Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
Journalist Tarric Brooker and I reconnected following my relocation, for the first in our series of bi-weekly afternoon chats about economics and politics. It may be a couple of months since our last, but in many ways, things are the same…
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A further deeper dive into the RBA Review recommendations. I felt it was more like blancmange, than a piece of innovative reform – not least because the proposed structural separation and targetting are close to that used by other Central banks, who make precisely the same mistakes as our own.
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Dale Webster has been highlighting the significance of rising online fraud in the context of bank branch closures, and we discuss her recent submission to the current inquiry. Poor mobile coverage in the bush makes two factor identification laughable, and yet banks are paying tellers to push them online.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
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The RBA Review has been released, and I discuss the recommendations with Robbie Barwick from The Citizens Party, which will removed important powers from Government and reaffirms the neoliberal philosophy which has undermined our economy for years.
The final week for submissions to the Regional Banking Inquiry also offers an important opportunity to make the case for a National Postal Bank, as an antidote to the banking drive to control our lives.
https://citizensparty.org.au/media-releases/64-more-towns-nabs-regional-bank-firing-line
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IOTP is likely to be relatively idle for the time being as Martin North relocates to the UK and John Adams continues his quest in a new way. That said, you can still follow us on our respective channels:
Walk The World (Martin) https://www.youtube.com/c/WalkTheWorldDFA @WalkTheWorldDFA
The Public Crusader (John) https://www.youtube.com/@thepubliccrusader/featured
Hopefully we will find ways to make joint shows, but meantime do not miss out following our work – and stay subscribed to IOTP for updates!
Thanks to all those who follow and support our work.
A significant gulf has opened up between New Zealand and Australia in terms of monetary policy, after RBNZ lifted another 50 basis points, while Australia held. Underlying this are a series of conflicting assumptions about how the economies will fare – but the risk of recession in New Zealand is now highly likely – some would say certain; while in Australia, the protection of the housing market appears to be front of mind, with the RBA willing to let inflation burn hotter for longer. Both cannot be right!
In the final part of our Australian Property Rant series with property insider Edwin Almeida we look at the latest numbers and emerging trends.
After a short break though we will be back with the International Property Rant weekly, so stay subscribed to catch the first in the new series.
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https://www.ribbonproperty.com.au/
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Are we in the foothills of the next banking crisis? Quite possibly. Investor sentiment remained fragile on Friday despite massive rescue for the banking sector, leaving global equities under pressure while gold prices were poised for their largest one-week rally since March 2020.
The U.S. banking crisis began after two mid-sized lenders — Silicon Valley Bank and Signature Bank— were rescued by the Federal Deposit Insurance Corp last week as depositors yanked billions of dollars from them after fearing about their solvency. Silicon Valley eventually filed for bankruptcy protection over the past 24 hours. A third bank, First Republic, is also in trouble despite receiving a $30 billion cash infusion from a consortium of banks.
SVB Financial Group announced it would seek Chapter 11 bankruptcy protection, the latest development in an ongoing drama that began last week with the collapse of Silicon Valley Bank and Signature Bank which sparked fears of contagion throughout the global banking system.
On Friday, investors lost confidence in U.S. regional banks and Credit Suisse in Europe. Risk appetite waned after showing signs of recovery on Thursday. Credit Suisse’s chief executive said on Friday the bank was working hard to stem customer outflows, although this could take time. Credit Suisse shares resumed their decline.
Fed data on Thursday showed banks sought record amounts of emergency liquidity in recent days, which helped undo months of central bank effort to shrink the size of its balance sheet. Its latest discount window borrowing has further seen banks take $150 billion, which makes for a new record even topping the 2008 GFC.
“Last week the Fed’s balance sheet swelled by $300 billion, wiping out 4 months of QT in one week,” gold bug Peter Schiff wrote in part of a Twitter reaction. “By the end of the month the balance sheet could reach a new high. Rate hikes don’t matter. Inflation is headed much higher, thanks to bank bailouts.”
Markets are pricing in a 25 bps increase by the U.S. Federal Reserve when it meets next week, down from previous expectations for a 50 bps increase. At last glance, financial markets have priced in a 60.5% likelihood that the central bank will raise its key target rate by 25 basis points, and a 39.5% probability that it will let the current rate stand.
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Earlier in the week I was a guest on TNT Radio, and we discussed the emerging banking crisis, and what lays behind it. Events since reconfirms our view this is a serious structural issue triggered by Central Bank’s reversal on rates, which have put many financial services players under stress.
Significantly, Central Banks are now trying to prop the system up. More finger in the dyke stuff?
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For the final time in Australia, I caught up with Robbie Barwick from the Citizens Party. We looked at the progress towards the establishment of a Public Bank in the light of recent failures, and the inquiry into Regional Banking.
Importantly, there are just two more weeks to get your submission to the Inquiry. Have your say! and support the transformational policy.
Make a submission to regional bank closures inquiry
Submissions to the inquiry are due by 31 March. All communities, organisations, businesses, and individuals impacted by the banks’ war on cash are strongly urged to make a submission, including to support a government post office bank.
A submission can be a formal representation from an organisation, or as simple as a letter or email, which explains to the Committee your experience and views.
Elderly and vulnerable regional bank customers, who are disproportionately affected, are especially encouraged to hand-write or type physical letters and mail them to the Committee through the post.
Mail your submission to the Committee at this address:
Committee Secretary
Senate Standing Committees on Rural and Regional Affairs and Transport
PO Box 6100
Parliament House
Canberra ACT 2600
Email your submission to the Committee at rrat.sen@aph.gov.au
Upload your submission, and get more information, at the inquiry website
For more information, phone the Committee on 02 6277 3511.
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