Greg, if you're monitoring this thread, you might be able to tell me how the RBA's recent purchases of mortgage backed securities, which if I have got this correct mirror similar purchases in the UK by the Bank of England, fit into your scenario. Are they a less organised example of the sort of scheme that you are talking about?

Greg,

What is the situation with CCDs at the momement? Circa 1974, I recall the Bank of New South having raising five billion dollars in one day at 341 George Street, Sydney, when in a liquidity bind. Interest rates of 18-23% were offered!

As I have said on other posts, the Banks wont be out trouble for a while, because of maturity transformation on term deposits. If rates fall say mid-2009, Banks will still be hold liabilities at the old rates.

Improving home affordability is not just about the availability of money.We have serious infrastructure and Govt inefficiences that add to costs.37% of a price of a house/land package is made of of Govt taxes and charges.Our few large cities are the only places that people can earn reliable decent incomes,hence the cost of housing coupled with Govt interference has become distorted.

No one wants to invest in housing because of taxes,maintance costs,the good performance of shares etc.

The cost of building with Govt regulation,OH&S requirements,lack of a skilled workforce, also makes housing very expensive.

The results are ,we have housing shortages,spirralling rents and with increased interest rates,a down turn in the construction sector.

The Govt regulators have stuffed everything at a State
level.Cheaper money will not solve the problem.