What will happen to AUD if the housing bubble bursts

Discussion in 'Currencies' started by billybob888, Apr 13, 2016.

  1. billybob888

    billybob888 Well-Known Member Silver Stacker

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    Im just curious as to what will happen to the AUD should the housing bubble burst, with rising unemployment and mortgage default.

    Would the AUD rise due to the deflationary crash or will the AUD crash from flight of capital and lack of confidence in the aussie economy?

    Opinions and past examples please
     
  2. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

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    Depends on what your "bubble burst" looks like, but I'd expect it would be AUD going down.

    In my opinion any major decline in housing is going to wreak havoc with the Australian banks balance sheets and also put great pressure on the government to intervene to prop it up. It would be likely the banks and government would be facing a downgrade of credit rating from the all important AAA and this would be another trigger for major currency flight if the bubble burst itself wasn't enough to trigger panic.

    Of course if the "bubble burst" scenario is in the context of a wider (global) crisis of some sort there is every chance the AUD will hold up. It's all relative.
     
  3. raven

    raven Well-Known Member Silver Stacker

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    Has the property market ever collapsed in this country, can't remember myself.
    Might have flattened out, but never had a "bursting bubble"
    Even 1987 stock market crash, was ridden out ok !

    There are approx. 75,000 new residents settling in Victoria each year, and so, where do they stay ?
    What do you actually call a bursting bubble ?
    And also, who cares ?
     
  4. billybob888

    billybob888 Well-Known Member Silver Stacker

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    Not trying to turning this into a debate about housing, you can believe houses will keep going up forever if you want, but my question is what if it bursts and its impact on the AUD
     
  5. House

    House Well-Known Member Silver Stacker

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    Apparently it has. Albeit 125 years ago. But you know, it'll definitely happen again.

    1891 Crash thread
     
  6. raven

    raven Well-Known Member Silver Stacker

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    Ok, nothing !
    :)
     
  7. raven

    raven Well-Known Member Silver Stacker

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    The value of the AU$, is directly proportional to the Federal Reserve's dictation, to the Reserve bank of Australia, and with regard to the setting of interest rates.
     
  8. Skyrocket

    Skyrocket Well-Known Member Silver Stacker

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    Can we go by example from other nations recent housing collapse to see what happened to their currency? ex USD
     
  9. raven

    raven Well-Known Member Silver Stacker

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  10. JulieW

    JulieW Well-Known Member Silver Stacker

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    It's a good example but I think the historical markers are a bit different.
    I'm in the flatten, increase, decline, increase camp as per PJ Anderson's property clock.

    As for AUD.

    Like a stone.
     

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