Australia’s Greenspan moment arrives

In October 2008, Alan Greenspan confessed:

Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief…. The whole intellectual edifice [of risk-management in derivative markets]…collapsed last summer.” Asked whether his ideological bias led him to faulty judgments, he answered: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

Australian bank corruption is being exposed by the Royal Commission as equally systemic, across all kinds of business lines and products.

We already know that NAB has outsourced mortgage issuance to gym mangers, the ANZ doesn’t bother assessing the credit-worthiness of borrowers, mortgage brokers are a running joke as risk arbiters and, now, we get this on the CBA:

Special counsel assisting the commission, Rowena Orr, QC, (whose masterful performance at these hearings surely makes her worthy of the nickname “Shock And”) revealed that between 2011 and 2015, CBA sold credit card insurance to 64,000 customers who it knew had no chance of claiming benefits.

Why was this insurance worthless for these customers? Because they were unemployed, on disability benefits, pensioners and students – not working more than 15 hours a week made you ineligible to make a claim.

But, incredibly, CBA’s salespeople never directly informed the customers of this problem in the vast majority of cases.

Jeez, what kind of culture extols the abuse of the most vulnerable? And, moreover, it’s still trying to hide it:

The internal audit conducted by Group Audit and Assurance revealed the bank had serious concerns about wide mis-selling of CCP going back almost three years. The report dated April 9, 2015 found 64,000 customers had been sold insurance policies while un-employed rendering them ineligible to make a claim.

One month later the bank would write to ASIC saying that only 27,800 customers were affected.

“Is it open to me to conclude that it was telling its board one thing and telling ASIC something radically different?” Commissioner Hayne asked.

The products were still being sold up to March 7, 2018.

These are rogue banks. Run by individuals who are arbitraging their own institutions for personal gain. It’s a giant control fraud and the only reason that the rubber has not yet hit the road for the perpetrators is that we guarantee them. Yet we are repaid with corruption twofold, as one would expect when moral hazard enters the equation. John Hempton asks the billion dollar question:

“Property looks expensive and there’s a fair bit of bad lending, but we don’t know if that lending is 2 per cent [of the banks mortgage books] – in which case I don’t care because the banks are so profitable they make that up in no time – or it’s 30 per cent of the book in which case the next five years are going to be fun.”

Obviously the odds heavily favour the latter. As UBS has shown:

The most significant findings of the survey were (1) Only 72% of respondents stated their application was “completely factual and accurate”. 21% stated they were “mostly factual and accurate”, 5% stated they were “partially factual and accurate” while 2% “would rather not say”; (2) 32% of respondents who secured a mortgage via a broker stated they misrepresented some element of their application, compared to 22% who secured a mortgage via bank distribution; (3) More concerning, 41% of respondents who used a broker in 2016 and misrepresented elements of their application stated they did so based on their broker’s suggestion (vs 13% for bank channel equivalent)…

ScreenHunter_15321 Oct. 07 08.28

Of the 344 respondents who stated they misrepresented parts of their application: 14% over-represented household income (18% of those who used brokers and 5% who used bank networks); 13% overstated other assets; 17% under-represented other financial liabilities; 26% under-represented living costs; 11% “other”; 31% “would rather not say”. 12% stated they misrepresented multiple factors.

Unfortunately survey results suggest misrepresentation is systemic with findings similar across the 2015 and 2016 Vintages, price to income levels, LVR, owner occupiers and investors. However, there was a correlation between borrowers who misrepresented their application and: those whose expenditure was broadly equal to their income; stated they are under financial stress; or have missed a debt payment…

Interestingly customers who come from NSW were more likely to misrepresent their mortgage applications. Notably this continues to be the most buoyant housing market in Australia. Customers from Queensland are more likely to be factually accurate.

ScreenHunter_15322 Oct. 07 08.31

Finally, the use of mortgages for investment purposes accelerated in 2016 contrary to the banks’, RBA and APRA’s data…

ScreenHunter_15324 Oct. 07 08.35

We believe this ties in with the ‘areas of less factual accuracy’ section above. This may suggest some customers were not factually accurate when stating the purpose of the loan, especially given the higher interest rate which has now been introduced on Investment Property compared to Owner Occupied mortgages.

What does this mean?

We believe these results are disturbing given: the recent housing market reacceleration; elevated household leverage (186% debt to income); and mortgages accounting for 62% of bank loans.

ScreenHunter_15323 Oct. 07 08.34

While banks have tightened underwriting following APRA’s ‘sound lending’ guidance, it does not appear to have prevented applicants ‘stretching the truth’. While low unemployment and rising house prices may help prevent losses near term, more rigorous auditing of applications appears essential, especially via brokers…

We believe it is more important than ever that the banks tighten their mortgage underwriting standards and ensure applications are factually accurate. We continue to see the mortgage broker network as a potential area of weakness in this process.

The only thing holding up the control fraud now your guarantee of it. That’s why I am of the view that it is approaching its end. With RBA all but out of ammunition and the Budget headed for all kinds of pain as China goes ex-growth the guarantee is next to worthless.


  1. sydboy007MEMBER

    A few fines for the banks, but not a single individual will suffer any consequences.

    When HSBC gets away with knowingly laundering money for mexican drug cartels, yet is still operating everywhere, well business is business and if you get caught colouring outside the lines what’s a fine when the profit was much greater.

    • Disgusting – Massive bonus and OAM for the individuals – I mean how does Narev & his board dodge this at a personal level?

      • How much of a pathetic bunch of bank bum lickers jokes does APRA look,… seriously they should almost be disbanded

      • St JacquesMEMBER

        Almost disbanded? A lot of wasted time and money could be saved, let alone a false sense of security.

    • “A few fines for the banks, but not a single individual will suffer any consequences.”

      And that’s the real reason why. They get rewarded for bad behaviour, and if/when they venetually get caught… nothing.

      How many of the banksters went to jail for their part in the GFC?

      • Quite a few actually. Iceland, Ireland and the US have jailed some bankers after the GFC.

        But then again, Australia is different.

      • You can count on your left hand the number of Bank execs that went to Jail in the US as a result of the GFC. And that would include Madoff…

      • nexus789MEMBER

        Some minnows but no one of significance will be jailed in the US, UK or Australia. The bank may get a paltry fine and if the executive goes they get to retire with full benefits intact.

    • FiftiesFibroShack

      Factor potential fines into the business model and act accordingly. It’s no wonder people like Gina Rinehart have suggested the option of paying fines to avoid prison – criminality determined by a cost-benefit analysis.

  2. “udget headed for all kinds of pain as China goes ex-growth the guarantee is next to worthless.”

    Are ther me some good global examples of markets discounting government guarantees that we can use as case studies?

    Or is this something that happens more in theory and not so much in practice?

    • It would be cool if you could do a bit of an article showing how it has happened elsewhere.

      My hunch is that a one-notch downgrade won’t do much. Even in a corporate world it would probably add only a few points to pricing. When the guarantor is a sovereign and can print money, I think even several notches won’t move the needle.

      Might even end up in a funny situation where a less-than-AA government is successfully guaranteeing AA-banks. We ain’t seen nothing yet.

  3. It is hard to figure out if Greenspan was disingenuous or just plain stupid.

    I guess those in the upper echelons of the RBA, APRA, etc. are busy rehearsing Greenspan’s lines.

  4. Control fraud?

    That is simply a symptom of the problem.

    When an economy is driven not on productive investment that expands the productive capacity of the economy but instead private bank credit creation sprayed at speculation in the prices of real estate, what you get is what we got.

    Anyone with half a brain could see what was going to happening once APRA and the RBA gave the signal in 2013 and set off another round of asset price speculation driven with private bank credit creation kept cheap with fast inflows of foreign capital.

    All those covered bonds etc the banks were given permission to issue to foreigners were not about building factories but simply to ensure the price of betting chips in the house price casino were kept low.

    By all means lets have fun squashing the “bad apples” but lets stopping kidding ourselves that the private banking / monetary policy “rules” tree is not poisoned and rotten bloated fruit is its true crop.

    Whether the Terms of Reference appear to allow it or not the Royal Commission must find a way of pointing its judicial finger right at the core of the problem. Any lawyer who cannot find space in these Terms of Reference is not trying hard enough. Just look at the way the High Court bent the Federal Constitution out of shape with ‘strict legalism”.

    If it fails to do so it is failing the people of Australia.

    • The trouble is, QCs are lawyers – they don’t know anything about how an economy works in the real world. I would be surprised if they have even heard of Hyman Minsky. Plus, I suspect they have a few investment properties themselves.

      In short, if they are clueless as to the root cause then they cannot do anything about it and if they are financially literate enough to know the root cause then they cannot do it because of its implications to their property prices.

      • Dumpling,

        Its not the lawyers that are the problem.

        Its all the lame brained economic commentators and observers in Australia who are trying to kid themselves that this is not a systematic problem driven by the structure of the banking and monetary model. A model that underpins, fiscal policy, monetary policy and the entire discussion of the relationship between the economy, the public and the government.

        Lawyers at least understand the importance of law to the existence and operation of that model.

        Generally speaking I find the people who least ‘get it’ are those who studied economics, accounting and finance and think they were studying anything other than propaganda.

        Count the number of articles in the Australian media ….any of it….you have read over the last few years that have seriously questioned the current structure and philosophy informing our banking and monetary system.

        At best we get a bit of stuff about tweaking “settings” and looks of constant puzzlement as our regulators fail to “act” in ways reasonable people expect.

        They act the way they do for a reason. There is a system of rules in place and there is a logic that informs those rules.

        We need lawyers to tell us that the problem is the rules and if we want to change the outcomes we need to change the rules.

        The very things that Malcolm sought to exclude from the Terms of Reference.

      • “Generally speaking I find the people who least ‘get it’ are those who studied economics, accounting and finance and think they were studying anything other than propaganda.”

        LOL – very good.

      • They only focus on exposing bank’s flawed processes and if banks did what they did by knowing they were breaking the law or taking excessive risks.

      • Oh yeah we need more lawyers like Peter Costello, John Winston, Julia Gillard, Joe Hockey, Malcolm Turnbull, Xenophon, Penny Wong.
        People who ooze substance and integrity, would never attempt to dress up ignorance and prejudice with their rhetorical skills…
        I’ve never come across a lawyer who comes close to understanding underlying economic linkages. It’s all form over substance stuff.
        Lawyers should be banned from economic public policy roles and from commenting on the economy. It is out of their depth and too important to leave to people programmed to see the truth as incidental to the strength of a case.

      • Sweppy,

        You gave us a list of politicians and presumably you are referring to their work as politicians.

        Hardly relevant to the point I was making about the relationship between law and the structure of the economy but then that is your speciality isnt it? Obsfucate, distract etc.

        Here is a tip. A deregulated economy is the result of deregulation. A regulated economy is the result of regulation.

        Regulation is law you goose.

        No doubt you would prefer we keep things the way they are and we just rely on “advice” from private bank apologists like yourself who insist that private banks have no special role and no special privileges.

        “Look squirrel” is your motto.

        Which hot desk did you snag today?. Don’t leave any crumbs.

      • Calling me “Sweppy” doesn’t change the fact that lawyers should be banned from economic policy positions / commenting on the economy.
        Since when did you need to be a lawyer to believe in regulation to protect the ordinary person? I’m ok for lawyers to put the paperwork together in a back office. But as soon as they go front of house their ignorance is exposed and out comes libertarian huff and puffery.
        Ben Chifley was a train driver. He had a better economic brain than all the lawyers impersonating PM’s/ treasurers in Australia’s history combined (excl. Deakin).

      • 007,

        I actually agree with Sweeper that one cannot trust lawyers. They have very specialized skills of presenting a persuasive case about pretty much anything their clients want them to present – and they can somehow do that without understanding the case.

        I know today’s legislation setting has problems, and that is why most bankers will not be prosecuted after the coming collapse, but I am afraid your faith is misplaced if you count on lawyers to do the job.

      • Yep I’m guessing Orr would be just as convincing in defence as one of the banks general councel.

      • Sweppy,

        When an apologist for the role of private banks in the monetary system talks about Chifley and then lectures about integrity we know we are dealing with a pro.


        I am not relying on the lawyers at the Royal Commission to do anything more than identify that the problem of crooked brokers, kick backs, introducers, forged documents, banks turning a blind eye, APRA standing by and the RBA cheering it all on derives from the system of law and regulation that applies to the private banks and their role in the monetary system.

        As to who decides what changes are required that is the job of parliament with effect given to their wishes by parliamentary counsel – lawyers who draft law.

        This is what Sweppy is trying to smear.

        The process of reforming the activities of his private banking buddies.

        Where is Sweeper’s little bank apologist mate anyway?

      • Sweepy should be able to point out at least ONE economic model that’s actually been able to predict economic movements, you know, since economists understand economics…

      • Even StevenMEMBER

        I agree with Sweeper and Dumpling on not placing too much dependence on lawyers in this context. I have (and continue) to deal with lawyers extensively. With rare exception, they just want to win the argument, not change the world. They are competitive, rather than radical.

        The key point here is that the Royal Commission probably has no idea about how money is created. Outside the confines of MB and some others, few people do. I’d apply this comment to the RBA, APRA, the vast majority of the finance industry and even most economists. I’d be genuinely surprised if any more than 1 in 100 politicians realise how credit is created and then squandered on unproductive pursuits like house price speculation.

        You’re a smart guy Pfh007 and one of the most consistently excellent posters on MB, but in my opinion, you overrate the intelligence and knowledge of others. I completely agree the credit creation system should be overhauled. Do I think it will be in the foreseeable future? Absolutely not.

        BTW, I’m not suggesting don’t keep fighting, but I’m a realist. We are well, well short of where we need to be to address the fundamental flaws in the monetary system. When the property market completely capitulates and people are screaming in the streets “what happened!?” only then might we start to ask the right questions. At this point in time? No chance.

      • Even StevenMEMBER


        This is what I meant by overrating their intelligence:

        “I am not relying on the lawyers at the Royal Commission to do anything more than identify that the problem of crooked brokers, kick backs, introducers, forged documents, banks turning a blind eye, APRA standing by and the RBA cheering it all on derives from the system of law and regulation that applies to the private banks and their role in the monetary system.”

        To expect them to realise (confidently) that all these symptoms stem from the banks’ role in the monetary system is too much. I hope I’m wrong, of course.

      • Before the banking Royal Commission there should have been a RC into Lawyers, Law Societies and the effect of Lawyers on the financial economic and social cohesion of the nation!
        Flawse for dictator

      • Mig, when has a lawyer ever said anything interesting or done anything for society?
        Agree with Flawse. There should be a royal commission into lawyers.

      • Even Steven,

        All we can do is keep rolling up the hard questions and eventually, hopefully we will make progress.

        I have been linking to plenty of good stuff on twitter using the #BankingRC tag. I figure that at least some of the staff will be monitoring that hashtag.

        Everyone who has something solid to link to should do the same.

        Perhaps they will read nothing and do nothing but in my experience most people do want to try and leave the world a better place.

        Plenty of places around the world are taking about the necessary reforms

      • So Sweepy can’t point to one single solitary economic model that’s useful – but let’s listen to economists because they understand economics… Bwaaahaaahaahaa

      • DarkMatterMEMBER

        I think that one of the big stumbling blocks here is that most people have absorbed a culture of homespun “wisdom” about principles of economics, and these make it close to impossible for them to get at the truth. There is a whole list of them, and the banks (among others) foster these wrong ideas. In the case of the banks, it seems like “do as I say, not as I do” as well.

        “a penny saved is a penny earned” lol
        “hard work and study makes you wealthy” lol
        “banks take people’s deposits and loan them out to borrowers” lol lol
        “RBA moves interest rates up and down to control the economy”
        “interest is just a measure of risk”
        “interest just expresses a time preference for money”
        “negative interest rates make perfect sense – its just like turning the volume up to eleven”
        “banks have big money vaults filled with cash – just like Scrooge McDuck who used to swim in his money vaults.”
        “insurance – particularly funeral insurance – is a very good idea”

        Very little about the reality of the financial shenanigans actually makes much sense at all – except 10M packages for the guys at the top. That is same old same old.

      • “a penny saved is a penny earned”
        savings do represent accumulated earnings, however the act of saving or wanting to save doesn’t lead to earnings.

        “banks take people’s deposits and loan them out to borrowers”
        Banks issue deposits and make loans. They can issue deposits without making a loan and make a loan without issuing a deposit. they can buy stuff without issuing a deposit, they can return deposits and sell stuff and make a loan at the same time, they can issue a bond, return a deposit, recall a loan and buy something at the same time. All are independent activities carried out for different reasons by different people within a bank.

        “RBA moves interest rates up and down to control the economy”

        “interest is just a measure of risk”
        The risk premium component is a measure of risk.

        “interest just expresses a time preference for money”
        risk free component of interest rate is obviously the cost of holding money instead of lending it and getting the use of money at a later date.

        “negative interest rates make perfect sense”
        Absolutely! Bonds should have a liquidity premium over money, especially if you are a big European bank who repos bonds and not cash and after doing the sums finds it cheaper to sit on negative yielding bonds rather than pay a heap to beef up security and storage and logistics to sit on a heap of currency.

        “banks have big money vaults filled with cash”
        when was the last time you went into a bank?

      • drsmithyMEMBER

        Mig, when has a lawyer ever said anything interesting or done anything for society?

        Plenty of examples in the arena of human rights, democracy, etc.

    • SupernovaMEMBER

      Hopefully I’m incorrect: 80 billion in covered bonds supported by approx. 43 billion in hybrid securities.

      • Supernova,

        120+ Billion !!!!

        Just so we could keep the cheap credit flowing into the housing punch bowl.

        It makes Gladys $2.5B to flatten three sporting stadiums and rebuild them sound like chump change.

        It even makes that hideously expensive tram ($2-3B sound like a bargain)

  5. But what will be the consequence, nothing, no significant fine, no change in policy, the banks will simply carry on.

    At the bank I work at (one of the guilty ones mentioned above) the cost of funding has gone down as APRA reclassified certain parts of the loan book meaning less capital needs to be held, thus making the banks more profitable. Also international funding markets don’t seem to care about the royal commission and continue to fund the Aussie banks very cheaply as they know the banks are govt backed and will carry on as before.

    • Lester Pearson

      The repercussions are entirely dependent on the consequences.

      If the economy goes pear shaped and the banks implode then everyone will lose their shirts and the banksters will be hauled before the courts. We wont see American style Obama white washing – not for lack of trying.

      If we sail through it – nothing will happen – no matter how criminal.

      • darklydrawlMEMBER

        “If we sail through it – nothing will happen – no matter how criminal.”
        Well, I would argue ‘something’ would happen. Probably along the lines of massive bonus payments for all upper level bank managment.

  6. everything will end one morning after Moody and S&P release statement saying that our banks are junk

  7. Every price in the global economy is based on fraud (to benefit private bank credit creation for the benefit of private bank shareholders who hide their true identities) with the false price fixing of interest rates. This is what you get, end of story. Legalised and enforced fraud.

    “Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.”

    —Theodore Roosevelt

  8. pyjamasbeforechristMEMBER

    So the HEM is being used as the expense side of the income vs expenses assessment. Meaning the macro expenses side is rather risk weak overall.

    But how accurate have the banks been on scrutinising the income side?

    I assume there will be similar – oh we just ask clients then confirmed via 2 payslip – the facts that the bank statements also provide didn’t align and showed much lower income was more likely isn’t checked.

  9. hey but everyone is focused on Putin (if Putin did at all) poisoning a guy who took millions of dollars for selling Russian state secrets but UK calls him an innocent UK citizen.
    Toppled by our domestic MSM driving the fake news about Labour’s tax initiative, our herd is too busy to be bothered by this insignificant development.
    Peachy – you are right we do need a nice depression.

      • I don’t look forward to any depression – I do have a family too. I also happen to have experience living under hyper inflation where if you don’t spend the money on groceries same day you gate paid you will go hungry for rest of the month.
        But we got so corrupted I can’t see way forward without rebuilding the system from scratch. For that to happen we do need to experience a crisis.

  10. Lester Pearson

    The unknown unknown – in my view is going to be Russia.

    The western anlgo petroleum alliance (US / UK) has pushed hard to isolate ALL competition for their Gulf / US fracking OIL –
    LNG. They have shut down pretty much all competition from Iraq, Iran, Syria, Libya and are now gunning hard for Russia.

    Germany issued a blanket warning yesterday that American efforts to divide Europe would fail. Bu this wont stop the hard push emanating from the UK and US against Russia.

    Russia is central to China’s ongoing success and China will benefit from a weakening Russia at the resources counter – but anything beyond that is going to start causing ructions.

    China is already a HUGE supplier of weaponry, intel, infrastructure etc into hot wars in the Middle East and is only set to massively expand that this year. So we may well see a serious expansion of conflict in the energy and resource wars PLUS an expansion in the ongoing trade wars which have so far remained at bluff and bluster status.

    I expect to see Saudi Arabia come under a serious and concerted push back in their ongoing proxy wars with Iran for regional control. Yemen and other areas…..may well start to see some serious increase in capacity and there will be entirely ignored finger pointing at China and Russia for assisting them – as though Saudi Arabia were the good guys.

    Basically the assault on Russia will move beyond the propaganda stage of deligitimising them and into a far more confrontational stage – that will draw in wider proxy states along with Chinese production support badly damaging the wests capabilities to control those regions and even maintain their own fiefdoms in Qatar, Kuwait, Saudi Arabia – etc causing a flow on impact into financial markets.

    We will see – but this is where things are headed.

    • possible scenario – one of few that can pan out soon – really soon. I think US and UK are desperate for immediate action – it appears something is breaking in their system and they need a reset.
      Trump is still hoping to work it out via trade and better deals for US manufacturing but that is not what the establishment has in mind – establishment and the military complex are only interested in maximizing profits.
      First Trump goes down, by being impeached or killed but impeached is the proffered option then rest follows. Though Mueller is taking too long to make his move. The longer it takes the more people will believe Trump is clean and CIA and FBI needed to split hairs and link some innocent business meeting between Trump and some Russian guy to the US elections. With all the surveillance capabilities and plus Obama did order to spy on Trump one would have thought Mueller would have needed about 2 weeks to wrap it up.
      If they can only make Americans believe that Trump sold 20% of US uranium reserves to Russia Trump would have been behind bars long ago. LOL LOL LOL

      • Lester Pearson

        Yup. And my best view is that the most significant shift in any form – including the digital age – is the transition away from all forms of combustible / fossil fuel as an energy to renewables.

        It is an wholesale total and complete removal of the most powerful companies in world history, the removal of the entire backbone of international relations, the removal of the entire power platform of the UK / US alliance – and the awesome wealth accumulated, power, networks and infrastructure is absolutely going to maximize their profit making in the final dawn.

        An almost total transition to renewables is going to happen by 2030 – if not, beyond question – we all die. Its totally inevitable.

        The military industrial financial complex knows this to be certain and are making hay while the sun shines – the final collapse of fossil fuels will herald one of the greatest money making opportunities of all time – both in limiting the access to the overflowing reserves while demand remains (take out all the competition) and of course paying for the privilege of doing so.

        China’s transition to renewables has not simply been about pollution. They are installing ten times the number of recharging stations in the entire world next year ALONE. They already have a third of that number in place. More than everywhere combined.

        Its plain as day what is going on – the race is on.

        I strongly suspect – in my worst fears that a hot war will open up – totally unimaginable only 12 months ago – absurd. But I think Ukraine will expand and we will see a front open up in the east.

        Any expansion in conflict – Georgia, Turkey, Belarus to Bulgaria will bring about a serious economic contagion. Would not be surprised to see issues flaring up regarding Greece again and expect to see a push back into the region by China as well via their new bases on the Africa coast line.

        There are some serious tensions building up outside the headline grabbing Salisbury checmical weapons case – Porton Downs fiasco – yeah – Russia.

    • reusachtigeMEMBER

      Hopefully those Turks get blown away in the process! I’ll never forgive them for Constantinople!!

      • Ino – when reusa talks about going greek I don’t think he is thinking of breakfast.

        Speaking of fruitcakes – Nikola – amongst many other points you make, your uranium quip is total bunkum.

      • @triage – considering MSM goes hysterical even when Trump simply shaks Vlad’s hand and have short conversation in front of all media.. Fact is Hilary was directly involved in the uranium deal and no issues but if Trump just says “we need to talk to Russia” sends msm into meltdown..

      • How do you separate the men from the boys in the Greek army? With a crowbar.
        Behind every great Greek, stands another great Greek.

        Says a lot about Reusa – ones I know are all into property investment. Rotating all that cash from fish and chip sales into hard assets.

    • Ronin8317MEMBER

      With the Syria civil war going into the final phase, all the Western nations have eggs on their face while Russia is on the winning side. The Qatar/Syria/Turkey pipeline is not going to happen. So Europe can wail all it wants, it is still hostage to Russian gas. Whatever sanction/threat will melt away before winter.

      • and, as a bonus, ISIS and Al Qaeda will be defeated in this country despite western efforts. That does not mean these organisations will not appear (out of thin air) in the Philippines.

      • For much of the war the regime/russia tacitly allowed ISIS to attack the rebels and Kurds. They fought them on and off in Deir Ezzor, but for the most part, they turned a blind eye to them; enemy of my enemy is my friend. The force that overwhelmingly defeated ISIS were the Kurds, backed by western air power. Now Turkey, the funnel of arms/funds/fighters to ISIS, suddenly decides it’s time to intervene once ISIS is all but defeated, attacking a region that had effectively been peaceful for the entire war, Afrin. A region that was supposed to be guarded by a Russian umbrella…funny that the same day Turkey invades is the same day Russian forces pull out with nary a word. Turkey, the Pakistan of the Levant.

        If it’s a choice between
        – West and secular kurds
        – Russia and Regime/shia (responsible for more deaths than all the others combined)
        – Turkey and sunni jihadists

        I choose the Western backed kurds any day of the week and twice on sunday.

      • @Brenton – US has been doing same where ISIS would fight Assad they never interfere but will bomb ISIS where Kurds fight them. Deal was Kurds to keep that territory from Assad. After Kurds sellout against Turkey I am not sure if the Kurds will cooperate with US in the future.
        Remember that Syria was and still is most secular country in that region.
        And yes, I do support the Kurdish case – I do think they should have country of their own and Assad (Iraq and Turkey too) should accept that.

      • bolstroodMEMBER

        The reason the kurds won’t be allowed to have their own country lies back in history.
        Everyone is afraid of them. Look what happened last time they had a country.
        Salladin the muslim leader against Richard Lion Hearts crusaders , and his warriors were Kurdish

  11. reusachtigeMEMBER

    Yeah you know what… no one really cares! Banks are great because they help people get on the ladder.


    Australia’s Greenspan moment arrives – MacroBusiness Australia
    Google Search ‘Australia Banking Royal Commission….0…1c.1.64.psy-ab..2.35.3726.0..0i131k1j0i10k1j0i22i30k1.203.wq9Cpte2gQs
    There is a world of difference between CLEAN true market housing values (at or below 3 times annual household incomes) … and CORRUPTED political values (above 3 times annual household incomes …

    2018 14th Annual Demographia International Housing Affordability Survey

    The above annual Survey categorises markets as affordable; moderately unaffordable; seriously unaffordable and severely unaffordable.

    They could be better categorised as politically clean; moderately corrupted; seriously corrupted and severely corrupted.

    If the politicians and bureaucrats have corrupted housing markets (misused the law to effectively ban the construction of affordable housing) … why should we be surprised market participants respond by behaving dishonestly in politically corrupted housing markets ?

    Has this been made clear to the Australian Banking Royal Commission ?

    The major aim of the Annual Demographia International Housing Affordability Surveys is to encourage the restoration of POLITICALLY CLEAN (at or below 3 times annual household incomes) housing markets.

    • Even StevenMEMBER

      Not sure I understand what you’re saying here Hugh – are you condoning the banks’ behaviour?

      “If the politicians and bureaucrats have corrupted housing markets (misused the law to effectively ban the construction of affordable housing) … why should we be surprised market participants respond by behaving dishonestly in politically corrupted housing markets ?”

      • Even Steven … I am most certainly not condoning misconduct by market participants (including Banks).

        Clean up the public regulatory administration of the housing markets … and ‘miraculously’ the behavior of the market participants will improve.

        Cheats and incompetents get flushed out of clean markets … as ‘reputation’ becomes an increasingly important factor.

      • Housing plan urges Coalition to help create 500,000 affordable homes | Australia news | The Guardian

        The federal government will be urged to help create 500,000 social and affordable rental homes in a plan that includes tax incentives for superannuation to invest in affordable housing.

        The Everybody’s Home campaign director, Kate Colvin, will outline the community housing and homelessness sector’s plan at the National Press Club on Tuesday.

        An Essential poll, also released on Tuesday, showed a majority of voters think the Turnbull government is not doing enough to fix housing affordability, including half of Coalition voters.
        Voters want housing affordability action – 9News
        … What are the Australians learning from New Zealands political progress ?

        Demographia International Housing Affordability Survey – Media Release | Scoop News

        … concluding …

        New Zealand global leader restoring housing affordability …

        The co-authors of this Survey, Wendell Cox and Hugh Pavletich, have short commentaries within the Introduction section.

        Within his commentary, Wendell Cox outlines that the principal reason for concern about housing affordability, is its impact on the cost of living and therefore the standard of living.

        New Zealander Hugh Pavletich briefly outlines the massive evolutionary political progress underway in his country, since the time of the release of the 2005 1st Annual Demographia International Housing Affordability Survey ( full schedule accessible via ).

        Housing has been a major issue these past 4 elections.

        A Labour-led government won the recent late 2017 election, with a comprehensive housing policy … that includes …

        ‘Remove barriers that are stopping Auckland growing up and out

        Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering and holding up development. New developments, both in Auckland and the rest of New Zealand, will be funded through innovative infrastructure bonds.’

        Labour has a proud tradition as the ‘Party of Reform’ in New Zealand.

      • That’s how I read it as well Even Steven. Everything is execusable provided local councils don’t act exactly as the developer lobby wants them to.

  13. We need a government owned bank to keep the other players honest. This bank inquiry is as much an indictment on 1980s financial deregulation as anything else. Fraser to his credit was reluctant to do it when pressed by Howard. It took a Labor Govt who then sold off the Commonwealth Bank. We need a government owned bank again although the Neo Liberals can’t bring themselves to admit it

    • The Traveling Wilbur

      Give it a few more election cycles and Oz gov will be able to get its hands on KiwiBank. If ANZ don’t get in first.

    • Jumping jack flash

      Agree completely.

      There needs to be balance. There’s nothing wrong with private banks, but when they’re the only thing, and when they’re effectively unregulated, then they’ll just run away with the whole place in the name of profit, which is their entire reason for being.

      The same goes for the provision of any essential product or service. Left to private entities there will always be extreme gouging because of the very nature of private enterprise and those particular markets, and even more so in the current environment of extreme private debt.

    • We need a break up of the banks. Glass – Steagall. There is nothing more the banks are afraid of.

    • We have a government owned Bank that is supposed to run the financiual sector for the good of present and future Australians. It’s the RBA. They went rogue many decades ago and have overseen the sell-out of our National Sovereignty over six decades.

  14. As much as the parallels are there with Subprime and so on, surely it still takes a confluence of random events to burst the bubble? In a series of parallel universes the GFC would not have happened in 2007, but at some unknown later date. As crazy as it sounds, the US for the most part was just not leveraged up the way Australia is. What sunk the US is its over-financialisation as well as a large number of short-sellers who were selling the case for the bubble. Plus the basic fact that in such a large, valuable and complex market, effective regulatory intervention is way tougher. Not sure those same conditions are in effect in Australia.

    The other point is, Americans don’t really see property as an investment. Few people hold IPS, and once it starts falling they’re out of there and back into stocks, which is by far their favourite investment. In the US media today you can still read cautionary advice telling people not to spend too much on property, with prices in many places at 2003 levels and 30 year mortage rates near 4%. The press gets antsy if you get 5% annual growth, and starts talking about “bubbles”.

    Can you imagine that in Aus? If it falls 10% all the MSM will be advising people to pile right in as it’s a great time to buy. The “time to buy” indicator is already showing signs of turning around.

    Property in Aus needs to reach the stage where people are mortally afraid of investing in it. Its hard to see how that will happen (although one day it must).

    An external shock that quickly raises interest rates by a couple % seems the only way this will happen.

    • YUP!!!! MB has been mealy mouthed about this all along – supporting lower and lower rates. As I remarked in these pages many years ago
      ‘If you want this thing dead you have to kill it!”

    • Exactly what incident proves to become the eventual trigger is impossible to predict and it is immaterial.

      Australia is an exhibit A of an accident waiting to happen. My kid likes playing with building blocks – keep placing a block on top of a tower. The structure eventually collapses for one reason or another – my kid is not yet good enough to pile them up until it collapses under its own weight.

      • By no means unique to US, just that every situation is somewhat different. Different parts of the US saw very different outcomes also.

        I was back there where I used to live not long ago. Blue-chip areas with years of stock on the market at 2003 prices, nothing selling. Yet other areas have pretty much recovered.

        In the case of Aus, the cultural attachment to property runs deeper than in most places. This does not prevent busts such as Gold Coast or mining towns, where a large external stimulus acts on a relatively small number of people to produce an extreme boom/bust. But what you see in Sydney and Melbourne is much deeper and broader IMO. And supported by the main business and political institutions.

        So its really going to need something major to blow it up. If that doesn’t happen, likely just a bit of down then up, as buyers jump back in.

        In the long term, a different story. Eventually there just won’t be enough people and credit to prop it up. So then a Japanese type of situation.

  15. “Jeez, what kind of culture extols the abuse of the most vulnerable?”
    “These are rogue banks”
    The RBA (with Fed, ECB)is the REAL perpetrator here. Without them little of this would have been possible in any way. The RBA set this bunch of crims use on us.

    “With RBA all but out of ammunition”
    Should read
    “With the RBA having lied itself into a corner”

    • Hang about! I thought I glimpsed Luci’s platypus!
      ” Lower inflation means lower nominal interest rates. Households can then service larger mortgages with the same repayment. So of course the sustainable ratio of household debt to income has risen. Housing prices followed suit, having previously been constrained in the 1970s and 1980s by the same strictures – high nominal rates and regulation. ”
      Good onya, Luci…

  16. …between 2011 and 2015, CBA sold credit card insurance to 64,000 customers who it knew had no chance of claiming benefits

    Jeez, I’ve been through a lot and seen a lot in my life, but that level of criminality and corruption in corporate offices…the breadth and depth of it…is still shocking…nauseating. How can people deliberately do shit like that over and over again…64000 times…and still sleep at night? Perhaps their placement people in HR do psychological screening for senior staff, and only recruit psychopaths instead of excluding them.

    • Come on… it’s basic human behaviour. They try it once, if it goes through, try it the second time, a little more boldly, still no repercussions, try it once more, with feeling… then keep going bigger and bigger, because past successes prove that there are no downsides to that behaviour. Before you know it – it’s part of the corporate culture, and people who do it, are often no longer those who started it, having arrived in the middle of it.

      Problem is, those corrupted individuals are now wired for this kind of behaviour, and you really need to watch for them as they have now spread into other org-units or other enterprises. How do you track and contain that kind of malware then becomes an interesting exercise. I think that nothing short of public executions will root this corruption out. Put the fear of guillotine into them.

    • Its rewarded. I’ve seen it up close. Most of those sold the products won’t complain, or if they do, they can be sweet talked. People like you or I would say “this is a waste of money” because we care about the customer and have personal integrity. That won’t take you very far. Not when KPIs have been invented and its very easy to say “Guy 1 sold 10,000 products, Guy 2 sold 4,000”. Doesn’t matter that Guy 2’s customers are real customers whereas Guy 1’s are majority pensioners or whatever.

      Money makes everything ok, and honestly the more you can exploit some people the more money you’ve got to pay off the ones who clue in. Imagine a private health system with lots of paying members who can’t claim, vs one with lots of paying members but they can all claim.

      Its a no brainer that those preferring the first scenario will rise while those preferring the latter will be moved on or will move on.

  17. What really pisses me off about this is we’ve probably all been in situations where we’ve looked at a house we’ve fairly valued and we have a decent deposit and it sits comfortably within leading a life without stress. Then some f-wit with barely a razoo to their name, given carte blanche by a bank, comes along and knocks you out of the way.

    • Exactly, when your core bank lending policy is 8x (now 7x) incomes then it becomes whomever is willing to take the dumbest risk, egged on by a bunch of agents, brokers and bankers.

    • And its been that way for so long that even a ‘bargain’ at todays prices really isnt. Banks win because they’re both the buyer and the seller.

      I thought the world might change after 2008 but credit is still king.

  18. Greenspan belonged to a well known philosophical group, which in hindsight, gave the A-OK for much of what has occurred.

    What was his job after leaving his post again.