It should be different in as much as some areas have much more...

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sierra

11,152 Posts.

15/11/20

12:57

Post #: 48883707
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Originally posted by dolcevita: ↑

I don't think the Reserve bank's response was predictable at all. They were left to do the job of stimulating the economy and have been crying out to the government to apply fiscal measures. These measures are philosophically, what the LNP have always been reluctant to do. It's been like pulling out teeth to get them to stimulate and right now they're pulling back on measures to support the underemployed and unemployed over 35s. This is very bad strategically.

In conclusion, Keen would have been right if the government acted responsibly.
Instead it's chosen to reinflate housing, and now it's poised to relax the measures on responsible lending that arose out of the Banking Royal Commission.

Let's just say these approaches are unprecedented. Keen is well within reasonable assessments to not have predicted them.
It's also possible to say they're irresponsible. It's worthwhile noting that there is only a bank guarantee of $250k for each bank account held.
The banks are being kept alive, because housing is being kept alive. How long this can be sustained is the question.

I recall the tech wreck and it took ages to actually start to unwind, when it did there was no stopping it. Similarly the signs about the GFC and the sub-prime mortgage were there for all to see. People chose to ignore it. That didn't end well either. Will this be different?

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It should be different in as much as some areas have much more capacity to unwind than others.

It's also important to factor in the massive underlying inflation. So much money has been created recently that the value of the currency has been depleted which has already collapsed the value of everything in real terms unless inflation balances the books.
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