Reference :- Renowned economist , Professor Michael Hudson , recently gave a lecture in which he discussed the real estate crisis in Vancouver. During this lecture he briefly used Australia to illustrate how overpriced real estate damages a country's economy . I have reproduced the relevant part of his lecture below . The spoken word often doesn't convert to the written seamlessly , which you will notice . But the quote is pretty much verbatim .
" Real estate booms are a kind of curse . In Australia the price of having a house has gone up so high that Australia is unable to be a manufacturing centre. It is unable to produce goods and services because if you can afford to pay for a home to live in Australia , you have to earn such a high income that your employer cannot compete with exporters in other countries. I discussed this in Canberra with the head of the central bank ( The RBA ) and he said ( paraphrasing ) ' Well we really don't need industry. We actually don't need 90% of our population because we are very fortunate. We live in a nice neighborhood , the neighborhood of China , and they are buying our iron ore and our other mining stuff and we can balance our payments, and pay the banks, really without industry at all. '
And I said ' Well what's going to happen to the Australians ? '
And he said ' I guess you can say that's not in the equation .' "
(At this point the Vancouver audience laughs . )
Professor Hudson then goes on to say " And I guess it's not in the equations of economists here in Vancouver when they say Vancouver must be getting rich because of the rising house prices . They don't see that rising house prices are making the economy poor. "
I wonder if we are in Mr Morrison's equations ? My son , Ken junior , didn't want a thing to do with this post . He is cheesed off because he thinks he will never be able to afford a house . And also cheesed off that he can't get a job , what with the state of the economy and all. I cheered him up by reminding him he is at least making a few quid selling his herb cookies. Then we ate a couple and had a good old giggle about it all . I quite like the lad sometimes .
Your comrade, Ken
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