How is Australia different than Greece? Do you think we could ever experience a banking crisis here?

no different, the same rules apply and yes a similar crisis is a real possibility.

How does it make you feel to know that virtually all of your deposits are invested in housing and businesses?

How I or anyone feel does not change the situation. Also I cant foresee a way to backtrack out of either. It would mean a complete restructure of the system as a whole.

What would it take for Australians to lose faith in the banking system and show up all at once to withdraw their savings?

mass media telling them such, large increase in unemployment etc.

Should our banks be forced to maintain a higher capital reserve than 1 or 2 percent?

Not really but there should be system that protects the Australian masses and banks should have to provide collateral the same way a home buyer does.

APRA this week tightened the capital requirements of the big banks by about 80 basis points (.8 percent). Do you think this will have an impact on property values?

Not enough to affect positively or neg if an issue arose.

In my opinion the bottom line is education, if the ins and out of the way the government/Financial sector and so on where understood in low level schooling (and so on) it could in turn benefit the country (e.g. Richest man in Babylon theory)

It’s obviously worked SO WELL too: “Let’s lower interest rates. Hm… That didn’t do what we expected. Let’s try that again. Gee, that didn’t work either, must do it again…” What’s that definition for someone that keeps making the same mistake over and over again? Oh that’s right – INSANITY.

BTW, it’s no use us discussing what ‘should’ government do… Because any one crowd is only in power a few years. All ‘government’ is really interested in, is pushing the problem down the line a few years… “Let the next lot take care of that messy problem.”

And… The government guarantee on deposits is, basically, just for show. If banks did collapse at once, where exactly do people think the government will get the $ to hand over to depositors – and – where will depositors BANK it!?

First, gov. won’t sell assets to provide such a huge amount of money to Australian depositors (if they have any assets left after selling them off continually to the private sector).

Second, the banks are now wiped out – so who is going to provide the loans, to buy any gov. liquated assets.

Third who is going to buy those assets, since they will continue to plummet in value. No-one will have the money on hand to buy those assets anyway, because the banks are closed.

Finally, if a run on the banks actually happens, people are fooling themselves if they think gov. will honour their promise to reimburse savings. Gov. won’t liquidate the countrys assets – what they will do is just WIPE THE SLATE CLEAN. In other words, all debt erased, all savings erased – the old system didn’t work, we blame govs. of the past – let’s start a new era and get it ‘right’ this time. They MAY give everyone a digital credit or debt based on your previous position – but I doubt it.

PS. Those folks storing gold & silver (or worse, cash) under the bed… Those will be worthless too. History shows when such things occur (ie. whenever the government feels like it), the use of such currency is simply outlawed, and/or gov. require it all be handed over to the treasury, to back-up their next ponzi banking scheme. If it’s stored on the gold-trader’s premises (as many people do), such businesses will be legally required to surrender it to gov. If it’s in your own hand, it’s now illegal to trade with – so other people will dob you in, to get the reward gov. will promise for informing on ‘unpatriotic traitors’.

These loaned funds are then re-deposited and then re-loaned up to the limit of that or the next bank’s reserve requirements, thus compounding the effect in the economy as this happens over and over. This is how our banking system creates money out of nothing.

So no, an individual bank can not loan out more than it has taken in through deposits, but those deposits were loaned from another bank, and on and on, which means money is essentially being created out of nothing. When you start diving into this, you realise how dependent our entire economy is on debt.

Banks are held accountable by APRA, but you could make the argument that they are quite permissive parents. If banks were any other business, they would be insolvent. The only reason the system works is because people either don’t know or don’t care because the government guarantees deposits (http://www.guaranteescheme.gov.au/qa/deposits.html), promising to bailout banks if they go bust.

This of course brings some level of moral hazard leading banks to take on a higher level of risk than they perhaps would if they were held accountable by the markets trust in their viability. And if banks do go bust, where will the government get the money? They would create it out of nothing with the help of the RBA.