Their time will come. Banks might think it is very clever to protect their profit margins by not passing on the cut in official interest rates but their time will come. Treasury officials and politicians have long memories and when circumstances change there will be a day of reckoning. When the immediate international financial crisis changes the government will get around to changing the very nature of banking back to that old fashioned concept of taking people’s savings and lending them to approved borrowers. Banking will return to being one of the world’s most straightforward and boring occupations. New regulations will ensure that profit margins return to what used to be norm 30 or 40 years ago. So those bankers today pocketing all or most of the latest 0.25% rate cut should enjoy it while they can. The time to teach banks a lesson will come soon enough.

Greece close to bankruptcy. It looks like we can add Greece to the list of countries facing bankruptcy although the global recession has yet to hit the country with full force. The German magazine Der Spiegel reports that the Government can no longer pay its bills. Strikes are paralysing the country and the EU is putting on the pressure to get the Government to start living within its means after exceeding the euro zone budget deficit limit of three percent for the third time in a row. EU statistics show Greek government debt amounts to 94 percent of the country’s gross domestic product with Italy the only other euro zone country which has a higher level of government debt.

Does the X in Xenophon stand for Xenophobia? Independent South Australian Senator Nick Xenophon is reportedly about to join in the anti-China bashing campaign by making a television advertisement opposing Chinalco increasing its ownership share of Rio Tinto. “You sell the milk, not the cow” is the message he will deliver. “We should be selling the minerals, not the mine … let’s not gamble with Australia’s future.” Senator Xenophon, like National Party Senator Barnaby Joyce who is also playing to a fear of the yellow peril, overlooks the simple fact that the Federal Government has the power to control the price of mineral exports whoever is doling the exporting.

What happens when the music stops? First home buyers are continuing to do their bit to keep the building industry from completely collapsing. In February the number of first home buyer commitments reached 26.9% of the total. That is the highest proportion reached since the Australian Bureau of Statistics began collecting such data back in July 1991.

Since the introduction of the First Home Buyers Boost in October 2008 the average loan size for first home buyers has risen from $264,500 to $280,600. The average loan size for all owner occupied housing commitments fell from $255,900 to $253,200 for the same period. That makes you wonder what will happen if the government does not continue with its “boost” in the new financial year.

The importance of first home buyers is illustrated by the fact that in the four months from November last year to the end of February, the number of financial commitments by first home buyers was up nearly 17% while for other buyers commitments fell 25.5%.

Peter Fray

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