Plain English Blog

Why rates could stay high for ages

Should Glen Stevens and the RBA board be stamping our interest rates “Made in China”? Me thinks so. China just overtook Japan as the world’s second-largest economy and this export-driven inexorable rise of the dragon continues to laden this lucky country with a largesse of fortune cookies. Dirt? We got heaps of the stuff! Coking coal, iron ore. Natural gas? More than you poke a Bunsen burner at! And then… Continue reading →

Interest rate basics

Andrew Pegler – 15 October 2010 With so much talk about interest rates I thought it apt to take a look at some of the basics of the whole shebang. What’s a central bank? This is a country’s primary monetary authority. Ours is called the Reserve Bank of Australia, known as the RBA. Other examples include the European Central Bank, the Bank of England and the Federal Reserve in the… Continue reading →

Dollar goes off…again

Andrew Pegler – 24 September 2010 It seems like just a few weeks ago that the dollar was sub USD 90c…hang on that WAS just a few weeks ago!! Yes folks, the little-dollar-that-could recently surged past .96c in a 26-month high. But, as we have discussed, this comes with benefits and pitfalls. Ahh, such is life. The AUD has risen more than 17% since May against the US dollar, thanks… Continue reading →

Basel III – the regulators strike back!

Andrew Pegler – 17 September 2010 For the years leading up to the financial crisis banks across the world had been progressively thinning out how much money they had up their sleeves for the day things turned ugly. As we know that ended predictably but last week the regulators finally struck back. This stash, known as reserves, is supposed to be pretty heavily policed but pre GFC things were good… Continue reading →

Monetary Policy – Indonesian style divider line

Andrew Pegler – 10 September 2010 Hello readers and Selamat pagi. I’ve just returned from Indonesia where interest rates aren’t the only way they keep inflation under wraps. As we have discussed before, central banks control inflation by raising or lowering interest rates. Lowering them encourages spending and growth and vice versa. But this hits growth pretty hard and Bank Indonesia (BI), Indonesia’s central bank, has a pro-growth policy so… Continue reading →

What the hell does ‘pegging your currency’ mean?

Andrew Pegler – 16 July 2010 No it’s got nothing to do with hanging money out to dry or even laundering it. Please let me explain. All this babble about China unpegging its currency from the USD may sound like something for the pointy-headed economists to mull over but it’s actually not that hard to grasp. Exchange rates fluctuate just like the share market, i.e. they’re up and down like… Continue reading →

Why a weaker dollar is good news

Andrew Pegler – 3 September 2010 The political kafuffle and those pesky global jitters have seen the AUD come off the boil a tad. But for an export-dependent country like ours this isn’t a bad thing. A nation’s currency rises and falls depending on the performance of its economy and the sentiment of its investors. If everyone wants a piece of the action then it heads north. If everyone wants… Continue reading →

The dragon enters itself

Andrew Pegler – 20 August 2010 With the US consumer crippled by debt and Europe going pear shaped, the Chinese have been looking for new markets. And they’re finding them in their own backyard. It’s part of the arc of economic maturity that eventually a nation goes from being a cheap destination for making stuff for richer countries, to having enough internal wealth to support an aspirational middle class that… Continue reading →

Cameras, lights, stimulus!

Andrew Pegler – 13 Aug 2010 The Libs say the stimulus package only played a small role in getting us over the line and it was a dog’s breakfast anyway. Labor points out that ours was the shortest and shallowest downturn in the industrialised world – end of argument. Whoever you support here’s your script for this weekend’s BBQ. (Sorry for not including the Greens.) The Liberal voter’s script Scene:… Continue reading →

You say RSPT, I say MRRT, let’s call the whole thing game on!

Andrew Pegler – 09 July 2010 Rarely does tax wield such an axe. But we’re one PM down and will soon be picking another. Julia’s new ballad to the tax man goes something like this. For starters the super word has been buried under a few tonnes of iron ore and coal. Ladies and gentlemen, introducing much less combatitive-sounding Mining Resource Rent Tax (MRRT). Sure it’s still a tax but… Continue reading →