mrd

By Business Spectator’s Christopher Joye

I clearly defeated Steve Keen in our debate in Melbourne, according to both electronic scoring and journalists who attended. So much so that Steve changed his approach in Sydney and started his presentation with the upfront caveats — “I am not a property expert” and “housing is a sideline for me”.

The debates were hosted by an Australian equities and fixed income retail fund manager, Perennial, that is commercially motivated to convince punters to get out of housing and into shares and fixed income. The audience was almost exclusively ‘financial planners’. Anyone who knows anything about financial planners will tell you that they make zero money out of housing and spend their lives trying to convince clients to invest in shares, fixed income, hedge funds, private equity, etc (that is, products they can earn commissions on). Financial planners are, therefore, almost always trying to tell folks why housing is a terrible investment.

Given these factors, I was delighted by the outcome in Melbourne.

In Sydney there were a few changes. First, given the comprehensive victory in Melbourne, the moderator, who runs Perennial’s funds management business, took a somewhat harsher line against me, pushing back more on what I was saying while offering Steve no resistance that I can recall. For mine, the swing factor in Sydney was the questions following the presentations. Every single one of the, say 12 questions fielded from the financial planners, were outright attacks on housing (and almost all of them were myths). I felt like I was battling 500 Steve Keens! The end result was that Steve prevailed according to the audience scoring.

Steve is a genuinely very nice guy. I suspect he is also pretty damn smart. But much of what he says is plain wrong.

So he successfully called a credit crisis. Yet he also publicly predicted that an Australian depression was “almost a certainty”, a recession much more severe than 1991 and 1.5 times as long a ‘best case scenario’, and assured consumers that we were facing double digit unemployment and 40% house price falls. Indeed, ask Steve for a forecast on any subject and he is likely to give you one, which of course makes for wonderful media fodder. But the hard facts are that he has been relentlessly wrong about everything except the credit crisis.

Long story short, Steve makes one objective contribution to the public debate: he has been correct in his critique of neo-classical economics’ oversight of the role of debt and debt capital market imperfections, which had been made by others before him.

But he has no alternative model of the world. And his analysis is often crudely simplistic and applied to areas that he knows nothing about. Housing is a classic example. His entire analysis of the housing market is based on a relationship between two variables that have no real relationship: the stock of outstanding mortgage debt and the annual flow of public and private economic expenditure (ie, GDP). Think about it.

It beggars belief, but Keen never discusses the much more critical relationships between changes in debt levels, the varying cost of that debt (ie, interest rates), and the incomes of the people servicing the debt (ie, households).

In his debate with me, Keen never once referred to the cost of debt or standard debt serviceability measures. He never once looked at how the value of mortgage debt compares to the value of the assets against which it is secured (ie, residential property) — using either the average levels, or the distribution of those loan-to-value ratios.

If he did, he would have discovered that gearing levels in Australia are incredibly low — less than 30%. He never once analysed the default rates associated with debt. If he did, he would have found that they are a fraction of most of our international peers notwithstanding the much higher interest rates Australian borrowers face. He never once examined debt serviceability ratios. Had he done so, he would have seen that they remain on par with the long-term average over the last 20-30 years (ie, around 33% of disposable income).

Keen can therefore provide no explanation of the link between mortgage debt levels, serviceability ratios, default rates, distressed sales and house prices. Steve’s claims are literally as crude as this: we have had a big increase in mortgage debt relative to GDP (ignoring the cost of that debt has plummeted while long-term serviceability has remained constant), hence debt levels must fall (forgetting our incredibly low default rates or that unemployment has now fallen to 5.3%), and thus house prices must also decline (ignoring that one-third of all homes have zero mortgage debt held against them).

Put differently, Keen provides no credible explanation of the relationship between mortgage debt and house prices. The media needs to understand that he is simply not qualified to talk about either of these variables until such a time as he does outline a model that deals with them.

Steve is also fond of claiming Australia is going to be just like Japan. Yet as I have explained many times before, this is a ridiculous comparison. Japan’s population growth has been falling since the 1970s, turned negative in the 2000s, and the government is forecasting that the overall population levels will contract by around 30% by 2050. This is the main reason why Japan’s real GDP has been growing at anaemic rates over the last 20 years.

It also means that housing demand in Japan has been in secular decline. So, of course, one would expect house prices to stagnate or fall if your population is shrinking. At the same time, you could not find a more extreme contrast than Australia. We have the strongest population growth in the developed world with the government conservatively projecting that our population levels will increase 62% to 36 million people by 2050 (the true estimate is likely around 40 million or more). But Keen never acknowledges these differences, or the fact that population growth is the single most important determinant of economic growth alongside productivity, because they do not suit his argument.

As a final comment, Steve engages in a great deal of ‘revisionism’ about his statements. He was quoted in the media many times during the GFC predicting house prices would fall by 40% or more ‘in the next few years’. Take this example:

“It breaks my heart. But I don’t want to live my old age in poverty and there’s no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years.”

But since he has been proven wrong by an order of magnitude (the peak-to-trough fall was less than 4%), Steve now argues his call was over 10-15 years. He says it is time for him to withdraw from the media and start doing some technical research. I could not agree more.

http://www.crikey.com.au/2010/03/02/final-word-keen-offers-no-property-market-alternative/

By Rohan Marwaha, CEO, Cityscape

DUBAI – Global real estate markets, particularly in the West, were hit hard by the financial crisis as banks slashed the amounts they loaned, sending property prices tumbling in many markets.

Two years on and property prices have begun to recover, but still have some way to go to get back to their pre-2008 highs. However, the subdued prices present attractive opportunities for real estate investors.

Here’s a look at ten cities worth investing in as their real estate market and wider economy bounce back.

>>> Top global property investment hotspots, UAE Sales, Real Estate – Maktoob Business.

Clues lead to evidence and evidence is there for all to see; that is… for those who are looking!

If you read stories about, or listen to interviews with, men and women (young or old) that have excelled in life & achieved outstanding results… there is always a common thread. Some call it a driving ‘desire/passion’, others a ‘sense of destiny’ that leaves them with the motivation and determination to defy the odds, overcome the difficulties and climb over the obstacles… in fact, to become EXTRA-ordinary.

It’s more often than not those who have all the odds stacked against them who are ultimately labelled as ‘successful’ by their peers. Everyone admires a battler and it seems that the ‘fight’ required to come out of poverty, injustice or racial intolerance wins them extra respect.

Man Swims the English Channel – Without Limbs

Perhaps you heard the story this week about the man without limbs who swam the English Channel!  In 1994 aged 26, a metalworker named Philippe Croizon lost his limbs when struck by a 20,000 volt charge. While attempting to remove a TV aerial from the roof of a house an arc of current from nearby power lines surged through his body.

Read more…

Watch Webinar Now -

“Secrets Of Great Property Research: How To Predict The Next Boom Town” >>> Here

NRL Preliminary Finals

All The Best To The Gold Coast Titans tonight as they battle with the Roosters to secure a place in this year’s NRL Grand Final next week!

The winner of tonight’s game (the Titans I’m hoping) will play the winner of Saturday nights game between the Dragons and the Tigers.

Let’s Go Titans… Let’s GO!

AFL Grand Final

We know that EVERYBODY has an opinion on Collingwood – whether they love them or hate them – so I’m going to stay quiet about that one!

Posted By Dr. Ben Kim on Sep 20, 2010

The next time that you experience a cold or the flu, remember this: giving your body plenty of rest while allowing the cold or flu to run its course is good for your health.

Conventional medicine and the pharmaceutical industry would have you believe that there is no “cure” for the common cold, that you should protect yourself against the flu with a vaccine that is laden with toxic chemicals, and that during the midst of a cold or flu, it is favorable to ease your discomfort with a variety of medications that can suppress your symptoms.

Unfortunately, all three of these positions represent a lack of understanding of what colds and flus really are, and what they mean to your body.

Colds and flus are caused by viruses. So to understand what colds and flus do at a cellular level, you have to understand what viruses do at a cellular level.

Do you remember learning about cellular division in grade seven science class? Each of your cells are called parent cells, and through processes of genetic duplication mitosis and cellular division cytokinesis, each of your parent cells divides into two daughter cells. Each daughter cell is then considered a parent cell that will divide into two more daughter cells, and so on, and so on, and so on.

Viruses are different from your cells in that they cannot duplicate themselves through mitosis and cytokinesis. Viruses are nothing but microscopic particles of genetic material, each coated by a thin layer of protein.

Due to their design, viruses are not able to reproduce on their own. The only way that viruses can flourish in your body is by using the machinery and metabolism of your cells to produce multiple copies of themselves.

Once a virus has gained access into one of your cells, depending on the type of virus involved, one of two things can happen: Read more…

MEDICAL facilities at Varsity Lakes on the Gold Coast will get a shot in the arm if plans for a 120-bed private hospital are approved.

The hospital will bolster the city’s already-burgeoning medical facilities with Gold Coast University Hospital under way at Parklands, Pindara Private Hospital undergoing a major expansion and John Flynn Private Hospital part way through a redevelopment of its day surgery facilities.

A China-based construction and engineering company is behind the proposed Varsity Central Hospital which is awaiting Gold Coast City Council approval.

The company, BCEG (Australia), wants to build a three-level complex on Lake Street at the entrance to the Varsity Central commercial precinct.

According to the development application, the hospital includes pathology, radiology, ultrasound and endoscopy departments, six surgical rooms, research areas, a cafe and basement parking for 75 cars.

Council is due to make a decision on the development application on Monday.

The complex is planned on a 5816sq m vacant block that a BCEG company bought for $2.9 million last year. The parcel is at the corner of Lake Street and University Drive, and is close to Bond University’s School of Medicine.

The parcel adjoins land in Lake Street held by Brisbane company Renaissance Retirement Living which has approval to build a vertical retirement village on the site.

Domain Aged Care has a 120-bed facility, Domain Varsity Rise, on land next to Renaissance’s parcel.

BCEG (Australia) has an office in Sydney and is linked to Beijing Construction Engineering Group, one of China’s top 500 companies.

Its projects include the new US embassy in Beijing, the presidential palace in Togo, Crown Prince Hotel in Malaysia and Shangri-La Hotel in Mongolia.

via Chinese plan for new Coast hospital Local Business | goldcoast.com.au | Gold Coast, Queensland, Australia.

The Coomera Town Centre’s massive retail heart could be open by 2013.

Westfield, the key player in the long-awaited $1 billion precinct, will lodge a development application for its shopping centre in the second half of 2011.Westfield spokeswoman Julia Clarke said the application would be lodged ‘some time after the middle of next year’, but she did not want to speculate on when construction would start despite Myer stating previously that it could be open in 2013. “Timing is all based on the planning process, and we have no say over how long it takes to determine a development application,” she said.

But Councillor Peter Young, who chairs the Sustainable City Future Committee, said Westfield’s timetable for lodging its DA meant the retail heart could, subject to the company’s commercial imperatives, be under construction by 2012 with completion in 2013. Cr Young said the extensive planning that had gone into the Coomera Town Centre would pave the way for a smoother and swifter approval process. “The hard work has been done getting all the planning right,” he said. “All the effort has been upfront.”

Westfield, in partnership with Queensland Investment Corporation, owns a 35ha site on Foxwell Road where it is progressing plans for a shopping centre that is to include a Myer department store.Ms Clarke said major retailers had shown a strong level of interest in the centre.Aside from Myer the shopping centre is expected to feature two discount department stores, two supermarkets, up to 10 ‘mini majors’ and 150 specialty shops, potentially making it the city’s biggest retail complex.

Last week the State Government approved a structure plan for the Coomera Town Centre, which has been in the pipeline for the past 20 years.Coomera Town Centre will be a transport-oriented CBD similar to Robina that will take shape on land surrounding Coomera train station and Foxwell Road.In addition to the shopping centre, there will be high-density housing, educational facilities and a new hospital.

via Coomera Town Centre could have 2013 opening Local Business | goldcoast.com.au | Gold Coast, Queensland, Australia.

50,000 Collingwood Fans meet at the MCG for a “Collingwood Fans Are Not Stupid” Convention.

Eddie says, “We are all here today to prove to the world that Collingwood Fans are not stupid. Can I have a volunteer.”

Alan Didak gingerly works his way through the crowd and steps up to the stage.

Eddie asks him, “What is fifteen plus fifteen?”

After 15 or 20 seconds Didak says, “Eighteen!”

Obviously everyone is a little disappointed.

Then all 50,000 Collingwood Fans start chanting, “GIVE HIM ANOTHER CHANCE! GIVE HIM ANOTHER CHANCE!”

Eddie says, “Well since we’ve gone to the trouble of getting 50,000 of you in one place and we have the world wide press and global broadcast media here, I think we can give him another chance.”

So he asks, “What is seven plus seven?”

After nearly 30 seconds Didak eventually says,”Ninety!”

Eddie is quite perplexed, looks down and just lets out a dejected sigh everyone is disheartened.

Didak starts crying and the 50,000 Collingwood Fans begin to yell and wave their hands shouting, “GIVE HIM ANOTHER CHANCE! GIVE HIM ANOTHER CHANCE!”

Eddie, unsure whether or not he is doing more harm than good, eventually says, “OK! OK! Just one more chance … What is two plus two?”

Didak closes his eyes, and after a whole minute eventually says, “Four!”
Read more…

Matthew Killoran   |  September 18th, 2010

More than $500 million worth of projects have been rubber-stamped by Gold Coast City Council in one day of spending.

A council administration centre at Robina, which could be worth up $224 million, was given the nod yesterday as well as the $284 million Evandale cultural precinct — but there is no set deadline to start construction for either complex.The cultural precinct was approved, despite more than half the funding yet to be sourced. Construction will be reliant on $140 million coming from State and Federal Government grants, as well as $8 million in donations and $40 million for a private public partnership to build a theatre. But, a council report said it would bring close to $400 million in economic benefit to the city during the construction phase and create more than 1300 jobs.

Economic Development boss Cr Susie Douglas said she was confident of State Government support because the 2000-seat theatre, which is part of the cultural centre, could be used to host the weightlifting events of the Commonwealth Games.”We’ll be working very hard to secure support. It’s a project of regional significance, one state and federal governments traditionally support,” she said.”If we’re willing to commit $80 million that’s a huge commitment from council. To have it matched makes sense.”She said the council was not considering the cost if the higher levels of government did not come to the party.”We’re not going to think about that. We’ll be working very hard to get that agreement,” she said.

Cr Douglas said the State Government had supported a similar project in Cairns.Cr Eddy Sarroff warned the council against committing the money without prior support from the State and Federal Government.”We need to understand what will be the cost if the money is not forthcoming,” he said.Mayor Ron Clarke said Opposition Leader John-Paul Langbroek had indicated support from the project.

Cr Douglas said no private enterprise had been approached to build the theatre in the precinct as yet.She said there would be opportunity to seek $8 million in donations from the public through incentives like tax deductions, and buying symbolic seats or bricks from the buildings.Stage one of the cultural precinct will include a theatre, cinema, an events terrace and basement car parking, while stage two will include a discovery centre and public art.Community consultation will begin soon, but a timeframe for the rest of the project will not be known until after funding has been secured.

>>> Council spends half a billion in a day Local Gold Coast News | goldcoast.com.au | Gold Coast, Queensland, Australia.