As the President of the United States, George W. Bush, is trying to pass a trillion dollar bill through the American parliament, the Rudd government is now going to spend a fraction of that price to re leave pressure on interest rates. The Minister for Finance and Deregulation, some dude, has revealed that it would cost four billion dollars. So what is this? Well, the plan is to exchange money with financial institutions in return for bad mortgages. Sound familiar? Of course it is a rip off of the stupid American idea. The government is making a ill informed decision based on out of date market philosophy. The philosophy that is guiding the Rudd government is free market ideology. This ideology is wrong based on two basic reasons:
Minister for Finance and Dregulation
1. If you have regulation, then there is no free market. And if you need more regulation, then why would you trust capitalists who have caused these problems with even more freedom in economic matters?
2. Under a free market system, the private investors who are responsible for economic growth under capitalism have control and ownership over the financial institutions. The financial institutions loan credit /money to the private investors to invest in enterprises thus creating economic growth in the capitalist economies. Most of the investment with in capitalist economies are debt funded. Thus, by putting the private investors in control of the financial institutions, you are basically putting rats in control of the cheese supply. It is doomed to fail and it has already caused the near collapse of western capitalism.
Like the American one trillion dollar solution, the Australia four dollar solution will only solve the problem for a short period of time. With out regulation and more nationalizations, the capitalists will only go back to their bad habits. They must be stopped or we are all doomed for a third great depression.
Mr. Kevin Rudd must abandon free market philosophy and embrace socialistic reforms to the capitalist economies. World leaders like Mr. Bush have already started pushing forward socialistic economic reforms to save capitalistic free market systems not just in American but all over the world.
Capitalism is doomed.
Australian Broadcasting Corporation:
Economists say the Government’s plan to buy into the mortgage market will help shore up competition in the home loan sector.
The amount of money available to lending institutions has dried up because of the global turmoil.
This has meant non-bank lenders have struggled because, unlike the banks, they do not have deposits to use to fund their loans.
The Government is trying to boost the market by making $4 billion available to lenders in exchange for mortgages.
TD Securities senior strategist Joshua Williamson says it will help revive struggling non-bank lenders.
“What the Government, I think is trying to do is to ensure the survivability of those smaller institutions by allowing them to access funds,” he said.
The Government’s plan is also expected to ease the pressure on interest rates.
Mortgage and Finance Association head Phil Naylor says the Government’s plan will help push rates lower.
“It’s good news, it’s good news for non-bank lenders and borrowers,” he said.
The banks have gained a bigger share of the mortgage market during the turmoil and head of the Australian Bankers Association, David Bell, has responded cautiously to the plan.
“This will certainly assist liquidity but we’re not sure about competition,” he said.
The Government says it will only be buying top-quality mortgages.
‘Exciting package’
Non-bank lenders have been lobbying for some sort of government relief.
Lisa Montgomery, head of consumer advocacy at Resi Mortgage Corporation, is optimistic about the package.
“What we haven’t seen yet is the detail of the package. But certainly just the news that it will exist is something that we’re really excited about,” she said.
She said she does not know if that is enough money to save the market.
“Certainly, it looks like that they’ll be two tranches of $2 billion each,” she said.
“But how that is actually spread between banks and non-banks is yet to be determined.”
The move is also supported by the Mortgage and Finance Association of Australia, which represents non-bank lenders and mortgage brokers.
Money worth spending
Mr Naylor said the body welcomes the move, which it has been pushing for, for months.
“We haven’t seen all the details of yet, but from what we’ve seen it’s great news,” he said.
“We need to get more lenders back into the market.”
Shane Oliver from AMP Capital Investors says while $4 billion is a lot of money, it is worth spending.
“The purists might say ‘Well, it’s not the role of the government to buy mortgages’, but as has been observed in the US, these are extraordinary times, and extraordinary times like the present, require extraordinary policies to combat them,” he said.
“Obviously, the Federal Government is trying to unblock, or unclog the mortgage market, the mortgage securities market; give a bit more power back hopefully to the independent lenders, the independent mortgage lenders. And hopefully that will inject a bit more competition back into the mortgage market.
“The big issue is that injecting $4 billion into this market is a relatively small amount of money. It used to be raising $18 billion; more recently it’s only been raising $2.5 billion a quarter.
“Four billion dollars is a lot of money but it won’t make a big difference in the short-term unfortunately.
“I guess the flipside is that if the federal government starts injecting money into that market, it might be seen as a bit of a confidence booster, and that should help to some degree.”
http://www.abc.net.au/news/stories/2008/09/27/2375930.htm
Any way, in celebration of the near collapse of western capitalism, we present to you, THE INTERNATIONALE
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