NortibaThe economic physics of a bubble collapse are well known...

Nortiba

The economic physics of a bubble collapse are well known , predicting the timing is obviously harder but I would suggest some correction (a very major one) is suggested by these fundamentals.

http://www.theaustralian.com.au/business-old/city-beat/rising-mortgage-arrears-sound-alarms/story-e6frg9no-1226049758390

"ANZ reported yesterday a sharp rise in arrears since September, with more than 30 days arrears rising 41 per cent to $5.8bn, while more than 90 days jumped 26 per cent to $2bn, with the majority related to its Australian mortgage business."

"Mott?s concern lies in the fact that given the sharpest rise is in the 30-59 day and 60-89 day buckets, ANZ will experience material increases in past 90-day due loans during its second half"

This is when we have low unemployment and booming commodities prices ??? . Australian Banks have the highest loan exposure to RE than any other banking geography , we also have the highest debt to income ratios. I can nominate a dozen other areas where the math is flashing very severe warning signs. I also pay particular attention to risk statements in financial reports, as we get further into this collapse I will dig a few out as examples .

Wachter and Herring's work on RE asset bubbles has Australia right in the cross hairs of what looks like a fairly remarkable collapse

http://realestate.wharton.upenn.edu/newsletter/bubbles.pdf

Watchters work on the Asian banking crisis cites lending percentages in the range of 40% as being one of the contributing cause, where as our big 4 run loan books of between 50-65% and mostly self insure their riskier loan ratio's

http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN026335.pdf

Im from a previous generation of bankers who just looks on and shakes his head at this generation . I am astounded that a bank like CBA can run itself up to 65% of its portfolio in RE and a bank like ANZ can go as high as 50% with 95% loan to deposit ratios while being self insured.

ANZ are not even running risk models that go above 8-9% unemployment , the reason why is they dont like the answers they get.