After all thats been posted here about free enterprise and caveat emptor here is the truth about the banking and monetary system. As we traders know liquidity can come in very handy but we cant go crying to the govt for a hand out. No, but the rats can. Can a car yard call up the RBA to swap cars for cash? Can any other business call up the RBA to swap inventory for cash? No, but the rats can.
-------- Whiff of bail-out in RBA move Michael West April 21, 2008 - 7:23PM The Reserve Bank of Australia has followed its central bank counterparts in the US and the UK as a white knight for banks struggling to fund their structured mortgage products, making an unprecedented $1.1 billion two-day intervention in the markets to buy bunches of mortgages.
The RBA does not comment on particular counterparties and so it is left for the market to speculate on both the type and the size of its latest plunge. There can only be two explanations though for its spending $780 million on securitised mortgages yesterday - on top of Friday's $320 million - and neither is pretty. ... http://business.smh.com.au/whiff-of-bailout-in-rba-move/20080421-27lz.html
