Congratulations Bill Evans, Group Chief Economist at Westpac Bank, you got it right in May 2012 about the “endless easing” of the Reserve Bank’s overnight cash rate.
But it was typically belated for a bank economist to wake up so slowly to what’s happening around you, Bill. Seven years late.
In an article in THE AGE on 15 June 2005 I said “We have now inflated the current residential bubble to voluminous proportions and economic growth is primed to tank into a major deflation (and) …. the next adjustment of Australian interest rates would more properly be down.”
And the RBA simply shouldn’t ratchet interest rates up during a major deflation, Bill.
Tomorrow, if I’m to earn my continuing professional development points, I’ve got to go and listen to Alan Oster of the National Australia Bank give me his latest underassessment of the state of the market. [Sigh!]
I don’t say this to disrespect these men. Unfortunately, they’ve been tightly shackled to a false economics.
When will the Australian Property Institute give Steve Keen or me a guernsey to speak to valuers in more realistic terms? Of course, that’s a largely rhetorical question because, as with banking, the property industry is usually found to be backward in coming forward with the facts about bubbles.
The apparent reason for this: “We don’t want to scare the horses” may alternatively be read as “We want to squeeze the last drop of blood out of this bubble market before it bursts”.
So, let’s simply disregard the damning consequences of inflating the bubble even further, eh guys?
“It’s not a bubble?” Oh? And black is white?
I consider not becoming compromised is a pretty good reason for valuers to be at arm’s length from bankers and real estate agents who continue to deny the existence of a land price bubble.