Are economists ignoring Australia’s property bubble? – “Many leading economists whose analysis and commentary the public relies upon have so many conflicts of interest it would fill a small book.”

I view of a related discussion on the ‘UBC housing’ thread yesterday, we note this timely Australian article today [from ‘Are economists ignoring Australia’s property bubble?’, Philip Soos, theconversation.edu.au, 20 Sep 2011].

Excerpts –

“One aspect of housing and stock market bubbles continually repeats: the vast majority of economists either miss or deny their existence.
In recent years, enormous asset bubbles have burst in many countries.”

“In Australia, our $2 trillion housing bubble has seen prices rise by 127% from 1996-2010, and every fundamental indicator is off the chart.
But while it seems logical to conclude that Australia’s property bubble will inevitably burst, very few observers seem willing to do so.”

“By definition, an asset bubble requires the vast majority of the public and economists to participate in the mass delusion that prices will endlessly rise.”

“Many leading economists whose analysis and commentary the public relies upon have so many conflicts of interest it would fill a small book. Consultancies, university chairs, endowments, six-figure salaries, and industry directorships comprise part of the package that ensures economic “thought leaders” within government, industry and universities speak the words pleasing to the rich.”

…and, one might add, in Vancouver, we’re ALL ‘rich’.
-vreaa

3 responses to “Are economists ignoring Australia’s property bubble? – “Many leading economists whose analysis and commentary the public relies upon have so many conflicts of interest it would fill a small book.”

  1. No conflict of interest here – just adding fuel to the fire. Welcome to the new Vander Zalm era – this will surely create another huge migration out / brain-drain of BC’s lower mainland:

    http://www.vancouversun.com/business/take+steps+attract+more+international+students+Christy+Clark/5431434/story.html

  2. Well it’s getting hard to miss headlines such as the following:

    “Mortgage stress rises to all-time high”

    http://www.smh.com.au/business/mortgage-stress-rises-to-alltime-high-20110921-1kkg9.html

  3. And you can draw your own conclusions about what this will do to the Australian property market if the economists from the IMF are correct:

    “THE International Monetary Fund has slashed its economic forecasts for Australia, warning of a new global recession that would hit commodity prices and drive millions worldwide into unemployment.”

    http://www.smh.com.au/business/sharp-drop-for-economy-imf-warns-20110920-1kjn6.html#ixzz1Ya5jDgjo

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