90 seconds at 9 am: UST yields at 2 yr high; emerging markets tumble; AU Govt bonds sold to one investor; NZ$1 = US$0.807, TWI = 75.9

Amidst all the bluster over the CBA’s bumper profit, The Australian’s Adam Creighton has come out todayquestioning the long-term  safety and stability of the banking system given the low level of shareholder’s capital held by Australia’s banks:

http://www.macrobusiness.com.au/2013/08/banks-long-term-safety-questioned/

Renowned professors of economics and finance at Stanford University and the Massachusetts Institute of Technology say very large banks with levels of shareholders’ equity around 3c in every dollar of assets are “ludicrously” and “outrageously” undercapitalised.

Only 4.8 per cent of the $2.83 trillion in total assets of Westpac, CBA, National Australia Bank and ANZ is shareholders’ equity, according to Macquarie Bank, up from 4.1 per cent before the global financial crisis. The rest is debt.

Anat Admati, professor of finance at Stanford, is calling for large banks to stop paying out dividends until their capital ratios exceed 20 per cent.

“A highly indebted bank is like an unstable, shoddily constructed building,” she said…

Simon Johnson, professor of global economics at MIT, said Australia should not be too confident it would never have a financial crisis given its exposure to China and resource prices.

Thanks Hugh

Anat Admati, author of The Bankers' New Clothes, joins Heather Stewart to discuss the state of financial regulation five years on from the banking crisis

http://www.theguardian.com/politics/audio/2013/aug/15/politics-weekly-podcast-anat-admati

I see Roy Morgan have a new poll out. National 44%, Labour 34%, Greens 14%. The collective percentage of all the parties presently in government is 46.5%.

All increasing in 'value' of existing items, is a 'bubble'.

So I agree with Hughey that this is one.

But sometimes these bubbles can go on for longer than a lifetime, and be assumed to be 'normal'. In that case, you look for the 'driver' which enabled the continuance.

Lotta folk seen to baulk at that point.