Many of you, I know, are furrowing your brow and shaking your head in a fruitless attempt to understand the global economic crisis*.
I’ve been following events closely and reading all the experts and I don’t have the foggiest about what’s happening either (and neither, I suspect, has anybody else).
I have noticed, however, certain turns of phrase keep cropping up so as a bonus to YOU, the loyal readers of TSFKA, I present the “Ramon Insertnamehere Handy-Dandy, cut out and keep, bluffers guide to the recent global economic unpleasantness”.
The important thing is to stress is “this is a liquidity crisis, rather than a credit crisis”. Now, for you and me (and more particularly, me) a “liquidity crisis” is where the pub hasn’t opened yet but it seems that money is like water – which means it can be boiled to make a refreshing cup of tea.
So there’s not enough money sloshing around the system, which means the major financial institutions are being forced to go to the financial regulators to ask for another bucket of water until the global plumber gets back from his tea break and reconnects the pipes.
The second point to stress that the Australian banks are still fundamentally sound. Why we should have more liquidity in the middle of a severe drought is something that has not, to my knowledge, been addressed but it probably boils down to Kruddy being very, very clever and keeping an extra bucket out by the back shed at The Lodge.
The third point is that this is an international crisis. Extra points for knowing five countries in the G-7 group and throwing in references to the Bretton Woods Conference, the IBRD, GATT and IMF.
There you have it. You may want to print this out and put it on your fridge, so you don’t look like a complete goose at dinner parties** when the subject comes up.
*Except for EMS who has been googling Rebecca Smart, so she can track her down and give her a richly deserved smacking.
**I am no longer invited to dinner parties, after that unfortunate “Catherine Deveny incident”.