Strangely pig headed. Making such a thing of not talking to the President of Nauru about using the island to process asylum seekers strikes me as strangely pig headed of Prime Minister Julia Gillard. I would have thought ordinary politeness dictated that our neighbour be briefed on what is in the Australian government’s mind.
Supposed market believers turn disbelievers. The message from the international money markets would seem to be clear enough. Interest rates on government bonds in the United States at under 2% are the lowest for 60 years. In Germany the yield is 1.85% and in Britain just 2.5%. People with money are clearly less concerned about the threat of inflation than fearful of slow growth.
As Martin Wolf explains in London’s Financial Times of London, the markets “are saying: borrow and spend, please. Yet those who profess faith in the magic of the markets are most determined to ignore the cry. The fiscal skies are falling, they insist.”
Are the markets mad? Yes, insist the wise folk: the biggest risk is not slump, as markets fear, but default. Yet if markets get the prices of such governments’ bonds so wrong, why should one ever take them seriously?
No free market for Switzerland. No more of that floating exchange rate business where markets set the rate for Switzerland.The Swiss National Bank overnight said it would “no longer tolerate” a euro rate below 1.20 francs.
“The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities. The massive overvaluation of the franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development,” it said.
The Bank will just keep printing money to buy foreign currencies.
Long shots sometimes win! I liked this little reminder from the Grasping Reality with Both Hands blog this morning that the unexpected sometimes happens:
The Swiss National Bank’s announcement that a weak Swiss franc was in Switzerland’s interest, and that it stood ready to sell unlimited quantities of Swiss francs to resist future appreciation, caused a 20 standard deviation daily decline in the value of the franc.
The odds of such a thing happening under a Gaussian normal distribution are less than 1.25 x 10-89.
That’s odds of 800000000000000000000000000000000000000000000000000000000
The expected bounce back. The Australian economy has experienced the expected bounce back from the March quarter decline but the trend is still showing only modest increase in gross domestic product.
Much of the jump in the seasonally adjusted growth rate for the June quarter was because of a build-up in inventories.
Australia loses a record. The Philippines have toppled Australia as the home of the world’s biggest crocodile. Details of the humiliation for the Northern Territory News are on the Crikey Stump blog.