Energy Efficiency

It looks like Canada is next and will Australia follow as another financial vacuum hits?

The federal government’s First Home Owners Grant and state governments’ ‘free stamp’ duty helped bolster the housing market in Australia; news stories via the main stream media are warning of rent increases, but where do they get the information?

I suspect they just make it up or make some ‘economic forecaster’s newsletter’ a story of interest.

If you leave the various stimulus packages aside, Australia is still in recession.

The Federal Reserve Bank may be oblivious to unemployment and that the growth they seek to supress – by raising interest rates to help the banks – is a Claytons growth.

While the Canadians don’t have the FHOG and side step Stamp Duty, the Conservative political have played a similar game to Captain kRudd’s only they have told the CMHC (Canada Mortgage and Housing Corporation) to take on pretty much every home loan application.

What this has done is make the CMHC the largest sub-prime mortgage lender in the world. Apparently in an effort to prop up the real estate market in 2008 (when affordability nosedived), the Harper Conservative government directed the CMHC to approve as many high-risk borrowers as possible and to keep credit flowing.

The approval rate for these risky loans went from 33% in 2007 to 42% in 2008. By mid-2007, average equity as a share of home value was down to 6% — from 48% in 2003.

At the peak of the U.S. housing bubble, just before it burst, house prices were five times the average American income; in Canada today that ratio is 7.4:1, almost 50% higher and in Australia, the prices are nearly 10 times the average Australian’s income.

The Americans have had their cash for clunkers (also pushed for here in OZ) and there is talk of ‘white goods’ and Australians have the opportunity to borrow $10,000 interest free for 4 years if they buy goods that reduce energy consumption on the grid.

Did Rudd create the situation … no, but he has extended it; Tony Abbot (now pretending to be pro-Aboriginal with respect to the Wild Rivers legislation in Qld) as opposition won’t expose the looming disaster becasue of the ripple effect (and shooting the messenger) as the banks will again put the hooks into the taxpayers for billions of dollars in defaulted mortgages.