Bernard Hickey did an article on this recently.
Quote:
Luckily for us, we don't have to imagine. The Reserve Bank has done a test of just such an scenario, and quite recently.
It ran a "stress" test with banks late last year to see what would happen to their balance sheets if house prices fell 55 per cent in Auckland and by 40 per cent nationwide.
It found the world would not end. Banks would not force everyone to sell their houses. Most home-owners have vast amounts of equity to fall back on. Those in negative equity would neither send their keys back to the bank in the mail nor be turfed out without warning.
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Protecting your peace is way more important than proving your point. Some people aren't open to cultivating their views. Just let them be wrong.
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