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Financial crisis

The picture tells the story

Tuesday, 5 August 2008 - Those of you who look at the daily news summary that I put up on the Owl website everyday will have seen this graph taken from the New York Times. It needs little explanation with the message a clear one: the bust in the US housing market with its impact on the international banking system has some way to go yet. Housing Lenders Fear Bigger Wave of Loan Defaults is how the headline put it. And there was further worrying news in a second New York Times story: Higher Prices Outpace June Spending by Consumers . Inflation is taking root in the US and the dreaded stagflation seems to be emerging.

Pinching ideas from a Walkley winner

Thursday, 31 July 2008 - I have been an admirer of the writings of Kenneth Davidson since the days when we shared an office in the old Parliament House and I was rewriting as page one leads for the Daily Telegraph his learned economic commentaries destined for well back in the finance pages of The Australian. Ken is, I think, the only journalist ever to win a Walkley Award for a story that appeared unheralded right up the back of the book! It has never been his style to sing his own praises but I did think this morning that an enterprising editor would have made more of his piece House prices are a bubble waiting to burst . I'm sure I would have taken the egg beater to it and landed on page one with a real shock, horror headline.

The column is based on West Sydney University economics professor Steve Keen's regular Debtwatch newsletter which suggests the doubling in real terms in house prices in the past decade is a bubble waiting to burst. more

The difficult task of damage control

Tuesday, 1 July 2008 - If the Australian papers have not depressed you enough with economic news this morning then give yourself a real fright by hopping on to the website of the Bank for International Settlements. This august body of advisers to the central bankers of the world has just released its annual report and heads its conclusion "the difficult task of damage control." more

Saved by lack of size

Tuesday, 3 June 2008 -The big four Australian banks should not be surprised that Labor Treasurer Wayne Swan has resisted their entreaties to allow them to merge with one another in some combination or other for the evidence suggests that it is only their lack of size that prevented them from the financial stupidity that recently cost the big boys in other countries so many hundreds of billions. more

Turnbull confirms the Howard-Costello Government's cowardice

Tuesday, 3 June 2008 - Shadow Treasurer Malcolm Turnbull confirmed in his response to the Treasurer's parliamentary statement on financial stability that the last government gambled considerably on no Australian deposit taking institution - bank, building society or credit union - getting in to trouble like the British Northern Rock bank as a result of the financial instability caused by the sub prime crisis in the United States. more

Conflicts of interest and credit rating agencies.

Thursday, 29 May 2008 - Senator Nick Sherry, Minister for Superannuation and Corporate Law, might be a junior minister in the formal scheme of things but the upheaval in the world financial community has given a new importance to the corporate law part of his ministerial title. When the financial markets of the world finally settle there are bound to be changes in regulations to ensure that there is not a repeat of the sub-prime crisis so the investigation into the role of credit rating agencies Senator Sherry announced last week is highly appropriate. more

Conflicts of interest and credit rating agencies

Friday, 23 May 2008 - Senator Nick Sherry, Minister for Superannuation and Corporate Law, might be a junior minister in the formal scheme of things but the upheaval in the world financial community has given a new importance to the corporate law part of his ministerial title. When the financial markets of the world finally settle there are bound to be changes in regulations to ensure that there is not a repeat of the sub-prime crisis so the investigation into the role of credit rating agencies Senator Sherry announced yesterday is highly appropriate. more

The failed financial system

Wednesday, 7 May 2008 - Treasurer Wayne Swan is naturally enough preoccupied with his first budget for it is the short term course of the Australian economy that will determine his immediate political career but we should hope he is soon able to move on from concerns about inflation and the desirable level of government spending to start thinking about developing a better financial system than the one he inherited. more

Paying the bankers

Tuesday, 15 April 2008 - The Chairman of the Australian Prudential Regulatory Authority John Laker will not have been surprised that the international body of regulators like himself, the Financial Stability Forum, has decided that the way bankers are paid has contributed to some of the current bout of problems in the international financial system. more

Talking their own books

Monday, 7 April 2008 - It was amusing, to say the least, that the representative of one of those leveraged buy out groups was taken seriously by Glenn Milne in The Australian this morning as part of what is turning into quite a vicious attack on the Governor of the Reserve Bank Glenn Stevens. more

Why defend banks?

Monday, 7 April 2008 - If curbing inflation is one major task for a Reserve Bank Governor, then keeping public confidence in the banking system is another and more important one. Yet while the Governor can speak openly about the inflation fighting it is difficult to utter anything other than platitudes about the financial position of our banks for fear that frankness might provoke the kind of run seen on Northern Rock in Britain . more

Rorts on the way up, rules on the way down

Tuesday, 1 April 2008 - The daily revelations of stock exchange manipulation are leading to calls for all kind of new rules and regulations but perhaps the only real requirement is to remind people every now and again that thin markets are more .likely to be distorted than big ones. It is now clear to me at least that many of the share prices that rocketed skywards during the boom were helped upwards by manipulators using borrowed money to create an illusion of demand. Now these rorters of the way up have met the short sellers on the way down they are crying foul and trying to get the rules changed to protect their ill gotten gains. more

He would say that wouldn't he?

Friday, 28 March 2008 - The Reserve Bank Governor Glenn Stevens was remarkably sanguine about the Australian financial system when he addressed Smart Capital 2008: The Euromoney Australian Financial Markets Innovation Congress in Sydney. more

The harder they fall

Monday, 17 March 2008 - The British Government has nationalised a bank specialising in home loans. The United States Government has baulked at government ownership but provided the guarantees that allow the private sector to bale out an investment bank. Things are getting serious and it would be naïve to assume that Australia is somehow exempt from the excesses that resulted in the failure of Northern Rock and Bear Stearns. more

Find another Peter Rae

Wednesday, 12 March 2008 - Now is probably not the right time for an inquiry into the excesses of the financial system that are daily being exposed. The circumstances are too fragile for that. Full knowledge of the madness of financial engineering and the risky behaviour of the nation's banks could well just increase the panic. But the day will come soon enough when Australia will need to reform the system to make sure that the same mistakes are not made again. more

Ticket clippers get clipped

Monday, 10 March 2008 - There is a rough justice in the way the world's ticket clippers are getting their comeuppance at the moment on world financial markets but unfortunately, in the end, it's invariably the rich wot gets the gravy, and it's the poor wot gets the blame. more

 

 

 

 

 

 

 

 

© Richard Farmer 2008