Summary
Phil and Cathy explain how banks create credit (not manufactured money from the real economy) for the FIRE economy (Finance, Insurance, Real Estate), fueling speculation not production. APRA reduced CBA’s required capital by 1 billion club” for mortgage loan officers. CBA held above 2007 highs while Westpac returned to 2009 lows in March 2020 — CBA is the stronger bank for the second half.
Key Claims
- Banks create credit primarily for FIRE economy speculation, not manufacturing/production. — confidence: high
- APRA reduced CBA’s capital requirement by $500M in November 2020. — confidence: high
- Australian banking regulations relaxing from March 2021 will enable further credit creation. — confidence: high
- CBA held above 2007 highs in March 2020; Westpac fell to 2009 lows — CBA is the indicator bank to watch. — confidence: high
- The $1B club for US mortgage loan officers is forming — late-cycle credit exuberance. — confidence: high