swans spends $370 billion on oz mortgages!!, page-2

sharedawealth don't u think it normal that a govt is allowed to lend money out to some who couldn't get it commercially ?

Doesn't the rba or govt constantly operate in money circles by issuing bonds and smoothing the flow of currency markets ?

ie; didn't the usa lend their banks a substantial sum ?
and bail out General motors which I think will be a good return ?

I don't see this as a freddie mac style catastrophe but a govt issuing security to allow those who were frozen out of markets by left field events happening world wide .
I also think part of the problem was created by the Govt as they basically insured the larger banks in ozz from defaulting on peoples withdrawls . ie they guaranteed everyones bank deposits up to x amount . So the larger banks ended up with the majority of cash and the tiddlers were left behind as no one wanted to put cash in a small instatution . This actually caused a commercial property melt down as folks sold their stuff and flooded the market so they could get an insured and secure return using bank deposits .

I think the real sin was our councils and others buying USA mortgage securities on borrowed money to gamble on making a a return when the purpose of a council is to serve their neighborhood .
I think many law suits are now in process and the cash is being returned as the ratings agencies and bankers selling that crap were super con men . ie ; offering a crap product which was so complex no one could understand it and then them betting against their failure using cds contracts . lol A very elaborate scam but it is all coming undone .

Please note I'm no money expert but if the govt issues security over AAA rated mortgage bonds then it is safe and ok . It's when they issue bonds to those who can't afford to buy like what happened in USA then it is a real problem .

As an aside the usa govt did the same thing many years ago with cars . They issued bonds or debt to those who could ill afford a car loan so homeless people were borrowing the full amount and living in the cars . lol true story . then giving the cars back when the payments fell over due .

cheers
ps; a left field argument would be the govt build more housing commision houses which they can't manage properly and stuff everyones neighborhood . Better to lend cash to banks and let them manage it as only shareholders suffer on a nil return .