Tag Archives: housing bubble

It is Critical that the Housing Bubble is Safely Deflated

[Published in Pearls & Irritations today 25 June. My pre-election attempt (the previous post) didn’t make it.]

Stratospheric housing prices are perhaps the most critical domestic issue in Australia. Not only are a collapse of the housing bubble and a recession now threatening, but homelessness and rent stress, unaddressed and exploited, can quickly fester into ugly politics. The elephant in the room is the excessive money created by under-regulated commercial banks.

Housing prices are a prime driver of severe inequality and a serious threat to the stability of the Australian economy. Rises in interest rates threaten to collapse the very high levels of household mortgage debt and bring on a serious recession. The dream of home ownership is disappearing for many.  Continue reading

A central dysfunction: house price inflation, stagnant economy

[Published at Pearls & Irritations, 7 Nov]

The problem with the housing bubble is not a shortage of housing, the problem is an excess of money. The solution is to restrict the amounts banks can loan. The solution is a credit squeeze. But it would have to be done carefully and the government would have to be willing to spend.

The housing market is rebounding. It is through the slump. The downturn is over and the market is making gains. So say the media reports, written by the property industry. Rising house prices are good.

Except they’re a disaster for everyone else.

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The Problem is Private Debt, not Government Debt

The obsession on both sides of politics with cutting the Federal Government deficit is not only short sighted in the context of the recovery from recent floods.  It is also economically insupportable when private debt in Australia is more than twenty five times public debt.

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