Finance Finance News Australia’s financial woes reach the US

Australia’s financial woes reach the US

At least one US media outlet feels our pain. Photo: Getty
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The fallout from Australia’s bank scandal and property ‘bubble’ has reverberated all the way to the USA.

On Tuesday, The New York Times warned that our “rampant property prices” are distorting the economy.

Australian property prices are growing even faster than San Francisco, the priciest metropolitan area in the US, the article by Sydney-based journalist Aaron Odysseus Patrick reported.

The comparison struck a chord with Australian readers, based on the social media interest. Perhaps seeing our worst financial fears confirmed by a foreign outlet gave us comfort that we aren’t exaggerating.

The Sydney suburb of Balmain made it to the New York Times. Photo: Getty
The Sydney suburb of Balmain makes it to the New York Times. Photo: Getty

The article used the Sydney suburb of Balmain, and retired local Fergus Fricke, 75, as its case study. Its general thrust was that sky-high prices are distorting the economy.

“Higher property prices entrench the advantages of the wealth,” the journalist opined.

“Yet Australia’s establishment celebrates high house prices as a symbol of national prosperity and economic success. A Labor Party proposal during the general election this year for a modest trim in generous tax breaks for property investors was assailed by the governing center-right coalition.”

The reportage matched a recent RMIT University study, which found that rising house prices hamper economy productivity by incentivising older women to work less.

It was the second time of late that the New York Times deemed the Australian economy a topic worthy of coverage.

On October 14, the US publication reported that Australia’s big banks are facing “the biggest public outcry in a generation”.

The reporter, again Mr Patrick, summarised for a foreign audience the bank scandals that triggered the recent public hearings. And again, the outside-looking-in view was a hit with Australian readers.

The CBA and Westpac are worth more than Goldman Sachs, in terms of stock market value, and the big four collectively are more profitable than US banks, the journalist noted.

His case study was Dr Benjamin Koh, a whistleblower at the Commonwealth Bank, who exposed alleged widespread refusal of legitimate insurance claims.

It may be that the editors of the Times see Australia as inherently of interest. Or it may be that the media company is preparing for an Australian entrance.

There are rumours in the media world that Australia will be one of the targets of the NYT‘s $US50 million global expansion.

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