The world's financial storm has swept through Australia and New Zealand this week amid mounting signs of contagion across the Pacific region.
Financial shares were pummelled in Sydney on Tuesday after investor flight forced National Australia Bank (NAB) to slash a £400m bond sale by two thirds.
The retreat comes days after the Melbourne lender shocked the markets by announcing a 90pc write-down on its £550m holdings of US mortgage debt, an admission that it AAA-rated securities are virtually worthless.
Emphasis added by me.
OK, that made even my jaw drop.
And this is simply staggering:
The decision by National Australia Bank to make drastic provisions on its US mortgage debt could have ramifications in the US itself. It opted for a 100pc write-off on a clutch of "senior strips" of collateralized debt obligations (CDO) worth £450m - even though they were all rated AAA. No US bank has admitted to such fearsome loss rates.
Emphasis added by me.
Poof! Money into toilet paper!
We tend to forget that all those fraudulent mortgages were laundered over and over again and finally packaged as financial obligations having little resemblance to their original forms. Much of this fraud was off-loaded to investors in other countries. That's how massive the fraud was, that our own country couldn't absorb it alone. And as our real estate rocketed, so did property in all of those other countries. Now with the crash in values, those countries have to deal with their own crisis as well as the one they imported from us.
Is the scope of this becoming clear yet?
Where is your money today?
Educate yourself!
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