Top 10 at 10: Aussie mortgage holiday idea; Property bubble comparisons; G20 fix real?
6th Apr 09, 11:31am
Here's my top 10 links from around the Internet at 10 am. I welcome your additions. I'm keeping these shorter so I can complete them every day. Australia's big four banks have agreed to mortgage payment holidays for Australians who have just lost their jobs, Bloomberg reports. Good idea for us? Same banks. Same problem. Spain's 'Caja' savings banks could have 40 billion euro hole in their balance sheets because of the collapse in Spain's property market, proving the European financial crisis is far from over, The Telegraph reports. Here's an interesting if slightly old comparison of the US and Japanese house price bubbles. The Japanese bubble is still deflating 19 years after its peak. This is a fascinating report at Politico.com on what actually went on inside the meeting last week between Barack Obama and bank executives. Essentially Obama read them the riot act and told them to drop their complacency about public anger.
"My administration," the president added, "is the only thing between you and the pitchforks."A cracking piece here in Forbes on the banker who refused to lend from 2004 to 2008, but is now making hay buying distressed loans. Here's a taste. H/T Lance Wiggs.
"Banks are on a prayer mission that somehow prices will come back and they won't have to face reality," Beal says. And that reality, according to Beal, is going to get a lot worse. "Unemployment is going over 10%, commercial real estate hasn't even begun collapsing and corporate credit defaults are just getting started," he says. His prediction: depression, without bread lines this time, thanks to the government safety net, but with equal cost to society.How to put the 'Great' into Depression, by Bill Bonner at the Daily Reckoning. The FT's Martin Wolf on why the G20 'fix' is not going to fix the underlying causes of the crisis. Here's a taste.
What this analysis is telling us is quite simple: next to no adjustment in underlying structural imbalances is occurring. In particular, the non-fiscal sectors of the three big surplus countries are expected to continue to run huge surpluses. The change "“ temporary, the surplus countries surely hope "“ is that domestic fiscal expansion is modestly offsetting the decline in demand coming from deficit countries with over-leveraged private sectors. But that decline in private demand is also offset by massive fiscal boosts in deficit countries. This is not a path towards a durable exit from the crisis. It is a path on which the fiscal deficits needed to offset persistent current account deficits, and collapsing private spending in external deficit countries, continue indefinitely. Unless and until surplus countries recognise that this cannot continue, no durable escape from the crisis will be achieved. Understandably, but foolishly, they are unwilling to do so.Alan Kohler at Business Spectator is also sceptical about the G20 fix and the FASB's mark to market fix. Delinquenices for 'Prime' mortgages in the US have doubled to 2.4% in a year, OptionARMageddon points out. Greg Mankiw on what started the Great Depression: too much government intervention.