Banks party as economy, Australian dollar tumble

The Australian dollar continues to correct as economic data sours fast:

XJO is partying like its 1987:

Bonds are threatening breakout:

Big Iron is building into a bubble:

Big Gas is up as AUD falls:

Big Gold too:

Banks are bid wildly on a Hayne RC short squeeze:

As realty sinks and brokers crater:

Beyond the flowing champagne, an economy being sucked into a housing crash is not bank bullish!

Comments

  1. The Hayne RC allows APRA/ASIC the flexibility it needs to continue to turn a blind eye if required. I’m not so sure we will continue to see a continued housing bust (based on access to credit).

    • so far there was nothing forcing banks to tighten credit yet they did and prices fell heavily

      keep in mind that a bank giving a subprime to someone opens an opportunity to that person to sue them if they default

      • Thing is no-one is going to sue anyone while prices are rising, its more built in procyclicality. If prices can get traction then its onwards and upwards until the next blow off when we go through it all again.

        Though I think more likely a dead cat bounce is in the offing, maybe the RBA wants to throw some fuel on the fire.

      • No one is going to sue anyone (at least not a grand scale). Lawsuits will only arise from fraudulent behaviour (e.g. bank changed income and gave a loan). Banks will not be liable for simply giving credit to people with low income (that’s a business decision). Nothing in ‘writing’ forcing banks to tighten credit, but they were certainly pressured to do so. In any case, my point is there is flexibility to revert to the ‘good ol days’. MB has been posturing the RC will be the turning point, it has not eventuated as expected. Many commentators (Peachy in particular) here, have been of the opinion no government will deliberately cause a crash (:|). Fair (albeit not that radical) sentiment.

      • I reckon a lot of it is that the banks, realising the music’s gotta stop at some point (house prices driven by credit expansion), have taken a look at their loan books and decided they better grab a seat, lest they be the one let go down when it hits the fan. They don’t care if they CAN loan more than they should, they’re actually starting to look at whether the loans they have are going to be paid back. Once a market has turned as far as this one has, even one as respectable (lolz) and bulletproof as the Australian housing market.., not much will pull it back.

      • @FUD – exactly. Which begs the question – did the banks engineer the RC as a ‘smokescreen’ to tighten credit far more rapidly than they would have done?

    • I read the bank lobbyists are all headed to Canberra. Says it all. I wonder if we’ll ever see change, fines, or prison time. The NAB guy says he’s ashamed…I say guilty.

  2. Despite falling dollar and some people concerned about a bail-in, real currency seems safer than crypto.

    https://www.smh.com.au/business/markets/crypto-ceo-dies-holding-passwords-that-protects-275m-worth-of-coins-and-cash-20190205-p50vp6.html

    Damn unfortunate for a young man to die suddenly. And damned inconvenient place to die. Dealing with the formalities and repatriating the remains will be complicated.

    Seems he was the only person able to access approx $200M of currency.

    Ironic that a singe point of failure has caused the loss of millions in a system designed to be decentralised and verifiable.

    https://www.thechronicleherald.ca/news/local/bitcoin-missing-after-ceos-death-281665/

    According to a report by the Globe and Mail, Cotten seemed to be diligent in other areas of his affairs — he signed a will less than two weeks before he died, appointing his wife as the executor of his estate and outlined the distribution of his assets, which included an airplane, property in Nova Scotia and British Columbia, and two pet chihuahuas named Nitro and Gully, along with $100,000 for their care.

    • Bwahahahahahahahahahah!!!

      :Breathes in:

      Bwahahahahahahahahahahaha!!!!! 🙂

      “His dodgy business was in all sorts of trouble and he just made his will two weeks ago then he went to India to open an orphanage of all things and mysteriously died at the age of 30 yeah right and nobody has seen his body and there’s a couple of hundred million dollars unaccounted for that only he had access to”.

      Nothing to see here all you folks who’ve lost millions, move along. Lol…that dude is sooooo living the high life, paid for by his customers chumps.

      • Mining BoganMEMBER

        He’ll show up at one of Reusa’s parties, just you wait and see. Keep a close eye on them.

    • You would expect authorities will be watching those coins very closely. I guess if they do disappear, then someone unknown was lucky enough to find a paper backup of the wallet key and pass phrase after all.

  3. … Capitulation in Australia ? …

    Surge in properties for sale as buyers go on strike
    The Australian-1 hour ago (behind paywall)

    The number of homes on the market in Melbourne, Sydney and Canberra has surged from a year ago as buyers go on strike on the wake of …
    .
    .
    Latest 60 minutes in Australia? A must watch!
    Featuring Martin North.

    https://vimeo.com/315073090/7018adc9e5

  4. The market has obviously decided that there will be no consequences for the banks as a result of the RC and so the ASX is up 143 points or 2.43% as I write this. Not that anybody wants to encourage dodgy lending or any other sort of corruption.

    I wouldn’t be surprised if that’s the biggest one day rise in the last ten years.

    • Mining BoganMEMBER

      I wish I had your confidence. I’m frightened now that the banks will have the confidence to go open slather. Start giving money to idiots again and Australia will be totally destroyed.

      You know, you could almost say that because of the harm done to society by open slather lending that it is un-Christian to take part in it. Bloody heathens.

    • Mining BoganMEMBER

      A nice man on the wireless this morning said it’s good for superannuation. As only boomers have decent superannuation he was really saying it’s good for boomers and f#ck everyone else.

      Hey, maybe he wasn’t nice at all…

      • Correct. It makes a superannuation balance look good, but if you are in the accumulation phase (pre-retirement) you are better off buying stocks that are cheap and higher yielding.