Against Australia's near world's worst household debt-to-income ratio?

And against the world's most open import economy, open to severe import price inflation passing through to the general economy and flattening the retail sector along the way?

And against debt service predominantly dependent on borrowers reliant "services industries" like finance and retail and other bottom surfing or dog walking driven incomes?

CBA really is as safe as those houses funded from offshore for which the funding is being denied at recycling by foreigners & for which there is no local capital, or export income, or prospective asset sales to foreigners, to form the capital to replace the RMBS as it reaches maturity.

And by measure of loans against over valued collateral against the highest market share of the debt binged valued residential property lending? Market share that which Norris and Schubert chose to aggressively increase after the RMBS funding bubble burst globally. And again they are at it with Bankwest and are hurtling down the road on the back of the pig flat toward the inevitable crash & bail out that will flatten the economy for a generation.

CBA is a work-in-progress heading to insolvency. These days you can mark an anglo bank's balance sheet by any method that suits the proletariat of greed except that of a rational deduction.

We are at 1890. Foreign investors are getting torched so forget about any empire or SWF coming to our aid with renewed investment to offset our debts except to secure commodities in perpetuity at knock down prices.

Actually I would be happier if the published graph did show the actual "cash" fund loss (rather than a bogus flat line of 0%) because I need transparency to know how to respond.

Do I jump back into a balanced or growth portfolio in the next month or so? Maybe I should (for reasons of diversification if nothing else) but there is that niggling issue of my fund LENDING all the equity investments to major foreign banks. Dan pointed to this connivance (by many funds) several months ago.

When the HMS Pandora ran aground on the Great Barrier Reef in 1791 a crew member threw a set of keys to the Bounty mutineers being held in a cage and most of them got out. Nick Sherry doesn't have a set of keys and is in no position to pretend that he does. Nore is he in a position to proffer bogas advice.

CBA has the strongest balance sheet of the Australian banks. It is not underwritten by the Australian Government but there is a market expectation that the Government would not let the CBA to completely fail. Money would be printed, if necessary, to prevent that event. There have I believe been "statements of implied comfort" relating to the other 3 major Australian banks as well. In the event of a major bank collapse the market would expect the Treasury to orchestrate a supported buyout (Bear Sterns style).

Back to Dan's article --- I never did like the concept of the Future Fund or how it has been operated - with high fees and along the lines of a super fund. Government have a different strategic timeframes, priorities to individuals and the scale of investment is magitudes greater. The whole idea was a crock and of course it is there to be used/pilfered as and when needed.

Unlike Icelandic paper, the country and its now sound infrastructure will still be in the North Sea after this crisis abates. Taking on what Buffett and Gates are saying, innovation is not dead and people will continue to go to work and produce (even in Iceland). For that to happen the banks do need to stay open (as a public utility) and asset prices need to adjust back down to actual values.

One thing to remember though is that there is still a lot of cheap credit air in a now one third deflated tyre and the wheel is still turning. For the past 18 months I've been posting the view here that inflation will be used as a fiscal tool to keep the tyre (at least partially) pumped during an adjustment period for however long it takes. Excessive central bank interventions will of course extend the adjustment period to a point of unbearability.

Inflation could still be a huge problem especially with the falling value of the Aussie dollar and the banks stealing from our future fund. What money you have could be worth a lot less, and that is a real concern. In the worst case scenario currency could be worth as little as falling stock.

But that's the problem when everyone believes paper is worth something. The current situation is unprecedented and it is possible that the only way to protect yourself could be to invest in tangible objects with real value in a depression economy (like food, fuel and clams). That's if things continue to get much worse.

A country like Iceland undergoing an economic collapse is a pretty major indicator that things are pretty scary right now. Hold onto your seats folks you ain't seen nothing yet.