The planned mini-bailout of the monolines seems to have failed, possibly because the real sums needed were beyond the bailees who were/are desparately seeking bailouts themselves... this is just something to replace that in the "talking heads" spin arsenal... but really it is only delaying tactics.. putting off the day of reckoning... but hey... if one was ahead of the game it gave an opportunity to get set.. I hope..
now... what comes next??? any takers???
Cheers
........Kauri
I agree all initiatives will not work, but impotantly it is only human nature to delay impending disaster where one can to buy time to find relief or remedies. It can only give people, particularly those most affected time to more rationally (less panic) assess their situation and make better decisions about their future.
Originally Posted by Whiskers
Back on topic; sure it doesent resolve the intrinsic problems in the US, but initiatives like this and more interest rate cuts ( geez I can feel dhukka climbing all over me already ) will effectively deminish any severe knock-on consequences for the rest of the world and Aus in particular.
Whiskers,
I have no objection to people making statements like these if they can support them. However you supply absolutely no evidence for such a claim. You may well be right, but without any support it just sounds like wishful thinking.
The operative word being severity, I would have thought that avoiding a rushed panic sell off of financial markets with monetry policy, intervention and or regulation to give businesses a chance to restructure and home owners better opportunities to refinance or a chance to make-up their late payments would be obvious evidence of deminishing the severity of knock-on effects.
It was the banks and other financial organisations who were essentially the cause of this problem with their poor economic judgement. I happen to believe that the banks always anticipated a high number of foreclosures as seen in the almost non-existant options borrowers had once a default occurred. Banks expected to recover their mortgage and then some with extreme penalties and fees.
With banks ramping up interest rates slugging customers to recover losses for their own bad financial management, as their borrowing costs were being substantially cut was always going to be seen as unconscionable and get up the ire of people and flow onto consequences for politicans if they didn't rein in the greedy banks.
An example of market failure that I mentioned earlier in the gold thread, where government intervention is necessairy to support average consumers from excessive profit gouging by these institutions abusing the recognised custom of Reserve Bank interest cuts.
The knock-on effect from banks increasing rates and forcing millions into immediate homelessnes and hardship is far less severe than the banks wearing the responsibility for their own greed and/or mismanagement.
Buffet foreshadowed what could/would happen. His offer while dismissed by many similar thinking commentators as the banks, will help resolve the financial crisis. The problem is that these insurers want to keep their cake and eat it too like the banks. The sale of their better quality assets wil go a good way to meeting their obligations with the lower assets and maintain their credit rating so they can live to grow another day.
If their credit rating gets cut they will be worse off. If they fold an administrator may well take Buffets offer anyway. In any case time and intervention inititiaves works to lessen the severity of the consequences outside the US.
The banks always knew they were in a unique position to be a price setter to maintain their margains.
I had an example with an Aus bank who substantially increased certain fees. The bank put a little notice on the statement and back dated the fees. I immediately phoned and insisted they be refunded. They refunded the next fee as a 'jesture of goodwill' but refused to refund the previous. I emailed insisting they provide in writing the reasons why they refused to refund the fees and to state which law or clause in the terms or conditions they relied upon to increase the fees.
A few days later they refunded the full amount without any refenence to their justifiable right to claim them.
The Rudd gov is also getting more proactive with banks breaking the custom with reserve interest rates. A sign that if these financial institutions don't stick to conventional interest rate custom and continue gouging customers in the so called right to offset their investment losses with increased fees and interest charges, then more severe intervention will come.