11% recovery on the DJ overnight.

the sky did not fall in, after all.

maybe I will ask Passy about his view of it on the other thread (on the other hand, maybe I won't)

Col,

Let us all hope the rebound is sustainable. On the other hand, have you read Moby Dick, towards the end? The whale dives and re-surfaces with Ahab entangled in harpon cabling, dead; yet, Ahab's arm beckons, before the whale sinks again.

It is good the dollar is recovering. In the Great Depression, Importors parked their money in term deposits waiting for the exchange rates to change upwards (we were pegged to Sterling then), but people were not borrowing. The Banks' cash ratio became too high, so as rates fell the burden of maturity transformation grew greater.

O.

Col,

Moby Dick has resurfaced.

At the moment, there is an argument in keeping the USD high.

Else, when importers have money, but the exchange rate is low, their funds become parked as term deposits in the Banks, during times of austerity. This blows-out the deposit side of of cash ratios, and, coupled with a deliterious maturity transform siution, should interest rates fall; profitability suffers. Better placed banks swallow smaller ones.

In the 1930s, the Commonwealth Bank (then the Central, as well as a Trading Bank) purchased huge holdings of Pound Sterling to protect Mother England. Afterwards, it held distorted currency reserves, which, low and behold, it found, it didn't want. So much of tampering with system

In the life of the thread we have gone from bailing out American banks to keeping the world economic system boats afloat.
With luck we will fail.
The system is so flawed we just have to consider rebuilding it.
Toxic loans and such dramatic terms do not address the real problem.
Country's, banks, people have borrowed far too much, yes in time some can pay it back, many can not.
The idea we will soon get back in the black is wrong, for most investors 10% per annual is just a memory.
We may see our super funds in the red for years to come, remember like homes those who bought in at the top of the market will never see much of that money return.
As we tighten our belts ,stop spending, the problem gets worse.
How bad will it get?
Capitalism that can not afford so much for the very poor spending trillions to prop up failed businesses?
Fact is we have seats in that boat, not the first class ones not the dividend paying ones but we have no choice but to pay the bills.

Belly,

Also, don't assume that Banks will report accurately to RBA. In the early '90s, a little of Westpac was for the "big" accounts with large debts was open an additional account for the default, declare the interest only, and not declare the principal.

O.

Oliver what you say is true, not just of that bank.
Yet our banks are so very much better than some.
You I and even Graham could have never thought this could get so bad just in the life of this thread.
America?? I just do not agree with the way they are thinking of fighting this crisis.
But very happy with the words coming out of the EU and France.
We may think we know the future we do not.
But you can bet your last dollar this is the end of the free market or it is the end of capitalism.
While credit as it always has been will remain the power house behind our economy it must not be wild uncontrolled credit.
Speculators have gambled with money they never had we all pay for it.
Three years down the track we may still not know our future.