An increase in interest rates will most likely cause an increase in the chances of people defaulting on their loans. Companies will need to pay more interest on their debt and some companies could face insolvency.
The facts are that economic growth over the past 10 years has been built up largely on debt. Now that is fine as long as the debt can be managed.
Problem is when debt levels are too high then the system is out of balance. This is when people become very sensitive to interest rates, ie: home loans, personal loans, commercial loans, margin loans, investment loans, etc...
As for the profits announced by the CBA you got to ask yourself that if the Federal Government did not guarantee the banks then where would they be?
You need to look past the smoke and mirrors that the politicians and fund managers and so called experts are thowing at you. This is what they did prior to the GFC then bang GFC hit and took all these people by surprise, even the so called experts.
Markets cannot go up forever especially after a record increase in the stock market in 2009.
China is the next bubble about to burst and when that happens then we will really have a GFC here in OZ.
