Henry Thornton writes:
“The ‘nirvana’ economy” is Henry
Thornton’s latest written advice to the RBA Board as it meets today. No change
in interest rates should be expected tomorrow, but in Henry’s assessment global
and local risks point to the upside.
The US Fed has just said goodbye to
its long-standing Chairman Alan Greenspan, and welcomed former Harvard academic
Ben Bernanke as its new leader. Global financial markets have been nervous and
will remain volatile in the transition. Later this year the Reserve will face a
similar transition when Reserve Bank governor Ian Macfarlane retires.
…Our criticism of Ian Macfarlane’s
stewardship of the Reserve Bank is that it has left Australian industry far less
competitive than it should be, and less wealthy because of the mediocre
currency value of the Australian dollar as it moves to balance the external
accounts with a massive CAD. How an uncompetitive industrial structure copes
with the surprises that shall be thrown up over the next few years will be the
ultimate test of Macfarlane’s Reserve Bank.
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