The global credit crisis has reached its worst point with the Brown Government now openly contemplating nationalising Northern Rock to protect its $120 billion loan exposure and maintain confidence in the British banking system.
However, British housing prices and the pound are both in rapid decline because that’s the biggest bailout cheque ever written by a government anywhere and the Poms are already battling with 520 billion pounds in public sector debt – equivalent to about 37% of its GDP, up from 29% seven years ago.
Whilst RAMS saw the destruction of $800 million in largely Australian equity, at least there wasn’t any need for a government bailout. Besides, our Reserve Bank doesn’t have $120 billion to lend because of the reckless way the Howard Government ripped out $25 billion in dividends out over the past 11 years to boost its claimed budget surpluses.
Just like Bank of America appears committed to stepping up and buying the Countrywide loan book, Westpac was able to swoop up the key RAMS business for $140 million, whilst helping run down and refinance the loan book.
Indeed, I still think the Future Fund should be in there as was argued in this discussion on the Sky Business Channel last Saturday.
You forgot the debt to disposable income that has ballooned to 160% under Howard up from 67% when he became PM.
While @ medical school I did a economics also. I’ve listened to 12 years of self-aggrandising economic cr-p from ex-PM and ‘worlds best’ treasurer and a roaring silence from the clever Australian, people, media, economists who know better than me. Speakup
Would not investing in the US investment banks provide a fairly hefty return on investment when the crisis is averted? Take a 10-15% stake of equity.
The losses from the likes of Citi eclipse the amounts being pumped in by SWFs. If the Fed cuts again, the US$ will go south again, and China and the Saudis will feel the pain of $s worth sfa.So it makes sense for them to fund insolvent wallstreet .
Stephen – why would the Australian government want to bail out a US investment bank – I’m not following your logic on that. How does that serve our interests?