Joe should dampen meltdown fears JOE Hockey has returned from the International Monetary Fund meetings in Washington deeply worried that continued instability in the US may precipitate a new global crisis. When financial market traders start fretting about whether to denominate their next transaction in US dollars, for fear they may not get paid, the future strength of the world's reserve currency is in jeopardy. Five years after brinkmanship over the funding of the troubled Lehman Brothers sent world markets crashing, there is yet to be a convincing economic recovery. The Reserve Bank of Australia shares the Treasurer's concern that the bruising debate over the US government's debt ceiling may bring further delay in the Federal Reserve's plan to wind down its bond purchases that have been flooding the world economy with excess liquidity. Governor Glenn Stevens has said there is little the RBA can do to relieve the resulting upward pressure on the currency, but it is unlikely the RBA shares Mr Hockey's fear that the world may be on the brink of a new meltdown, with no hint of this emerging in either the minutes of its last board meeting or in a speech Mr Stevens gave last week. The RBA's core position would remain that the US will avoid allowing any default to occur and that the US central bank will still start tapering its extraordinary monetary support in the first half of next year. This will eventually bring relief to the Australian dollar. Mr Hockey's reaction to his first IMF meeting bears a striking resemblance to that of Wayne Swan following his first trip, in April 2008, which led him to cancel planned spending cuts in his first budget. Giving the RBA enough capital to ride out any storm is a good move, as is the decision to lift the government's debt ceiling to an ample $500 billion. However, Mr Hockey must take care that his fears, which he is using to draw political attention to the imprudent decision of Mr Swan to demand a dividend from the RBA last year, do not undermine the welcome recovery in business and consumer confidence. As Mr Hockey has himself noted, a revival in confidence is the first step to restoring some sorely missing dynamism to the Australian economy.