Just a quick note to inform our readers that CBAs data fudging that we mentioned here, has now become a mainstream news item appearing on the SMH web site this morning in two different articles.
David Llewellyn-Smith, who often writes for business spectator, has the most interesting article. Looks like CBA will be in damage control for some time yet.
At this point, if I’m an international investor, I’m thinking ”we gotta short these chumps”.
The point of this analysis is not to predict an imminent housing crash. In fact, conditions are not yet ripe for the reckoning of the great Australian housing bubble. It would have happened in 2008 when global markets closed to wholesale Australian bank debt, but was postponed by a strong federal budget that supported both the asset and liability side of the banks’ balance sheets.
The willingness of the government to support the bubble means the reckoning can only come when the budget also finds itself under pressure from a more serious and long-term correction in commodity prices or, as Grantham has hypothesised, from a burst of serious inflation.
But in the meantime we might rightly ask: is CBA’s reputation in global markets currently so at risk that it need resort to the spin pilloried in its own advertising?
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