Economist Steve Keen has warned for years of an Australian housing crash comparable to the U.S. subprime crisis.
Today Keen published a must-read essay full of charts on the housing bubble and how it propped up bank stocks.
He concludes: “It’s great fun while it lasts, but all Ponzi Schemes end for the simple reason that they must: they aren’t ‘making money’, but simply shuffling it—and growing debt. When new entrants can’t be enticed to join the game, the shuffling stops and the Scheme collapses under the weight of accumulated debt. There are very good odds that, when this Ponzi Scheme collapses and house prices fall, bank shares will go down with them.“