For readers not aware of Steve Keen - he is the Associate Professor of Economics at the University of New South Wales - who is very much "his own man".

As Bernard quite rightly states - his paper "Lies, Damn Lies and Housing Statistics" is well worth a close read. Of particular note is the graph by Case Shiller of the US housing market since 1890 - with an overlay by Stapledon of the Australian housing market over that period.

It is hoped economists / researchers here in New Zealand provide us with an overlay of the New Zealand market over that period as well.

The RBA speeches certainly attempt to show the Australian housing market in a rather favourable light.

Outside of this however - there is deep concern that the Australian housing markets are grossly overcooked - and only propped up by the First Home Owners Grants (FHOG) of $21,000 for new homes - $14,000 for existing - due for review in the next few months.

Above the bottom end of the market - prices are falling.

It appears the Australian Federal Government could be pouring about $200 million a month in to the FHOG. The whole thing is a nonsense - and illustrates the power of property lobby groups there. The FHOG is in reality a "property industry mates welfare programme".

The sad thing is that its enticing too many young and poor people in to excessive mortgages - as the economy is winding down, with rising unemployment.

The political and commercial interests however are acutely aware of the consequences of the massive housing bubbles collapsing in Australia. This years Demographia Survey www.demographia.com clearly illustrates the gravity of the situation.

Bubbles - by their very nature are never sustainable of course.

Miguel,
Good point on Tiwai Point. Would it be big enough though to have that effect? Does its electricity consumption punch above its GDP weight?
cheers
Bernard

The definition of insanity is doing the same thing over and over again expecting different results. This is exactly what most foreign economies are engaging in. They are trying desperately to encourage the status quo. This is not the greater depression or event he great recession this is the great correction. We are seeing a fundamental economic shift from the west to the east. It may take a couple years or even a few decades, but it will happen.

Bernard - Tiwai basically needs its own power station, so yes it's big. Also, remember that GDP measures value-added rather than value, so I'd say that Tiwai definitiely punches above its weight for electricity use vs output.

Andy,

are you sure they're not just queezy because they feel there's only one way to get rid of all the excess wine from last year?

Re Electricity - NZ's total gen capacity is around 8,600MW growing to ~10,000MW by 2010 (Meridian). Tiwai cut consumption 30MW (5%) & Tiwai is fed from Manipuri so it's effect on those consumption figures may not be that significant.
I believe the electricity market fails us on the retail side. We are seeing healthy investment in generation but high fixed rates on the retail side - consider average wholesale rates of <10c vs. retail rates of well over 20c - there is a lot more than ~40% or so transmission losses and line charges hitting us. I'm hoping smart meters which will allow time of use billing will eventually see retailers offer competitive deals on a margin basis - so you pay wholesale plus a margin on what-ever the spot rate is. Imagine that - a market which balances supply and demand through a pricing mechanism!

Dumping fruit! surely it could be stockpiled as ethanol, jam, dried fruit, feed supplement..

Andy,

Yes. You're right. Baltic Dry decidedly weak in last couple of weeks. Fair point. It does seem to have hit a bottom of sorts though since November. Still above its lows.
cheers
Bernard

Re Elec - yes exactly, supply and price mech on the wholesale side are working fine however not on the retail/residential side - & I am suggesting this is due to our old meters which require retailers to build everything into fixed rates. Ripple control relays on water heating has done a lot there with day/night rates but the real transformation I hope to see may come with the installation of smart meters and half hourly billing.

I tracked back to John Gappers article, originally posted 21 Jan 2009. Not exactly new material. But I think the statement "bank nationalisation is no panacea because governments are bad owners of banks" needs to be analysed. We need to differentiate between the MONETARY SYSTEM and the BANKING SYSTEM. The two functions are separate. The CREDIT CRISIS has been brought about by the ABUSE OF FRACTIONAL RESERVE CREDIT CREATION by the BANKS. The fractional reserve system allows the CREATION of CREDIT/MONEY as a manufactured book entry, by a multiplication factor of deposits. The lending of this new 'money' at interest then creates a spiralling debt leverage and profits for the banks as long as no debtor defaults. When the inevitable defaulting begins, the leverage goes into reverse and the valley becomes as deep as the mountain was high.
The correct statement that Mr Gapper should have made, in my opinion, is " Banks are bad owners of the Money Creation power, and should have it stripped from them, and just do their job of storage, transaction and lending of owned assets". Governments, on behalf of citizens, by 'BAILING OUT' these failed banks, have shown that the real security of any money system is the productivity of the citizens and the natural wealth of the nation. So in fact, a stable democratically elected, checked and balanced, GOVERNMENT IS THE BEST GUARDIAN OF A STABLE MONEY SUPPLY. ( Zimbabwe is a failed state, just as certain banks have failed). When the constitution of the United States of America was decided upon, they provide for the separation of powers: the Executive, the Legislature, and the Judicial. They also provide for the Monetary system to be the sovereign right of Congress, and the BANKS have subtly usurped this power to themselves through the creation of the Federal Reserve Act 1913 - ref Wikipedia.
The creation of money is a SOVEREIGN RESPONSIBILITY OF GOVERNMENT BY LAW and needs to be balanced against the PRODUCTIVITY OF THE NATION. The BANKING SYSTEM is the function of book-keeping and storage of the money and enabling the transactions between parties.
So the real solution for the future is the NATIONALISATION of the MONETARY SYSTEM, but NOT the BANKS. The banks need to have the Fractional Reserve Money Expansion fraud License, removed from their power. Governments can then create sufficient money supply for the nation's economy by bringing it into existence as non-interest bearing debt. This removes the burden of compounding interest on the nation's taxpayers and allows the wealth of the nation to be released rather than captured by the International Banking Cartels through the present Fractional Reserve Money Creation system, where whole nations are held in debt slavery ( witness the third world and the IMF slavery - same system )
Wake up Bernard Hickey and your 'educated' colleagues - are you blind, or do you choose not to see - let's have some real presentation of alternatives here, not regurgitated 'robot ' mentality.

Have a nice day - will you allow me the academic freedom to post this response?
John Kelly

Many farmers' world- wide growing especially middle and high range products will be driven out of business. The selection of goods on the shelves is already smaller. As I said to our grocery- shop owner months ago: "Welcome to a new/ old potato culture" = deja vu!

In other industries it is even more complicated because most big manufacturers rely on smaller, but struggling or even bankrupted suppliers. A very dangers scenario for any economy appears when the chain of supply is interrupted.