In 2009, economist Steve Keen walked from Canberra to Mount Kosciuszko after losing a bet that the Australian housing market would crash 40% after the Global Financial Crisis (GFC). However, he had been one of the few economists who actually predicted the coming of the GFC. And he still maintains that a crash in the Australian housing market is coming.
I know exactly where I was on August 9, 2007. It was a hot summer’s day — “debtonation day”.
Bankers all over the world had lost their collective nerve and refused to lend to each other. The globally synchronised financial system froze, and began its descent into sustained failure. It then took more than a year, and Lehman Brothers’ collapse, before the world understood the gravity of the crisis.
Ten years on, that slow-motion crisis, a prolonged period of disinflation, noflation and deflation, is still playing out.
As expected, the major banks are preparing to launch a media war against the Turnbull government’s proposed $6.2 billion bank levy, as outlined in Treasurer Scott Morrison’s May 9 federal budget speech.
Australian Bankers’ Association head Anna Bligh was furious. She said a campaign was being considered, claiming the government was playing “fast and loose” with the nation’s financial system.