(Alternative Thread Title: Don't yell at me again for discussing fundamentals)
First it was the US dollar, then it was GBP - both of which were due to sub-prime or some other mortgage related nonsense.
A quick look below the equator shows that AUD may well be the next currency to take a fall.
According to some very interesting stats from BNP Paribas - The Northern Rock case broke sterling’s backbone. Northern Rocks claims were only covered by 28% by deposits while 72% was down to wholesale funding. Australian banks are not much better.
Guess what, the housing inflation/bubble is a global phenomena and all the excess global savings will decline the same moment Asia allows its currencies to appreciate. In addition, Australian banks account for 21% of bank total liabilities declining from 37% a decade ago while funding 79% by tapping international capital markets or selling bonds to global investors. The ratios are even worse than those of Northern Rock.
Comes the next credit event the AUD will fall victim to it - the timing of course will be particularly challenging and likely require a catalyst.
First it was the US dollar, then it was GBP - both of which were due to sub-prime or some other mortgage related nonsense.
A quick look below the equator shows that AUD may well be the next currency to take a fall.
According to some very interesting stats from BNP Paribas - The Northern Rock case broke sterling’s backbone. Northern Rocks claims were only covered by 28% by deposits while 72% was down to wholesale funding. Australian banks are not much better.
Guess what, the housing inflation/bubble is a global phenomena and all the excess global savings will decline the same moment Asia allows its currencies to appreciate. In addition, Australian banks account for 21% of bank total liabilities declining from 37% a decade ago while funding 79% by tapping international capital markets or selling bonds to global investors. The ratios are even worse than those of Northern Rock.
Comes the next credit event the AUD will fall victim to it - the timing of course will be particularly challenging and likely require a catalyst.