Pascometer guides Hockey to $2 billion killing

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Weeoo, weeoo, weeoo. From The Pascometer:

Joe’s had a big win at the Forex casino.

…Hockey loaded up last financial year’s “Labor” budget with an $8.8 billion capital injection for the RBA. The RBA didn’t ask for it, didn’t really need it, but certainly went for all it could carry when the offer was made as it removes the annual tussle between the bank and the Treasury about how to divvy up the profit.

By maxing the RBA’s balance sheet last year, Hockey gets to take back to Canberra all of the RBA’s annual profit – and a great deal of that can come from the revaluation of the bank’s foreign exchange reserves when the Aussie dollar weakens.

…It’s a little unfortunate though that Joe took a while to get set. The Aussie was trading above 96 US cents at the time and had fallen by a few cents before the RBA received the cheque.

I’m sure we all recall The Pascometer siren screaming its objections when the recapitalisation of the RBA was announced. It was always sensible policy and good politics as well as a great investment, not least because it followed the contrary counter-contrarian signal generator known to all as The Pascometer.

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Weeoo, weeoo, weeoo.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.