Last week, RBA governor Glenn Stevens assured us the big Aussie banks are solvent, that he can and will print dollars if necessary and cannot see a housing bubble pop when he examines the entrails.

The only thing in the Guv’s speech we may be certain of is the printing press part.

Prosper sees many indicators pointing to a fall in land prices, particularly the widespread disinterest among young adults to buying when it makes no financial sense and means life-long debt-slavery. They pass.

Absent a constant flow of ‘new money’ from first homebuyers, second buyers cannot trade up and down-sizers cannot exit. The system jams.

We are in a disleveraging phase – where net new debt barely exceeds net savings. Paul Vallejo argues with some justification this is not because of an epiphany among the indebted to change their ways, but a lack of fresh suckers borrowers to keep the boom going – which is how all Ponzi schemes end.

A deleveraging cycle is very painful for everyone. Asset price falls pin big borrowers like a spider mounted on blotting paper: repayments are painfully high and they can’t sell as their equity has been erased. For more on deleveraging cycles, Ray Dalio is excellent.

The big loan, small equity group are recent buyers and negative gearers. Both are exquisitely exposed to even modest asset price falls.

I think Australia’s invisible-to-Stevens housing bubble will destroy the banks’ solvency and they will turn instantly to government for a bail-out. We can only hope the RBA says No! and institutes instead Steve Keen’s Debt Jubilee.

Of course, this mess we find ourselves in could have been averted if we had a decent Land Value Tax. This giving in to The Dark Side, where scarce capital is diverted to rent-seeking, impoverishing and enslaving our young – prompted by Australia’s very bad tax system – has already destroyed enough lives.