Tech CEO Matt Barrie reveals why he believes Australia is headed for imminent economic collapse

A leading entrepreneur has warned that Australia is on the verge of financial collapse due to a housing bubble similar to the one that crippled the US economy in 2008, and relying on surging immigration to prevent it from bursting.

Matt Barrie, founder and CEO of staffing agency 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, resulting hikes in interest rates 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 housing collapse in America, when reckless lending and risk-taking by banks drove house prices up and then inevitably crashed.

“It’s exactly the global financial crisis that we saw in America, happening here in Australia today,” he told the Australian online broadcaster ADH TV.

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 Australian workers have been forced to take out huge mortgages because of extraordinary house prices, which have been pushed higher and higher by importing more and more people to support rising demand.

“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).

As a result, young people entering the housing market must take on extraordinary debt to buy their first home, making them highly vulnerable to rising interest rates.

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.

As rates rise, discretionary spending falls as intended as the Reserve Bank tries to bring inflation under control, but some analysts fear it could go too far and plunge the country into recession as spending dries up and companies go bankrupt to go.

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 mortgages, 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, helped banks that had made speculative loans rather than letting them go bankrupt, and that only encouraged them to quickly return to such risky lending.

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.

However, Mr Barrie said that our reliance on primary exports and the collapse of local manufacturing means that the Australian economy has been dangerously narrow and barely changed since the 19th century.

“We’re a very primitive country in terms of what we export,” Mr. Barrie said.

“We dig up soil, which is iron ore, and ship it to China, and we dig up dead trees, which is coal, and ship it to Japan and China.

“Australia has a production as a percentage of GDP comparable to a financial haven like Luxembourg.”

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.