RBA Watch: Minutes and Glenn in the “Big Apple”

To read the original version of this comment in the original context at Macrobusiness.com.au click this link. (link maybe locked – but there is a free trial available)

The RBA have been busy overnight publishing the most recent minutes and a speech by Governor Glenn in New York.

What does this mean for interest rates in May?

Within the logic of the current debt driven economic model and a heavily over indebted household sector the tractor beam of ZIRP is almost inescapable so further cuts are just a matter of time.

Especially when the government is still deep in Clockwork Orange-style deprogramming of its mania for fiscal conservatism and the treatment is not showing signs of success – yet.

Having said that it is clear the RBA are getting worried about the frequency with which more and more people are pointing out that the Household Debt Machine is blowing smoke and dripping oil.  Normal people are just not borrowing and the Household Debt Machine is now running on an unstable and volatile mix of the “white shoe brigade” and that newly discovered (but last resort) source of debt demand the First Home Investor “FHI”.

The FHI is often found lurking in granny flats behind mum and dad’s place, simmering while their dear parents supervise all their expenditures and latte consumption

” Son do you really need to go out this weekend, you know your mother and I are worried about you…..and that guarantee we gave the bank”.

We know the FHI will never get to live in their tiny investment flat unless they are prepared to make some sacrifices just like their parents did when they selflessly strapped themselves (and their residential assets) into the asset price rocket ship launched by the RBA in the late 1990s.

Plus “Bubbles” Hockey insists he is not going to “chase down the mining bust” as revenues dry up which may mean he reckons he can blow the budget deficit and still find some way of fingering the ALP for it (or perhaps that smug Mr Costello).  Those eyeball dilators featured in Clockwork Orange might start to gain traction if “Bubbles” is shown endless reels of smiling babies juxtaposed with fiscal deficit graphs.

It was so much easier for the RBA when the great mass of the economic commentary industry was repeating the predictable mantras of the orthodox school and falling on their knees to bless the sublime beauty of an economy run on monetary policy, private debt and an “independent” central bank.  No one was asking questions… everything was just sweeeet.

You know the drill …..private debt does not matter…it is mostly just rich people who are levering up on asset price speculation….. rich people debts don’t go bad…….unregulated capital inflows are great….why not gorge on the savings of foreigners……a nation can be built on the wealth effect elf and asset prices……… the confidence fairy has made an unbreakable vow to never leave our side ……..etc etc.

Sadly for the RBA and Governor Glenn the economic policy rebels are now whizzing all about the interwebs in their X-wings and shooting soft Central Bank rationales like wamp rats on Tatooine.

Shockingly, the limits of monetary policy are now being discussed in mixed company and over fine china and silverware in the Big Apple.

What does this mean for an interest rate cut in May?

Maybe yes and maybe no.

5 thoughts on “RBA Watch: Minutes and Glenn in the “Big Apple”

    • Yes – real Edmund Burke conservatives are rarer than hen’s teeth these days. Most so called ‘conservatives’ are just radical neo-liberals who are as keen on wrecking the joint as the average ‘lefty’. 🙂

      I blame the over consumption of strong coffee. People were much more agreeable after a nice pot of tea.

      Like

      • Well I missed making a point of it the first time, but won’t now, superb imagery as customary, fine china and silverware in NY meet interweb X-Wing fithers. Fantastic. Now on onto more tedious matters; I was saddened by flawse’s lack on spray, perhaps he just doesn’t have it in him any more, and so was grateful for yours here. Truly a pathetic showing #qanda and apropos my original comment, in what universe does a “dry conservative” sitting government Minister for Trade and Foreign Affairs get away with prattling on about getting high from sneezing and smiling (like that fools anyone under 60!) and NOT ONCE address the most important multi-lateral trade deal Australia has signed up to since GATT Uruguay or ASEAN? Both of which I clearly remember all the rounds were constantly scrutinised and televised. And that was before the internet! Just an appalling situation truly, and if “conservative” voters let their Trade Minister prattle on about autism and beer I honestly don’t know what to say. Maybe 3d can shed some light?

        Liked by 1 person

      • Mig, I can shed no light.

        Jones would have been well briefed that the bulk of negotiation took place under Labor rule, Robb attending to little more than procedural matters. There were no points to score in Labor’s favour pursuing TPP and as it is broadly supported by both sides would lead ABC open to claims of bias (!).

        Apart from that we are in the world we are in. Globalisation is a way of life – as easy to critique on grounds of national interest as it is to celebrate.

        For a bit I’d not be surprised to see a retreat of sorts, at least in word and minor action, from the global mantra. But WTF, we’re not going to give up our Samsungs and iPhones.

        Liked by 1 person

  1. You’ve got style PHF

    I’ll simply replay my comment on MB: Stevens has long warned the limitations of monetary policy by implication urging other authorities and or Governments to step up to the plate (entirely acceptable cliche given the NY connection).

    Frankly, I’m now of the opinion Stevens is hell smart and more of a risk taker than his Zenlike exterior suggests.

    Liked by 1 person

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