Example of media manipulation by vested interest

April 3rd, 2007

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In our previous article, Using the media as a quick and dirty sentiment indicator, we mentioned that the media can often be ?easily manipulated to co-opt ideas from others who have different agendas or bias.? Today, we will show you an example from this article: Building starts up strongly.

In that article, it quoted an ?expert? saying that ?Home affordability is suffering on the back of higher interest rates and high land prices – today’s numbers confirm that still is the case.? As expected, the ?expert? is from the housing industry, which has a vested interest in seeing that interest rates do not go any higher.

Why did home affordability become such a problem in the first place? It is the availability of too much money and easy credit (?printing? of money) that gave rise to this problem in the first place (see Wasteful investment not the cause of housing un-affordability). Worse still, the government?s ?investment friendly? taxation policies accentuated the problem. As we said before in Rewarding mal-investments?, the real problem is that house prices are currently too high.

Australia needs a further deflation of house prices (which means a lot of pain for property ?investors? and builders) and higher interest rates certainly helps.