I agree. Earlier this year, the banks were crowing that they were getting half of their funding from deposits and the other half from offshore. They said they could still access the MBS markets.
Now, go and have a look at the cliff dive the AUD/YEN has done the past month. That giant sucking sound you hear is the non-deposit half of the banks' funding disappearing back into Mrs Watanabe's Japanese cheque account.
Shortly thereafter, we have two announcements out of the blue: the government will buy up to $10bn of MBS's; and bank deposits are to be guaranteed.
What's the bet the banks went to the government and said, "You need to do something, because half our funding just disappeared and that means lending volume will be cut in half. Do you know what that will do to house prices?"
And Kevin747 said, "Gulp!"
Now, we have an RBA minion trotted out to say, "Don't panic, everything will be fine."
