Well, that’s it, the taxpayer subsidised wholesale banking guarantee is set to end on March 31st.
According to Australian Bankers Association (ABA) chief executive David Bell, “The decision comes as no surprise and reflects the relative strength of the banking sector.”
Really? Aw, you know what we think about that don’t you? Do we really need to go over the details again?
Just a little bit then. Seeing as you asked nicely…
The fact is, under a fractional reserve banking system no bank is strong or safe. They’re each as rotten and feeble as the other.
So, was the decision really “no surprise” as Mr. Bell claims?
Of course not, but it’s only natural he’d put on the ‘we don’t care’ image for the press. The banks care so little about the wholesale guarantee that in 2009, according to yesterday’s Australian Financial Review (AFR):
“The government said the big banks had raised about $160 billion using the guarantee and that non-majors had raised $32 billion.”
The guarantee that no-one needed has been used to the fullest extent possible. In fact, if you look at the chart printed on page eight of yesterday’s AFR you’ll see that Australia’s ’strong’ banks raised more through bond issues last year than in the previous three year’s combined.
Most of it underwritten by you and other taxpayers.
Meanwhile, taxpayers are underwriting a soiree organised by the Bank of International Settlements (BIS), the so-called central banks’ central bank.
The mainstream press are labelling it as a ’secretive’ meeting of the world’s central bankers. So ’secretive’ is the meeting that it’s been splashed across the pages of News Ltd and Fairfax websites for the last three days.
And so ’secretive’ is it that The Age has even been able to get the scoop on who the attendees and guests are, what the attendees were drinking and what kind of music they listened to.
But never mind, it’s nice to know how your tax dollars are being spent.
We do like the timing though. It’s funny how Treasurer Wayne Swan made the announcement this weekend to withdraw the government guarantee. Not last weekend before the mob arrived. And not next weekend after the mob has gone.
Nope, it had to be this weekend. It’s a perfect example of how ego-mania plays a more important role in the life of a politician rather than concern about what governments are doing with taxpayer money.
But, there’s a simple reason why the Treasurer chose this weekend. And it’s got nothing to do with Australia’s banks being stronger today than they were a week ago. It’s… what’s the phrase?
That’s right, it’s called ’showing-off.’
“Look at me, look at me!” Treasurer Swan is effectively saying, “Look at what I can do!”
It’s nothing more than the political equivalent of a six-year old trying to show-off in front of his mates. Treasurer Swan chose last weekend to announce the end of the guarantee because he was hoping to get in some back slapping from his new central banking pals.
Looking ahead, the interesting story will be how many of the banks gorge themselves on the guarantee over the next couple of months before it’s withdrawn.
And already it looks as though the pinstripes at Macquarie [ASX: MQG] have been spooked. From today’s Sydney Morning Herald (SMH):
“Macquarie Group is expected to return to credit markets before the expiry next month of the government funding guarantee, in an attempt to roll over more than $2 billion worth of funds that are due to expire this year.”
Ouch! Of course in its presentation to analysts and investors this morning Macquarie claims:
“Removal of Government guarantee was anticipated and is not expected to impact funding position”
We’ve got a feeling that was written through gritted teeth as the banking whizz kids quickly figure out how the heck they’re going to raise more debt without paying higher interest rates.
But we’re sure the bright sparks there will figure something out. Not that investors are too impressed so far. As we write, Macquarie Group shares are down over 6% this morning.
Our message is, if you’ve short sold the banks, hang in there and keep shorting them. But just make sure you’re using stop or guaranteed stop orders through a CFD provider such as City Index.
That way you won’t face potentially unlimited losses if the banks receive more taxpayer funded support to get them out of their dark deep hole.
Anyway, if you look at the chart below of the four major banks plus Macquarie you can see there’s still plenty of downside potential:
As you may know, we’ve refused to tip any of the banking stocks in Australian Wealth Gameplan even though they may have good dividend yields.
Our simple position is, that when we know something is rotten and technically insolvent – due to fractional reserve banking – we’d prefer to keep clear. To us it’s akin to walking across a rope bridge that’s fraying at the ends.
Sure, we may get across safely, but quite frankly I’d rather not take the risk when we can cross the iron bridge further up the stream.
But what are the consequences of the end to the banking guarantee. Clearly it could lead to the banks increasing interest rates independent of any action by the Reserve Bank of Australia (RBA).
And that will naturally cause big problems for our property spruiking friends.
Speaking of which, it’s clear we’ve hit a raw nerve. We cruised on over to the Business Spectator website yesterday to see what the doyen of property spruiking, Christopher Joye has been writing about.
Not surprisingly it’s the same old stuff. Cutting and pasting millions of charts from his heroes at the RBA, all of it of course pointing to a wonderful time for the economy and a perfect time to buy a house.
However, and here’s where we think we’ve struck a raw nerve. In fact, we even think early stages of paranoia may have set in. So concerned are we, that we’re tempted to put in a call to the Sydney Mental Asylum to see if they can send the ‘men in white coats’ round to Rismark’s offices.
Because as we were casually looking through a couple of the articles and some of the articles posted, we noticed these quite extraordinary comments by Christopher Joye:
It seems that Joye is convinced your editor is posting comments on the Business Spectator website under the assumed name of “Tom Kimop.” If you’re a regular reader of Money Morning you’d clearly know that’s not our style.
When we have something to say, we blurt it out there for everyone to see. And what’s more you’re free to go to the Money Morning website and comment without fear of censorship – unlike some other mainstream websites.
Anyway, we could excuse one comment from Mr. Joye as an aberration perhaps, but four hours and twenty minutes later it seems it’s still eating him up inside:
Considering Mr. Joye had this to say about us on 8th January:
“One striking example is the occasional scribblings of the sharemarket and CFD promoter Kris Sayce…”
It makes you wonder why the “scribblings” of your editor warrant such fear by a Cambridge University educated and BRW award winning company executive.
It certainly is bizarre. The only conclusion we can come to is that over the past year or so, your editor has revealed the truth behind the stinking corpse that is property spruiking.
For years these clowns have gone unchecked in their claims about property prices doubling every 7-10 years and about the so-called chronic housing shortage. For years they’ve mesmerised the mainstream press with one made-up index after another.
And even the latest index produced by Rismark has faltered at the first sign of questioning. According to Joye, in his 29th January blog, he claims:
“As Australian home values rose robustly in 2009, Rismark’s National Dwelling Price-to-Income Index has risen from its low of 3.7x in December 2008 to 4.1x as at the end of the third quarter of 2009… Over the last six years, Rismark’s National Dwelling Price-to-Income Index has remained broadly static after solid growth during the early 2000s… In December 2003 Australian dwelling prices were 4.2x disposable incomes, which is effectively where they remain today.”
Only they don’t. Because even by Joye’s own admission in a subsequent post:
“If you applied this circa $10k difference to the current NA [National Accounts] numbers you would get a ratio of 4.6x as opposed to 4.1x.”
In other words, housing unaffordability is 12% greater than Rismark claimed in the Rismark National Dwelling Price-to-Income Index.
But look, 4.1x or 4.6x, it doesn’t matter which they use, because we all know the more accurate figure is house prices to be somewhere north of six times disposable income.
Anyway, we see the humorous side of Joye’s comments. Not that what he’s written is funny, it’s just that it’s humorous to see the scale of the paranoia among the property spruikers.
They’re still spinning the same old stuff. And trying to back up their half-baked arguments with nothing more than statistics from banks, central banks and other vested interests in the property sector.
Based on the response of Joye it looks as though we’ve pushed the spruikers right to the edge. Is it time to stop? Or is it time to give another big heave and tip the whole property spruiking lies and misinformation over the cliff for good?
Definitely the latter.
Cheers.
Kris.
{ 34 comments… read them below or add one }
Good work Kris, Nice to know there are people keeping an eye on these guys and exposing the lies & fake numbers they put out there to make a buck. Got to say the Joye comments were hilarious, keep giving him stick, he deserves it.
Kris – Iron bridges further up the river? – Like, Australian small caps recommendations, perhaps? There are some questins here that your subscribers should know the answers to, I suspect: What is likely to happen to their holdings when they all head for the same exit in a stampede? And will you be frontrunning them?
Don’t let go Kris. These property spruikers $#IT me to tears.
from wat i’ve read in herald-sun newspaper over $ one million dollars $,$$$,$$$ coverage expires march 2010
under one million $$$,$$$ deposits are safe till october 2011
is that correct? anyone confirm?
Ah, this is a good one. Lord Monckton on Greenpeace, Big Oil, Carbon Trading, Politics,the IPCC, and its chief crook going to jail.
http://aprilbaby.typepad.com/a_california_life/2010/02/about-that-corruption-of-science-someones-going-to-jail.html
In light of the way political power has corrupted and has been destroying the very good name of science with its climate scare campaign, this must be the joke of the month, surely:
“THE Rudd government has outlined its grand plan to create a scientifically-engaged Australia.
It wants to get Australians thinking more about science and will establish, for the first time, a national framework aimed at “catapulting science into classrooms, boardrooms and lounge rooms”.”
http://www.theaustralian.com.au/news/breaking-news/grand-plans-for-a-scientific-australia/story-fn3dxiwe-1225828035687
I would have thought that the further Rudd stayed from anything to do with science, the better the chances of salvaging something of the reputation of the discipline. But, given this development, you have to wonder whether this might not be Rudd’s Plan B, for wholesale brainwashing of the population, young and old, of the merits of his climate agenda.
Or is this his lame attempt at covering his tracks about the way he has corrupted the CSIRO and University academics in science with the millions and billions he has been dishing out to them to get them on his climate change gravy train? Is his trying to create an image of being a friend, rather than a corruptor of science? Whatever it is, my hunch is that he will fail, yet again.
I suspect that this fraud will stick to him for a very long time, and will probably be remembered as the dirty little rat who was chiefly responsible for corrupting and undermining the credibility of a discipline whose reputation should be above reproach.
Liar, Liar, another warmist’s pants are on fire. This time it is the UK’s Chief Scientist, or something like that.
http://www.youtube.com/watch?v=Dzb8FljvGGI&feature=player_embedded#
For those interested, this series is a talk on the Non-IPCC Report on Climate Change.
http://www.youtube.com/view_play_list?p=CCD06BE4C566F77C&annotation_id=annotation_770862&feature=iv
Well, I have just finished watching that talk. It is a very lucid presentation of the science, as well as gives a credible explanation about how the IPCC and its corrupted scientists have been cooking the books and misleading the public. It is also humorous in a good natured way, and full of information you can believe. The speaker makes the point that some 31,000 scientists have signed a petition, testifying that they disagree with the IPCC’s conclusions about man made global warming.
So much for the consensus in science Kevin Rudd is still appealing to with his 4,000 scientists in white coats who, according to him, are only interested in measuring things. Cooking the books, more like it.
Kris, I read many financial/economic blogs and I’d say that yours is the most honest and refreshing one out there. I appreciate that you have “the plums” to say it how it is – unlike so many of the sycophantic commentators out there.
Thanks for keeping it real and keep up the good work.
Ah, cynical me, I think I have found the origins to Kevin Rudd’s latest mad plan to inundate us with his “science education.” We know that Rudd has recently committed a cool 1 million to Crook in Chief Pachauri. What do we get in return? But why? Valuable advice, no? See it for yourself:
http://www.youtube.com/watch?v=HesdOJdLN-k&feature=player_embedded#
Unbelievable. Climate science education for your children.
Courtesy of Kevin Rudd and Penny Wong. Who, now, is raving mad?
cb – from wat i observe its just another way to dupe the people of another way to conjure up another tax if you ask me
to pay off the deficeits
2 drops of essence of terror, 3 drops of sinister sauce…….. mega-egomaniac!!! As far a KRudd is concerned the deficit is just numbers on paper and carbon taxes just more numbers on paper.
Hmmm – an article on Reserve Banking that delivered little detail, just empty rhetoric.
No wonder cb moved onto the climate change topic.
Alright then – cb – what is your take on Abbots proposal?
hahaaaa, PF – don’t encourage me – Talk about a red rag to a bull
But since you asked, chuckle cluckle, my short answer would have to be: NOT MUCH.
He clearly does not belive in the alarmism, but for reasons best known to himself, he chose not to challenge the bandwagon, so he is proposing to apply his own remedy to a non-problem. But, thankfully, neither his remedy, nor Rudd’s, is going to make one iota of difference to the climate, or to atmospheric CO2 levels for that matter.
What is being lost in all this hype is the counter-question of what would happen to food production and yields in the event that the world really went mad and managed to reduce CO2 levels drastically. Going by some of the material I have seen lately, there are reasons to believe that food production would suffer, or even collapse, leaving millions more to starvation even in areas of the globe where food shortages are not a problem. This is because atmospheric CO2 is an essential plant food, it is like a critically important fertiliser, and the less you have of it available in the air, the tougher you make it for plants, and aspecially for agricultural plants that are not as tough as, say, are weeds.
I encourage anyone even remotely interested in the science on this to watch that talk by Professor Fred Singer. Forget about Lord Monckton and the distractions surrounding him. Singer’s talk is a clean, measured, no nonsense and no hype presentation of the science. If I had to choose just one presentation to recommend on the subject, this would be it. This is all you need to get through the clutter, the controversies, the confusion, and right on top of it. Here is the link again. Enjoy.
http://www.youtube.com/watch?v=HesdOJdLN-k&feature=player_embedded#
I can’t believe it. I have given you that crook Pachauri’s link.
Here it is:
http://www.youtube.com/view_play_list?p=CCD06BE4C566F77C&annotation_id=annotation_770862&feature=iv
But since I made that little slip, what do you good folks think about a Rudd program in climate science curriculum for our children to shame us, the lazy, ignorant and complacent world of adults, into passing his ETS? That is a very brief video clip, and I am sure that many of you would have an opinion. After all, the Pachauri plan has found now a clear outlet in the latest government announcement of a comprehensive, national education program for us all in science.
Again, the relevant links for this science education question are at
cb @ 8, and then cb @ 4, in that order.
Andrew Bolt over at the Herald Sun has also been covering all the great stuff cb has been posting.
And if you happen to be in business and wanted to disrupt your competition, here is a tip:
http://www.youtube.com/watch?v=AOQS626mV5U&feature=player_embedded
On the subject of deflation, as examplified by Japan, the latest edition of the Keiser Report gives some sobering analysis:
http://maxkeiser.com/
But then this raises the question debated earlier with Jon about what a deflationary period is likely to mean for the gold price. The question, essentially, comes down to whether one should sit in cash, or real money, such as gold and silver, in the face of a prolonged deflationary period. Well, if Japan’s 20 year deflationary period is to be our guide, we must look at what the gold price has done over the past ten years or so against the yen, since the start of the great golden bull run. This article, I suggest, is a must read. It deals with more than just the gold price, as its discussion proceeds in the context of what it calls Australia’s Monetary Inflation Delusion. It is a gem. Enjoy.
http://www.globalspeculator.com.au/documents/GoldandAustraliasMonetaryInflationDelusion_000.pdf
I haven’t seen this before on Lateline Business. It is a bit dated, but still on topic, and still relevant for those interested in the metals.
http://www.abc.net.au/lateline/business/items/200907/s2628308.htm
CB @ 4 –
well said!
I wonder how long it will be before the MSM reveals him as the fraud that he is?
lol – i wont hold my breath! They’re “in” on the scam as much as he is…
Well, I have just watched Penny Wong and Greg Hunt debate the merits of their respective solutions to a non-problem. It was on the ABC just after the Midday Report, and was held at the National Pressclub. I thought that Wong’s case was rather shakey, but then again my perception are likely be labouring under a heavy cloud of bias, so you should judge it for yourself, if you have the time and are interested in their debate. It should become available online at some point.
Sandra, I sadly must agree. However, there is still hoping that the more genuine and vigorous debate in the UK might just save the day by exposing the fraud and make the majority populace here Downunder realise that our emperror really does not have clothes.
Sandra, what did you think of the Pachauri interview, his suggestion that by educating children on climate change, they will shame us, the adults, into action? Ah, sorry, you might just be catching up on the thread?
CB @ 24 -
I think that Emperor Kevin underestimates the intelligence of Australians in general. This whole climatechange scam that he’s using as the driving force for his great big new tax on everything ETS will still bit him in the butt!
While it’s true that it may take the Australian public longer to “catch on” to the BS surrounding this scam (than say the public in Europe and the UK), it’s only because the media blackout here on the truth (as revealed in many of your links eg showing Lord Monckton and Professor Fred Singer) is so much more thorough…
Not sure if it’s because our media is so left wing, but they certainly seem to do their damest to shut out anything which detracts from the hogwash the Labor party is spouting.
Does Kevin REALLY think that Australians wont find out for themselves – through the wider media (eg internet, overseas media, etc) – that the effect of CO2 emissions on the so-called greenhouse effect have been grossly exagerated by the warmist camp? That in fact the more CO2 there is in the atmosphere the better it is for plant life? i.e. the benefits of more CO2 in the air GREATLY outweighs the downside (minute temperature rise)?
If people really want to worry about “manmade” emissions causing any form of warming then it’s definately NOT CO2 they should be worried about. Gases such as methane have a MUCH higher effect on warming (greenhouse effect). The truth is out… CO2 DOES NOT cause global warming!
What it DOES DO is massively increase the fertility of plant life.
I guess this explains why the most renowned “predictions” of the warmists (used by Rudd, Wong, Turnbull and a host of other political simpletins) such as Antarctica melting, glaciers in Himalaya melting, etc have already been disproven. In fact I was amazed to find out (about a year or two ago) that the ice shelves on Antarctica are actually icing up (growing) at a rate FAR GREATER than what the arctic ice caps are supposedly melting… The net effect is that the amount of ice is INCREASING – not decreasing as the warmists contend. Furthermore, this would explain why sea levels are NOT rising, as being spouted by leaders of islands here in the South East Pacific at the Copenhagen conference, as a way to try and make Australia and other first world countries hand over massive sums of cash as so-called restitution for being naughty and pumping so much CO2 into the atmosphere over the past couple of hundered years ….
Another thing i found amusing a couple of months ago was when Australia’s very own “lead scientist” tried to decieve people when asked why atmospheric temperature readings taken over the last two decades or so actually show that temperatures are dropping on average … to which she answered that the increased heat energy is stored not in the atmosphere but in the oceans… her explanation may have sounded credible to Joe Public, but unfortunately she was lying YET AGAIN! Teh truth is that OCEAN TEMPERATURES have also been DECREASING … not increasing.
lol – shame – there is nowhere to hide for the warmists. The truth will be know by the masses soon enough!
CB – thanks for all the great links – i will definately catch up this evening … have lots to watch! ;p
I just wanted to add that our very own “lead scientist” or whatever her title is gave this misleading explanation on so-called global warming just before the climategate scandal broke … so i assume she was still under the impression at the time that their comfy little “global warming gravy train” scam could go on forever and nobody would know.
Amusingly enough, she has moderated her stance somewhat since then.
She recently said she “fully supports and agrees with the UK’s lead scientist” – who had come out against the scam tactics used by the IPCC and their little club of 4000 scientists partaking in the scam…
saying that climate science needed to be open to peer review once again etc etc to prevent such data fraud from occuring ever again.
Not sure where Kevin gets the nerve from to perpetuate his ETS scam!? Oh yes – i know …. he’s relying on our MSM which has the same effect as keeping us in the dark ages as far as the true science surrounding climate change is concerned…
byt hey – isn’t this the same MSM who is merrily broadcasting the perpetual nonsense from the property spruiking camp??
indeed! i guess they have no interest in fair dinkum reporting at all … only in reporting whatever benefits their own interests and/or those special interest groups who are paying them.
Wow, Sandra. Give them plenty, lol.
CB @ 11:
Chief Pachauri looks a bit like a goat!
lol, Sandra, he certainly has some kiddish ideas for our kids.
topic head line
“”"Under a Fractional Reserve Banking System, Banks Aren’t Safe”"”
reminds of that movie with dustin hoffman ,MARATHON MAN
“is it safe???????????”"
“IS IT SAFFFFFFFFFFFFFFFFEEEEEEEEE!!!!!!!!??????????????”"”"”"”"
http://www.youtube.com/watch?v=FHbBWC7w_Gk&feature=PlayList&p=6B80EB2A0C6B082D&playnext=1&playnext_from=PL&index=12
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