"should the bank costs prove in the end to be impossible to cover"
What COSTS?
This is a hole in the Banks capital lending ratio, a fictional figure supposedly to be maintained in case there is a run on a bank.
In practice this is maintained to prevent any real competition to large banks from smaller banks.
So there are NO REAL COSTS - just the fictional ramblings of finance directors, based on the even more fictitious nonsense that Banks operate under principles of sound financial governance.
Just utter nonsense both three years ago and thirteen years ago.
Three years ago the Banks were shovelling money at everyone with a piece of land.
Thirteen years ago you couldn't get a loan to finance speculative development.
The first pumped up the Tiger economy after the second held it back unreasonably for years.
The problem was Cowan's lack of foresight and Ministerial ability in dealing with the boom, a failure than you cna be sure had Berti Ahearne's fingerprints all over it.
- no restraint, no regulation
- nothing done to reduce pressure
- the continuance of tax incentives long after they were needed
- the failure to implement even the 40% Capital Gains Tax
- the failure to prevent recycling of profits by developers into buying property pushing the values to unsustainable levels
That's the danger of letting intelligent people without much common sense run a government.
So much for the "real government" those overpaid, overpensioned hacks in Grade 1 and 1 Civil Servant positions.
Tell the lot of them they have lost their pensions until they find us a way out of the financial black hole we're in - because its the truth!
The investing of profits in property drove prices up astronimically, and together with the easy availability of low interest credit, is I believe what led to private home owners borrowing far more than they could sustain in an even moderate interest level - say 4-5% - with only one job.
There was a mean to be found somewhere, and it was mere hubris to ignore warnings like the value or property here exceeding the property values in places like New York, Paris and Hong Kong, major urban and financial centres.
Now we face more "financial prudence" from the Masters of the World in the Bank for International Settlements in Basle, Switzerland.
They, arguably the architects of the current disaster, now appear to be planning to repeat their "mistake" and raise bank capital lending ratio requirements again.
Someone needs to give these unelected people a good boot in the behind.
ONQ.