Making threatening noises when there is nothing he can actually do is a strange course for Labor’s new boy Treasurer Wayne Swan to be taking. What the National and ANZ Banks have done with their housing interest rates is exactly what the Reserve Bank predicted would happen. They have gone up independent of any increase in official rates set by the Reserve and if there is a surprise it is that the NAB’s increase was so low rather than the ANZ’s being so high.

Treasurer Swan can huff and puff as much as he likes but any politician who thinks he can stand between a bank and its profit margin in this financial climate is really rather foolish. The only weapon Government has over banks is the threat of reversing the last two decades of deregulation and this is not the time for that action. The problems caused by banks using their array of off balance sheet devices to circumvent controls would be worsened by governments getting stricter now. That is something for sometime further down the track when Australia can tack its re-regulation on to the actions which central banks in the United States and Europe will certainly have to take.

Until then the best Mr Swan can do is blame his predecessor for not forseeing the crisis that will result from the US teetering on the brink of that terrible double of recession combined with rising inflation as its housing market continues to collapse as a result of its loans debacle.

So far the Labor Government has maintained that its promised $30 billion of tax cuts is safe as it scrambles to find a host of spending programs to cut. Far better, and certainly much easier, to blame Peter Costello for misleading everyone before the election about the true state of the impact the world financial crisis on Australia. Scrap the tax cuts for all but the lowest paid and get it over with.