I’ll happily apologise to David Murray this morning. His inquiry has delivered better than expected in a framework that all long term MB readers will recognise as our own: guaranteed and too-big-to-fail banks are distorting economic outcomes via a sustained housing bubble funded by offshore borrowing. It needs to be stopped or disaster looms.
Murray has also set Australia on the right path to repair this circumstance, with higher capital ratios the one (and probably only) long term solution. His recommended capital hikes at the headline level and in crimping the discounts afforded to mortgages are a direct blow to the above tax-payer funded rort.
That is the real achievement of the inquiry. There is now an official and highly credible document that lays out the MB thesis for all to see. We have been taken to the heart of the Australian economic narrative by David Murray and his team and we should perhaps take a moment to reflect upon the irony that it took a man carrying a legacy of interest in the banking sector to do it. That probably makes it all the more admirable.
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