Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Does The Economics Profession Understand At All?


Does The Economics Profession Understand Very Much At All?

Hugh Pavletich
Christchurch
New Zealand

August 25, 2008

It would appear the worlds Central Bankers had a “confusing time” at their annual retreat at Jackson Hole, Wyoming, USA – if this article from the Financial Times Bankers caught between hope and despair is any guide.

Let’s hope the “Hole” wasn’t too big between hope and despair!

Since the housing bubbles burst - firstly in California - where housing had ballooned out to in excess of 9 times household earnings – there has been no meaningful discussion by economists, researchers and media - to firstly estimate the quantum of the “bubble value” or “fake value” of individual markets globally, and secondly, to discuss the “comprehensive disruption costs” of allowing these bubbles to inflate, plateau and deflate.

Housing markets that exceed 3 times household income are in bubble territory.

A rough estimate would suggest that the US housing markets have around the equivalent of 80% of its GDP of “bubble value” – Australia, New Zealand, the United Kingdom and Ireland around double their GDPs of “bubble value”.

Another useful measure is the relationship of Total Residential Stock Value and Gross Domestic Product / Gross Area Product.

Housing markets such as Houston with a Median Multiple of 2.9 ( refer 4th Edition 2008 Demographia Survey – Sept Qtr 07 data ), a population of 5.6 million people and estimated residential stock of 2 million units – and an average sale price (refer HAR latest monthly report all residential types included – dollar volume divided by sales volume) of $217,507 – would roughly indicate that Houston’s residential stock is worth $435 billion. According to the US Dept of Commerce – Bureau of Economic Analysis – in 2005 the Greater Houston Area GDP was $316 billion. It is now likely closer to $400 billion (strong economic growth coupled with strong population growth).

This would suggest that Houston’s housing stock ($435 billion) and a GDP of near $400 billion – that its housing stock value is only some 1.09 times its GDP / GAP. It would be most interesting to learn what the quantum of household debt is in Houston.

No wonder the Central Bankers – and the rest of us for that matter – are so confused. It would be of some considerable comfort if economists, researchers and media could estimate the quantum of “bubble value” or “fake value’ within the stressed markets that needs to be dealt with.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Budget

It may seem like Oliver to be so bold as to ask the Finance Minister for more gruel – but what the Dickens, Steven Joyce… is this Budget really as good as it gets?

Supposedly, the public was going to receive significant rewards – an election year lolly scramble no less – for the eight years of belt tightening that they’ve endured, and for the rundown of essential public services.

Well, what Budget 2017 delivered instead in Education and in Health were allocations barely sufficient to maintain the current levels of service delivery More>>

Scoop Full Coverage: of Budget Announcements & Reaction
Latest: Scoop Search

 
 

Auditor-General Stands Down For Investigation: Gordon Campbell On (Not) Taking Responsibility

So Martin Matthews, our current Auditor-General wishes he could have detected “earlier” the fraud that occurred on his watch at the Ministry of Transport. Hmmm. But he could have detected it earlier, surely? That’s the point. More>>

ALSO:

NGOs Pleased: Govt To Halt Collection Of Client Data

Brenda Pilott, the chair of ComVoices and national manager of Social Service Providers Aotearoa, congratulates the government on its decision to call a halt to the collection of individual client data until the concerns of not-for-profit service providers have been worked through. More>>

ALSO:

Gosh: Blasphemy Law Repeal Struck Down

Chris Hipkins, the MP who tabled a Supplementary Order Paper to add our Blasphemy Law to the Statutes Repeal Bill, said this was a "sad day for freedom of speech, tolerance, and leadership". More>>

ALSO:

Gordon Campbell: On The Navy’s Dealings With Fat Leonard, And Twin Peaks

At an official level, our “she’ll be right” attitude routinely spills over into a keen resentment of anyone who suggests the outcomes may be less than satisfactory… The Navy has now gone one step beyond. It won’t even ask itself whether it did a good job. More>>

ALSO:

NZDF: Fifth Rotation Of Troops Heads To Iraq

The fifth rotation of New Zealand Defence Force troops left today for a six-month mission training Iraqi soldiers. More>>

ALSO:

Gordon Campbell: On The Demonising Of Iran

Will New Zealand still be willing to pursue its recent trade overtures to Iran, now that US President Donald Trump has used his speech in Riyadh to single out Iran as the main source of terrorism and instability in the Middle East? More>>

ALSO:

 
 
 
 

Opening The Election Supporters

 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election