Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

I thank Senator Lundy for her question. At the present time every country in the world—I emphasise ‘every country in the world’—is facing some significantly tougher economic questions. What is known as the global credit crunch has come about as a result of the massive housing crisis that has occurred in the US. The mis-selling, to millions of Americans, of mortgage products which they could not repay and the passing on of securitised investment instruments for the US and mainly European economies have caused a massive global credit crunch. That has pushed up borrowing costs here and abroad.

The global stock markets have fallen by some 20 per cent since this turmoil began. Consumer confidence across advanced economies has fallen to its lowest point in almost 30 years—and Australia is no exception—as a consequence of this fallout that continues to occur. Global difficulties are slowing economic growth around the world. To highlight this, five out of the seven most advanced economies have recorded zero or negative growth in the three months to June this year.

I noticed that the Liberal opposition laughed and scoffed earlier to the reference Senator Conroy made to what is happening in the United States today. Yet another major bank, Lehman Brothers, may not exist at the end of the day—again, a consequence of the global credit crunch and the housing crisis in the United States.