© 2019 by Henry Thornton. 

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July 6, 2019


Two rate cuts in quick succession gets cash interest rates to an alltime 1% low, much lower than in the severe recession of 1990/91. The word ‘panic’ is bandied about.

Not much room for further cuts if it turns out Australia is facing a really bad recession. ‘We need help’ says RBA but events show they needed help when house prices were rocketing up and the central bank sat still like monkeys mesmerised by a cobra.  Get...

June 26, 2019

‘Investors Are Glum, Even With Stocks at All-Time Highs’ writes Akane Otani in the Wall Street Journal.

This comes from the digital version of the WSJ, which apparently can be available free, though I could not wait for minutes to find out. A complementary article in the paper version Monday lead as follows: ‘Bond-yield Drop Fuels Uncertainty‘. The opening paragraph says: ‘The collapse in bond yields since this spring has been...

March 10, 2019

The PM is not amused, but sadly for the rest of us we are in the third income recession since the real 1990/91 recession blighted lives. An income recession is defined as real GDP relative to population, ie GDP relative to population.  In the real recession of  1990/91 real GDP fell for at least 2 quarters and unemployment reached 11 %. Measured properly, the rate of unemployment plus underemployment was nearer 20 %, in Prime...

January 19, 2019

Big headline in the Oz yesterday will spook the punters – the government’s label for us ordinary folk. ‘Are we headed towards high noon for democracy?’

Henry Ergas reached back almost 100 years. ‘In 1923, as the Weimar Republic struggled with chaos, the German polymath Carl Schmitt wrote a short but enormously influential book, The Crisis of Parliamentary Democracy. Schmitt later destroyed his reputation through his collaborati...

November 17, 2018

Finally, the housing boosters are confronted by realists who say this should be a big downturn.  Also, Henry's lonely position on monetary policy has been supported by none other than Warwick McKibbin, former RBA board member.  And RBA chief Dr Philip Lowe, who said it well in 2002 but seems to have forgotten his younger self's brave views.

First to house prices.  Adam Creighton says: 'Housing market teeters'. Henry knows...

October 29, 2018

Inflation, bloody inflation, October 29

Nice article by David Uren today.  RBA seems a bit obsessive about the definition of 'Inflation'.   Their target is goods and services inflation, actually some elegant variation of CPI inflation.  This is the current fashion among central so we mustn't be too critical.

'What about asset inflation', I hear you cry.  Share price inflation is dominated by USA share prices, so t...

October 20, 2018

'The next recession' is the theme of the latest Economist magazine. Today I provide a lean summary but I strongly recommend readers work through the entire supplement. My article last week, written before the Economist arrived, more briefly makes some of the same key points.

The summary is:  'Toxic politics and constrained central banks could make the next downturn hard to escape'.

 'JUST a year ago the world was enjoying a...

October 13, 2018

One of the best forums for discussion of economic policy in Australia is the Economic Outlook conference jointly run by The Oz newspaper and the Melbourne Institute.  Paul Kelly, Editor-at-Large of the Oz always presents a fine overview of issues. Sadly, however, global macroeconomics is in a greatly weakened state, so the assembled economists (and Paul Kelly) struggle with discussion of macroeconomic policy. Also, politicians...

September 26, 2018

Gender inequality in the news again, 28/9

Gender inequality in the news again, recently on Credlin, today in the OZ, presented in both places by John Slater of the Menzies Research Centre.

'What might McManus make of an industry where top ranking executives are paid in excess of $36,000 more each year than their female counterparts? Or a business where female executives are outnumbered by males by 2.5 to one?

'That is the width o...

September 8, 2018

Annual rate of growth of over 3 per cent cheers the cockle of the hearts of Australian economists, those who have hearts that is. Result was largely due to strong consumption growth, and most people missed the fact that this growth was accompanied by another fall in household saving, now almost zero. With wages still growing at a tad over 2 per cent, and commercial banks cheerfully raising interest rates, there is an inevitabl...

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