Would someone be so kind as to point out to me how we are going to be able to avoid a financial catastrophe that will largely "commence" (used loosely) with the unwinding of the residential property bubble.
I appreciate that things are a little different here than they are in the US in terms of how mortgages are structured re the responsibility of the borrower, however as I understand it two of our largest banks; CBA & WBC have significant exposure to residential mortages.
Presently the rate of default on residential mortages continues to grow, albeit slowly while the value of the homes relative to these mortgages is decreasing at varying levels throughout the country. It's worth remembering this is precisely how the US bubble started to unravel, it started slowly but has since gathered significant momentum.
What concerns me the most I guess is that many still believe that our regulators and Government have their fingers on the pulse despite the recent events of the GFC that were proof that they most certainly DO NOT.
IMO sentiment has now definitely changed at a local, national & international level and this is what drives trends.
The data released this morning re China's unexpected drop in new loans and a further tightening of domestic money supply are IMO further indicators that Australia is not as well placed as our leaders would have us believe.
Seems to me that we are relying on Chinese growth more than ever before and should there be a further problem with that growth then ......
