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."

Monday, August 20, 2012

Banks too dominant in Australia, finds BIS

From Banking Day:

Research by the Bank for International Settlements suggests the dominance of Australia's finance industry - one of the largest in the world relative to the size of its economy - is a source of future vulnerability.

Stephen Cecchetti, chief economist of the BIS said: "Experience shows that a growing financial system is great for a while -- until it isn't," he told the BIS annual conference in Switzerland.

He argued there was an optimal size beyond which the financial industry drags down the rest of the economy.

Cecchetti was speaking at the BIS annual conference in Switzerland. The Australian reported on his remarks.

BIS research show the finance sector starts subtracting from growth when it accounts for more than 6.5 per cent of value added and more than 3.2 per cent of employment, the newspaper reported.

In Australia, the finance sector accounts for 11.5 per cent of all industry value added. Australia's finance sector employs 3.7 per cent of the workforce.