The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."
Wednesday, October 24, 2012
Terry McCrann: "bad CPI number" - broadly, 0.7 underlying inflation or higher...rule[s] out...rate cut
A "bad [CPI] number" - broadly, 0.7 underlying inflation or higher for the September quarter - would rule out a follow-up official rate cut to the one in October...
But a "good number" - by broad definition, 0.6 per cent or lower - would only open the door for the RBA to cut. It would not guarantee the RBA would walk through that door.
There are a number of disturbing elements about the way Swan is still clinging to his "lower rates are better" mantra. Along with an industrial level of self-delusion, that he could impress the RBA to trade-off rate cuts against his dodgy surplus.
The most important and most troubling aspect - for someone who is the purported keeper of the country's economic well-being - is the complete failure to understand how uncomfortable the RBA is about making further cuts.
It sees itself facing a most invidious choice. That it might have to deliver a mix of lower rates, that could restart an asset bubble, especially with property - but, with a strong Aussie dollar continuing to squeeze major sectors of the economy.
We have a treasurer who might think all his Christmases had come at once if our official rates go down to the 1 per cent of Europe or even lower.
Trust me, it is not a view shared by the RBA or indeed, anyone who knows anything about the economy and the most basic economics.
Rate cuts that large would be absolutely disastrous for Australia. They would also signal that the Australian economy was in a bad state.