Callam Pickering at locked-BS today adds hit take to yesterday’s RBA myth-making about GFC-preparedness:
…in part the high interest rates — or at least the last few moves in 2007 and 2008 — were evidence of the RBA failing to recognise the size and scope of the impending financial crisis prior to the collapse of Lehman Brothers.
At the time, it was too inward looking, focusing on domestic inflation and wage pressures, under the belief that our proximity to China had decoupled the Australian economy from the United States and Europe…with so few staff remaining from Australia’s last recession, there was a clear lack of appreciation for what was happening.
…Our regulatory framework…certainly helped us weather the storm. Australia’s financial system didn’t suffer to the same extent as the US or Europe, though we certainly had our dicey moments particularly with the near collapse of Bankwest.
Luckily for the RBA, the federal government acted swiftly via a stimulus package that was largely unprecedented…
Correct! Nicely diplomatic but still good to see a former RBA insider recognising that it was ill-prepared for the GFC. For what it’s worth, the word on the street is that it was Guy Debelle that kept the place from nodding off.
