Former chief economist at the IMF Kenneth Rogoff claims the world is only midway through a major financial crisis with the worst yet to come. He forecasts a major US bank will fail as the bloated US financial sector restructures. I wonder if Australia's RBA have made the same inference with their recently unprecedented moves to preannounce an interest rate decrease with a veiled warning to the oligopolistic banks that they must pass on the decrease. It is worrying and I would not be buying bank shares at present.
For the life of me I cannot understand why the RBA could not persuade the ACCC to reject the St George-Westpac merger. As I have previously argued this merger should have been rejected and the 'four pillars' policy strengthened not weakened. Bank customers in Australia are getting a bad deal at the expense of bank shareholders.
Interestingly, Rogoff rejects US Federal Reserve moves that have cut interest rates to only 2% arguing they willl be severely inflationary. Australian official rates have been a long way above this which accounts for the strength, until quite recently, in the Australian dollar. The RBA remain concerned with inflation and continue to the concerned with a possible wages explosion under Labor as interest rates are eased.