A weekend topic starting with the West Side Rag. "A Q&A With Upper West Sider Paul Krugman: WSR: When and why did you come to live on the Upper West Side? PK: Growing up on Long Island, I always had it in my mind that I’d someday be a New York City intellectual. Somehow or other that got deferred for about 40 years, but I finally managed it. My wife and I acquired a pied-a-terre on the Upper West Side in 2009. This may get me in trouble, but we looked at various parts of the city. We went to the Village and said, ‘We’re too old for this.’ We looked on the East Side and I said, ‘When the Revolution comes, these people get shot first.’"

"WSR: What about people who say we live in a bubble, that we’re detached from the rest of the country? In fact, a few miles from us, people are living in abject poverty. PK: New York is a hugely unequal place. But it is pretty good, by national standards, at making sure everybody gets essential healthcare. And a lot of people rag on Bill de Blasio, but he’s actually built a lot more affordable housing than people realize. But, if you’re the kind of person I am, which is an affluent, New York liberal, there’s always a little bit of guilt about how nice your life is, because you’re aware that other people are suffering."

The Globe and Mail in Canada. "I predict that Canada’s housing market will crash next year, or in 2021 at the latest. A bold claim, you might think. But if we look at housing booms in the past, each lasted around 10 years and we’re reaching that boom end point in the next year or so. Canada largely survived the 2008-09 housing crash unscathed, which seemed – and still seems – like a good thing until you realize it just means this country has had another 10 years to embed housing assets at the heart of its economy."

"And this is a major problem. It means people are more in debt than before, with the Canadian household debt-to-income ratio topping 170 per cent in 2018 – and this ratio is more than 200 per cent in Toronto and more than 240 per cent in Vancouver, according to Canada Mortgage and Housing Corp. A slight upswing in interest rates will put a lot of people under financial water, while new policy initiatives to cool overheated real estate markets are threatening the dream of ever-rising house prices."

"Why might this matter? We have to think about what most people rely on nowadays to support themselves and secure their futures. And the answer is assets – housing assets in particular. It’s no longer our salaries or incomes, nor even our pensions. Rather, Canada has become an asset-based economy in which it’s now a viable choice to buy a house far above your income threshold and sit tight – renting out rooms to pay the mortgage you can’t afford on your own income alone – waiting for its value to appreciate."

"But there are perils to relying on this sort of economy for our future. An asset-based economy is underpinned by continuous asset price inflation alongside the suppression of income inflation, meaning a rising debt-to-income ratio is built in."

"Today, though, I think it makes sense to talk of a neoliberal ratchet in which asset prices are continually inflated, pushing the cost of things such as housing further out of reach of more people. So, while neoliberals sought to release markets in order to let them work their magic, paradoxically this had the unintended effect of forcing governments, business and everyone else to pro-actively and continuously raise asset values."

"It’s increasingly difficult to see how Canada would be able to change economic course without a wholesale restructuring of our personal ambitions and expectations. And no one is going to propose political or economic solutions to climate change that might threaten the wealth tied up in our real estate assets. The current asset-based economy requires us all to protect asset values at almost any cost, so expect to see a range of policies this time next year designed to prop up a faltering housing market."

From Independent Australia. "With the Government so focused on delivering its much-promised and talked about surplus, Treasurer Josh Frydenberg has begun looking at alternative avenues to stimulate economic growth at no cost to the Federal Budget. The thought bubble goal put forward by Frydenberg was encouraging housing prices to grow by 10% in the next 12 months, in order to promote economic growth through a 'Wealth Effect.'"

"Aside from Frydenberg’s apparently poor grasp of Treasury research, there is an extremely serious issue with the Coalition’s plans for mortgage holders to come to the economy’s rescue. In the long term, the higher level of household debt that would result from pumping up housing prices would actually substantially damage the nation’s economic growth potential."

"Rather than simply abandoning the goal of a surplus with little-to-no political cost to the Government, the Coalition is instead encouraging Australians to get out there and bid up housing prices. With the implicit encouragement of Josh Frydenberg that 10% higher housing prices are a goal for the Treasurer to promote economic growth, the allure of such high returns at a time when interest rates are at emergency record lows is too much for some to resist."

From Malaysia Kini. "Many Budget 2020 wish lists are about the property market. In general, there are two main groups that call for some measures to incentivise the property market and they are the developers and the home investors. All these wish lists are in general but are these wish lists something that the government should fulfil? Aren’t some of these 'wishes' the very things that have caused the property market to be overheated (some call it a 'bubble')?"

"Essentially, these are all proposed reactive measures by the real estate industry (developers and investors alike) to tackle the overhang issue. But what about proactive measure to avoid this issue from happening in the first place? Fulfilling the developers’ and investors’ wish lists will probably resolve current overhang issues but will definitely contribute towards a greater problem in the near future. These measures are all things that facilitate speculative activities that caused the problems we are facing now. And as a responsible government, the government should no longer encourage speculative activities in the real estate market."

The New York Post. "Stock up on canned goods! Ship your kids out of town! The apocalypse is upon us. Manhattan apartment prices are falling, a sure sign that streets will soon run with blood and The Bronx will burn anew. Brokers and media pundits have termed the situation a 'free-fall,' 'a bloodbath,' 'the worst since the 2007 crash' and 'a harbinger of a new recession.'"

"But falling prices of luxury apartments are hardly unique to the Big Apple. They’re struggling everywhere, including in the Miami area despite a mostly mythical 'exodus' of New York money there."

"Few New Yorkers will lament the sag if means the oligarch bubble has burst. Manhattan homes aren’t selling for less because of dirtier streets — the highest-end buyers don’t walk the sidewalks like the rest of us if they’re in town at all. It’s rather because the loose change dropped by foreign zillionaires seeking 'safe haven' investments is finite."

"The slump is supposedly different than previous ones because it also hit 'cheaper' apartments under $5 million. Sales fell by 4.7 percent in the 'modest' $1 million to $2 million range. But unless the bottom truly falls out — which isn’t remotely the case — the market fluctuation is a good thing. What’s a bummer for sellers is a feast for affluent renters — people who actually reside, work and raise families in the Big Apple but can’t afford to buy."