Australian Financial Collapse – No Worries Mate?
I remember people saying your house is your castle. What if that castle is a sand castle and the winds of change arrive. Then what? People work their lives to pay off mortgages in order to feel secure that their home is at least theirs. Yet in the world of credit, greed, sub-primes, derivatives and speculators, the housing market overheats and has little real asset backing.
For myself, I’ve never felt to buy a house. My preference has been to use money for life experience and not sink it into variable assets that chain myself to debt and force me to work in areas that don’t inspire me where I would watch the clock for 5pm. I prefer to live with little, where need equals want and pursue my passion for peace with freedom. So when the system collapses I have nothing to lose as I’ve done the work on inner security. However, there will be many dazed and confused as they haven’t sat back and really thought about the torniquet of debt we call security as an unquestioned expectation that appears normal. The financial crisis around the world is grounded in a business culture that profit maximises and increasingly sees value in money and yields rather than values and integrity. We will soon see the real wealth has nothing to do with money. It is who we are and not what we do. At its essence is fairness, sharing, caring, kindness and living on purpose.
Here is some information from Business Review Weekly quoting from the Australian Financial Review quoting Moody’s rating agency. Me thinks of Chinese whispers.
http://brw.com.au/p/business/australia_banks_vulnerable_to_looming_CqqXz6Jgzqw3d5DG15yEJL
Australia’s banks vulnerable to ‘looming’ housing collapse
Published 15 July 2013 09:27, Updated 02 September 2013 11:27
The reliance of Australia’s banks on residential mortgages leaves them very vulnerable to any housing market correction, Moodys’ Tony Hughes has warned. Photo: Glenn Hunt
Australia’s banks have the highest exposure to residential mortgages of any financial institutions in the world, leaving them vulnerable to a “looming” house price correction, a leading credit market economist has warned.
Tony Hughes, the managing director of Moody’s Analytics, said in a new report that Australian house prices were overvalued, presenting a “major concentration risk” for the banks.
“There remains an unhealthy concentration in credit backed by the fickle values of houses in dusty but orderly suburbs,” Dr Hughes said.
“Irrespective of the complacency of local analysts, who sound a lot like many US housing cheerleaders circa 2006, this exposure represents a major concentration risk for banks and the Aussie economy. Houses appear to be overvalued. One merely hopes that the looming correction is a smooth one.”
Dr Hughes, who heads the economics arm of credit ratings agency Moody’s, said the high exposure of Australia’s banks to home loans was a key concern for international investors.
While local analysts played down the threat of housing bust, Dr Hughes said the experience of the financial crisis, when a property downturn in the US brought the country’s banks to their knees, showed that Australia could not risk being complacent. He said Australian house prices where “modestly, but not excessively”, overvalued.
“The high degree of exposure to the domestic mortgage market raises many concerns. Recent experience has shown that house prices can fall significantly and trigger serious banking meltdowns,” he said.
“But what are the chances of a similar housing collapse in Australia? Many international analysts think the chances of an antipodean housing bust are quite high – it would take a bold economist who has been in a decade-long coma to declare that an Australian housing correction was impossible. When trends in Australian house prices are compared globally, the signs look worrying.”
Read the full version of this story at The Australian Financial Review.
https://www.brokernews.com.au/news/breaking-news/australian-banks-extremely-vulnerable-to-housing-collapse-177222.aspx
Australian banks extremely vulnerable to housing collapse
Australia’s banks are dangerously vulnerable to any potential housing collapse, according to the latest Moody’s Analytics housing market research.
“The continued strong expansion in real estate loans—at least relative to other lending segments—has raised some eyebrows,” reads the report. “The Australian banking sector has the highest exposure to residential mortgages in the world…With the absence of any publicly supported securitization market—such as that provided by Fannie Mae and Freddie Mac in the U.S.—and a currently weak private securitization market, any new mortgage originations have to stay on banks’ books.”
“The high degree of exposure to the domestic mortgage market raises many concerns. Recent experience has shown that house prices can fall significantly and trigger serious banking meltdowns.”
Furthermore, the research group argues that the chances of a housing collapse in Australia are ‘quite high’.
“When trends in Australian house prices are compared globally, the signs look worrying. House prices have increased for longer and faster than in many of the markets where prices cratered during the Great Recession.”