In October last year, when the first signs that Australian nominal house prices were rising again after falling since June 2010, I argued that this was going to be a “suckers’ rally” (Riding the great debt elevator, October 8, 2012). I stuck with that call (Where to for house prices in 2013? December 17, 2012) even when the data appeared to be showing a revival in my key indicator, the “Mortgage Accelerator” (Don’t look for high-rise house prices, February 11), largely because I couldn’t...

The Seattle Economics Council has invited me to speak on the topic of “The Great Financial Crisis and the Great Recession: How we got here and the way out“. The details are: Venue: Seattle Town Hall Date: May 23rd Time: 6PM If you’d like to attend, click on this link. I’ll also be speaking with Gerard […] ↓ Read the rest of this entry...

The ABS publishes its house price index data today. My leading indicator for this is the Mortgage Accelerator, and it implies another increase in prices—and the first sign of rising real prices on an annual basis since early 2011. But there’s also a turnaround developing in mortgage acceleration which implies that the rate of increase […] ↓ Read the rest of this entry...

I interrupt my series on the instability of capitalism for a special report on the serious problem of Australia’s budget deficit. As everyone knows, the world will end tomorrow unless Australia’s government plugs its $12 billion ‘budget black hole’. And I have proof! After all, we have 40 years of data showing the ratio of […] ↓ Read the rest of this entry...

As I noted in my previous post, neoclassical economics made it an item of faith that capitalism was inherently stable, and dismissed arguments to the contrary as no more than left-wing propaganda. My favourite statement of this perspective came from the pen of Nobel Prize winner Ed Prescott, who was one of the key players […] ↓ Read the rest of this entry...

Sydney Morning Herald commentator Gareth Hutchens commented that the Rogoff and Reinhart affair shows how slow economists are to realise that their data may be dodgy, but to my mind that is insignificant compared to how slow they are to realise that their theories are dodgier still. A defining feature of mainstream economic modelling is the belief that the economy is […] ↓ Read the rest of this entry...

The bulls are roaring, house prices are rising, and all’s well with the world. Or maybe not. Certainly house prices have risen — and contrary to popular opinion, I expected price rises this year, since mortgage debt has been accelerating since the beginning of 2012 (see Figure 1). One of my many economic heresies is the […] ↓ Read the rest of this entry...

Sorry for the late notice here (the total crash of my ISP prevented me from posting when I had hoped to—and thanks to Phil Stevens for his brilliant work in reviving the site from the wreckage), but if anyone in Sydney has free time today (Sunday 14 April) I recommend attending this event between 2:00 […] ↓ Read the rest of this entry...

Last week’s column on margin debt and the US stock market confirmed that leverage plays a key role in driving movements in share markets – and vice versa. But it left one technical question unanswered for me: is the causal link between change in debt and change in asset prices, or between acceleration in debt and change […] ↓ Read the rest of this entry...

Stock markets are booming — not only in USA and Australia where economic growth is positive, but even in economies still locked in the doldrums like the UK and Japan. Alan Greenspan observed last month that this augured well for the economy, since “the stock market is the really key player in the game of economic […] ↓ Read the rest of this entry...