Deputy Governor of Reserve Bank of Australia says that the Global Financial Crisis is history!
I thought you all might like to know that according to the Deputy Governor of the Reserve Bank of Australia, Ric Battellino, the global financial crisis is history and Australia’s “very big” mining boom is here to stay. He reckons that Australia’s current boom could last 15 years or more because of demand from China and India.
From the Sydney Morning Herald
According to Dr Keen, though, the hangover from the latest real estate binge is going to be a heavy one.
”The crisis is caused by too much debt and it’s too late to stop too much debt,” said Dr Keen.
The government stimulus, the investment rules change and low interest rates have combined to swell the country’s mortgage debt by $100 billion more than where it was headed when it began to dip in March 2008, according to numbers Dr Keen delivered in a speech in Melbourne today. (China’s lending rates are typically lower than Australia’s.)
Had no First Home Owners Buyers’ grant been enacted Dr Keen estimates there to have been a $20 billion reduction in debt.
Dr Keen said the ratio of mortgage debt to the size of the economy – as measured by gross domestic product – hit 81.29 per cent in March 2008. It then eased to 80.37 per cent by November 2008, before rising to a new record high of 84.28 per cent ”from where it is still rising,” he said.
Australian housing bubble will be popped when China slows down its commodity binge. Currently, housing is on a rampage in AUS. My sister in law put a offer on a townhouse in Perth for 410k. Its a 3 bedroom townhome that should be valued at 210k based on incomes. There are also foreigners bidding up home values in AUS, just like in Dubai.
So here is what the chain reaction will be like. US treasury market blows up, bringing US depression even further down. China, which can no longer fake its GDP data panics and begins to sell off assets of all kinds. Another risk is out of EU as China sends trillions over there. Commodity prices will PLUNGE thereby stopping many of the Australina mining projects. Once the commodity boom ends the party is over for australia.
Longer term AUS will be a great place to live. Only 21 million people in a country the size of the US. Granted its 80% desert but AUS can easily accomodate another 20 million people. The mining sector will provide wealth for AUS for many years to come. However, too much too soon. Too much credit, speculation, and mortgage debt will crush many households out there.
[quote=bearmarkettrader]Longer term AUS will be a great place to live. Only 21 million people in a country the size of the US. Granted its 80% desert but AUS can easily accomodate another 20 million people. [/quote]
Like hell it can…….
Australia doesn’t have the water, nor does it have the food. We already import more than 75% of our fruit and veg, Peak Oil was in 2000, and we could experience fuel shortages this year or next…..
The entire Aussie economy mirage is a total delusion. Once the Chinese bubble bursts, it’ll be all over Rover. And in any case, we have a two speed economy: for those who are in the resources boom, and for those who are not.