Banks to gamble with our savings

[mantra]

Rudd gave the Australian people a government guarantee that by putting our money in the bank - it would remain safe, but it looks as though the banks have forgotten the turmoil that has hit the global economy. People have been cashing in their shares, tightening their belts and going without luxuries and putting their cash in the banks in order to have some cushioning for the hard times many of us are experiencing or will experience.

The banks have been warned by the G20 to exercise caution, but appear oblivious to any advice and plan to invest $180 billion in the mining industry to cash in on a projected mining "boom". Experts have warned that the boom could only be temporary as other nations are forced to rein in their expenditure and this will result in a decrease in commodity prices or a decline in demand. The banks are gambling on short term speculation and putting our savings at risk.

As members of the G20 - why isn't the government intervening - or even the Reserve Bank for that matter? How can the government guarantee our savings if they haven't got the revenue to back up their promises?

The banks hold at least $30 billion in direct loans to mining projects. The report warned there was a major investment boom under way that the banks would be exposed to.

It is estimated at least $180bn is being pumped into the Australian economy in the mining sector to cash in on the boom.

There is a growing concern the economy could start to slow if the world economy slips into recession.

"The post-crisis period presents a number of challenges for Australia, particularly in the context of domestic monetary policy tightening combined with relatively high household indebtedness against the backdrop of a fragile global economy," the report said.

"The economy and by extension the financial system is going through a period of structural change in response to the strong demand for commodities from emerging Asian economies.

"As a result Australia's terms of trade is at historic levels and the country is experiencing a commodity-inspired investment surge.

"However, the economy's increased exposure to potentially volatile and cyclical commodity prices warrants particular focus.

"The use of prudential tools may be considered to manage sector-specific risks stemming from the structural changes in the economy."

The report said the government and regulators needed to be aware of the potential for a "too big to fail" type event if one of the majors was ever to hit serious financial trouble.

"The presence of four domestic banks presents . . . important policy challenges for the authorities," it said.

"Their size and nature of activities means that they could pose systemic and moral hazard risks in Australia. The authorities have a supervisory framework in place to address the risks posed by regulated entities through a graduated supervisory response."

Nomura's banking analyst Victor German said banks' earnings could be at risk if the Australian economy slowed and commodity prices crashed.

http://www.theaustralian.com.au/busines ... 6148499526

[boxy]

What do you expect them to do with the money, Mantra? They have to invest it to pay for the interest they give, and to make a profit. It's not like they can just sit on it, and keep it safe for you.

[mantra]

Anyone with savings would hope that their money is being invested in a diverse range of industry, people and property - not just predominantly mining. There are many other avenues which need a healthy dose of revenue also eg. renewable, manufacturing, government infrastructure etc.

As banks restrict our borrowing for investment - they should be doing the same and not putting all their eggs in the one basket particularly for such a transient industry that is often not stable.

For a decade or so we have had a huge trade deficit and the mining corporations are responsible for a large proportion of that. Many of them have gone bust yet we have to pick up the tab for them as well as clean up the mess they leave behind.

The same will happen to the banks here - as happened to the banks during the GFC. Booms are only short term.

Maybe it's time to start hiding our cash under the mattress again.

[punk]

theres nothing else to invest in, ur fucking greens and labor have rooted everything else. where else are they gonna invest if not in the foreign companies the greens and labor c unts are looking after,

[Neferti]

Anyone with savings would hope that their money is being invested in a diverse range of industry, people and property - not just predominantly mining. There are many other avenues which need a healthy dose of revenue also eg. renewable, manufacturing, government infrastructure etc.

As banks restrict our borrowing for investment - they should be doing the same and not putting all their eggs in the one basket particularly for such a transient industry that is often not stable.

For a decade or so we have had a huge trade deficit and the mining corporations are responsible for a large proportion of that. Many of them have gone bust yet we have to pick up the tab for them as well as clean up the mess they leave behind.

The same will happen to the banks here - as happened to the banks during the GFC. Booms are only short term.

Maybe it's time to start hiding our cash under the mattress again.

So, what happened to the Big 4 Aussie Banks when KRudd decided to follow the US with a response to a GFC that America was having and Australia wasn't? Do you remember? Were your investments involved?

Investing in the share market is effectively a gamble. You win some, you lose some. I haven't a cent invested in shares. Ditto I do not play the pokies or expect The Government to look after me.

[Super Nova]

Our whole system has banking at the core of it.

It has allowed capital to be made available to the masses. Before this, capital was only available to those with power or existing wealth.

Banks have always been gambling with other peoples money. It is the core of the principle of banking.

The issue is risk management. As the banks need to take risks, these need to be managed. I think it is up to every individual to manage risks. The difficulty is that mosy people do not uinderstand that. Historically we trusted banks to be a safe place for our money. The fact is they are not risk free. Nothing is risk free. Even putting money under the bed is not risk free, inflation can eat away at it's worth or someone could break in and steal it.

We need the banks to take risks. We can only spread our money and diversify to mitigate exposure to a single organisations failure.

[freediver]

Anyone with savings would hope that their money is being invested in a diverse range of industry, people and property - not just predominantly mining.

Nothing you have posted suggests otherwise mantra. Your opening post threw around some big sounding numbers, but lacked any context.

[Aussie]

Anyone with savings would hope that their money is being invested in a diverse range of industry, people and property - not just predominantly mining.

Nothing you have posted suggests otherwise mantra. Your opening post threw around some big sounding numbers, but lacked any *context.

*Spelling error.

[freediver]

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[Aussie]

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You should use that as your signature.