NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

On this site are most of the important things I have written for Fairfax and the ABC over the past few decades. I recommend the Search function. The site is a record for you, as well as me.

I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Friday, October 10, 2008

Rudd has me very, very worried

The Prime Minister has just announced legislation that will guarantee the first $20,000 of each individual bank deposit. Bloody hell!

What does that imply about the rest of each bank deposit? (One of my family's deposits is quite big at the moment.)

It was fine when there was no explicit guarantee of bank deposits - that mean that everyone was in the same boat. But not now. This wise thing would be to split our family's deposit into a number of individual $20,000 accounts.

Other depositors will think the same way. As John Quiggin says, it'll lead to large-scale withdrawals:

"The possibility of this turning into a run is far from remote".

As commenter Bingo Bango Boingo says:

"Is he mad? One day he says bank savings are safe, the next he comes out with a policy that very strongly signals they are nothing of the sort."

This surely can't last. He'll have to guarantee the lot. No real loss, they have been effectively guaranteed anyway.