ID :
24234
Mon, 10/13/2008 - 19:15
Auther :
Shortlink :
http://m.oananews.org//node/24234
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Share prices rebound ahead of bank plan
Financial markets gave the Rudd government's three-point plan to shore up the Australian banking system a nod of approval by pushing share prices and the Australian dollar higher. Economists are trying to second guess what further measures the government will undertake to defend the economy against the global financial market meltdown after Prime Minister Kevin Rudd reiterated he was prepared to loosen the budget purse strings.
The share market ended 5.6 per cent higher on Monday led by banking shares - defying a negative lead from Wall Street on Friday - after Mr Rudd's announcement on Sunday that the government will guarantee bank deposits for three years.
This decision, along with guaranteeing the borrowings of Australian banks in
international credit markets and increasing its investment in residential
mortgage-backed securities, was made at an emergency weekend meeting of senior
government officials and bureaucrats.
The Australian dollar was trading just under 66 US cents, recovering from a
five-year low of close to 63 US cents late on Friday.
Mr Rudd said the three-point plan prevented Australian banks from being
disadvantaged by other countries defending their own banks.
"This was potentially going to have an impact on the way international credit
markets looked at Australian financial institutions," Mr Rudd told parliament.
"I was not prepared to stand idly by and allow the concerns of households, concerns
of working families, pensioners and carers about the banks to go unaddressed."
Opposition Leader Malcolm Turnbull reiterated his backing for the government's plan
and will support enabling the legislation through the parliament.
"The only note of disappointment that I want to express is Mr Rudd's failure to
engage in a bipartisan, constructive discussion with us," Mr Turnbull said.
Mr Rudd said the global financial crisis had entered a "new and dangerous phase"
that would impact on economic growth and jobs. The government had taken a view that
the surplus should be used.
"The purpose of the surplus is to deal with tough times ahead, and my message to the
nation today is those tough times have arrived," he said.
"Therefore the government remains determined to deploy that surplus intelligently to
deal with the long term support of positive economic growth Australia and to deal
with the necessary support for households."
In May, the government announced a $21.7 billion budget for 2008-09 and has since
committed to accelerate spending on public infrastructure.
"It now looks likely that there could be a direct round of measures announced to
support households," JP Morgan chief economist Stephen Walters said.
"Personal tax cuts and, or tax rebates could be announced soon, along with
additional welfare payments and special bonuses, including to the elderly."
New data shows the economic slowdown and global financial crisis is having an impact
on employers hiring intentions.
A key forward indicator of employment growth - the ANZ job advertisement series -
fell for a fifth straight month in September, declining a further 1.4 per cent last
month.
"Eventually this will show up as a weakening of employment growth and a rise in the
unemployment rate," ANZ head of Australian economics Warren Hogan said.
ANZ has lifted its forecast in the nation's jobless rate over the next 12 months to
5.75 per cent compared with the current rate of 4.3 per cent, Mr Hogan said.
The share market ended 5.6 per cent higher on Monday led by banking shares - defying a negative lead from Wall Street on Friday - after Mr Rudd's announcement on Sunday that the government will guarantee bank deposits for three years.
This decision, along with guaranteeing the borrowings of Australian banks in
international credit markets and increasing its investment in residential
mortgage-backed securities, was made at an emergency weekend meeting of senior
government officials and bureaucrats.
The Australian dollar was trading just under 66 US cents, recovering from a
five-year low of close to 63 US cents late on Friday.
Mr Rudd said the three-point plan prevented Australian banks from being
disadvantaged by other countries defending their own banks.
"This was potentially going to have an impact on the way international credit
markets looked at Australian financial institutions," Mr Rudd told parliament.
"I was not prepared to stand idly by and allow the concerns of households, concerns
of working families, pensioners and carers about the banks to go unaddressed."
Opposition Leader Malcolm Turnbull reiterated his backing for the government's plan
and will support enabling the legislation through the parliament.
"The only note of disappointment that I want to express is Mr Rudd's failure to
engage in a bipartisan, constructive discussion with us," Mr Turnbull said.
Mr Rudd said the global financial crisis had entered a "new and dangerous phase"
that would impact on economic growth and jobs. The government had taken a view that
the surplus should be used.
"The purpose of the surplus is to deal with tough times ahead, and my message to the
nation today is those tough times have arrived," he said.
"Therefore the government remains determined to deploy that surplus intelligently to
deal with the long term support of positive economic growth Australia and to deal
with the necessary support for households."
In May, the government announced a $21.7 billion budget for 2008-09 and has since
committed to accelerate spending on public infrastructure.
"It now looks likely that there could be a direct round of measures announced to
support households," JP Morgan chief economist Stephen Walters said.
"Personal tax cuts and, or tax rebates could be announced soon, along with
additional welfare payments and special bonuses, including to the elderly."
New data shows the economic slowdown and global financial crisis is having an impact
on employers hiring intentions.
A key forward indicator of employment growth - the ANZ job advertisement series -
fell for a fifth straight month in September, declining a further 1.4 per cent last
month.
"Eventually this will show up as a weakening of employment growth and a rise in the
unemployment rate," ANZ head of Australian economics Warren Hogan said.
ANZ has lifted its forecast in the nation's jobless rate over the next 12 months to
5.75 per cent compared with the current rate of 4.3 per cent, Mr Hogan said.
