The situation might be slightly more complicated than either of us can assess, in fact.
The actions of central banks worldwide mean that our recession may involve significant inflationary pressures as well. This, combined with the reliance of the banks on overseas credit (the rates of which will increase should the property decline accelerate, and overseas lenders sense the additional risk) means we may well experience a stagflationary period.
So the above may reduce or eliminate the ability of the RBA to implement monetary stimulus.
While our public debt is currently very very low by OECD standards, our private debt is massive. If our federal government is required to bail out our banks in the future, our public debt scenario will become unpleasant. As can be seen in the eurozone, and even in the US increasingly, if you wreck your public finances sufficiently through the socialisation of the debts and losses of irresponsible people/institutions, you may eliminate your ability to provide fiscal stimulus as well.
So it is not inconceivable that we might be unable to apply monetary or fiscal stimulus. But not before socialising the losses and debts, as property investors will no doubt expect the government to do.
