Paxter

I wouldn’t have declared but what do I know.

Pretty good fightback there from Joe and Johnny. Wonder what is a good score on this pitch?

Yup. Australia’s session I’m afraid.

Haha. Pretty good stuff from Crawley so far, knocking the ball around. Pitch looks flat. Pope did his usual get in, get out trick.

Kiss of death: I think Aus have a good chance to win an away Ashes series (would be their second this century). In favour of Aus: Dominant middle order (Marnus/Smith/Head) Experienced, balanced, relentless pace attack Good team balance with the rise of Green Stokes unable to bowl (or unlikely to) Against Aus: History Conditions Jimmy Anderson David Warner Bazball (though this could backfire in this instance - who knows) Praying to the cricket gods that Moeen comes up trumps in this series.

The Senate cross-benches keep growing, this time as Dutton expels SA Senator David Van from the Liberal party. Seems like there are at least two further allegations against him so far, in addition to those made under privilege by Thorpe.

Or just racism? It can't be a coincidence that the states less in favour are those with a greater tradition of intolerance.

According to a recent Resolve poll: So yeah. Things not looking good from my perspective. And the above was confirmed by the sentiment on my extended family WhatsApp group...

A better performance from India in the second half of the test, but still a comfortable win for Aus.

You'd think with a lead of 300 and India missing the brilliance of Pant - this match is pretty much over. Australia definitely making a case that they could snag a rare away Ashes win. They seem to have most of their bases covered - defensive batting (Smith, Marnus), in-form aggressive batting (Head), all-rounder (Green) and a varied attack. I really hope Moeen's return to tests is a good one.

Warner gone early. I wonder whether he has done enough to get an Ashes berth...

“Doesn’t matter how you get them, just matters how many”. I’d take Smith over any Bazball initiates :P.

Signs as well that Smith is returning to the peak of his powers, which must be triggering for England. He's managed to keep his test average over 60 despite a slight dip in form since the pandemic. Kohli meanwhile has seen his average dip below 50 (currently at 48.9) and has a poor test record since COVID.

Pretty poor day for India after a decent start. Hopefully they can bounce back and make a good match of it still.

But first...the WTC Final. Looking forward to this one.

I have thought for a long time that the RBA was living in a dream and needed to follow the rest of the central banking world higher. Last year, we were talking about them getting to 2-3% and then pausing - that was certainly way off. The reality is and remains that rates of 3-4% are still accommodative when headline inflation is running at 7% and core inflation (trimmed mean) at 6% (i.e., still translates to a negative real interest rate). This creates an incentive to borrow, not to save. But perhaps we will finally start seeing a slowdown effect this year.

Not quite true - Tasmania is still governed by the Libs. And now McGowan has surprisingly resigned in WA.

Regionals rallying hard today. Plenty of industry insiders are blaming the volatility on short-sellers’ vulture like behaviour (especially shorting ETFs). I am less scathing of the shorting - at the end of the day it’s fair game to make a bet on the future viability of banks with questionable business models. Ultimately we are likely to see significant consolidation as more of these regionals reach attractive valuations. In the meantime, margins and profits are going to be squeezed for the foreseeable future. At least no resolutions this weekend!

Yeah the prudential framework is generally pretty good. It’s not quite a level playing field as the large banks are permitted to implement their own capital rules via internal models, while the smaller banks have to use a completely standardized approach (much to their dismay). That tiered system has slowly been watered down over the years as APRA has followed new Basel rules that effectively restrict the use of models. The major banks also get a two-notch upgrade on their credit ratings because Moody’s and S+P both believe they are implicitly guaranteed by the government. This gives them an edge in funding markets. But overall it’s a quite conservatively and I think fairly regulated system. There’s a bias towards the safety of the big players, but that’s arguably a feature more than a bug. ETA: On deposit rates, I think it was the speed of increases (or lack thereof) rather than the level of rates that was the concern. But it’s good that TINA is now over, at least for a while. I hate the idea of negative interest rates and wish we had never taken that path globally.

I guess I'm hoping that if the RBA manages to get inflation back under control, that will end up being a boon for most renters and probably worth the interest rate hikes. And let's not forget what got ourselves into this inflation mess: Global lockdowns that froze supply chains and caused shortages of goods Massive and overly prolonged fiscal and monetary stimulus both at home and abroad A sharp rebound in demand for services like travel, dining out etc. Labour shortages in key services industries (the biggest chunk of the Australian economy) War in Europe causing a global commodity-price shock The RBA is trying to fix this mess with the only tool in their toolkit: interest rates. And as others in this thread have pointed out (Anti-Targ chief amongst them), it's actually a pretty shitty tool.

The current inquiry into deposit rates might indicate otherwise! And we are going to lose Suncorp at some stage, which is kind of a shame. With the demise of Bankwest and St George years ago, there really isn’t much choice at the regional level. Having said that, it would be unusual for a country of our size to have many more banks than we do. And it’s not as if the US is a great exemplar right now with its ultra-diffuse market for financial services.

Oh they are loving the profit boost. Bank stocks are paying good dividends again. It’s just not as big as analysts were expecting, because the expectation was that they could throw their oligopoly power around. Instead they are competing hard to get deposits and loans. Insurance was never a money spinner for them but the loss of wealth management does narrow their business models.

That may be true of SVB or Signature, but not all of these regional banks are being grossly mismanaged. We have just seen the sharpest interest rate hiking cycle in 40 years. Small, less diversified banks (like, PacWest or Western Alliance) are always going to find it hard to maintain profitability and retain deposits in these circumstances. That’s business model risk rather than a criminal act. Ideally, banks would be holding some extra capital for this interest rate risk (known as IRRBB in regulation speak). But in reality, the capital that banks are required to hold is based more on other types of risks. You can expect much hand-wringing and finger-pointing over IRRBB in the next few years. ETA: Oh and I wouldn’t be surprised if some criminal charges are eventually laid over some of these failures. I don’t think this is a repeat of 2008 in that sense.

This is the moral hazard argument. Of course, if you simply let them fail, a lot of uninsured depositors are going to get hurt. Plus it risks causing more contagion to solvent entities.

My view is that the systemic guarantee of deposits is already in place and making it explicit won't change much. No way would Yellen protect SVB depositors and not PacWest. It's unthinkable. The reason for the "pick offs" is that the business model of these banks is essentially fried now that the cost of deposits has skyrocketed. I think M&A is really the only way to go here, just as it was in the S&L crisis. The other option is something like TARP that could be used to effectively recapitalize the regional banks...which takes us back to full-scale bail-outs.