Oliver you missed the point.Our financial system did invest in the US sub-prime debacle and now with the blessing of the RBA,we ordinary people are paying the price of a waywould banking system.

Can any small business in Aust make poor decisions and expect it's customers to pay more because of their atrocious decisions?
Only our banking system gets away with because of the backing of the RBA,World Bank and our own gutless Govt.Why should not the share holders suffer come grief,instead of ordinary folk losing their homes,jobs and busineses?

Don't try to deflect the reality I've painted.John Howard proudly proclaimed last yr that we have a $ trillion GDP,now you would beg to differ?Divide one million,million by 20 million and the answer comes out at $50,000.00 for every person.Even if we give half to the the multi-nationals,that means that every person should earn $25,000.00 pa,or every family should have an average income of $100,000.00.

Don't try to peddle me the BS unproductivity of the Aust economy.The lowering of tarrifs mean the lowering of our living standards to match that of China and India.That is the reality!

It is interesting that Kevin Rudd has just taken $20 million from the budget of our bureau of statistics.Perhaps they don't want to hear the truth either!

Arjay,

Why the attack? I agree with everything you said, except we are not as exposed as the US. Oz and the US have hundreds of billions of dollars of cross FDI. Th US sub-prime will create enormous problems.

The world central banks will try to protect to USD because its FDI when repatiated to home will be worth less, say on non-US transnationals balance sheets.

Because US retirement funds must invest a portion of their funds in the few Sovreign AAA rated countries around the world and there is an Australian minerals boom, I predict parity before the NY; the Banks say March 2009.

China will US companies to remain sustainable until there the possibility of take-overs, like with Rio Tinto in Oz. This will take decades and trillions of dollars.

Yes, Oz home values could fall as repayments go up. Yet, much wealth will still be in the hands of Baby-Boomers in their million dollar, low mortgage, properties. Both will loose out on the house balance sheets, but, as happened in Japan in 1980s, equity could be less deby. I think Japan now has intergenerational mortgages [need to check].

NB: I have worked on an ABA working committee reporting through Bob White to Bernie Fraser. I predicted the present world economy two years ago in a fairly heated exchange with the Chief Econonist, HSBC, Hong Kong. He disagreed. He didn't undrestand maturityn transformation; strange for a senior economist.

Then again, it was a Weath Seminar and the Chief Economist couldn't really agree in public with many millionaires in the audience with money to invets in the HSBC.

Gidday Oliver!

I'm sure Arjay will respond for himself, but understand the reaction as this is a relevant and sensitive topic, which is why I've raised it.

Regardless of who forsaw the economic situation or who is to blame, or what's a symptom and what's a problem, shouldn't we be actively exploring and developing solutions?

Isn't the government heavily, if not ultimately responsible for social and economic stability?

Doesn't it seem reasonable that if the government has a mortgage relief plan, that it should be at the top of their list right now?

if we can shift some of the margin away from the lender to these people to buy them relief, why shouldn't we?
How would you propose it be done?
When banks won't loan to other banks is the dilemma, money being lost in Australia by get rich quick individuals, I will not cry about. The least they must learn to read/understand contracts. The world is full of fraud.
fluff4

Thanks Fluff4,

There's not enough space here to explain the detail. Essentially essence the plan helps transfer part or all of ongoing commissions to borrowers.

Visit the proof of concept at www.matesratesmortgages.com.au.

Whilst there are a number of complexities associated with this model, they are resolvable. Mates Rates is in it's third year of full blown operation although concept trials started in 2002.

Challenges for increasing competition amongst this model include that most brokers can't access lenders directly. It takes huge lumps of money, expertise, technology and business volume to do this. This is why Plan Australia and Aussie John et al exist. (Aussie John built his $50m house with this exact margin - 40% to 60% of commissions, whilst screaming, "we'll save you" no less!)

The mortgage relief plan creates a co-operative middle layer allowing the benefits of commissions to flow to the borrower, without compromising the broker financially.

Another interesting point you raise is the loan contract. The plan includes a component for better consumer education and other protections.

Although it's inappropriate to call complex and costly clauses fraudulent, it is doubtless this complexity befuddles the borrower at a time when they are vulnerable and pressured. As Eastern Access Community Health stated, "the reliance on disclosure as a primary consumer policy has failed". Information is overwhelming. When you don't know what you don't know, it is difficult to spot the catch!

Consequently, borrowers go with what the advertising leads them to believe, which does not usually align with reality.

These are complex issues, however the mortgage relief plan that the Government has sat on since 2007 goes to reasonable lengths to explain and address the what, how and why of it all.

If it is too complex or not complex enough for them to act, you would expect they would at least do what you've done and asked 'how'.

The problem is, they are either not listening to the people, they do not care, or the people aren't loud enough. Hence the petition.

Please sign up and pass it on.

"Isn't the government heavily, if not ultimately responsible for social and economic stability?" - M.

I can remember a lecture by one Professor Michael Parent. After a chalkboard [182] of equations, the result was Government controls about one-third of the economy. Moreover, public servants were far, far [thank Mr Dickens] less efficient than than private sector workers.

In the eighties, before academia, I worked for on the funding side of the Bank and setting interest rates in concert with a few other people. Not mortgages. Folks in the street usually see their own mortgage and creit cards today's/this pay week's situation, the person setting the rates needs to consider maybe one hundred products, competition, PR and importantly maturity frofile of its term deposits: One needs to consider what might happen daily per day over four years. Much more complex.

If the Banks push lending rates now and have high deposit rates too, they will pay for it in two of three years' time when the reates fall and the high rates are still being oaid to depositors. Well billions now might become losses. Well its their own greed.