Comments on: No reason for Rudd to guarantee mortgage funds http://www.crikey.com.au/2008/10/24/no-reason-for-rudd-to-guarantee-mortgage-funds/ now with extra source Tue, 24 Nov 2009 10:24:29 +1100 http://wordpress.org/?v=2.8.6 hourly 1 By: peter http://www.crikey.com.au/2008/10/24/no-reason-for-rudd-to-guarantee-mortgage-funds/#comment-16451 peter Thu, 01 Jan 1970 10:00:00 +0000 #comment-16451 Great work Glen... even a fifth grader knows that there is a direct ralationship between risk and return ... soon we'll have people (Dennis Shanahan et al ? ) lobbying the government for tops up from the tooth fairy beacuse their overseas spending power has been eroded as a rsult of the decline in value of the aussie peso!<br /><br /> <br /><br /><br /><br /> Great work Glen… even a fifth grader knows that there is a direct ralationship between risk and return … soon we’ll have people (Dennis Shanahan et al ? ) lobbying the government for tops up from the tooth fairy beacuse their overseas spending power has been eroded as a rsult of the decline in value of the aussie peso!

]]> By: Realist http://www.crikey.com.au/2008/10/24/no-reason-for-rudd-to-guarantee-mortgage-funds/#comment-16452 Realist Thu, 01 Jan 1970 10:00:00 +0000 #comment-16452 Excellent peice, Glenn. Glad to see there's someone telling it like it is. Excellent peice, Glenn. Glad to see there’s someone telling it like it is.

]]> By: Steve http://www.crikey.com.au/2008/10/24/no-reason-for-rudd-to-guarantee-mortgage-funds/#comment-16453 Steve Thu, 01 Jan 1970 10:00:00 +0000 #comment-16453 The inconvenient reality that in the last two weeks we have seen a massive flight of redemptions against these and other funds by scared people. They are fleeing from higher returns and relatively security to government backed safety of banks. To say we have seen it all before is simply naive because we have not. These investment funds are being attacked by appalling government policy made on the run by a panic stricken government.<br /><br />The US is in a diabolical hole. Talk to anyone (we got a briefing by KPMG) and the terror is abject and real. To be blunt; the US's banking system is utterly ruined and the linkages between economies through securitisation mean everyone caught cold. The UK is even worse.<br /><br />Take the $1m plus fee for guarantee; its a stroke of genius. If you place your money in an institution rated below the big four you will pay extra to guarantee it. Anyone see what will happen? Funds will flow from the lesser rated banks to the better rated ones, thus weakening the lesser rated banks. So the very effect of the fee for guarantee is to cause funds to flow quickly from the weaker to the stronger. Um, its called a run and NO bank in Australia could sustain a wholesale funding run. NONE. What would happen to MacQuarie Bank if its investors get flighty? <br /><br />The same rules apply to the breath and scope of the investment funds. Illiquid assets, a rush of redemptions based on fear and loss of confidence, not incompetent management or bad loans and viola; freezing redemptions is the only solution. These people were chasing a retirement income, not super profits.<br /><br />Now we have some moronic imbecile (aka the Treasurer) demonstrating such contempt towards self funded retirees as to make many of them wonder why they bothered saving in the first place! The sheer "let the eat cake" arrogance does not inspire confidence that these guys know what they are doing. To be frank, our Treasurer would be hard pressed to take charge of a wet dream. The inconvenient reality that in the last two weeks we have seen a massive flight of redemptions against these and other funds by scared people. They are fleeing from higher returns and relatively security to government backed safety of banks. To say we have seen it all before is simply naive because we have not. These investment funds are being attacked by appalling government policy made on the run by a panic stricken government.

The US is in a diabolical hole. Talk to anyone (we got a briefing by KPMG) and the terror is abject and real. To be blunt; the US’s banking system is utterly ruined and the linkages between economies through securitisation mean everyone caught cold. The UK is even worse.

Take the $1m plus fee for guarantee; its a stroke of genius. If you place your money in an institution rated below the big four you will pay extra to guarantee it. Anyone see what will happen? Funds will flow from the lesser rated banks to the better rated ones, thus weakening the lesser rated banks. So the very effect of the fee for guarantee is to cause funds to flow quickly from the weaker to the stronger. Um, its called a run and NO bank in Australia could sustain a wholesale funding run. NONE. What would happen to MacQuarie Bank if its investors get flighty?

The same rules apply to the breath and scope of the investment funds. Illiquid assets, a rush of redemptions based on fear and loss of confidence, not incompetent management or bad loans and viola; freezing redemptions is the only solution. These people were chasing a retirement income, not super profits.

Now we have some moronic imbecile (aka the Treasurer) demonstrating such contempt towards self funded retirees as to make many of them wonder why they bothered saving in the first place! The sheer “let the eat cake” arrogance does not inspire confidence that these guys know what they are doing. To be frank, our Treasurer would be hard pressed to take charge of a wet dream.

]]> By: brian http://www.crikey.com.au/2008/10/24/no-reason-for-rudd-to-guarantee-mortgage-funds/#comment-16454 brian Thu, 01 Jan 1970 10:00:00 +0000 #comment-16454 There is a lot of mis-information being pushed by self interested liberal pollies re the mortgage funds,I became concerned about the viability of them in july this year and decided to pull out of them for a safe haven, finally settling on bank west at 8.71% fixed for 1 year, I was able to access nearly all funds except for $130,000 in two funds, these were frozen till they could sell assetts to pay me, I still get a 10% return paid monthly from them, which I am quite satisfied with, these funds were frozen long before rudd gave the banks their guarantee, so to blame the government for the run on them is wrong, anyhow, it is made quite clear that higher returns all ways equal bigger risk, There is a lot of mis-information being pushed by self interested liberal pollies re the mortgage funds,I became concerned about the viability of them in july this year and decided to pull out of them for a safe haven, finally settling on bank west at 8.71% fixed for 1 year, I was able to access nearly all funds except for $130,000 in two funds, these were frozen till they could sell assetts to pay me, I still get a 10% return paid monthly from them, which I am quite satisfied with, these funds were frozen long before rudd gave the banks their guarantee, so to blame the government for the run on them is wrong, anyhow, it is made quite clear that higher returns all ways equal bigger risk,

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