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The Forum > General Discussion > Are you worried about the credit crisis and sharemarket slump?

Are you worried about the credit crisis and sharemarket slump?

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The US sub-prime crisis has now been unfolding for months and has claimed some Australian victims, like Centro Properties. Our banks have had to raise interest rates because it has increased their funding costs and because they have lost capital participating in bail-outs of some US financial institutions.

Now the US government is injecting $145M in to the economy to try to avert a recession.

Modern economies run on trust, and changes in sentiment can affect economic circumstances more than the underlying problems on their own. So I'd be interested in knowing what posters here feel about this crisis and whether they are worried about the effect it might have on Australia, and whether that will change their behaviour in terms of spending and saving.
Posted by GrahamY, Sunday, 20 January 2008 3:45:09 PM
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In the early 1970s the Bank of NSW [Westpac] was borrowing several billion dollars a day via Commercial Certificates of Deposit to stay liquid and paying interest rates of up to 23%! It can happen here. It has.

Moreover, for a Bank what is problemic when rates fall as in the US, Banks still must pay the higher old rates on existing term deposits lodged say two or three years previously
Posted by Oliver, Sunday, 20 January 2008 3:54:53 PM
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Sharemarkets go up and they go down, so I don't see that as a problem.

Where I see a problem is that roughly half of the money that banks
lend, comes from overseas financial sources, they dicatate the
terms.

Our tax system is flawed in that respect. There is no incentive for
people to save money in bank deposits. Inflation takes half the
returns, marginal rates of tax the other half. So people often
don't prefer to borrow more and buy a property, to try to protect
their savings. Our trade deficit is not so bad, its our current
account that is the problem, which reflects our lack of savings.
A Govt change in tax policy might work wonders in this respect.

It looks like our new bankers will be Asia and Arabia. Its
a changing world.

http://business.theage.com.au/the-end-of-the-world-as-we-know-it/20080119-1mx4.html

.
Posted by Yabby, Sunday, 20 January 2008 4:44:46 PM
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Being suspicious of anything to do with the New World (economic) Order I thought sub-prime might have been "arranged" in order to bring about the establishment of the microchip on either the right hand or forehead economy (Revelation 13:16-18 and 14:9-11). The chip is out there right now and one day there will have to be a switch over to it. If not...Bible prophecy is false. As Henry Kissinger once said, so someone reckoned some years ago, "if we want to control the people, we must know where they are". The microchip, with its small battery, gives the NWO that chance. The satellite picks up the signal from the chip, as you shop, and the watchers know where you have been... that whole day.
Posted by Gibo, Sunday, 20 January 2008 6:43:42 PM
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The subject interests me , I have been showing my concerns in threads here for months, if some are not concerned they should be.
America is bleeding money, in debt to some who are not its friends, Americas greatness came via money so too may its fall.
We however are not isolated from the problem, personal credit card debt is said to be $3.000 for every Australian, is that men women and children?
Very many are struggling to pay home loans content in the view by hard work and controlled spending they can do it.
Yet what if they have no job overnight? it my not be in the hands of Australians world wide problems can come overnight.
40 year olds have not seen true credit squeezes true unemployment or even true pain as often as older people have.
The purpose of lending money is to make money, that lost in Americas low doc loans will in time be paid for by others.
Conspiracy theory's are apart from reality and no help here however the impacts on the world must not be underestimated.
Even without Americas problems it is clear we one day will have our own credit bills arriving in Australia , money is never free.
The growing Australian superannuation funds may one day insure we do not borrow so much over seas.
Posted by Belly, Monday, 21 January 2008 5:56:27 AM
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Belly, a report out today http://www.nbr.co.nz/home/column_article.asp?id=19876&cid=16&cname=Property suggests that Australia's debt may be leveraged against an asset that is over-valued by almost 100% compared to the US - the private home.

That has to add an additional layer of risk to our situation.
Posted by GrahamY, Monday, 21 January 2008 8:30:27 AM
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