The IMF says global growth is set to decline over the next few years, driven by higher interest rates and inflation; geopolitical instability and insular behaviour. So they call for action to address this.
However, on a finite planet, perpetual growth is impossible so they should be perhaps taking a different tack because growth benefits the wealthy minority whilst the majority suffer. But then this is typical neo-liberal thinking, and I would expect nothing else from the Davos mob. But it does not make it right.
We have been led to a dead end by years of growth aligned policy, and of course GDP is hardly a good measure of success. And this same thinking has bankrupted monetary policy too. Time for some fresh thinking!
This is a recording of a recent interview I gave on ABC New Radio, where I discussed the latest IMF report which highlights the risks to the Australian Property market. Australia has one of the most “misaligned” housing and rental markets in the developed world, leading to high priced land and houses.
Property prices in Australia may be as much as 50 per cent above what an average household can afford as interest rates rise, a global analysis has revealed while warning the market is at risk of a major crash as interest rates are pushed up to bring inflation under control.
We hold the prize for unaffordable housing, and rents, and the IMF believe we are due a correction. Is this likely? Will the Government save us?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Talking About An Australian Property Price Crash On The Radio! [Podcast]
This is a recording of a recent interview I gave on ABC New Radio, where I discussed the latest IMF report which highlights the risks to the Australian Property market. Australia has one of the most “misaligned” housing and rental markets in the developed world, leading to high priced land and houses.
Property prices in Australia may be as much as 50 per cent above what an average household can afford as interest rates rise, a global analysis has revealed while warning the market is at risk of a major crash as interest rates are pushed up to bring inflation under control.
We hold the prize for unaffordable housing, and rents, and the IMF believe we are due a correction. Is this likely? Will the Government save us?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest forecasts from the IMF highlight how precarious the global economy is, and the complex interaction between issues which we face. Begs the question, has globalization been effective, or is it part of the problem? Go to the Walk The World Universe at https://walktheworld.com.au/
New Zealand Housing makes an interesting case study, given the Central Bank there started lifting rates last year, following a strong period of credit driven price growth.
Now the IMF has reported on the state of play, and they highlight the risks in the system. https://www.imf.org/en/Countries/NZL
In its latest review of the New Zealand economy, the IMF has had a close and detailed look at the housing market. The housing market they say constitutes a risk in view of borrowers’ vulnerability to rising mortgage rates, high household debt, and banks’ exposure to housing.
The IMF says that financial stability risks from a sharp downturn in the housing market are limited given high bank capitalisation, “but pockets of vulnerability, particularly amongst recent borrowers, may exist”.
“More broadly, there is likely to be a larger impact on consumption through wealth and sentiment effects. In a scenario of a marked housing correction, macroeconomic policy support may be needed to avoid second round effects and a pronounced downturn.”
Go to the Walk The World Universe at https://walktheworld.com.au/
This past year or so has seen a massive creation of liquidity across the world as Central Banks ramped up their Quantitative easing programes and Governments threw money into the mix in an attempt to revive economic momentum, inflation and preserve the unstable financial system. There is of course no simple way back, and currently the main impact appears to be asset inflation across stocks and property, while the real economy languishes, even as debt climbs.
But now the IMF wants to join the FIAT party – FIAT meaning “Let it Be” or created from nothing using allocating special drawing rights (SDR) to augment instantaneously the international reserves of its members. They claim this would significantly benefit poorer countries and help build confidence at a time of global crisis, dramatically demonstrating international cooperation. But it is pure Neo-liberalism…
CONTENTS 0:00 Start 0:40 Introduction 1:16 IMF Joins the Fiat Party 2:00 Special Drawing Rights 3:12 IMF Statement $650 Billion SDR Allocation 10:20 The History of SDR’s And How They Work 21:35 PRGT Australia Contributes $500 million 22:05 SDR Accounting 24:50 Pros and Cons 27:22 My Conclusions
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
"Lets Create Yet More Money": Says The IMF [Podcast]
This past year or so has seen a massive creation of liquidity across the world as Central Banks ramped up their Quantitative easing programes and Governments threw money into the mix in an attempt to revive economic momentum, inflation and preserve the unstable financial system. There is of course no simple way back, and currently the main impact appears to be asset inflation across stocks and property, while the real economy languishes, even as debt climbs.
But now the IMF wants to join the FIAT party – FIAT meaning “Let it Be” or created from nothing using allocating special drawing rights (SDR) to augment instantaneously the international reserves of its members. They claim this would significantly benefit poorer countries and help build confidence at a time of global crisis, dramatically demonstrating international cooperation. But it is pure Neo-liberalism…
CONTENTS 0:00 Start 0:40 Introduction 1:16 IMF Joins the Fiat Party 2:00 Special Drawing Rights 3:12 IMF Statement $650 Billion SDR Allocation 10:20 The History of SDR’s And How They Work 21:35 PRGT Australia Contributes $500 million 22:05 SDR Accounting 24:50 Pros and Cons 27:22 My Conclusions
International Monetary Fund Managing Director Kristalina Georgieva made the following statement today following a conference call of G20 Finance Ministers and Central Bank Governors:
“The human costs of the Coronavirus pandemic are already
immeasurable and all countries need to work together to protect people and
limit the economic damage. This is a moment for solidarity—which was a major
theme of the meeting today of the G20 Finance Ministers and Central Bank
Governors.
“I emphasized three points in particular:
“First, the outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021. To get there, it is paramount to prioritize containment and strengthen health systems—everywhere. The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.
“We strongly support the extraordinary fiscal actions many
countries have already taken to boost health systems and protect affected
workers and firms. We welcome the moves of major central banks to ease monetary
policy. These bold efforts are not only in the interest of each country, but of
the global economy as a whole. Even more will be needed, especially on the
fiscal front.
“Second, advanced economies are generally in a better
position to respond to the crisis, but many emerging markets and low-income
countries face significant challenges. They are badly affected by outward
capital flows, and domestic activity will be severely impacted as countries
respond to the epidemic. Investors have already removed US$83 billion from
emerging markets since the beginning of the crisis, the largest capital outflow
ever recorded. We are particularly concerned about low-income countries in debt
distress—an issue on which we are working closely with the World Bank.
“Third, what can we, the IMF, do to support our members?
We are concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact.
We will massively step up emergency finance—nearly 80 countries are requesting our help—and we are working closely with the other international financial institutions to provide a strong coordinated response.
We are replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. We welcome the pledges already made and call on others to join.
We stand ready to deploy all our US$1 trillion lending capacity.
And we are looking at other available options. Several low- and middle-income countries have asked the IMF to make an SDR allocation, as we did during the Global Financial Crisis, and we are exploring this option with our membership.
Major central banks have initiated bilateral swap lines with emerging market countries. As a global liquidity crunch takes hold, we need members to provide additional swap lines. Again, we will be exploring with our Executive Board and membership a possible proposal that would help facilitate a broader network of swap lines, including through an IMF-swap type facility.
“These are extraordinary circumstances. Many countries are
already taking unprecedented measures. We at the IMF, working with all our
member countries, will do the same. Let us stand together through this
emergency to support all people across the world.”
We look at the latest trends on Australian Bonds, Credit Markets and the recent IMF paper on negative interest rates – which they link to the need to restrict cash. This will not end well.
We look at the latest trends on Australian Bonds, Credit Markets and the recent IMF paper on negative interest rates – which they link to the need to restrict cash. This will not end well.
