sixty minutes, page-22

pwinne, i hope you are not relying on the IMF for your economic/market forecasts. In the months proceeding the 1990's recession they were still predicting 4%+ growth in the coming year.

Sure Kean is overly negative, but a lot of what he says has fundamental merit. The process of trying to spend and borrow our way out of every economic hiccup is destined for failure. We can not keep increasing debt levels happily ever after. At some point you have to take some pain, and because we have tried to avoid it so many times in the past the eventual pain is more severe.

Labour's recent first home grant policy is shameful. This will only encourage those who can not afford it (the young) to take on excessive debt and invest in an asset class that is quite possibly the most over valued in the world. At the same time the older generation property investors who hold significant equity in their homes following years of above average returns are given a free ticket to exit the property market before it really starts to fall.

Property values at 7-8 times income are unsustainable and need to fall for the future of the country. Other western markets who also had over inflated property markets(ie US, UK, Ireland, Spain etc) are currently falling back to long run averages around 3-4 times income, so why is Australia an exception. Labour are trying to engineer the fall in Australia to be more extended and less severe than these other nations, but by doing this all they are doing is passing the losses from those that can afford it and who are sitting on large equity in the properties (ie older generations), and passing it on to the young and so called future engine of the Aust economy who can almost certainly not afford it. Is this really smart?

Why dont the govt let the market determine the price (ie let them fall back to fundamental value), and use the funds earmarked for the current grant to support those people who purchased their first home in the last 3 years and who will quite clearly be underwater (negative equity) once this process has run its course.

Why arent the govt actually trying to promote young people to save some money? Their original proposal of saver accounts was an excellent idea, so why did they all of a sudden change their minds? In 4 years time when the young have proven they can save some money, and house prices have fallen down they will be in a perect position to buy a house. Im guessing some of the banks got in their ears as they wouldnt make any money out of this savings idea!!

This pyramid scheme or pass the parcel style economics has gone on too long, and will only cause more pain in the future. My old man always told me you dont get anywhere in life without hard work and it's about time we get back to living this motto