Last time I saw scenes like this was just before the economy collapsed in Argentina. Brits today are queuing in the streets to get their money out of the Northern Rock bank (Britain's fifth-largest mortgage lender) before it collapses, and other UK banks are also in trouble.
This all goes back to the US sub-prime lending crisis, which goes back to Bush's "trickle down economics" fantasy and irresponsible deficits. There is now a global credit crunch underway, with banks refusing to lend each other money.
Former Bush stooge Alan Greenspan sheepishly puts his hand up and admits "My bad." The world's greatest treasurer insists that Australians have nothing to worry about. But he would says that, wouldn't he?
Personally, I am more inclined to listen to Mike Whitney, who has been screaming in the economic wilderness for years and is now being proven dead right. Whitney today quotes economist and author Henry C K Liu's article “Why the Subprime Bust will Spread”:
“Greenspan presided over the greatest expansion of speculative finance in history, including a trillion-dollar hedge-fund industry, bloated Wall Street-firm balance sheets approaching $2 trillion, a $3.3 trillion repo (repurchase agreement) market, and a global derivatives market with notional values surpassing an unfathomable $220 trillion."I don't remember the world's greatest treasurer having much to say about that at the time.
Australia, the UK and the USA have all enjoyed record housing bubbles over the past decade. The US and UK are both now in trouble. I'm no economist, but only a fool would expect Australia to come through this unscathed.
UPDATE: A ripple of panic hits Aussie banks...