rudd's scheme for commercial property projects, page-5

what the government should do is compete with the banks to drive down the cost of debt.

that would be much more helpful than allowing the big 4 to keep their profit margins intact.

imagine people could actually bank with the RBA, ie the RBA became a corporate lender? the govts cost of debt it much lower than the big 4 so they would kill the big banks on pricing and force the banks to lend to the more "risky" loan seeks as the big corporates used the RBA facility.

the big problem is that if banks actaully really start revaluing the properties they have on their books then how many of those properties would have loans greater than the value of the debt?

say CBA has $500b of debt on its books and has $550m of assets and that those assets are now written down by 20% accross the board? well you get negative equity of $55b. yeap CBA would be bust and the financial system would need the government to recapitalise the banks, even then the economy would be frozen.

i think developers like valad are stuffed, the only assets worth anything are the buildings they own and even then they are worth a lot less than the value the valuers have given them.

however at these prices they are worth a punt.