Speach by Ric Battellino

[Token Funder]

Forum members of a few years standing will be familiar with my regular references to the importance of credit growth in undersanding the Oz property market since the early nineties.

Here's today's speech from Battelino which gives a decent perspective of the situation.

 

[willair]

Forum members of a few years standing will be familiar with my regular references to the importance of credit growth in undersanding the Oz property market since the early nineties.

Here's today's speech from Battelino which gives a decent perspective of the situation.

Always puts a balance on the past 20 years when you read something like that..thanks for the link..

 

[tom32]

From the OP's document:

Some people claim that the global financial crisis was a vindication of the view that offshore borrowing causes problems. But this misses the point that all banks were affected by the crisis, irrespective of whether they were borrowers or lenders in international markets. In fact, the Australian banks, which many see as being among the largest users of offshore wholesale markets, emerged from the crisis in better shape than most. While they benefited from a temporary government guarantee, so too did banks in most other countries.

If the government had not put an unlimited guarantee on deposits and commenced the FHOGboost I am not sure if the Australian banks would have been as strong as claimed.

If they were strong, sure they would have needed temporary support during global uncertainty but not increasing support 2 years out now in the form of covered bonds etc. I think they are still fragile and it would appear the market agrees for now...

Anyway as he says this change to nett savings with slow credit growth by default in conjunction with increased activity driven by the mining boom supporting employment when it would otherwise be shot due to the change in nett ependiture we may indeed end up being the lucky country in the end if we can come through the boom with a more resilient private sector. I just hope this boom has the legs in it to get us there.