Could it Be True Not One Single Taxpayer Dollar Ended Up With the Banks?


Some mornings your editor sits at our desk not knowing what to write to you about – could you guess?

Other mornings our story cup is overflowing with, erm, story coffee…

Anyway, today is one of those “Other” mornings.

We’ve got so much to write we’re not sure whether to just fight one of them individually, or attack them all kung-fu style.

So, we might do a bit of both. First up we noticed a couple of funny things in the Commonwealth Bank’s results yesterday.

The most obvious was that Ralph Norris is clearly a graduate of the same university as ANZ Bank’s Mike Smith. They both hail from the Pinocchio University.

Because, like Smith, Norris was able to tell a whacking great tissue of lies yesterday by claiming:

“[Australian] Banks were well managed, with more conservative business models which discouraged high risk lending and widespread exposure to toxic subprime assets. The Australian government introduced guarantees to support the financial system, but it should be noted that not one dollar of taxpayer money has gone to our banks. In fact, the Australian taxpayer will benefit to the tune of $5.5 billion from the wholesale guarantee over its life.”

That’s funny, because we thought the government had handed out $21,000 to first homebuyers over the last year or so.

Could it really be true that not one single dollar of taxpayers’ money ended up with the banks? It doesn’t seem likely, not when you consider how reliant people are on using bank accounts these days.

You see, in order for the banks not to have received “one dollar” from taxpayers, that would involve the vendors to all property sales specifically choosing to not deposit $21,000 of the sales proceeds into their bank account.

All vendors since October 2008 who have sold homes to first homebuyers must be still holding the $21,000 in cash. Maybe they’re keeping it under the mattress, or they’ve dug a hole in the backyard to put it in.

I’m serious. For Norris’s statement to be true, then over $4 billion in bank notes must been hoarded by vendors, refusing to save, invest or spend it.

Because that’s the only way that Australia’s banks would have avoided receiving “one dollar” of taxpayer money.

And we know that just isn’t possible.

Of course most of the mainstream press just laps whatever a bank CEO says without question. Except for Eric Johnston at The Age who reported:

“Mr Norris is correct to point out that unlike the US or across Europe, no taxpayer dollars were spent bailing out an Australian bank… However, Australia’s majors had a substantial boost from the combined efforts of the government providing a blanket guarantee of the nation’s deposits, as well as a backstop funding program to ensure continued access to crucial wholesale funding markets – albeit for a fee.”

But we’ll stop short of tipping our cap to Johnston, because like most in the mainstream he can’t help himself with the claim that “Australian banks were run with substantially lower risk settings than some of their global counterparts.”

Yeah right!

If that’s the case, why the need for the guarantees and the first home buyers bribe? It just doesn’t add up.

Australia’s banks are so low risk, that apparently, according to The Age, “The State government-owned developer that has responsibility for providing affordable housing is selling house and land packages in East Keilor for close to $1 million.”

It’s true, you can see the properties for yourself here.

But what about this idea that the taxpayer will ‘profit’ from the bail outs due to the fee charged by the government to guarantee the bank’s debt?

Of course, that’s not true either.

The obvious point is that the banks just pass the higher funding costs through to the customer by either charging higher interest rates to borrowers or offering lower interest rates to savers.

The bank itself doesn’t pay for it. Ultimately it’s a fee borne by the public. And because credit and bank accounts are so ingrained into the daily lives of individuals, those individuals are unable to avoid those higher costs.

I mean, just say the government provided a guarantee to bakers of white bread which cost the bakers 10 cents per loaf. The bakery would try to pass this cost onto the consumer.

However, the consumer could easily avoid this impost by refusing to buy white bread and instead buy multigrain bread. This effect would mean that white bread bakers would be less inclined to pass on the increased cost for fear of losing customers to bakers who make multigrain.

Of course, even then it wouldn’t necessarily be good news for the consumer, as due to a higher demand for multigrain, those bakers could raise their prices in response to the higher demand until white and multigrain bread are a similar price.

The upshot is, that in whatever form it’s made, government interference in the market is always to the detriment of the individual.

The banking system is completely different. All the banks have used the government wholesale guarantee to some degree, therefore not one bank can advertise that it hasn’t and therefore claim it has lower fees.

Therefore the banks can uniformly raise their prices so that the consumer never gains the benefit of even a temporary drop in price.

In addition, it’s much harder to change banks than it is to change the type of bread you eat. So the banks know there is no chance of losing customers if they pass the costs through to customers.

Besides, what’s with the idea that the government is able to run a profitable enterprise? Taxpayers aren’t going to make money on the deal. Every dollar that goes to the government is a dollar that’s denied to the individual.

The fact is, Governments don’t make profits. They aggressively expropriate money – called taxation – from private citizens. And then they waste it by either spending it on themselves and the wasteful coercive sector, or they hand the cash out to their chums, such as Senator Conroy and his mate.

But take the farce of the Green Loans programme and the $850 million overspend on the solar scheme.

That’s proof that governments are incapable of managing money or running a profitable business. After all, if these dudes were any good at running a business they’d be out doing that rather than leading the life of a parasitic politician or public servant.

But the biggest point to come out of these ‘green’ schemes is that it gives you a preview to how an emissions trading scheme, or any other government sponsored carbon reduction scheme would work.

If the government claims the cost of its programme will be $40 billion, you can guarantee the real cost will be about ten times that amount. And we’re not exaggerating either.

The reasons are simple – the government has no profit motive, therefore it has no level at which it knows when to stop spending money. If it runs out of cash then it just takes more from the taxpayer.

Government obtains all of its money by force – through taxation. Therefore it does not have to justify its spending, and nor does it face competition from others who could provide the service for less – typically because the government prevents competition by law.

And don’t think the so-called cheaper option put forward by the Coalition will be any better. Both will involve an excessive cost burden on the taxpayer and the consumer, and neither plan will have any impact on global warming or cooling whatsoever.

As we’ve written before, the only solution to discovering whether there is Climate Change, and therefore whether to do anything about it, is to leave it to a free market.

You need look no further than the current disaster with green initiatives to see how your future tax dollars will be flushed down the toilet by the loony green lobby.


Kris Sayce

Kris Sayce

Publisher and Investment Director at Money Morning Australia

Kris is never one to pull punches when discussing market developments and economic events that can affect your wealth. He’ll take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money. Kris is also the editor of Tactical Wealth, and Microcap Trader — where he reveals the best opportunities he’s discovered in the markets. If you’d like to more about Kris’ financial world view and investing philosophy then join him on Google+. It’s where he shares investment insight, commentary and ideas that he can’t always fit into his regular Money Morning essays.

Kris Sayce is the Publisher and Investment Director of Australia’s biggest circulation daily financial email, Money Morning Australia.

Kris is a fully accredited advisor in shares, options, warrants and foreign-exchange investments.

Kris has close to twenty years’ experience in analysing stocks. He began his career in the biggest wasp’s nest in the financial world — the city of London — as a finance broker back in 1995.

It’s there where he got his ‘baptism of fire’ into the financial markets, specialising in small-cap stock analysis on London’s Alternative Investment Market. This covered everything from Kazakhstani gold miners to toy train companies.

After moving to Australia, Kris spent several years at a leading Australian wealth-management company. However he began to realise the finance and brokerage industry was more interested in lining its own pockets with fat fees, commissions and perks —rather than genuinely helping out the private investors they were supposed to be ‘working’ for.

So in 2005 Kris started writing for Port Phillip Publishing — a company which was more attuned to his investment outlook.

Initially he began writing for the Daily Reckoning Australia— but eventually, took over Money Morning. It’s now read by over 55,000 subscribers each day.

Kris will take anyone to task — banks, governments, big business — if he thinks they’re trying to pull a fast one with your money! Whether you agree with him or not, you’ll find his common-sense, thought-provoking arguments well worth a read.

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29 Responses to “Could it Be True Not One Single Taxpayer Dollar Ended Up With the Banks?”

  1. Nick

    EC… are not the Jews living by a several thousand year “quest” of the “promised land”? Why did the Jews try to “scuttle” one movie called “The Passion” as “offensive to Jews” while we are constantly bombarded with movies and documentaries of the “Holocaust” which has clearly become a trademark to keep the issue alive? Isn’t that grossly offensive to the Germans? My parents and extended family suffered horrifically under the Nazi regime but never condemned the German citizens for that. They are intelligent enough to understand that an evil regime FORCES its people to act and behave in particular ways. Don’t forget that many Germans, who were long time neighbours of Jews in Germany, set out to hide and shelter their Jewish neighbours at great risk to their own lives. The reason my parents came to Australia was due to a similar act my father did for an escaped Aussie POW in Greece. Has this “experience” made the Jews more compassionate to their neighbours? Why was the movie “Schindlers List” the only movie that received an academy award by Spielberg? He created many box office hits but the award was given to a flop. When the historian Irvine wanted to come to Australia to debate his “theories” it was the Jews influence that forbade him attaining an entry visa? Yet degenerate rock “stars” are allowed in freely. It would have been more sensible to let Irvine come and debate his “theory” and if he was wrong, then he would look like a fool. Just like the climate debate today. Rudd & co wanted NO debate but Monckton was successful in putting his debate across and the rest is history. It is a human instinct to assume that when one side of a point of view is not allowed to be debated then it automatically shows an onlooker that there is something to hide. Once again, see climate debate.
    I too know many Jews. A fraction of them are appalled by what Israel is doing to Palestine and are shunned by others in their community. These are the free thinkers and people whom I have the greatest respect for. The others are more “hard lined” and arrogant. No different to the Jihad extremists. I also have Muslim friends and acquaintances. All are decent family people and are very active in trying to make their community learn to live together with other Australians. If you are a Jew or seek to defend the Jewish cause, then I suggest that you follow these peoples example and try to convince those in leadership to learn to live together with their neighbours instead of aggravating through aggression.
    I grew up as a child of a migrant family. I know what it is like to be persecuted, however, rather than “hate” all Aussies I was taught to earn respect by accomplishing and contributing. I entered the events my school friends did, swimming, surfing nippers, basketball, rugby, water polo. I achieved many trophies for all these sports. By late high school I was elected prefect then school captain. Yes, there were still the ones who “hated” wogs but they were quickly swamped by the majority who put the thugs in their place and hence I have never looked back since. This should be the same for all cultures. Wrong is wrong whichever way you look at it. Those of sane mine should strive to better this world not lead it down a path that we, and the generations that follow us, will regret.

  2. EC

    Nick, thanks for your reply. I agree that it is legitimate to criticize Israel, just as it is legitimate to criticize America, Iran, Australia or any other country. But we should never prejudge any one member of a group based on the actions of other members of the group.

    I don’t think this is what you do, but unfortunately it is implied in statements like ‘the Jews’ try to scuttle the Passion – it was not ‘the Jews’, it was ‘some Jews’.

    Can you imagine how it would feel, as a Jewish person living an ordinary life with an ordinary job of no great importance, trying to raise a family like any other person, to read a statement like ‘the Jews control America’? Can you imagine? To imagine that someone out there, in fact, lots of people, who you’ve never met, but who resent you or hate you. It would be terrifying.

  3. cb

    Another bent scientist in the hot seat. This time, it is chief warmmonger “hockey stick” Prof. Michael Mann. Mann has been the butt of jokes for a long time for his fraud, but this time it starts looking as if he might be called to answer. Too right, too.

  4. Nick

    EC… I am with you all the way. I have lived that way. Truly I know. Take a look at Greece today, they are not representative of all who left that country and toiled to better the next generations. What I am saying is that YOU prove the critics wrong as I have. Lead by example. I can hold my head up high today. I take pride in my heritage and use my parent’s lessons to teach my kids how to live a full and productive life. I jokingly remind my kids that it was a Greek that brought Madoff down!!
    I have said before that religion is a personal journey for each of us. My view is whomever you call God is not the point. The fact that one believes that there is a greater being takes the focus off one’s self and more towards the common good. Unfortunately, society, hence our politicians, have lost this. Sadly, there are no “statesmen” any more. The populace is more powerful than you think and if we could all follow logic rather than what the various propaganda machines dictate, then the animosity between the ordinary folk, will be vastly reduced.
    Evil will ALWAYS exist. It is as certain as there is day and night. You have heard it many times that ”evil men succeed, only when good men do nothing”. The issue is which one would you support.

  5. cb

    EC – I am very much in sympathy for the disempowered, the run of the mill average guy who is the brick and mortar of any nation. And that includes everyone, regardless of citizenship, creed, or race, and I fully endorse everything that Nick has said on the topic.

    What is most likely to be behind simplistic claims like the one you take objection to, are such evidence, many of them plain to see and well documented, as that of the US consistently defeating any censoring motion put forward in the UN that seek to condemn the countless and ongoing gross human rights violations of the Palestinians in their own, ancestral homelands, and worse.

    So, while it is understandable that many ordinary Jews would find “Jews control America” to be an offensive claim, there can be little doubt that the political influence of the Jewish lobby in the US and many other countries, enables the ongoing obscenities to be perpetrated on the men, women and children of a Palestinian background by the Israeli state and Zionist fanatics. Those who do not believe that Jewish interests control large sections of the media, Wall Street and Washington, as well as the politics and governments of many other countries, have their heads firmly planted in the sand.

    As Nick said, injustice is injustice, and wrong is wrong, and the fanaticism with which Israelis oppress their Palestinian sisters and brothers (don’t be offended, Palestinians are our fellow human beings, plus think of Jakob and Esau of the Old Testament – I think I got those two sons of Isaac right) is no different from the fanaticism they themselves endured from the Nazis.

    The bottom line is that right minded people will condemn outrages and attrocities, so this is what you are getting in the criticism, which, as often happens to be the case, is frequently framed in awkward and less than happy terms.

    And, finally, until MSM and various governments of the world stop giving free passes to Israel over injustices and wrongs that offend a decent man, they will never shake the accusations and suspicion that they are pandering to, and are being influenced by, if not outright controlled by, powerful, if narrow, Jewish interests.

    But hey, none of this criticism is going to make much of a difference to the thinking of those in the grip of Zionist fanaticism, so what will be will be. You cannot fool all of the people all of the time, and you cannot control all of the people all of the time either, and therefore my longer term expectation would be along the lines of the Old Testament’s As you sow, so shall you reap.” It is somewhat bemusing to see when the majority of a people ignores its own pearls of wisdom.

  6. Dave Kidd

    EC reckons I’m missing the point.

    What he doesn’t know is that I have followed numerous similar discussions in other places dealing with discreditable behaviour by the jews. I have not attempted to clutter this forum by mentioning all of it here, nor even to exhaustively prove the few points I have touched on. That does not mean these points can not be proven, just that this is probably not the place to do it. They have already been substantiated in other places, anyway.

    One thing I’ve learned from the discussions in other places is that jews and their supporters will present unending argument ad-infinitum in defense of their beliefs and behaviour. To be honest I’m not interested in going through it all again but I do urge readers to do their own investigation into the influence of the jews on the world. There are still numerous sources of information available both on the Internet and elsewhere, despite vigorous efforts of jews and their supporters to marginalize and discredit them.

  7. EC

    Nick and cb. I think we are basically in agreement, and I have to say I am reassured by your latest contributions. I look forward to contributing to more savoury topics in the future.

  8. Nick

    EC…you see, when logical people discuss things only logic prevails.

  9. EC

    Long live logic!

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Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
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