Banksters Get Shafted

[SuckSqueezeBangBlow]

sold pending settlement in six weeks!

[Guest XR09]

And don't forget the sink fund Sideways. They're always wanting more money for something. Painting, plumbing so forth. Never buy a place with on site management. Just a money pit that always seems to have a tenant the week you want it.

[sexual harrassment panda]

Nah not a managed one, the have units there you can buy. still gotta pay the bloody body corp though.

congrats JC807

[hypnodoc]

This is worth a laugh. I followed this advice 5 years ago and I'm laughing now, even after a 30% drop last week the crooked bankers couldn't hold it back cane straight back up 18% and is 350% above what I paid, still a long way to go yet, same as Gold http://thesilvergoldhedge.blogspot.com/2011/05/join-sla-to-get-even-and-regain-your.html

[hypnodoc]

Todays latest re our Big 4 Banks

Moody’s Cuts Australia’s Four Biggest Banks’ Ratings to Aa2

May 18, 2011, 4:05 AM EDT

(Updates with banks’ comment from fifth paragraph.)By Jacob Greber

May 18 (Bloomberg) -- Australia’s four largest banks’ credit ratings were cut one level to Aa2 by Moody’s Investors Service on concern their reliance on wholesale debt markets makes them vulnerable to swings in investor confidence.

Commonwealth Bank of Australia, Westpac Banking Corp., Australia & New Zealand Banking Group Ltd., and National Australia Bank Ltd. were cut from Aa1 to Moody’s third-highest grade, the New York-based ratings company said. The banks’ shares and the Australian dollar fell, while the cost of protecting against default on their debt was little changed.

The so-called four pillar banks have “relatively high levels of wholesale funding, at about 40 percent of liabilities on average,” Patrick Winsbury, a senior vice president at Moody’s in Sydney, wrote in an e-mailed statement. “The global financial crisis has underlined the speed with which shifts in investor confidence can impact bank funding.”

Australia’s biggest banks -- four of the 14 lenders in the world with a AA rating or better from Standard & Poor’s -- largely remained profitable through the financial crisis as the economy avoided recession and the government introduced guarantees to support debt sales. Moody’s move brings its rating on the lenders in line with S&P’s assessment.

Commonwealth Bank Treasurer Lyn Cobley said in a statement that “we do not expect this to have any material impact on our funding plans or expected price of our new issuance.” National Australia remains committed to maintaining “strong capital, funding and liquidity positions,” the Melbourne-based bank said in an e-mailed statement.

Funding Risk

Westpac is still “one of a small number of banks worldwide within the ratings agency’s AA category,” the Sydney-based bank said. ANZ Bank said its rating is still one grade higher than it had before May 2007.

“The arguments for this downgrade have been in place for three, four or five years,” Wim Steemers, a banking analyst at Macquarie Funds Group in Sydney, said in a phone interview today. “Is there a real risk that the Australian banks cannot fund themselves? Probably not.”

Australia’s banks have reported a surge in deposits after the nation’s savings rate climbed. Savings as a share of disposable income increased to 9.7 percent from October through December, from 8 percent a year earlier, according to Bureau of Statistics data.

Pension Drain

Moody’s said it expects banks to continue reducing their wholesale funding requirements for the next 12 to 18 months. Banks sell bonds to raise money to lend to borrowers.

“However, the fundamental funding structure of the major Australian banks remains in place,” today’s Moody’s report said. Australia’s compulsory pension system, which siphons 9 percent of workers pay into managed funds, means the nation’s banks have access to a smaller proportion of savings.

Moody’s said the recent increase in domestic deposits has come mainly from large companies, which is likely to drop as the nation’s economy rebounds and they fund expansion.

“Retail deposit growth will then likely be insufficient to fund the banks’ needs, driving them to increase wholesale funding once more,” Moody’s said today.

‘Confidence Shocks’

The lenders are also potentially subject to “confidence shocks” given the nation’s increasing “bias” toward mining, the surge in income from exports of raw materials and “high asset prices,” the report said.

“The downgrade reflects Moody’s concern that -- in a less liquid and more volatile post-crisis world -- the banks’ sensitivity to market conditions is better reflected at the new rating level,” the company said.

The Aa2 rating is two levels higher than the A1 grade held by Goldman Sachs Group Inc. and one step above JPMorgan Chase & Co.’s Aa3 rating.

The lowest mortgage demand since at least 1977 has cut Australian banks’ need to raise cash in foreign debt markets.

Borrowing for mortgages grew by 6.6 percent in March from the year-earlier period, the least since the central bank figures were first reported. Australian house prices fell in the first quarter by the most since the third quarter of 2008, according to a government report on May 2.

Rising Rates

Consumers are cutting back on spending and increasing savings after central bank Governor Glenn Stevens raised the benchmark lending rate by 175 basis points, or 1.75 percentage points, to 4.75 percent between October 2009 and November 2010.

ANZ said this month that short-term wholesale funding accounted for 11 percent of total financing as of March 31, down from 14 percent a year earlier, helped by higher deposit growth. That will allow the bank to shoot for the “lower end” of its A$20 billion ($21.25 billion) to A$25 billion funding requirement for the fiscal full-year ending Sept. 30, it said.

Westpac said May 4 that lending rose A$9.6 billion and customer deposits gained A$17.9 billion in the year to March 31, meaning the nation’s second-largest bank was able to fund its growth with deposits.

Separately, Fitch Ratings today said Australian banks could have their credit ratings cut if they lower standards to boost mortgage sales as demand for home loans slumps.

“If we do start to see signs of erosion in those lending standards, there may be some negative pressure on ratings coming through,” Tim Roche, director of Fitch’s financial institutions group in Sydney, told a credit forum today.

Shares of Commonwealth Bank, the nation’s biggest lender, reversed a gain of as much as 0.6 percent today to close 0.2 percent lower in Sydney. Westpac slipped 0.1 percent, National Australia Bank added 0.1 percent, and ANZ Bank pared a gain of 1.6 percent to finish 0.9 percent higher.

Credit-default swaps on the four banks were little changed at 107.5 basis points after the announcement, according to Westpac. The Australian dollar pared gains to trade at $1.0635 at 5:20 p.m. in Sydney.

--With assistance from Angus Whitley and Sarah McDonald in Sydney. Editors: Malcolm Scott, Ed Johnson.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

[wiresquire]

Yo, hypno, what do you think about bitcoin?

[hypnodoc]

  On 20/05/2011 at 3:51 PM, wiresquire said:

Yo, hypno, what do you think about bitcoin?

Hi Wiresquire, mate I haven't had a chance to check it out as yet.

Below is the latest pack of lies foisted upon us in Aus by the Govt and the reserve bank.

Australias Peek-A-Boo Debt Reappears

by Kris Sayce on 29 April 2011

Australias Peek-A-Boo Debt Reappears

A couple of weeks ago we quoted CommSec economist, Craig James. In an economic update he had written:

Debt levels continue to slide. Private sector debt fell by 6.2 per cent in the December quarter the biggest fall in nine years… Debt is down 11.6 per cent on a year ago and has consistently fallen in annual terms over the past 18 months. The slide in debt levels in unprecedented over the past 50 years. Per capita debt stands at a 4-year low of $23,056…

Debt fell by 6.2 per cent in the December quarter from $553 billion to $518.5 billion…

At the time we were suspicious of the claim. It didn't seem right.

If youre a regular Money Morning reader you'll know we've kept close tabs on rising Australian debt levels. Many times weve commented about rising household debt while everyone in the mainstream has claimed households have been deleveraging.

that's why we were surprised when Mr. James claimed Australian debt had fallen.

Anyway, heres a chart showing the historical numbers Mr. James relied on:

Source: Modellers Database

As you can see, hes right. The green line shows the value of total private-sector debt. The red line shows the total of private-sector debt denominated in foreign currency. And the blue line shows the value of total private-sector debt denominated in Australian dollars.

And as you can also see, the debt levels have clearly fallen since they peaked in 2008.

But we still werent satisfied with this. Purely because of the debt numbers wed seen from the Reserve Bank of Australia (RBA). So, we sent the Australian Bureau of Statistics (ABS) a note two weeks ago, asking them to explain the difference.

Where had the debt gone? Had it disappeared? Case closed, debt is falling…

Not so fast Moriarty.

It turns out the debt hasnt gone… it was just hiding.

Counting ALL the debt

Yesterday the ABS replied and confirmed our suspicions. Here's what they said:

The Modellers data only includes net debt owed to the rest of the world.

It doesnt measure total foreign debt. And it doesnt measure total household debt.

In other words, we have to say its a pretty pointless and misleading statistic.

To put it in simple terms. Lets say you have a $200,000 debt. The loan is a $150,000 from your next door neighbour. And a $50,000 loan from your friend who lives in Santiago.

In any normal world youd say youre total debt was $200,000.

But in the world of the Modellers data your total debt is only $50,000.

How so? Because it doesnt include the debt you owe to your neighbour.

But the data is potentially even more misleading. Because if you happened to have savings of $25,000 at a bank in Ulan Bator, your total debt under the Modellers data would only be $25,000 ($50,000 you owe to foreigners, minus $25,000 owed by foreigners to you).

In other words, the Modellers data would seem to create a far rosier picture than reality. Your debt in this example is actually $200,000 but according to the Modeller's data its only $25,000.

Now, from a statistical analysis, maybe the Modellers data means something (we dont know what). But just try telling your next door neighbour you dont actually owe him or her anything. And also try telling your friend in Santiago you only owe him or her half of what they think theyre owed.

Our guess is, you wouldnt get away with it.

Thanks for the data, Modellers, but having never heard of it until Mr. James mentioned it a couple of weeks ago we now know why weve never heard of it… its useless statistical rubbish.

Which reminds us of something else Mr. James wrote not so long ago:

There is an old adage in economics there are lies, damned lies and statistics.

At least theres something we can agree on.

As we noted a couple of weeks ago, we prefer to look at the raw numbers.

The real numbers

Numbers that show total debt, including securitisations is nearly $2 trillion. Where owner-occupied housing debt is $819 billion. Investor housing debt is $351 billion. Other personal lending is $142 billion. And business debt is $682 billion.

That's a far cry from the total private sector debt claimed by Modeller's and Mr. James of $518 billion.

All the talk about deleveraging and conservative household balance sheets is nonsense. As weve pointed out all along, households havent deleveraged, theyre just broke. They arent not spending at the retailers because theyre saving. Theyre not spending because theyve got no money left to spend!

Even the banks are wary about lending because theyare fearful of being left holding the delinquencies.

Foreigners Aren't Playing Anymore

So, what explains the falling debt numbers as claimed by the Modellers database? Simple, it means an increase in domestic borrowing.

But that's not news. It's the precise reason why the banks increased savings rates last year, to attract more domestic savings so they could keep the debt bubble Ponzi scheme going.

As was widely reported in the press, Aussie banks relied heavily on foreign funding. Funding that dried up to a large extent from 2009.

And it also explains why the Australian government ordered the Australian Office of Financial Management (AOFM) to increase its holdings of Residential Mortgage-Backed Securities (RMBS) to $20 billion.

Simply put, foreigners are either incapable of investing in Australia's debt market, or more likely, theyre too scared given the size of the housing-induced Ponzi scheme.

So rather than stitching up foreigners with Ponzi debt, the banks are doing the proverbial in their own backyard.

But just in case youre unsure of what we're saying, let me be clear…

The Aussie economy and housing market is toast!

It's up the proverbial without a paddle.

There's nothing miraculous about the Aussie economy, nor the Aussie housing market. Both have been fuelled by a credit bubble.

Edited 27/05/11 04:41 AM by hypnodoc