PM’s get out of jail card
Here is the text of my opinion piece in The Age today.  The events of the GFC have snookered the Rudd Government.  The RBA is now raising interest rates to suppress resurgent inflation, but most the Government’s $95 billion stimulus package is still in the pipeline and cannot easily be reversed.  The Prime Minister and Treasurer have lost control of events, as monetary policy (interest rates) and fiscal policy (government spending) pull in opposite directions.  But they are not completely trapped – there is a way out. The Government’s political problem is that rates will quite possibly rise month by month all the way through to the next election.  Th

Superfreakonomics: The Final Review
I had intended to review Superfreakonomics chapter by chapter but only managed Five, One and Two. Chapter 3 was perhaps the most satisfying of the book dealing with John List’s research on altruism (or that lack of it). It is a bit triumphant but otherwise informative. Chapter 4, in contrast, with pithy and unsatisfying. It was a prelude to Chapter 5 (on global warming) and dealt with how often there are simple solutions so long as you are willing to look for them. They again talk lots about hand washing and they also introduce a plan to

US inflation
There are two extreme views going around regarding where US inflation is headed. Those who subscribe to the view that the US is in for a long period of insufficient demand see the risk as being a Japanese style decade long deflation. On the other side are those who see the only way out of the US problem with unsustainable debt being to inflate it away. For those of that view, there is an extraordinary debate going on in the US House Financial Services Committee, which could lead to the Fed being a lot less independent (leading to the risk of higher inflation, among other problems). It will be very interesting to see how this pans out, but to follow the debate go to the Wall Street Journa

Yuan revaluation
I updated the piece that I posted last week relating to the value of the RMB and the US trade deficit - the new piece appears in todays AFR, and follows below. There’s a nice piece in The Economist magazine with similar themes – if you’re a subscriber you should be able to access this link. Follows is my piece… During the 1992 US Presidential debates candidate Ross Perot famously declared that passing the North American Free Trade Agreement (NAFTA) would lead to the “giant sucking sound” of manufacturing jobs being sucked down to Mexico.

2 years on
I was asked to contribute a few words to a feature in The Age about how Australia has fared two years into the Rudd government. My bit dealt with the economy. One thing is for sure, if there ever were a time when one can’t distinguish the soundness of economic management from things beyond control, the last two years would be it. A year ago, I could easily have imagined writing this assessment with the conclusion, “what’s the government of a small open economy to do?” Our expectation was for plummeting investment, high unemployment and a Government desperately trying to get things going again. Instead, the economy is strained but otherwise fine. The G