The facts about houses and avocados (Bernard Salt is an arrogant prick)

“Bernard Salt is a futurist who uses demographic and social change to interpret how society and business might evolve.”

I’ll just leave that there for a moment.

Another day, another self-righteous Baby Boomer castigates themselves in the court of public opinion by equating Millenial eating habits with financial ruin, this time at the expense of ubiquitous hipster-licious avocado. It happens so often that a veritable army of hipster economists are armed and ready to update their innumerable Food / Beverage / TV / iPhone / Overseas Holiday vs. House Price charts to ‘smash’ down the ignorant Boomer home-owner the second they start tweeting so much as a “When will Gen X/Y… blah blah blah”.

Barely is the ink dry and the hashtag offending eyeballs before the glorious chorus of #StopRightThereOldFartDon’tYouDareGenYMeYouIgnorantDoucheBag is unleashed in an unstoppable wave of righteous Millenial indignation and sarcasm. And Bernard Salt did so in textbook fashion, without so much as a trace of economic, financial or demographic analysis to back up his intergenerational condescension, as might be appropriate for an economist and demographer. (Just saying).

It was very nearly a “Let them eat cake!” moment, were it not for the fact that it was actually worse. He basically said “Don’t let them eat cake… and definitely don’t let them eat smashed avocado!”. Fuck me! Did this guy not watch that dreamy Kirsten Dunst film about French Baby Boomers stuffing themselves full of avocado, oblivious to the peasant mob sharpening the guillotines at the foot of their 700 room inner-city bungalow / castle in Paris?

In that light, I’m actually a bit worried that Bernie’s ill-researched outburst puts him at risk of physical backlash, as the rising ranks of young renter scum – otherwise content to survive on smashed avocado brunches, and not even expecting any cake – treat his spray of toast crumbs in The Australian with the contempt it deserves.

And to be fair, it’s not like there’s no truth in what he says, it’s just that he’s completely wrong and his argument utterly devoid of facts. Hmm. Well, at least in regard to housing affordability. I mean $22 is a fuck-load to pay for avocado on toast. But what a delicious irony it is then that the price of avocado on toast is partly driven by its input costs, chief of which would be… you guessed it, LAND! But you do need to be an economist to grasp such subtleties, and it’s far more fun to just rag on hipsters, they get so angry about stuff!

Either way, lets have a look at the facts before we string up poor old Bernie, he was just having a crack. It’s not his fault that he belongs to the landed gentry, enjoying an all-you-can-eat tax-break buffet at the taxpayer’s expense, what to speak of the once in a 100 year demographic tailwind (hello Bernie?!) and never-to-be-repeated financial engineering and pro-bubble policy supports. Anyone (everyone?) in his position would be equally myopic as to the underlying atrophy in Australian society and political economy. Lets give him the benefit of the doubt and look at the facts.

Just sampling the last few weeks alone of obsession with Australian housing, we have all the news we need to explore the relationship between housing and avocados in a more evidence based manner:

Housing and avocado facts

So in Bernie’s defence, it would seem that there is indeed a significant relationship between smashed avocado breakfasts and Australia’s 20 year long housing bubble, but it’s not the one-dimensional relationship with fiscal responsibility that the “Middle Aged Moraliser” scornfully posits through projectile flecks of hard-earned green breakfast fruit.

Far worse than the inability of Australian youth to practice avocado-austerity adherence, is the disturbing fact that unaffordable housing is secondary to the irreparable damage caused to our once productive, dynamic, diverse and competitive economy by over-investment in smashed avocado breakfasts, and the terminal build up of severe risks to both personal and public financial stability caused by the highest level of smashed avocado breakfast debt in the world. We spent the last 20 years putting all our avocados in one basket, leading to a hyper-concentrated and unsustainable debt-fuelled economy, having experiencing the fastest de-industrialisation in the developed world.

Manufacturing now represents some 6% of GDP, as compared to around 12% in the 80s, whereas the finance, insurance and real estate (FIRE) sector has grown from 6% in the 80s to now comprise some 12% of GDP, a complete trading of places between ‘making things’ and ‘speculating on things’. This an over-concentration that even the IMF admits is damaging to long term economic prosperity. Australia once had a classic ‘mixed economy’, but now we now have nothing more than an avocado and real estate economy. More fool us.

Smashed avocado breakfasts have a lot to answer for, and in time it seems likely that even hard working Bernard Salt may need to forgo his third or fourth weekly brunch dose in order to begin piecing our shattered economy together again.

In my mind, this leaves three serious questions for poor ole’ misunderstood Bernie to answer:

  • On what measure is Australian housing affordable other than the smashed avocado index?
  • On what basis is Australian housing not in the largest and most dangerous asset price bubble in our own long and dangerous bubble history, and in comparison to widely studied global housing bubble history?
  • Even if you believe the first two points to be miraculously irrelevant or incorrect as applied to the Australian situation, how can you possibly deny the extremely well researched and documented destruction to economic sustainability, financial stability, wealth equality and political progress caused by:
    1. the highest levels of household debt in the world?
    2. amongst the most expensive housing in the world?

While Bernard may be unfamiliar with such questions, young Australians are all too familiar with this trifecta of shit facing the economy, the financial system, and the ability to afford housing. His article grossly misjudges hipster wannabes, because unlike Bernie, young Australians are predominantly aware that:

  • Housing at current prices represents the worst value for money in history
  • Housing at current prices represents the highest risk to personal finances in history
  • Housing at current prices represents the lowest prospect for future price gains in history
  • Housing at current prices represents the shittest investment in history, as rental growth and yields plumb record lows
  • Housing at current prices represents the highest risk to the stability of the financial system in history
  • Housing at current prices has helped drive the largest de-industrialisation in history, which will severely endanger any ability to service a 40 year mortgage in the future, let alone afford smashed avocado breakfasts.

Young Australians get it. We are smart enough to realise that in light of these facts, forgoing yet more smashed avocado breakfasts to get a foot on the property ladder (pyramid) at this stage is universally NOT A GOOD DEAL. As Chris Richardson from Deloitte Access Economics remarked in regards to the investment prospects for Australian residential real estate:

“They should have as much quinoa porridge and as much smashed avocado as they want because inevitably property prices are going to come down and their patience will be rewarded.”

Viva La Avocado Revolucion!

Remember that dreamy quote from Salt’s own website that I left at the start of this article? Where he describes himself as a “futurist who uses demographic and social change to interpret how society and business might evolve“?

Well, Bernie’s self-described futurism and prediction of social and demographic trends has so far failed to spot the evolution of an imminent dystopian future for Western Boomer-run neoliberal debt-fuelled asset bubble economies, brought to their knees by private debt saturation and de-industrialisation.

He has failed to identify and explain the groundswell rebellion of ‘heterodox economics’ against the prevailing (and failing) neo-classical order of financialised capitalism, equilibrium theory, monetarism, private debt ignorance, theft by privitisation, population growth Ponzi-nomics, monopoly protectionism and worst of all: the sacred status of the creditor and rentier above any common or public interest.

He has so far failed to predict the global revolt of the young and aspirational classes against those that would sit in their Avocado Towers pouring scorn on their own young. The revolt against those very same Boomer-crats who simultaneously completely miss the fucking point as to why the likes of Donald Trump and Pauline Hanson – regardless of their respective moral vacuums – are being used as figurative or literal Molotov cocktails to try and destroy the rotten and shaky edifice created by the arrogant, corrupt, short-sighted, nepotistic, tax-advantaged scions of the neoliberal era; the sole beneficiaries and champions of the fastest deterioration in working class living standards since the Gilded Age of the late 19th century.

Bernard Salt, I’m sorry to say, you’re not just an arrogant prick, you’re also a shit economist and an irrelevant futurist.

Your lot fucking wrecked the place Bernie, and typical of all such eras throughout history, your own blindness and hubris has sewn the seeds of destruction of your presumptive political, social and economic advantage, as the young avocado munchers of the world begin to amass with torches at the iron gates to your 700 room Californian bungalow.

Enjoy your $22 I-already-raised-my-family brunch while you can you self-righteous irrelevance, because thanks to the brutal honesty of Baby Boomer representatives like yourself, young people are becoming less and less squeamish about stealing the smash right off your hipster-cafe table. We gave you crates to sit on so that your ageing legs would be too seized up to run away or fight back as we stuff our faces with your future-eating, economy-smashing brunch.

16 thoughts on “The facts about houses and avocados (Bernard Salt is an arrogant prick)

  1. Excellent article!

    Now how can I get a loan for a smashed avocado brunch? I haven’t got the savings but I could afford the interest only repayments.

  2. What a read! I enjoyed your article and could really feel your passion from start till the very last word. Well done. I think it is important for young people to question those who have influence in shaping our country. This article definitely resonated with me.

  3. Was it not really a satire on moralistic baby boomers and how they think? Did you not get that it was poking fun at them? That they have had so much advantage yet still begrudge the Gen Ys having an avo breakfast. Either reading comprehension is very poor amongst Gen Y (have you even read the article) or you are just coiled waiting to strike out at Boomers any chance you get, which may well be fair enough but I still can’t get over the poor reading comprehension, I mean really, read the friggin’ article! Gen Xer.

    1. Nice try Dan, but my rage is *absolutely* justified. Of course Salt is shaking the tree, he and the likes of the Kouk have made a career our of it. But the reaction to this article far and wide shows that Australians cannot tell the difference, and the “irony” is not parsed by the media and the general population.

      This bubble is so epic in part because Australians take everything so literally, to the point of crafting self-fulfilling destinies, usually for the worse in the long run. The majority of ‘Boomers’ that I can’t wait to strike out at (those who have shared an opinion publicly) are the real bearers of poor reading comprehension, as they for the most part took Bernard’s diatribe as just the next cue to make massive generalisations about the fiscal responsibility of Millennials and blame housing affordability on its very victims. Classic victim-blaming, and Australians are experts at it.

      If they can’t even parse the irony, then they certainly haven’t a fucking clue about how damaging to the economy and financial system this housing bubble is, despite the mountains of comparable empirical evidence. Irony is as irony does, and fucking clueless is as clueless does. That’s why this utter garbage perspective must be called out, ironic or otherwise, Australians mostly can’t tell the difference, and so the myth goes on. Omitting Gen X from this particular article is not a personal slight on you, it’s a response to a culture of explicit victim-blaming. Please interpret it as such, and get angry with me, Gen Y or not.

  4. Excellent article. Of course, a bubble is ALWAYS at its peak when it pops. The Australian crash will be particularly spectacular, even beyond the Houston Texas real-estate crash of the mid 1980’s when real-estate lost 95-96 percent of its pre-crash values (i.e. real-estate was selling for 4 to 5 cents on the dollar, the banks had collapsed so it was a cash market with no mortgages available). Prices were not nearly speculated as high in Houston as they are in Sydney today. Curiously, quite a number of the VERY SAME real-estate developers and promoters are operating in Sydney today as they did in Houston way back when.

    1. When a bust is national in scope (rather than just regional), you can safely bet that the Central Bank and Treasury will bail it out US style. ZIRP/NIRP and QE-infinity to come. In other words, the lives of people living on Main St will drop to being worth 5c on the dollar, but real estate “assets” on the books of banksters will retain their inflated, never -marked-to-market, “values”.

      The Wall St parasite will never skip a meal, even if it means killing the host. Only then might it reconsider its survival strategy…unless it finds a warm new host to jump to.

  5. I’m honestly afraid that this will happen. Bank bail ins, etc.

    Not because I will lose equity, but because for the last 9 years since graduating as an Engineer I’ve been working (sacrificing my time as a FIFO worker) and saving 80% of my income. Along with my partner we have close to $1m AUD saved together and most of it is in term deposits, high interest saving accounts and a very small portion in PM’s (Gold/Silver), and a minuscule amount ($15k) in shares.

    She wanted us to purchase a house a while ago; I feel very foolish for telling her for the last 5 years that we shouldn’t do it because the value isn’t there and that the bubble will pop – only to have it continue and have property prices rise faster than we can save. The house we wanted to buy 5 years ago we would have paid off by now and had money to spare if we had purchased then; now I’d need 1.6 million to pay for it (land $1m now and house a ridiculous $600k quoted – something I could get built to higher spec in Germany for $200k for example).

    A great collapse, if it occurs, I fear will actually see our savings disappear (via bank bail-ins or similar) while the people who overspent and gambled end up walking away relatively unscathed. It sickens me and has me practically paralysed due to the fear.

    To make matters worse, as of six months ago I lost my job due to the disappearance of the mineral export industries’ competitiveness and have been struggling finding alternate employment back in Melbourne (I am adaptable however there are now close to 2,000 Engineers available and local industries are only seeking people with experience in Rail – not Oil/Gas/Mining, which is what I’ve experience with).

    I’m studying for the GMAT now in the hope to land a spot on the 3rd/4th round offers for an MBA starting next August, preferably with INSEAD in Singapore – to branch away from Engineering and more into Business / Consultancy, as there is no real future for Engineers in Australia.

    I feel depressed.

  6. Brilliant. Well done. Salt’s comments infuriated me the moment I read them. I only have to walk around my local suburb and wonder about all the Porsche Cayennes, Audis, AMG mercs, triple stripe BMWs, Range Rovers to know that we are a nation living perilously on a debt infused “high”. Is anybody paying any attention to the fact that most if not all of the Central Banks, including the Fed have lost control of the monster? Our own RBA is a joke and the current government deplorable. If by any chance Turnbull decides to open the flood gates to foreign house buying just to maintain and prop up the baby boomers sense of entitlement and the current govt lousy economic performance, plus the outrageous call by our treasurer “no housing bubble here” (Scott “DH” Morrison) I will be the first in line to walk the streets in protest. Word of warning hipster gen…. they will try it on!! Its political dynamite but anything to save face for their lack lustre performance as a government. (Ref Mcauley’s “Its The Economy Stupid”, New Matilda) and watch Steve Keen’s housing bubble burst ABC interview, 2016. Rather than have the balls to make the necessary infrastructure calls. Where are our fast train networks…? There are only two continents left in the world without fast train networks: Australia and Antartica!! Why can’t we live in regional areas but travel into the CBDs to work like most of the Western world does? I read the other day that it is not in the best interests of the LNP to have a sophisticated large voter network outside of a major metro area. (perhaps that goes for the ALP too?) Why has it not happened- major infrastructure spend that is? My research would reveal its also not in the best interests of business, especially our lovely big fat banking system and associated businesses. When the fuck are we going to wake up as Australians and get rid of these “Bastards”!! They are a blight on progress and on our own and our children’s future.

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