Did faber recommended long bear sterns?Please provide the link I...

Did faber recommended long bear sterns?
Please provide the link I am curious.

Just before US market crashed Ben Bernanke(FED) said everything is hunky-dory in US.

Coming back to RBA,
Glen said on some mainstream media
"I think it is a mistake to assume that a riskless, easy guaranteed way to prosperity is just to be leveraged up into property. It isn't going to be that easy."

and recently Reserve Bank governor Glenn Stevens says the rapid deterioration of Europe's debt crisis should serve as a warning for Australian households to reduce their debt.

Mr Stevens says the biggest lesson from the Greek debt crisis is that financial markets can ignore problems they know about for a long time, before a catalyst creates a sharp reaction.

"Markets can happily tolerate something for an extended period without much reaction, then suddenly react very strongly as some trigger brings the issue into clearer focus," he told a business function in north-west Sydney.

He says Australia's public and corporate debt is very low compared to other countries, but the nation's vulnerability is its relatively high level of household debt.

"The big rise in debt in the past couple of decades has been in the household sector," he warned.

"There have been many reasons for that and, overwhelmingly, households have serviced the higher debt levels very well.... So, to be clear, my message is not that this has been a terrible thing.

"But that doesn't mean it would be wise for that build-up in household leverage to continue unabated over the years ahead.

"One would have to think that, however well households have coped with the events of recent years, further big increases in indebtedness could increase their vulnerability to shocks - such as a fall in income - to a greater extent than would be prudent."


Now lets read it once again
"Markets can happily tolerate something for an extended period without much reaction, then suddenly react very strongly as some trigger brings the issue into clearer focus"

Is this bullish comment or a warning?

Someone also mentioned about the strength of Aussie banks,
Big four Aussie banks have more than 50% of their lending books as mortgages. Look at CBA 2009 annual report Leverage ratio is almost 20 times (total assets of $620.4 billion against $31.4 billion of equity). Of $620.4 billion of assets, $473.7 billion are loan assets. If around 6.6% of CBAs loans go bad (any loans,not just mortgages), 100% of its shareholder equity will be wiped out!

During GFC Aussie banks were able to raise cash form external sources only becoz it was backed by tax payers(Gov garantee)not becoz of thier great balance sheets or lending practice,

Banks reliance on external Sources(due to insufficient deposits) is what Glen is worried about and hence he wants aussies to stop taking loans and start saving.

Now if people become conservative in taking debts(or forced to by banks) where is next price increase in housing coming from?

RSPT is internationally seen as soverign risk, if it happens then Aud will fall hard(we have seen the trailer recently), Our investment grade with be degraded and banks will find it difficult to get funding externally, So even with our RBA reducing interest rate, banks cant really pass on that reduction. Plus if RBA Reduces interest rate this will makes Aud fall futhter, which makes creates further difficulty for banks.

International Hedge funds sharks are already smelling blood, there have been minor bear raids on aussie banks(due to thier over exposure in inflated property market),
Carry trade is unwinding further puting pressure on our dollar.