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Archives for March 2009

What Caused The Financial Crisis?

The global financial crisis is “a crisis of credit markets”, says Malcolm Edey, Assistant Governor (Economic) of the Reserve Bank of Australia.

In an address to the Foundation for Aged Care Business Breakfast in Sydney, Edey traced the origins of the financial crisis, discussed its effects and looked at responses to the crisis.

Text of Reserve Bank Assistant Governor Malcolm Edey’s speech:

I’ve been asked to talk this morning about the current financial crisis: where it came from, and the effects that it’s having on the economy.

What we refer to as the global financial crisis is, at its core, a crisis of credit markets, centred particularly in the United States, the UK and Europe, but with significant spill-over effects to the rest of the world.

Over the last year or so, financial institutions in the major economies have reported losses on a large scale. Some of these institutions have become insolvent, or have had to be taken over or rescued by their governments. Associated with all of that has been a massive swing in the appetite of world financial markets for risk, and in their capacity to accept risk. The result has been a shift from easily available credit to tight credit. [Read more…]


Political Quotations – Set 6

  1. Great minds discuss ideas, average minds discuss events, small minds discuss people. – Admiral Hyman G. Rickover, “father” of America’s nuclear navy (1900-1986)
  2. What experience and history teach is this: that people and governments have never learned anything from history. – Georg Wilhelm Friedrich Hegel, German philosopher (1770-1831)
  3. More persons, on the whole, are humbugged by believing nothing, than by believing too much. – P.T. Barnum, American showman (1810-1891)
  4. The law that will work is merely the summing up in legislative form of the moral judgment that the community has already reached. – Woodrow Wilson, American president (1856-1924)
  5. The crisis you have to worry about most is the one you don’t see coming. – Mike Mansfield, American statesman (1903-2001)

    [Read more…]


Economic Growth Declines 0.5% In December Quarter

Australia’s Gross Domestic Product (GDP) declined by 0.5% in the December quarter, according to the latest National Accounts figures.

The 0.5% contraction was lower than most commentators had predicted. Two consecutive quarters of contraction (illogicially known as “negative growth”) is defined as a recession.

Speaking in Canberra today, Treasurer Wayne Swan said the decline was to be expected but that Australia was cushioned to some extent from the global financial crisis by its stronger financial system.

Swan also argued that an increase in household savings in the quarter was a result of the 3% reduction in interest rates which had led to consumers paying down debt and restructuring their finances. [Read more…]