Another record profit off the back of the world’s greatest residential real estate bubble. How on earth was Westpac, like the other big three, able to manage that one? Quelle surprise!

But what about its risk management? Remember, Westpac nearly fell at the late 1980s commercial bubble hurdle, at the same time the State Bank of Victoria went under (due to the excesses of Tricontinental). Did the bank learn anything from that episode about what happens to land values when a bubble bursts?

Hasn’t the bank once again lent against a gargantuan bubble?  [Remarkable!]

Take your dividends while you can, folks, but the question of failed risk management must be asked of each of big four banks before one cent of Australian taxpayers’ money is spent on bailing them out.

Oh, there’s no chance of that happening this time around because they’ve packaged up and onsold many of their mortgages in CDOs? And they’ve conducted worst case risk management scenarios, haven’t they?

Oh really? Pull the other one.


[Wouldn’t it be nice to see such fresh analyses in the Fin Review, or on “Inside Business”?]

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You say we need more funds to tackle poverty, homelessness, health, the environment, education and infrastructure? I say instituting the Henry Tax Review is a BIG step towards solving those problems.


  1. I’m sure our Reserve Bank will follow in the footsteps of the Fed Reserve, ECB and the BoJ.
    I guess we can expect government solving our debt problem that the banks have created with more debt, GST at 15% and the raiding of our super funds.
    And when that does’t work, expect the likes of Goldman Sachs to seize the future royalties of our gas, coal, uranium and iron ore reserves.

  2. Oh, yes: the obscene profits will certainly turn into losses shortly. But this is where we have to be different from the Us and Europe and not bail them out for their sins, or else they have it both ways: becoming winners in good times and bad. Let someone simply take them over after due diligence on their assets: they won’t have to pay much with all those non-performing loans!

  3. My theory is that a huge number of borrowers are getting further and further behind in their mortgage payments and now that China is coming off the boil this will become an epidemic.
    30 year mortgages (or any other loan) are fine as long as there are no black swan events during the loan period such as income reduction by loss of job (unemployment now rising), reduction of hours worked (jobs now shifting from full time to part time), illness, pregnancy, child care fees (on the rise), divorce (domestic violence at record highs), debt deflation etc. With mortgages at 8x income any of the above events (which are happening now) will crucify the borrower. En-masse, this will crucify our banks.

    No doubt QE4ever will endeavour to mask mortgage default losses for as long as it can.

  4. Aren’t our banks recipients of the trillion dollars of cheap money printed by the Fed.

    Doesn’t Wall Street park this money on the balance sheets of foreign banks that have a licence to operate in the US where the funds are disguised as cash on the sidelines increasing the value of the bank and thus it’s share price.

    Sounds like one big fraud by the banks to jack up their value as it is certainly not due to their mortgaged stretched customers boosting the bottom line.

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