Rise of the housing bubble hypocrites

From Rob Burgess today:

Shadow Treasurer Chris Bowen gave a good speech on Tuesday, promising to super-size Labor’s planned banking royal commission.

Originally intended to flush out illegal and deceptive activity in the banks, a royal commission should, he says, spring clean their legal activities too because that’s where the real damage to the economy is occurring.

Actually, Labor doesn’t need a royal commission to address the problem Mr Bowen described – namely, the hodge-podge of regulations being used to deal with the housing-credit bubble. A bit of well-written legislation would do the job just fine.

He is right, however, that we have a problem.

The key regulators who influence bank behaviour – the Reserve Bank, the Australian Prudential Regulatory Authority and the Australian Securities and Investment Commission – are discharging their duties admirably, but are still somehow allowing the banks to gobble up more and more of Australian life.

Australia’s growing private debt to GDP ratio, he points out, is second only to Switzerland’s, at 123 per cent.

Mr Bowen spoke about the need for banks to be “unquestionably strong”, complained about the “composition of the property market, investors versus owner-occupiers”, and repeated regulators’ concerns that household debt is making the economy less resilient.

Well that’s all true. But if he wants to sharpen his rhetoric, he’d should reframe those comments from the perspective of young Australians.

After World War II, only half of private sector homes were owned, either with or without a mortgage, by their occupants.

That climbed rapidly to peak at 71.4 per cent in 1966 – a level that fluctuated a bit, but was essentially maintained until the turn of the millennium.

But as the housing-credit bubble inflated, and prices sky-rocketed, the home ownership rate started sliding – from 69.5 per cent in 2002, to 67 per cent at the 2011 census, and to 65.5 per cent last year.

MB could not agree more. We just wonder how Burgess can write this one day then the following the next:

There is, however, a political danger that comes with these arguments – beyond the obvious whipping up of xenophobia…

If we got the balance wrong in the past 15 years on housing/population, infrastructure/population and growth/population, cutting immigration would seem to be the obvious answer.

But attacking the population side of the equation is a bit like the old joke about religious puritans – that they ‘don’t like sex, because it can lead to dancing’.

When it comes to immigration, we ‘don’t like people, because they can lead to policy failure’.

…it’s not hard to see that Australia isn’t full of people – only full of politicians who have stoked a property bubble without boosting supply, failed to invest in adequate infrastructure, and have tricked the nation into believing that jobs will flow from a historic run-up in private debt…

In short, the government has to take its share of the blame for creating an under-populated nation that ‘can’t afford’ to house new migrants, or provide them with services and jobs.

So in the short-term immigration levels will need to be cut. But in the longer-term we need to stop blaming willing, hard-working, would-be migrants for the policy failings of Canberra.

We are – or at least should be – much bigger than that.

If you’re against the housing bubble and, moreover, the marginalisation of young Australians, then ipso facto you can’t also favour mass immigration. Especially so post-2011 as the mining boom adjustment transpires and mass immigration into economic oversupply also smashes wages, especially at the entry level (ie youth), not to mention debasing infrastructure for the future and destroying the environment. Sorry!

This cognitive dissonance is rampant across the Left of Australian politics. The housing bubble hypcocrites include:

  • Ross Gittins, who used to regularly question the economic benefits of the population ponzi but never mentions it today;
  • for that matter, the entire Fairfax crew who would rather virtue signal in support of Domain than they would discuss the merits of immigration;
  • The Guardian Australia which never mentions immigration as responsible for anything other than Nirvana despite fake sympathies for youth;
  • the Grattan Institute which has terrific research but can’t seem to bring itself to discuss immigration even on issues like housing affordability;
  • The Greens who rejigged their anti-population growth policy to fight One Nation in the late nineties despite it destroying the environment and purporting to care about youth;
  • The Labor Party which is pro-immigration because it supports sectional union interests;

I could go on. Indeed, the only groups I can think of that occupy progressive political territory but don’t suffer from this peculiar hypocrisy are MB, The Australia Institute and Tim Colebatch.

All of the Left’s housing bubble hypocrites have advanced cases of Paulinephobia, the fear of association with One Nation policies no matter the truth. And they’re happy to abuse Australian youth in defense of this wowserishness.

Here’s a tip, guys. Pauline Hanson is nothing more than a tuck shop racist writ large and you’ve all turned her into some kind of all-consuming devil that dis-empowers yourselves and our kids.

To wit, from the AFR:

In front of the 22-storey high-rise Reserve Bank of Australia building on Martin Place is Sydney’s homeless “tent city”, where 33-year-old Rewi Waetford has been sleeping rough for the last three months.

When New Zealand-born Mr Waetford came to Australia as a 15-year-old he got a job operating a forklift at a warehouse, which paid him $37 an hour. But when the warehouse was taken over, he had to get a job as a labourer for a small construction company and copped a pay cut to $26 an hour.

Following a breakup with his partner, he found himself paying $357 a week for a lodging room in North Sydney. When the construction company didn’t pay him on time and he fell behind on the rent, he was forced to temporarily stay at a hotel.

After the money ran out for that, he rented a private room at a backpacker’s hostel, then a six-person shared room at the backpacker’s, until he ended up on the streets earlier this year. He no longer works as a labourer.

“The rent’s gone too expensive. You have to be in a relationship or shared housing,” Mr Waetford said. “It’s been good, I plan on keep doing this,” he said, referring to living in a tent alongside the other 52 homeless people on Martin Place and helping out at Sydney’s 24-7 Street Kitchen and Safe Space which provides tents, food and clothes to homeless people.

Get over yourselves, wowsers. There’s no war but the class war and you are prosecuting it directly upon Australia’s children, old and new.

Comments

  1. GunnamattaMEMBER

    What interests me is that of late (Gitto’s weekend piece on Globalisation and neo liberalism being the prime example) they are starting to run some really superb arguments, with good analysis on other issues – need for a bank royal commission, rising real estate prices, fake degrees and visa rorting, corporate malfeasance etc. They just cannot bring themselves to refer to, let alone discus, immigration and the role it plays – its use as a tool in all they would rightly observe is unfolding and is wrong – in the observations and analysis they make.

    • That might mean having to really look at Labor’s own hand in formenting the housing crisis by allowing your good mate Wodley Chontok to buy up the housing supply in leafy neighbhourhoods. It’s amazing that all these organs of government are getting the finger except the one that needs it most.

      But that would be RACIST!

  2. Personally, I blame post-modernism and its obsession with the way language is used. Seems to have led to a complete inability to discuss, or deal with, actual reality.

    • So how do you explain all the tyranny, inequality, cruelty, exploitation and general head in the sand behaviour of humanity in the world prior to the post modern deconstruction of language?

    • Ronin8317MEMBER

      George Orwell predicted this with his version of Doublespeak and Double Think. It was suppose to be a dire warning, but the Left have used it as an instruction manual.

      • billygoatMEMBER

        @ronin
        Orwell wasn’t sending a warning, he was providing the model. Do some research /not an attack – there is more to Orwell than meets the eye. Any wonder the novels that are mandatory reading through education: 1984, z for zaccarah, handmaids tale (dystopian drivel for ‘feminists’

      • @billygoat I am curious as to why you put feminists in quotes? Why you wrote ‘feminists’ not feminists when describing real world evidence that results from feminist ideas?

  3. Know IdeaMEMBER

    If your object is to entertain rather than inform then changing a stance is understandable. Consistency is not necessary and nor is it necessarily sought by the readership.

  4. fitzroyMEMBER

    Ross Gittins was on ABC radio last night about low wage growth- Not a word about immigration.

  5. FiftiesFibroShack

    “If you’re against the housing bubble and, moreover, the marginalisation of young Australians, then ipso facto you can’t also favour mass immigration.”

    The same could be said about MacroBusiness and its position on interest rates.

    • Ronin8317MEMBER

      What can Australia do about US, Japan, China and EU interest rate being at virtually 0%?. Nothing. The problem with the RBA lifting interest rate is it’ll drive the AUD to the moon. The RBA talking about lifting rate is enough to send it close to 80c.

      Australia however can determine how many new immigrants it takes.

      • DominicMEMBER

        With the greatest respect, rates are a two-sided coin: when you lower them you prop up debtors and encourage more unnecessary borrowing (a lot of it reckless) and bubbles form. The other side of the coin is that savers get shafted — low rates are not a ‘free lunch’. Savers are subsidising borrowers. Period.

        There is no need for central banks to set rates — there is no practical difference between a committee setting the price of money and a committee meeting to decide what the price of apples should be. The market is perfectly capable of determining an appropriate level for rates and the price of money will move in real time rather than re-set every few months (or even years).

        The longer run interests of Australia would have been better served with much higher cash rates. Why?

        1. The current housing bubble (caused by crazy low rates), when it goes bang, will annihilate the economy and render long-term damage.
        2. Higher rates wouldn’t have robbed the savers and they would actually have more money to spend/invest in the economy over medium to long-term.
        3. Contrary to the economic illiteracy that insists that a lower exchange rate boosts the economy, the economy would simply have adjusted over time to the higher (relative) exchange rate by increasing productivity. Switzerland is a prime example of this. Increasing productivity is what makes a country wealthy while lowering your exchange rate makes it poorer i.e. your money buys you less. Lowering exchange rates is bad economics as it allows the export sector to be lazy and ignore productivity improvements. High exchange rates force them into the aforementioned action. It’s what makes world class companies.

  6. QuentinMEMBER

    Couldn’t you say there is the same hypocrisy when calling out the cgt discount, immigration, anti-money laundering etc yet still calling for further rate cuts from the lowest rates in Oz history???

    Though to give MB a bit of rope it is often framed as what the RBA will do, not should do…

    • Not to mention championing macroprudential into being which has been a condition of lower rates all along.

      I mean, seriously. Are folks really going to question MB’s war on the bubble?

      Cripes.

      • reusa,

        Macro: large scale; overall.

        Pru: short for prudence, cautiousness.

        Dential a misspelling of Dental: relating to the teeth

        Putting it together means be cautious sticking large things in your gob. How that relates to finance I don’t know.

      • @Dennis

        >Putting it together means be cautious sticking large things in your gob. How that relates to finance I don’t know.

        Presumably – one gets paid to put large things on one’s mouth…

  7. What about Judith Sloan and now, Laura Tingle?

    Here is Ross on SBS insight in 2011 ranting against 457 visas! http://www.sbs.com.au/news/insight/tvepisode/migration-boom

    Youth are not the only ones wanting to get an entry level job. Men who used to work in car production or the mines, have to attempt career change.

    The Guardian UK or at least Owen Jones blames everything but mass low-wage immigration for the misery that Britons suffer!

      • Right. I saw Laura on ABC Insiders 23 July. Tingle said that mass immigration has a huge cost and perhaps hurts the job prospects of Aussies. But is perhaps censored from saying “mass low-wage immigration means that foreigners are hired instead of Aussies”.

        Ross (link above) on SBS Insight in 2011 made complete sense: A) we are hurting the 3rd world by importing nurses from there and B) denying Aussies a job.

  8. reusachtigeMEMBER

    I see those tent people everywhere nowadays and say to myself “youse should go get a better job”. Losers! Back in my day we would have ripped up those tents but there weren’t any to rip up unfortunately!

  9. Jumping jack flash

    “… then ipso facto you can’t also favour mass immigration..”

    I would argue that you could – with the idea in mind that mass immigration wasn’t originally used as a tool to inflate the economy, but as a tool to bring down labour costs in the face of several failed attempts of both major political parties to regulate incomes; the incessant baying of the private sector for lower wages, and then that mining boom-led debt explosion and subsequent runaway inflation in the latter Howard years – before they gamed the stats – that saw interest rates spike up, albeit ever so briefly. (Something that can never happen again, ever!)

    The fact that immigrants needed a place to live and had access to mountains of debt in almost, or exactly, the same way as ordinary Australians was, and is, largely a side effect, but now it has of course changed into the main purpose of mass immigration because Australia has little else than debt attached to houses to keep us afloat now, after the hasty exit of almost all productive activity, and the rise of the FIRE economy.

    It is simply a matter of perspective.

    tl;dr We could theoretically have mass immigration for the sole purpose of lowering labour costs if we then restrict them from buying property and taking on debt mountains to immediately throw up the pyramid. However the important word here is THEORETICALLY, because throwing mountains of debt up the pyramid is how a FIRE economy fundamentally works.

    • I did not mind Workchoices. I actually got a job under Workchoices! But then the fake left wing went all virtue signalling crazy and decided to abolish Workchoices and print 457 visas like mad instead. The 457 visas are a very blunt instrument to smash wages with and causes a lot of collateral damage. Smashing the job prospects of everyone from pizza deliverer to computer networker – with a tsunami of men from the 3rd world willing to work for $9/hour.

  10. ‘Get over yourselves, wowsers.’
    I’m not sure they can hear you while they are busy competing on how far they can ram their heads further and further up their own moral involution.

  11. TailorTrashMEMBER

    ….at least we can take some consolation that that which dare speak its name …The bubble ….is getting used more frequently in the MSM
    ……The pity is that the punters ( both local and imported ) are still borrowing up big (often to compete with the cashed up foreigners) to feed it
    ……………sooner or later the debt levels have to crack it ………how high can we go ?

  12. sydboy007MEMBER

    increasingly i see an image of the “elites” shovelling pretty much every facet of life that makes it worth living into the neoliberal turbine boiler.

    The HMAS TitanicAustralis is listing, never designed to carry so many passengers, with more by the day, repairs increasingly being delayed with no improvement in the underlying carrying capacity of the ship.

    Teh Captains of industry are furiously researching the calorfic value of non property owners and if the furnaces can set to run on consuming the leaners holding back the goodship TitanicAustralis.

  13. Any reason for not mentioning the Sustainable Australia party? Population issue is the core of their platform.
    If the criteria for a party in your list above is that they have members in Parliament then that could be countered with the fact that Sustainable Australia got a million or so votes at the Federal Level (just quoting from their website).

    Also, it’s good to look at how things were years ago regarding how negative gearing was portrayed in the media. My recollection of events is that it took repeated direct attacks at negative gearing spin articles in the MSM by Leith and Saul etc over years for the MSM to slowly respond and change their stance.

    Would expect a similar timeline necessary for the population issue.