Full article: http://www.theguardian.com/commenti...ket-like-a-ponzi-scheme-and-its-about-to-bust Extracts: Australia’s big four banks are among the largest and most profitable financial institutions in the world. Despite this, it is mathematically impossible that these banks, primarily focused on domestic retail operations, could be as big and profitable as they currently are without one of the following taking place: either each of these banks, in their individual capacity, has solved (at the same time, in the same country, and as a first in the history of banking) the ultimate recipe for infinitely profiting from an exponentially-growing stock of private debt; or they are all engaged in activity which is incredibly risky. the evidence suggests that on the back of irrational exuberance, Australia is experiencing what can only be described as a classic debt-financed speculative housing bubble with every metric that evidenced the bubble in the US and Ireland present within our economic system today. Between 2002 and 2015, the mortgage books of National Australia Bank, ANZ, Commonwealth Bank and Westpac grew by 388%, 435%, 475% and 554% respectively. Put another way, the big four’s mortgage books escalated from a combined $242bn to a whopping $1.13tn, surging at such a consistent rate it would make Bernie Madoff proud. Australia’s economists have not learnt the lessons made obvious by the global housing bubble, especially in the US. While claiming dwelling shortages justified sky-high prices, none except a small number of American economists were competent enough to realise that more than enough dwellings were constructed to house the flow of new households formed over the course of the price boom, and any such shortage would’ve been evidenced by a strong surge in rents (steady yields). The housing market is sure to follow the path of the mining industry. Policymakers believed the mining boom would last for decades, boosting the economy. With the mining sector now collapsing, the public will inevitably realise rising housing prices cannot last forever.