The following article shows how out of touch the "great economic...

The following article shows how out of touch the "great economic manager" is

Maybe he should go and look at the low doc loan market in Australia. He may then realise they are very similar in nature to sub prime loand in the US and the use of low doc loans is as large if not larger than the percentage of sub prime loans


manager:Sub-prime loans are irresponsible - PM



PRIME Minister John Howard has labelled as irresponsible so-called sub-prime mortgages, which have sparked falls on world share markets.

But Mr Howard said unlike in the United States, such loans only made up about one per cent of total borrowings in Australia and the issue was not a concern to the great majority of Australian home owners and borrowers.

"They're really loans given to people without the lender requiring any proof of the capacity of the borrower to meet the obligations under the loan arrangement,'' Mr Howard said.

"They are very irresponsible loans.

"They are quite bizarre arrangements, according to our lending practises.

"It's not surprising they have caused this difficulty.''

Mr Howard said the fundamentals of the Australian economy remained sound.

"But when you have a stock market shake-out such as this we can't avoid some impact,'' he said.

"That impact is not due to any weaknesses in the Australian economy, it's simply due to the fact that we're part of the world economy.''

Mr Howard said in the US, sub-prime mortgages made up about 15 per cent of total borrowings and as more people had begun to default on loans the companies lending the money had got into financial difficulty.

"That has had a ripple effect on financial markets....and so the thing spreads around the world,'' he said.

Mr Howard said he did not expect the problem to have an impact on most lending organisations in Australia.

"As to about 95 per cent of Australians who borrow through banks and other mainstream lending organisations, there won't be any immediate impact and perhaps no impact at all,'' he said.

Nor did he agree with some commentators who suggested the problems in the US would herald an end to the era of ever-increasing property values.