Economic policy
« Previous EntriesVictoria’s PPP that lost two of its Ps
Wednesday, November 26th, 2008I couldn’t go past this neat headline on a piece by Michael West in the Age . The central point is that the impending failure of both financier Babcock and Brown and bond insurer FGIC will leave the Vic government holding the risk on a PPP hospital project. Money quote
Maybe the Government ought to have [...]
What about the unemployed ?
Friday, November 21st, 2008My article in yesterday’s Fin, over the fold was about the need to prepare for rising unemployment
Financial crisis presentation
Sunday, November 9th, 2008I’m attaching my presentation to the BrisScience lecture series on The Financial Crisis and what it means for you(2.7 Mb PDF). It incorporates part of a cartoon exposition that circulated early in the year, in the style of (but apparently not by) xkcd. I left a fair bit out, partly because I only give PG-rated [...]
Australia at risk?
Thursday, November 6th, 2008According to FT Alphaville, former investment bank Merrill Lynch has done an analysis of country credit risk which, alarmingly if unsurprisingly, given the factors considered, lists Australia as the riskiest country in the world. The analysis uses seven measures “current account financing gap, FX reserves/short-term external debt ratio, exports to-GDP ratio, private credit-to-GDP ratio, private [...]
What I thought about deposit guarantees in 2006
Monday, November 3rd, 2008Here’s a piece I did for the Australian Institute of Company Directors in 2006 (actually, in 2005, but it came out later). I think it covered most of the main points that have arisen in the debate over deposit guarantees.
Embarrassment alert Thanks to a system failure, the link wasn’t saved but reader Tintin found [...]
Meanwhile in a galaxy far, far away …
Tuesday, October 28th, 2008This story about the IMF rescue package for Ukraine (second of many, after Iceland) quotes Timothy Ash, head of emerging-market research at Royal Bank of Scotland Group Plc in London as saying
`The money is only half of the issue, conditionality is key. We hope the fund is maintaining its push for a more flexible [...]
Defining the boundaries
Tuesday, October 21st, 2008I did a radio interview this morning, in response to a couple of stories about the second-round impacts of the government’s decision to guarantee bank deposits. Both at retail and wholesale levels, the decision has produced a rush to move funds where they can benefit from the guarantee. Those at the losing end, including foreign [...]
Climate change and the crisis
Thursday, October 16th, 2008As I’ve mentioned before, the drama of the financial crisis has tended to distract attention from the bigger long-term problem of climate change. But is there more than that? How will the crisis affect the economics of a response to climate change? I’ve been asked by GetUp to do a guest post on this.
Quick take on fiscal stimulus package
Wednesday, October 15th, 2008I’ve been responding to quite a few media questions about the government’s fiscal stimulus package and I haven’t had time to formulate more than a dot-point response. So here goes
* The size of the package is about right and it makes sense to announce it now
* The help for pensioners and low-income households is well-targeted [...]
Krugman wins Economics Nobel
Monday, October 13th, 2008Paul Krugman has been awarded the 2008 Nobel prize for economics[1]. The rules of the prize, honoured more in the breach than in the observance in economics, say that it is supposed to be given for a specific discovery, and Krugman is cited for his groundbreaking work in the economics of location done from the [...]
The fiscal policy response to the crisis
Monday, October 13th, 2008With the effective nationalisation of the banking system now accepted as necessary (Australia’s comprehensive guarantees amount to public assumption of the risks of ownership, and hopefully the fees to be paid by the banks will reflect this) attention has turned to the role of fiscal policy.
Getting fiscal policy right involves a delicate balancing act. On [...]
Now we’re getting somewhere
Sunday, October 12th, 2008The British government has abandoned proposals for non-voting preference shares and is moving towards full-scale nationalisation of the banking sector. According to the London Times(h/t Felix Salmon) the latest proposals would leave the government owning 70 per cent of Royal Bank of Scotland and 50 per cent of Halifax. The London stockmarket is likely to [...]
All that is solid melts into air
Sunday, October 12th, 2008My piece in Thursday’s Fin caused a modest stir by quoting Karl Marx, offset to some extent by an allusion to Schumpeter. It’s mainly about how to finance infrastructure investment, given that the PPP model looks to be off the table for some years to come.
A bit more on deposit guarantees
Sunday, October 12th, 2008I worked a bit more on deposit guarantees and the resulting note is over the fold.
There’s also more from Joshua Gans, Peter Martin and Armagnac’d.
A bad move
Friday, October 10th, 2008The Rudd government has made its first big mistake in handling the financial crisis. The just-announced proposal to guarantee bank accounts up to $20 000 is worse than useless. Given that lots of people hold more than $20 000 in individual bank accounts, they have an obvious incentive to diversify, which means large scale withdrawals. [...]
State capitalism on the instalment plan
Wednesday, October 8th, 2008With the financial meltdown accelerating in the wake of the US bailout, and the recognition that many more failing banks will have to be nationalized, the British government is moving to get ahead of the game by offering equity injections across the board. But already this seems inadequate. Now that the taboo on nationalization [...]
The decline of the dollar
Tuesday, October 7th, 2008So many bizarre things are happening in global financial markets that it’s impossible even to keep up with the critical events (today for example, more European countries guarantee deposits, 1 per cent cut in interest rates, US Fed starts buying commercial paper), so I’ll focus on one thing that has struck me. A few [...]
Time to guarantee Oz bank deposits
Saturday, October 4th, 2008Both Ireland and Greece have now moved to guarantee all bank deposits, while the US bailout bill increases the FDIC guarantee to $250 000 for individual accounts at any institution (meaning that anyone willing to hold accounts at four different banks can have $1m guaranteed).
I’ve never seen the merit in the RBA stance of refusing [...]
The full dress rehearsal
Friday, September 26th, 2008My column in yesterday’s Fin looked at the dotcom bubble and bust as a precursor of the current much larger disaster.
The smartest guy in the room?
Wednesday, September 24th, 2008One thing that really puzzles me about the great bailout plan is the almost universal acceptance that Paulson should be the one to run it, at least until the next Administration. More generally, I’m surprised by the kid-glove treatment he’s been getting in public discussion, even from people highly critical of the plan.
Let’s stipulate that [...]