30
Nov
2011

>Desperate policy for desperate times

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The efforts of the world’s major central banks overnight to free up borrowing and liquidity in the banking sector is clearly good policy.Something had to (and still has to) be done to drag the world from a particularly pernicious banking and economic situation.

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30
Nov
2011

>The Economy: What’s hot and what’s not

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The data flow today sits nicely with the RBA moving to cut interest rates at its Board meeting next Tuesday.Most likely is a 25 basis point cut to 4.25%.

The private CAPEX data were nice and strong, confirming another 3 month increment of an unprecedented surge in mining and related investment.

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29
Nov
2011

>Fascinating Fiscal Facts – Who’s addicted to spending and taxing?

>The MYEFO presented some wonderful historical tables on various aspects of the Budget and fiscal policy. The highlights, to me at least are probably:

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29
Nov
2011

>MYEFO – A quick post mortem

>There were few shocks in the MYEFO statement, other than perhaps the size of the revision to the Budget numbers in 2011-12. Given that that year is five-twelths over, there is or was precious little the Government could do to influence that result to any significant extent, even if it wanted to.

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28
Nov
2011

>MYEFO today

>Not sure if there will be any rabbits out of the hat with the MYEFO today, but the Government’s fiscal and economic management skills will be on display for all – including the RBA – to see.

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28
Nov
2011

>The 2012-13 Budget Surplus

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There’s a bit more chatter about the need or otherwise for the Government to structurally alter fiscal policy in the MYEFO to ensure a Budget surplus in 2012-13.

I think it is very important to deliver that surplus as I have spelt out before – see http://stephenkoukoulas.blogspot.com/2011/11/budget-surplus-in-2012-13-good.html

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28
Nov
2011

>Cost of Living pressures? Get real!

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There’s a perception that Australians are suffering under the weight of cost of living pressures and that these pressures will only get worse when the carbon tax starts and when some other unspecified issues unfold.

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24
Nov
2011

>Next week – a big one for data

>Next week will be a big one for local economic news – it will help to settle the RBA’s thinking on what to do with interest rates when it meets on 6 December. At the moment, it looks most likely that it will opt for a 25bp cut, with some risk that a 50bp cut will be delivered. Events offshore will be the strongest influence on whether or not it goes 50, with a 25 cut linked squarely back to local conditions.

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23
Nov
2011

>Rate Expectations

>With the threat of bank failures, policy deadlock and recessionary clouds overhanging the world, the market in Australia continues to push down the expected level for the cash rate.

This morning, monetary policy expectations have changed to the point where the market is pricing in (rounded to nearest quarter %):

* 3.5% for March 2012
* 2.75% for June 2012
* 2.75% for Sep 2012.

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22
Nov
2011

>Government debt – the US vs the Eurozone

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In all of the kerfuffle over sovereign debt issues in Europe, it has been largely overlooked that the level of net government debt is higher in the US than in the Eurozone as a whole and it is forecast to increase sharply over the next 5 years, unlike in the Eurozone where is it forecast to stabilize.

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