Banks losing big $$$$$

NAB, one of Australia's largest banks, is forecasting to lose up to $1,000,000,000 largely due to their exposure to the US Sub-Prime mortgage debacle. All fuelled through their insatiable demand for higher profits. 

NAB and others have thrown enormous amounts of money at the U.S. lenders because the returns were so high. Properties in the U.S. were over valued, yet many lenders were keen to loan to people, who at best, would struggle to make repayments.

Now we have people defaulting on loans, walking away from their properties and letting the banks have their home. Surprise, surprise, the homes are not worth the amount at which they were valued and banks are losing vast quantities of cash. 

Compounding the issue is the fact that we seem to want everything now. We are not prepared to wait for that new TV, car or furniture. We want it now and banks have been keen to cater to our desires. More and more money has been financed until people have no expendable income. No-one considers what may happen if interest rate go up, as they have been. We now also have the unfortunate situation where banks are increasing rates outside of Reserve Bank rate rises. (Trying to re-coup some of their losses I'd say.)

Rents in Australia are forecast to continue to rise, as more and more people find themselves in the rental market because of housing unaffordability. 

Where will it end?