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Australia: Boom to Bust: The Great Australian Credit and Property Bubble by [Lindsay David]

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Lindsay David

Australia: Boom to Bust: The Great Australian Credit and Property Bubble Kindle Edition

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"How much longer can the China construction boom last?"

“At the height of the Global Financial Crisis, the American banking system was too big to fail. Today, the Australian banking system is too big to save.”

After almost 10 years living abroad, former strategy consultant and GreenRigCo co-founder Lindsay David returns to his native Australia. His years of macroeconomic research suggests that Australia is in the midst of one of the biggest credit and property bubbles in modern Western history—bubbles that are supported by the largest credit bubble in human history, the one that has been brewing in China.

Australia: Boom to Bust dives deeply into the plausible collapse of the “Three Pillars” of the Australian economy: Banks, Natural Resources and Real Estate. Lindsay David provides unique commentary on the true state of the Australian economy and identifies major defects in the structures of the Three Pillars. Toxic levels of private sector debt sponsored by Australia's largest banks has managed to flood already-inflated asset classes of the Pillars on the back of a once-in-a-lifetime construction boom and property bubble in China. Compelling data and research suggests that the Australian economy has lost touch with reality and has gambled away its banking system to propel the mining and property markets into unchartered waters.

Powerful Australian property and banking pundits have successfully led Australians to believe that the unusually high cost of real estate is justified. The pundits tell us that Australia is simply “different.” Pundits love to use the word “boom,” but they rarely use the word “bust.” When a country as a whole and its cities lack density alongside a median house price that is more than six times the median household income, there is only one word that can describe the true state of the Australian property sector—bubble. The domestic banking sector in Australia learned absolutely nothing from past economic downturns in Japan, America, Spain and Ireland. Unfortunately, it will suffer the same sad fate that its northern-hemisphere peers did, as history has a good track record of repeating itself. The warnings signs of a toxic Australian credit bubble could not be any clearer—they have simply been ignored.

Length: 228 pages	Word Wise: Enabled	Enhanced Typesetting: Enabled
Page Flip: Enabled	Language: English

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Lindsay David

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About the Author

Lindsay David is a co-founder of clean technology company GreenRigCo and a former strategy & business development consultant. Lindsay holds an MBA from IMD Business School. --This text refers to the paperback edition.

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Format: Kindle Edition
File Size: 871 KB
Print Length: 228 pages
Page Numbers Source ISBN: 1497503868
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Sold by: Amazon Australia Services, Inc.
Language: English
ASIN: B00JJ7UW0S
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Customer Reviews: 77 customer ratings
Amazon Bestsellers Rank: #192,368 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Brendan

A Must-Read for anyone who thinks about the economy...

Reviewed in Australia on 21 April 2015

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What is most fascinating about this book is how the parallels with other bubble-busts are clearly illustrated but these parallels are being ignored by the custodians of the economy in Australia.

Having gone through one property crash makes you more sensitive to the variables when another is possibly pending. Australia is an open economy greatly dependent of export of primary resources for much of its success. It is an incredibly high cost economy in which to live or do business. By normal yardsticks its residential property is overvalued - by how much is the great conundrum. A major external shock could have a massive impact and could decrease property prices by 10-50% in a short time. On the other hand that shock may not come, or if it does it may not be as shocking as feared, Australia's government debt is still relatively low and the country could withstand some significant borrowing if pushed. However, the budget deficit is a major concern and if government revenue fell off a cliff then the economy could be in very serious trouble. Strangely this has happened in several developed economies elsewhere in the past 7 years but there is no debate going on and that in itself is scary.

Most fears are not real and this crash may not happen, but if it does the RBA would rightly take alot of flak for not reining in bank personal and property lending. Mr. David clearly shows that excess credit drives up property prices and that fact alone should be taken very seriously.

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R. Davy

Interesting though clouded by political bias

Reviewed in Australia on 12 February 2015

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There is a good deal of insight in this book. However the political analysis is flawed. The author gives top marks to Howard/Costello, when the greatest increase in mortgage debt and price to income ratio occurred under their watch. Public statements made by John Howard show that he was entirely comfortable with this situation. Mistakes were made under Labor, especially the doubling of the first home owners grant. I was also surprised that the author apparently had no knowledge of the work of Prof. Steve Keen, who has been contributing scholarly articles on this topic for several years.

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Andrew Jordan

Insightful analysis

Reviewed in Australia on 12 April 2015

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A provocative and thoughtful review on Australia's current economic situation with a focus on the "toxic" credit bubble. His opinions are backed by analysis and data. They are scary to say the least but do give great insight into a perilous current economic state. I am left afraid of the difficult times ahead, which I must say I completely agree are likely to occur after experiencing the ridiculous Sydney property market.....something which completely defies logic. The loss of a star is for the constant repetition....it could easily have been half the length and contain the same amount of information.

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Benjamin Cassell

Lindsay's style is so easy to read and his content so fascinating

Reviewed in Australia on 1 September 2014

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Lindsay's style is so easy to read and his content so fascinating, filled with facts. I read alot of stuff and was amazed to learn about the prices of Australian homes. No one had ever pointed this very simple fact out to me, ever. I loved the way he uncovered the reasons why the Aussie home market is so high on average, and how it has relied on Chinese buying of iron ore. I wish I had a home to sell right now so I could take advantage of the pricing peak. Lindsay really makes this stuff absolutely fascinating. The best book I've read on the Australian economy.

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Michael H Hamm

Good read but data is quite simplistic

Reviewed in Australia on 23 June 2015

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I like the general thesis on overvalued housing due to 'toxic' lending and China driven mining demand that the author attempts to explore.
The data he uses to describe housing as overvalued income to median housing multiple versus historical and other global cities is descriptive rather than predictive and is rather simplistic.
The explanation on the links between three sectors are well covered however it would have been more in depth had he covered more data points on each sector.
The main issue I have with the overall conclusion of the book being based on rising inflation and rising rates when the latest U.S. Example of the Gfc showed that deflation is more of an issue during falling house prices and higher unemployment and the central banks worldwide have shifted towards loosening monetary policy and buying bonds. Whilst the fact that Australian housing is overpriced is generally correct higher unemployment and falling prices will see massive stimulus resulting in a longer bubble than the author anticipates.

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Adrian Andy

I've recommended it to many friends

Reviewed in Australia on 23 February 2015

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It may well be "doom and gloom" but it's definitely food for thought. As someone who also lived through the recession in Europe from start to finish, before moving back to Australia, I felt the exact same things about the precariousness of the economy. Though, 6 years of "austerity" will do that to you. Still, David puts forth a strong argument about the pitfalls and caveats of the Australian economy, and property market. Property prices, relative to now stagnant incomes, simply cannot keep growing at this rate. I've recommended it to many friends.

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Xenon 6

An economist who has not been infected by Australia's obsession with property

Reviewed in Australia on 8 May 2015

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David is an Australian who has lived overseas for many years. He comes back to Australia after having worked as an economist overseas. His perspective has not been infected by Australia's obsession with property. He points out that Chicago has a larger population than Sydney, a larger GDP, is of similar physical size and yet the real-estate prices are similar to Mildura in the middle of f#@&ing nowhere. By all comparisons Sydney is way over priced.

He also points out when interest rates rise there will be a lot of people in severe financial hardship. (Remember the elephant in the interest rate room is the US bond market, not anything the Australian Reserve Bank wants to do.)

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G. Budrikis

She won't be right this time.

Reviewed in Australia on 30 June 2015

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This book is essentially a companion volume and Australian edition of books with titles like "This time will be different" "A History of 800 years of financial folly" etc. Informative if frightening.

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Scottie

Finally someone talks sense about the Australian economy!

Reviewed in the United Kingdom on 13 April 2014

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This book is a very easy to read analysis of the main Australian economy as it currently stands. It's refreshing to hear such a dissenting view on the state of the economy that offers a decent rebuttal of the bullish rhetoric the Australian media keeps offering up to the Australian public. Read the book and decide for yourself.

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Steven D. O'brien

Excellent

Reviewed in the United Kingdom on 22 December 2014

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an excellent review of Australia's rise to become a world financial power.

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Dr Vader ( Leicester, UK)

Five Stars

Reviewed in the United Kingdom on 22 September 2014

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Good book, am reading it.

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VIVEK SHIVDASANI

I never expected this book to be so good to read

Reviewed in India on 26 October 2016

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If ever Australia goes bust like Thailand did some years ago I will remember this book. The author explains the economic situation that Australia finds itself in today very clearly.

Tremors in the Middle Kingdom causing earthquakes in down under. How the world has changed. Till the 1980s Australians considered Asia to be a landmass that they had to fly over to get to the mother country (England).

I have always considered the big 4 banks of Australia to be the bluest of blue chips but after reading this book I would not touch their shares with a barge pole.

There is no doubt that a lot of Australians are going to suffer financial pain in the years to come but I take no pleasure in the fact.

Life is very easy in Australia and Australians are a very innocent people. They have never experienced poverty like us Asians. They have never gone to bed on an empty stomach. They are not hard and ruthless like Americans or Asians.

Everything the author writes about Sutherland shire is also true because I have been there a number of times. There is something special about this suburb. You can feel it as soon as you alight from the train.
I used to feel as if I had stepped back into the 1950s. It had a Better Homes and Gardens feel about it. There was a very Anglo Saxon feel about the whole region. In those days(1997) you could buy a nice house for one hundred and fifty thousand dollars in Sutherland.

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Max Power

Mostly good, but the writing style is a mess!

Reviewed in the United Kingdom on 12 September 2014

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This book covers the main themes about the problems facing Australia, however, the author is not unique in highlighting them. Much of what he discusses has been researched and explained by people such as Steve Keen and Hugh Hendrie long ago.

There were two problems I had with this book. Firstly, I had to return the physical copy and buy the kindle version as the font is just ridiculous in the print version. Perhaps I was sent a copy for the visually impaired? The main issue I have with this book though is the authors' constant asking of questions to himself and then answering them in the next line. Why does he do this? Who knows. Does it stop? No, it goes on and on like this. Is it excruciating to read something written this way? Yes. See, its tiring and annoying isn't it?

I have done a lot of work myself on the topics covered so much of it isn't new to me, but I can say it's properly researched. Anyone in the finance industry (think Global Macro HF) probably has read a lot of what is in this book many times before, however, it is put together concisely and coherently in this book. On balance though, its a good book and I recommend it, even if the Q&A the author gives himself is painful to endure.

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tomomori

沈むオーストラリア経済。

Reviewed in Japan on 29 October 2016

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個別データの興味深さは置いといて、全体としては最後まで目からウロコが落ちない本だった。もしかして私は豪州経済のシャーマンだったのだろうか。豪州には行ったこともないし、ニュースをフォローしたことも（ほぼ）ないんだが。ま、我がシャーマニズムの理由は簡単だ。私がバブル後の社会を生きる日本人で、中国経済を横目で見てきたというだけ。
豪州経済と言ったら鉱物資源オンリーだからして（農業もあるが）、把握も割とラクである。「鉱物資源オンリー」「不動産と物価は世界最高レベル」「国土の大半は砂漠や乾燥した草原で、水資源に乏しい」の三つを知っていれば、シロートでもロジックを大雑把に繋げられる。豪州が中国の二十年バブルの恩恵をずっと受けてきたということ。水が足りないということは産業用水供給が難しいのだから、製造業育成は困難。中国バブルで好況が続く豪州社会で、しかしこのように多様性も重層性もない経済構造の中で、豪州の銀行は何処を狙って信用創造をするのか。当然、不動産くらいしかない。不動産を狙って銀行が貸せば貸すほど、不動産価格は吊り上る。仮需ゲームの中で富の拡大幻想が生まれる。かくして、最大手オーストラリア・コモンウェルス銀行の資産が豪州GDPの五割弱に相当、世帯負債は世界一でGDP130%とかいう事態になる。中国景気で繁栄を謳歌した豪州は、銀行によって潰される（銀行も潰れるが）。日米欧で起ったことから豪州の人々は何も学ばなかった。しかしバブル史を見れば、バブルに関しては「学ばない」が人類的通常運転だと思われる。馬鹿なのは常に他人で悪いのも常に他人だからだ。
という訳で、中国バブルが崩壊する時、豪州経済は奈落に堕ちる、という日本人には特に驚くところのない警告の書。その時、豪ドルは暴落する。鉱物資源オンリーの国には他に輸出するモンがないのだから、出るマネーが入るマネーを上回るのは簡単。「鉱物資源、金融、不動産」の三本柱で突っ走ってきた豪州経済は、絡み合う三者が総崩れ状態になり、悲惨極まりない落ち方をする。
感想は、結局、資源にぶら下がる国は工業国に使われる存在になるのだなぁ、とかそれくらいだ。ブラジルやロシアと同じ。良い時には価格が上がって良い暮らしが出来るが、下がる時にはひたすら暴落する。特殊な技術や供給が限定されるモノじゃない限り、価格は安定しない。好況時に設定されたコストや供給量を減らすのは並大抵のことではない。そして暴落しても好況時から生活は落とせない、というラチェット効果的悲劇まである。ちなみに、本書でひとつ割と興味深かったのは、1990年より中国と足並みを揃えて「不況」なるものを知らずにきた豪州国民は、自分の国は非常に特殊で奇跡的な国であり、この先も不況を経験することはないだろうと、本気の本気で信じてきたというあたり。「奇跡を口にするは因果に無知なる者」と言ったのはスピノザだが、経済に対して「奇跡」という言葉を持ってくるのはその最たるもん。

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Prasad Wimalasiri

Good insight into Australian property bubble and indicators to avoid disaster

Reviewed in the United States on 28 April 2017

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I just completed reading this book today, and I cannot agree more with Lindsay on the current the current property Bubble Australia is going through. I had to justify this is absolutely a good read.

The book is well researched, I have first hand experienced the GFC in U.S. and the property Bubble Japan and also the U.K. I can see similar activity in Sydney. When linked with true economic indicators, I am able to understand the early warnings to see as we go into a correction. Although it has taken a bit longer than expected for this correction to take place, the warning signs are up on the wall, and Lindsay has taken time to join the dots and explain it to a reader in plain English. The scenarios described shows my experience and can draw parallels in Singapore on how property developers can suddenly pull-out in an uncontrolled market, same goes to the Australian scenario - and I can very well relate from my recent observations at the auctions.

All in all, a good read if you want to understand how the current Australian Bubble takes shape, and to understand in comparison to other Property markets collapsed elsewhere in the world. Property Bubbles don't happen overnight, it takes time, and there's a lot to learn from historically similar events that occurred in other parts of the world.

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Satya Chari

Factual, candid, awakening but analytically simplistic considering the options and externalities....

Reviewed in the United States on 28 July 2015

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I would recommend this to every Australian, anyone who has or might develop interest in Australia and Her possibilities, and / or broad economic thinking in general...

Despite some of the true leadership duos Australia was blessed with, their zesty dynamics not withstanding, like Hawk / Keating and Howard / Costello; later day Australia seem to have wasted the good work of those and every other opportunity presented by circumstances, be it natural endowments or externalities...

Today's Australia is no more lead, but managed, that too based on opinion polls, lack of imagination, conviction and / or courage.

Author's writing is typical Australian, straight from the heart, at your face, narrow and straight. The book could have been shorter for what it covers.

It would have been more useful, if the Author dwelled into the broader landscape of externalities and Australia's future / possibilities within that changing world. That would have taken the reader beyond the mirror of facts into the realms of possibilities, which Australia can...

Australia came into being a First World country from being a Terra Nullius in just 200+ years. Australia can once again aim for a period of relevant, rewarding and sustainable citizenship amongst the world socio-economic, but will need to seriously reconsider it's geopolitical realities away from the past and fast irrelevant mindset of implant. Australia is no more isolated from anything or anywhere in this hyper-connected world.

Australia will need to move on from being a luck country to a smart country, from near-enough-is-good-enough and she-will-be-right-mate and adapt to the world of over supply, quantifiable value and justifiable differentiation...

I would argue that, Australia has more to offer than the simple natural endowments, to the world hungry for know-how...

But as the author rightly points out, Australia will need to start with serious examination of Her current state of affairs and choices...

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Aceaussie

interesting, well researched contrarian view-simply intelligent and refreshing

Reviewed in the United States on 17 September 2014

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Lindsay David has written a thoroughly researched book and given his view (rather than sit on the fence) of the realistic state of the Australian economy. What I like about this book, is that, Lindsay David is not afraid to say "the emperor has no clothes". Although I don't agree with everything the author says, I agree with his overall synopsis and opinion. The book is refreshing in stating facts, of how the Australian media, federal government and banking industry has a strong vested interest in keeping the whole property bubble going, the reasons are convincingly laid out and debated. Definitely worth reading.

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Dries Deetlefs

A very good read that puts a name to the mania gripping ...

Reviewed in the United States on 30 July 2014

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After settling in Australia something soon seemed very wrong, after leaving it my suspicions were confirmed! A very good read that puts a name to the mania gripping the lucky country...

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Oleg Zgursky

Straight into the point

Reviewed in the United States on 14 September 2014

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Good book about real estate property market in Ausland. No funny words, no PhD calculations all is clear and straight into the point.

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Oz Boy

The facts no one want to address in Australia!

Reviewed in the United States on 26 September 2014

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A quick read that presents the arguments for the bust. Well written with facts and reference. While the predictions might be a bit exaggerated there is a lot of possibility that they might come true.

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Oscar

Written in a very easy style. A credit to the author for the ...

Reviewed in the United States on 2 November 2014

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Very informative. Written in a very easy style. A credit to the author for the way he was able to get his economic message across without being lost in all the usual dry economic terminology. DK. Sydney.

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Evan Zlotnick

how bad the mainstream media is writing things as if it ...

Reviewed in the United States on 12 November 2014

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Well researched and presented. It would be hard for someone who has not lived in Australia to understand: 1. how bad the mainstream media is writing things as if it were fact such as "property doubles every seven to ten years", 2. how the average Australian is convinced that obscenely high prices is a GOOD thing, and 3. the extent to which the average Australian will ignore economics insisting that the presence of kangaroos in their country makes them immune to the laws of economics. This book is an absolute must read. When the Ponzi scheme unravels, this country will be studied for decades to come. Of course, the leaders will claim it was a black swan which was its undoing, but the coming troubles are more than obvious.

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Ztroy

Fair Analysis

Reviewed in the United States on 7 June 2015

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A fair assessment of the Australian property economy. Makes several broad assumptions without evidence but overall it is thought provoking and well researched.

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