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Sep 18, 2013

Magic dust of confidence and reading the RBA tea leaves

What were in the Reserve Bank tea leaves yesterday? Not great news for a new government, with worries particularly for the banking sector. Glenn Dyer and Bernard Keane report.

tea leaves

The new Abbott government hopes for an economically buoyant start to its time in office: politics off the front pages, happy consumers celebrating a Coalition win and rising house prices by opening their wallets, investors chuffed at the removal of so much sovereign risk piling in to the economy, businesses looking to expand as the economy picks up speed.

Those hopes — best illustrated by the absurd idea to delay the federal budget’s mid-year update until early 2014 because it will contain more grim news — sit poorly with the RBA’s warnings in the minutes from its most recent meeting, and the whingeing from Solomon Lew about the need for another emergency rate cut.

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2 comments

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2 thoughts on “Magic dust of confidence and reading the RBA tea leaves

  1. Dogs breakfast

    Of course, the wealth effect, and that happy world where people spend more than they earn.

    If only we could return to those golden years where most of us were in hock up to our ears.

    That’s totally sustainable, and really a worthwhile economic goal.

    Of course rising house prices are always a good thing.

    With apologies if I just blew up your sarcasm detector!

  2. Hamis Hill

    The recession we had to have all down to ignoring Adam Smith’s warning that when the national treasurer puts the interests of bank shareholders above the economic interests of the rest of the economy then chaos ensues.
    Hockey would do well to ignore any advice emanating from Costello or Howard or Abbott for that matter.
    But does he, like that other “big man” Kim Beazley, have the “ticker” for it?

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