Two speeches caught Henry’s
attention yesterday, new US Fed Chairman Ben Bernanke’s first address and Dr.
Jerome Fahrer’s speech to the Economics society in Melbourne on “Reforming
the Tax System”.

“Business as usual at the Fed” is
the best summary Henry can find for the much anticipated testimony by the Fed’s new
chairman. US equity market rose slightly during
the testimony and there was no stuff-up during the Q&A, at least until Henry
nodded off in his armchair.

Following his review of 2005 and
forecasts for the coming year, Chairman Bernanke emphasised
continuity at the Fed. In Henry’s opinion, Bernanke handled well a wide range of
questions from Congresspersons, questions that went well beyond the issues
directly confronting US monetary policy. One
representative even congratulated Bernanke for the clarity of his answers, which
will worry some Fed-watchers who specialise in explaining what has been said.
It may also also worry people at the Fed who like the “wiggle room” that more
delphic utterances provide.

Earlier, and 10,000 miles closer to home, Dr. Fahrer spoke to a room of
economists in Melbourne about a tax report The Allen Consulting Group
had developed for the Victorian Government. The report was designed to
reduce the complexity, inequity and inefficiency of the current system
delivering big reductions at the low income end and smaller reductions
at the high income end, without affecting Government revenues.
While not perfect it is a clear example of what can be done to improve
our tax system if the Howard Government really wants to clean up the
10,000 page mess that currently confuses the life out of anyone without
a CA. Read the review of the speech here.

It should also be noted the
Victorian Government received a muted clap (as loud as a group of economists can
muster for politicians) for pursuing the reform agenda most vigorously of all
Australian Governments.

Read Henry’s Blog
here

Peter Fray

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