So Obama won the debate, at least according to the polls, and I’m yet to find a reasoned argument saying he didn’t. He was cool, calm and collected, where as McCain was angry, real angry at times.

I made the observation during the debate that while Obama spoke more about what he would do as President, McCain spent more time attacking Obama than speaking about his plans. There were attacks in both directions, and I don’t have data to back that up, so it’s an observation only.

Obama’s no Churchill, and despite some earlier comparisons, he’s not a JFK or RFK either, at least in a debate. And yet he presents himself as the right man at the right time: a man who is smart, confident in himself, and remains oh so cool under pressure.

The fun part now will be watching the GOP implode as they realize the election is lost. They were hoping that McCain would win the debate, and giving polling showing Obama with a double digit lead, it was really their last serious throw of the dice. They lost.

The signs of a GOP implosion had already started before the debate. Reports of disagreements between Palin and McCain, a number of high profile conservatives coming out to support Obama, pulling ads in previously battleground states because they’ve conceeded they can’t win them. Odd leaks, the starting of finger pointing, and even some of the right wing blogs are starting to join in, instead of just towing the party line as usual.

There is still a slim chance of the election being won by McCain. Obama could slip up, but those chances are slim. Reagan came from a similar behind position to McCain 3 weeks out to beat Carter in 1980. But Reagan also won the last debate.

The only question now is how bad will the implosion be before November 4.

The Australian Prime Minister announced yesterday that the Government would guarantee all deposits in Australian Banks, Building Societies and Credit Unions. Right move. The previous cap was $20,000 and it only applied to banks.

I don’t have hard figures, but I heard the word “cash hording” on the ABC last week in an Australian context, so although there may not have been a run on the banks, some people were obviously taking cash out. Our current term deposit is coming up, and we were thinking of taking at least some of it out in cash as well, just in case, particularly given it’s invested with a credit union and didn’t have Government support until now.

The scheme though doesn’t seem to extend to other institutions that take money, for example finance companies (the motoring associations for example offer investments to raise money for lending), so we’re still going to see a cash deficit in non bank lenders to some extent.

The second part was $4 billion acquiring Residential Mortgage Backed Securities. This at least props up some of the non-bank mortgage market, so it’s a good move.

There’s also this line “The Australian Government will also guarantee wholesale term funding of Australian incorporated banks and other authorised deposit-taking institutions,” which the press and PM’s office is saying will help banks raise capital. Good move.

The announcement addresses some of the bigger problems facing the Australian market: cash deposits, and mortgages, but it seemingly ignores two areas: non-mortgage finance and non-bank finance. Backing up deposits means that there won’t be a drain on cash at hand to lend, but it doesn’t fully address the roll-over issues facing banks on external debt instruments used for domestic borrowing (the wholesale funding guarantee does in part), and it doesn’t address to a large extent business finance. We’ve got to presume that borrowing capacity will reduce, and the flow on to that will be lower business growth. Maybe the Government’s largess is incapable of going that far.

Australian Prime Minister Kevin Rudd today told the nation that aside from super (401ks in American) taking a massive hit, everything else was a.o.k. Our banks are solid he says. We’ll weather the storm etc…

So why did the dollar hit 67cents exactly?

News.com.au says its because London hedge funds think they’ll be a downturn in commodities, the bread and butter of Australia’s exports. And yet, does that really fully explain a drop from near parity at the beginning of the year, to 67c? (at the time of writing, it had gone back to 69c). It was around the 85-89c range when I was in the US late August.

What am I missing in Australia’s financials that our politicians aren’t telling us, probably to prevent panic locally? Something the market knows about, but the media either hasn’t picked up on yet, or isn’t in the loop.

Could it be debt exposure? True that Australian banks are more reliant on depositor funds for lending than those outside Australia, but from a figure I saw earlier this week (possibly in Crikey) 30% of lending capacity comes from inter-bank lending, most of it external, and the big four all have serious roll over issues ahead of them for existing credit lines (roll overs that simply won’t happen because they won’t be able to borrow more money), that will likely restrict their ability to lend. Could this be the pandora’s box we’re not hearing about, but the market is factoring in? that not only could our banks end up in some strife (maybe not terminal), but with a serious reduction in their capacity to lend that will result in a massive decrease in growth in this country, worst still perhaps a recession?

I’m not qualified to answer this question, but she who must be obeyed, who despite working in PR actually has a degree in economics can’t work it out either. It’s like a jigsaw puzzle where you don’t have all the pieces, and without those pieces, you cant work out what the real picture is.

But I do know something: we definitely aren’t being told everything. If things are as great and rosy compared to the US that the media and Government is saying, explain the dollar. Surely if we were in such a great position, and the US was as screwed as everyone is saying it is, then our dollar wouldn’t be plummeting against the greenback, at least as much as it is.