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Australia's housing cash splash can't go unchecked; Housing bubble threatening Australia's financial security
Topic Started: 4 Aug 2014, 06:52 PM (458 Views)
Timo
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The housing bubble continues its onslaught of destruction ....


"An array of global organisations, from the International Monetary Fund to the Bank for International Settlements, have lined up in recent months to berate Australian policy makers about the looming risk of Australian banks and their reliance and exposure to housing.

It all seems to be falling on deaf ears. Unwinding negative gearing or lifting capital gains taxes falls into the category of political suicide, so entrenched are the practices among middle and upper class households.

That's left the heavy lifting to the Reserve Bank. At the moment, its only weapon is interest rates. But with a fragile economy, weak wages growth and a looming crash in mining capital investment, a rate hike could seriously damage the economy."


http://www.abc.net.au/news/2014-08-04/verrender-housing-market-deja-vu/5645392?section=business
Edited by Timo, 4 Aug 2014, 06:56 PM.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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van
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There is no risk to Australian banks, they have a $380 Billion bailout if anyone goes wrong.

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In a globally unique policy, the Reserve Bank of Australia will supply banks with a permanent bailout facility worth up to $380 billion by 2015.

The policy has been designed by the RBA to help banks satisfy stringent new liquidity tests which simulate “acute stress scenarios” that deny banks funding for 30 days under the post-GFC rules, Basel III.

Local regulators argue that insufficient liquid assets such as government bonds meant they had no choice but to give the banks a new taxpayer-backed “line of credit” that could be tapped at a cost just above the RBA’s cash rate.


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roberto
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You know they don't actually have that $380B on hand don't you? It's just an arbitrary figure they though up to instill confidence. If they ever had to actually come up with it it would be as a monitizing venture, not good for the economy since it leads to rampant inflation.
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Timo
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van
4 Aug 2014, 07:16 PM
There is no risk to Australian banks, they have a $380 Billion bailout if anyone goes wrong.



Great....if the billions wasted on the middle class welfare policy of negative gearing wasn't enough
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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