Callam Pickering continues to support MB’s push for Australian macropudential today:
The introduction of macroprudential policies is not about saying a bust is imminent — both the UK and New Zealand economies appear set for reasonably strong growth over the next couple of years.
Instead it is about risk management. It is the acknowledgment that ever rising house prices and excessive mortgage lending will leave our financial system and economy more vulnerable to economic shocks. It also has the potential to curb spending and crowd out business investment.
This is particularly important when you consider that the only thing standing in the way of an Australian recession is the Chinese economy — an economy we barely understand and few others do either. Chinese demand for iron ore and coking coal has proved a once-in-a-lifetime boon for the Australian economy, but with our terms-of-trade declining and China looking to curb excess capacity, our reliance on China could suddenly take a darker turn.
Well done, Callam. However, I think you have it backwards. Regulators don’t want to touch MP because they know that the only growth driver Australia has outside of mining is house prices and as the former slides their worst nightmare is that the latter does too. They’ve bet the house…
