. Such a bias leads to potentially drastic planning and policy remedies of which the restrictive urban growth boundary is the prime and most costly example. A higher level of sprawl and polycentric land use may indeed be optimal…”

  9. The land boomers by Cannon is a excellent account of the 189s depression. A very Entertaining read

  10. reusachtigeMEMBER

    What an ugly doomsayer this nobody is. He obviously has NO experience in property investing!!!

    • Jumping jack flash


      he obviously doesn’t understand that the more debt there is, the more house prices increase, and the more the risk reduces for the banks.

      Why don’t they just lower the rates and relax? Seems like they’ve got a bee in their bonnet about nothing they can’t fix with a simple pull of a lever…

  11. wasabinatorMEMBER

    I’m moving overseas to watch this battle of good looks from afar. Will have my popcorn at the ready.

    Just remember though: bail-ins are now law.

    • Bail-Ins … Can any shed some light on this?

      if you have cash sitting in an offset account balancing debt, can this lump sum be taken off your hands by the government in the event of a collapse in the economy? what are the rules and where can I read about it?


  12. Everyone is ignoring that the last depression we were on a gold standard

    In the days of fiat, governments and banks can do as they please

    Why are you all still refusing to accede to them? Don’t fight it, just understand where the inequities and imbalances will be so you can benefit from it

    If housing starts to fall or stall, we will get government deficits, or lower interest rates, or both
    Don’t be in cash. Banks and government don’t want you to be in cash, and they are omnipotent

    Money and labour will continue to be devalued. The endgame is probably a paradoxically more socialistic system

    • The Patrician

      +1 The US have shown exactly how its done
      Corporate Socialism
      Bail out the Corporates
      Socialise the costs
      It is already happening

    • +1 Both depressions.And they both had a lot to do with hot international capital. Things like land restrictions for whatever reason, can greatly aggravate bubbles but are not the cause; it took decades of residential development after the 1891 bust to back fill railway development in Melbourne.

    • I agree fiat money changes things significantly vs. a gold standard, but it won’t stop nominal prices in real assets like property and equities from crashing like it just did in the US and Western Europe. If you think a major market correction is going to eventuate then you WANT to be in cash; just not AUD.

      • the value of fiat money is always plastic

        If it needs to be reduced, it will be, and consequently the price of assets will go up

        Its just not even up for argument

        The only risk is political: if there isn’t the desire or the will to do this

      • @coming the value of fiat is law…. backed by taxation… same F*%n thing as gold yet its not dependent on holes in the ground so the problem must be political w/ a huge slice of ideological agenda…

    • We are on a gold standard now as well.
      It has just been re-badged as a 2% crawling peg to goods and services.

    • I would have to agree Coming.

      Very different financial world now compared to then.

      These days they will say and do what ever they want to, to keep the bubble afloat.

      The problem is it will only delay the inevitably of a crash, and it will be bigger and more painful then it should have been.

      So I suppose it will happen, it will be a long while before it does though, methinks.

      • There is zero evidence for the contention that Govt will do everything in its power to continue to pump the ponzi

      • Yup. Politicians hold 300$ million in property investments, Nick X holds 8 from memory and he holds power in the senate. Few reasons why we still have some way to go and why this government will do EVERYTHING possible to keep this Ponzi going.
        MB has gambled against them for many years now and have lost badly.
        I do concede though that it’s getting a bit too crazy but still plenty of ammo to go around to prop this for a little longer

      • C.M.BurnsMEMBER

        “but still plenty of ammo”

        can you please elaborate ? the ammunition seems to be running on empty (to butcher a metaphor) to me.

      • Accessing super for First home owners is a massive one, more tax incentives like removing CGT for First home buyers too.
        They are simply replacing investors with First home owners who will take the bait. Check the latest Vic government incentives post July.

      • C.M.BurnsMEMBER

        super for FHBs won’t happen: there are now too many people talking about risks in property market, so the push back will be too significant and widespread. Furthermore, the super funds management lobby is super powerful (excuse the pun) and they are vehemently against the idea, expect it to be a non-starter

        faffing around with tax breaks for FHBs won’t make a material difference – the prices are too high therefore deposits are unattainable and lending conditions are tightening, not loosening. The numbers are too low. Besides, many FHBs are already aware that the market is a bubble, why would they buy into a market that’s already got so much negative publicity about it’s risks / popping / danger etc etc

      • Maybe and maybe not. The banks have good strong lobbies too and they want their share of that super 😉
        Yes lending is tightening but its still extra low rates compared to any point in time and Owner Occupier rates are not drifting higher as much as Investor loans rates are.
        Also, It’s markets within markets and when say Western Sydney is overpriced, North Melbourne for example is still looking ok and people are moving from interstate to get cheaper housing.

  13. During the last depression Australia had local manufacturing of essential goods. Now we don’t even refine our own petrol or make spare parts for our cars anymore.

    Things can go from bad to total-shitshow pretty quick.

    • reusachtigeMEMBER

      LOLOLOL!!! Someone else who knows nothing. We don’t need any of that because property investing makes us way more prosperous than any of that third world shit could!!!

    • However, MB has recently been reporting robust growth in the manufacturing sector. My guess is that the recent growth is only because it got hit so hard during the mining boom when the AUD was above parity and now it’s rebounding a little BUT it is still too small a portion of the total economy to compete with the likes of resources, FIRE, and tourism/education and is therefore unable to provide an immediate life raft in case the other sources of income fall apart. Any other thoughts?

      • C.M.BurnsMEMBER

        makes sense. a 20% yoy growth from fuck-all doesn’t mean you suddenly have a strong or robust manufacturing sector

      • Building products.

        You’re of course correct. A little increase in bugger-all is a huge percentage. That’s how suckers get drawn to penny stocks.

    • HadronCollision


      Somewhere between 300-1000mm of rain in 24 hours saw
      – no fresh food in something north of a dozen supermarkets in Northern NSW. Supermercados emptied in just a few hours
      – fuel stations’ fuel washed away
      – access to cash, both geographic access (road access) and branch access curtailed

      Things went to sh$t very quickly, albeit for a short period.

      Fortunately fresh water harvesting not an issue though had the power failed, rural properties would be bucketing water. Cooking an issue ex LPG. Access to more LPG problematic due to widespread flooding.

    • The Penske FileMEMBER

      I’m with you but being honest probably not as much. Almost all of mine is now lent out of private mortgages as I still can’t work out another “cash” option.

  14. Jumping jack flash

    excellent article, and well observed.

    When this thing blows it will blow big. But make no mistake, they will do everything you can imagine, and then some more, to stop it, at the slightest whiff of a problem.

    As for depression-proof industries, there’s obviously undertaking, but also circuses.
    People will die, and lots of them, but those that don’t can’t really do anything else but be entertained because of the fact there’s no work, and no money to pay you even if there was.

    I can juggle, and tell stories. Sometimes simultaneously.
    Grifting is also another depression-proof industry. It goes well with circuses, too. Watch me juggle while my kids pick your pockets.

    • ErmingtonPlumbingMEMBER

      There is always blocked sewer and burst water and gas pipe work.
      I dont like the idea if having to halve my prices to remain competative though,…or the likely hood of having to work beyond 2.30pm just to make a reduced daily target.

      • Jumping jack flash

        +1 services are good, up to a point when nobody can afford to pay you.
        Suddenly everyone becomes not quite so precious and finds they can live with pooing in the gutter.

        That’s the problem with depressions and a quick correction of the money supply as it evaporates.
        It is usually realised that our prosperity was actually debt foam and unicorn-farts, and the power of positive thinking.

        Not saying it is going to happen. Quite the opposite actually.

  15. What’s suddenly brought this on now? I’ve been talking quite loudly about this since 2004 (and have known about the problem since 1999).

    • History shows that asset bubbles are inevitably stopped by banks becoming nervous and bailing out – usually after a run of small interest rate rises. Prior to that, prices just keep rising on a wall of worry.

    • ErmingtonPlumbingMEMBER

      I bet your looking forward to telling everybody ” I told you so”.

      Vindication!,.. after only 18 years.

      • There’s always defensive investing – gold, supermarkets etc. Or you can hedge house prices I believe, using index bonds. Doubt the banks will fail, they have the Turnbull Put.

      • In the big short, 1 of the guys who was shorting the market was said to have never ever said “I told you so”. I like to think I’ll be able to refrain and do the same when the correction happens. I just hope I haven’t capitulated before then myself. At these prices I doubt it however..

      • chadszinowMEMBER

        The other quote from the big short that I like is “being too early is the same as being wrong”.

      • The real estate agent. I believe that they followed it up with, “There’s never been a better time to buy.”.

      • @footsore – literally saw some interview on the ABC somewhere yesterday where some Perth real estate agent said that very thing “never a better time to buy”. He even said this little beauty in response to acknowledging that Perth prices had dropped “at the very least we (Perth) are now less risky than the eastern states..”. Fark me!! Delusion personified.

  16. If you own property or not, the balancing act is going to come by a much lower AUD and it’s going to sink all of us. Unless ofcourse you move your savings overseas.

  17. Just to point out that SMSF loans are NOT non recourse. They are only limited recourse to other assets within the SMSF. They are mostly taken with personal guarantees and at times, security across other personal assets outside the fund.

    SMSF loans are a source of demand no doubt but I don’t see a problem in the SMSF space unless we are talking specifically about off the plan and finance approved in principal.

  18. As I posted a few weeks ago, I am expecting the crash to start anytime between now and the weekend after next, when we put our house on the market. That for me is the leading indicator of trouble. I call it the “When I get of my a*se and sell leading indicator of bubble destruction”. (WIGOMAASLIOBD) for short.

    There’s one for the text books.

    • Haha, my mum wants to sell her abode this year. In October. I am hoping it holds on until October.. after that I don’t care. But Reusa knows best, boom times ahead.

  19. PrinceOfPersia

    The idiot with the cowboy picture must be a real dill. If you are doing so well because of your properties, why aren’t you a member?! So you are making so much money but cannot afford few dollars to pay for your membership!!!!! You are an absolute loser, and people do not take you seriously, LOL. What a waste of space.

    • Ahahahahha, LOL.

      You must be new here. Reusa is the only wise one around here. Him paying for the membership? Pffftt, people willingly pay to hear him, he is an increasingly appreciating asset to MB.

    • He is pretty busy getting some negative sideways movement with some lady investors; not enough time for membership

    • reusa knows not to waste money on things that can’t be negatively geared, as negative gearing is better than an improved diet+exercise regime and plastic surgery for those who want to be more attractive

    • C.M.BurnsMEMBER

      lol. i thought he was talking about “Leaner” and was trying to enlarge the caption to figure out how he looked like a cowboy

      Our Reasu is a prussian aristorat – was born beautiful and is now even more beautiful due to all the property he owns. and he does paid speaking for bbqs and dinner parties

  20. lukehowardMEMBER

    Thoughts on USD cash safety in ETF vs account in US? (Currently have USD accounts in both AU/US.)

    • USD in any form anywhere likely good regardless of what happens to Australian banks. USD account unlikely to be bailed in.
      Play safe and move your USD to a foreign owned bank even if that account is held in Australia eg. Citibank, HSBC etc. There are plenty of HSBC and Citibank branches in Australia. Move it out of any big 4 Australian bank.

      • lukehowardMEMBER

        Sure, I have accounts at Citi both here and in the US. Just concerned that during a crisis Citi AU may go under – particularly given foreign currency accounts in ADIs are not guaranteed (for obvious reasons).

  21. So, is it still a good idea to build my first home in Perth for personal use? Renting isn’t working out for a young family.

    • yep go for it. There must be plenty of tradies in Perth who are willing to negotiate a discount on their services so you may get it built on the cheap, comparatively of course.

  22. There it is,

    the BUY signal


    Australian Property and

    Australian Banks

    @ 10:48 today, the 5th April 2017

    Thanks so much, MB … refer the post

    “Get out of property, sell banks “

    • Funkie, what’s wrong with you?

      You missed the other major BUY signal … given TWO in one day …

      How gracious of MB to do that for it’s participants !!

      @ 12:59 today, the 5th day of April 2017 :

      ” The Big Iron short presents itself ”

      Load up on the Iron Ore majors too, folk … there you have it … just can’t go wrong here !!!

    • Refer : Kipron4747 @ 2:34 today.

      HnH please, pretty please ….

      Don’t act on your own …….

      suggestions / advice / recommendations.

      Surely, you possess more wisdom than that !!!

      • Are you not worried that a rise in unemployment would smash that yield? Adelaide isn’t known for creating lots of employment. Albeit I tend to agree that it’s not a bad place to buy, given the way Sydney and Melbourne are headed.

      • SweeperMEMBER

        Below 4% would be most of Melbourne and Sydney atm. You say you would be a seller below 4% yet also claim there is no bubble in Melbourne and Sydney…

      • @Gavin, not overly concerned. Rents in the area have perhaps only crept up by only 10-12% over the past 6-8 years. Rents are not particularly unmanageable in Adelaide.

        @Sweeper, where have I claimed there is no bubble in Sydney or Melbourne? They are clearly overvalued, perhaps even in a bubble, but that will only be confirmed when and if it bursts. Your definition of an asset bubble may differ to mine.

        What yield would it take for you to consider buying property?

      • It’s not always about rental yields if you can flip a property with good CG in a few years. Live in it and there is no CGT, buy in a new state and there is some sort of First home owner incentive like no Stamp duty. Add to that, the lowest interest rates in the history of the country and you can get out with a very good lump of money in just a few years. The whole system is rigged but not participating is simply missing on a good opportunity to make good money. Don’t believe this way would have high yields moving forward, at least not in Melbourne and Sydney.

      • In excess of 8-9%. That was around about the yield that got the Blackstone types into the US market post subprime. Even then though I wouldn’t be enthusiastic, just because it is a dreadful asset.

      • You claim it’s not a bubble all the time. Or otherwise claim that a bubble can’t be defined – even when it clearly and precisely can be defined.

      • Paul, it is always about yield.
        Even for those buying for CG. Though they don’t realise it, for their decision to be rational they are really buying for the next buyers expectation of yield, or if that buyer is buying for CG, for the buyer after that’s expectation of yield etc. etc.
        At this point, if a property investor claims to be buying for CG, yet can’t tell a very convincing story as to why they are expecting extremely fast growth in rents in the not to distant future, then it is simply an admission that they are a fool. Whether they will be the greater fool is yet to be determined but has nothing to do with their investment ability.

      • Had this discussion before. You claim it’s not a bubble until it bursts (or we can’t know it was a bubble – same thing).
        Then you set out that wordy subjective non-definition of a bubble to muddy the waters. Even when the concept is narrowly and technically defined and settled on – where the current market price of the asset reflects expectation of CG not supported by a realistic forecast of cash-flow. Or to put another way – where the sum of all discounted cash flows in perpetuity < current market price.

  23. In my opinion to understand Australia’s exchange rate you only need to learn three words.
    “Marshall Lerner Condition”
    As long as Australia’s balance of payments remains dominated by commodity exports that are priced in USD and the local economy remains incapable of developing Import replacement products, our exchange rate will remain high and the Capital markets will continue to fund the game. Problems will only emerge when the Capital markets refuse to play ball. It’s unlikely that that will happen before the last thing of intrinsic value has been sold.
    I suspect the below the line portion of the J curve will be very deep and very wide but that’s the price one must pay for economic stupidity.

    • exports in USD? Really? What about the carry trade? Interest rate differential is all that drives exchange rates. A Ship full of USD 10mm of Iron Ore pales in comparison to one hedge fund (just one) raising multi USD Billions in US/Europe converting it to AUD and investing in the capital markets here.

  24. michael francis

    That’s a good paper by the RBA about the 1890’s property bust. Noticed that current RBA Governor , Philip Lowe is on the credits of that paper.

  25. Median age in China is forecast to reach 38 in 2019:
    That is typically the median age when populations become net savers so the banks find it more difficult to grow debt. That is when the government needs to step up to the plate to maintain demand.

    The private deleveraging in China by 2020 should be impacting on Australia in a big way. Anyone speculating on property should be looking to cash out before 2020.

  26. You say –
    “The 1930s did see a 30% devaluation of local currency versus the standard which also helped cushion the shock. I put it to you that the fall would be more like 50% from today’s levels.

    That means at least some of the shock would be absorbed, or transferred, from nominal to real prices and we would not only see an enormous crash in household wealth but also a gigantic and one off crash in living standards as everything imported literally doubled in price overnight. It is the equivalent of an enormous pay cut as inflation halved household’s purchasing power.”

    So protect your “real” wealth position by buying gold and gold mining shares, which is what I am doing. That will work so long as there is not a global deflation, in which case you want to have lots of cash on hand to benefit from the fall in the prices of real assets.

    • Gold actually crashes hard after significant economic down turns i.e. its a fear trade in the run up and during the panic… after there is no trading and as such no velocity e.g. it too goes poof in value… no trade no value multipliers…

      disheveled… not to mention during the gold standard era many a soverign nation went down the gurgler or fought wars due to its nature…. oops forgot gold is intrinsically deflationary…. oops….

  27. WOW returning off work only to find a level of Hayekian paranoia not seen since the GFC…. one might think some wish it…. so their beliefs ™ are affirmed…

    Were not on a bimetallism standard, we now have more knowlage about environmental impacts, saying the word – land – does not cover 90+ of what is related to its use or the viability of its use, there are geopolitical and market landmines all over the planet [Oz is largely irrelevant in the big show save association], less we forget crashes don’t really clear markets because the down swing is well past any reasonable price e.g. you just get mindless destruction i.e. aggressive short selling turning what would have been a S&L level event into the GFC and all the ramifications post facto….

    disheveled…. never fear tho…. there is more stuff to privatize and sell off, more room for individual responsibility [if your poor suck it]… and any and all natural capital can be privatized – especially potable water… that will boost productivity and via GPD…. have no fear… mirth….

  28. armchair economist

    MB is the new pscometer….whatever they say..do the opposite!!!
    Buy moar property, Buy moar bank stock, Buy moar big mining, Sell USD….The only way for Australia is up, up and away.
    Again yesterday manufacturing PMI GOOD, today SERVICES PMI GOOD, Commodity prices stable, Imports falling GOOD, as far as INCOME/CAPITA and GDP/CAPITA…these are misleading because what you reallt need to look at is GDP/investor and Income/investor which i bet is UP UP and UP….offcourse GDP/useless bogan and Income/useless bogan will be falling fast, but as long as they are not spoiling the neighbourhood…who cares…Moar rent, moar dividends = less work, moar holidays, happy life

  29. @Travis,
    How would you insure a Safe Deposit Box? Do you take a photo of mounds of cash or gold bars? I bet the claim form
    would be a fascinating document, especially the Declaration at the end of it.

    • Usually the provider offers insurance as an up sell however here is one lot providing insurance, although you do wonder if they are “safe” why the need for insurance

      No doubt some pre-registering of insurance valuables just like you would have to do with missus engagement ring when you take out home contents insurance

  30. Quality Focus

    Macro bear, Macro bore, Macro losers! Hows your 2017 recession coming along? Imminent housing crash!! Oh no wait, its a slow melt, oh no, we’re wrong again, its all fine, prices to the moon, we just called it 2 years too late and were the only ones no to see the obvious!!