© 2019 by Henry Thornton. 

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January 21, 2018

Golly gosh another year has gone by. Instead of matters for Aussie looking up they are decidedly looking worse by the day. The global sentiment concerning Australia is reflected in the ASX 200 where key companies have mostly treaded water for recent months with anaemic...

May 15, 2017

The Raff thinks that many of Henry’s readers will not have heard of the august government body ARPC, otherwise known as Australian Reinsurance Pool Corporation. Toot-toot-toot, here comes the money train, all aboard. So what is the ARPC? The function of this business i...

March 10, 2017

The Raff Report is not sorry for Victoria’s and South Australia’s power predicament.

The government in South Australia is so incompetent that they should be cast adrift when it comes to dividing GST – their share only (i.e. GST dollars sourced within South Australia) to...

December 3, 2016

Crikey, another year is almost over and it’s time to look ahead for what 2017 might hold. How much the world has changed since the last Raff Report is impossible to measure. Some nights ago the right-wing Austrian party failed to gain parliament but a 54 to 46 score be...

October 4, 2016

Henry’s readers are no doubt aware that ASX: MINING has comfortably outperformed all other sectors, especially the BANKS & TELCO. The reason that the Raff can think of for the outperformance of the likes of BHP and South32 is that stocks in this sector got sold down he...

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NEWS + VIEWS

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.

 

Henry.Thornton@henrythornton.com

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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