Households' Problems With Core Inflation Number At Zero?
28th April 2019: CPI Aberration Or Downward Spiral? Deflation Highly Likely!
Australia's 3rd Qtr 2018-19 Core Inflation of Zero is highly troubling: for incoming Federal Government, labour markets, consumers, retirees, economy, 9m households, banks/lenders, us all.
Why? In short, deflation can lead to economic stagnation, lower economic growth & periods of high unemployment coupled with falling wages. Most importantly, deflation results in an increase in the real value of household debt.
It's the "increase in the real value of household debt" issue for Australia & Australians which is the big bear in the OZ-China shop.
Today, Australians are drowning in debt, savings are at record lows. For 9m households, property security is key issue plus declining residential prices & values. Thus, Negative Equity, Defaults, Bank Foreclosures/Sales at 25%-32% below market value loom larger than life.
In short, Australians are exposed like never before. No safety net.
So too are major banks-CBA, WBC, NAB, ANZ-plus all property lenders with balance sheets up to necks in mortgages, some 2.5m in/entering default zone.
Banks do what they always do: dump properties at 25%-32% below current market values!
