This has been the week in which the government produced some heavy fire against Labor. Treasurer Peter Costello produced his usual withering assault in parliament, but for the general public he warned about debt. From The Oz:

Peter Costello has warned business about embracing private equity deals, declaring that the lust for debt will look “pretty irresponsible” if there is a 1980s-style downturn.

In his most forthright comments on the $11 billion takeover bid for Qantas, the Treasurer said the 70% debt level proposed by the Macquarie Bank-led consortium should be “concerning” the airline’s board.

Clearly there will be no HIH-style crucifixion for Cossie: “People ought to remind themselves they are living in a golden period with low commercial interest rates, small spreads and high profits, and they ought to tuck away enough to weather a bit of a shock, and the shock could come from around the world,” the Treasurer said.

And, after a long hiatus, the Treasurer has appointed Ric Batellino as the Reserve Bank’s new deputy governor. There has been a chorus of justified praise for this appointment, which means governor Glenn Stevens can take the occasional rostered Sunday off. Henry likes the reports that Battellino is outspoken – well, for a central banker – and a hawk on inflation, but is less happy to hear he is not so strong on the growth of debt. No doubt a few long meeting on the Treasurer’s taskforce will set him straight on this.

Then there was the OECD: “[Australia’s] Growth has been strong and stable, but the income gap with the best performing countries remains substantial because of a large productivity shortfall. Employment rates for the low-skilled and older workers are still relatively low, notwithstanding recent improvements”.

Sadly, it seemed the new minister for unemployment had not read this comment, or so it looked when Joe Hockey debated Julia Gillard and told watchers of The 7.30 Report that Australia’s productivity has recently risen. (He no doubt missed Henry on this subject also.)

This (fairly major) gaffe apart, Henry thought Smokin’ Joe performed well, with concrete job creation to pit against Julia’s rhetoric about “fairness” and lack of a specific plan to achieve this without losing every small business vote that ain’t nailed down or rusted on.

In other heavyweight news, Ben Bernanke was upbeat about the US economy overnight. In his first a speech to the now Democrat-controlled Congress, Bernanke said that interest rates are currently at a level that is “likely to foster sustainable economic growth and a gradual ebbing of core inflation.”

“Overall, the US economy seems likely to expand at a moderate pace this year and next, with growth strengthening somewhat as the drag from housing diminishes.”

Read more at Henry Thornton.