The management/Board of the RBA and APRA must truly be in PM Malcolm Turnbull and Mr Morrison’s good books at the moment.
Governor Glen can expect a triumphant retirement full of flowery speeches and trumpets and parades. Better biscuits for the RBA Board Meetings as well.
Perhaps a new cone of silence for APRA?
Nothing a drifting government likes more than a huge bubble in assets prices bubbling away during an election campaign and the RBA and APRA have delivered a beauty!
The latest “bait rate” cut by the RBA really got the juices flowing in Sydney yesterday with a crackling winter day of auction action. Continue reading
Auction Action is back!
Apologies for the dead air but all Glass Pyramid operatives have been busy storing acorns for winter and throwing beer cans at the TV in unsuccessful attempts to scare away the politicians filling up the horror movie that is the 6.00 o’clock news during the election campaign.
Hopefully the gaps in the data line can be plugged by idle operatives while they celebrate the special Australian birthday of our Australian Queen with some home made fireworks consisting of various combinations of flammable liquids and an inventive use of a second hand Soda Stream filler acquired at a garage sale.
The gaps in the data line have been updated and the comparison for this week has been stretched back 6 years to 2011. Keep in mind that the comparison is by date and not all of those earlier years were long weekends. Continue reading
Macrobusiness turned a bright illuminating spotlight on APRA this morning in an article that raised a series of very important questions about the regulation of the Australian Banking and monetary system and the roles of the RBA and APRA.
The roles of APRA and the RBA would make another excellent paragraph in the Terms of Reference for the forthcoming Banking Royal Commission that Malcolm Turnbull (former banker) and Scott Morrison (former FIRE sector executive) are so desperate to avoid.
A Glass Pyramid operative added their own government issued 2 cents in the comments (sightly modified here) to the article Continue reading
The good thing about all this attention on APRA is that people are slowing starting to understand the significance of APRA as part of our regulatory framework.
Having said that the discussion is still mostly incoherent.
Moody’s talk as though APRA (and other similar prudential regulators) are horse breakers faced with a particularly unruly steed and there is no guarantee that even a very skilled and experienced APRA could hope to control the beast.
What a load of hogwash.
APRA has all the power it needs to stop credit creation DEAD in its tracks.
No death stares, voodoo dolls, smoke signals, cuddles after midnight required.
APRA can direct the banks ANYWAY they want when it comes to credit creation.
They can specify Continue reading
There is a lot of speculation at the moment about what is going on in the Australian credit creation industry and what exactly APRA is trying to achieve.
There is a growing concern that APRA is working to maintain rather than resolve or deflate the massive bubbles in Australian house prices and the related bubbles in household debt and foreign debt.
There is good reason for concern – it all fits a consistent narrative that starts with the ‘unexpected’ end of the mining boom and a search for solutions by the RBA and APRA within the neoliberal post Wallis framework of regulators “independent” from the political process.
If mining and the associated CAPEX could no longer be relied on for economic activity and employment an alternative was required. If the public balance sheet had been neutered by ‘fiscal conservatism’ obsessions that just left the private household balance sheet – the gift that had already been giving for a decade. Continue reading
The RBA/ APRA strategy of filling the unexpected mining bust hole with low interest rate stimulated residential construction and the household debt that goes with it was always misconceived.
Such a strategy could only work for a short time because the ex-mining workforce required to build the housing was always going to be able to fill the housing supply gap quickly in a few years– especially with the very efficient (cheap, fast and nasty) construction methods now available.
Sure population ponzi immigration booms help provide demand for some of this excess housing output but the ponzi population folk need jobs and construction cannot support more than a fraction of them. If it tries it would only build even more housing stock more quickly – and in part that actually happened.
The only thing that has really kept the model going for this long is that much of the excess supply is staying off the market.
If all the new supply was made available for rent or purchase to owner occupiers things might be very ugly already. Continue reading