Steve Keen will be right one day on Australian housing crash: Peter Switzer
The financial adviser Peter Swizter has blogged that economist and academic Steve Keen will one day he will be right about his housing crash predictions.
"Another crash will come and it will be linked to too much debt — the policies used to beat the GFC recession," wrote Switzer.
"Yes, and house prices in some countries, even here, might collapse, taking unemployment over 10% or it could happen the other way, with the loss of jobs causing a huge house price slump."
Switzer noted he usually referred to Keen as the world’s scariest economist.
"Keen is the former Professor of Economics at the University of Western Sydney, which surprisingly closed down its School of Economics.
"He became famous for raising concerns about the escalation of debt — here and worldwide — before the GFC.
"After that he became infamous for warnings about a house price collapse, another stock market crash and recessions.
"And this is where it gets tricky in assessing Keen.
"He lost a public bet with former Macquarie Bank economist, Rory Robertson, over the likely fall in Australian house prices.
"It resulted in Keen having to walk from Canberra to Mt. Kosciuszko — 224 kilometres — wearing a T-shirt that read: “I was hopelessly wrong on house prices”.
Switzer noted Keen had been hopelessly wrong on house prices.
"If people had listened to him in the media, they might have sold their houses and not bought stocks and they would have lost money, missing out on a house price surge and a stock market recovery."
"One day he will be right.
"In economics, you can be a rooster crowing about your big and correct calls one day, but soon you're a feather duster when you get it wrong."
Swizter added economics was not a science — but a social science.
"It rests on assumptions and these can make you look smart or dumb.
"Let me remind you that a lot of the media went along for the ride with Steve Keen but then quickly crucified him when he was proved wrong.
"For my part, I like to avoid being biased and I like to be open to challenging points of view.
"I test them and I hope my tests are rigorous enough to make a reasonable assessment on them."