This is one of AFR's better reports in a long time.
What is missing is a formal acknowledgement that we have created a ponzi financial system which relies on the greater residential buyer fool to keep it afloat.
All is OK (on the surface) so long as house prices do not fall. Once they fall then the banks' assets (mortgages) reduce in value as people decide that their houses are not worth keeping and they accept bankruptcy.
To keep this madcap system going we need rising property values which can only be sustained by more people in a households working to pay for the mortgage. Two incomes may no longer be enough - now you have to get kid/s out of the house and into the employment. So the extra bread winner has not really added to family wealth because it is being transferred to the bank employees and bank shareholders.
One way out of this mess is to have high inflation plus fixed interest rates for mortgages so long as wages rise (which they should if we get 1970s style inflation).
Both Labor and Liberals have worked very hard to give Australia this crook financial system, which was spiced up with high immigration and FHBGS.
I have avoided investing in the banks. Their profits are based on placing a massive burden on working Australians and is obviously unsustainable. Outside of Steve Keen there were few economists that pointed out the inequity of this system. Quite a few academics kept saying that this was free enterprises in operation and it would right itself without any govt involvement or costs. We now know this was wrong because the govt feels it cannot let the big banks go under.
If I were receiving superannuation payments from a fund heavily invested in bank shares I would be very concerned. 2008 and 2009 showed that their dividends could be cut and shareholders' interest in the banks could be diluted.
PaulKeating/RJHawke/JohnnyHoward - thanks a lot for nothing. I just wish we could stop paying these nobs pensions out of the public purse.
