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."

Friday, February 24, 2012

The policy truth: ACCC vs RBA on bank competition...

Any serious policy expert knows that the RBA always defends the major bank oligopoly because they have no regulatory competition responsibilities. That is the domain of the ACCC. The RBA's main regulatory responsibility vis-a-vis the banks is financial system "stability", and they have regularly argued that there is a direct trade-off between competition and stability. Accordingly, by their own logic, they have a conflict arguing for greater bank competition because they think it undermines stability...On competition, I trust the head of the ACCC, Rod Sims, who only a few weeks ago told News Ltd:

"Normally four players in a market should lead to a lot of competitive activity.

"In the banking sector it seems to need more because even though there are four of them there is a lack of full and effective competition."

"I think the four of them [the major banks] feel they are protected from others entering the market and that makes for arrangements that are too cosy for consumers," Sims said.

News Limited newspapers reported that Sims said more foreign banks should open up business in Australia to put pressure on the local banks.

"If we can see any behaviour by the banks that is preventing competition, any misuse of market power or any collusive agreements, we will move," he said.