The financial giant that is america has been momentarily staggered, lets take advantage while we still can.

Banks are a bit different to other businesses as they form part of the mechanics for the operation of our economy. If, say, a textile firm went out of business it may be a shame and society may want to provide some kind of assistance, financial or otherwise, to workers who have lost their job. But the failure does not threaten the broader economy. The same is not always true of banks, particularly if they are large or a number are threatened at once, as we have seen recently. In this case failure could have far broader repercussions. This has been understood for a long time, which is why banking is already subject to extensive regulation. But the regulation of banks is effectively an ongoing experiment. The rules are designed based on problems or near misses that have been observed over the years. The latest crisis show that we have not yet got the mix quite right. Two key lessons are the importance of preventing individual banks from becoming “too big to fail”. First, since it will never be possible to completely eliminate risk, we should at least have an environment where a single institution could be allowed to fail, like a textile firm or any other sort of business, without threatening the whole system. Second, it has become evident that it is not only traditional retail and commercial deposit-taking banks whose failure can threaten the economy. The same can be true of the so-called “shadow banking system”, comprising businesses such as investment banks, hedge funds and the like. Changes to regulation should therefore extend greater restrictions on the activities of these sorts of firms.

Even so, the new regulations will, of course, not be perfect. But they will, with luck, represent an improvement in this ongoing experiment.

I would see it more a case of common sense that the government take this crisis as a chance to make us less independent of imports. Create new jobs through govt companies working for the government!!

Alot of the recent “news worthy” layoffs (ie. pacific brands) could be re-employed by the businesses in making, oh i dont know, the uniforms of all the public service employees, contracts supplied to australia’s boat industries to build patrol boats, which will become increasingly important in our region, the various equipments used by our defence forces etc. Take this chance to solidify our independence of imports from america, china etc. for the very supplies we need.

Also, one quick technical point. The aim of lowering interest rates is to pump more money into the economy, not to take it out.