“We think that the Australian dollar along with perhaps the Aussie banks and Aussie property are maybe the greatest shorting opportunity that we're going to see for a long time to come,” Gambles said.
“Australia has a very leveraged consumer sector whose wealth is dependent on the performance of the housing sector, which I think is in a bubble,” he said, adding that the real estate market is highly overvalued, by approximately 45-70 percent.
According to Edwards, the lack of volatility in the Australian economic cycle and the absence of any recession since 1991 has led Australians to have an “excessive” appetite for debt in the belief the “future will reflect the past”.
“But for us, suppressed volatility is merely storing up an even bigger crash further down the road,” he wrote in report published Thursday.
Paul Gambles, Managing Partner at independent financial consultancy MBMG, agrees that there is a large credit bubble in Australia’s banking sector,
