FORMER prime minister Paul Keating says there are marked differences between the current global financial crisis and the economic problems experienced during his time in office.
"What we`re seeing at the moment is the disintegration of the international financial system," he told ABC Television tonight.
"That`s not what we had in 1990. We had a world recession in 1990, it was a business recession, that means business investment fell.
"What we have here is the advanced disintegration of the international financial system."
Mr Keating also said he agreed with suggestions from Treasurer Wayne Swan that recent developments would make it difficult for Australian commercial banks to pass on in full an expected cut in official interest rates.
The Reserve Bank of Australia is widely expected to cut interest rates by at least 25 basis points next week. Some analysts have forecast a cut of 50 basis points.
However, with banks facing higher costs of funding in the wake of a worsening in credit market conditions over the past few weeks, there are doubts over whether they will pass the cut on to borrowers.
"The Treasurer is right about this," Mr Keating said.
"The London inter-bank rate today is 250 basis points ... it`s normally 25 or 30 or 40, it`s 250.
"Banks won`t lend to one another.
"So of course the Treasurer is right in saying they`re not in such a strong position as they were say, two months ago, when borrowing costs at that point were lower."
"That`s not what we had in 1990. We had a world recession in 1990, it was a business recession, that means business investment fell.
"What we have here is the advanced disintegration of the international financial system."
Mr Keating also said he agreed with suggestions from Treasurer Wayne Swan that recent developments would make it difficult for Australian commercial banks to pass on in full an expected cut in official interest rates.
The Reserve Bank of Australia is widely expected to cut interest rates by at least 25 basis points next week. Some analysts have forecast a cut of 50 basis points.
However, with banks facing higher costs of funding in the wake of a worsening in credit market conditions over the past few weeks, there are doubts over whether they will pass the cut on to borrowers.
"The Treasurer is right about this," Mr Keating said.
"The London inter-bank rate today is 250 basis points ... it`s normally 25 or 30 or 40, it`s 250.
"Banks won`t lend to one another.
"So of course the Treasurer is right in saying they`re not in such a strong position as they were say, two months ago, when borrowing costs at that point were lower."
