Eric’s Reviews > Australia: Boom to Bust: The Great Australian Credit and Property Bubble > Status Update

the conclusion says that Aus would suffer because its economy staggeringly dependent on three industries. With recession that might be coming, AUS can have chanece to diversify its economy. For example, recession would reduce currency and labor cost, bringing down the cost of investment for multinational corporations.

How bad does it get in AUS in future about the collapse of banking and housing market

give hypothetical examples about what would happen if AUS economy went bust. also, it highlights that homebuyers are too exposed to debts and when financial crisis coming, they could not survive,because int rate would rise higher, which force to sell their properties to pay back the debt. With too much toxic lending, banking system would suffer a lot coz banks would lack cash in hand.

the author give an example talking shadow banks which would trigger widespread issues when they didn't have money to payback debts. this also affects negatively to other industries such as real estates. Also, Aus would be affected too, with lower mining export making mining industry down. As mining companies have too much leverage, gov could not save them, then it would trigger issues in banks and housing market

Aus politicians and RBA is far behind leaderships in USA in terms of tackling with recession. in Aus, politicians take blind eyes on bubble in real estates and don't take action against it since they are afraid the citizens would make them down. Also, RBA took too aggressive actions to take down interest which trigger investment flooding into real estates.

an example is given talking that there were many bidders for one house bidding initial price from 700,000 to 920,000, which is heat. Also, with capital gain and negative gearing, property investors can get benefits from property investment. On the top of them, interest only debt would make the economy risky. Totally, housing prices in AUS is at least 5 times as average income, which is non-sensible.

real estate industry is in bubble where the housing price is much higher than Chicago, which is non-sensible. In aus, the high housing price is caused by banks' willingness to lend money rather than high demand. Also, as first home-owners become less and foreigners buyer buy a small proportion of new-built home, Aus property investors, who seeks capital gain, have a strong purchasing power coz interest rate is lower

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it is about Mining industry with very high leverage. also it bets that China will still have high demand for mining in the future, but actually not. Therefore, with high debt invested into expansion of infrastructure, mining industry is in risk with too high leverage whilst lower future demand for mining. If AUS would save the industy, it would sink the AUS economy because a lot of money should be used.