australia / capital

Australia, a safe haven for capital

“Now, the events occurring in Europe will also predate large capital movements, indeed they are, this extreme capital market volatility, not extreme I shouldn’t overstate it but there’s considerable market volatility at the moment, very important question. If the worse thing happens where does the capital go? It is quite possible of course on this occasion some of that capital will come into Australia, it is quite possible, it is quite possible on this occasion Australia will be seen as offering something of a safe haven for global capital movements.”- Ken Henry, May 2012.

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4 thoughts on “Australia, a safe haven for capital

  1. Henry is hilarious, very patriotic, and I suspect very wrong. Maybe he’s just bigging up the “favourable investment climate” in AU (read: no riots or strikes).

    But someone could/should write volumes about different definitions of the “safe haven.” I find all the talk of “no safe haven for capital” quite exhilirating … Makes a pleasant change from worrying about the ‘absence’ of a “safe haven” in the context of migration/housing/etc …

  2. Well, if you’re a financial end-timer, there are always catastrophe bonds – which grew out of the storms of the mid-1990s. But the rise in premiums after the earthquake/meltdown in Japan might have dampened the enthusiasm — though I did see that Fermat have just taken a slice of the compulsory AU superannuation fund to play with (private super funds are in actuality huge and forcibly acquired loans to financial markets).

    In Europe and from the perspective of capital, “the worst thing” is a Greek default followed not by the success of the nationalists of any European stripe (return of the drachma, eviction from the EU, etc) but by Spain, Italy and Portugal following suit against austerity policies.

    There are dolts in the Greek Left who want to present a supposedly nice version of nationalism because they think “the worst thing” is a rise in fascism, and “good nationalism” would be better than that. This is intended to scare the more conservative parts of the Left into losing their nerve.

    In any case, Syriza’s position at the moment is that the only way out of this would be for the European South to form an anti-austerity bloc. I suspect this is what Henry et al would characterise as “the worst thing.”

    That, accompanied or followed by a “slowdown” in China would be armageddon (for the mining industry).

    For everyone else, “the worst thing” seems unexceptional and happens every day.

  3. Fascinating. I am most certainly unworried about anti-austerity blocs (at least the nationalist ones are explicit about it and lay some ground on which to fight) or a slowdown of the mining boom.

    LOL catastrophe bonds.

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