Policy paralysis: Capital flows from China.

A lot of people spend a lot of time engaging in the reading of Chinese government tea leaves.

It is the modern equivalent of the Cold War exercise of Kreminology where platoons of pointy heads watched the Kremlin and tried to work out what the commies were up to.

When it comes to capital flows the “SinoSpooks” get very very excited on almost a daily basis as they try to work out whether the Chinese government has turned the capital flow tap on or off. Continue reading

Bank “Junk Food” credit, macroprudential and the Australian Banking Royal Commission

With all the excitement surrounding the announcement of a Royal Commission into Australian banks, a few have asked whether there are less drastic options than those recommended by the Glass Pyramid in the article “Real reform starts with a Banking Royal Commission”

One option that is often raised is that the Australian Prudential Regulatory Authority “APRA” could make more use of a regulatory tool that is commonly referred to as “macroprudential”. The argument goes that macroprudential action by APRA would ease the worst of the problems and allow the ‘hard’ issues about banking to be avoided or put off for another decade /generation – though most likely only until the next time the banking system explodes after too much greed and gouging. Continue reading

Real economic reform starts with a Banking Royal Commission

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What a week it has been.

The Prime Minister Malcolm Turnbull and the Treasurer Scott Morrison have been dragged kicking and screaming by the public, the opposition and even members of their own Liberal Party / National Party coalition into having a Royal Commission into their Australian Banking “mates”.

There has been an air of pandemonium as the Banking industry and their “special friends” in politics and the media have run multiple scare campaigns and threatened the end of life as we know it … unless we back off.

“..“Australia is capital hungry, and when the capital is gone our economy has a very good chance of going into some form of economic collapse.”.

If nothing else this attempt by the Bankers to create an atmosphere of panic and fear makes the point how insane the role of private banks in our monetary system has become.

A Royal Commission into Australian Banking is NOT an “inquisition into capitalism” or “Rank socialism“.

It should be nothing more than a thorough inquiry into why our banking system is so dysfunctional, bloated, greedy, powerful, sneaky, dodgy and incompetent and why the period of deregulation of Australian banking since the 1980s has produced record levels of household debt and an economy that is now hooked on using foreign debt and liabilities to speculate on the prices of houses and land rather than investing in productive industries. Continue reading

Banker Panic ! Why a Royal Commission is so important.

What a week it has been.

The Prime Minister Malcolm Turnbull and the Treasurer Scott Morrison have been dragged kicking and screaming by the public, the opposition and even members of their own Liberal Party / National Party coalition into having a Royal Commission into their Australian Banking “mates”. Continue reading