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."

Tuesday, January 11, 2011

The Australian: RBA cost us $5 billion

Fascinating story in The Australian today using revelations from a Freedom of Information search to show that the RBA sold most of its gold holdings at historically low prices on the basis that (a) it did not think gold would be a good investment, and (b) that a breakdown in the global financial system was increasingly remote. This was consistent with the view at this time amongst various central banks that the developed world was experiencing a "great moderation" wherein the more extreme variations in the business cycle were effectively dead. The Australian figures that this decision has cost taxpayers $5 billion thus far with the RBA being proved wrong on both fronts: gold has soared to record highs while the world was subject to one of the worst recessions in modern history in 2008-09. Yet another sobering reminder of the limits to the abilities of frequently lionised policymakers.