Wednesday, March 26, 2008

House Prices - a disaster about to happen

The Possum at his web site has an interesting series on housing – lots of ideas, thoughts and comments on display.

I do like the fact Poss that you have gone “out there” and offered your thoughts and ideas - but my sense of it is that the time for properly managed policy responses has long gone. Now we are in unchartered waters - the housing market has a life of it’s own and “policy” - is pretty much redundant.

A major factor influencing house prices is “emotion” - how else to explain the fact that for at least three years the “punters” have been buying houses at seriously overvalued prices.

The OECD have been saying for at least those three years that OZ house prices are 50% overvalued. It might be that *some* of us are deaf but the rest of us have been in denial. The truth is that we have been paying too much because we think that we will be bailed out - either by the banks or by government.

Perhaps that should be re-phrased as - we think that we will make a serious killing while other punters keep buying and paying too much. And in the event that the music stops - then we will be looking for someone to bail us out - because isn't that what always happens?

And the reason is because that is the expectation and the history of the place. When was the last time that Joe punter had to wear the consequences of his decisions? Greed is a powerful emotion and greedy punters think that they will be saved from their own stupidity - by *someone* - often a taxpayer.

And in truth it will likely happen. Because we have been pouring our spare cash into non-productive housing investment and not into real business activity, we have come to believe that this is all OK.

My sense is that we are about to find out how the “market” works - and some of those folks who were flashing around someone else’s money will end up in deep doo-doo.

The question is - “do we save them from their own stupidity”? Or “do we let the market perform it’s function”?

Friday, March 14, 2008

Adelaide Traffic - Is anyone listening?

I wrote about this last year - but obviously no-one was listening - probably time to regurgitate it.

Many years ago when I was a conscript we had a saying about the mission of the Australian Army - it was “Hurry up and wait”. That seemed to be the single thing that drove the place and which all conscripts could identify with - we had to rush to get somewhere and then we had to wait.

Well it seems that Adelaide has adopted the theme.

The local traffic management system was obviously designed to keep people waiting in the city. It’s a stop start system that seems intent on wasting time and money. Progress through Adelaide is a series of small steps from intersection to intersection - each followed by an excruciating wait for the signals to change to green so we can continue to the next - only to approach and get the dreaded red light.

Some think this was designed to slow us down - but did anyone calculate the impact in terms of fuel and pollution cost and wasted time?

A simple analysis shows that the cost of the Adelaide traffic management system in wasted time, fuel and pollution is around $1 billion annually. The cost of fixing the system is also large but using new and smart technology, it is likely to be less than $100 million. The benefit/cost ratio is compelling – so why won’t the state fix it?

Good question – the answer is because the state has become dependent on red light, speed camera and other penalty revenues which are designed to exploit the dysfunctional system. It’s about exploiting traps and is a Catch 22.

These revenues are generating huge monthly income for the state and that is something Messrs. Rann, Foley and Co. have come to rely on. Is it sustainable?

Never mind the poor old motorist - why isn’t the business community up in arms? It’s a standing joke with interstate visitors. The worst thing is that it’s been like this for over 30 years - and no-one locally seems to have noticed.


I am just getting in early

I know that we aren't yet in the FOOTBALL season but frankly I find the local obsession rather disturbing.

People need to be entertained - but local entertainment has become almost exclusively the AFL brand of FOOTBALL!!

AFL marketing folks have done a great job at exploiting locals and promoting their product. The trouble is that outsiders look at the place and think - Why?

Excuse me - but how can anyone obsess about their “Footy Tips”? The truth is that the local obsession with football just demonstrates that nothing of much substance happens here - there is no depth, no breadth and no alternatives.

Football is the “filler” that occupies time between work and family. Most developed states and nations exploit a variety of “fillers” - often including a form of football but also other sports and other cultural activities. From a cultural perspective it seems unhealthy to focus on just one filler - and limiting the depth and breadth of experience that results from a diverse activity set.

I sat through a boring lunch recently where the ONLY topic of conversation was the Crows, Port Power and their likely progress against the dreaded Victorians. Excuse me but this is a joke - how can we expect the world to take SA seriously when our single topic of conversation is football - what about the big issues facing us - why don’t they get a mention? Do we even know what they are? Probably not.

So we need to find cultural activities that will enhance the “filler” experiences of South Australians - and promote diversity. The good news is that there are lots on offer - lets use the clout of the State more effectively to promote healthy alternatives that exploit the natural advantages of the place.