The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Thursday, May 26, 2011

Hmmm, I wonder how those 'sky-rocketing' default rates are affecting Aussie banks (chart)?

The RBA's Financial Stability Team can tell us. They compare the dollar-value of "impaired" loans on the Australian banking system's balance-sheet across credit types. As you can see from the chart below, impaired housing loans (red line, left panel), amount to a trivial circa $2 billion (or about 0.7% of all assets). In contrast, impaired business (red line, middle panel) loans sum to over $20 billion, or ten times (10x) the amount of housing impairments. No wonder banks are comfortable having more housing credit on their balance-sheets. This same story played out during the 1991 recession when unemployment peaked at 10.9%. Housing losses were less than one-tenth business losses. But, of course, the housing nutters would have you believe otherwise. The problem is their fiction never fits with the true facts.

at 8:07 PM