The recession will not be fully imported

Australia's residential land market is a bubble about to burst. Because property is used as collateral for loans, a bursting bubble leaves lenders and borrowers exposed, causing a recession. It is therefore “irresponsible and incorrect” to blame “spiritual emanations from U.S. subprime mortgage lending,” says Bryan Kavanagh. The truth, as he writes in this article in the Age, is that “we have an enormous debt bubble of our own and suffer the same vast hole in credit management that has again been exposed in the U.S.”

[Posted February 16, 2009.]