MPs are already up in arms about proposals to get their piggy little snouts out of the expenses trough. Apparently there will be strict restrictions on taxpayers' financing of MPs' second homes and a ban on MPs hiring family members at public expense. Here's one old buffer's reaction, from the BBC website:
Conservative MP Roger Gale said his wife Suzy has worked for him for 27 years and does "a very good, very hard, very long job", 60 hours a week, and was highly qualified. He said the reported proposals were "not realistic".
"I've heard one comment, which I think is absolutely ludicrous, to the effect that apparently somebody living an hour's train ride from London will not be allowed to have a base in London," he said.
"I just don't believe that Kelly lives in the real world, I don't think he knows what kind of hours we work or what kind of job we do."
No, Rog, you're the one who's not living in the real world. Those thousands of taxpayers who take trains into London at unearthly hours of the morning all year round and frequently come home well past dark are unlikely to sympathise with people whose working day starts around mid-morning and who get almost half the year off. Trains on the principal line through my town, which is less than 30 minutes from London, run 24 hours a day. That didn't stop our local MP, whose family home is in another equally convenient commuter town less than 20 miles away, from claiming taxpayer money to purchase a second home in the constituency -- which she promptly rented out to her daughter. Even if we weren't facing a period of restraint on public spending, that would be a serious piss-take. It has to stop.
Anyway, if either Roger Gale or my local MP wants to have a second home, there's nothing to stop them. It's just that, like their constituents, they'll have to pay for it with their own money.
Wednesday, 28 October 2009
Tuesday, 27 October 2009
The BNP are revolting!
I didn't watch all of the Question Time programme with Nick Griffin when it was first shown last week. Missing it was a no brainer: it clashed with a new episode of Curb your Enthusiasm, which I'd guess is not on Griffin's Sky+ recording list. However, I've seen it since, and I thought Griffin came out of it pretty badly, though arguably rather better than Jack Straw.
He could have come out of it a lot worse, though. It was a mistake for the BBC to confine the questions to race and immigration. Those are Griffin's territory, and they're also hot topics for a lot of potentially disaffected Labour voters. It would have been much better if the questions had covered other issues -- say, bank bonuses, the Royal Mail strike and global warming. Putting questions to Griffin on those topics would have revealed that he sees them through the prism of his awful racial views as well. (I'm guessing here, but I'd assume he thinks that the bankers are all Jews, the Royal Mail strikers are worried about losing their jobs to immigrants, and global warming is caused by flatulent foreigners or something of the sort). Exposing his lack of insight into the important topics of the day would have done much more to destroy his appeal than allowing him to spout nonsense about aboriginals or the ultra-leftist bias of the BBC.
Griffin is planning to complain about the way he was treated by the BBC, but at the same time he's claiming that the show led to a surge in membership enquiries for the BNP. He needs to watch his back, though. A splinter group within the BNP, the reassuringly-named Stormfront, thinks he made the party look silly. According to their spokesnazi, "the intelligent ones in the party want Griffin out".
The intelligent ones? What, both of them?
He could have come out of it a lot worse, though. It was a mistake for the BBC to confine the questions to race and immigration. Those are Griffin's territory, and they're also hot topics for a lot of potentially disaffected Labour voters. It would have been much better if the questions had covered other issues -- say, bank bonuses, the Royal Mail strike and global warming. Putting questions to Griffin on those topics would have revealed that he sees them through the prism of his awful racial views as well. (I'm guessing here, but I'd assume he thinks that the bankers are all Jews, the Royal Mail strikers are worried about losing their jobs to immigrants, and global warming is caused by flatulent foreigners or something of the sort). Exposing his lack of insight into the important topics of the day would have done much more to destroy his appeal than allowing him to spout nonsense about aboriginals or the ultra-leftist bias of the BBC.
Griffin is planning to complain about the way he was treated by the BBC, but at the same time he's claiming that the show led to a surge in membership enquiries for the BNP. He needs to watch his back, though. A splinter group within the BNP, the reassuringly-named Stormfront, thinks he made the party look silly. According to their spokesnazi, "the intelligent ones in the party want Griffin out".
The intelligent ones? What, both of them?
Wednesday, 21 October 2009
King to Brown: you're deluded
Hot on the heels of the FSA's none-too-soon plan to ban self-certified mortgages, Bank of England Governor Mervyn King has demonstrated that he too is determined to learn the lessons of the financial crisis. His speech in Edinburgh last evening to "Scottish business leaders" (presumably excluding Sir Fred Goodwin) was hard hitting to the point of being downright hostile. The whole thing is worth reading but here are a few key quotes:
It is hard to see how the existence of institutions that are “too important to fail” is consistent with their being in the private sector. Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk.
When bank failures impose costs on the rest of the economy, it is reasonable to insist that banks themselves purchase a sufficient degree of insurance in the form of a large capital cushion available automatically before insolvency.
Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are.
These are not new themes for the Governor. It's been clear for some time that he believes that some UK banks are now too big for the economy to support, and that he sees no reason why government guarantees should stretch beyond what he calls "utility banking" to cover the banks' riskier and more speculative activities.
So both the Bank of England and the FSA "get it", but it seems as if Gordon Brown doesn't. At PMQs today he outright dismissed the Governor's advice. Acoording to The Man Who Saved The World, King is misdiagnosing the problem. In Brown's view, Lehman, which was an investment bank, went broke, but so did Northern Rock, which was a retail bank; ergo, the problem has nothing to do with the distinction between "utility" banking and investment banking.
The problem with this is that Northern Rock wasn't really a retail bank. Sure, its main assets were retail in nature: mortgages, mostly. But it was rubbish at the other side of retail business, the gathering of deposits. Because of that, the only way it could pursue its hyper aggressive growth strategy was to turn to wholesale funding markets and structured financial products, provided by Lehman et al. The Rock needed Lehman, and the Lehman needed the Rock: they were part and parcel of the same problem.
According to Brown, what's needed is better regulation. Seems as if King may have guessed that the PM would say that, though. Here's another excerpt from last night's speech:
The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion.
You'd love to be in the room if King says that to Brown next time they meet face to face. But maybe King's not too worried. His likely next boss, Tory Shadow Chancellor George Osborne, has already said he agrees with most of what King had to say last night. If King saw this as an audition, I'd say it went quite well.
It is hard to see how the existence of institutions that are “too important to fail” is consistent with their being in the private sector. Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk.
When bank failures impose costs on the rest of the economy, it is reasonable to insist that banks themselves purchase a sufficient degree of insurance in the form of a large capital cushion available automatically before insolvency.
Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are.
These are not new themes for the Governor. It's been clear for some time that he believes that some UK banks are now too big for the economy to support, and that he sees no reason why government guarantees should stretch beyond what he calls "utility banking" to cover the banks' riskier and more speculative activities.
So both the Bank of England and the FSA "get it", but it seems as if Gordon Brown doesn't. At PMQs today he outright dismissed the Governor's advice. Acoording to The Man Who Saved The World, King is misdiagnosing the problem. In Brown's view, Lehman, which was an investment bank, went broke, but so did Northern Rock, which was a retail bank; ergo, the problem has nothing to do with the distinction between "utility" banking and investment banking.
The problem with this is that Northern Rock wasn't really a retail bank. Sure, its main assets were retail in nature: mortgages, mostly. But it was rubbish at the other side of retail business, the gathering of deposits. Because of that, the only way it could pursue its hyper aggressive growth strategy was to turn to wholesale funding markets and structured financial products, provided by Lehman et al. The Rock needed Lehman, and the Lehman needed the Rock: they were part and parcel of the same problem.
According to Brown, what's needed is better regulation. Seems as if King may have guessed that the PM would say that, though. Here's another excerpt from last night's speech:
The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion.
You'd love to be in the room if King says that to Brown next time they meet face to face. But maybe King's not too worried. His likely next boss, Tory Shadow Chancellor George Osborne, has already said he agrees with most of what King had to say last night. If King saw this as an audition, I'd say it went quite well.
Monday, 19 October 2009
No more Ninjas
The UK mortgage market never quite reached the same level of insanity as that of the US, where "ninja" mortgages (no income, no job or assets) were a major contributor to the financial crisis. We got pretty close, though, with so-called "self certified" mortgages, in which the lender took the borrower's word for how much they earned and how big a loan they could afford to service. Amazing to relate, some borrowers lied about their circumstances, and some of these idiotic loans went bad.
The FSA seems to have learned a lesson from this, and is planning to ban self certified mortgages, although bizarrely, it's giving the industry until mid-January to respond to the proposal. You wouldn't think there'd be much to discuss, but this quote from the Council of Mortgage Lenders suggests you'd be wrong:
"It is ironic that at the same time as politicians are seeking to encourage lenders to increase their flow of mortgage lending to consumers, they are also keen to take steps to address the perception of 'irresponsible lending'," the CML said.
Two things come to mind here. First, like Alanis Morissette, the CML has no idea what the word "ironic" means. Second, it's hoping that politicians and taxpayers have very short memories.
I heard someone from a mortgage brokerage on the radio just now commenting on the proposals. She warned that any new credit checks that were required as a result of the FSA's stance would inevitably add to the cost of borrowing. That's in contrast, of course, to the costs of irresponsible lending, which can, as we know, simply be dumped on the taxpayer.
Forget the alleged return of the bonus culture -- at least that will generate some chunky tax revenues. It's the possible revival of the bad old lending practices of mid-decade that the Government should really be worrying about.
The FSA seems to have learned a lesson from this, and is planning to ban self certified mortgages, although bizarrely, it's giving the industry until mid-January to respond to the proposal. You wouldn't think there'd be much to discuss, but this quote from the Council of Mortgage Lenders suggests you'd be wrong:
"It is ironic that at the same time as politicians are seeking to encourage lenders to increase their flow of mortgage lending to consumers, they are also keen to take steps to address the perception of 'irresponsible lending'," the CML said.
Two things come to mind here. First, like Alanis Morissette, the CML has no idea what the word "ironic" means. Second, it's hoping that politicians and taxpayers have very short memories.
I heard someone from a mortgage brokerage on the radio just now commenting on the proposals. She warned that any new credit checks that were required as a result of the FSA's stance would inevitably add to the cost of borrowing. That's in contrast, of course, to the costs of irresponsible lending, which can, as we know, simply be dumped on the taxpayer.
Forget the alleged return of the bonus culture -- at least that will generate some chunky tax revenues. It's the possible revival of the bad old lending practices of mid-decade that the Government should really be worrying about.
Friday, 16 October 2009
He's right about the "moron" part
There's a very dispiriting letter in today's Times. It's only two sentences long:
Sir, The term “fair trade” is an oxymoron (letter, Oct 14). Trade by its very nature can never, ever be fair.
Don't hold back, sir. Tell us what you really think.
In the two ancient dictionaries that I have at my disposal, trade is defined (inter alia) as "the business of buying and selling or bartering commodities", and "the business of buying or selling for money".
Is The Times's correspondent really asserting that every transaction that he or anyone else has ever carried out has been unfair? That when he bought a stamp in order to mail his letter, either he or the Royal Mail was ripped off? That when I bought The Times today, either Rupert Murdoch or I was a loser? (Might be a bit closer with that one, come to think of it!) If so, he's denigrating one of the fundamental characteristics of every human society since Adam was a pup. Unless you build your own house, grow your own food, make your own clothes, deliver your own children and so on, you will always have to "trade" with others.
It's certainly true that trades can be unequal, because of an imbalance of market power (up to and including monopoly) or rigging of trading conditions (through cartels and such). A large part of economic theory is devoted to these imperfections in trade, and a large part of domestic economic regulation and international trade negotiation is devoted to minimising their impact. But to suggest that all trade is by nature unfair -- and, I may say, for The Times to publish a latter making such an asseveration (sorry; those two dictionaries again) -- is quite extraordinary.
Somehow, though, it doesn't surprise me that the author of the letter appears to be a Yorkshireman.
Sir, The term “fair trade” is an oxymoron (letter, Oct 14). Trade by its very nature can never, ever be fair.
Don't hold back, sir. Tell us what you really think.
In the two ancient dictionaries that I have at my disposal, trade is defined (inter alia) as "the business of buying and selling or bartering commodities", and "the business of buying or selling for money".
Is The Times's correspondent really asserting that every transaction that he or anyone else has ever carried out has been unfair? That when he bought a stamp in order to mail his letter, either he or the Royal Mail was ripped off? That when I bought The Times today, either Rupert Murdoch or I was a loser? (Might be a bit closer with that one, come to think of it!) If so, he's denigrating one of the fundamental characteristics of every human society since Adam was a pup. Unless you build your own house, grow your own food, make your own clothes, deliver your own children and so on, you will always have to "trade" with others.
It's certainly true that trades can be unequal, because of an imbalance of market power (up to and including monopoly) or rigging of trading conditions (through cartels and such). A large part of economic theory is devoted to these imperfections in trade, and a large part of domestic economic regulation and international trade negotiation is devoted to minimising their impact. But to suggest that all trade is by nature unfair -- and, I may say, for The Times to publish a latter making such an asseveration (sorry; those two dictionaries again) -- is quite extraordinary.
Somehow, though, it doesn't surprise me that the author of the letter appears to be a Yorkshireman.
Tuesday, 13 October 2009
Left right left
Yesterday we had Gordon Brown announcing a mini-Thatcherite plan to flog off state assets. Today I get a love-letter from my Tory MP, mauling the government's plans to replace local GP practices with "polyclinics". I quote (selectively but without bias): "The Government has been blinded by the private sector"....."taking back control from GPs and shifting contracts to private providers under preferential terms". This could be straight out of Socialist Worker (not that there's anything wrong with that).
Confused? Come election time, you will be.
Confused? Come election time, you will be.
Monday, 12 October 2009
Selling the furniture to buy gin
Gordon Brown has announced that the Government will seek to alleviate the financial problems that he usually denies it has by selling off state assets. £3 billion is to be raised over the next couple of years by selling the Tote, the Dartford Crossing, the Channel Tunnel rail link and some other odds and sods.
The Tories are supportive but critical; the Lib Dems are dismissive -- Vince Cable wins the award for best comment by referring to the plan as "this car boot sale" -- and the press, as ever, are just confused. Stephanie Flanders, the BBC economics correspondent, is typical, describing the asset disposal as a measure to cut the budget deficit. NO IT BLEEDING ISN'T! It's an attempt to reduce the borrowing requirement in the near term by flogging off assets that may have considerable long-term value. It may actually increase the deficit.
Take the Tote, for example. It makes money -- even the Government can't figure out a way to lose money catering to the British public's gambling obsession. Once it's sold, the Government won't receive any of the profits. Even if the proceeds of the sale are used to pay down debt, the interest savings are likely to be smaller than the foregone profits, so the net result is a higher deficit. (Chris Dillow has looked at the math for the Tote sale in more detail here).
The same very likely goes for the Dartford Crossing and maybe even the Channel Tunnel link -- indeed, if it isn't true, the assets are probably unsellable. And it's not hard to imagine how the access charges for them will shoot up once they're in the hands of Ferrovial or some faceless private equity fund. (Here's a thought: the charge for cars on the Second Severn Crossing is now over £5, 24 hours a day, compared to £1.50 on the Dartford Crossing, with no charges at night. Plenty of scope there, I'd say).
Then of course there's the question of whether this is the right time to sell these assets if you want to maximise the returns to the taxpayers. Brown's previous disastrous exploits in flogging off the UK's gold reserves are being cited gleefully in some quarters. More pertinently, the problems BAA has experienced in trying to find a buyer for Gatwick Airport are a good indication that the market for assets of this type may not be strong at the moment.
I'm not here to suggest that there's any good reason for the state to own a betting company, but flogging it off right now is a damned poor substitute for a proper fiscal plan. I'm much less sure about selling bridges and railways -- the taxpayer has taken all the financing and completion risk in these projects, and may now see them pass into private hands just so that a desperate government can do some pre-election window dressing.
The Tories are supportive but critical; the Lib Dems are dismissive -- Vince Cable wins the award for best comment by referring to the plan as "this car boot sale" -- and the press, as ever, are just confused. Stephanie Flanders, the BBC economics correspondent, is typical, describing the asset disposal as a measure to cut the budget deficit. NO IT BLEEDING ISN'T! It's an attempt to reduce the borrowing requirement in the near term by flogging off assets that may have considerable long-term value. It may actually increase the deficit.
Take the Tote, for example. It makes money -- even the Government can't figure out a way to lose money catering to the British public's gambling obsession. Once it's sold, the Government won't receive any of the profits. Even if the proceeds of the sale are used to pay down debt, the interest savings are likely to be smaller than the foregone profits, so the net result is a higher deficit. (Chris Dillow has looked at the math for the Tote sale in more detail here).
The same very likely goes for the Dartford Crossing and maybe even the Channel Tunnel link -- indeed, if it isn't true, the assets are probably unsellable. And it's not hard to imagine how the access charges for them will shoot up once they're in the hands of Ferrovial or some faceless private equity fund. (Here's a thought: the charge for cars on the Second Severn Crossing is now over £5, 24 hours a day, compared to £1.50 on the Dartford Crossing, with no charges at night. Plenty of scope there, I'd say).
Then of course there's the question of whether this is the right time to sell these assets if you want to maximise the returns to the taxpayers. Brown's previous disastrous exploits in flogging off the UK's gold reserves are being cited gleefully in some quarters. More pertinently, the problems BAA has experienced in trying to find a buyer for Gatwick Airport are a good indication that the market for assets of this type may not be strong at the moment.
I'm not here to suggest that there's any good reason for the state to own a betting company, but flogging it off right now is a damned poor substitute for a proper fiscal plan. I'm much less sure about selling bridges and railways -- the taxpayer has taken all the financing and completion risk in these projects, and may now see them pass into private hands just so that a desperate government can do some pre-election window dressing.
Tuesday, 6 October 2009
Tories start to flesh it out
After the pieties of the LibDem conference and the vacuities of Labour, we're finally getting a bit of substance from the Tories. It's good that at least one of the parties is willing to spell out what might be needed to get the UK's fiscal situation back under control. Unfortunately, however, not all of their ideas have a whole lot of merit.
The media were dominated today by the suggestion that the state pension age for men could rise by one year in 2016, to 66. This step was already in the pipeline under Labour, but for 2026; the Tories argue that the public finances demand that it be done much sooner. (Disclosure: this doesn't affect me either way. I'll be 65 before 2016, and anyway the value of my state pension will be determined more by the nice, kind people in Ottawa than by anyone in Whitehall).
It's amazing to listen to the furore this has stirred up. BBC Radio 2's lunchtime talk show host (mercifully not Jeremy Vine on this occasion) challenged Tory social affairs spokesman Theresa May to explain how the party would dare to impose such a change at such short notice. The line went dead and we didn't get to hear her answer. However, while I can't cite chapter and verse here, I'm willing to bet that the same show has run several items on the iniquity of compulsory retirement within the past few months! I'm not taking sides, just wondering about the lack of consistency. I will say, however, that in my own experience the people who want to work past 65 mostly have cushy office jobs. You don't see many miners or assembly line workers demanding the right to keep working.
The same theme about the supposedly short notice of the change was echoed by a gent on the TV a little while later. He said the change was unfair because people set their financial plans for retirement many years in advance. Maybe I'm missing something, but I'd have thought that was only a problem if the goverment was planning to force people to retire earlier. Anyway, most of what I've read in the past suggests that the big problem we have is not people who plan their retirement finances way in advance, but people who make no provision for retirement at all.
For me, the Tories are on the right lines on pensions. The rest of their ideas affecting the elderly have a lot less merit. Despite the strain on the public finances, the Tories apparently feel they have to honour their previous pledge to eliminate inheritance tax on estates of less than £1 million. As I never tire of saying, I don't find it hard to choose between paying taxes now and paying taxes when I'm dead. The Tories are plain wrong on this issue, though from a party built on inherited wealth I suppose we can't expect anything else.
Then there's the plan to provide free residential care to anyone willing to make a one-off payment of £8000 to the state when they retire. This would remove the supposed iniquity of people having to sell their homes in order to pay for their care, though as I've noted before, this is not iniquitous for the elderly, only for their heirs, and I'm not sure they should be the ones dictating public policy on this. In any event, the Tory policy is already showing signs of being half-baked. The party has already had to "clarify" that the one-off payment will only entitle you to a voucher for "average" residential home costs. Damn! There goes my plan to take over the entire top floor at the Lanesborough and send the bill to David Cameron.
So far then: one good idea; one bad one; one not fully thought out. Still, at least they're trying.
The media were dominated today by the suggestion that the state pension age for men could rise by one year in 2016, to 66. This step was already in the pipeline under Labour, but for 2026; the Tories argue that the public finances demand that it be done much sooner. (Disclosure: this doesn't affect me either way. I'll be 65 before 2016, and anyway the value of my state pension will be determined more by the nice, kind people in Ottawa than by anyone in Whitehall).
It's amazing to listen to the furore this has stirred up. BBC Radio 2's lunchtime talk show host (mercifully not Jeremy Vine on this occasion) challenged Tory social affairs spokesman Theresa May to explain how the party would dare to impose such a change at such short notice. The line went dead and we didn't get to hear her answer. However, while I can't cite chapter and verse here, I'm willing to bet that the same show has run several items on the iniquity of compulsory retirement within the past few months! I'm not taking sides, just wondering about the lack of consistency. I will say, however, that in my own experience the people who want to work past 65 mostly have cushy office jobs. You don't see many miners or assembly line workers demanding the right to keep working.
The same theme about the supposedly short notice of the change was echoed by a gent on the TV a little while later. He said the change was unfair because people set their financial plans for retirement many years in advance. Maybe I'm missing something, but I'd have thought that was only a problem if the goverment was planning to force people to retire earlier. Anyway, most of what I've read in the past suggests that the big problem we have is not people who plan their retirement finances way in advance, but people who make no provision for retirement at all.
For me, the Tories are on the right lines on pensions. The rest of their ideas affecting the elderly have a lot less merit. Despite the strain on the public finances, the Tories apparently feel they have to honour their previous pledge to eliminate inheritance tax on estates of less than £1 million. As I never tire of saying, I don't find it hard to choose between paying taxes now and paying taxes when I'm dead. The Tories are plain wrong on this issue, though from a party built on inherited wealth I suppose we can't expect anything else.
Then there's the plan to provide free residential care to anyone willing to make a one-off payment of £8000 to the state when they retire. This would remove the supposed iniquity of people having to sell their homes in order to pay for their care, though as I've noted before, this is not iniquitous for the elderly, only for their heirs, and I'm not sure they should be the ones dictating public policy on this. In any event, the Tory policy is already showing signs of being half-baked. The party has already had to "clarify" that the one-off payment will only entitle you to a voucher for "average" residential home costs. Damn! There goes my plan to take over the entire top floor at the Lanesborough and send the bill to David Cameron.
So far then: one good idea; one bad one; one not fully thought out. Still, at least they're trying.
RBA rate hike -- straw in the wind or outlier?
The good old Reserve Bank of Australia today became the first monetary authority in the G20 to raise interest rates since the onset of the credit crunch. The move was a surprise to most of the world, though to judge from the Bank's statement , it was already priced in to local markets.
The RBA has form in this regard -- it was the first central bank to start raising rates after the 9/11 atrocities, implementing its first rate hike in May 2002, having cut only modestly in response to the attacks. With hindsight, you'd be hard-pressed to say it was wrong about that -- would, indeed, that others including the Fed had seen fit to follow suit. As I've suggested before, the RBA's steady-as-she-goes approach throughout the past decade looks massively smarter than the compulsive tinkering of the Fed, Bank of England and others.
Currencies (other than Sterling) and commodities have rallied in the wake of the RBA decision, which markets seem to see as evidence that the global economy really is on the mend. Caution is needed here. Unlike the US, Eurozone, UK et al, Australia has not experienced a recession in the past couple of years. Labour markets and costs have therefore eased much less than the RBA had expected. What's more, as the RBA statement makes clear, its economic prospects are rendered much more favourable by the signs of a strong recovery in key Asian economies, notably China. In the circumstances, the longer the RBA delays in raising rates, the more risk it will run that inflationary pressures will start to mount.
These conditions are simply not replicated anywhere else in the G20. As a result, it's unlikely that any other central bank will start hiking rates until well into next year. An outlier, then, rather than a straw in the wind -- but that's not to suggest that the RBA has made a mistake.
The RBA has form in this regard -- it was the first central bank to start raising rates after the 9/11 atrocities, implementing its first rate hike in May 2002, having cut only modestly in response to the attacks. With hindsight, you'd be hard-pressed to say it was wrong about that -- would, indeed, that others including the Fed had seen fit to follow suit. As I've suggested before, the RBA's steady-as-she-goes approach throughout the past decade looks massively smarter than the compulsive tinkering of the Fed, Bank of England and others.
Currencies (other than Sterling) and commodities have rallied in the wake of the RBA decision, which markets seem to see as evidence that the global economy really is on the mend. Caution is needed here. Unlike the US, Eurozone, UK et al, Australia has not experienced a recession in the past couple of years. Labour markets and costs have therefore eased much less than the RBA had expected. What's more, as the RBA statement makes clear, its economic prospects are rendered much more favourable by the signs of a strong recovery in key Asian economies, notably China. In the circumstances, the longer the RBA delays in raising rates, the more risk it will run that inflationary pressures will start to mount.
These conditions are simply not replicated anywhere else in the G20. As a result, it's unlikely that any other central bank will start hiking rates until well into next year. An outlier, then, rather than a straw in the wind -- but that's not to suggest that the RBA has made a mistake.
Monday, 5 October 2009
Beckham for President!
Even the most passionate Europhile must feel heartsick at the prospect of Tony Blair becoming the first President of the EU.
Tony Blair, the man who alienated most of Europe with his grovelling attitude to the United States and his gung-ho support for the invasion of Iraq.
Tony Blair, the man whose high-profile, high-cost role as a peace envoy in the Middle East has been so ineffective that you can't even call it a failure. In order to fail, you have to try, and there's not much evidence that Blair has done that. (As soon as he landed the job, he swanned off to Barbados for a three-week break. That rather set the tone for the whole pointless enterprise).
Tony Blair, the relentless moneygrubber who is now charging people for the privilege of getting photographed with him -- see previous posting.
The EU Presidency is an almost entirely ceremonial post, so in a sense the vacuous, self-obsessed publicity hound Blair is well qualified. However, if those are the criteria, why not appoint David Beckham? He's well-liked across Europe, his missus would be thrilled -- and he's already got his own palace.
Tony Blair, the man who alienated most of Europe with his grovelling attitude to the United States and his gung-ho support for the invasion of Iraq.
Tony Blair, the man whose high-profile, high-cost role as a peace envoy in the Middle East has been so ineffective that you can't even call it a failure. In order to fail, you have to try, and there's not much evidence that Blair has done that. (As soon as he landed the job, he swanned off to Barbados for a three-week break. That rather set the tone for the whole pointless enterprise).
Tony Blair, the relentless moneygrubber who is now charging people for the privilege of getting photographed with him -- see previous posting.
The EU Presidency is an almost entirely ceremonial post, so in a sense the vacuous, self-obsessed publicity hound Blair is well qualified. However, if those are the criteria, why not appoint David Beckham? He's well-liked across Europe, his missus would be thrilled -- and he's already got his own palace.
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