Your humble blogger has been warning of this for months.
As has Fitch Ratings, amongst others.
Now, according to today’s Australian Financial Review, our Aussie banks “have been given 1 week by regulators to stress test how they would handle a spike in joblessness, plunge in home prices spurred by EU debt crisis.”
In other words, to prepare for meltdown.
According to Bloomberg:
- Australian Prudential Regulation Authority envision worst-case scenario of 12% unemployment, 30% drop in house prices, 40% fall in commercial property values, AFR says
- Banks will assume that write-offs, other mitigation measures are unavailable; later stress tests might allow for such steps, AFR says
- Australia’s banks have A$87.2b of exposure to Europe, or 2.7% of assets, with A$74.6b of it mostly tied to bank borrowers in France, Germany, Netherlands, AFR says, citing RBA statistics
A “worst case scenario” of only 12% unemployment? Some say that we’re already at 8.6%.
No doubt our banks will come through these self-conducted “stress tests” … a la the farcical self-conducted “stress tests” that have been repeatedly passed by EU banks … with flying colours.
It’s all about public con-fidence, you see.
The entire modern financial system is built on con-fidence.
Without your continued con-fidence in the banksters’ system, their obscene wealth-from-debt-slavery machine implodes.
As with every con-fidence trick, it’s just a matter of time before a critical mass wakes up (pun intended).