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Written by joni
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Sunday, 28 February 2010 15:56 |
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Barnaby Joyce continues to lead the charge on government debt, and how it is a very bad thing. But compared to a lot of countries, Australia is in a very good position.
Over in Europe, things are not so good. Greece for example is severely hampered by it's debts. But how did those debts occur? Could it be that the "free market" was behind it?
The Guardian reports that Goldman Sachs is taking a lot of heat at the moment, because they "helped Athens borrow cash without putting it on its books as a loan".
The so-called swap deal, permitted under EU law at the time, helped Greece meet eurozone limits on government borrowing. Under the arrangement between Goldman and Greece, the government in effect obtained a $1bn loan without adding to its public debt burden.
So, the same institutions that caused the GFC in the US, were also behind the massive debt levels that Greece now faces. Deals that made Goldman Sachs a lot of money in fees, and possibly more by "creating and selling securities and then betting against them"
Of course, Goldman Sachs is maintaining that they did nothing wrong.
"The Greek government has stated (and we agree) that these transactions were consistent with the European principles governing their use and application at the time".
That may well be the case, but is it as Ben Bernanke says "counterproductive"? Is there a conflict in interest between financial institutions and their government clients?
When I was reading this article I wondered, have our state and federal governments done the same thing in their rush into privatisation? |
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Written by joni
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Monday, 15 February 2010 20:52 |
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Around 350 economists from around the world have written an open letter to the G20 governments for a tax on currency speculation transactions. The text of the letter is:
Dear G20
As economists from across the world, we call on you to implement a financial transaction tax (FTT).
This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.
Even at very low rates of 0.05% or less, this tax could raise hundreds of billions of dollars annually and calm excessive speculation. The UK already levies a tax on share transactions of 0.5%, or ten times this rate, without unduly impacting on the competitiveness of the City of London.
This money is urgently needed. The crises of poverty and of climate change require an historic transfer of billions of dollars from the rich world to the poor world, and this tax would offer a clear way to help fund this. Given the automation of payments, this tax is technically feasible. It is morally right. We call on you to implement it as a matter of urgency.
Dear G20
As economists from across the world, we call on you to implement a financial transaction tax (FTT).
This tax is an idea that has come of age. The financial crisis has shown us the dangers of unregulated finance, and the link between the financial sector and society has been broken. It is time to fix this link and for the financial sector to give something back to society.
Even at very low rates of 0.05% or less, this tax could raise hundreds of billions of dollars annually and calm excessive speculation. The UK already levies a tax on share transactions of 0.5%, or ten times this rate, without unduly impacting on the competitiveness of the City of London.
This money is urgently needed. The crises of poverty and of climate change require an historic transfer of billions of dollars from the rich world to the poor world, and this tax would offer a clear way to help fund this. Given the automation of payments, this tax is technically feasible. It is morally right. We call on you to implement it as a matter of urgency.
It is being called a Robin Hood tax, and seems to me to be a good idea. As long as the money does go to fighting poverty and climate change.
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Written by joni
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Sunday, 07 February 2010 13:30 |
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Update: I was holding this post back, but the government has decided that the bank guarantee is to stop.
Australia's financial regulators say the guarantee scheme for large deposits and wholesale funding – introduced at the height of the global financial crisis to help the nation's banks borrow funds overseas – can now be phased out because of improved funding conditions.
The decision on Tuesday by the RBA to keep the cash rate at 3.75% was seen as a surprise by some (not me - hehe). Could it be that it is the big four banks that actually caused the RBA to keep rates on hold because they are increasing the margin between the cash rate and their standard variable rate (SVR). The Australian reported that "RBA deputy governor Ric Battellino warned monetary policy in Australia was higher than the official cash rate because of the move by the banks after the three rate rises in 2009."
IG markets analyst Ben Potter said:
"Comments that stimulus affects are fading and that banks have hiked in excess of the official cash rate have clearly hit home with the RBA"
I thought that I should create a chart that shows the increase in the difference between the RBA cash rate and the SVR.
Back in November 2007, the gap between the RBA cash rate (6.75%) and the SVR (8.75%) was 1.82%. This is the rate it was for year and years.
Now - the gap is 3.01%.
The banks are now taking more than 1% extra - and where does that go? Does that mean we should thank the banks for the interest rate staying the same? Will the banks ever return the gap to 1.82% - or will they continue to gouge their customers in their search for bigger profits?
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Written by joni
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Monday, 18 January 2010 17:50 |
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CBA has reported a jump in profits.
Australian banking major, Commonwealth Bank of Australia re-emphasised just how unscathed the nation’s largest lenders have emerged from the global financial crisis, and on Friday reported a 44 per cent jump in first half profit to $2.9 billion.
Remember what Ralph Norris said in December 2009:
CBA chief executive Ralph Norris told AAP the introduction of new liquidity rules by the prudential regulator will force the bank to hike interest rates by up to 7 basis points.
Now where do we think the extra increase in interest rates went? Was it to combat funding costs? Or was it just for profit?
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Written by joni
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Monday, 04 January 2010 09:26 |
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The Productivity Commissions report into executive pay is due to be released today and it looks like the robber-barons will get away with their excessive pays.
The Productivity Commission's final report scales back plans to force directors to face immediate re-election if shareholders reject their salaries.
The report, to be released today, details the spiralling pay packets and bonuses of executives and proposes a range of measures, including preventing executives interfering with the committees that set their salaries.
Those who made bad decisions will still get their big money, and those at the bottom suffer.
Just proves that life is like a shit sandwich: the more dough you have - the less shit you have to eat. |
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