The Global Economic Crisis and Its Effect on the Australian Currency

[Tyler Durden]

How China Plans to Change the Way Gold Is Traded
By Porter Stansberry
Saturday, February 25, 2012

Thanks so much, that was a great read. Definitely accords with my limited experience so far (held shares in a gold mining company taken over by the Chinese).

 

[fatmango]

Our banks do not borrow money from foreign central banks. Some of them did during the dark days of the GFC panic - but that was an isolated event in the way banks get funding.

Our banks issue bonds into foreign markets (and our domestic market), and have private investors bid for them.

All in all, interest rates set by foreign central banks (or our central bank) are irrelevant, as the banks will get the money at the interest rates which these private investors are willing to lend the money to our banks at.

thank you

 

[fatmango]

correct,

The funding comes from very diverse sources,

Eg,

domestic bank accounts 0.1% interest,
domestic High interest bank accounts 5.25%,
domestic Term deposits circa 5%,
domestic Bonds circa 4-5%,
Asx listed debt equites ie, cba pearls circa 7%,
Over seas money markets,
Overseas bonds

and the list does go on,

Another factor to think about, Even if they are sourcing over seas bonds the low coupon interest does not actually give a fair indication of the true cost of the capital because they will have to pay to hedge the forex risk. because they don't want to borrow $1Billion US dollars and then have the Aussie dollar collapse back to 50US cents, and have to pay back $2Billion aussie dollars.

and thank you! I take it then that when athe media refers to wholesale markets they are talking about these bond markets mentioned in these posts.

 

[Starcraftmazter]

and thank you! I take it then that when athe media refers to wholesale markets they are talking about these bond markets mentioned in these posts.

That's right.

 

[skating101]

So, it appears a deflationary event is on the horizon.

Greece appears to be heading to a default either technical or not.

The Federal Reserve has made it clear they will not print in the short term at least, perhaps they are waiting for a significant deflationary event.

This default would be a largely deflationary event and would be reflected in a flight back to the $US.

The $AU is currently at unsustainably high levels and even Australian industry wants a significant reduction in the $AU.

So could any of you make an argument why the $AU will rise against the $US over the next few months?

During 2008 after lehman brothers collapse the $AU/$US fell from 95c to 60c in the space of 4 months.

Why not just put the money into $US now and just await the deflationary event?

 

[Starcraftmazter]

Why not just put the money into $US now and just await the deflationary event?

Because there is too much crazy **** happening all the time.

 

[Timmy]

Because there is too much crazy **** happening all the time.

"All the crazy **** I did tonight, those'll be the best memories"