RBA Deputy-Governor Glenn Stevens
delivered an elegant speech last evening in Hobart. A serious observer said “this is
foreshadowing inflationary pressures, but this is not
explicit.”

The final sentence says it all: “The
issue before us in the next year or two is whether the world and Australian
economies can adapt to higher energy and resource prices without a significant
bout of inflation. If we can, then in a year or two from now, the TCCI will be
hearing about further opportunities for businesses and their employees, both in
Tasmania and
around the nation, to create the sustainable prosperity we all
seek.”

The press – one assumes “well
briefed” – has generally agreed with our assessment.
Stevens is playing the ‘bad cop,” as Henry predicted, though whether my predicted
Interest Rate rise follows remains to be seen.

Higher energy costs, particularly
petrol, seem the major economic consideration for all Australians at the moment.
Higher fuel costs have caused demand of 4WDs to fall drastically, and
Nicholas Gruen is more than happy to see this happen.

The higher levels of environmental
and physical damage that 4WDs cause – the Revenge of the Latte Sipping Inner
City Elites – should not be left to “social consciences.” Rather, they should
pay for it!

Read the full article
here.

And in breaking
news:

The Westpac/Melbourne
Institute index of consumer sentiment, released this morning, showed a fall of
1.6 to 98.7 from 100.3 in September. The consumer confidence fall was reported
yesterday by Henry based on Roy Morgan Research data (available since
Saturday) but was ignored by the mainstream press. We still don’t know why.