Politico-housing complex goes on tour

There’s nothing like a breath of honesty. From the SMH today:

As global investors curb their exposure to Europe’s troubled banks and governments, Australia’s biggest issuers of bonds plan to step up their marketing efforts in a meeting with key US fund managers this week.

In the first co-ordinated roadshow of Australian credit market players, the heads of the federal government’s financing arm, major state government financing agencies, as well as the big banks, will make presentations to investors in New York on Wednesday. Reserve Bank deputy governor Ric Battellino is also scheduled to make a presentation.

Combined, the issuers are looking to tap investors for more than $150 billion in funds this financial year, the bulk of this being the government’s Australian Office of Financial Management and the big four banks.

This kind of government and private sector co-ordination is quite common in economic diplomacy. High level delegations of Ministers and business leaders are standard. As are export roadshows.

This is the first time, however, that the politico-housing complex has sold itself as a single unit. Very smart idea. The banks can offer their bonds in an environment framed by fiscal and monetary support (and avoid the kind of rotten fruit throwing they have experienced in the past).

Which is fair enough, that’s the reality of it, after all. So, here’s your lineup:

  • Vocals: RBA
  • Lead guitar: AOFM
  • Backup singers: Big banks
  • Drums: State treasuries

Singing their smash hit “This time it’s different”, from the triple platinum album “Appetite for moral hazard”.

And the crowd goes wild!

Later today, I’ll do some digging and see if I can unearth who the agent is behind the tour.

Update: I spoke with the RBA late today and there is less coordination in the tour than reported by Fairfax. The core event, where all of the participants come together is a Euromoney conference. So the tour has been organised by an independent third party, not anyone at this end, which is a mitigating factor it seems to me. It remains the case, however, that this is the first time that all arms of the Australian monetary and fiscal machine have appeared simultaneously to promote everyone’s debt.

David Llewellyn-Smith


      • Is Ric Battellino going to do an encore performance of Boom Boom?

        Hey babe I’d like to talk to you
        How about coming back to my room for a little Boom Boom

        You keep coming to me
        I can dig your dynamite
        Know the way you move
        Get in the groove
        You’re driving me crazy, crazy for you

        Second time you moved me
        It’s time for us to Boom Boom
        You can come right close to me
        And feel the burning fire
        All the time you got me
        It’s fine for us to Boom Boom
        If you see the spark in me
        And feel my strong desire

        Boom Boom Boom
        Let’s go back to my room
        So we can do it all night
        And you can make me feel right

        Boom Boom Boom
        Let’s go back to my room
        So we can do it all night
        And you can make me feel right

          • “…..the RBA’s Invisopowered liquidity facilities…..”

            I know what you mean, I like your term, and I think this is a major reason why the Aussie housing bubble just keeps growing and growing.

            Instead of trying to pump liquidity into the system to rescue it after the crash, I suspect the RBA is doing it to prevent a crash. Goodness knows what the outcome will be – I don’t know that we have any historical precedent.

      • I hope enough noise and spotlight is put on this debt show to keep Boom Boom away.
        How can the RBA maintain its supposed independence of monetary policy execution, when deputy governor of the RBA is literally “pimping” for the Treasuries and the private banks??

    • Now I can see why everything this guy says is bullish on banks, the housing market and Australia in general.

  1. $150 bill. So that’s another, what, ~$7.5bil in foreign interest onto the CAD.

    By comparison how much were those mining taxes going to raise?

      • I wasn’t looking for an argument …coz I’ll be out most of the day and can’t participate 🙂

        But seriously, leaving aside our differences, I am trying to compare relative magnitudes.

  2. So the pollies, bankers and bureaucrats were lying and need heaps more funding to stay afloat. send the bill to the taxpayer!

  3. I reckon Boom Boom was given this task by Stevens…he said, “Ok boom boom, you and the banks are so sure of our housing market stability, you go out and spruik overseas lenders the virtues of our housing market”.

    How will we know if this goes well HnH? i.e. if the US fund managers call Housing Bubble on us and walk away, will this be reported?

    Good piece and loved the band analogy!

  4. “# Lead guitar: AOFM
    # Backup singers: Big banks”

    Nice to see that the acoustic duet who teamed up to release “Ain’t No Sunshine (When GFC’s Gone)” in parallel with their RMBS buying-selling initiative have now got the whole band together!

  5. ‘Knock knock knocking on PIMCO’s door’

    Bill take these debts off of me;
    I can’t roll them, anymore;
    I want them gone before you see;
    The debtors’ low credit scores…

    (I should really get a life…..)

    • Mama told me to invest in houses would be sound;
      Now I can’t finance my mortgage anymore;
      that long cold black debt cloud is coming down;
      feel like I’m knocking on Bernanke’s door.

      All together now!

  6. Stavros summed it up nicely:

    “Ok Boom Boom, you and the banks are so sure of our housing market stability, you go out and spruik overseas lenders the virtues of our housing market”


    I reckon this will be counter productive – the overseas lenders will panic once they’ve had the chance to see these guys grilled by a well informed interrogator. I nominate Max Keiser.

  7. Yep, I’m surprised that boom boom is doing this. The potential for this to backfire is surely huge. I wonder if they underestimate the skepticism overseas about Australia’s housing market and ‘sound’ banks.

    • Jousting Sticks, that’s very UN-AUSTRALIAN. I recall Johnny Howard about six or seven years ago telling the media that people who talked about the dangers of an overdrawn banking sector and too much debt were un-Australian. Now take yourself off to your nearest re-education centre (shopping centre or new fringe dwelling estate) and do your patriotic duty!

  8. Re State Treasuries, I believe the Waratah bonds are offering 4.25% for 12 months. I am not sure how competitive that is spruiking overseas for funds agaisnt the banks

  9. There is a house, in New South Wales.
    They call it the rising sun….

    It is, the ruin of many a poor boy
    Good heavens, Bill Evans, I know I am the one…

    My Mother was my traitor
    She signed me up for life
    My Father was a ramblin’ man
    Now, I’m in, big strife…

    Now the only thing I have to my name
    is a suite case and a trunk
    I’ll never ever be satisfied
    My parents and banks they lied

    I’m going back to Sydney town
    to rent a shack, near a dumb…

  10. $150 billion, that’s a lot of money for sub-prime lending through AOF(mis)M. I hope that O/S investors will see through this BS.

  11. US bankers et al are stupid but not stupid enough to do the maths on Aussie “It’s equity mate”

    The USA has a population of 308 milion with USD $6 trillion “It’s equity mate” in housing.

    Australia with a population of 22.5 million has $3 trillion USD of “It’s Equity mate”

    That makes Aussie “It’s equity mate” 1/2 the USA’s

    +/- (depending on the Fx rate on the day)

    Sorry double post