© 2019 by Henry Thornton. 

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March 28, 2020

USA-China relationship far more hostile.

USA allies (including Australia) less trusted by China, less trade.

Vast government spending everywhere.  Unless Jonson plan (See last week's blog) is adopted, counties will have massive, unmanageable debt burdens.

USA will adopt a...

March 17, 2020

Infection, recession, remission

It has already been a bugger of a year, and we are still in the early autumn season. The VIRUS is decimating Italy and spreading quickly.  President Trump looked rattled on TV this morning, while his Veep, Mr Pence, stood behind him and t...

March 14, 2020

It has already been a bugger of a year, and we are still in the early autumn season. The VIRUS is decimating Italy and spreading quickly.  President Trump looked rattled on TV this morning, while his Veep, Mr Pence, stood behind him and tried to scare him with very ang...

March 10, 2020

The world is waking up that recession is on the way.  Ever since the Global crisis economists have been baffled by low inflation and slow GDP growth.  To my mind, this combination is due to the big scare of the global crisis, fears of workers worried about losing their...

February 29, 2020

What a week it was.  The Weekend AFR said 'Pandemic Panic'. Saturday's Age pointed out that Australian share investors had lost $210 billion 'as coronavirus grip tightens'. The weekend Australian's offering was 'Virus contagion: recession'. As the man who has been tell...

February 23, 2020

So far Australia's leaders have hung tough.  Like the ever optimistic governor of the RBA, Philip Lowe, all will be well.  This is despite the pandemic from China, the Bushfires, the drought, low consumer spending, hesitant business investment and the global slowdown....

February 1, 2020

The Virus 'is deadlier than it looks' says the headlines on the front page of the Oz. 'Borders shut, flights cut as crisis grows' says the AFR. The Melbourne Age prefers to discuss the need for the mighty state of Victoria to alter its approach to providing gas to make...

January 25, 2020

The Honours have been distributed, the fires have been somewhat tamed with the help of heavy rain and cooler weather, Melbourne has been blessed by heavy rainfall with red dust from central Australia. But the damage from the fires is horrendous and is a long way from b...

January 11, 2020

Relatively quiet wind, some rain and cooler temperatures have helped calm the bushfires around Australia.  This gives the firefighters some respite but still working to burn off dangerous scrub and put out some of the burning bush. When intense heat and strong winds oc...

January 5, 2020

For several weeks - or is in months - bushfires have been raging in various parts of Australia. Western Australia, South Australia, New South Australia and Victoria have all suffered enormous fire damage. People have died, stock and wild animals are dead or wandering a...

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The next financial crisis ... is inevitable

The weekend AFR's article reporting the GFC work to save our financial system was interesting. RBA chief Glenn Steven is reported as saying something like: 'We flooded the system with liquidity'. (An action recommended by Bagehot all those years ago.)

Coincidentally, this week's Economist looks at the global equivalent under the heading 'Has finance been fixed?'

It concludes: 'Policymakers have made the economy safer, but they still have plenty of lessons to learn. And fracturing geopolitics make globalised finance even harder to deal with. A decade after Lehman failed, finance has a worrying amount to fix.'

Deep within the article is a statement I have not heard before.

'The Fed acted as lender of last resort to the world, offering foreigners $1trn of liquidity.

[other sources say total swaps were more like $ 11 trn]   Since then, offshore dollar debts have roughly doubled. In the next crisis, America’s political system is unlikely to let the Fed act as the backstop to this vast system, even after Donald Trump leaves the White House.'

This is a truly scary remark.

Comments welcome. Contact Henry here.



Who is Henry

 Henry Then...

"Henry Thornton (1760-1815) was a banker, M.P., philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His 'Enquiry into the Nature and Effects of the Paper Credit of Great Britain (1802)' is an amazing performance. "...it anticipates in some points the analytic developments of a century to come. No other performance of the period will bear comparison with it, though several, among them Ricardo's, met with much greater success at the time as well as later... He was one of those men who see things clearly and who express with unassuming simplicity what they see."

This is the judgment of Joseph Schumpeter, one of the twentieth century's finest economists, in his monumental 'History of Economic Analysis', Allen and Unwin, 1954, p.689.


Henry Now...


Henry Thornton is the nom de plume of a prominent economist. Like his predecessor the modern Henry Thornton has been a banker and an advisor to M.P.s although he is not a politician himself. He is no evangelist but is keenly interested in a wide range of economic, social and political issues... 

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