Well said David, there is a massive subprime problem in Australia.

The situation has been exposed very well on Australian Property Forum (see below for some of the discussions).

http://australianpropertyforum.com/topic/9681427

In fact this huge subprime disaster is unfolding as we speak and the points you raise are just the tip of the iceberg.

http://australianpropertyforum.com/topic/8634082

Denise Brailey of the BFCSA is calling for a royal commission!

http://australianpropertyforum.com/topic/9672375

It's great to see this start to get the media attention it deserves, and agree a Royal Commission is the next logical step. Perhaps you would consider a campaign on 'Get Up!' or similar to increase the media attention and build public pressure on the government?

Excellent piece, David Collyer! As Australia is behind the curve, we shouldn't make the same mistakes, now obvious, countries around the world have made. Look at Ireland: it's taken money from people's pockets, bailed out banks and created unemployment. Their banks may be in remission, but how does empty Irish pockets now help its economy? We mustn't go down the same path, and both parties shouls let us know we won't.

Your idea of a combination of Steve Keen's and Ken Henry's thinking as an alternative to austerity or the USA's mindless money-printing is inspired.

Colour me Unconvinced.

I am hampered by a fundamental commitment to the laws of supply and demand, so I apologize in advance if my thinking is too radical for the audience here. I also live in central Sydney, so my views are ultimately infected by what I see around me every day. Apologies for that, too.

"We see young adults rejecting home-ownership because without future price appreciation, taking on debt-slavery is futile."

Emotive stuff. Young adults aren't "rejecting" home ownership. They simply haven't managed to reach a position where home ownership is affordable in the place that they would prefer to live. That happened in my generation too, and I don't believe that much has changed,. Except that we baby-boomers are sitting on more land than we need, and will only let it go when either a) we have to sell in order to afford managed care or b) we pop our clogs. We're essentially a selfish bunch, with a massive sense of entitlement, which we have carelessly passed on to the next generation.

And what is "debt-slavery"? Over-emotional twaddle for "borrowing money". Which, amazingly, is what my generation did too.

>>Look at Ireland: it's taken money from people's pockets, bailed out banks and created unemployment<<

Chalk, meet cheese.

Ireland created a massive over-supply of housing, thanks to an EU-funded boom that encouraged brainless speculation. A report I read recently calculated that to fill all the properties that are presently empty will take Ireland another forty years of population growth. When we get into a similar position, I will dust off my ancient copy of the laws of supply and demand, and predict a "housing bust".

But not before.

That is not to say that a detailed investigation into malpractice in the home-loan business is not a Good Thing. It most definitely is. But again, the situation is sufficiently different in scale to the US experience - which was exacerbated by (wait for it) excessive supply - to have less overall impact on the property market here.

A few sharks will lose their gold teeth, is all.

http://www.webofdebt.com/articles/commonwealth_bank_aus.php
Ellen Brown knows all about the inequity of the banking system.She wrote this article about our once great Commonwealth Bank that for the first 11 yrs of its life created money debt free to equal some of our increases in productivity and inflation.It was King O'Malley a Canadian/American who joined the Labor Party and initiated the Commonwealth Bank in this form.Billy Hughes by the early 1920's scuttled the power of the Commonwealth to be truely a bank of the people.After this time private banks created from nothing all the money to equal increases in our productivity.We became their debt slaves.It could have saved Australia during the Great Depression.

With the mining sector slowing our RBA can save us.Prof Michael Hudson visited our RBA in 2009 and asked the really big question.If the RBA is our Central Bank,why does it not create from nothing all the money to equal our increases in productivity,population and inflation? He was met with a wall of silence.Our Banks continue to borrow from OS Central Banks like the US Federal Reserve ( A cartel of private banks) who just create this money with the click of a computer mouse.They own our productivity by virtue of creating from nothing to equal it and give it back as debt.

We need to put pressure on our Govts to get the RBA to express some our productivity debt free.They can loan to our private banks and this would be a tax saving of at least $40 billion pa plus interest.

If we want to end the debt,we have to get politically active.

I'm beginning to wonder, Arjay, whether even you understand what you are saying. 'Cos I'm pretty sure that no-one else does.

There is this recurring phrase that you employ, at the drop of the proverbial hat, whenever you want to grizzle about the banking system. Yet I become more and more certain, each time you use it, that you couldn't actually explain what you mean by it - neither in simple terms that non-bankers can grasp, nor in the technical jargon of finance.

>>...our once great Commonwealth Bank that for the first 11 yrs of its life created money debt free to equal some of our increases in productivity and inflation... After this time private banks created from nothing all the money to equal increases in our productivity... If the RBA is our Central Bank,why does it not create from nothing all the money to equal our increases in productivity,population and inflation... They own our productivity by virtue of creating from nothing to equal it and give it back as debt<<

Could you give us a quick example, do you think, of how this creation occurs? Either debt-free, or making us into "debt slave", it doesn't matter which, so long as you enable us to distinguish between the two.

I have ignored it to date, on the basis that you usually only include the phrase it once in each post. But employing it four times is simply too much.

So let's hear it: show us how you "create money debt free to equal our increases in productivity and inflation", and how you "create money from nothing to equal our increases in productivity and inflation".

I'm sure I'm not the only one on tenterhooks here. Especially when you manage to get the entire banking system of China so spectacularly wrong, using the exact same terminology...

Pericles you are the master of deception.How does this money creation happen? Well QE3 in the USA is about to happen.The US Federal Reserve creates money in their computers and loans it to the US Govt.The people are then taxed by the Govt and have to pay back inflationary money plus interest to a private cartel of banksters.

A partial audit initiated by Ron Paul found that the US Federal Reserve in 2008 created an additional $16 trillion in off balance sheet transactions to the $15 trillion they put the US people in debt for illegal wars,bailouts and scams.This is criminal activity for which no one has been held accountable.

You either have a total disconnect with logic and reality or are profiting from this scam via the dervivative market that feeds off it.