banking royal commission

Well they just won’t quit at the Australian Financial Review will they?

Months after poor Jacob Greber was forced to pay his way to DC by writing an endless series on how the same small number of economists constantly demanded interest rate hikes, today Sarah Turner and Vesna Poljak have been pressed into service to resume writing the same piece about why the Reserve Bank was betraying Australia by not massively hiking interest rates.

It features the same neoliberal usual suspects: Warwick McKibbin, safely out of reach of an economic downturn at ANU, and former ANZ executive Warren “upper level Middle Harbour views” Hogan, aided as usual by a couple of guest star investment bankers.

This mob ain’t classy enough for Casablanca, but The Usual Suspects is a good fit. You may recall that in The Usual Suspects, the entire plot is the confection of a mild-mannered minor crim who turns out to be a criminal mastermind. It may seem like a stretch, but it’s not an entirely inappropriate comparison for nice middle-aged white men who spin a web of bullshit to hide their own designs. In this case, those designs include a punitive tightening of monetary policy, “even if it comes at the cost reaching full employment” later, as Hogan said earlier this year.

Or maybe McKibbin is more suitable to play Fenster, Benicio Del Toro’s character whom literally no one, not even the rest of the cast, can understand. McKibbin constantly talks about abandoning the RBA’s inflation target — his move-the-goalposts tactic because inflation is below the level that would trigger interest rate rises — and replacing it with a nominal income target. That’s an idea that other, more experienced economists regard as little short of gibberish.

At a three-day RBA conference in April, former RBA deputy governor Stephen Grenville demolished McKibbin’s idea, noting nominal GDP/income targeting would be far more volatile and subject to constant revision, while current deputy governor Guy Debelle pointed to the benefit of the current inflation target, saying it had “gone a long way to fulfilling the mandate of the Reserve Bank of contributing to the welfare and prosperity of the Australian people”. As if that matters.

Meantime, Hogan thinks “that interest rates are too low for the underlying economy” and should be 2.5%. Perhaps he can swan into the camp commandant, sorry, Reserve Bank governor’s office — Werner Klemperer as Philip Lowe — and talk some sense into the recalcitrant leader? Perhaps the Russian front looms for Lowe if he doesn’t fall into line? “Hogan!” Lowe will cry, monocle falling from his eye. And one of this week’s guest stars in the AFR is Stephen Roberts, or “Mr Roberts” as the AFR renders him, which suggests another WW2 comedy — Henry Fonda as the eponymous Mr Roberts, a man stuck in a naval backwater during the war who longs to get into real combat, if only Jimmy Cagney’s captain would let him.

Careful, Mr Roberts, you might want to remember what fate Henry Fonda eventually meets.

And all of these pop culture shenanigans in the same edition in which the AFR runs one story claiming “Experts brace for regulatory response as credit crunch hits house prices”, and another piece from Tory maven Jennifer Hewett warning, “Overreaction to Hayne inquiry risks a credit crunch”. 

So, which is it? Do we have a crunch, or are we risking a crunch? Of course, if McKibbin and Hogan have their way, it’s the economy that will be crunched courtesy of a radically tighter monetary policy wholly unjustified by its current state.

Snark and old movie jokes aside, this constant use of a major media platform to demand a punitive and deeply damaging economic policy is an important insight into neoliberal thinking and its increasing disconnection from the real world, the real economy and the real lives of ordinary people.

For Michael Stutchbury at the AFR, and McKibbin, Hogan and assorted guest stars, ultimately it is people who must serve the ideological ends of the economy — and certainly not the economy that must serve the interests of people.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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