I think you made a small error in that cycle... it actually goes more like this. Ratings downgraded -> Increase lending costs -> Government steps in and "lends" the banks it's credit rating to avoid the problem.
It can't happen here. We are different, with our housing shortage, excellent economy and growing population. The financial crisis has passed us by. We dodged the bullet and are through the worst of it.
Stedlar that sounds like the financial advisor i fired but you forgot the part about the GFC was just a "paper loss" and "no one saw it coming"
Another perspective: the big four banks raise money offshore because the Australian economy isn't rooted like many other economies and foreigners are happy to leave their money here. It'll be interesting to see what happens.
that's a problem though - that money can disappear as quickly as it arrived which is quite frankly a huge risk to the banks and the economy as a whole.
Yes. Borrowing short and lending long is risky and was their Achilles heel. Don't think much has changed in that regard so they would still be vulnerable to liquidity drying up again.
There can't be a shadow of a doubt that the government (whatever government) would step in and take whatever action was necessary, regardless the cost. The alternative would be unthinkable to them So often we look at the situation and the rules and draw a valid conclusion. But when the time comes the rules are changed and the valid conclusion is made wrong. In other words they "kick the can down the road" The government has deep pockets. Don't be too keen to bet against them.
The government doesn't really have deep pockets, they have a deficit. They use the taxpayer as an ATM to pay for the bankers mistakes, ie: they transfer the men in suit's debt to us.
The gubberment will change the super rules to allow propping up of the RE market. This is *very* dangerous shit
If you want to see what happens about the Gov bailing out the banks, just take a close look at what happened here the UK and the current mess we're in because of all the billions and billions poured into the failing banks. Everywhere now is cutbacks, cutbacks and cutbacks for everyone, but guess what, the banks that were bailed out are still trading badly and are continuing to pay mega bonuses to staff. A lot of people reckon they should of let them fail and the ones that did keep their house in order and didn't ask for any money would of continued trading and increased their business and we might of been in a better position today. rockin'
No no no mate, aren't you listening? [youtube]http://www.youtube.com/watch?v=mor10bQYiB8[/youtube] It's different here! It's more safer! I just LOVE the delusion that's in place with the market bulls though, most entertaining.
And just hit the news that Barclays Bank paid only 1% company tax last year, whilst awarding bonuses of 1.5 billion pounds http://www.guardian.co.uk/uk/2011/feb/19/barclays-ban-protests-tax-avoidance This is in the face of massive cuts to budgets after the governments efforts at bailing out the banks. It is indeed hard to see how the world can continue as it is with such naked and arrogant behaviours by greedy thieves and their corrupt government cronies.
