Quote Alan Kohler of Business Spectator,""The implication of...

Quote Alan Kohler of Business Spectator,

""The implication of that for the US banking system is catastrophic.

This little Aussie bank down under has gone too far, they’ll be saying on Wall Street. They’re wearing the full hair-shirt and suffering the bed of nails all at once, only because they can – they have the capital to do it.

John Stewart said this morning that he didn’t want to drip feed the provisions out over several years as the truth about the situation in the US unfolds; far better, he says, to take it all now and move on.

But there is a big problem with that approach: if other banks are forced to do it, especially the big US banks, the economic impact will be swift and drastic. The $4.5 billion that NAB holds in other securities through its off-balance sheet conduits, will also be hit.

But Stewart and Chaney have pulled the pin out of a grenade; there’s no going back now."

A hand-grenade is a good analogy. The messsage to the US banking system is, "You sold us all that crap and rated it AAA ,but your rating turned out to be fraudulent. We know this is going to cause you a lot of damage !" Unfortunately for shareholders another $4.5 B write-off can be expected and I do not think this has been taken into account by the market