Thursday, February 17, 2011

Australian Bubble Exceeds the U.S. Bubble

Steve Keen does a round up on the parallels between the rise in prices in Australia and the U.S.

Our Bubble's Bigger Than Their Bubble
Whether this period marks the beginning of the end of the Australian house price bubble will only be clear in hindsight, but the volatility of the index is now extreme, and the inflationary impact and misdirected benefits of the Australian government’s first home owner’s boost (which I prefer to call the first home vendor’s boost) is obvious in Figure 3.

This is not a new phenomenon: though I apportion most blame for the Australian house price bubble to the finance sector, there’s little doubt that the fuse itself was lit by the government’s interventions via the First Home Owners Scheme, which began in 1983.

No comments: