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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 386.01+1.6%Nov 12 4:00 PM EST
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To: John Pitera who wrote (117427)3/24/2016 1:41:09 AM
From: Elroy Jetson  Read Replies (1) of 217734
 
Ian Macfarlane, Governor of the Australian Reserve Bank between 1996 and 2006, showed it was very easy to control incipient real estate bubbles if that's what actually you wanted to do.



Oddities like the post-9/11 real estate bubble are deliberate policies to which a central banker can simply say no to, as Macfarlane did. All of the nations which participated in the Iraq War, America, Poland, Spain, England and Canada experienced the post-9/11 real estate bubble, while other countries around them did not.

Australia participated in the Iraq War and home lenders like GE offered the same peculiar mortgages in Australia as they did in America - very limited money down required, optional mortgage payments, no credit underwriting beyond your credit score.

Of course this flood of peculiar loans started a post-9/11 real estate bubble in Australia but Macfarlane quickly stomped the life out of it. He raised capital levels required for real estate lending and enforeced down-payment requirements on lenders and lobbied State governments to implement some very punitive taxes on speculators.

Those owning more than three homes in the same state saw their property taxes tripled - but apartment buildings were exempted. Punitive transfer taxes and income taxes were implemented on those owning a home for less than 12 months.

A number of major "off-plan" residential towers in downtown Melbourne and Sydney failed to materialize as "housing demand" evaporated when "home buyers" needed to own only four homes in each metropolitan area and needed to own their home for more than 12 months.

Off-plan is a peculiar Australian artifact where a major development is pre-sold with minimal down-payments prior to construction. "Buyers" in the projects which proceeded to construction were stuck with the obligation to actually purchase their new home at the contracted price, but without the benefit of a real estate bubble in the interim. With a sensible man like Macfarlane at the central bank the "uncontrollable" market spirits which drive real estate bubbles died months after they were born.

Meanwhile Alan Greenspan claimed these spirits were beyond his control in a popular comedy routine which had become extremely unfashionable by 2008.

Of course Ian Macfarlane had to find the backbone to say no to a President who wanted a real estate bubble as much as the other scams he was running at the time, but he did so with charm and elegance as lying rodents acquired a different reputation.









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