Great. The problem however is a mistrust of government and a...

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dolcevita

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2096

24/03/20

20:44

Post #: 43676826
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Originally posted by thorburn: ↑

Darts the $189 billion is is made up of $89 billion government an $90 billion RBA

imagine this is a line of credit that the government and the RBA can draw down. RBA can eventually purchase up to $90 billion. So far I think it's $750 million. They will buy any bond providing it's not inflation indexed. Preferably 3 year bonds. They will access this via the secondary (current) bond market at the moment . These purchases will mainly be from banking houses requiring cash in exchange for assets. This is designed to stop the financial freezing up, keep financial cash flow positive and for banks to lend over 3 years at a charge rate of .25% to business.

The government will payout maybe $14 billion in one offs and Centrelink payments will stretch out for 6 months. Apart from one off payments everything comes with strings attached and time limits so the government will plan bond sales when the need arises and has a window of roughly 3 years to run this program down.

That's the plan, micro managed by Treasury. And it's complicated when it comes to helping small business finance through this time. Not only is it not free but Einstein would have some difficulty with the lending detail.

Long and the short is most of this money is destined to be lent, it's not gifted. That's the clever plan that Scomo and coy have planned. It's not the headline amount but the fact that most of this involves loan and loan guarantees. The government will guarantee 50% of a loan to small business. That guarantee is part of the package but not drawn on until default.

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Great. The problem however is a mistrust of government and a flattening of confidence.

How realistic is it to offer businesses a loan in this market?

It's absurd. Labor isn't criticising because they haven't got the power to do anything much and don't want to make it worse by denting whatever confidence remains.

This is going to get a lot worse before it gets better. IMO.
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