C'mon Gary, run The Age story about the depraved life facing young aborigines up in FNQ.

Rumpole QC
do you mean this one?

Removing just the girls would place the boys at greater risk of sodomy and of learning to be sexual offenders.

Isnt this in some sense a replay of the Savings and Loan scandal/ripoff during the Reagan years.

A scandal in which the Bush boys did very nicely thankyou.

One big and important difference is that everything is now more intricately, and instantaneously connected via the internet and the 24/7 global casino.

And also much more entanlged with the entire world too. The S&L scandals were more of less local by comparison. They also placed a huge burden on future Americans. But nobody mentions that any more!

There's also the new one about truckies in NSW.

Boarding school doesn't sound like such a bad middle ground solution to me. Removal without removal. But then, I don't know what the hell I'm talking about.

Gary,
re your comment that

The black hole is that the whole financial system is facing demands to come up with cash it doesn’t have.

The SMH is carrying reports that that Bear Stearns Cos. required a bailout from the Federal Reserve and JPMorgan Chase & Co. to avoid collapse.

Bear Stearns, the second-largest underwriter of US mortgage bonds, ran short of cash. So are they pawning their assets to the Federal Reserve?

John,
I read somewhere that US home prices fell year-over-year in 2007 for the first time since the Great Depression.That will destroy household wealth for sure.

Gary
The Coalition is arguing that Labor Government just doesn't understand what it is doing in terms of managing the economy. Hence Malcolm Turnbull's argument that inflation was not a major economic problem. So Labor does not know what it is doing. It's not convincing.

The Reserve Bank governor Glenn Stevens released a speech that challenges this view. In the speech Stevens said the headline inflation rate was likely to be 4per cent over the past year. Accepting a rise in trend inflation would be short-sighted and would lead to the problems faced in the 1980s of fixing inflation, he said that it is far better to resist rising inflation now.

The conservatives do have a credibility problem with economic management. They defend the Howard/Costello years without ever mentioning the excesses of the Howard handout machine; or acknowledging the way middle class welfare blew out under the Howard regime.

Gary,
This graph doesn't show the recent decline but it is interesting.
http://graphics8.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif

Les,
the graph shows the extent of the boom in house prices in the US; a boom that was financed by debt premised on rising prices. As Robert Reich says

Americans turned to a third way of spending beyond their wages. They began to borrow. With housing prices rising briskly through the 1990s and even faster from 2002 to 2006, they turned their homes into piggy banks by refinancing home mortgages and taking out home-equity loans. But this third strategy also had a built-in limit. With the bursting of the housing bubble, the piggy banks are closing. The binge seems to be over.

John,
yes you are right. If the worst comes to the worst, the US government can mount a bail-out similar to the one of the bankrupt savings and loan institutions in the 1980s.The bottom line is that even if things become bad the US government is able to rescue the financial system and the economy.

The financial system is a subsidiary of the state--not something tha the free market liberals want to hear; or are willing to acknolwedge.

Gary,
The thing I found interesting with the graph was that after the last 2 booms prior to the most recent the house prices seemed to come back to where they started. Now I am skeptical that this will happen this time because building materials and land are so expensive.
But history proves that it can happen.

Nan,
The 'do you understand?' thing won't last. They're too vulnerable on that front themselves in too many other areas.
Brendan, do you understand the difference between an aeroplane and a brick?
Mr Andrews, do you understand the difference between a terrorist and a boiled egg?

Les,
but in the meantime--between boom and bust---lots of people lose their homes.

Nan,
Yes but the houses are resold. People out there are waiting to pounce on bargains.
As I said before the mortgage brokers got a lot of people in the market at over inflated interest rates that shouldn't really have been in.
And most of them would of been sold mortgage insurance as a prerequisite of getting the loan.
They were used.

Gary,
I see that Bear Stern, a US investment bank, has had to be bailed out by the Federal Reserve. It simply ran out of money.
Megan McCardle writes:

J. P. Morgan, which unlike Bear can borrow directly from the Fed's discount window, is taking a short-term loan from the Fed and re-loaning the money to Bear. They hope this will let Bear Stearns hold things together long enough to find permanent financing or -- more likely -- auction itself off. Bear Stearns, however, suffers from the same problem that is plaguing credit markets: since no one knows what many of its assets are worth, it's hard for either buyers or sellers to put a price on the firm.

Gary
an update.PMorgan Chase has agreed to buy Bear Stearns, the stricken US investment bank, for around $230m in shares in a deal that puts an end to Bear’s 85 years of independence.

JPMorgan’s cut-price takeover of Bear, which has the backing of the Federal Reserve and the Treasury, was agreed before the opening of Asian markets on Monday morning in an attempt to stave off a run on other banks.

The deal, which values Bear at just $2 per share, compared with the $169 hit in January last year and the $30 reached on Friday.

That means lay-offs among Bear Sterns 14,000 employees are likely.

Peter
who is next? The liquidity crunch is like watching a house of cards waver with the odd card crumbling.The bails out of Wall Street smell like socialism for the rich to me. I find that objectionable.

Wall Street continues to say that global financial markets are resilent and flexible and would adjust to the new circumstances. Yeah 'flexible' to take hand outs to help bail them out of their own mess.

The US Federal Reserve is showering Wall Street with cash in a bid to hold up asset prices and stop the credit crunch. So he will lower interest rates yet again.

This life support is an attempt to prevent recession. Doesn't the free market require the creative destruction of a recession to clean up the financial excess and toxic waste of the investment banks and hedge funds.

The Federal Reserve is assuming all the risk.

Anon,
the cash and lower interest rates from the Federal Reserve isn't working.As is pointed out here in the Age:

Home buyers are unlikely to put down offers on houses that they think will lose value -- no matter how much the Fed does to lower mortgage costs. Banks with mounting loan losses will shy away from lending to borrowers they think might go bust -- no matter how much money the Fed pumps into the financial system. And investors will remain jittery -- even after the Fed throws a lifeline to struggling financial institutions, as it did last week with Bear Stearns

Things continue to spiral down.

Peter,
a couple of quotes from here to show why the Federal Reserve will not cut the lifeline:

While bailing out investment banks looks like an act of gross corporate welfare, the ramifications of letting Bear Stearns go would have been cataclysmic for financial markets. The Wall Street bank is one of the top three "prime brokers'' in the world. A prime broker provides loans and processes trades for hedge funds. But the hedge fund relationship is far more critical than a service provider.

And:

The collapse of Bear Stearns demonstrates just how critically interlocking are the relationships in global financial markets. In the case of Bear Stearns the prime brokerage business was probably OK, but at the parent level there was about $US400 billion of assets sitting on just $US13 billion of shareholder equity.
Rival Wall Street bank Lehman Brothers is just as leveraged, and equally dependent on its prime broker. Wall Street is watching closely in the hope there are no nasties about to jump out. Lehman was down 14.5% yesterday

The bailout of Bear Sterns is further evidence the bottom is nowhere in sight.