Fun and Games
Updated: Nov 29, 2021
I have just returned from the Cabrini hospital after ‘enjoying’ a ‘TURP’. This follows an initial TURP a decade ago. Curiously I cannot recall the process and outcome of my first TURP but I have been informed that another old digger had five (5!) TURPs, not something I would greatly enjoy.
Aussie PM demands apology from China over ‘deeply offensive’ image.
Otago Daily Times Online News.
I did not get much opportunity to keep up with the very latest news, but the second last week of national politics provided more than the usual excitement. A newly open east coast promises a major economic rebound. The mighty RBA begins to consider joining the rest of the world in rate hikes. Parliament was hard to manage.
I am reminded of 1990 when inflation got out of control at 9 % and the newbie team of Fraser and MacFarlane slammed the economy to introduce the deepest recession since the Great Depression. To his credit, Ian MacFarlane later apologised, but sadly the damage was done. The good news was continued with low (goods and services) inflation. However, this has been accompanied by strong share price inflation (following the Fed) and even stronger house price inflation (following the RBA).
One assumes that the men and women running the RBA are beginning to worry about house price inflation but so far little action has been attempted. The truth of the matter is that, despite low (goods and services) inflation, global share prices and Australian house prices have been out of control and almost nobody seems to care. Shares will follow the US and the newly reappointed Mr Powell is unlikely to want to stop share price inflation, perhaps for fear of upsetting his old mates in the American financial sector. A more serious reason is that it could cause a serious economic collapse.
I am more puzzled by Dr Philip Lowe’s reluctance to stop house price increases. As a graduate student in the USA, Lowe wrote jointly with a senior American economist of the need to raise interest rates when asset prices got out of control. Now he says interest rates will not be raised until 2024. Hints of revision emerge, but so far Dr Lowe is sticking to his position. House prices certainly need at least slowing and preferably to be reduced somewhat. This may upset people in the financial sector and you will be criticised. But I will support you and I suspect some of Australia’s more serious economic thinkers will agree.
In conclusion, I present the end of this weekend’s editorial for the AFR: ‘Business investment expectations suggest a catch-up surge into investment in next year. For a government that necessarily spent two years battling the pandemic, voters back in work is very good news, and will deflect Labor’s reliance on pandemic failings and character attacks on Mr Morrison.
‘But a rebound is not the same as a road map to sustained economic growth. There is heavy debt and major spending programs. MYEFO should be a starting point to talk about the productivity policies we need to pay for them. And if not soon, then when?'