`No Depression`, $A and shares both down

The OECD's chief economist says the world is experiencing the "worst financial crisis in decades" but a repeat of the 1930s Great Depression is unlikely. Organisation for Economic Co-operation and Development (OECD) chief economist Klaus Schmidt-Hebbel's comments come as the Australian sharemarket had another gloomy performance on Monday.

And a slump in the Australian dollar to a five-and-half year low forced the Reserve
Bank of Australia to intervene and buy the currency both late on Friday and Monday.
Industry researcher Superratings also provided a dismal update on the performance of
superannuation funds, while the freeze of investment funds in the wake of the
federal government's deposit guarantee scheme claimed another victim - Colonial
First State.
Regulators and fund managers were in Canberra on Monday, trying to thrash out a
solution to the problems caused by the government's scheme which has left some $12
billion of investment funds frozen because they are not covered by the guarantee.
"There are no instant solutions," Treasurer Wayne Swan said.
"We are working with the industry as assiduously as we can to see what appropriate
steps can be taken."
Colonial First State said the sudden actions of other fund managers to suspend fund
redemptions have had a roll on effect on its mortgage funds, causing an increased
level of redemptions in the last few days.
Opposition Leader Malcolm Turnbull said the deposit scheme had been a "blunder" by
Prime Minister Kevin Rudd and Mr Swan.
"A lot of people are suffering real hardship because of that," he said.
He said it was important there be no more blunders.
"So, we stand ready to cooperate with Mr Rudd, to work with him," he said.
"He has rejected our offer in the past but we stand ready to do that.
"We think that Australians would like to see both sides of politics working together."
Australian share prices struck fresh four-year lows after a drop of over five per
cent on Wall Street on Friday, ending 1.6 per cent lower.
The Australian dollar also slumped below 61 US cents on fears of a global recession
hitting demand for commodities.
"It is carrying some of the weight of this global financial crisis, there's no doubt
about that," Mr Swan told the Fairfax Radio Network.
But the dollar's near 37 per cent depreciation since mid-July has brought some
benefits to the local economy.
"If you are in the tourism industry or an exporter this will certainly provide some
relief," Mr Swan said.
The fallout in Australian and international sharemarkets has continued to take its
toll on superannuation accounts which posted their worst performance in the 12
months to September since the introduction of compulsory super in July 1992.
SuperRatings said the median fund posted a negative return of 3.42 per cent in the
September quarter, its fourth consecutive quarterly negative return.
This meant in the 12 months to September the median negative return stands at 11.59
per cent, and Superratings warned this could fall further by the end of October.
Mr Schmidt-Hebbel said he expected many OECD countries would slip into recession.
"This is the worst financial crisis in decades, but a repeat of the 1930s Great
Depression is highly unlikely, thanks in large part to these massive rescue plans
now in place," he said in an interview with OECD Observer magazine.
"It is likely that (economic) recovery will depend largely on how quickly financial
markets resume transactions and lending, even if that lending remains restricted, at
least compared with 2002-2007," he said.
But Mr Schmidt-Hebbel said macroeconomic policy should also play an important role
in cushioning the recessionary impact of the crisis.
"As economies quickly weaken and inflation recedes, there will be room for interest
cuts in some OECD economies, not to mention timely, temporary, and targeted fiscal
stimulus as well."
A spokesman for Mr Swan later said there would be further talks after Monday's
meeting in Canberra between regulators and fund managers ended without a
breakthrough.
Richard Gilbert from the Investment and Financial Services Association said the
meeting was positive but more talks were needed.
"All I'd like to say that is this is an important issue, we had a very constructive
meeting, we will be sending obviously further advice to government on these issues,"
he told the ABC.