Tsk Tsk Tsk. Subprime Singaporeans QXD, Axe168, and IWC2006 Will Have a Heart attack in 2009. Dont say I did not tell you so. My predictions of the terrible situation in Australia only come true 90% of the time.
Makes me soooooo happpppppy!!!!!!!!!!
Hee Hee.
http://www.nzherald.co.nz/markets/news/article.cfm?c_id=62&objectid=10545839
Gloomy forecast could end in long hike
4:00AM Monday Dec 01, 2008
Wall St meltdown
* Govt takes over RBS
* Falling kiwi means more action for film
A
n Australian academic who expects the country's interest rates to hit zero within two years and a 40 per cent drop in house prices has promised to walk from Canberra to the top of Australia's highest mountain if he's wrong.
And he'll wear a T-shirt saying: "I was hopelessly wrong on home prices! Ask me how."
University of Western Sydney associate professor of economics and finance Steve Keen made the bet with Macquarie Group interest rate strategist Rory Robertson.
Keen expects Australian house prices to plunge by 40 per cent within five years, double the drop in the troubled US market.
The academic who sold his inner-city house earlier this year also says the Reserve Bank of Australia will cut official interest rates to zero per cent by 2010 as spiralling debt levels push the economy into a depression.
His challenger, Robertson, said Keen's gloomy predictions of an Australian housing market plunge had a 1 per cent chance of being right.
"Never say never, but a 40 per cent drop in Australian home prices is a highly unlikely event, effectively requiring a meltdown of our financial system despite the combined efforts of the RBA and Canberra," Robertson said.
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On the chance Keen is right, Robertson said he would make the 200km trek from Canberra to Mt Kosciuszko, in the Snowy Mountains of NSW.
A confident Robertson says a shortage of housing in Australia, unlike in the US, and the prospect of lower interest rates would ensure Keen became a mountain walker.
"We now have a bet, and I expect eventually to win," he said.
"That's because falls in Australia-wide home prices will be limited by our lack of overbuilding, our much more disciplined mortgage market and, especially, by the RBA's ability to drive mortgage rates lower."
Australian house prices fell by 1.8 per cent in the September quarter, the sharpest quarterly fall since 1978.
For the record, Robertson expects a 100 basis point interest rate cut from the RBA tomorrow, which would take the cash rate to 4.25 per cent for the first time since May 2002.
On this bet, financial markets agree with him.
- AAP
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