Unconventional Economist

11

Beware the Unintended Consequences of Increased Bank Competition

The Federal Treasurer, Wayne Swan, is due to announce the Australian Government’s reforms to increase competition in the banking sector on Sunday 12 December. In anticipation of this announcement, I want to take readers through some of the key proposals put forward in submissions to the Senate Inquiry into Competition in the Banking Sector, which is

25

Unluck of the Irish

Earlier this week, Alan Kohler wrote an article in Business Spectator on the misery created by the Irish housing bubble/bust and its lessons for Australia: After 2002, when Ireland joined European Monetary Union and adopted the euro, the two things combined to create a massive property boom and, in essence, the government was able to

16

Negative Gearing Revisited

My cousin, Peter van Onselen, writes for the Australian. In my opinion, he is one of the more insightful and balanced commentators on their roster (of course I am biased). Today he published an article explaining the political sensitivities and difficulties of reforming Australia’s housing policy, in particular our overly generous taxation concessions (such as negative gearing)

21

Baby Boomers, Retirement and Asset Prices

In this week’s post, I’ve undertaken a detailed analysis of one of the key macro factors I believe will exert significant downward pressure on Australian asset values, in particular housing, over the next decade: the retirement of the Baby Boomer generation. But before I launch in, here’s an overview on what I have said previously about this issue on

18

Australia: Following Canada into a Financial Black Hole

No doubt many readers have heard that the Australian Government is looking to follow Canada’s lead and implement a Government guarantee of residential mortgage-backed securities  (RMBS), in order to foster greater competition in mortgage lending and reduce the power of the big four banks. Following on from David Llewellyn-Smith’s critique of this proposal, I thought it timely

6

US Housing Market: From Bad to Diabolical

We all know that the US housing market is in bad shape. Following the onset of the sub-prime turned ‘Global Financial Crisis’ (GFC), US house prices have tanked to be near their long-run trend: Some markets where supply restrictions were present – most notably California, Nevada and Florida – have fallen hardest, whereas those with liberal land

15

Kohler Turns Spruiker

Has anyone else found Alan Kohler’s recent spruiking of Australian residential property annoying? Twice in the past week Kohler fronted  the ABC News Finance Report claiming that Australia has a chronic housing shortage that would prevent house prices from falling. In Kohler’s first finance report, from Monday 27 September, he provides the below chart (shown from 1.18 in the video) claiming that Australia’s housing shortage will reach a

8

Canadian Housing: Another Debt-Fuelled Bubble?

Canada and Australia have a lot in common. Both economies are commodity exporters. Both countries largely dodged the global recession that has recently shocked the developed world. And both countries are said to have world-beating banking systems, with Canada’s ranked as the strongest and Australia’s ranked third strongest in the world by the World Economic Forum’s Global Competitiveness Report 2009-2010. As

22

Safe as (straw) houses

Whilst I was on vacation escaping the bitter Melbourne cold, Morgan Stanley Chief Strategist, Gerard Minack, released an excellent research article on the Australian housing market, entitled Living in a Bubble. Mr Minack’s article received widespread coverage in the press (for example, see here and here), so it is likely that many Australian readers are aware of his analysis already. And fellow

15

China’s Colossal Housing Bubble

There has been a lot of reports recently that China is in the midst of a colossal housing bubble. In March this year Edward Chancellor, financial historian and bubble expert from Boston-based global investment management firm GMO, released an article entitled China’s Red Flags (available on the GMO website after registration). In this article, Mr Chancellor offers a checklist for