The Commonwealth bank has cut interest rates on the back of the global economic crisis.

NATION'S largest lender cuts home loan interest rates by up to 60 basis points as ASX200 opens at a two-year low point.

The Commonwealth Bank of Australia has cut interest rates on its fixed rate home loans by up to 60 basis points.

Australia's largest lender said the fixed rates for its one to five year products will now range from 6.59 per cent to 6.99 per cent, a cut of between 0.25 per cent and 0.6 per cent.

"Many customers want certainty with their home loan repayments and we are pleased to take a lead and offer customers that peace of mind," executive of retail banking services Ross McEwan said.

Read more: http://www.news.com.au/business/australia-faces-market-test-of-nerves/story-e6frfm1i-1226111305525#ixzz1UUHnTcql

The Aussie dollar has taken a hit , now below parity, as more banks cut interest rates.

Well, we were "lucky" enough to dodge that bullet on Thursday, via a "fortuitous & better than expected" Unemployment Report out of the USA.

However, I suspect that the will be more bullets to dodge, in the period going thru to the end of 2012 and future "fortuitous & better than expected" reports, may be less believable?

Whilst on the issue of believability, some of the following article on "Myths & US Politicians", may also ring true locally.
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NEW YORK (TheStreet) -- The financial system is on the brink of collapse after trillions in bad loans were issued by greedy bankers. If you were a U.S. political figure, would you:

A.) Tell everyone to suck a lemon, and (maybe) let the economy implode.

B.) Fire the bankers who made the bad loans, prosecute the guys who broke the law and guarantee a portion of the loans in a grin-and-bear-it show of good faith.

C.) Reward the bankers who made the bad loans with billions of dollars in bonuses and guarantee every loan with U.S. taxpayer money (with interest, because we borrowed the money from China).

If you answered C, then maybe you should run for office, support laws that funnel billions to insolvent companies, retire from politics and start working for one of the companies you helped bail out. Heck, that's what former Republican-senator Judd Gregg did (newly hired by Goldman Sachs).

But don't worry, the revolving door between Wall Street and government is just a "myth", and here are 10 actual myths that politicians want you to believe:


10. Quantitative Easing Helps the Economy
Make no mistake, quantitative easing is a gift to bankers and nothing else. Let's take a deeper look:

Quantitative easing is when the United States' central bank, the Federal Reserve, buys U.S. Treasury bonds.

   Treasury bonds are a future obligation of the United States, paid out with Federal Reserve notes (dollars).
   Federal Reserve notes are a current obligation of the United States, redeemable for goods and services.

If the Federal Reserve purchases bonds directly from the United States Treasury, they are electronically creating dollars (current obligations) in exchange for future obligations. This is inflationary if the amount of obligations (money) is increasing faster that the amount of capital (goods, services, products and ideas). But the Federal Reserve doesn't buy bonds from the Treasury, it buys them from "primary dealers."

9. Republicans Are Fiscal Conservatives
Since 1968, the U.S. national debt accelerated fastest under President Ronald Reagan until President Obama claimed this distinction. The national debt does not take inflation into account, so perhaps we should look at inflation-adjusted deficits instead. According to research by Dave Manuel,

From 1946-2010:

Democratic President

   Total Years: 29
   Average Inflation Adjusted Deficit: $150.73 billion

Republican President

   Total Years: 36
   Average Inflation Adjusted Deficit: $202.28 billion

8. President Obama Is an Enemy of Wall Street
President Obama is the best friend Wall Street could have.

7. The Financial System Is Safer Today Than in 2008
The Federal Reserve, which neglected to use regulatory powers to rein in the last crisis, has been awarded more regulatory powers. The majority of "too big to fail" banks are even bigger. And while the government is guaranteeing fewer mortgages through Fannie Mae(FNMA_) and Freddie Mac(FMCC_), it's made up the difference by guaranteeing mortgages through the Federal Housing Authority. "Good as cash" money market funds are full of mortgage-backed securities backed by the government (who needs to borrow money to back them up).

6. The 'Bush Tax Cuts' Increased Tax Revenue
Washington has always had a spending problem, but since the "Bush Tax Cuts," we have a revenue problem as well. From 1990 to 2000, U.S. tax revenue had a period of exceptional growth. Following the 2001 tax cuts, revenue plummeted -- then recovered -- then plummeted again. You can attribute the sustained revenue growth of the 1990s to the fact that the decade didn't have a recession, but if you expand the timeline to 1965, we've had numerous recessions without substantial drops in revenue.

5. 'No One' Could Have Seen the Financial Crisis Coming
No one -- except for everyone who did. TheStreet has interviewed numerous economists and money managers who have been pounding the table for years.

4. If You Support Capitalism, You Support Big Business

3. Republicans Are a Bunch of Fat-Cat Millionaires
Republican: 22
Democrat: 28

2. The U.S. Has the Highest Standard of Living in the World

1. U.S. GDP Is Growing

U.S. GDP has increased by 4.26% from 2007 to 2010

, according to data compiled by the U.S. Bureau of Economic Analysis.

In the same period of time, the U.S. national debt has increased by 61.6%

, according to the U.S. Treasury. Looking at these numbers, you don't need to be an economist to see that something is very, very wrong.
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Interesting info?
http://www.treasurydirect.gov/NP/BPDLogin?application=np

Italy's economy on the brink

The global financial situation has markets alarmed that many big countries cannot repay the enormous debts they owe. One country causing concern is Italy, with 50 percent of the nation's debt held by overseas investors.

Video report from the ABC 7.30 program is embedded & well worth viewing!

Link -
http://www.abc.net.au/news/2011-08-10/italys-economy-on-the-brink/2833934?sectio...
===========================
Italy is a much greater problem than some of the other European Piigs, such as Greece, Ireland & Portugal.

For starters, Italy has the 3rd largest Economy in the Eurozone, in fact if Greece, Ireland & Portugal were put together & doubled, that would be somewhere near the size of the Italian Economy.

In addition, the Italian Bond market is the 3rd largest in the world, behind only the USA & Japan and Italy currently owes the international market around $3 Tillion.

So, if the perception is there that Italy may be sliding into problems, then the ramifications would spread far & wide!  

In the most recent Federal Open Committee Meeting, the following was observed by the policymakers:
“Economic growth so far this year has been considerably slower than the committee had expected. Indicators suggest deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in non-residential structures is still weak, and the housing sector remains depressed.

The key question here is: Are the policymakers again underestimating the severity of the economic downturn for the second half of 2011?

Consumer confidence at three-decade low
The latest consumer confidence data suggest that confidence among consumers slumped to a three-decade low in August. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. Further, the index of consumer expectation for six months from now, which might be a good indicator of consumer spending direction, slumped to 45.7 from 56 in the prior month. Clearly, for an economy primarily driven by consumption, a meaningful drop in consumer confidence is an ominous sign for the foreseeable future.

10- Year Treasury bond yields nearing December 2008 levels
Looking back at the 10-year Treasury yields, the yields reached a low of 2.07% in December 2008. This was period of economic collapse post the Lehmann Brothers crisis. Post that, yields on the 10-year bond have been increasing steadily. However, the yields have again slumped in the last month and are threateningly close to the yields seen in Treasury bonds during the phase of economic collapse.



Does this mean we are headed for another sharp downturn? In my opinion, markets are telling me this ahead of any data, which surprises many on the downside. It is really important to note here that the yields have slumped even after the recent downgrade by S&P. Surely, the markets feel that, even after the downgrade, bonds are a safer place.

Withdrawals from stock funds biggest since 2008
Over the weekend, Bloomberg reported that investors pulled out most money from global stock funds since 2008 in the last week. Many might argue that it was primarily because of negative sentiments arising from the downgrade. However, in my opinion, market participants are just discounting the slowdown factor from the global markets.
Further, if the reaction of market participants is such, one can expect some negative surprise in the last few months of 2011. I have to add here that I expect markets to correct further from current levels. Hence, fresh long exposure to equities might not be a great idea.

Conclusion
The last few months of 2011 might be rough for the economy and the equity markets. Further, this might be a short period in which holding some cash would be beneficial than being invested in equities or commodities. The most important thing would be to watch the reaction of the government and Fed if there is any meaningful slowdown or even recession.

Link -
http://seekingalpha.com/article/287409-are-we-headed-for-another-major-slump?sou...
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This author has come to the conclusion that the last few months of 2011, may be rough for the Economy & Shares.

The Truth is, that whilst the author was referring to the USA, I suggest the same will apply Globally, but the downturn is likely to be more sustained!  

Ex Dame Pansi wrote on Aug 18^th, 2011 at 7:04am:


I hope not, it'll be us that will suffer.

http://chart.finance.yahoo.com/zs=%5eFTSE&t=1d&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU
FTSE: 5,187.32  

Down 144.28 (2.71%)

http://chart.finance.yahoo.com/zs=%5eGDAXI&t=1d&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU
DAX: 5,719.65  

Down 229.29 (3.85%)

http://chart.finance.yahoo.com/zs=%5eFCHI&t=1d&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU
CAC: 3,144.33  

Down 110.01 (3.38%)