This morning Robert Gottliebsen attempts something of a backflip with three million twists after his egregious defence of housing bubble interests late last week that was deconstructed nicely by Delusional Economics.
The Australian newspaper followed up by revealing that the manager of Treasury’s Macro Financial Linkages unit, Phil Garton, believes that if financial deregulation was “reversed significantly” there would be risks to the current level of high house prices. He does not isolate the Greens' proposal but I would suggest that’s exactly what Treasury is referring to. I don’t always agree with Treasury officials, but in this case it is good to have Garton on my side.
Only problem is, The Australian makes clear the Garton comments were part of preparation of the Red Book for the incoming government, long before the current bank debate and the Greens' push for regulated interest rates:
Documents obtained by The Weekend Australian under Freedom of Information laws show the Treasury officials preparing the so-called Red Book of briefs for the incoming government were as divided as private sector economists about the strength of the property market.
Phil Garton, the manager of Treasury's Macro Financial Linkages Unit, sent colleagues a draft paper on the rise in household debt, prospects for further growth in the debt-to-income ratio and the potential implications of slower household debt growth.