The Australian Property Bubble Explained with Steve Keen
b'ARVE Error: Mode: lazyload not available (ARVE Pro not active?), switching to normal mode\\n\\n\\n\\n\\n\\n\\n\\n\\n{"@context":"http:\\\\/\\\\/schema.org\\\\/","@id":"https:\\\\/\\\\/onproperty.com.au\\\\/the-australian-property-bubble-explained-with-steve-keen\\\\/#arve-youtube-brx18yrtpty659a0b2e476e8872617393","type":"VideoObject","embedURL":"https:\\\\/\\\\/www.youtube-nocookie.com\\\\/embed\\\\/brX18YrTPTY?feature=oembed&iv_load_policy=3&modestbranding=1&rel=0&autohide=1&playsinline=0&autoplay=0"}\\n\\n\\n\\nIn today\'s episode economist Steve Keen explains why Australia is in a property bubble and what you can do about it.\\n\\nIs there currently an Australian property bubble? Some experts say that there is and that prices in property could fall by as much as 40% or more. While other experts say that we aren\'t. Today, I have with me an expert in the Australian property bubble, an economist, Steve Keen, who understands this issue like nobody else.\\n\\nI was really excited to get him on and to understand why he believes that we are in a property bubble in Australia, to talk through some of the statistics and to also really get an idea of is this bubble likely to pop in the near future and what can we do about it as investors. I\'m really excited to have this interview today on whether or not Australia is experiencing a property bubble and what we can do about it.\\n\\nI do want to apologize ahead of time for the quality of the recording. The internet at my house wasn\'t performing very well when we did this and we\'re talking to each other on the opposite sides of the world. Unfortunately, there are some areas where the audio cuts out or it\'s not too strong and the video can be quite pixelated. So just beware of that, I do apologize for that, but there wasn\'t much I could do. But this definitely an interview worth watching.\\n\\nSteve:\\xa0Okay. Let\'s see if it works with me calling you.\\n\\nRyan:\\xa0Okay, cool.\\n\\nSteve:\\xa0Share screen. Start. Let\'s see.\\n\\nRyan:\\xa0Alright it\'s just loading.\\n\\nSteve:\\xa0Yeah.\\n\\nRyan:\\xa0Okay. Yup, I can see it.\\n\\nSteve:\\xa0Okay. That particular graph is what I\'m calling a smoking gun of credit. So the red line is GDP. The blue line is GDP plus change in debt, which is basically credit \\u2013 plus credit. And the black line is credit graphed on the right hand side. Okay. Whenever the blue line\'s above the red line, credit is adding to demand. When it\'s below the red line, because people are paying off debt more than they\'re taking on new debt, credit\'s reducing demand \\u2013 credit\'s negative.\\n\\nRyan:\\xa0Which basically never happens on this graph.\\n\\nSteve:\\xa0Well, it never happened in Australia so let\'s take a look at the American, just give me a sec to get to the right part of it. Right chart here. This is all charts for a book I\'m writing right now on the topic. I\'ve got to change that. That\'s the UK. Where\'s the USA? This will give you just as Australian in private debt. This is when I started calling the crisis to understand why. So the dotted line\'s the exponential fit to the Australian data and the American data in ratio of private debt to GDP.\\n\\nRyan:\\xa0Okay.\\n\\nSteve:\\xa0See the trends? Okay.\\n\\nRyan:\\xa0Yes.\\n\\nSteve:\\xa0So exponential increase ratio of debt to GDP. It\'s not the actual level. So here\'s the chart from America. Same when I showed you for Australia a minute ago.\\n\\nRyan:\\xa0Okay.\\n\\nSteve:\\xa0Where you have the GFC maximum boosted demand coming out of credit being positive and then it plunges. And for quite some time, it\'s negative, so it\'s taking demand out of the economy. So we side stepped that. Australia\'s went down to here and bounced up again. And that was because of the impact of the first homeowner\'s scheme. These people dived in and took on mortgages.\\n\\nRyan:\\xa0Yup. I remember that time.\\n\\nSteve:\\xa0And they fall. The trend for this to go negative. Yeah. And then the second time, around 2012 when, again, we started having a decline in mortgage debt growth. That\'s when people started borrowing for all the investment projects in mining.'