This presentation was noted by a blog member today. Take particular note of slides 21-20 which compare the balance sheets of US and UK banks to that of one Australian bank, the Commonwealth.
How to Profit From the Coming Aussie Property Crash (and Banking Crisis)
Also a quick note that the site’s server crashed this morning and had to be restored from backups. Several blog comments were lost, including some from new members. These records of these new members might also have been lost, so if that applies to you, please rejoin and resend your comment.
May 21st, 2010 at 7:12 pm
Steve,
That’s a very good presentation. Thank you for posting it.
May 21st, 2010 at 8:16 pm
“Australia’s deficit will soar!”,
“Foreigners who lend money to us will stop lending!”
So what?
The response comes from Ben Bernanke:
“Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost”
http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm
May 21st, 2010 at 10:01 pm
These banks will all be insolvent when the property bubble bursts. The same crap that’s been going on for decades if not hundreds of years. The banks will blackmail the government by threatening to bring down the whole economy if there isn’t a massive bailout.
Neo-classical and neoliberal ideologies will insist on the following solutions:
1. Bail out the banks with taxpayers money.
2. Maintain or increase all existing debts.
3. Maintain or increase the privatization of land rent and economic surpluses. This of course is the root of the whole system.
That is the exact opposite of what should be done:
1. Nationalize the banks and shoot the executives and major shareholders.
2. Write off the debts.
3. Socialize the surplus.
May 21st, 2010 at 11:54 pm
When I first started to follow this site there seemed to a principal of open economic debate and exchange of ideas and information. I had a naive sense that this website would be an outlet for objective learning based on an amalgamation of different and sometimes extreme views.
The moment when you tolerate carzy people advocating murder I am looking fast for the unregister button, which doesn’t seem to exist.
At this point my pursuit of knowledge and this website will be diverging faster than most of our opinions.
Peace be with you. Ladies and gentleman it has been a pleasure.
May 22nd, 2010 at 12:16 am
I take it I missed some inflamatory remarks today. Which comment are you referring to TININT?
May 22nd, 2010 at 12:19 am
If you mean #3 on this thread then I think you’re over-reacting TININT. A bit of hyperbole isn’t a call to murder.
Maybe it’s time everyone (in Australia anyway) took some time out for Friday evening. Myself included…
May 22nd, 2010 at 12:20 am
Hey, how come no one in Australia saw this coming?!?
^joke^
Be prepared for the next stage, when the people warning of the inevitable, and those smart enough to be short the banks, will be vilified as “wanting” bad things to happen. You see, this could have gone on in perpetuity if you JUST HADN’T NOTICED!!!
May 22nd, 2010 at 12:40 am
I’m getting worried about a currency crisis in Australia. I mean, look at how the AUD drop 10 cents in just a couple of weeks! And we haven’t got anything bad happening in Australia yet.
I shudder to think what will happen to the AUD if there’s a major home-grown banking/credit crisis. The panic will obliterate the AUD!
May 22nd, 2010 at 12:46 am
This is what Jimmy Rogers said in http://www.smh.com.au/business/reserve-earns-praise-but-not-our-politicians-20100518-vc69.html
May 22nd, 2010 at 2:23 am
Re: bank regulation. Here in the States, the new Bank Regulation Bill has no real power in it (despite the soundbites you’ve heard to the contrary). Obama talks a mean game (especially in an election year). But will it pass?
I’ll be very surprised if it does. I pay my credit card bill on time. Aside from a small amount on my card, I’m debt free. Yet, what does my bank do? They cut my credit limit by almost half. The banks here still aren’t lending. Many of my sources here say that they’re still not hiring. Go out on any major street here and in five minutes you’ll see at least 5 homeless people begging at intersections.
The number of bank failures is still going up. The FDIC Insurnace Fund is still almost bankrupt. And, the number of U.S. expats abroad are renouncing their citizenships in growing numbers.
In an ironic way, it’s almost funny to read what the “Net pundits” are saying about the Greece Bailout. All they care about are their “socialist” benefits. What they conveniently forget is how much is socialized here in the States:
police and fire depts.
Public libraries
The car industry
Almost all of the banking industry
Sen. Bernie Sanders (the Socialist Senator from Vermont)
All it is right now is endless fingerpointing and still no transparency. Don’t expect it get any better.
May 22nd, 2010 at 2:40 am
What can one do,
.
If you own property you will loose equity,
If you don’t your savings will be wiped out when the banks crash, or through currecny devaluation :/.
If you own gold or silver, by Australian law the government can and probably will seaze it to defend the currency.
damed if you do, damed if you dont hehe. The best thing is just spend your cash now on booze or have some fun at star city, so at least you enjoyed it
May 22nd, 2010 at 4:27 am
great presentation, thanks for posting. and I agree with soho that you should not expect things to get any better in the States. as for Europe, I thought this article did a good job explaining why the new financial regulations won’t help fix the problems with the euro currency:
http://www.goldalert.com/stories/The-End-of-the-Euro
May 22nd, 2010 at 5:52 am
Good presentation. Diversifying into foreign currencies as it recommends may be a good idea for traders, but I’m not sure it be a good idea for the average Australian. FOREX can be volitile, and there aren’t many fiat currencies that are very attractive right now. With the yield curve heading down on US government debt, plenty of people do seem to like US treasuries though.
May 22nd, 2010 at 9:26 am
Correct me if I’m wrong but I think that the main reason some people want deflation and keep talking about “moral hazards” of Keynesian policies is because these people want to snap up cheap properties after the crash.
Yes I do see a hidden agenda there. And it is personal.
I think that the right-wing libertarians are much more dangerous to the society that someone who (mis)quotes Marx. Personally I would nationalise the banks, sack the managers and give them ice cream. Never do any harm to anyone.
Banks have been effectively gambling with public money anyway. So the equity should also belong to the state.
Why should I subscribe to the same set of (im)moral values – greed is good and speculation is better than work? Hoarding the surplus to create financial assets which then can generate income (also called “saving”) is the most glorious thing to do.
For these people property rights are absolute and should be considered above any other human rights.
In that context labeling the current policies of bailing out the banks and allowing debtors to default as Keynesian or socialist seems to be at least hypocritical. Not much of wealth has recently trickled to the poorest.
But the worst cases of neoliberal manipulation appear to be:
1. Claiming that the Governments are fiscally constrained, have to borrow all the money they spend on the financial markets and cannot, simply physically cannot, discharge their duty of care once a hole in aggregate demand is created by debt deleveraging combined with wealth hoarding.
2. Manipulating the majority of the society to believe that we are all capitalists (a Marxian bourgeoisie class) now. In Australia 70% of people are home owners. Almost everyone has a superannuation account and frets about high inflation or falling share prices. This was the most effective response to left-wing ideologies – blurring the lines of the class divide. Everyone is a hostage. What if the state guarantees pensions allowing to live with dignity? (this is especially important in the context of the collapse of the social security systems in Central Europe)
3. A special type of libertarian anarchism where the state is branded the worst enemy of the people. Privatisation and dismantling the “corrupt system of social welfare” is the only answer. So why does the wealth end up in the hands of so few people?
I am not in favour of any kind of socialism but I do believe that people should have equal opportunities to work and to enjoy life (without destroying the environment) and that the worst moral hazard is to allow the rich get another free lunch while so many people are starving. No hedge fund manager is my personal hero – even if I may have some respoct to their intelligence.
More on “how the Germans do that” is here:
http://bilbo.economicoutlook.net/blog/?p=9847
May 22nd, 2010 at 11:46 am
you know, i just put a lot of money into the commonwealth bank, in a fixed term deposit, a lot! I am from the UK and well, decided CBA was probably the safest.
Now, I see this presentation and wonder, advice would be useful.
Ultimately, I may take it out and buy gold at the mint, unallocated. I wonder what steve thinks of the unallocated perth mint scheme (they do lease to AGR only!).
Is there any bank that maybe is safer, would the AUS govt underwrite 0.5M dollars deposit? (assume I am a aus perm resident)
May 22nd, 2010 at 12:44 pm
ak, I think you are too cynical. I think deflation is good for the next generation and for planet Earth.
May 22nd, 2010 at 12:58 pm
To be honest Steve, i think this presenation is a little bit too sensationalist, even for you.
Are you actually supporting it’s claims that the Australian banking system will collapse? Do you actually believe we are better off buying other currencies…and if so..which ones?
I’m all for hard facts and putting them out there..but this presentation either doesn’t provide sources or the references unverifiable sources (apart from it’s references to this site of course!). Who put this presentation together and what are their motive’s.. can anyone point me to the author?
I think we do have something to worry about based on the balance sheets provided above for the CBA but I found this on intelligent investor and I think it sums up the my thinking on this type of analysis.
“Any outside investor who says they fully understand the intricacies of Commonwealth Bank’s balance sheet is either a fool or a liar.”
http://www.intelligentinvestor.com.au/articles/Commonwealth-Bank-Of-Australia-CBA/The-bottom-line-on-CBA-s-balance-sheet.cfm?articleID=815114
May 22nd, 2010 at 1:48 pm
A 50% or 60% exposure is not an intricacy!
May 22nd, 2010 at 2:08 pm
I just heard a great news report on the radio this morning.
The state housing minister in WA wants to release more land for housing by selling off surpluss govt land to lower home prices.
The REIWA has slammed the move and railed against it saying it was unnecessary and wrong.
I mean seriously if that does not smak of the most purile self serving self interest by a lobby group, with a vested interest in high house prices. Read “my members rely on house prices going up or staying stable for our capital growth profits, and tough for people who want to own homes in a affordable manner”
Why do we tollerate these lobby groups i dont know
May 22nd, 2010 at 2:11 pm
I thought it was worth sharing brett–especially with the comparison of bank balance sheets. I wasn’t necessarily endorsing its interpretation overall, but I thought it was well done.
May 22nd, 2010 at 2:17 pm
http://www.smh.com.au/business/property/property-market-cools-as-buyers-stay-home-20100521-w1ts.html
Make of it what you will
“Sydney’s property market has suddenly caught a cold.
Auction clearance rates in the past two weeks have been down and agents report fewer visitors to open houses.
Properties were being passed in because buyers were reluctant to commit, said Paul Lowe, of Ray White Double Bay.”
Oh such a poetic turn of phrase
“Sharlene Purser, an agent in Marrickville, is blunt: ”It’s died in the arse.”
Oh Say it aint what we think it is
“Despite the sudden chill in the property market, no one is predicting that prices are about to plummet. After a year in which median prices jumped 20 per cent, the senior economist at BIS Shrapnel, Jason Anderson, is instead forecasting a quarter of no growth, either in the June or September quarters.”
May 22nd, 2010 at 3:58 pm
Brett123,
I don’t think there is any harm in Steve putting this presentation up, even if it is just to promote discussion and the types of criticisms you have levied. If no one outside the commonwealth bank can make any sense of all of its risks and balance sheet then I certainly wouldn’t want to invest in it, also if this is true, then no regulator could possible know what was going on either. That is a pretty bad indictment of our company disclosure laws. In anycase anyone should be able to put their opinions about what it is – we are not in a totalitarian state just yet – and people in a public forum, such as this, can debate whether various claims and interpretations are true or not. I personally don’t think authorship is that revevant, many people do not identify themselves on the internet, nor do I think they should have too. Are you suggesting that we should assess such information based on its author rather than its inherent face value? I do agree that some better acknowledgement of the sources used would be beneficial and in general work that includes such sources should be preferred to work that does not.
May 22nd, 2010 at 4:05 pm
Brett123
Sorry, further to the authorship question. I acknowledge that there are two camps here. The traditional academic camp believes in blind review, ie. that work should be assessed on its own merits. However, others, who are interested in critically assessing ideas believe you need to know the author and their intentions before you can assess any ideas (i,e so you can offset any baises in your own mind). I believe this second effect can be better achieved by simply having a balanced presentation of ideas and open discussion of them in a forum like this, rather than risk dismissing ideas because you think the guy who wrote the article is a communist or whatever. The critical assessment idea belongs to an age and a mindset where public discussion was not so easy as it is today.
May 22nd, 2010 at 4:12 pm
brett123 # 17
Based on their published financials the Big 4 are subject to a massive rollover risk on the bonds issued to foreign investors. Consider also the potential duration mismatch between their loan books and 2, 3 and 5 year bonds. On the numbers presented by the banks themselves this presentation isn’t “sensationalist”.
IMO the other factor (mentioned in the presentation) that really should concern people is the $13 trillion in off-balance sheet “liabilities” reported by the RBA. What are they holding?
Despite all of the hype Australian banks have a rich history of getting themselves in way over their heads in risks they don’t understand, can’t evaluate or manage. Westpac’s swiss franc loans during the late 1980s and the NAB losses on Homeside in the USA are two that spring to mind.
May 22nd, 2010 at 4:19 pm
All,
This article explains new US legislation designed to capture public housing with a subsidy from the US Govt for the vultures.
“HUD Is Trying to Privatize and Mortgage Off All of America’s Public Housing” – George Lakoff
“With rents set above market rates, the mortgage risk would be attractive to banks. Either they make a huge profit on the mortgages paid for by the government. Or if the government lowers what it will pay for rents, the property goes into foreclosure. The banks get it and can sell it off to developers.”
The writer also points out:
“And a precedent is set. The government can privatize any public property: Schools, libraries, national parks, federal buildings — just as has begun to happen in California, where the right-wing governor has started to auction off state property and has even suggested selling off the Supreme Court building.”
http://www.huffingtonpost.com/george-lakoff/hud-is-trying-to-privatiz_b_585069.html
May 22nd, 2010 at 5:30 pm
Sure I’m happy it’s generating discussion..that’s why I’m here, it’s just in my opinion Steve posted this with not enough clarification on what he thinks of it’s conclusions. He didn’t say “I’m posting this to generate discussion”, he called it an “excellent presentation”. Someone quicky skimming over the site would take it as his. I don’t think it’s anywhere near Steve’s standard of work, and should not be mixed with it. (Just my opinion – of course that’s up to Steve!).
Already there’s a few sites out there referencing Steve keens latest blog, which is referencing a presentation with questionable references… I find that a little concerning.
I know Steve said he’ll be posting a few more property based entries and that’s fine. IMO, the sooner he gets back onto other economic issues – Greece, The impact of a falling aussie dollar or good old fashion debt to GDP the better!
May 22nd, 2010 at 6:17 pm
Brett123,
Personally I think your comments are fair enough. I was thinking from the view point of someone who is familiar with Steve’s work and has a long history with the site. In relation to people coming onto the site fresh from outside, without considering the broader context they may indeed get a skewed impression based on this single post.
May 22nd, 2010 at 6:57 pm
livejazz
http://www.couriermail.com.au/money/australians-living-in-prosperous-times-says-commsec/story-e6freqoo-1225843571040
I think this article sums up the competency of the Commonwealth Bank with reference to our economy and the banks ability to take care of your hard earned money.
Maybe it should be forwarded to all employees at Clive Peeters saying how fantastic the CBA economists think everything is considering the article is only a few weeks old.
Personally I think money under the mattress would be in safer keeping.
May 22nd, 2010 at 7:45 pm
mfo,
Re: # 27
Did you notice this in that article?
“The starting point for the gauge is 1987.”
Why use a base year that included a massive stock market crash and other disruptions in the economy?
Black Monday (1987)
http://en.wikipedia.org/wiki/Black_Monday_%281987%29
May 22nd, 2010 at 7:54 pm
Magic
http://au.news.yahoo.com/thewest/a/-/newshome/7276014/minister-wants-to-flood-land-market/
May 22nd, 2010 at 9:54 pm
This is my first post-I’ve been listening, reading and learning from all on this blog for years-thanks everyone….I’m wondering if now is the time we should take our money out the bank? It’s getting harder to pretend that everything’s going to be alright- any thoughts?
May 23rd, 2010 at 2:58 am
http://www.news.com.au/money/property/cashed-up-foreigners-snap-up-homes/story-e6frfmd0-1225870016929
Whoops
CASHED-UP foreigners snapped up $14.9 billion worth of houses and land in Australia last year, including $2.49 billion worth of existing homes.
I guess we weren’t supposed to find out ???
The Federal Government refused to release but they were in a Foreign Investment Review Board (FIRB) report that was quietly posted online last week.
But its not the full story
But the figures are incomplete, because the Government changed the rules in April last year so foreigners no longer had to notify the FIRB if the property was to be their principal place of residence.
Yeah well this govt will keep house prices high by stealth if it has to —
Although the Government announced last month that it would adopt a more stringent approval process, experts claim the latest changes will have little effect on the market.
Opposition finance spokesman Joe Hockey said it was clear that foreign investment was having an upward impact on housing prices.
Immigration-law specialist David Stratton said the new amendments focused on penalties for non-compliance.
“In one sense, little has changed: foreign residents can still purchase Australian properties and, in particular, people in Australia on temporary residence visas can still purchase existing dwellings,” Mr Stratton said.
May 23rd, 2010 at 9:27 am
Apologies for ruining your Sunday breakfast:
http://tinyurl.com/289p2ga
Yes folks, the true blue Aussie reverse mortgage is here. God help us all.
May 23rd, 2010 at 9:41 am
Spooky, if you want something really spooky, then read this associated article:
Revealed: The home loan that could save you a fortune
Words fail me… Even in the final stages of the Japanese, they only introduced a 99 year mortgage, not an infinite one. I wonder what happens to the mortgage after the borrower’s death if, somehow, house prices haven’t risen in the meantime?
May 23rd, 2010 at 9:43 am
Hi MamaBear,
As I noted before the Australian government introduced its comprehensive guarantee of bank deposits in the early stages of the crisis, if there’s one thing we’ve learnt from the Great Depression, it’s that you can’t let deposits fail when a bank does. The guarantee has been reduced and wound back since, but I expect it would rapidly resurface if the banks became shaky during a real estate crisis.
May 23rd, 2010 at 9:45 am
Most likely coincidental angophera, since the ABS house price index series begins in mid-1986. I won’t often spring to Craig James’s defence, but here I expect it’s just a factor set by the availability of recognised statistics.
May 23rd, 2010 at 9:47 am
No argument there brett, and I’ll be posting one next week that should be of interest.
And yes a disclaimer would have been useful, but as usual I’m in a hurry doing other things. I’ll be a bit more careful next time.
I did check the balance sheet claims about the Commonwealth Bank however, and they–as best my non-accountants eyes can determine–are pretty accurate. Australian banks do appear to be far more exposed to the housing sector than their overseas counterparts.
May 23rd, 2010 at 9:59 am
Steve, that AIG director should be fired for conceiving that…but not from the company but by a firing squad.
Even Indentured servancy, an institution that helped to populate the U.S. , was supposed to have a fixed term….
That man, if the world had still common sense, should be warned that a serious charge for crimes against humanity is going to follow any attempt to market that horror….
May 23rd, 2010 at 11:41 am
The ING product is objectionable and all dressed up as a populist strategy. What are the risks for ING and potential writedowns when the vaunted capital growth doesn’t occur. Many financial institutions have shown an inability to price and evaluate risk.
May 23rd, 2010 at 11:44 am
This is pretty sensationalist. I don’t see how those graphs comparing ‘exposure’ to property loans equals impending doom for Australia’s banks. If there were a property collapse many older loans would still have a buffer of equity and any forced sales would recoup most of the banks’ losses. Even overseas the fall in property hasn’t been the driving force in banking collapse by itself – rather the combination of sub-prime and credit derivatives. The real story will be a housing collapse and profits as usual for the banks who are pretty well hedged against such an obvious risk factor. For ordinary folk with their savings in the bank don’t forget the government guarantee before you start losing sleep.
May 23rd, 2010 at 12:01 pm
Steve,
Thanks for the clarification on the Commsec gauge. Must have hurt to defend Craig James. On a positive note it is highly unlikely you will need to do that on a regular basis.
May 23rd, 2010 at 12:32 pm
Well, it seems I have little or no real protection for my savings at the commonwealth, albeit I surely must be one of 1000s with lots of savings there. Luckily i dont own property now as I know whats going to happen. I find little in the way of govt. g’tees for my money. Which in many ways I agree with, it means I now want to move it again.
Steve puts forward the money multiplier concept is BS and he is right, the neo-classical idiots really are going to make a financial crisis into a great depression 2 (although steve may not agree with that).
What the world faces now really is a big experiement of several forces
* disappearance of globalisation as we lose faith in currency and exchange, move towards bartering
* movement of reserve ccy away from usd to hard currencies
* lets face it oil is going up
* total breakdown of social cohesion in many places (2 parents working, no community)
* oh, an the end of the fractional reserve banking system. the neo-classical thinking will be shown to be broken, it is ending. now we’ll have a total lurch to the right, the USD will be seen as the symbol of everything wrong that has happened before and they’ll bring in a new global currency via IMF,
* meanwhile…my little savings account will be held and I’ll only be allowed to withdraw a fraction per year…
welcome to the future.
(question is will they tax gold ownership, probably)
May 23rd, 2010 at 12:55 pm
If you really want an Auusie sub prime lender have I got the lender for you:
http://www.amohomeloans.com.au/amo_home_loan_products.htm
The Zero20 loan product is a cracker.
Although I do admit they have tightened up their criteria somewhat in the past months and will now only lend up to 95% depending on the product.
May 23rd, 2010 at 1:52 pm
Steve,
This is off the track but I came across this while reading some academic work:
“Economists have devoted huge amounts of effort into developing models of capitalist economies. There are enormous computer models of economies used to assess the impact of a change in tariffs or investment. Large amounts of data on employment, interest rates and the like are collected and analysed. Econometricians – economists who look at abstract models of economies – have developed entire bodies of mathematical analysis.
Most economists give very little attention to anything that challenges their fundamental assumptions. John Blatt, a leading applied mathematician, examined some of the assumptions underlying neoclassical economic models – such as the assumption that an economy will tend toward equilibrium – and found that they did not hold up. His work should have led to a reexamination of the foundations of neoclassical economics. Instead, it was ignored.” (p. 123)
Martin, Brian. 1998. Information liberation: Challenging the corruptions of information power (London: Freedom Press).
May 23rd, 2010 at 1:58 pm
My concern about the Government Guarantee on savings deposits isn’t about the Government honouring its obligation of paying up but over what time frame will they pay up. I believe the last time this happened in Australia was the 1890′s depression when all the banks went belly up because of reasons that are exactly the same today, if not worse.
I believe the last of the depitors were payed out in 1920, almost 30 years after they lost their deposits. Fotunately for the Government, most people owed money from bank failure deposit guarantees were dead from old age by the time the Government coughed up.
May 23rd, 2010 at 2:25 pm
Steve,
You need to make it clear that this presentation IS NOT your work or a recommendation by you. Mish Shedlock is running the following:
“Email Regarding Global Bust II – Perfect Storm for Australia; How Safe is Australia’s Banking System?
Inquiring minds have been investigating the property bubble down under and are asking the question “How Safe is Australia’s Banking System?”
Australian economist Steve Keen addresses that question and more in a presentation on his blog How to Profit From the Coming Aussie Property Crash (and Banking Crisis). The answer to the question is on pages 19-23…..”
http://globaleconomicanalysis.blogspot.com/2010/05/email-regarding-global-bust-ii-perfect.html
Shedlock seems to be saying that YOU are recommending that people short Westpac etc.
Cheers
May 23rd, 2010 at 3:36 pm
mfo,
From what I have read the 1890′s depression wasn’t at all pretty for Australians. Many people died of starvation and others were just outright impoverished.
There is a good poem about that: http://www.majormitchell.com.au/htah/htahcrash1890s.html
May 23rd, 2010 at 3:42 pm
Think sometimes we all become over sensitive to other bloggers comments.
Sometimes I need to watch my own comments maybe taken out of context by other more sensitive bloggers.
Showing heads cut off is not really funny to anyone.
Good to hear these other bloody comments gives you a good idea of the social mood of society.
Usual herd on the this website need a good shake up in independent thinking and real economics.
My feeling is that people in this country are becoming more angry and fustrated by large incompetent central planning.
Ak made a very good point yes plenty of people out there who would love deflation so they can pick up bargains, however if these people have saved hard and been productive, have not recieve taxpayers grants then why not?
Would you like cheap reasonable housing for your own family in the future?
May 23rd, 2010 at 3:58 pm
MMitchell
That’s a great poem. I should transcibe the lead up to the 1890′s depression from my old school history book. It’s reading is exactly what’s happening today, almost word for word. The reckless lending by banks, the hysteria over property speculation, the addiction to debt, all of which was reported in the Argus newspaper of 120 years ago could be published in todays Age, and you wouldn’t know the difference.
The only difference is that the Argus refers to Brighton as an outer Melbourne suburb.
May 23rd, 2010 at 4:33 pm
If the housing bubble crash, wouldn’t it mean that a lot of property developers will go bust? Since our banks are so highly leveraged, wouldn’t that mean the banks themselves will go bust?
Another thing I worry is the $13 TRILLION of off-balance sheet liabilities on the banks’ books. What the hell is all these liabilities? What kind of stakes are our banks gambling on?
Yeah sure, maybe the government will print big money to nationalize the entire banking system. But what will happen to our AUD? Will we end up like Iceland? These numbers are freaking large and they look to be too big to bail!