Australian State Politics

Post #45 – The Five Stages of Australia’s Housing Bubble

So recently I blogged about some of the common myths surrounding the Australian housing market. That post also hinted that I believe our housing market is entering a very fragile phase, where finally, after many false prophecies of collapse, our luck might finally run out. I am predicting that the Australian housing market will enter a volatile period within the next 9-12 months, with a drop of approximately 20-40% in the next two to three years after that. And I’m going to borrow the theory of an obscure and oft-forgotten 1960’s economist by the name of Hyman Minsky to explain exactly how this housing market bubble will pop and collapse.

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Hyman Minksy

This man’s ideas have never really been applied to a housing market though, dabbling predominantly in the world of finance. However, I believe that the financialisation of the housing market in Australia means that the leap between his theory and the housing market in Australia can be made. Let me quote BBC News to give you a brief introduction to this man:

American economist Hyman Minsky, who died in 1996, grew up during the Great Depression, an event which shaped his views and set him on a crusade to explain how it happened and how a repeat could be prevented…

Minsky spent his life on the margins of economics but his ideas suddenly gained currency with the 2007-08 financial crisis. To many, it seemed to offer one of the most plausible accounts of why it had happened.

He referred to his theory as the Financial Instability Hypothesis (FIH), and argued that lending goes through certain stages in a capitalist economy. Considering housing in Australia is no longer just a roof over your head, but rather seen as an investment and an asset, it’s easy to apply his different approach to finance to the housing market here. This is how it flows:

1. THE HEDGE POSITION: Your expected inflows are expected to be less than your committed outflows for the foreseeable future. You’re good.

2. THE SPECULATIVE POSITION: Your committed outflows are larger than your inflows, but enough to pay interest. You must refinance to pay the principal. You’re playing with fire, but still… you’re good.

3. THE PONZI POSITION: Your interest payments are greater than your inflows. You’re fucked.

I’m going to outline the steps below, and explain how they can be applied to what we have seen, and what we are currently seeing in the Australian housing market.

PHASE I: RECOVERY

This is the first stage, when banks and borrowers are cautious. They’re usually cautious because the inherent contradictions of capitalism have once again fucked things up, the housing market is a shambles and everybody is broke. You can take your pick which economic downturn you’d like to focus on. For example, (more…)

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Post #43 – 10 Myths of the Australian Housing Market

Every time I try to suggest to my family and friends that the Australian housing market is in a bubble – the likes of which no developed Western nation has ever seen before – I’m dismissed as a bit of a ‘crackpot’. Amongst the sneers and chuckles, I’m told that the Australian housing market is ‘different’. Yes, different. What makes it ‘different’ is something nobody can really tell me – but here are a few of the excuses I’ve heard:

ARGUMENT 1: WE’VE GOT BIG HOUSESLargest in the world by some counts. According to our former Treasurer Joe Hockey, this means that Australia has a fundamentally different ‘asset’ class. Here’s exactly what he said:

A lot of Australians put a lot of new capital into their homes – renovate their homes, upgrade their homes – and we have the largest homes on average perhaps in the Western World, and the world more generally. So it’s a very different asset class in Australia than in other jurisdictions.

This means, naturally, we have to pay more for our houses – because they’re bigger than everyone else’s.

DEBUNKED: Hockey is correct in saying that a bigger house costs more than a smaller house. However, it doesn’t excuse why a median house price in Sydney is $1 million, whilst in Houston, a city of comparable size and wealth, it’s about $US146,600. Americans tend to challenge us for the title of most obnoxiously big houses in the Western world, so we’d hope to see some correlation there. But we don’t, the maths just simply doesn’t add up.

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Post #42 – Evangelical Christians Are Literally Ruining My World

 

The other day I had the (mis)fortune of getting into a protracted conversation with an evangelical Christian friend about climate change. Walking to our cars’ from the train station after work, we innocuously stumbled into the conversation as we rattled on about the large storm that hit Sydney over the weekend just gone.

We both noted the intensity of the storm, our personal experience whilst it was happening, and the damage that was done. Then as an off-hand comment I stated that the “weather is going crazy these days, eh?” – more a rhetorical question than anything else. But also, deep down I was seeing if he would take the bait. You see, I wanted to know if he took the threat of climate change seriously. I remember this individual being a wiz in our science class back in high school, but I also knew his deeply-held religious convictions. What I wanted to test was my hunch that evangelical Christians don’t give a shit about climate change, or worse, they actively challenge the science.

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Post #39 – How Skype Helps Large Mining Companies Not Give A Shit

I have family and friends alike who have been fortunate enough to cash-in on Australia’s mining boom. Even though it looks like the ‘boom’ might finally be petering out, there’s still money to be made. But the golden goose doesn’t seem to be laying the golden eggs anymore… and I personally blame Skype.

You see, Skype and other forms of new technology have helped the mining industry break barriers that have existed ever since this country has had white folk in it. These barriers have been…

  • Isolation – Australia is a fucking big country. Its vast distances meant that a mining town (i.e. Broken Hill or Ballarat) was permanent and therefore needed investment and infrastructure. Otherwise labour wouldn’t be enticed to live and work near or at the mines.
  • Community – This investment fostered a sense of community and camaraderie in these mining towns, so much so that the employees banded together.
  • The Workers – United together they formed associations and unions to increase economic and political influence for the betterment of their lot in life, their community, and last but not least…
  • The Nation – The royalties, tax collection and economic stimulation played a large part in making Australia one of the richest and opulent nations’ the world has ever seen.

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Post #34 – GST From the Perspective of a Fluffy, Comfy Pillow

Hi there, I’m a pillow. Mr Comfy McPillow to be exact.

You may know me from mundane life experiences such as sleeping, providing comfort and support for a Netflix binge, or a weapon to whack someone over the head with when on camping trips. However you decide to remember me, I know you reminisce of me fondly. In fact, you may be taking comfort from me right now.

My mates and I come in all shapes and sizes plus a multitude of different designs, forms and levels of softness. Sometimes we’re just for decoration, sometimes we’re ergonomically designed for therapeutic needs. Occasionally we’re stuffed with something called memory foam, or feathers, or possibly latex and we can even assist with circulation and a good nights sleep. So yeah, we do heaps of cool shit.

But what’s the best part about being a pillow? I cater for everybody! ‘Leave no weary head behind!’, I always say. Whether you’re young or old, black or white, male or female, rich or poor – I’m there for you, I’ve got your fucking back. Literally!
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Post #19 – What The Frack Is Going On?!

I went and saw Frackman: The Movie a couple of nights ago and my consciousness was well and truly ‘fracked’. It had everything you would want in a film – drama, suspense, humour, tears and even a love story. However, it was missing one thing: concrete evidence. This isn’t to detract from this stellar film though, as The Guardian noted “… given the subsequent increased awareness about the effect fracking [the process of fracturing the earth via drilling to access trapped gas deposits] has on the environment, Todd [the director] felt the film didn’t need to go deep into science and opted instead to concentrate it around his dyed-in-the-wool subject.”

This emotive approach may leave the viewer in a state of flux, as if the film hadn’t quite dealt the irrefutable killer blow. Just to bring you up to speed, (more…)

Post #16 – Three Questions You Need To Ask Yourself Before Voting for Mike Baird

As some of you may have been made aware, I really try and encourage participation on my blog – my posts are as much about me and my observations as they are about you and your observations. Just like my post on Islam after the attacks in Paris, I’m going to base this post off a message I recently got from a friend asking my advice about the New South Wales state election, which will be held on the 28th of March:

Yo JimJam [my uber-cool nickname]… Coz I couldn’t give two shits about politics these days, what’s your view on state elections? Non bias if possible. Apart from the angst of the lock out laws I haven’t heard too much negativity against liberal state govt.

Again, I said it was going to be difficult to sum up my response in 140 characters, and I would take it to the interwebz and my blog – so you can all see my response, and possibly comment and get involved *hint, hint*. I know a lot of my friends voted for the Liberals’ in the last federal election and (just like the rest of Australia) feel dismayed and confused as to how it all went so horribly wrong so quickly. Most people don’t want a repeat of an Abbott-style onslaught at both a federal and state level. So to start my answer to the question posed, I’m going to quote the famous playwright, Shakespeare:

‘Something is rotten in the state of Denmark.’

– Hamlet, (Marcellus to Horatio)

Shakespeare’s modern day version of his famous play would probably incorporate the Australian state of New South Wales, such is the stench of corruption in this state. Something truly rotten is happening with politics around here, but bizarrely it doesn’t seem to be affecting the current premier much at all, with the ABC stating that:

Bookmakers have him [Baird] easily winning the election with odds of 20 to 1, making a win for his rival, NSW Opposition Leader Luke Foley, highly unlikely.

The current premier Mike Baird seems to have successfully disassociated himself (in the eyes of the public) from the toxicity of his Federal counterparts and Tony Abbott, plus the foul odour still emanating from the ICAC (Independent Commission Against Corruption) inquiries. Just to illustrate how impressive this is, the Abbott government’s continual lack of popularity has partly led to the surprise routing of both Liberal denominations in the states of Queensland and Victoria in the last couple of months – elections the Liberals’ were tipped to win.

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Post #4 – The WestConnex: Roads are for Chodes

Roughly two weeks ago I dragged my girlfriend along to a rally in the middle of our Christmas present shopping/hangover recovery walk through Newtown. It was essentially an occupation, the likes of which I’ve never quite seen before – in a skinny suburban street in the centre of St. Peters. Although the mood was jovial – with drum’n’bass DJ’s and pugs with sweaters aplenty – the reason for this rally was very serious indeed. Hundreds of people had gathered to occupy a main thoroughfare (and a park) in the centre of St Peters that is set for demolition (or so I’m told) if the state and federal government’s get their way. What the government is proposing looks a little something like this:

  1. a widening of the existing M4 Motorway from Parramatta to North Strathfield from two or three lanes each way to four;
  2. cuttings (or “slots”) along Parramatta Road from Strathfield to Taveners Hill;
  3. a tunnel from Tavener’s Hill to St Peters;
  4. a viaduct from St Peters to Tempe;
  5. a tunnel from Tempe to Bexley North; and
  6. a widening of the existing M5 Motorway from Bexley North to Beverly Hills from two lanes each way to four.

All sounds good once the proposal is summarised into numerical point-form as such, does it not? Who would be opposed to a new road, especially in such a congested, car-loving city like Sydney?

The two fellows that I referred to in my previous post also make an appearance this time around. Mike Baird, the Premier of NSW, and Tony Abbott, the Prime Minister of ‘Team Australia’ – both wholeheartedly embrace the WestConnex. And to let history repeat itself twice, I’m going to say that these two can get fucked, and I remind you that they are both manipulative arseholes. It’s a terrible idea and I will briefly tell you why in 10 easily digestible points. (more…)

Post #3 – Siege

So I sat in front of my computer at work about 9 in the morning on Monday the 15th, mulling over what to write for my third blog. I knew the government’s MYEFO was to be released at about midday, and a lot had already been leaked to the press – I assume as a way of softening the blow of such a massive budget blow-out. It was big news (I thought) and would most likely dominate the headlines for the rest of the week. How wrong I was…

At exactly 10:19, I received an email from my girlfriend into my work inbox. It was short, succinct and at that stage, confusing. It simply read: ‘Office in lock down :/’

Below this rather vague one-liner with a ridiculous emoticon in tow was a link to ABC News – whose information at this stage was also limited. “Police operation under way. It is believed a police officer has his gun drawn in Martin Place. More to come.” I looked up to the TV screen at work – the news-cast on the box also knew very little. For whatever reason, terrorism did not cross my mind. I questioned the intelligence of the man (or men) who decided it would be a good idea to hold up a cafe specialising in round little chocolate balls. Sure, they might have a few hundred dollars in the till, but an escape route from such a busy, central locale was near on impossible. Then I saw the flag planted – live – on the window of the cafe. He’s not planning on escaping – whoever has done this is right where he wants to be.

I was soon speaking to my girlfriend via mobile, who at this stage was worried. She works directly opposite the Lindt cafe and could see right inside the store. Their faces, the flag, the police with their weapons drawn – everything. Then the panic really set in. Rumours of the airspace shut down, reports of explosives inside the cafe and also strategically (more…)