MB Radio: Irresponsibility becomes the new black

Ahead of the anticipated announcement of the Federal Governments trashing of responsible lending laws by moving oversight of financial lending from ASIC to APRA, Gunnamatta spoke with David Llewellyn-Smith and Leith van Onselen about the implications of the move, and how this positions the Australian economy.  The sound is a touch raw, and the discussion was recorded circa 1130-1215 25 September, 2020.


Latest posts by Gunnamatta (see all)


      • Thanks Gents, the only reason it happened is because I am home from work with a health issue and looked at the AFR this morning. An email to Dave and Leith revealed they were up for it too and we got online just before lunch. I enjoy doing them

        • “I am home from work with a health issue [after having] looked at the AFR this morning. ” Fixed that for you, gunna, domainninefax products should come with a health warning.

          Always appreciate these recordings, thanks to all involved. The only suggestion I make is you get footsie to select the theme music so as to set the tone right from the outset (footsie: wonderfully questioning mind but with decidedly shite music tastes :))

  1. greedypuppyMEMBER

    I guess folks will scream for a Royal Commission into Banking once this gets rolled out -like we learned nothing

  2. I want to buy a property overseas ($150,000), how can I get one of these dodgy loans to finance it? I am Aussie born and bred.

  3. Goldstandard1MEMBER

    haha, Irresponsibility becomes the new black…. god I wish it was new…..
    Well done Gunna and boys. It sounded like you guys were talking whilst constantly shrugging your shoulders. The question is how does this play out? Wowsers!

      • Mining BoganMEMBER

        When Dave mentioned the lending buffer at the end my jaw hit the floor. I sincerely hope the Hungarian doesn’t tune in.

  4. two plus twoMEMBER

    Thanks gents, sensible commentary. A dose of sanity to help offset some of the madness going on. Have a great weekend.

  5. Mate just got a call from his mortgage broker to let him know that he could increase his approved borrowing limit in the next day or two….

  6. happy valleyMEMBER

    Hopefully, Josh and ScoMo allocate a few more millions to funding mental health and suicide prevention counselling for borrowers as a quid pro quo for the unfettered irresponsible lending licence the LNP gubmint has just handed to their bankster mates. At least, the LNP can now be reasonably assured of some decent donations by the banks? So, that can’t be a bad outcome, if nothing else?

    • It’s going to be the opposite. Just heard from a friend that the Federal government is going to cut a cool billion from community mental health services over the next couple of years. Source is from a colleague in the field – were told this week there were going to be job cuts, reducing support worker positions by half and effectively doubling the case load for those remaining.

      • happy valleyMEMBER

        Interesting and hardly surprising. I made the above comment “tongue in cheek” knowing full well that this LNP gubmint would provide no such additional funding. Being laden with happy clappies, this gubmint believes that anyone who gets in to financial or other unfortunate strife, deserves it. Their appalling and seemingly illegal Robodebt effort where they crucified so many poor and vulnerable people, to cover a $2bn budget blackhole showed their true colours.

      • RobotSenseiMEMBER

        That is absolutely disgusting policy on the MH front. Funding in this country for MH is already running on the smell of an oily rag. I’m not going to lie; the “suicides” from COVID are going to absolutely pale in comparison to what is about to be unleashed by these economic terrorists.

      • Just as well I didn’t progress beyond a thought bubble of some type of counseling qualification for a change to a work from home type of career move. What a waste of my previous stood down for the second time this year time researching that would have been!

        Having said that I can personally attest to the fact that daily chookherding is fantastic formy mental health. Chickens are the best to observe and interact with!

          • As ‘the giver of wheat’ and ‘she who opens the door and lets us out’, I get the special role of ‘we will follow you anywhere’ and ‘let’s sit on her lap for a little chat sometimes’.

          • Thanks for the chuckle. I’m sure they are. Had a lovely time herding the girls today and raking yup after their scratching. Was lying down on some grass at one stage and nearly got pooped on by a young magpie which landed on a branch above me. It was all very relaxing, near misses included. Not looking forward to work induction tomorrow work a likely return to work this week

          • Chook update: They are doing well and have forgiven me for getting them out late quite a few times this week,. though I haven’t missed a day (I’ve been back at work and the 4.30 am wake up for a 5.30am start have been brutal, throw in daylight savings and it’s a bit urgh atm). It was very windy on Sat so I couldn’t hear them and I realised I missed hearing their chatter

        • My chook update is that I handed my charges back to their owner, not a feather ruffled. There are two Australorps and the other three are some variant of a Light Sussex (I think).
          You can contact me via mb(_at_)theclaw.33mail.com

      • Just the tip of the iceberg — either there’s going to be big cost cutting at both State and Federal level these next few years or the RBA will be funding deficits at both levels. Interesting times.

  7. Arthur Schopenhauer

    Good discussion guys.

    It sh!ts me to tears that there is absolutely no strategic position in any of the recent policies. Thanks for the full and frank roastings. And where the fck is Labor? Fkn nowhere.

  8. I have to be honest, I think it’s great. I’m as equally as happy with house prices at 50 bucks or 50 million.

    I’m now here for the chaos and disaster. I want it all.

    • I’m not reading a lot of support for this online. There is a lot of fear about debt having been the trigger for the GFC, so it may well turn out that this brainfart by Recessionberg has the opposite effect of what is intended.

      With the changes not looking at coming in until March, there may be those that simply elect to wait until then. Is six months of reduced transactions possibly enough to crash the whole thing?

      • Display NameMEMBER

        It would be interesting to hear the discussions in the cabinet that lead to this stupidity I get the feeling it would not be all that nuanced or well informed.

        • Do you think this was worked up into a cabinet decision? I dunno, to me it has the feel of a brain [email protected] decided upon by maybe an adhoc meeting involving as few as scummo and borrowerbewareburg – that there was no leaking or prepping of journos suggests against the full cabinet process (?).

  9. Diogenes the CynicMEMBER

    Thanks for the recording – it was good to hear some emotion! Astoundingly bad policy. I like reading fantasy / scifi I never thought that reality would become weirder than my fiction.

  10. The wind back of this policy was basically to stop the deluge of idiot borrowers suing the banks because they end up defaulting on their loans out of their own misadventure. It was entirely foreseeable. It was absurd that it came into place in the first place…

    It was simply a knee jerk reaction from the RC and a case of the legal industry pouncing and butting it’s nose into more than it deserved and was appropriately wound back.

    And again, it’s strange to see all the heartfelt emotion about this from all the crashniks here. You should be glad that “irresponsible” lending is going to come, no? 🤯 Does not irresponsible lending cause crashes ??

    • this. I don’t expect increased lending. just wound back so they can pursue the debt. No reason for tax payer guarantees on accounts now right? lol

  11. This sort of desperation suggests the end game is nigh.And we are going into a depression anyway.I wouldn’t worry to much about this decision

    • You are joking, right?

      With a comment like that, you’re either a boomer that’s had a lifetime of gifts and has his (and can’t fathom in his mind that the constant spurt of benefits lasted this long so therefore it must end soon). Or…

      You’re a gen Y who believes the MSM BS.

      If the latter then I hope comments like mine open up your eyes to the game. If the former, then stop commenting with mindless drivel.

  12. “18 months from the Banking Royal Commission” and then “18 months till the Election ” It’s ALWAYS 18 months lol.

  13. How wrong you are in every utterance.Look around you.Go and have a look at how places like New York are going and that’s before the second wave.You truly think the world is going to avert a depression.And if past depressions are anything to go by the ability of an individual or country to navigate such an event was directly correlated with your level of indebtedness.And again if history is a teacher government policy was largely ineffective in the last depression
    So no I kid you not.Right now there is so much distortion that normalcy bias has been given a breath of fresh air.There is nothing normal about our present circumstances.Wait till next year my friend

    • Next year, you will see the greatest intake of migrants, international students, wealthy Chinese that Australia has ever seen. You’ll see mortgage rates with a 1 at the beginning. You’ll see stamp duty abolished. You’ll see first home buyer incentives. You’ll see boomers piling their mountains of cash back into the big 4 et al. You’ll see RE prices skyrocket to unprecedented levels. Don’t kid yourself. Wake up.

        • Lets work through some of that……..(because it is what I think the Josh Depressionburg ScoMo preferred game plan is)

          Next year, you will see the greatest intake of migrants,

          I think Leith made some compelling points about migrants and migrant numbers. The nexus has been broken. Australia has already experienced a crash in immigration numbers and Frydenburg is already talking about a 2 year crash in immigration numbers. They now have no jobs to come to, they have a local population now experiencing heavier unemployment and massive underemployment. More importantly the ‘service’ jobs which were the mainstay of ‘Bullshit job’ creation over the last decade or so have been kneed in the nuts by COVID, All those restaurant jobs and a lot of those tourism jobs wont be back the way they were without a COVID vaccine distributed widely enough to make an impact. The population ponzi is no longer a one way/politically safe bet.

          international students,

          The whole international student industry has been disrupted by COVID. More students are learning online, more are experiencing learning online, and there are more people observing that heavily populated class environments are not going to be a goer (anywhere) until there is a COVID cure. Severe pressure is likely to remain on our tertiary education sector (which only a year ago was touting itself as one of Australia’s major ‘exporters’ and the 70% of academic staff who are temporary are already being shelved. Also there is the point about China (source of half our foreign students) and the political decoupling taking place with it. The Indian, Nepalese, Sri Lankan, Columbian, and Brazilian students are all potentially significant sources of COVID 19 with the virus ravaging those nations. Getting them into Australia is going to be a tough sell (which is why Australians offshore are being held to ransom by the Australian government to open up a conduit to bring in the students)..

          wealthy Chinese

          Maybe. But those wealthy Chinese from here on in will be those making a clean break from China and in most cases a clean break from the source of their wealth. Far fewer will be making the break with the Middle Kingdom. I completely agree with David. Australia needs to make a break with China, both for the economic welfare of Australians, but also for Australia’s ability to articulate Australians views about the world around us, and it has already started. The real risk is that ‘wealthy Chinese’ who are here will decide that it is time to get out, as pressure mounts to look at their sources of wealth, and what their ‘investment’ into Australia actually does in terms of creating jobs and meaningful economic activity. Buying corporate paper and speculating in real estate behind shelf companies isnt going to cut it the way it was doing 9 months ago.

          You’ll see mortgage rates with a 1 at the beginning

          Maybe. But to see that we will see the ‘savings’ of a load of Australians wiped out and/or you would need to RBA step in to stuff cash into banks and lending standards gelded. Sure, we are obviously going to get that. But that simply creates another set of epic risks, and we are playing those risks with what is already the worlds most heavily indebted population, and the worlds most expensive real estate, and the worlds most uncompetitive exposed side of the economy.

          You’ll see stamp duty abolished.

          Maybe, but State governments – who rely on its significantly, are going to need to replace it, while demand for the services they fund will remain higher than hitherto for a nation experiencing a depression. What does replace it? I would go a land tax, but do you think the ScoMo government (or any other) will look at soaking the wealthy end of town for the value of inner Sydney and Melbourne?

          You’ll see first home buyer incentives.

          We are already seeing them, but are they going to work well enough in a nation with the worlds most expensive real estate and dead wages/insecure jobs? Sure, there will be takers, but for most 1HBs Australian RE is simply too expensive to look at. There are simply too many households (couples) with combined incomes of maybe 70-100 grand (both temporary or contract and terminable at a moments notice) for FHB supports to work on a widespread scale.

          You’ll see boomers piling their mountains of cash back into the big 4 et al.

          To get 1%? They are doing precisely that at the moment, and the Big 4 and government are trying desperately to get them to do something ‘productive’ with it. Then there are the considerable numbers of ‘Boomers’ who are discovering that retirement is now foist upon them earlier than anticipated, or that they dont have the money they thought they did/would have, or the vast majority who were never into the speculation or ‘wealth’ scene anyway and dont have the mountains of cash (and do just have a home in the burbs). The mountains of cash are what the ScoMo move is trying to get back into speculative real estate (to drive prices higher). It will have some effect, but as David noted in the podcast the fundamentals in SYD/MEL are pretty bad regardless.

          You’ll see RE prices skyrocket to unprecedented levels.

          There will be some but as David noted the fundamentals are still pretty bad – apart from ADE/BRI/PER. And that will be accompanied by the risk that all the additional funds being hosed into RE will be accompanied by ‘risks’ in the form of temporary jobs and outright bullshit. Then, as noted above, the mental health funding world will come to the fore.

          • Sorry can’t even buy into Adelaide Brisbane Perth being okay.I guess when you have to report day in day out you could loose sight of the bigger picture.I don’t know for sure.The most likely out come from here is a worldwide depression with all it’s consequences and that includes falling property prices

          • I dunno of it is OK so much as OKer. Or more OK than SYD/MEL.
            I know that I often look at places in Russia for circa 200k (current AUD) which are well made, massive, have saunas and game rooms etc, and very close to quite OK medical facilities schools and the like, and on 1500 square metres, and regularly have similar noted to me in Central Europe, the Balkans, Cyprus, parts of the Americas, and figure the same money would get me a dilapidated rat infested fibro shack anywhere in Australia.

    • I tend to agree. These aren’t well thought out policy responses, but throwing the kitchen sink without even really knowing how bad the situation is. Economy is contracting, business confidence smashed despite huge stimulus. The largest ever put into the economy. Let’s not forget most states only shutdown for about a month to six weeks but received stimulus as if they were going to be shut for 6 months. Not to mention decades worth the of super accumulation for part time and low income households was pulled in just a few months. All of this is now firmly in the rear view mirror. Government desperate to get private debt growth back to close the output gap but with no migration there’s no way that’s going to work. It’ll bring it up but not to the level the perpetual debt machine needs to keep your whole Ponzi scheme going. Banks will use these laws as a way to refinance loans they think ppl can eventually pay whilst forcing out others. Some FHB will be lured in but job insecurity will only increase next year as more businesses fail after voodoo profits from job keeper subsidies evaporate. They are solving the symptoms and trying to prop up the KPIs rather than solving all the fundamental issues.

    • yeah I didn’t read more into your post than, yeah, it’s f&^ked anyway – do whatever. I agree, its already done. doesn’t matter anymore. no more population growth for the foreseeable.

  14. I am far less sanguine about a crash of any kind in Australia. While decrying MMT, they are effectively engaging in it (in a subtle way), and they have stopped caring about government debt, ergo there are many “crises” they can paper over, and will, just like in the great recession.

    I currently live on an acreage property, mortgage-free. I need to buy a small property to rent out, and then downsize to in a decade or so when the wife and I are seriously old. I’m going to wait until ~July next year, and if no property slump by then, I’m just going to buy with the full expectation that prices will probably never meaningfully correct.

    • OK R2M, without seeking to get into an argument with you, and as someone who has family in a not dissimilar situation, FWIW here are the observations I have made with them. I am not a financial advisor so please do not take anything I write as carved in stone.

      1. Most acreage is ‘productive’ in some way – and I will assume yours is. Given your regular environmental stance I would also assume your place is environmentally friendly, low/non existent connection to grid (low/np bills), and probably not in a location where there is large scale speculative investment in RE. So my initial thought would be your place is unlikely to experience any major crash.

      2. Government policy will be to avoid an RE crash simply because they wipe out the whole economy if it does. As David noted at the end of the podcast there are other things they can potentially do to fend off a RE crash. That said, we do live in the worlds most spectacular example of a bubble economy, and the biggest inflator of the bubble (iron ore) has a limited shelf life vis price. My guess is that at some point – and I know MB/people like me have been saying it for years – the policy will become one of allowing the currency (AUD) to slide lower (to keep nominal RE prices where they are, but making them worth less in global terms, to get competitiveness moving and create some meaningful jobs, wage growth etc.

      3. Most of the ex-acreage people I know prefer to retire to somewhere near where their acreage is/was. The exception being where health considerations are such they need to get close to specialist medical care. Without having the faintest idea where you are (but having family in the Murray Valley in similar situations – and able to get to Bendigo, Albury or Wagga for their medical needs) my guess would be that places in the towns near where you are arent likely to see that crash, and should be affordable (possibly even now).

      • Interesting comment, Gunna. I’ll respond to each point:

        1) My 8 acres is partly forested, but there are huge lawns that are a massive pain to maintain. I’m talking hours of mowing on a 46″ ride-on mower every couple of weeks. The lawns are also prone to grass-destroying ant infestations that require hours of hand spraying with pesticides on a regular basis, or the ground becomes threadbare and open to rain erosion. That’s partly why we are looking to downsize; it’s just too much damned work. Yes, we have extensive vegetable beds and fruit trees, and this does offset the cost of living, saving thousands every years. Solar panels make power cheap. The place is gloriously quiet and private. I’m considering covering the lawns with native trees, IOW going back to forest, using a low-growing, fast growing native cabinet timber tree like Deep Yellow Wood. That would take care of the lawn problem, and may allow us to live here until very old. But I still worry about dying and leaving my wife alone on this property. My manual skills, tools, and ability to fix things are a big part of what makes living here possible. So buying a smaller property for the future is still obligatory.

        2) I totally agree that “at some point” it’s going to collapse, and I too have been confidently predicting this collapse for over a decade. I am now convinced that while this collapse is inevitable eventually, it may come so late that it is meaningless for me and my wife. I cannot plan with it as a factor anymore.

        3) You’re right. Funnily enough, the sort of small property we need is now becoming plentiful on the market in nearby towns, as Airbnb collapses and rental townhouses, houses and flats become vacant. So yes, that’s a positive development. My problem is that our best course of action would be to buy a smaller (say 1-acre) property nearby for us to live in for a decade or so (wife needs a studio and I need storage space), and then a smaller property for advanced old age, when one of us may have died. It’s the 1-acre sideways move that’s proving treacherous, because in my area these properties are actually in high demand from urbanites fleeing the virus and wanting to retire rurally, and prices are going UP.

        • One final observation I would make – please dont be offended.

          I have been mystified a few times by people retiring from larger acreages (I have seen everything from orchards on 10-20 acres to grains/sheep on a thousand+) who assume that something smaller 1-5 is going to be less work, and who then end up essentially killing themselves trying to work their 1 acre (I have seen ex- farmers go completely insane clipping hedges, planting trees, sowing and mowing lawns, laying out and maintaining garden beds etc. I had one relative get a serious toxic reaction from mouse spiders who bit him when he crawled under his new place (in his 80s) to give a spray to, and would probably have died if it hadnt been for the postie (who knew him) spotting the under the house gate was open and thought he would suss it out.

          Why dont you try a really low maintenance townhouse or abode and save your health for the never ending struggle.

          • Good point, but here’s the counterargument: 2000-4000m² is a whole different ballgame to 5 or more acres. Plus it gives you some privacy and the space to pursue a hobby or pastime (as I said, the wife absolutely has to have a studio of 50m² or larger, and I have a lot of tools etc and totally need a separate shed for my pastimes). For us, a townhouse or even a typical suburban block (400-1000m²) would mean giving up activities that make life worthwhile.

            Yes, when infirmity, extreme age an death loom, a small abode would be most welcome, but until then, we have to have space. I also love a little privacy and peace, both of which are hard to achieve in Australia in a suburban or higher density setting.

            If you live smart, you don’t need to be driven insane with maintenance on ½ to 1 acre. Replace hedges with dwarf clumping bamboo, so no need to prune. Minimize lawns. Mulch heavily. Be insect and snake aware. We used to own a 0.75 acre place for a while and it was easy to maintain compared to our current place.

            The big problem here is all the accursed city slickers buying up everything, often sight unseen, in a new wave of panic over C19.

        • 46” Zero! A baby! Time to treat yourself to a 60 inches (Brooklyn 99 – title of reusa’s s3x tape!!)

          No but seriously I was on a 54” Kubota zero I suspect quite near you (just south of Ballina and inland ) and mowing 4 acres VERY OFTEN in summer so feel your pain

          At Gunna – we’ve come off 10 acres productive and just bought 2000sqm and way way less mowing , and way more time for kids and veggies etc etc riding surfing golf

          Good life skills for our 2 boys to be looking after fruit trees sprouts mushrooms and keeping bindi etc at bag plus learning some house maintenance e

        • Seriously get a bigger mower. The Kubota BX range with a 60 inch deck are great. If you have a quad bike get a tank sprayer or Hardi make a 120L sprayer.

    • Display NameMEMBER

      You might be right. If we do not correct I suspect we will stagnate indefinitely. Small business is being killed by high real estate prices as is discretionary spending. I am in a holding pattern with money in the bank from the sale of my house in sydney in late 2017 waiting for the right moment to downsize. And it might not be in Sydney. The worst outcome is another lost decade of stagnation and no reform. And I have to say it is looking like the most likely outcome based on evidence to date.

  15. Is it nitrous for the supercharged v8? Or the deployment of an airbag to stop us breaking the steering wheel with our face?

    • Yeah mate, that was me. I worked in broadcast (mainly TV) overseas for a long time – in newsrooms, on air. There was sweet FA of that type of work (which I was interested in doing) when I returned to Australia in 2012 (particularly for a guy in his then late 40s who didnt want to be working crazed hours because he had kids), so I went into another field. I enjoy doing the pods with DLS and LvO. I enjoy chipping in at MB all round.