Discussion in 'The Economy' started by Simon Hampel, 3rd Feb, 2009.
Lateline - 02/02/2009: Paul Keating joins Lateline
Lateline - 03-Feb-2009
I got a lot of respect for Keating, if he was running as Treasurer or PM of the Labor party next election, I'd vote Labor in a heart beat.
Really good interview that really gets to the heart of the problem, there is no credit, and the world was living on credit, now banks around the world are insolvent.
My only fear will be that when inflation starts to reemerge in both the US and world economies that the private central banks will see this as a justification for tightening monetary policy again, which will obviously lengthen the recession, rather than letting everyone take the real losses (via inflation) that are needed after the two to three decades of unjustified credit expansion in developed economies.
I also like how Paul eluded to the importance that India and China hold over the world in terms of their unlikeliness to continue to fund the deficits of developed nations that have limited prospects for growing out of their problems. It is somewhat of a comfort to know that at least China and India have government run central banks rather than private, for profit, institutions controlling their currency issuance. So hopefully they should both be in a position to effectively deal with this crisis as long as they can handle the reduced western investment of capital.
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