You can always tell that the Australian economy is really at risk when Ross Gittins resumes the campaign for national ignorance:
We’re still learning to cope with a globalised world. Things work a bit differently now, and we have to adjust our thinking accordingly.
Globalisation – the breaking down of barriers between countries – is leading to increased trade between economies and increased flows of financial capital around the world, not to mention greater flows of people.
Another dimension of globalisation that’s having big effects without being widely noted is the globalisation of news.
News of important happenings somewhere around the world now reaches most people in the rest of the world with a delay of maybe only a few minutes.
Because humans have evolved to continuously monitor their environment in search of threats, the news that interests us most is bad news. The news media are only too happy to oblige. They ignore all the good things that are happening, and all the everyday things as well, to give us a concentrated dose of any highly unusual, bad thing that’s happening anywhere in the world.
The question is whether we’re capable of absorbing this quite unrepresentative picture of what’s happening around us without unconsciously reaching the conclusion that the world is in much worse shape than it actually is.
There’s always been herd behaviour in markets so let’s not call this complete tripe but it’s close to it. Just because cows can stampede does not mean that they are not being chased by a lion, nor, more to the point, that Gittins’ readers should make themselves an easy meal.
Other folks to add to your growing ‘Greece doesn’t matter’ blacklist include:
- Alan Kohler
- Robert Gottleisben
- Callam Pickering
- Phil Baker
- The Pascometer
- Chris Joye
- Joe Hockey
- Terry McCrann
- David Sokulsky
- Andrew Thorburn
- Bill Mitchell and Nigel Stapledon
Greece may or may not turn into a major global event but the point is that it’s a very definite possibility if it exits the euro and defaults big, and if you’re a small, open and externally funded economy that is going to matter a great deal.
This morning we’ve seen the impact of the Greek “no” vote in a big break lower in the Australian dollar and heavy buying in bonds driving yields down 7-8%:
The good news is that as of Friday the shift in bank funding costs was still muted with CBA CDS at 66:
Today’s action will be interesting.
