In 1955, interest rates on housing loans were fixed for the full term of the loan.
Why is it little or no mention is ever made about the increase in interest rates on the so called 'toxic' loans in the American housing market? Many of those defaulters saw their loans interests rates go from 1% to 5% in just a few years.
Now they are being offered the golden opportunity to rent the houses they formerly owned; ie pay off the loans on someone else's behalf.
Meanwhile, it has been reported that the median wage level in America has actually dropped.
You want to stabilise the financial sector? Bring back certainty to contract law.

"You want to stabilise the financial sector? Bring back certainty to contract law."

Bravo Grim!

Since the entire purpose and function of central banking is to undermine certainty in contract law, by favouring one party to each transaction over the other, and since this fraud in turn is the grandaddy of the systemic fraud further downstream in the financial system, we should start by calling for the abolition of central banks.

This is something on which socialists and libertarians should be in agreement.

It would be the single biggest stroke that could be made against the inflation being used to steal from the poor and working class to fund handouts to the rich and privileged; big government getting in bed with big business, crony capitalism, the military-industrial complex, the funding of aggressive imperial wars, big pharm, and the rampant consumerism of consuming the future for the present. At the same time it would be the single biggest stroke possible to increase liberty, and reduce the ongoing tendency of the population to become dependent on government which is unsustainable in any event.

The argument that the raising and lowering of interest rates impacts on demand for money may have had some validity when there were capital exchange controls, however in a globalised economy raising the domestic price for money will not necessary deter demand for money.
Those speculators can simply access loans offshore. If the domestic price of money is raised in a deregulated currency exchange environment we see the carry trade push the local currency up, in Australia's case the Japanese were the predominant market. This leads to overseas loans becoming cheaper even with a higher interest rate. Hence jacking up domestic interest rates will not curb speculative activity. It will hamper productive investors who will be cautious about hedging risks associated with offshore loans, but the gamblers will still continue to gamble.
That is why we cannot continue to rely on the price of money to underscore monetary policy. But I doubt Saul will seek repentance for his devotion to economic dogma and will continue to write articles calling for higher interest rates to curb the excesses of the financial system rather than putting the trust in democratic institutions to develop appropriate regulatory regimes to control their recklessness (because that is populist meddling)

Ok, economics is not my field, due to my own assertions along the lines of "you cant eat money", "money cant buy me love" etc. Laugh all you like but what means more, that your family loves you and you can feed your children or the value of your home? Money does not stop us being human does it?
Why has this human made thing called "the economy" somehow become more important in "democracy" than people? People are so busy making money these days that they dont know how to grow (nature used to provide, greed even ruined that) their own food nor even how to keep each other happy without Foxtel.
ECONOMICS IS MEANT TO SERVE THE PEOPLE, NOT THE REVERSE.
The modern economy is meant to work like ecology, "the survival of the fittest", so if the big banks cant cope why is it that us ants have to bring the dinosaur food instead of eating him?

Well said, Milgu.
I love the imagery.

Ah another submission on “business bashing”, from the mouthpiece (or perhaps the cod-piece) of the union movement.

Jardine K Jardine’s summation is very accurate to what really happens.

Kenny McKay is, as all union agendas do, promoting an emotional wedge which see private enterprise as bad and a union dominated economy, through pulling the strings of their parliamentary puppets as in the best interests of the common good.

(and whilst I have met lots of private entrepreneurs, I have never, ever met “the common good” )

With current mortgages, I choose who I borrow from and the lenders choose who they lend to. Lenders finance the loan under conditions I accept and I carry the capital risk.


I was in UK in 1977 when the socialist swill had regulations on lending which meant, because I was not a first time buyer, I was not allowed to arrange for a new mortgage from normal housing funds.

That was the result of a socialist government meddling in that which it denies because it cannot control it - aka the forces of supply and demand.

All that Kenny baby wants is some mythical central system which makes sure everyone is treated the same, risk is eliminated and fairness prevails.

Well it is going to happen when the meek inherit the earth and the fairies reveal themselves at the bottom of the garden.

Until then, private enterprise knows better than government and unions combined –

it always has and always will…

milgu “why is it that us ants….”

I don’t see myself as an ant but as an individual. Maybe you should work on your self esteem.