Australia's major banks could be hit with a ratings downgrade and find it more expensive to borrow money in overseas markets if their bond-holders are forced to incur losses in the event of bank failures, according to Fabienne Michaux, head of Standard & Poor's Ratings Services Australia and New Zealand. http://www.smh.com.au/business/bank...atings-downgrade-sp-says-20140911-10f8v6.html I think I'm losing my mind. But isn't this a rather circular argument? Not that I hold much store in ratings agencies, but if a bank did fail why wouldn't they be downgraded? What's with the MSM?
Moving towards "bail-in' measures. Even though it's thinly disguised as being for "senior bank creditors". If the proverbial hits the fan, we'll see just how quickly bail-in measures apply to all deposit holders.
I wonder why no Australian Big 4 banks collapsed during the 07/08 financial crisis...MSM went quiet on which Australian banks had to get a handout of $5.4 billion from the US Federal Reserve. Australian Banks borrow short from overseas and lend long here at home to keep the system going. Once that short time loan facility dries up, then it spells big trouble for Australian banks. Regards Errol 43
Incidently, how much Capital does the banks have to hold to cover Derivatives? some members of the financial circles, think that it is in the range of $700,000,000,000,000 to $1,200,000,000,000,000..When derivatives collapse so will the banks...Where do they hide them on their balance sheets? Regards Errol 43
All banks borrow short and lend long. That's what the banking business is: balancing the deposits against the withdrawals and vice versa.
