Comments on: Wayne and Kevin’s excellent financial crisis

By: Peter Roberts

Peter Roberts — Thu, 01 Jan 1970 10:00:00 +0000

A fine article, Bernard. It’s good to see one commentator recognise that the government is not inept.
They seem to have gotten the settings right and have not gone into panic mode over the ‘economic meltdown’
happening in the US and elsewhere. I am encouraged by their performance.

By: SaveForTheFuture

SaveForTheFuture — Thu, 01 Jan 1970 10:00:00 +0000

Borrowers had years of low interest rates and speculated on asset prices always rising. They didn’t think about how they were going to pay back the capital they had borrowed. It is now the turn of savers to reap the reward of high interest rates. If asset prices fall, savers can buy at realistic value. Bad luck for borrowers who can’t hang on. If house prices fall 30%, first buyers won’t have an affordability problem any longer. If unit prices fall 30%, new investors will earn appropriate yields. That should produce some affordable rentals.

By: Graeme Lewis

Graeme Lewis — Thu, 01 Jan 1970 10:00:00 +0000

The only problem with the so-called settings that Peter Roberts refers to is that when Swan brought down a “responsible” budget surplus of $22billion just last May, and big-noted his Govt by setting it aside in various “funds for later,” that was about battling inflation and “keeping downward pressure on interest rates to help working families.”

But now, just a short four months later, with inflation no longer something to worry about because other factors have emerged to put downward pressure on interest rates, surprise surprise, Rudd and Swan will now big-note themselves with their profligate State Govt. mates by breaking open the “funds,” and immediately start to spend the surplus, as Rudd himself said, not with undue haste, but to get the money out as soon as “practicable.” So much for responsible budgetting!!

By: Peter Roberts

Peter Roberts — Thu, 01 Jan 1970 10:00:00 +0000

Well, Graeme Lewis, I think the govt has shown responsibility to date and that ,just maybe they can use the surplus to positive ends. I certainly hope they will resist the urge to ‘slush fund’ the infrastructure money and if they do I would be disappointed. There is no doubt that the country (not the state govts) need to invest in major infrastructure programs that will benefit the generations to come. As far a ‘working families’ are concerned I believe that restructuring the taxation system is a better option a than the previous govts so called ‘handouts’.
This has been set in train and I look forward to the results.

By: Tom McLoughlin

Tom McLoughlin — Thu, 01 Jan 1970 10:00:00 +0000

There is another way for banks to pass through the full rate cut and protect their solvency level - it’s called an executive wage cut. Funny how no one in the Big Media bothers to put that question.

Government of the Rich by the Rich for the Rich? http://en.wikipedia.org/wiki/Bulworth

By: JamesK

JamesK — Thu, 01 Jan 1970 10:00:00 +0000

I am not so sure that they will continue to enjoy an excellent financial crisis.

Swan has give $4 billion liquidity to the second tier mortgage sector to "provide competition" to the banks whilst at the same time they are seemingly encouraging or at least allowing the banks to keep some of the projected 50 basis points reduction in the official RBA interest rate because the banks are presumably struggling.

Well which is it?

Either way the taxpayer and mortgagees lose........ them's votes as well as profligate waste.