A leading entrepreneur has warned that Australia is on the brink of financial collapse.
Matt Barrie, founder and CEO of Freelancer.com, outlined a terrifying list of factors that he claimed would soon plunge Australia into economic collapse.
He said the rising cost of living, continued rate hikes and rising mortgage payments were some of the worrying signs of impending financial disaster.
Mr Barrie compared Australia’s current economic climate to the global financial crisis triggered by the 2008 US housing collapse.
“It’s exactly the global financial crisis that we saw in America and is happening here in Australia today,” he said ADH TV.
Matt Barrie (pictured), founder and CEO of Freelancer.com, has warned that Australia is on the brink of recession
Mr Barrie said every Australian is realizing ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket
Mr Barrie, who rose to national prominence for opposing Sydney’s exclusion laws in 2016, said every Australian realizes that ‘something is terribly wrong in this country’ as mortgages, bills and the cost of living skyrocket.
He said the Australian housing market was in turmoil due to a number of factors, including increased immigration.
“The only reason house prices are rising is because we’re bringing more people into the country,” he added.
Nearly half a million immigrants are expected to come to Australia this year as overseas students, temporary visa holders and working holidaymakers return.
The average house price in Australia rose by a whopping $8,500 in the March quarter to $896,000.
The average property price in NSW is $1,150,400, which remains the highest in the country, followed by the ACT ($951,800) and Victoria ($898,300), according to the Australian Bureau of Statistics (ABS).
Mr Barrie said Australian household debt is now double that of the US, ‘a country you would normally associate with credit cards and debt’.
“Households are on the verge of breaking through and mortgages are skyrocketing,” he said.
The outspoken tech CEO warned Australia would see a “full replay of The Big Short movie.”
The Big Short documents some of the events leading up to the global financial crisis of 2008, in which a select group of investors predicted that the US housing market, which was based on extremely risky subprime lending, would eventually collapse under the weight of rising interest rates. .
The eventual collapse of the US subprime mortgage market eventually led to a global recession – the deepest since the Great Depression in 1929.
Many Western governments, including the UK and the US, were forced to conduct massive bank bailouts to avoid the total collapse of the global financial system.
The shock waves of the crisis hit the coasts of Australia, bringing with it a period of slow economic growth, higher unemployment and heightened uncertainty.
Overall, however, Australia performed relatively well as the country’s banks were less exposed to the US housing market and the economy was boosted by large coal exports to China.
Mr Barrie warned we are talking about a ‘full rerun of The Big Short movie’ in which Ryan Gosling’s character (pictured) uses a Jenga tower to illustrate the fragility of the US housing market and why investors should bet against it
Mr Barrie warned that now in Australia ‘households are basically on the verge of breaking and mortgages are skyrocketing’
Last week, the Reserve Bank raised cash rates for the twelfth time in nearly as many months, adding more mortgage woes to families across Australia.
The RBA cash rate is now at an 11-year high of 4.1 percent, with monthly variable mortgage payments already up 58 percent from just over a year ago.
National Australia Bank has updated its forecasts that the Reserve Bank will hike rates in July and August, bringing the cash rate to 4.6 percent and adding $295 to monthly mortgage payments on an average loan.
This would be the highest level since November 2011 and would be the 14th increase since May 2022, with rates already rising at their fastest pace in 34 years.
The Australian economy only grew by a paltry 0.2 percent in the first three months of the year, according to the ABS.
It’s because inflation has risen to just under seven percent, forcing families to cut their already tight budgets.
According to recent research from Suncorp, nearly half of Australians claim they cannot afford to fill their carts at current supermarket prices, while four in five are actively working to reduce their food costs.
Consumers also buy significantly fewer goods in shops and department stores.
Retail sales fell 0.6 percent in the March quarter of 2023, according to the ABS.
The decline in the March quarter followed a 0.3 percent decline in the December quarter of 2022.
“Outside of the COVID-19 pandemic period, this is the largest drop in retail sales since the September quarter of 2009,” said ABS head of retail statistics Ben Dorber.
Earlier this year, Deloitte Access Economics warned of an impending “consumer recession” as mortgage payments rose, rents rose and other living costs continued to rise.
But last month, the National Australia Bank’s chief economist warned that it had already arrived.