Freeze on Funds (1 Viewer)

[blue_chameleon]

Freeze on Mortgage Funds Grows

• Perpetual and AXA freeze $5.5bn of savings
• Bid to stop withdrawals as cash pours into guaranteed bank accounts
• New challenge to government as credit crisis widens</I>

PERPETUAL and Axa Asia Pacific have led a freeze of $5.5 billion of investors' savings, as mortgage funds continue to suffer from being excluded from the Rudd government's deposit guarantee scheme.
The mortgage funds yesterday moved to halt a cash exodus as investors sought the added security of the federal government's guarantee on bank deposits.

Perpetual Investment Management froze $2 billion of investor funds, joined by Axa Asia Pacific ($2.1 billion) and Australian Unity ($1.4 billion), according to an Australian Financial Review report.

AXA is potentially freezing redemptions for the next 6 months, which if things remain unchanged will have major consequences for clients that have invested into AXA portfolio's if they can't draw out income.

Rudd really put a lot of thought into this one. RBA was warning that there would be a run on cash management funds and this would happen, but still he pushed on.

I'm predicting after government meets with with fund managers today, they'll realise that they have no option but to allow the funds invested directly into the money markets to also be guaranteed.

Would hate to be in an industry fund at the moment, because they aren't frozen. At least with AXA, Perpetual, Challenger et al, everybody's hands are tied.

Is anybody else following this? Opinions?

 

[sam04u]

Is anybody else following this? Opinions?

My opinion is this. Imagine there is a major shitstorm brewing outside your house. And one of your ignorant children/younger siblings hears it's ravaging the neighbours poorly built house. He decides he wants to bail, and try to escape the shitstorm. He opens a window and inevitably the shit pours in through the now open window, ruining the otherwise impenetrable inside of the house. In doing so, not only does he not escape the shitstorm, but rather he makes an opening in the house for the shit to seep into.

Now, exchange shitstorm with current economic crisis. The house with Australia. The ignorant younger sibling/child with investors, etc.

Best solution is to stop the ignorant child/younger sibling from causing a disaster out of fear.

 

[Trefoil]

Fucking dickheads.

I'd expect this sort of shit in America or Europe where they actually have a financial crisis, but not Australia. Probably a bunch of senile old people who thinks it's the Great Depression 2.0.

Well done freezing the funds. I'd prefer not to have them insure secondary funds as well, but if that's the only way to knock sense into people I guess it's necessary.

 

[blue_chameleon]

My opinion is this. Imagine there is a major shitstorm brewing outside your house. And one of your ignorant children/younger siblings hears it's ravaging the neighbours poorly built house. He decides he wants to bail, and try to escape the shitstorm. He opens a window and inevitably the shit pours in through the now open window, ruining the otherwise impenetrable inside of the house. In doing so, not only does he not escape the shitstorm, but rather he makes an opening in the house for the shit to seep into.

Now, exchange shitstorm with current economic crisis. The house with Australia. The ignorant younger sibling/child with investors, etc.

Best solution is to stop the ignorant child/younger sibling from causing a disaster out of fear.

Thanks for your insight champ, but you've completely missed the point.

The government has just caused this shitstorm, by saying 'if you invest your moeny with the banks, its guaranteed. Outside of that, all super funds, managed funds, cash funds......well, we haven't thought of that actually. Well we were told by the RBA, but we know better than them.'

 

[sam04u]

Thanks for your insight champ, but you've completely missed the point.

The government has just caused this shitstorm, by saying 'if you invest your moeny with the banks, its guaranteed. Outside of that, all super funds, managed funds, cash funds......well, we haven't thought of that actually. Well we were told by the RBA, but we know better than them.'

Initially Rudd put out an across the board guarantee , didn't he? I thought he only rescinded those comments after it was deemed irresponsible. If anything what caused this shitstorm is our obsession with what's happening in the U.S and around the world. Either way there has been no blunder on the part of the government as of yet, as far as I can see.

 

[blue_chameleon]

Initially Rudd put out an across the board guarantee , didn't he? I thought he only rescinded those comments after it was deemed irresponsible. If anything what caused this shitstorm is our obsession with what's happening in the U.S and around the world. Either way there has been no blunder on the part of the government as of yet, as far as I can see.

I think you've misunderstood things a bit. The government guarantee only covered all monies with the banks, unlimited in amount.

This issue is to do with the short-term money market now being alienated, which the banks throw money in and pull money out of to balance their sheets at the end of the day. A lot of cash management funds directly use the money market, and these are the likes of AXA, Perpetual, Challenger etc that are seeing people pull out their money because it is guaranteed through the banks, but ultimately the banks throw it back in the money market anyway.

AXA et al use the money market to invest their Income Funds directly,
Banks use it to invest their Term Deposits etc indirectly, now with a guarantee.

Can you see the issue? Now, frozen funds could potentially mean that investors using these fund managers to draw out an income (eg retiree's), now can't take income out.

It's more irresponsible to say that 'ok, i'll guarantee that you can't lose your money in banks, but we wont extend that to managed funds'. Of course investors are going to shift.