Two things are clear from this article.

1. The Australian economy in general and interest rates in particular are largely contingent on international market movements. If this is so, it makes little sense for John Howard to be claiming first (before the last election) that his government would keep interest rates lower than Labor and secondly (now on the verge of another election) that if there is another rise in interest rates the Australian States will have been responsible for it. The article shows this is mere political buffoonery.

2. The Reserve Bank is much closer to the Government and its friends than its independent mandate requires. On the one hand, Henry tells of well-direcetd leaks to mimimise the shock news of a rise, and on the other hand he signals that the bank is intent upon giving the Government 'the greatest possible time before the Federal election' to allow the bad news to dissipate before the Coalition faces the anger of the electorate.

"The Australian economy in general and interest rates in particular are largely contingent on international market movements."
If that was so, official interest rates throughout the world would be more or less uniform.
One of the most productive measure any national government can take to retard an interest rate rise, is to maintain a healthy surplus - government deficits put upward pressure on interest rates.
It is unfortunate for us all that state ALP governments are not only slipping into large deficits, but are wasting their borrowings on salaries.
That's the nature of the beast.

Admiral von Schneider says that if my proposition - "The Australian economy in general and interest rates in particular are largely contingent on international market movements" - is true, then "... official interest rates throughout the world would be more or less uniform."

That second proposition doesn't follow from the first proposition at all. We are not in a uniform world economy, but one dominated by a handful of super-economies (not all of them within national borders). Australia is an economic minnow in this very large ocean. China and the US for example are so dominant that their economic fortunes control Australia's and the reverse is not at all true. Wall Street sneezes and the ASX catches the fle as they say.

National governments as small as Australia's can take only tiny steps to retard an interest rate rise. Our resources boom is thoroughly dependent on the continuance of China's economic boom. And the trade deficit with the US since the US/Australia trade agreement has proved very much to be in the favour of the US.

The attempt by Howard to blame the Australian States for a likely interest rate rise (*uncomfortably close to an election) is desperate stuff from an increasingly desperate PM who told the electorate in 2004 that he would control interest rates...remember Admiral?

He was either lying then or lying now. Can't have it both ways.

The Admoral is right about the bureaucrats.Iemma's fat cats cost us $7 billion pa.We have approx 3 million workers.Do the division.Our fat cats cost each worker $2300.00 pa.Why is our state broke?

Answer; undisciplined Labor Govts.

"an increasingly desperate PM who told the electorate in 2004 that he would control interest rates."
Howard was not lying, he did not say that.
Howard cannot control official interest rates, that is the sole prerogative of the Reserve Bank and it was his government that made it so.
What he said was interest rates would always be lower under a coalition government than under the ALP.
We'll see.

Admiral says

"It is unfortunate for us all that state ALP governments are not only slipping into large deficits, but are wasting their borrowings on salaries."

What complete and utter tosh. Admiral, it's actually quite easy to access the various state budgets and read them.

Just a quick look at 2007 - 08 state by state shows:

VIC = surplus $324 m
NSW = surplus $376 m
QLD = surplus $268 m
SA = surplus $38 m
WA = surplus $1.8 b
TAS = surplus $150 m

couldn’t be bothered looking up ACT and NT.

The states have been in surplus for years and continue to do so. Your ignorance is astonishing.