It’s frowned upon to talk about this as a generational thing, but it very much is. Debt is the instrument to have now and pay later, and the debt burden is rampant everywhere. Modern economics has essentially disregarded the role of debt in the economy.[1] All our government institutions seem hell bent on maintaining asset prices at any cost.[2] There’s no sensible plan to even remotely reign in government debt. The world’s stuck at zero percent interest rates, handing out money to the politically connected, and growth is still anemic. Even at low rates people can hardly afford to buy anything since asset prices are so inflated.

I would like to believe we can deal with this in a reasonable fashion, but am skeptical. As can already be seen by the U.S. elections and elsewhere, populism is rearing it’s head on both the left and the right. It feels like a storm is on the horizon and I only hope it doesn’t devolve into war.

[1] http://blogs.lse.ac.uk/politicsandpolicy/ignoring-the-role-o...

[2] http://blogs.lse.ac.uk/politicsandpolicy/ignoring-the-role-o...

On the bright-side, even the most conventional institutional macro-economists are finally acknowledging these problems: http://www.bis.org/speeches/sp160210_slides.pdf

FYI the Bank of International Settlements is 'the Central Bankers' Bank', and the slides are from a speech given by its 'Head of Monetary and Economic Department'. The last dot point on the 'summary' slide (#2) really jumps out:

   "Need to abandon debt-fuelled growth model"

Come to Seattle. Reasonable housing costs, cheaper everything else and high american software engineering salaries.

SF has crazy housing costs, higher salaries, better weather and a bit higher cost of everything.

As an Australian a work visa is significantly easier for you than lets say a British citizen.

    > As an Australian a work visa is significantly easier for
    > you than lets say a British citizen.

For example, spouses can work on the visa.

Still the jobs market beats the pants off of Midwestern U.S. when it comes to software dev.

With only a few notable exceptions, some dying fast (mining jobs), the cost of living in Australia but not Melbourne or Sydney is any chance at meaningful career advancement. Adelaide, Darwin, Perth, Cairns and to a lesser but still noticeable extent Brisbane offer only small firms. Let's not talk about Hobart.

Though, for me personally this is brilliant and one of the reasons why I still live in Brisbane. The small firms have some big clients, and salaries are high if you're good at negotiating as there is a massive lack of talent in Brisbane/SEQ!

1. Higher than average wages mean higher than average prices. It's not much different to Melbourne in terms of house prices. Two full time prof incomes is the norm. Cost of living is higher. Quality is lower. 2. Fed gov is pretty backward and hard to get into (I voluntarily left after 5 years and no real prospect of job progression while still effectively taking below market wages at my org, while non-technical unskilled bureaucrats at other departments got paid 10-20k more, and I was politely informed if I wanted to progress, I would have to become non-technical/non-expert). Job cuts in recent years, promotion based on whether the person above you has died/left yet, and a policy of redeployment rather than competitive rehiring means it's really hard for young people. 3. You have to live in Canberra. Don't get me wrong, you really can make a career of it, and if you and your SO want to plop down, live in suburbia, have a child, and not worry about merit/skills/culture/tech/life while carrying a mortgage for 25 years, I can think of worse places to try to pull it off.

When you're on the outside, you figure all the clever folks in the 'central agencies' have got it figured out; they're tweaking their models and pulling the right policy levers at the right time.

When you get in, the horrible realisation hits you: no-one actually knows what the f* they're doing. There's no plan, no coherent goal, just a bunch of people doing....stuff. It's like you've wandered into the cockpit of a commercial aircraft, only to discover that no-one is flying the plane.

Are you a techie/IT person? It's a criminally under-valued skill-set in the public service.

I never worked in the "IT" streams (backend databases/helpdesk/hardware is kinda what I'm thinking of when I say that), but worked doing analytics for the ABS. Which at least at the time was one of the worse paying agencies in terms of the levels at which tech staff are employed, and by tech staff, i mean, people with specialist skills who actually do work (APS 4 - 6, with a handful of competent techie EL1 - EL2 old timers who are still there mixed in with the incompetent APS 6 - EL 2 rusted-ons). But it was also one with the smartest workforces (if I might say so) and had highly skilled requirements.

I found my time there quite intellectually stimulating at times, and left for a variety of reasons. Part of which was Canberra itself and the public sector attitude.

Part was because they were trying to phase out the higher skilled positions and enforce a mangement-aucracy: only managers get paid high, and we should get rid of EL1/EL2 non-supervisor specialist roles and subsequently they weren't willing to match pay to demand/productivity but had to try to fit everything into the public service predefined heirachy.

And part was a crackdown on social media posts and commentary that was happening at the time.

And part was questions of whether the government would try to claim intellectual property over anything I worked on during a side project, meaning I had some risk of them not letting me do challenging stuff at work any more, but claiming rights over it if i subsequently did it on the side.

Anyway, a whole host of issues. Good luck, hope its managable where you are :)

Once negative gearing is removed, the wealthy can simply debt shift against asset classes that still allow negative gearing. e.g shares. The very wealthy have this asset base to increase debt ratios against share type assets, then buying property for that cash borrowed, effectively leaving them with the same negative geared net benefit just more higher leveraged against shares (and likely debt covenants against the property for collateral). Meanwhile the middle class can never do that so you just knocked them out of the property investment game reducing competition for the wealthy.

Secondly, removing negative gearing doesn't stop property hoarding of all those people that own a bunch of houses debt free.

Ultimately I believe the goal should be to allow people to own a home if they wish, and this group should always have a financial advantage to doing so over someone simply investing/spectating as residential property should not be a speculative asset class.

The best way to solve investment hoarding of residential property is to remove/reduce land tax on owner occupied houses, and place a premium % land tax on investment properties. This will influence people buying both with and without debt. Further it will be easier for government to increase/decrease the % land tax differential to get the ratio right between investment opportunity and not overheating the market. Whilst Removing negative gearing is a one time move.

I'd also look to do the same deal for farmland or we're likely to find rural Australia largely owned by corporate interests over the next couple of generations.

I mean, the general problem you describe is that money creates means, to create more money. How do you solve this problem now that existing policies have resulted in a skewed distribution of existing money?

Absolutely agree though that owner occupied houses should be massively incentivised compared to investment properties. IMO it's advantageous for society to have most people owning property. I think a good goal would be to have most people both owning property, and not being cash-poor at the same time.

Sure. But then you making increasing complicated rules when the land tax premium is simple. And generally the more complicated/specific the rule the more new loop holes are made.

> I mean, the general problem you describe is that money creates means, to create more money. Not at all. The government should encourage people to save, invest and build wealth. I guess what my general problem is allowing unfettered business activity into essential areas of life, above the needs of the masses and especially where demand is inelastic. So I'd be inclined to keep strong regulation or government involvement in areas of; housing, health, education, agriculture (ie food), and telco if it became a problem to ensure this is available to the population at fair market rates not distorted by monopoly (or similar) or speculation.

Personally, I think the main issue is greed unchecked.

Doesn't seem that way.

Ah, yes, the Ayn Rand Derangement Syndrome.

Owing to the shorter engagement norm with any given employer, and the constant acceleration of change through technology, we cannot bet against entropy (unemployed, economy has tanked, etc.) as surely we once did. This is particularly the case for singles, who are faced with the entire gambit themselves, whereas traditionally more people were in partnerships which would effectively halve the chances of a particularly 'bad run', as it were.

In short, not only is it unaffordable, but the degree to which one takes ones chances even when committing to a long-term attempt at investment has increased significantly.

In my family, which is probably representative of upper middle class Australia, my brother has taken the conventional route and worked his ass off for most of a decade, and now has the deposit down and a fat mortgage on a shoebox with a view ... in conjunction with his 10-year long-term partner (they are unmarried). I on the other hand have studiously avoided such a commitment, living a year in London, a year in Hollywood, a year in Bangkok, traveling the world, seeing the Arab Spring first hand, spending months on end in 5 star hotels, having a family, and spending the rest of my time here in China, where I play with expensive toys like sailboats. In the end, out net worth is the same.

Most of my friends from youth in Australia, who are generally also higher income bracket people, are still unable to buy property or are locked in seemingly loveless relationships just to get past mortgage go.

My 'uncle' (actually somewhat more distant) recently sold the highest value property ever recorded in Melbourne (Toorak). He is the ex chairman of the board for Rothschild in the region, as well as ex-CEO of famous companies. When I last saw him, he said something is fundamentally broken in Australia, because his kids couldn't afford the downpayment on a house without his help (they have literally had all the opportunities you can pay for, and are not doing badly).

In Europe, the will to own is commonly seen as dissipated, in fact in Italy it has sunk so low as to be replaced by "the will to live away from one's parents", which many, many 30-something can ill-afford.

The world has changed. Travel gives you perspective. Individual countries, policies regardless, may have extreme difficulty changing this new reality. I say cheat. Leave your homeland, enjoy the differences. We are too intelligent to live stuck in a box. Eat someone else's young, or at least get drunk with them.

OK, the government can print more money, but this causes inflation, the worst taxation of all.

Keep in mind also that negative gearing was brought in to try and stimulate house-building. It has overstayed it's purpose, but it wasn't brought in as a 'fuck the young' measure.

Damn, you guys have a lack of empathy. Life isn't absolutely perfect for you, so whine whine whine.

Medicare?

Gay rights?

Indigenous rights?

Advances in medicine?

Equal rights for gender? Same wage regardless of gender? Women even being able to work at what they want?

End of the WAP and far greater multiculturalism?

Strong public attitude shifts against domestic violence?

Global travel? Cheap travel?

Legal abortions?

Working in airconditioned offices instead of brick factories being the norm?

Cheaper food and clothing? Much cheaper technical doodads. Colour television as standard?

Vastly greater entertainment offerings, and cheaper too? Entertainment on demand?

Food revolution? Coffee revolution? Bars closing later than 6pm?

No conscription?

Safer vehicles?

The bloody internet?

But no, you guys can only see the one issue right now about house pricing. ONE problem, and bam! it's 'worse than the boomers ever had it'. Whine whine whine; it's the only thing the young have to say about the difference between the generations. Show some empathy, and have a go at understanding how it was for the people before you. Then you'll better understand how things got to be that way today - and you'll start to see a lot of the things that you take for granted today are considered luxuries by the boomers, and you'll start to understand why they say "work harder". Whether or not they're right is a different thing, but jeez, the whining.

Instead of just focusing on this one issue and assuming they had it better than you, tell them to shut up and show them that you are already working hard - show them the hours or the effort. But most importantly, try and understand where they're coming from, why they say what they do. Show some damn empathy instead of just complaining that you didn't get dealt a perfect hand.

My apologies for that.

And yes, I have a double whammy - I'm Australian, and I'm a sysadmin, so I really like to complain :)

The weird thing, is why have houses become considerably more expensive in AU, the UK, NZ, CA and a few parts of the US while most things have become much better?

The finance thing, on negative gearings and capital gains isn't enough. And why does it do it now when negative gearing has been around in AU since 1915 and there was no negative gearing at all until the 1980s. But housing was much cheaper in the 1970s?

Totally a gut intuition, not supported by anything in particular. Things outside housing have become cheaper. And most people consume their full income in some way - I just think that housing seems to be taking up the slack from other things being cheaper.

See: http://i.imgur.com/t0RYpOo.png

The second graph is especially telling. The value of an investment asset is determined by how much income it is expected to produce in the future. Yet even though rents (i.e. the return to property) stayed flat, the price of the asset quadrupled.

And no, at the time it was brought in it wasn't intended as a 'fuck the young' measure. It was more, 'fuck the poor'. However, a 15 year head start on wealth accumulation and a selfish refusal by the baby-boomers to entertain the idea of fixing this glaring inequity (among many others) means it has since morphed in to 'fuck the young'.

And I don't want to own a string of properties. I just want to own one. I like the idea of owning my own shelter, as a form of insurance against homelessness.

Alice takes some of Bob's property without Bob's permission and with the intent to permanently deprive him of it. Alice is a thief.