When Rudd and his cabinet bailed out the Australian banks they were within a day or so of collapse.

The whole world situation is problematic because the various Basle Agreements have been used, since they replaced the Bretton Woods Agreement, to push back the day of reckoning which has loomed, for some day in the future, since the early seventies when the USA became a debtor nation.

The Australian Banks were in trouble because they borrowed $US short term to fund long term mortgages in $A. American dollars can only be spent buying imports from people willing to accept those dollars in exchange or they can be spent buying foreign assets. Australian banks can always be saved by the sovereign currency of the Australian Government provided they are not too far in debt to foreign lenders.

Barnaby Joyce does not realize that the real alternative to government borrowings are higher taxes on those who can most afford such taxes, that is, those who cannot spend their surplus income without causing asset inflation.

The world needs a means to settle payments for trade in real goods and services that does not consist of only American dollars. Such a system would choke off speculation in the huge pile of $US slopping around the world funding derivatives and swaps. As early as 1972-3 Neil McInnes in the Fin Review wrote a series titled "What do we do with all these worthless American Dollars."

In 1998, I pointed out to John Howard's government that the then "let it rip" policy would result in an asset value bubble which must eventually burst. On 5 June 1998 I wrote,
"A major concern is that everywhere genuine productive activities are being undermined by the rise, in power terms, of basically parasitic financial institutions and the dead load that these institutions and unnecessary service industries impose".

In January, 2007 I sent a long letter to the SMH stating that unless present policies changed we were heading for a cliff.

The world is still too near the edge.

Europe and the USA is on the verge of collapse.This casino derivative economy is integrated and Perciles writes it all to conspiracy theory?

Ostrich economics Pericles is not good policy.World wide the dervivatives are 20 times the GDP of the planet.It is monopoly money backed by nothing that is integrated into our productive economy.Why do you not support a Glass Steagall Act pericles?

Instead of bailing out our banks we should just nationalise them and get the RBA to be the creator of whole sale money instead of the Private Central Banks.

OUG need to talk to you.
In a thread not dissimilar than this you diverted the subject.
Full of wrong information, mistaken ideas you killed it.
And with the same total lack of understanding, propped up with the idea only you understand, you are still at it.
Here are my thoughts.
Can you start a thread about conspiracy theory's?
I will come, armed with some of the funniest ones.
Mate its a fact, threads die when it is no longer possible to remember what they are about.
And when we are asked to adopt ideas our every instinct says are silly.

Are you refusing to listen, Arjay, or simply refusing to hear?

>>Ostrich economics Pericles is not good policy.World wide the dervivatives are 20 times the GDP of the planet<<

If you have derivatives valued at $100 trillion, the actual exposure to the economy is the net figure, after you have subtracted the calls from the puts. So if you have $50 trillion in each category, the economy is not disturbed by one single dollar.

What is it about this simple fact that you dislike so much, that you ignore it in every one of your "we're all rooned" posts? The equivalent in company terms would be to add up the credit and debit sides of the balance sheet, and declare that as a single, entirely meaningless number. The net worth of a company is basically comprised of its assets minus its liabilities, in the same way that your net worth is calculated as your assets - house, car, bank balance etc. - minus your borrowings.

Only when your liabilities exceed your assets should you feel uncomfortable - you are in "negative equity" territory. Even then, your bank might look at your future ability to repay them, e.g. from your salary, business profits or whatever, and lend you some more to keep you going.

>>Instead of bailing out our banks we should just nationalise them<<

One question: given that you would have us believe that they are drowning in worthless derivatives, how much would you pay the current shareholders? Hint: quite a lot of those shareholders keep bank shares in their clients' superannuation portfolio. And a second question: what would you do with all those derivatives that (presumably) the government will acquire when it buys the bank?

>>Why do you not support a Glass Steagall Act pericles?<<

Pretty much the same reason that Senator Carter Glass gave when he tried to later repeal his own Act.

Instead of being a solution, it quickly became part of the problem.

I suppose it must be true, Arjay, "If our banks collapse,there is no way they can be bailed out."

But this is based solely on things you've told us previously… If the only money printing entities (the banks) can't be bothered lifting a finger on their computers to print money with a few more zeros – then they deserve to collapse – or they could just hire a temp who knows how to push the zero button repeatedly six or nine times. And obviously governments (who can't print money) won't be able to bail them out.

You're right not to regard it as a simple conspiracy theory – more of the fantasy variety.

Speaking of fantasies, surely you're aware that it is not true that ostriches stick their heads in the sand?

But it is true that their kick is strong enough to kill a lion.

I'm also annoyed to hear that "We are absolutely stuffed!" when I have no recollection of enjoying being shafted.

Pericles & WMtrevor,have a close look at what Foyle has written.This is not being alarmist.They cannot go on just printing digital money.Eventually it must collapse.

What is wrong with separating the casino economy from the real one? You never risk all your income when gambling.How are banks the exception?