I have been waiting for the explosion all day, and the longer it takes, the more ominous it seems.

Joe Hockey's idea that the government should regulate bank interest rates is, as his colleague Don Randall said in an interview, "lunatic".

Business isn't worried about the price of money at the moment, it's worried about its availability.

The reason that bank interest rates are running higher than the ones set by the RBA, is that the RBA rates are not properly reflecting the borrowing costs of the banks.

For decades now the RBA has had only persuasive power to set interest rates, but everyone seemed to think they were somehow powers of command.

The error of this view has been practically apparent for a while as the banks set their rates on the basis of how much it costs them to borrow, not what rate the government will borrow from them.

Anyone seeking to run the economy of Australia has to understand this. Hockey must understand it, and is making an opportunistic play.

Abbott must understand this, and by not countermanding his Treasury Spokesman, it suggests at best he is prepared to profit (if that is the right term) from his spokesman's opportunism or at worst, it is a considered move by the team.

Everyone expects politicians to be opportunistic, but they can't be opportunistic on everything. This is an issue where the Liberal grass roots will rise up.

The Liberals need to get used to the idea they will not be back in government soon and that quick fix strategies will not help them to get there any sooner.

*it suggests at best he is prepared to profit (if that is the right term) from his spokesman's opportunism or at worst, it is a considered move by the team.*

Exactly. IMHO, the present liberal bunch have made it quite clear
that they won't let ideology or facts interfere with political
point scoring. Just look at Abbott's suggested payments to
working mothers, paid for by increased company taxes, as an example.

Most of the general public simply don't understand bank funding,
so bashing banks or bashing Coles/Woolies is an easy option for
both politicians and tv programmes who want a bit of cheap
sensationalism.

I thought that Hockey had already backflipped on this.

Crikey reported it this afternoon as:

"At a press conference this morning [Hockey] pulled back significantly, and used as his cover a call for a "social compact" and a fundamental debate about the responsibilities of major banks and how they should be regulated. He is not, he made clear, calling for regulation of interest rates."

Mind you, the idea of Hockey being given any portfolio more complex than ordering two lattes to go is too horrific to contemplate.

Graham with the US Federal Reserve printing another $ trillion, it is putting upward pressure on our rates.There should be a tax on US Fed phoney money to create stability here.

The Board of the RBA needs a more representative membership that represents the interests of all Australians.Currently Corporate Aust determines monetary policy and they modify the money supply to suit their interests.

The ABC reports it a bit differently http://www.abc.net.au/news/stories/2010/10/21/3044519.htm?section=business. It's a pretty major issue and I don't think Abbott has any alternative but to humiliate Hockey. Looks like Hockey's doing the gradual backdown and hoping it will disappear next week. It won't. Labor will play and replay the tapes mercilessly. Better to have a stoush within the leadership team than have Abbott tarred with this brush.

Looks like it was probably a brain explosion, despite the senator raising it last night.

I am heartened to see GY say this.
Labor is not keeping Liberals out of power that is some thing they are doing them selves.
I have got it wrong before but truly think Malcolm Turnbull is looking better every day.
He for sure, would never propose such lunacy.