Economics

The reset to lift us out of recession must be bold

Talk about returning the economy to normal after the crisis is misguided. Before the crisis, normal was nowhere near good enough. Australia did indeed manage to go 28 years without a commonly-defined recession. But the expansion had three distinct stages. The first, from the end of the early 1990s recession to the early 2000s, saw…

RBA: No rate hike until unemployment near 4.5%

Reserve Bank governor Philip Lowe’s message to the nation today through the National Press Club is that he means it. He isn’t intending to push up interest rates – he most probably isn’t intending to even think about pushing up interest rates – until 2024, at the earliest. That’s a full three years from now,…

Why the RBA might go negative

Few people expected the Reserve Bank to adjust its cash rate at its first meeting of the year today, and for good reason. It has been saying loudly that it is “not expecting to increase the cash rate for at least three years”. Today it said the commitment extends to 2024. But it isn’t a…

Vital Signs: The importance of the Treasury Secretary

It is widely tipped that US president-elect Joe Biden will nominate Janet Yellen as Treasury Secretary – one of the most important posts in any administration. She will make for a terrific Treasury Secretary, bringing with her a wealth of experience and a lot of IQ points. Her appointment also signals what kind of president…

The budget tax cuts make fiscal sense

This year’s budget is something of a play in two acts. Act one involves large economic stimulus to help plug the hole in output generated by the coronavirus pandemic. Act two tries to set Australia up for a bounce back in economic growth and employment that involves more than just waiting for the pandemic to…

The RBA has done as much as it can, now it’s up to the government

Last week Reserve Bank of Australia Governor Philip Lowe, and his top lieutenants, appeared before the House of Representatives Standing Committee on Economics. This time-honoured tradition goes roughly as follows. The governor makes an opening statement that contains nothing not said before in public. Committee members then take turns trying to trick the governor into…

Why Australian corporate chiefs are paid so well

The annual chief executive pay report produced by the Australian Council of Superannuation Investors is a must-read for shareholders and members of superannuation funds. The latest report, relating to the financial year that ended in 2019, reveals a new record for the money actually paid in one year, so-called realised remuneration, of AU$37.7 million. The…

HomeBuilder might be the most-complex jobs program ever devised

HomeBuilder is a good idea gone bad. It is possibly the most complex and least equitable program the government could have devised to deliver construction jobs. It gives $25,000 to people who already own a home or already have enough money to buy one while delivering a minimal stimulus to extra construction. It isn’t a…

Investor Signposts 10 Feb 2020: Quiet week ahead

Australia: Quiet week ahead In the coming week, there is only a spattering of economic indicators. Main interest will be on the profit-reporting season. On Tuesday, there are three indicators to be released. ANZ and Roy Morgan issue the consumer sentiment index for the week ended February 9. The National Australia Bank issues the January…

How Much Crude Oil Do You Unknowingly Eat?

You may think (or hope) that in your daily life you don’t need to worry about unknowingly eating or otherwise ingesting crude oil or any of its many, many petrochemical byproducts. But you would be wrong. And not just a little wrong–very, very wrong. Petroleum-based substances are in all kinds of innocuous-seeming things that we…