Saturday, 18 October 2008

Not-So-Invisible Hands

In a move that has stunned journalists who know nothing about basic economics, house prices have jumped in the wake of the Government's increase to the first home-owner's grant.

What's really funny is that this was precisely the Government's intention in the first place. They want house prices to go up. That's what K-Rudd means when he talks about "growth in the housing sector".

At least I'm pretty sure that's what he means. It certainly doesn't mean building more houses.

We're coming off the end of one of the longest housing booms in history, and people are conditioned to see the value of their house as a measure of economic health.

What they don't seem to realise is that the economy's temperature is being taken rectally, and the thermometer is being artificially heated by a systemic colonic imbalance in supply and demand.

Prices are high because there just aren't enough houses.

A nice fibrous diet of more houses in the system would clean things out, but it would also end up very messy. K-Rudd knows this. So for the moment, he's decided it's better to stoke the fires.
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