Skip to main content

Lessons from Australian housing boom?

Not the first article we've seen drawing parallels between the property booms in Australia and America, but Reuters serves up some interesting points in this piece, entitled "Australia's housing tale holds lessons for US".

Key points from the article:

1) While similarities exist among these property booms, it's likely that eventual outcomes will be influenced by differences between the two.

2) Goldman Sachs economists studying the issue felt a housing slump would have a more pronounced effect on the American economy.

"They argued that a downturn in housing would have a far greater impact on U.S. consumption than in Australia since American consumers had largely used equity withdrawn from their homes to fund spending.

While Australians had withdrawn just as much equity as Americans -- equal to about 10 percent of disposable income -- they spent far less of it."


3) Differences in the national economies. Australia is being kept afloat thanks in part to its strategic role in resource market. A bull market in commodities and natural resources is enriching the country and floating its share market higher. This has helped smooth over any losses suffered in the housing market.

"The global commodity boom came just as the housing market was tipping over and saved Australia from a likely recession," said Su-Lin Ong, senior economist at RBC Capital Markets.

"What will save the U.S. as their housing market turns? Consumers are in debt up to their eyeballs and fiscal policy is maxed out," she warned.

Interesting reading for anyone who has been following the "real-estate bubble" debate.

Popular posts from this blog

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi