Budget emergency or a gambler in trouble? During those first few weeks after the election, as over half a nation sat there in shock contemplating what had just happened, presumably flushed with joy at having the keys to the safe, Joe Hockey made the astonishing decision to borrow $8.8 billion to give to the Reserve Bank. Hockey tried to sell this as crucial to our economy in giving the Reserve Bank a buffer zone to address future crises. What a load of hooey. The RBA deputy governor, Philip Lowe, ‘said the level of the bank’s capital reserves had not been keeping him awake at night’. The board had wanted to rebuild the capital level over time but the government wanted to do it immediately. In a speech at a Sydney investment conference in October, Reserve Bank governor Glenn Stevens backed up comments by the RBA deputy governor that the bank was happy to rebuild its capital reserves over time. The RBA certainly didn’t ask for Hockey’s $8.8 billion capital injection and didn’t think it was necessary. At the current five-year commonwealth bond yield of nearly 3.4 per cent, the borrowed $8.8 billion will cost taxpayers about $300 million a year. There were two reasons that Hockey did this and they have nothing to do with stability... read more theaimn/2014/04/25/budget-emergency-or-a-gambler-in-trouble/
Posted on: Mon, 28 Apr 2014 05:56:46 +0000
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