This Bank guarantee thing.....

[MrBurns]

And many SMSF's would have sold out of shares and have cash in the Bank. Cash is king etc etc. Interesting, and rather

Exactly, once again I'm thinking gold.......

 

[Schmuckie]

I have to admit (dumb Canadian here) how surprised I was to find this thread. Does this mean that Australia did not have a deposit insurance program? We've had one here for many years, having been raised from $60,000 to $100,000 quite some years ago, yet Canada has what's rated the safest banking system in the world, according to the World Economic Forum. If I remember correctly, Australia is the fourth safest banking jurisdiction.

Europe and the U.S. also have deposit insurance programs. After Ireland raised its limits a week ago, there was a mass exodus from other European banks to Irish banks. Hence, a coordinated effort in Europe and elsewhere to have unified insurance limits. International finance ministers agreed on Saturday in Washington that they would coordinate a lot of their actions.

Australia's guarantees are probably just falling in line with the agreement. I really don't think you have to worry much about your deposits in one of the safest deposit-taking commercial banking jurisdictions in the world.

 

[Green08]

Exactly, once again I'm thinking gold.......

If you have to keep Gold look at this construction for a vault. One in the basement perhaps? http://www.craigcraft.com/mod.html

 

[Prospector]

I have to admit (dumb Canadian here) how surprised I was to find this thread. Does this mean that Australia did not have a deposit insurance program?

Australia is one of the few countries that didnt have one, although that is changing now.

Rudd is whinging that the previous Government didn't put one in place; well, tough luck Kev because that is what we need now!

 

[Green08]

Here is a link to the APRA website. http://www.apra.gov.au/Superannuation/

it is cumbersome but you may find some information to help you.

 

[Smurf1976]

I think if the Government did extend to $100,000 this would actually reduce to nil the risk of any stupid panic. Actually, probably even the $20,000 is enough.

One major bank and one major local financial institution have blocked access to customers' funds at some point over the past week. Both were supposedly due to "computer problems" which just happend to occur amidst the financial crisis.

Then the local one announces a proposed merger.

And the government wants to limit its liability to just $20,000 per person.

All of which makes me think the situation is a lot worse in Australia than anyone seems willing to admit. Politicians don't hesitate to promise things unless there's a decent chance they'll be forced to deliver.

If the alarm is sounding, you can smell smoke and the building is being evacuated then there probably is a real fire.

Judge for yourself but I can see quite a bit of smoke, several "false" alarms have occurred and a fleet of big red trucks with hoses have arrived out the front. And now the insurance broker is trying to minimse the value of cover whilst at the same time telling us we don't need it anyway because everything's fine and always will be. It all looks rather ominous to me...

 

[Prospector]

Thanks for checking all this out Green but we have an SMSF so APRA doesn't apply to us. Gold is looking good at the moment...

 

[Green08]

"After the Reserve Bank Board has decided the target for the cash rate each month, the Domestic Markets Department of the Bank is responsible for keeping the actual cash rate in the market as close as possible to the target over the ensuing inter-meeting period. A major determinant of the cash rate is the aggregate level of balances held by commercial banks in their exchange settlement accounts at the Reserve Bank. These are the funds that banks rely on to meet their daily settlement obligations to each other and to the Reserve Bank. If banks do not have enough of these funds, they risk failing in their payments, so a shortage of funds causes banks to bid more aggressively in the money market to try to restore their holdings. On the other hand, because these funds earn an interest rate that is below the rate that could be earned in the market (25 points below the cash rate), banks do not want to hold more than necessary. As such, a build-up in exchange settlement balances makes banks more eager to lend funds, and this pushes market interest rates down."
http://www.rba.gov.au/Speeches/2007/sp_dg_280807.html

 

[Nyden]

Just to add to the problem, even if you do keep your cash safe will it be worth anything ? The hyper inflation that all the throwing of billions around like so much small change will create will mean your paper money will be worth bugger all.

Go to gold ???????????????

I could be mistaken, but surely the destruction of credit / loss of money from all account holders would completely negate any inflation as a result of this ... heck, the USD hasn't fared too badly from failing banks, has it?

 

[Julia]

Superannuation or managed funds will not be covered by the scheme, and deposits at banks not regulated by APRA will also not be insured. "

http://www.news.com.au/business/money/story/0,25479,24375006-5013952,00.html

Great so SMS funds in cash in the bank are not guaranteed.

Mr Burns, I doubt that this is the correct interpretation of the info supplied above by Green08.

I would have thought that the phrase "superannuation or managed funds" would refer to public super funds and managed funds, and that cash as part of a personal SMSF would receive the same treatment as a personal account provided it's with an APRA regulated bank.

But I don't know. Obviously the government are in the throes of thinking all this through.

I have significant funds in cash with CBA and with ANZ via E-trade cash account and am not at all concerned that they are unsafe. It's easy to allow the climate of fear to instil more worry than is really justified.

However, I do agree with Prospector's suggestion that we are not being told everything by a long shot. So far I support the way the government is handling what is a moving situation, and think they're right not to jump into rash promises at this stage.

And as far as any bank guarantees are concerned if they're only likely to guarantee a maximum of $100K then a lot of people are up for losing a lot of money if anything were to go badly wrong.

 

[Green08]

Just providing information for others to further research if they wish.

As mentioned, there is alot of detail that is needed. Personally I move to the side of caution.

With so many experts being wrong in their predictions I do for my family what I feel is right. As all will do, circumstances are different for everyone.

 

[Prospector]

For once I hope the headline is correct:

http://www.news.com.au/business/money/story/0,25479,24481708-14327,00.html

All Bank deposits guaranteed for three years........no mention of the upper limit yet but here's hoping it will be $100k, which means I can do some shuffling into different accounts...

 

[Nyden]

For once I hope the headline is correct:

http://www.news.com.au/business/money/story/0,25479,24481708-14327,00.html

All Bank deposits guaranteed for three years........no mention of the upper limit yet but here's hoping it will be $100k, which means I can do some shuffling into different accounts...

Just heard it on the TV as well Prospector.

Definitely a little reassuring.
... Might also give a little reason to start buying AUD again for international investors.

 

[xoa]

I agree with guaranteeing deposits. Our savings rate is already sharply negative; there needs to be more incentive to save, especially with the RBA's reckless interest rate cuts.

However, pumping another $4bn into the toxic mortgage market is like flushing money down the toilet. The government is forcing every Australian taxpayer to take a stake in the housing bubble.

 

[Pommiegranite]

For once I hope the headline is correct:

http://www.news.com.au/business/money/story/0,25479,24481708-14327,00.html

All Bank deposits guaranteed for three years........no mention of the upper limit yet but here's hoping it will be $100k, which means I can do some shuffling into different accounts...

Hmmmm...just wondering how the sharemarket will react.

Will it be postive?

OR

Will all the investors who were nervous of banking cash, now cash out of the sharemarket, driving it down further?

 

[jackson8]

THE Federal Government will guarantee all money deposits of any size for the next three years as a key step towards safeguarding the nation from the impact of the global financial crisis.
Prime Minister Kevin Rudd today said that local banks remained in first class shape but the global financial crisis was affecting confidence across the world, including in Australia.

just read this on news site .
pretty bold position to take on by the government

 

[MrBurns]

Prime Minister Kevin Rudd has announced that the Government will guarantee all deposits in all Australian banks and other financial institutions for the next three years.

All deposits implies just that ALL, regardless of the amount or savings institution. So....... I can move my money to a dodgy one offering a large return ........safely. HA no I wouldn't risk it anyway.

This may mean there will be an influx of funds from OS to our banks.

Dont think it will have an effect on the share market, that will go it's own way regardless.

 

[MrBurns]

Ok what the secret sound ?..........

Oh yes I know that one........... thats the sound of 15 million people penciling 12th October 2011 into their diaries.

 

[Prospector]

This may mean there will be an influx of funds from OS to our banks.

Dont think it will have an effect on the share market, that will go it's own way regardless.

I think I read that overseas funds coming into Australia was one of their hopes. I agree I dont think it will impact on the share market but it should stop a lot of panic withdrawals

 

[pepperoni]

All deposits implies just that ALL, regardless of the amount or savings institution. So....... I can move my money to a dodgy one offering a large return ........safely. HA no I wouldn't risk it anyway.

.

Wouldnt risk it? There is no risk!

Subject to clarifying the date this starts and the terms of the gtee all my money will go here at 8.1% ZERO RISK

http://www.bankwest.com.au/Personal/Savings_and_Investment/TeleNet_Saver/index.aspx

Much more money to be made in busts than booms IMO