Defer the RBA “Enhanced Inde­pen­dence” Act

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Steve Keen’s DebtWatch No 22 May 2008

The Reserve Bank Amend­ment (Enhanced Inde­pen­dence) Bill 2008, which was tabled in Par­lia­ment in March, aims to give the RBA Gov­er­nor and Deputy Gov­er­nor “the same level of statu­tory inde­pen­dence as the Com­mis­sioner of Tax­a­tion and the Aus­tralian Sta­tis­ti­cian” (Wayne Swann, Hansard, Thurs­day, 20 March 2008, p. 2381).

Under the cur­rent Reserve Bank Act, the Gov­er­nor and Deputy are appointed by the Trea­surer, and the Trea­surer must remove them from their posi­tions if either of them:

(a) becomes per­ma­nently inca­pable of per­form­ing his or her duties; or
(b) engages in any paid employ­ment out­side the duties of his or her office; or
© becomes bank­rupt, applies to take the ben­e­fit of any law for the relief of bank­rupt or insol­vent debtors, com­pounds with his or her cred­i­tors or makes an assign­ment of his or her salary for their ben­e­fit;”

Under the Amend­ment:

  • The Gov­er­nor Gen­eral replaces the Trea­surer as the appointer (and ter­mi­na­tor);
  • their removal under those same three con­di­tions becomes optional rather than compulsory–the word­ing changes from “the Trea­surer shall ter­mi­nate his appoint­ment” to “The Gov­er­nor-Gen­eral may ter­mi­nate the appoint­ment”; and
  • there is a pro­ce­dure that must be fol­lowed for that option to be exer­cised:
  1. The Gov­er­nor-Gen­eral has to sus­pend the RBA Gov­er­nor or Deputy, on one of the three grounds;
  2. Within 7 days of that, the Trea­surer has to give both Houses a state­ment jus­ti­fy­ing the sus­pen­sion;
  3. Within 15 days of that, each House has to vote to approve ter­mi­nat­ing the appoint­ment; and
  4. If either House votes against ter­mi­na­tion, the sus­pen­sion is revoked and the appoint­ment con­tin­ues.

There are some “Gilbert and Sul­li­van” aspects to this Amendment–we could, for exam­ple, have a comatose and bank­rupt Gov­er­nor kept in office indef­i­nitely by a hung Par­lia­ment.

But leav­ing aside even that even­tu­al­ity, the prin­ci­ple under­ly­ing the Amend­ment is flawed. Though the aim to put mon­e­tary pol­icy above pol­i­tics is noble, the faith it puts in eco­nom­ics is mis­guided. Economists–even those run­ning the Reserve Bank–do not deserve the sta­tus this Act gives them.

There are good rea­sons to put the Tax Com­mis­sioner above pol­i­tics. We don’t want a Tax Com­mis­sioner using the office to run polit­i­cal vendet­tas (and the tax laws the Com­mis­sioner enforces are passed by Par­lia­ment any­way, so in that sense the office is under polit­i­cal con­trol).

Equally, no-one wants a offi­cial sta­tis­ti­cian who is sub­ject to polit­i­cal pressure–a good look at Stalin’s Rus­sia shows where that might lead. The process of col­lect­ing and inter­pret­ing sta­tis­ti­cal data is also a well-estab­lished sci­ence.

Therein lies the rub: eco­nom­ics is not a well-estab­lished sci­ence, but this Act treats eco­nom­ics as if it were one.

If it were, then the Act would make sense. Then, only econ­o­mists should con­trol the economy–just as only physi­cists should run a nuclear power sta­tion. But econ­o­mists don’t under­stand the econ­omy any­where near as well as physi­cists under­stand nuclear fis­sion. Far from pre­vent­ing eco­nomic melt­downs, econ­o­mists can cause them, by apply­ing the­o­ries about how the econ­omy works that are, in fact, wrong.

Of course, physi­cists can make mis­takes, and the inher­ent safety of nuclear power is a mat­ter of debate. But even crit­ics of nuclear power have to admit that nuclear acci­dents have been a lot rarer than finan­cial crises.

Now look at the cur­rent state of world finan­cial mar­kets, and ask your­self whether they resem­ble a well-func­tion­ing reac­tor, or Cher­nobyl on a bad day. Since the mid-1990s–when Cen­tral Banks have been more inde­pen­dent of gov­ern­ment con­trol than at any time in history–asset mar­kets have reached stratos­pheric lev­els of over-val­u­a­tion. If Cen­tral Banks were sup­posed to be man­ag­ing the nuclear reac­tors of finance, then they have taken the con­trol rods out and let the sys­tem go gang­busters.

The fuel that has fed this nuclear fire is pri­vate debt, which has risen at a faster rate than ever, and to lev­els that are unprece­dented in human his­tory. What was a fun ride on the way up promises to be any­thing but fun on the way down.

Obvi­ously many par­ties share respon­si­bil­ity for this mess, but with­out doubt economists–including Cen­tral Bankers–shoulder a large part of the blame.

Firstly, the last two decades have been a period of unprece­dented inde­pen­dence for Cen­tral Banks. After the high infla­tion of the 1970s and 80s, when politi­cians were last in direct con­trol of mon­e­tary pol­icy, politi­cians will­ingly ceded con­trol to the Cen­tral Bankers–largely to avoid the polit­i­cal pain of being blamed for high inter­est rates.

Infla­tion has cer­tainly been lower since the Cen­tral Bankers too over, but at the same time there have been more–and ever larger–financial crises than when politi­cians held the reins. We’ve had the Asian Finan­cial Cri­sis (1997), the Russ­ian Finan­cial Cri­sis (1998), the Long Term Cap­i­tal Man­age­ment Finan­cial Cri­sis (1998), the Inter­net Bub­ble and NASDAQ Finan­cial Cri­sis (2000), and now, the Sub­prime Finan­cial Crisis–all since Cen­tral Banks cast off the shack­les of polit­i­cal con­trol.

That’s not a track record that inspires the con­fi­dence in Cen­tral Bankers. I’d be inclined to give them less inde­pen­dence, rather than more, on that evi­dence alone.

Sec­ondly, eco­nomic the­ory itself has con­tributed to the finan­cial excesses that caused these crises. Econ­o­mists devel­oped mod­els of how mar­kets were sup­posed to behave–such as the “Effi­cient Mar­kets Hypothesis”–that cham­pi­oned the explo­sive growth of finan­cial mar­kets. Yet these the­o­ries were wildly inac­cu­rate mod­els of how mar­kets actu­ally behave.

When put into prac­tice, these the­o­ries gave us products–such as derivatives–that were sup­posed to help investors hedge against uncer­tainty, but were instead used for lever­aged gam­bling. They gave us policies–such as deregulation–that were sup­posed to lead to greater effi­ciency, and instead caused spec­u­la­tive bub­bles.

The same will prove to be true of the RBA’s cur­rent empha­sis upon con­trol­ling the rate of infla­tion using inter­est rates. I expect this policy–which is based on an eco­nomic model known as the Tay­lor Rule–to fail in sev­eral impor­tant ways:

  • It will, as hap­pened with high inter­est rates in the ‘90s, make the approach­ing reces­sion worse;
  • It will fail to con­trol infla­tion any­way, since many of the causes of infla­tion are immune to move­ments in Australia’s inter­est rates; and
  • It down­plays the impor­tance of the over-arch­ing need to ensure the sound­ness of the finan­cial sys­tem, at a time when the sys­tem is more frag­ile than it has been since the Great Depres­sion.

I am cer­tainly not say­ing that politi­cians would have done a bet­ter job of man­ag­ing mon­e­tary pol­icy than econ­o­mists in the last two decades. Polit­i­cal poli­cies like the Howard Government’s dou­bling of the First Home Buy­ers Grant, and halv­ing the rate of cap­i­tal gains tax, def­i­nitely stoked the spec­u­la­tive fire beneath Aus­tralian house prices ear­lier this decade.

But at least politi­cians are ulti­mately account­able. This Act would put econ­o­mists above account­abil­ity, not so much to politi­cians, but to the Aus­tralian peo­ple.

Of course, I could be wrong, and the Reserve could be right. Events could prove its focus on fight­ing infla­tion to be cor­rect, and expe­ri­ence could thus show that the RBA deserves more inde­pen­dence than it cur­rently has. So let’s defer this Act until we know from expe­ri­ence that this is the best way to man­age mon­e­tary pol­icy.

For­tu­nately, the sky won’t fall in if the Amend­ment is passed. It leaves intact the pro­vi­sions of Sec­tion 11, which allow the gov­ern­ment to com­pel the RBA to under­take a dif­fer­ent pol­icy than the one it wants to fol­low. So mon­e­tary pol­icy could still be taken out of the hands of the RBA, if a seri­ous dis­agree­ment devel­oped over what to do in an equally seri­ous eco­nomic crisis–and the politi­cians were coura­geous enough to call the experts to heel.


Com­ment on Data

There are signs that Australia’s debt bub­ble is finally approach­ing burst­ing point. Though debt is still ris­ing faster than GDP, the rate of increase is slowing–and even on the aggre­gate debt to GDP chart below, there are signs of a turn towards what Michael McNa­mara of Aus­tralian Prop­erty Mon­i­tors so aptly chris­tened “Peak Debt”.

If we are indeed approach­ing “Peak Debt”, then it will be the third such moun­tain in Australia’s eco­nomic history–the other two being 1892 and 1931 respec­tively. This still-grow­ing Peak, how­ever, already dwarfs the other two. The fact that debt has reached such tow­er­ing pro­por­tions dur­ing a period when Cen­tral Banks (and other reg­u­la­tors) are sup­posed to be exer­cis­ing pru­den­tial con­trol over the finan­cial sys­tem is one of the main rea­sons that I am opposed to grant­ing them any more inde­pen­dence:

Last month, aggre­gate pri­vate debt rose by 0.86 percent–still faster than the monthly rate of growth of nom­i­nal GDP (run­ning at 0.59 per­cent), but not over­whelm­ingly so, as has been the rule for the pre­vi­ous fif­teen years.

Sig­nif­i­cantly, per­sonal debt fell for the third month run­ning (though busi­ness and mort­gage debt con­tin­ued to rise). It appears that Aus­tralian house­holds might be finally try­ing to bring debt under con­trol, start­ing with its most expen­sive com­po­nent.

If a slow­down is finally hap­pen­ing, then–though in a finan­cial sense that is a good thing–there may well be an “inex­plic­a­ble” decline in eco­nomic activ­ity in its wake.

Since aggre­gate spend­ing is the sum of income plus the change in debt, when that change in debt slows down, so does demand. Since the change in debt last year accounted for 19.4 per­cent of aggre­gate spend­ing, any slow­down will hit spending–on asset mar­kets, or con­sump­tion, or both–like a brick.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • Hi Steve!

    You wrote,

    The same will prove to be true of the RBA’s cur­rent empha­sis upon con­trol­ling the rate of infla­tion using inter­est rates. I expect this policy–which is based on an eco­nomic model known as the Tay­lor Rule–to fail in sev­eral impor­tant ways: 

    Coin­ci­den­tally, we found in today’s news arti­cle in The Aus­tralian, RBA’s three strate­gies, Don Hard­ing, a pro­fes­sor of eco­nom­ics at LaTrobe Uni­ver­sity and the Thomp­son ISI lau­re­ate wrote that,

    In The Week­end Aus­tralian on April 26, Gra­ham Lloyd wrote that the RBA has fol­lowed the Tay­lor rule in set­ting the cash rate. This is sim­ply not true. Cen­tral banks don’t set mon­e­tary pol­icy by slav­ishly fol­low­ing a rule. 

    We don’t know enough about Taylor’s Rule to have any opin­ion about it. But this is just to let you know what we’ve found in the media.

  • Ken

    House prices Aus­tralia-wide rose just 1.1% in March quar­ter, so they are get­ting close to going back­wards.

    On the Tay­lor rule, I expect the RBA are fairly scared of the con­se­quences and have tended to be a bit reluc­tant to make changes to inter­est rates. Only expla­na­tion for not increas­ing them when infla­tion was stuck at 2 point some­thing per­cent and the tar­get is 1–2%.

    What is obvi­ous to any­one who has some knowl­edge of con­trol the­ory is that the quan­ti­ties they mea­sure are fairly noisy and also delayed, mak­ing con­trol dif­fi­cult espe­cially when you don’t really have a good model for the sys­tem. Add in that it is get­ting pro­gres­sively more unsta­ble as the debt increases and you have a night­mare. All done with a method­ol­ogy that looks fairly ancient. Remem­ber the early rocket launches where they would loop around and slam into the ground.

  • Among a clutch of fun­da­men­tal errors in Aus­tralian pol­icy in the last forty years has been the ever more for­mi­da­ble deter­mi­na­tion to put more power in the hands of the cen­tral bank — the RBA — and to place ever more reli­gious­like faith in what it does. It has been part too of the slav­ish devo­tion to Amer­i­can eco­nomic and finan­cial pol­icy — a pol­icy which has been remark­able for its pow­ers of self-destruc­tion. I have explained why an obses­sion to abdi­cate power to the cen­tral bank is the height of demo­c­ra­tic irre­spon­si­bil­ity in “America’s Sui­ci­dal State­craft: The Self-destruc­tion of a Super­power” and in other books and arti­cles going back to 1971. Just as one fea­ture of their incom­pe­tent man­age­ment of the finan­cial and con­sumer econ­omy, may I just note that, as well as the near hyper­in­fla­tion of asset-prices, the cen­tral bank has, by fol­low­ing ludi­crous inter­est-rate and credit poli­cies over the last forty years, deliv­ered a con­sumer-price infla­tion that has ensured that the Aus­tralian dol­lar has lost 95% of its pur­chas­ing power of every­day goods and ser­vices. An Aus­tralian dol­lar in 2008 is lucky if it can buy as much as five cents bought way back in 1969. If that is the best we can expect from the RBA, let’s get back to the sys­tem we had under the Bank­ing Act of 1944.
    May Sun­day 4 2008 (07h45) :
    The col­lapse of the United States is accel­er­at­ing : Oil in Euros vs. US dol­lars
    In the last eight years imple­ment­ing the plans for the Project for the New Amer­i­can Cen­tury (PNAC) designed “to pro­mote Amer­i­can global lead­er­ship” has back­fired.

    To accom­plish PNAC’s goals, all threats needed to be elim­i­nated. From the onset, the United Sates ear­marked two coun­tries as mor­tal ene­mies: Venezuela and Iran. With Venezuela, it is well doc­u­mented that the CIA attempted to over­throw the demo­c­ra­t­i­cally elected gov­ern­ment of Chavez. And with Iran, the United States con­tin­ues to use it as a scape­goat for its fail­ures in Iraq. These cold war tac­tics how­ever are prov­ing to be US’s undo­ing.

    The United States is hem­or­rhag­ing from every ori­fice, and oil prices can be used to mea­sure the rapid­ity of its demise.

    In April 2006, Venezue­lan pres­i­dent Hugo Chávez launched “a bid to trans­form the global pol­i­tics of oil by seek­ing a deal with con­sumer coun­tries which would lock in a price of $50 a bar­rel.” At the time, this pro­posed price was $15 a bar­rel below global mar­ket lev­els, and what must surely seems to be a steal at the cur­rent $118 a bar­rel.

    How crit­i­cal was the deci­sion not to take Chavez’s pro­posal seri­ously? Just two short years later, in April 2008, Pres­i­dent Mah­moud Ahmadine­jad of Iran is stat­ing that oil at cur­rent lev­els is too cheap. That’s call­ing a 136% increase in price not enough, and most analy­sis and the mar­ket seem to agree. So what has changed in that time? The per­ceived value of the US dol­lar of course.

    US dol­lar ver­sus euro

    In 1999 the euro was intro­duced as an account­ing cur­rency (trav­el­ers’ checks, elec­tronic trans­fers, bank­ing, etc.) and then launched as phys­i­cal coins and ban­knotes on 1 Jan­u­ary 2002. The euro replaced the for­mer Euro­pean Cur­rency Unit (ECU) at a ratio of 1:1. How­ever its value quickly began to drop, reach­ing a low of 0.8252 rel­a­tive to the US dol­lar on 26 Octo­ber 2000. This proved to be a solid sup­port level for the next two years, and in 2002 the euro began its appre­ci­a­tion reach­ing a high of 1.60 as of 23 April 2008.

    click to enlarge
    Aside from con­sol­i­dat­ing power for the new Euro­pean Union, the euro added liq­uid­ity and flex­i­bil­ity to the finan­cial mar­kets which in time has made the euro a very attrac­tive and safe invest­ment as a major global reserve cur­rency.

    As of the begin­ning of 2007, within five short years, euro notes in cir­cu­la­tion have exceeded the value of cir­cu­lat­ing US dol­lar notes. Con­sid­er­ing that the dol­lar has been deval­ued by approx­i­mately 50% since reach­ing its high rel­a­tive to the euro in 2000 (the euro has gained approx­i­mately 100%), we can only assume that accord­ing to global mar­kets, the US dol­lar is los­ing its per­ceived value.

    Price of oil in US dol­lars and euros

    Oil prices had a recent low point in Jan­u­ary 1999 at $8 per bar­rel, after “increased oil pro­duc­tion from Iraq coin­cided with the Asian finan­cial cri­sis, which reduced demand. The prices then rapidly increased, more than tripling by Sep­tem­ber 2000 (35 dol­lars per bar­rel), then fell until the end of 2001 before steadily increas­ing.”

    1999 is the same year that the euro was intro­duced as an account­ing cur­rency. By the time that the euro was launched as phys­i­cal coins and ban­knotes in Jan­u­ary 2002, oil was trad­ing at approx­i­mately $20 a bar­rel, and at present, on 23 April 2008, oil is trad­ing at $118 a bar­rel.

    click to enlarge
    Let’s com­pare the rise in the price of oil rel­a­tive to the two cur­ren­cies.

    If we take Autumn of 2000 as our base point when the euro was trad­ing at its low of 0.8252 rel­a­tive to the US dol­lar and oil was trad­ing at $35 dol­lars per bar­rel, we get the fol­low­ing results: The increase in price of oil in euros has been 74% since 2000, while it has been a 237% increase in US dol­lars.

    click to enlarge
    Now let’s take a look at what the increase in price of oil in euros and US dol­lars has been since April 2006 when Hugo Chávez wanted to lock the price at $50 per bar­rel. (Note: in April 2006 the euro was trad­ing at approx­i­mately 1.22 rel­a­tive to the US dol­lar).

    click to enlarge
    Tak­ing into account that the euro had a dra­matic increase in value from 2002 to 2005, and then began a retrac­tion period through to 2006, the above num­bers con­firm what Ahmadine­jad has been stat­ing, that “the dol­lar is not money any longer but a hand­ful of paper dis­trib­uted in the world with­out com­mod­ity sup­port,” and that oil is under­val­ued at present lev­els when priced in US petrodol­lars.

  • Zoo

    Kevin was already spout­ing off about this act back in early Decem­ber last year (,21985,22880778–5005961,00.html
    ), so it looks like they have a strong com­mit­ment to it. I hope you have some luck get­ting your mes­sage through though Steve. 

    On the sub­ject of Aussie debt in this blog entry, is there any pub­li­cally avail­able data about the com­po­si­tion of Aus­tralian per­sonal debt? Apart from mort­gages, what is it that is caus­ing peo­ple to take on all of this debt? My apolo­gies if this has already been cov­ered in this blog some­where — a nice linky to a post would be much appre­ci­ated.

  • Just a quick com­ment before a lec­ture this morn­ing. Thanks for that link Con­trar­ian; my state­ment that they’re fol­low­ing a Tay­lor Rule was in the “If it walks like a duck, and quacks like a duck, it’s…” cat­e­gory.

    A sim­i­lar obser­va­tion was made by a US econ­o­mist about the Fed, until the lat­est shift: they might claim not to be slav­ishly fol­low­ing a Tay­lor Rule, but if you use a Tay­lor Rule equa­tion, you can pre­dict every move the Fed did in fact make prior to the recent panic.

    I’ll check that arti­cle out in more detail and get back to you.

  • Hi Steve!

    Got a ques­tion to ask you.

    It may be unwise to give too much power to econocrats over mon­e­tary pol­icy. But wouldn’t it be worse to turn that respon­si­bil­ity over to politi­cians?

    Econocrats may not know enough about eco­nom­ics, but politi­cians would know even less. If we give politi­cians that much power, we can be sure that the con­flict of inter­est between pol­i­tics and eco­nom­ics will give way to polit­i­cal inter­ests. That would be a dis­as­ter for the coun­try.

    We shud­der to think what will hap­pen if Aus­tralia has the bad luck to elect a Mugabe into power in the future. (Accord­ing to Murphy’s Law, any­thing that can go wrong will go wrong even­tu­ally).

    Per­son­ally, we favour the ‘democ­ra­ti­sa­tion’ of money- let the mar­ket deter­mine inter­est rates under a gold stan­dard. That implies that the cen­tral bank be abol­ished. At least, if things go wrong, there’ll be no one or insti­tu­tion to blame.

  • dyork

    Can I ask what source of data you used? What met­ric for debt? And how you get com­pa­ra­ble fig­ures that go back so far?

  • Ken

    The gov­ern­ment is still in con­trol, as when­ever they like they can change the law and regain con­trol pro­vided of course that the Sen­ate lets them. My feel­ing is that if the RBA become unpop­u­lar enough the gov­ern­ment would take back con­trol in some form, either directly or by appoint­ing a new board and gov­er­nor. The main con­cern is that the gov­ern­ment is dis­tanc­ing itself fur­ther from respon­si­b­lity for the econ­omy.

    dyork I think most of the data is avail­able from the ABS.

  • david

    Your com­ments about the Aus­trian school mis­un­der­stand­ing credit per­haps are a mis­un­der­stand­ing of the Aus­tri­ans by many.

    The whole idea of a Gold stan­dard can only be under­stood in the con­text that it would exist in it’s most use­ful form with­out frac­tional reserve bank­ing.

    It’s true that credit growth today is almost entirely in the pri­vate domain. How­ever it is still a man­i­fes­ta­tion of frac­tional reserve fiat money.

  • Hi David,

    I can under­stand that inter­pre­ta­tion, but I believe I do under­stand both the Aus­trian the­ory and frac­tional banking–and regard them as both defi­cient the­o­ries of credit cre­ation.

    It would take a lengthy and very tech­ni­cal post to explain why, but in a nut­shell I’d call both mod­els a “one tap” the­ory of how one fills a bath, when in fact there are at least two taps.

    There is an addi­tional man­ner in which credit is cre­ated, which exists in either a non-fractional/No-Gold Stan­dard world or a Gold Standard/No-fractional bank­ing world. Attempts to con­trol credit cre­ation in either finan­cial worlds are like try­ing to stop a bath over­flow­ing by con­trol­ling one tap, when the bath is in fact filled by two taps.

  • miner

    Hi Steve,

    not sure how to con­tact you directly, but was look­ing at the May debt­watch, and noticed that the debt growth chart, (which I take to reflect the change in debt on a monthly basis (row 3) from the D2 table), and the chart does not seem to match the data for the mort­gage (table states mort­gage growth as 0.84%, whereas the chart shows ~1.5%)

    Am I miss­ing some­thing??


  • pru­dentsaver

    I like to say that some­thing sim­i­lar to the UK can be observed in the small econ­omy Ice­land. Just on a much smaller scale. And they seems to be hav­ing a com­plete col­lapse in their cur­rency that might seem like a model to what is going to hap­pen in the future. It’s also strange to me that investors like War­ren Buf­fet seems so eager to burn his cash, even val­u­a­tions are not that cheap.

    So you agree that cash is a dan­ger­ous invest­ment, that might not sur­vive a credit col­lapse?

  • Hi Miner,

    Those dif­fer­ences are because of the ratio com­par­isons. One is mea­sur­ing change in debt rel­a­tive to its own level; the other is mea­sur­ing it rel­a­tive to GDP.

    If you–or any­body else here–need to con­tact me directly (rather than via the blog), use

  • Hi pru­dentsaver,

    I agree that cash, while safer than assets, is still not safe in the cur­rent envi­ron­ment. One of the many things that Keynes said that was unfor­tu­nately ignored was “And above all else, let finance be national.”

    The fact that it is not, and that pro­duc­tion is as glob­alised as it has become, means that this cri­sis will be marked by extreme cur­rency volatility–even more than applied dur­ing the Great Depres­sion. In this sense, even the ulti­mate safe haven of the past has become a spec­u­la­tive play.

    I have a sim­i­lar feel­ing about gold, etc. While this has always worked as a hedge in the past dur­ing a credit cri­sis, the spec­u­la­tive hold­ings of it today might mean that the out­come this time round isn’t as rosy as in the past.

    In a nut­shell, I can see lots of ways to lose money as this cri­sis unfolds, and pre­cious few to make it. So I’ll leave spec­u­lat­ing about that to the pro­fes­sional pun­dits.