Dear oh dear Alan, you love the odd easy quip don't you?The fact...

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    Dear oh dear Alan, you love the odd easy quip don't you?

    The fact is that there is substance and depth to Keen's argument.

    The Economist was drawing too easy analogies with the GFC based on the subprime housing loans in the US.

    At various times the know-all OECD does the same thing and pronounces Australian house prices too high by 40% or so.

    Now you can split hairs about what % and by when all you like. And take bets like a trader would. Because he was baited into doing that.

    Or you can respect that he is someone who doesn't just swallow conventional thinking.

    Unlike the Economist and the OECD Keen understands the Australian market and that housing is much more sticky because the debt follows you, unlike in many US states. But corresponding with the fraud being perpetrated in the making and bundling of subprime loans in the US, there had to be dodgy dealings by the Australian banks.

    People like @Dopey in here would tell us from time to time that the Australian banks were sound. But they've been revealed to be rotten. Where are the prosecutions for fraud?

    What threw Keen's predictions was the interference by the RBA to prop up the housing market. This should not have happened. It was wrong then and wrong now.
    Also the covering up of the rotten behaviour of the banks caused delay.

    If the market really were transparent, Keen would have been proven right and on time. He's still looking right because the unwinding has just begun. What do you imagine is going to stop it?

    The rule is that the longer and more extreme the rise, the harder the fall. Take that and add it to your collection of homilies.
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