Australian prime minister Kevin Rudd has been forced to reassure consumers that their bank savings are sound as their Opposition demanded the Government underwrite every account containing up to A$100,000 in case a bank collapses. In the US, they are weighing two dramatic steps to repair ailing financial markets: guaranteeing billions of dollars in bank debt and temporarily insuring all U.S. bank deposits. In New Zealand, we are struggling to get such measures even to be considered. Two private sector agencies have tried to get prepared with the outlines of a plan. We have set out why a deposit insurance program should be started in New Zealand. Meanwhile, commodities prices fell sharply this week as fears mounted that the crisis in financial markets would drag the global economy into a deep recession. Oil fell well below US$80/barrel, 45% below where it was 15 weeks ago, and agricultural commodities also fell sharply. Dairy prices are down as well; skim milk powders are almost one half of where they were a year ago.
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