Risky Business

Oh yes, here it is, another post about our fearless leader, Kevin Rudd.
Now rather than scoring political points on a soft issue, he's scoring points by attacking a tough issue; the economy.
The problem; he's made an awful mistake.
The Government has decided to insure all deposits in all institutions. Sounds great, right?
The Government has also sought to "guarantee" our banks credit ratings (in some way, I'm not too clear on), sounds great too, doesn't it?
WRONG!
Once again, this moron has tried to take control of something that is not in his realm of influence. He's trying to eliminate risk, and when you do that, you eliminate reasonable thinking.
By insuring deposits, you're allowing depositors to think their money may be safe no matter what their savings institution does with the money. So then, the savings institution can over extend it's lending without risking a run on the bank. Then the taxpayer is forced to pay up when banks mal-invest.
By guaranteeing the banks credit ratings (it doesn't matter how) you're adding to this false sense of security that the banks will abuse. This is how the American system got to be how it is. Not because of capitalism and greed, but because the government tried to eliminate risk. They made the most reckless decisions possible to lenders, through absurd regulation and a guarantee of intervention.
Australia is heading down the same path, all the while lording the benefits of our regulatory system and damning the free market for causing America's crisis.
It's bullshit! The free market died for America nearly a century ago when Daddy Rockefeller and his cohorts helped push through the Federal Reserve Act, and gave a quasi-government agency the ability to fix the price of the money in-order to regulate the market. Since then they have created agency after agency to eliminate the inherent risks of business, but all they did is cover up the danger. They hid it behind a smoke screen of low interest rates, mortgage insurance, the FDIC, a false CPI, and inflated housing prices to mask the reality of the GDP.
We are living in a fantasy world. There is no free market to blame for this situation, and regulation and intervention are not the solutions. Investors don't need to be reassured that their deposits are safe, they need to know the reality. Banks don't need more credit, they need to pay off their debts, increase interest rates, and give more incentive for people to save.
Yes, many mortgages will become unpayable. Yes there would be a recession, but the recession is not the problem, it's the cure. If people default, house prices will drop, and it will end the affordability shortage we're now facing.
People may lose their jobs, but not permanently. ALL prices need to fall, and unfortunately that includes the price of labour, it will need to drop for people to get re-employed, but if prices are going down, it doesn't really matter.
The Government is price fixing, with all the regulations and measures it's taking to combat a problem that has been caused by price fixing... It's fucking stupid. This is only going to bring us down with the yanks. They have basically ensured that the value of our dollar will drop, and inflation will go up. It won't matter if your savings are insured when it costs you $200/ day to live.
I'm not going to say things would be any different if we'd stuck with Howard and Costello, but Rudd and Swan just don't understand what they're doing.