I heart Hockeynomics

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Of course, that depends upon what that means. But if it means reevaluating our system of financial regulation to ensure it is working for us and for consumers, then count me in. As it is outlined in this speech, Hockeynomics seems to articulate a line very consistent with mainstream economic thinking on the subject. I must admit that I don’t follow enough Australian political coverage now to understand the whole controversy here but his nine policy suggestions seem, on the face of it, worth evaluating more closely.

But some are objecting. The banks (especially ANZ) have come out violently against all of this. Why? If we hold an inquiry and no competition issues are found (remember we did this for supermarkets) then the banks are fine. Their outcry suggests that they know there are competition issues. This all suggests that we need to push forward with an inquiry and also that the banks should be arguing for as much independence from the political process as possible for it.

The Government is objecting. This is hardly surprising given that they had a year to move forward on this and failed to do so. It is all the more interesting because the Hockey line is very traditional Labor fare. But we should note that the Government has not acted in the face of the financial crisis despite constantly telling the country that our understanding of finance had changed. To be sure, they enacted some good crisis measures (the banking guarantee and the RMBS interventions), but now that we are out of the woods is not the time to drop the ball. What is our system of banking guarantees now and should the banks get those guarantees for free? When it comes to mining, the Government expects the public to receive a share of the rents. What happens when it comes to banking?

Hockeynomics may sounds populist but that does not mean investigating, gathering evidence and thoughtfully considering the long-term future of the Australian financial system is a bad idea. As Kevin Rudd said, the time to mend the roof is when the sun is shining. The sun is shining now.

3 Responses to "I heart Hockeynomics"
  1. I’m bemused –  far less by your qualified endorsement than by the implication that following Australian political coverage would help you understand.
     
    Do you reckon you’d be able to get an op-ed somewhere on the topic?

  2. ‘Good crisis measures’.. Are you kidding?
    Guarantee only those who didn’t need it..
    What do you think that did to everyone else?
    I, like many others, invest in a property trust that has existed safely for decades, and still does, no thanks to current Fed Labor Govt. Consisting of about $3bil, this fund lends for commercial & residential property based on a 40% deposit rule. If U.S. banks were half as honest, would we have even had a GFC?
    Usually returning about 1-2% more than banks, for investors, has provided a safe alternative to bank investment accounts.
    Property trust funds which did total about $30bil in Australia, have been savagely & unfairly attacked by fast talking politicians who upset a large financial balance, and the bigfour must have got a big wad of panic dollars go to them, during the rush from funds like Challenger Howard..
    I defy anyone to provide genuine proof that Australian banks were in actual need of a guarantee, given the ever positive feedback to their shareholders. Except i guess when Wespac lost $300mil to sharemarket exposure.. which is ironic, given that the Federal Treasurer did not want to guarantee ‘market linked’ investment organisations..
    Maybe the lesson is to just sell everything that isn’t bolted down (like the state govts do) and quit your job to buy bank shares, then relax knowing they are the only listed stocks effectively guaranteed by big brother.
    The fact that good funds were not wiped out, and most of us still have our money, is proof that most were & are, good honest investments that could even withstand such an onslaught of favouritism !
    But i’m seriously thinking that i may be better off just buying another propery, and just take more rent, rather than lend my money to homebuyers. I’ll let the ‘guaranteed golden quadropoly’ write the rules for everyone who needs them..
    The sun that you think is shining, has had a trillion tons of public owned gasoline thrown at it. Mending the roof, means global regulation & a buttkick those who needed any hint of a guarantee, and a duncehat to politicians who wrongly thought they did..
    Don’t accuse me of whinging, i’m not..I’ll live to fight another day. i just feel sorry for the millions of people who are being hearded into the choice of four, and i seriously doubt that Joe Hockey or anyone else, will have enough say (shares) to do anything about it.
     

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