The Bogan Empire Steals a Few Tricks off the Celtic Tiger Handbook

By Lindsay David

Since the end of the Second World War there have been more than forty housing bubbles in countries across the globe and they have all ended with a hard landing. One of the housing bubbles already written in the history books as one of the greatest of all time was the Irish housing bubble of the last decade.

And when you look through these history books (or Youtube for better entertainment) you find a remarkable trend between those who identified or failed to identify a forthcoming collapse of their housing bubbles. And just as concerning for Australia’s case, it’s the arguments by those who deny the existence of a housing bubble in an attempt to justify the high and rising price of real estate. More specifically I am talking about Australia’s mainstream economists & bankers, politicians, central bankers, construction industry representatives and any other individual whose job it is to spruik the price of property and deny the existence of a housing bubble even when the data states by all mathematical accounts a housing bubble exists.

On the other hand those small few who argue the existence of a housing bubble always have one issue in mind. That is the irrational amounts of debt households accumulate. Now taking just a few minutes out of your life, watch this classic debate in Ireland between two Irish economists just before its housing market crashed. And ask yourself if the gentlemen sitting on the left (Jim Power) is making any similar arguments to justify the high price of housing in Ireland that the mainstream economists in Australia have been drilling down the throats of Australian society.

If you believe the current state of the Australian housing market is any different to Irelands ‘Celtic Tiger’ a decade ago then you might want to think again. As per Morgan Kelly’s argument in the debate, rents were not keeping up with price growth alongside Irish society mortgaging their lives away. And believe me when I say Australia has built more residential dwellings than physically needed.

So why do economists get it so wrong when it comes identifying housing bubbles? There is a very answer to that question. It’s called ‘vested interest’

Except for the local housing markets that have already crashed across a host of mining towns, Australians are currently caught up in the myopia of a housing bubble and not one mainstream economist has come out of their shell to call it. And it is the same economists who claim that those who are warning of a housing price crash are simply ‘scaremongers’. Yet these mainstream economists never analyze the data and facts these apparent ‘scaremongers’ present to the debate. Those who are claiming that Australia will experience a ‘crash in housing prices’ (or a housing bloodbath in my case) all are arguing the exact same issue that mainstream Aussie economists will not go near discussing and that is the roughly $2 Trillion in liabilities on the balance sheets of Australian households. This is quite frankly a sum of debt that will never be fully repaid by Australian households to their creditors. And for house prices to rise or remain stable, home buyers need to borrow a greater sum of debt than the previous round of homebuyers. If for whatever reason they can’t…that’s it.

The unfortunate reality in Australia is that mainstream economists are more often than not either employed or outsourcing their services to clients that have too much skin in the housing market game. Lets face it, if an economist from a major bank were to stand up and publicly say that ‘Australia is experiencing a housing bubble, it will burst and send the Australian banking system broke’… I would expect there is a good chance that the economist would one way or another lose his or her job. Because our banking system has been fuelling the debt fire whilst the Reserve Bank of Australia and financial regulator APRA drive the Titanic Australian housing market into an iceberg. This is what happened in Ireland,, and surely to happen across this whole nation in the not too distant future as the economic conditions continue to deteriorate further over the course of 2016.

So whilst the mainstream economists of the Bogan Empire continue to preach the Celtic Tiger mentality, don’t expect anything different than the same end result. That is a bust.

 

Taxing Corporations like Humans or Getting Rid of Corporate Tax altogether?

Overblowing the PM’s investments in Cayman

As someone who has spent the better part of three years of my life in the Cayman Islands and the better part of ten years in places like Switzerland & London where there are very favourable tax treatments for non nationals who reside in these locals, I must say I have seen extraordinary changes and evolution on how the international taxation community has successfully tackled tax evasion for individuals. However, the challenge today is not as much catching individuals who try to evade taxes, but to find solutions on how to get large multinational organisations to pay their fair share in taxes and invest more in the countries they operate.

The debate on international taxation in Australia has switched into overdrive on the back of the attention raised from Australian Prime Minister Malcolm Turnbull investments made into businesses registered in the Cayman Islands.

And from the looks of it, has made a lot of Australian’s question the ethics of the Prime Minister. In defence, Malcom Turnbull made it very clear that he pays tax on all his income earned from his investments in the Cayman Islands is taxed in full. To those gritting their teeth right now, if the Prime Minister is a man of his word, he is not committing anything illegal. And I would say that Mr Turnbull does pay his taxes in full on any income derived from the Cayman Islands.

The unfortunate reality is that heads of multinational corporations alongside the hedge funds around the world are just as focused on their tax structures as they are about their return on investment. And quite often, we find in the international landscape– corporations so focused on reducing their tax burdens that they end up spending more on legal and accounting services than they would in paying taxes in their home country. And any Australian with money in a superannuation fund has (without knowing) most likely seen a small piece of their savings end up flowing through the Caymans.

Now here is the problem for Australia– It’s a global world and there are only so many industries to invest here. Believe me, since moving back to Australia, there are very limited choices (almost all of which require significant leverage). But hopefully we could create a new culture where we invest in local startups and innovation. I will save that argument for another post.

So let me break things down on the pros and cons of Australia’s Ultra-high net worth individuals (UHNWI’s) in Australia worth over say US$50million investing in business in tax havens.

Cons

  1. Firstly, a dollar of capital invested overseas is a dollar less in capital that could be invested in Australia. Australia is a net importer of debt and this nation needs more capital.. because there is not enough of it.
  2. Secondly, Less capital invested in Australia means less jobs created.
  3. Thirdly, It makes you look sneaky.

Pros

  1. When an Australian invests in an overseas jurisdiction that has no tax treaty with Australia, Australian residents are taxed on the entire dividends received as they cannot use franking credits etc..
  2. Leading on from point 1, companies in tax havens have no incentives to make significant write-downs or drive up costs to reduce profit. Remember these corporations are in a tax free jurisdiction. Hence corporations using offshore tax structures don’t need to make their corporations looking like they earn less in profit than they actually earn. This again puts more money in the pocket of the Aussie investor that will be taxed.

So here is the conundrum for Australia and a lot of other countries that are trying to level the playing field between corporations that pay less tax than others through the use of offshore tax havens. Corporations are not human so skilled accountants and international taxation lawyers use this to the advantage of the multinational corporation they represent. But if corporations were treated like humans, it would be very hard for corporations to escape paying taxes. On the other hand, the international monetary system has all but 100% clamped down on tax evasion for individuals. Hence even considering scrapping corporation tax altogether and putting the tax burden on individuals who receive the dividends at the end of the day could be a plausible option in a truly complex international environment. So regardless of where one invests, they will pay their taxes in their place of residency (minus any tax treaty commitments).

Both options offer incentives for corporations to repatriate their cash to their motherland which should hypothetically stimulate investments, economic activity and make tax havens a thing of the past. I know it sounds crazy, but for every action there is a reaction. And sometimes we need to figure out what could create a positive reaction in such a negative economic environment. And governments would start to see revenue flowing back into their coffers at a significant rate.

 

 

Wayne Swan’s getting his “Wayne Black Swan” can kicked off a cliff.

A Treasurer who thought he saved the Australian economy, but just delayed the inevitable blaming everyone but himself.

Swan cliff

image source: Twitter

As I argued in my book Australia: Boom to Bust, Australia will eventually see a significant economic recession in the not too distant future. And all the data points are clearly indicating my worst fears on where the Australian economy is headed. But we have to ask who is responsible for this economic downturn, and which policy makers helped line Australia up for the collapse in capital expenditure.

Well we can all try to blame Joe Hockey (even though his approach was most definitely the icing on the cake), but unfortunately he was not Treasurer at the time Australia’s political elite truly made what could be two of the greatest (yet laughable) economic related mistakes in the history of Australian economics. And the blame lies with Wayne Swan, alongside the RBA, Treasury and APRA.

Mistake 1. Flawed Calculations

Crummy Forecast

As per the chart above from the 2012 ‘Australia in the Asian Century White Paper,’ If there was ever such a stupid miscalculation by Australian’s it was the forecast on how much iron ore Australia would need to extract from the ground to export to emerging nations such as China to fulfil their long term consumption requirements. Essentially when you calculate how much iron ore would have to be used by China to construct residential dwellings for its economy not to falter, Team Swan, alongside the RBA, forecasted that China would construct a residential dwelling for every one of its citizens….and more.  In other words, build more apartments than people… Not to mention China’s private sector accumulating an extra $52Trillion in debt over the next several years in order to stop its Ponzi economy from hitting a brick wall.

China USA Debt

Yet, Australian’s and various stakeholders of the Australian economy took Swan’s word and in unity agreed with the then Treasurer that China would indeed consume several billion tonnes more Aussie iron ore than mathematically required over the next decade and a half. Thus apparently making a first world country an economic powerhouse by digging for rocks whilst society flipped houses to each other.

Hence there was a rapid expansion in capital expenditure during the period Swan was Treasurer. One that today has come back to haunt Australia. Had Swan and the RBA actually considered what China would look like if it actually did consume as much iron ore as they suggested, the planet Cybertron from the Transformers movie comes to mind. Hence today we would not be dealing with the same challenges that still lay ahead for the Australian economy as the mining boom goes bust and capital expenditure falls off a cliff.

Mistake 2. Not allowing households to deleverage in 2008/9. 

Though the buildup of household debt was Howard and Costello’s making,,The other grave mistake that Wayne Swan made was not allowing Australian households to deleverage back in 2008/9. It was the first and last real opportunity for Australian households to have what would have been a difficult, yet manageable fall in house prices due to the all but 100% guarantee the mining boom would continue until at least 2012 and flank a depressed housing market as the housing bubble would have burst. The end result would have been affordable housing and a nation forced to diversify its economy and spend more on building innovative new businesses. But Swan chose to save the housing market so the bubble would simply burst under someone else’s watch. And if I were Scott Morrison I would be clearly reminding people of this.

Wayne Swan thought he saved the day when Aussie households back in September 2008 owed creditors $1.265 Trillion. Chump change compared to the $1.9+ Trillion households owe creditors today leaving this nation with an impossible economic mess to deal with as the Australian economy moves further into Wayne Swans’ Black Swan moment.

Lindsay David is a founder of LF Economics, the author of Australia: Boom to Bust &  Print: The Central Bankers Bubble.  He holds an MBA from IMD Business School

Not as concerned about underquoting as I am about ‘no quoting’

Australia’s dodgy real estate market

Australia’s real estate industry does not make it easy for property buyers to get a handle on what the asking price is for a home. A clear example of this is the global real estate house Sotheby’s. Looking on its website, it’s pretty clear there is the most remarkable of trends. Search Sotheby’s listings in any city in the world and you will notice that more often than not there is the asking price of the home advertised. Miami, Madrid, Los Angeles are perfect examples. The site displays the home for sale and the asking price…

Now to Sydney… The page is flooded with “Price upon request’. Why is it so hard for Australian real estate agents to display the asking price of a home on their website? Sotheby’s has given us a great global perspective on the dodgy antics at play in the Australian real estate market. Would be great if the mainstream media dived a bit deeper into Australia’s real estate industry questioning why it is so hard for real estate agents to quote the asking price.

 

 

 

 

Tackling foreigners whilst letting locals prop up the Ponzi

Though it is welcomed to see the Australian Treasurer committed to assuring that foreign property buyers play by the rules (local laws). The true problem at hand for Australia is the localised $1.9Trillion in household debt owed by locals. Not foreigners.

Could foreign buyers be making an impact on the price of housing across all of Australia? Mathematically that is impossible to be the case. But foreign buyers would indeed be making an impact in a small handful of suburbs across the major cities. And that is a common global phenomenon whether we are talking about Sydney, Las Vegas, Miami or Berlin. And thus should be accepted. Remember, Australia has no New York’s, London’s or Hong Kong’s. And as a frequent traveler able to look at the Aussie housing market from the outside in, believe me when I say the Australian housing bubble is a localised issue, not a foreign buyer issue.

Australia’s inevitable problem is that the nations wealth model is created through Ponzi financing. Allowing property buyers to leverage on new found equity whilst not earning any income from the investments they make is the most dangerous of wealth creation models. This well known property investor in this youtube video illustrates precisely how our banking system lends in a way that can only be described as Ponzi financing.

History tells us, this type of wealth creation model has a 0% success rate as an end result.

The cities Aussie property investors really made some coin.

And its not in Oz!

Australians who invested in American real estate back in 2011 when the Australian dollar was above parity have made some extraordinary gains in Aussie dollar terms over the last four years on their investments in both capital gains & yield; which have far outweighed the benefits of investing in the local Australian housing market.

Using data from Zillow across a small handful of American cities, the numbers in both capital gain and yield in $AUD speak for themselves. Particularly for those Aussies who invested in cities like Phoenix, Miami and Las Vegas.Capgain USPROP

 

Those Aussies who invested in Dallas real estate back in July 2011 would have paid less than AUD$90k for a median home and would today be earning roughly AUD$402 a week in rent. Not bad indeed…

Yield USA

First the Miners, now the Banks, and then comes…Property?

It’s going to be a hard landing.

By Lindsay David

It’s truly surprising since LF Economics released its chart pack on the Australian housing and debt markets the great interest that hedge funds and financial institutions in the US, Europe and Asia have in our product and work. The same however, cant be said for Australia. But that’s no big deal. Based on the analytics of this blog, Aussie institutions and govt prefer or try to scrape the free data on this blog. I’m sure the same happens on the Macrobusiness website

It felt just like yesterday when I released Australia: Boom to Bust . As I argue in the book, the Australian economy is incredibly dependant on what I call the ‘Three Pillars of the Australian Economy’. They being the mining, banking and real estate sectors. And as I argue, at least three of the five larges iron ore producers will go bust. And ‘at least’ one of the big four banks will either go bust, be nationalised or bailed out before the end of 2017.

Now the mining sector is in dire straits. In order for miners such as Fortescue to survive they must continue to increase output to keep their extraction costs low and the spot price of iron ore not to fall any further. This is not sustainable. And unfortunately only a small handful of us over the last year or two were warning about this scenario taking place. And today it is.

Now to the banking sector. More specifically the Big Four banks. Yes those banks that are apparently strong and safe even though their stock value continues to slide off a cliff. It is only now that the broader public is starting to question the fundamentals of these banks. And the media is now honing more attention to their balance sheets, capital ratios and their ability to withstand an economic shock. Now personally, aside from a small handful of us, I strongly believe that if we look back to say January 2014, hardly any Australian’s in their own right would have thought that the stability of our mining sector and banking system would be under such scrutiny today. And day by day a darker picture is rightly portrayed.

So, if our miners are stuffed, and our bankers are more than likely, and desperately trying to explain to the international wholesale lending community that there is no housing bubble in Australia, what happens when emphasis moves from the miners, to the banks…. to the housing market?

A society caught off-guard

Whilst the overwhelming majority of our real estate analysts work for, and are employed by entities who have too much skin in the housing market game which restricts their ability to make a fair analysis, they have essentially become more like property cheerleaders than anything else. Fly-squatting any view that suggests Australia is experiencing a credit-fuelled housing bubble. Clear examples can be found here, here, here, here and the real estate guru with a silver necklace here, What none of these media commentators (alongside almost every other commentator) ever mention is the unsustainable growth in household debt in this nation.  $1.6 Trillion economy and $1.9 Trillion in household liabilities and growing. Have any of these real estate pundits ever given a clear indication on what our national household debt load will look like in a year from now? Two years? Here is a hint. Its comfortably over $2 Trillion.

Under the current mathematical metrics, House prices in any market that has the same debt levels as Australia’s can and have crashed. If our housing market looks like a bubble, smells like a bubble, quacks like a bubble and you have every stakeholder denying the bubble,, its a bubble. And society will unfortunately be the biggest loser caught with its pants down when the housing market has the mother of all corrections. The debate on the risk of the mining sector taking a hit was too late. We are only starting to really get friction on the debate on the safety of our banking system. Unfortunately the whisker of debate that is happening today and over the last twelve months about the housing market conditions is simply a whisker. But a whisker is a lot compared to early 2014.. And expect the voices in sum continue to grow. And remember with housing bubbles, when they burst there is no such thing as a soft landing.

Lindsay David is the author of Australia: Boom to Bust and  Print: The Central Bankers Bubble. David recently founded LF Economics and holds an MBA from IMD Business School

The 30-10-30 plan…An excerpt from Print: The Central Bankers Bubble

This is an excerpt from the recommendations chapter of Print: The Central Bankers Bubble.

The 30-10-30 Plan

 My first recommendation is designed to help countries never get caught up in the worst of asset bubbles in the very first place: a credit-fueled property bubble. And we know, these IZNOP business models have a 100% track record of failure, and they just need a trigger to send an economy crashing back to earth. No country or central banker can outsmart or outplay an IZNOP business model. That’s what history and the laws of economics tell us. When these credit-fueled property bubbles burst they always crush the banking system that fueled the IZNOP model and leave a population confused because they thought “this time it was different.”

My 30-10-30 plan is a plan that can be universally adopted and easily regulated. Many influential economic commentators, such as Stanford economics professor Anat Admati, are arguing that banks need to hold a lot more capital than they currently hold. When banks hold more capital, it generally means they are taking less risk. Who wants to hold their money in a bank that takes excessive risk? Unfortunately, many banks around the world hold very little capital against the risks they have undertaken. Australian banks are a very clear example. This leaves them very vulnerable to economic downturns, particularly when it comes to credit-fueled property bubbles. Banks around the world that take excessive risks don’t like to hear that they should hold more capital, because it means that they make less profit when times are good, which affects the market capitalization of the bank. But banks also expect their central bank and government to be there to bail them out when the crap hits the fan. The less risk the banks take, the less chance there is that an economy will get caught up in an IZNOP business model. In addition, there is less risk that a bank, or banking system, will require a bailout or go bust!

 My 30-10-30 plan can also organically force banks that lend to homebuyers to hold more capital across the board. And my 30-10-30 plan helps to provide enough buffer to the banks’ risk profiles when they lend to homebuyers. In other words, it helps to build sustainable foundations between lender and borrower.

 30-10-30

 The first part of the plan is that homebuyers may not borrow more than 70% of the purchase price of a property. A homebuyer must come up with a 30% deposit or greater. This is the cut-off line. No exceptions! For example, if a homebuyer wants to purchase a $150,000 house, he needs to come up with the first $50,000 as a deposit for the home. This gives the bank that lends to a homebuyer a lot of breathing space between the value of the property at the date of purchase versus any economic instabilities that may arise in the future.

 As an example, the homebuyer purchases the $150,000 home and loses his job in the midst of an economic downturn. Because every other buyer also had to come up with at least 30% deposit for their purchases, even if the property market were to fall by 30%, the banking system would still not be put in as bad a situations as the American or Irish banks back in 2009. These situations came about because a lot of homebuyers only provided a 5% to 20% deposit to purchase a home, and the property market got caught up in the IZNOP model and property prices fell, the damage was already done. A 30% deposit or greater with no exceptions is an effective enough buffer to stop homebuyers and lenders taking on excessive risks.

30-10-30

 The second part of the 30-10-30 plan is that homebuyers who take a loan must hold in an account the equivalent of 10 months mortgage repayments. And for arguments sake, this could be held by the bank as its own Tier 1 capital until the loan is fully repaid. These funds must come from the homebuyer’s income. Nothing else. Not a gift from parents, not a wedding gift, not casino winnings, etc. The homebuyer cannot touch this money and it generates interest while the money is held by the loaning bank. As the homebuyer’s loan comes close to being fully repaid, the last mortgage repayment the homebuyer makes will be the 10 months worth of mortgage repayments that was deposited, on top of all the interest earned. This should dramatically cut down the overall time it takes a homebuyer to pay his or her home loan.

 If, for whatever reason, the homebuyer suddenly is unable to pay mortgage repayments at a particular time of hardship, the bank will extract funds equivalent to the monthly mortgage repayment from the particular account holding the 10-months’ worth of mortgage repayments. Once again, this reduces the bank’s risk on the mortgage made, and it also provides a buffer for the homebuyer to get his or her act together. It’s a win/win for both lender and borrower. As an example, if the homebuyer lost her job, she wouldn’t need to offload her property right away. She would have enough time to find another job and income source. Wouldn’t that have come in handy for Irish banks in 2009! And if the homebuyer can’t find a way to resume making mortgage repayments after 10 months without a job, well, that’s when the home enters receivership. But this strategy buys both parties a lot of time. And in most economic downturns, more time is by far the hardest commodity to find.

 As a clear example:

If a homebuyer were to purchase a $150,000 home with a $50,000 deposit. The home loan would come to $100,000. In the first year, the monthly repayment on a 10-year loan that charges 10% interest is $1,666. Therefore to secure the loan, the homebuyer must deposit $16,666 into a holding account he cannot touch. The only reason this account can be touched is if the bank needs to take monthly mortgage repayment installments out of this account if the homebuyer is experiencing financial hardship. As the sum value of the loan becomes smaller as it gets paid off, these held funds will be able to make repayments for a prolonged period of time. I.e., five years into the mortgage repayments, the homebuyer still owes the bank $50,000 and is still paying 10% interest. That means this buffer should last 20 months in a period of financial hardship.

 Overall, I believe this holding of funds that are equivalent to 10 months of mortgage repayments would be a good way to helping both the bank and borrower from getting themselves into a financial mess. It’s also an important tool to prevent a property market from getting caught up in an IZNOP model. And I make a fair argument that the bank could hold this equivalent of 10 months of mortgage repayment to be classified as Tier 1 capital until the loan is fully paid.

 30-10-30

 The third part of the 30-10-30 plan is that homebuyers aren’t allowed to spend more than 30% of their after-tax monthly household income on their mortgage in the first 12 months. Furthermore, a bank cannot lend a homebuyer a sum of debt that would mean that they would have to spend more than 30% of their income on mortgage repayments. This is important for many reasons.

 Firstly, this protects the banking system from lending to homebuyers who have very generous parents willing to take excessive risks on their children’s home purchase. As an example, in Australia parents come up with massive deposits for a home for their middle-aged kids, and still their children are stuck paying more than 50% of their incomes on mortgage repayments in a record low-interest-rate environment.

 Secondly, it assures that regardless of what a household earns, the homebuyer will still be able to spend the greater proportion of his income on the greater economy outside of real estate. If a homebuyer is thick in an IZNOP model, he is exhausting so much of his income (prior to possibly losing his job) on mortgage repayments, that he, and his lender, are contributors to the break down of the IZNOP model. All it takes is for him to lose his job!

 Thirdly? It just makes common sense! Nobody should live in a home and feel like they cannot enjoy life and spend some money outside of that home. And if interest rates rise, well, there’s a big buffer compared to the household members that already spend 60% of their disposable incomes on mortgage repayments and then have to pay more when interest rates rise.

 The overall benefits

 There are so many external benefits to the 30-10-30 plan. It’s also a plan that doesn’t impede on property developers, construction, and property investor activity. In fact, it would offer property investors a much better annual gross rental yield. Because the 30-10-30 plan stops the property market from finding its way into an IZNOP model, it means less overall risk is taken for purchasers.

 In November 2014, look at how much it cost property investors in Houston, Texas, and Melbourne, Australia, to purchase an investment property that would earn $30,000 in gross rental yield. It’s not hard to guess which city is caught up in an IZNOP.

City

 

House Price to attain $30k gross rental income

Houston

$218,978

Melbourne

$722,891

 As you can see, the common property investor in Houston is earning the same in gross rental income as the Melbourne property investor, but spending $500,000 less! If a Houston property investor spent $722,891 on three investments properties, the investor would be getting back almost $100,000 a year in gross rent. With my 30-10-30 plan, there’s no way that the Melbourne property market would ever be able to get as overly priced as it has in the first place, which would allow for property investors to earn a much better yield on their property and monthly incomes!! Not just a monthly losing tax write-off while in pursuit of capital gain! And believe me, when the credit-fueled Australian property bubble bursts, some great jokes could be made if the problem wasn’t so grave.

 Today, the American property market is probably the market that could adopt the 30-10-30 plan with minimal impact on its economy. Property across the country (apart from a very small handful of major cities) is relatively affordable when compared to many overseas First World countries. And I truly hope this 30-10-30 plan is explored by banking regulators and central banks around the world.

 There are simply too many instances wherein too much risk is taken by both the lenders and borrowers and property markets get caught up in IZNOP business models. America saw a stock market crash in the late ‘80s and early 2000s, as well as in 2008/9. But the last crash was the worst on the back of a credit-fueled property bubble bursting. Japan’s credit-fueled property bubble burst and it was all over for them. So why do global economic regulators allow for these IZNOP models to happen in the first place, now that we know what the end result is?

 The 30-10-30 plan is the regulator’s best friend when it comes to protecting an economy from going anywhere near the worst of economic edges. But unfortunately, it’s too late for countries like China and Australia. Their IZNOPs will burst. But hopefully, in the future, their governments will never let property prices get so far out of reach through the use of toxic credit again! Let’s never forget, buying a home is more often than not the largest investment an individual will make in a lifetime. And it is the single asset class that can put the neck of any economy under the guillotine’s blade.

Lindsay David is the author of Australia: Boom to Bust and  Print: The Central Bankers Bubble. David recently founded LF Economics and holds an MBA from IMD Business School