Australia is unlikely to repeat its outstanding economic success of recent years, a leading forecaster says.

Access Economics predicts Australia is heading into recession after an unprecedented period of wealth growth, on the back of a commodities boom.

The current account deficit will grow to $100 billion and 300,000 jobs will be lost by this time next year, it says in a report published on Monday.

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The FBI was aware for years of "pervasive and growing" fraud in the mortgage industry that eventually contributed to America’s financial meltdown, but did not take definitive action to stop it.

"It is clear that we had good intelligence on the mortgage-fraud schemes, the corrupt attorneys, the corrupt appraisers, the insider schemes," said a recently retired, high FBI official. Another retired top FBI official confirmed that such intelligence went back to 2002.

The problem, according to the two FBI retirees and several other current and former bureau colleagues, is that the bureau was stretched so thin that no one noticed when those lenders began packaging bad mortgages into bad securities.

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THE Reserve Bank (RBA) is universally tipped to slash the official interest rate next week to 1960s levels as it continues to try to mitigate the impact of worsening global economic conditions.

All 17 economists surveyed by AAP expected the central bank to slash the cash rate next Tuesday to stimulate a domestic economy facing its first recession in 18 years.

Nine economists, a majority, expect the cash interest rate to be cut by 100 basis points, following the RBA’s February 3 board meeting, which would take the cash rate to a 45-year low of 3.25 per cent – its lowest since 1964 when regulators set it at 3.18 per cent.

The remainder expect a 75 basis points reduction.

If the commercial banks match a 100 basis point move, home borrowers on an average $250,000 mortgage would save $162 a month as their repayments fell 10 per cent to $1,458.

The cash rate has already been slashed by 300 basis points since September last year, reversing a dozen rate rises between 2002 and early 2008.

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FOREIGN banks have started cutting their loans to Australian businesses, jeopardising investment and jobs.
The Reserve Bank yesterday blamed a fall in foreign currency lending for the second-biggest monthly drop in business borrowing on record in December.

The total level of loans to business fell by 1.1 per cent or $6.7billion in the month, while total lending to households and businesses fell 0.3 per cent, the first monthly fall since the 1992 recession, The Australian reports.

The fall in lending and the rapid weakening of the world economy mean the Reserve Bank may cut interest rates when its board meets in Sydney on Tuesday by even more than the 1 per cent tipped by financial markets.

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ALTHOUGH the average Sydney house price slipped only slightly at the end of last year, there were big falls in the eastern suburbs and on the lower North Shore.

Eastern suburbs house prices fell 14 per cent to an $887,000 median during the December quarter. Lower North Shore house prices fell 13 per cent to a $1.03 million median, the latest figures from Australian Property Monitors show.

Overall, Sydney house prices fell just 0.7 per cent in the December quarter. But the year’s 4.2 per cent price deterioration shaved $23,000 off the city’s median house, which now stands at $536,000. The inner west recorded a 2.7 per cent drop to $700,000 in house prices.

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