Why is it that some pundits feel that the democratic voice of a minority is vitally important to listen to when it’s their candidate, but as soon as the tables are turned, any opposition to their candidate is “destroying” their party?
Darryl Mason asks – where’s their commitment to “democracy” now?
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Cuppa’s comment is I think worth noting here
http://blogs.crikey.com.au/purepoison/2009/12/07/open-thread-december-7-11/#comments
Pedro @ 39:
“Now speaking of big business, where’s our gutless Prime Minister over Westpac?
As far as I know, our government is still guaranteeing the assets of the big banks’ account holders – so why doesn’t he just announce that Westpac’s deal is now void. That would get them moving. Or at least get the account holders switching.”
Pedro, I agree with you here. The tax-payer is bearing the risk while the banks make these astronomical profits, without adding real value to society (they don’t innovate, they’re just fucking leeches). Labor is a right of centre party too remember (economically speaking, not socially) – but Kev is the lesser of two evils here. It’s a lite version of corporate socialism compared to the U.S., where tax-payers bailed out big banks in exchange for NOUGHT ZERO ZILCH, sanctioned by the right-wing Democrats and the ultra right-wing Republicans.
This is typical of conservatives, only interested in helping their corporate mates, while the workers and yes Pedro small businesses pay extra taxes and higher fees so these fucksticks can drive around in sports cars. And people fall for all the tricks, hear the dog whistles and vote the arseclowns in.
rrrr rant over.
Pedro
So your small Government Conservatives are now in favour of BIG regulation
“OPPOSITION Leader Tony Abbott has opened up the prospect of re-regulating the banks in response to Westpac’s outsized rate increase, saying Prime Minister Kevin Rudd gave Westpac ”enormous support” during the financial crisis without getting influence in return.”
Of course we rember how well the banks were regulated under the Government Mr Abbott used to be a part of!!!!!
Those arguing against the bank guarrantee: what repercussions do you think there would be for investors if the bank guarantee was no more?
confessions @ 54
I am happy with the decision to guarantee the banks when everything collapsed. However I don’t think they need it any longer, their profits have increased substantially…they are now taking the us for a ride.
I don’t care about investors.
Just back from the UK, popped into Bolt’s Blog to see if things had improved.
What the hell has happened, over there? It seems to be a single issue group. Sixteen pages of idiotic comments, all in furious agreement, over climate change, or rather the lack of it.
The bank guarantee guaranteed the deposits held in banks for a period of 3 years, when hopefully conditions will be normalised. I wasn’t aware banks actually received any funding for this underwriting by the Federal government.
@57
They don’t receive funding, but the tax payer is bearing the risk, not the bank which is unfair. They can therefore make dumb and risky decisions in the knowledge that if the shit hits the fan, the tax payer will be left carrying the can. We saw what happened in the States. Why should they make multi-billion dollar profits while we bear the risk? Fuck that – they offer nothing to our society, they don’t innovate, create, they just take. We should seriously think about what and who we reward within our system.
If they have been guaranteed for 3 years then I think that is far too long – they are doing fine now.
The guarantee was put in place because deposits in institutions in other countries had been similarly guaranteed by their respective governments. It was about the risk posed to the bank’s standing as a result of global events. To the best of my knowledge those risks are still present, and therefore the risk to deposits still very real, even though we avoided a recession in Australia. I also don’t think those other nations have removed their guarantees either.
You also cannot compare financial institutions in the US with those here in Australia: there isn’t the regulatory framework in the US that covers our financial institutions. The behaviour of financial institutions in America could not happen here for that reason. And AFAIK the taxpayer only bears a cost if deposits are lost.
Confessions, I’m not arguing that the guarantee should never have been applied (I am against it in principle, but the situation dictated that it was necessary at the time – it is an imperfect system), but surely they can cover their own asses now – eg Westpac recently posted a net profit of $3.5B. Alternatively, if it is deemed necessary to maintain the guarantee as you argue, then okay sure, but why doesn’t the taxpayer receive a percentage of the profits for bearing part of the risk? It’s such a rort.
Hypothetical: what would the government do if our banking system collapsed tomorrow?
I guess we’d all be fucked JCL, including the government. As for taxpayers not receiving a percentage of profits, welcome to the capitalist MO: privatise the profits, socialise the losses.
My understanding (though I could be wrong about this) is that the banks pay for the guarantee.. it’s not just a gift. Though whether the price they pay reflects the amount of risk implicit in the guarantee, I don;t know. That’d be a pretty tough thing to determine…. though it’d certainly generate some nice consulting fees for the finance types.
ok… a slight correction.. apparently only ‘large’ deposits attract a fee for the gurantee. deposits under $1m are guranteed by the government at no charge.
confessions, you took the words right out of my mouth.
gregc09, that’s interesting, thanks for that. Indeed, anything below $1M is free, anything above attracts the following fee structure, dependent on the credit rating of the institution:
Long Term Credit Rating of ADI1 Fee (in basis points per annum)
AAA to AA- = 70
A+ to A- = 100
BBB+ and below and Unrated = 150
As you point out, it would be difficult to determine whether these numbers are reasonable or not, but it sounds like SFA to me. Oh well, it’s something at least.
just as a point of comparison – probably entirely inappropriate – since 70 basis points means 0.7 percentage points… it would be something like insuring a million dollar house for $7000. I don;t own a million dollar hous so i don;t know whether that’s steep or not…….
I think that the risk profile of a million dollar house would be lower than the money market gregc09, so the analogy probably doesn’t hold very well.
Of course, the bank guarantee wasn’t meant to guarantee the state of Australia’s financial systems. Only deposits held within those individual institutions.
yes, perhaps…. though on the other hand, bank deposits are also possibly less risky than the money market… so i have no idea whether a $7000 premium for insuring a $1m bank deposit reflects an appropriate risk premium… I guess we could drag out a few asset pricing models from finance for better comparisons… but then we probably ought to ask an expert.
I think the banks were not required to take on the deposit insurance, and I don;t know the extent to which they did… if they used it a lot, that might suggest the risk was underpriced, which would hardly be surprising…
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