There is no way one can really put into words the horror of the Victorian fires.
I can do no better than recommend you read the account by Gary Hughes, that was on today's front page of The Australian. It is a 'happy' story from a day when such types of stories feel like they were in the minority. Here is an excerpt:
The house begins to fill with smoke. The smoke alarms start to scream. The smoke gets thicker.
I go outside to see if the fire front has passed. One of our two cars under a carport is burning. I rush inside to get keys for the second and reverse it out into an open area in front of the house to save it.
That simple act will save our lives. I rush back around the side of the house, where plastic plant pots are in flames. I turn on a garden hose. Nothing comes out.
I look back along its length and see where the flames have melted it. I try to pick up one of the carefully positioned plastic buckets of water I've left around the house. Its metal handle pulls away from the melted sides.
I rush back inside the house. The smoke is much thicker. I see flames behind the louvres of a door into a storage room, off the kitchen. I open the door and there is a fire burning fiercely.
I realise the house is gone. We are now fighting for our lives.
We retreat to the last room in the house, at the end of the building furthest from where the firestorm hit. We slam the door, shutting the room off from the rest of the house. The room is quickly filling with smoke. It's black, toxic smoke, different from the superheated smoke outside.
We start coughing and gasping for air. Life is rapidly beginning to narrow to a grim, but inevitable choice. Die from the toxic smoke inside. Die from the firestorm outside.
It is an incredible account.
Life is fragile, hug your loved ones.
Monday, February 9, 2009
Saturday, February 7, 2009
Pour some sugar on me
Over on the Crikey website, the excellent blogger Possum Pollytics has produced some excellent graphs on the make up of Rudd's stimulus package.
Possum really has no right to call himself a blogger, because he has an unnerving tendency to use facts rather than opinion to support his argument.
He wondered about the claim that the stimulus was just a one off "sugar hit" (a nice little sound bite that the media loves so much). So he came up with this graph which breaks down the package into tax breaks-handouts and infrastructure spending (he also has more detailed graphs on the package on his site - definitely worth a read)
And what do we find? Well yes there is a big "sugar hit" now, but if you look at the next financial year of 2009-2010, there is just as big an "infrastructure hit". Then in 2010/2011 the infrastructure spending is still pretty big (around $8.25 billion - hardly small change, especially when Malcolm Turnbull thinks the entire package should only be $15 billion).
I guess the problem with selling this package is that Rudd didn't come out and announce the Snowy Mountains Scheme II.
While such a scheme would be nice and romantic (the "true believers" would be in raptures) the good thing about the education spend, and the roads and black spots spend is that the construction is Australia wide. It's a broad spend rather than a narrow deep spend (ie a tonne of money all spent in one area).
Now some of the commentary on the package has gotten a bit ludicrous. Dennis Shanahan thinks Turnbull has got Rudd on the ropes because of responses on "straw polls, talkback radio reaction and internet surveys". I do like some strong irrefutable evidence.
Over at The Age, Ross Gittins runs his economic slide rule over the package:
Since the revised forecasts are for real GDP to grow by 1 per cent this financial year and 0.75 per cent next financial year, you can see how much the Government is relying on this package to keep the economy out of recession.
Similarly, the targeted principle says the stimulus should go to those people or on those purposes most likely to get the money spent quickly. This favours governments spending the money themselves so that, at least in the first round of the money's flow around our circular economy, all the money is spent on consumption or investment.
This explains the support for spending the stimulus on capital works (now grandly named "infrastructure"). Trouble is, major capital works programs such as expressways, bridges and railways can take years to plan and get approvals for.
Almost 70 per cent ($29 billion) of the $42 billion is going on capital works projects. But Swan has tried to ensure the money is spent quickly by targeting it towards lots of quite small building projects.
Cue the phrase "shovel ready". Yep Snowy Mountains Scheme II sounds good, but how long do you think it would take to get going? Too long is the quick answer. It is a lot quicker to build a new library, science lab or school hall, especially as that building is not being done only in one place. (Still will need to get trained people to do it though... ah the skills crisis remains...)
Clearly, Swan's approach scores well on timeliness and reasonably on targeting, although this time the cash bonuses are going to many middle-income families who'll be more inclined to save them than would poorer people.
So get out there you middle class people - spend some money!
Malcolm Turnbull's argument that people would be more inclined to spend a "permanent" tax cut than a once-off bonus - based on the economists' "permanent income hypothesis" - isn't a strong one empirically.
"isn't strong" is a nice way of saying "complete bollocks"
Finally, the temporary principle says everything you do must be a once-off (even if spread over a few years) so that it leaves no impediment to getting the budget back into surplus once the economy is well clear of recession. Swan gets full marks on that bit.
OK, look Gittins is just one opinion, but the criticism that the government is just wasting the money in cash payouts lacks credibility. It asks you to believe that the Treasury went to the Government as said, look we need to pump up demand in the economy; you can do this two ways, spend $12b on a cash payout, or spend $12b on a huge infrastructure program the like of which you have been dreaming of for the 12 years you were in opposition. And then you'd have to believe the Government said, hell, we don't want to spend money on a big incredibly popular infrastructure program, we want to throw away $12b to buy votes because we have only won every single opinion poll since 2006, so we're feeling a little bit nervous given the election is 2 years away.
Please. The ALP LOVES infrastructure programs. It is embedded in its DNA. Every ALP PM worth his (or hopefully one day, her) salt would love to do Snowy Mountains Scheme II - if only because (if you want to get cynical) a lot of labourers and construction workers vote Labor.
Peter Hartcher (no doubt with a lot of inside info) writes how the stimulus package actually was worked out:
The hardest part would be to stimulate the early part of the year. Any projects big enough to influence the overall growth of the economy take years to mobilise. Rudd and his ministers wanted results in weeks and months.
They decided to simply send out cheques in the mail. It was the fastest way of getting money out the door.
The Government had done the same thing in December when it mailed $8.7billion to pensioners and lower-income families. Now they would do it again, handing out $11billion in "bonus" payments, most of it in $950 wads for families, in the first half of the year.
Cash handouts, however, are a poor kind of investment. They leave nothing of any value for the economic productivity or the social capital of the country. Rudd and his group decided that the cash would taper out and the emphasis would switch as quickly as possible to investment.
OK, so they knew cash is bad (but a necessary choice), so what to do about longer term investment:
But what sort of investments? For speed and effectiveness, the economic advice was to make them geographically diffuse.
Gillard's office had suggested for last year's stimulus package that schools be allocated big construction grants. This was rejected for the December package, but now its time had come.
Rudd proposed a grant for any householder who wanted to insulate a home. Officials were sent away to develop the details. Among other things, they had to covertly research Australia's capacity to produce, and install, pink batts.
In the final package, schools were awarded a total of $14.7billion over three years for building and maintenance. A further $3.8billion will go to home insulation.
But what about that horrible debt Malcolm Turnbull cares so much about (I swear you'd think Turnbull bought his own house with cash)?
Rudd was worried that the stimulus plan would get the Government into serious debt and wanted a plan to get it out again. He asked the Treasury for some fiscal rules. Henry came back with a number of alternatives, and Rudd adopted the Treasury's preferred option.
This was a pair of guidelines. First was that once growth returned to its long-run trend of 3per cent, any extra revenues would go towards reducing the deficit. Second was to limit the rise in government spending to 2per cent in real terms once the crisis had passed.
So there you are readers - hold them to it.
Hartcher writes one final thing:
The Strategic Policy and Budget Committee of the cabinet considered many scenarios and hypotheses, and, so far, only one event has taken Rudd and his ministers completely by surprise - the decision by the Opposition to oppose it.
I guess they foolishly assumed the Liberal Party didn't want Australia to go into a recession.
Possum really has no right to call himself a blogger, because he has an unnerving tendency to use facts rather than opinion to support his argument.
He wondered about the claim that the stimulus was just a one off "sugar hit" (a nice little sound bite that the media loves so much). So he came up with this graph which breaks down the package into tax breaks-handouts and infrastructure spending (he also has more detailed graphs on the package on his site - definitely worth a read)
And what do we find? Well yes there is a big "sugar hit" now, but if you look at the next financial year of 2009-2010, there is just as big an "infrastructure hit". Then in 2010/2011 the infrastructure spending is still pretty big (around $8.25 billion - hardly small change, especially when Malcolm Turnbull thinks the entire package should only be $15 billion).
I guess the problem with selling this package is that Rudd didn't come out and announce the Snowy Mountains Scheme II.
While such a scheme would be nice and romantic (the "true believers" would be in raptures) the good thing about the education spend, and the roads and black spots spend is that the construction is Australia wide. It's a broad spend rather than a narrow deep spend (ie a tonne of money all spent in one area).
Now some of the commentary on the package has gotten a bit ludicrous. Dennis Shanahan thinks Turnbull has got Rudd on the ropes because of responses on "straw polls, talkback radio reaction and internet surveys". I do like some strong irrefutable evidence.
Over at The Age, Ross Gittins runs his economic slide rule over the package:
Since the revised forecasts are for real GDP to grow by 1 per cent this financial year and 0.75 per cent next financial year, you can see how much the Government is relying on this package to keep the economy out of recession.
Sounds like a pretty good reason for a Government to do something...
I doubt we'll escape it but, like most of the economists, I don't doubt the recession would be a lot worse without the various stimulus packages.I agree - if we stay out of a recession, it'll be a technicality and it'll be by the skin of our teeth. But without the package? Do you really want to contemplate that?
In preparing this week's package, the Government has sought to comply with the Three-Ts rule of fiscal stimulus: measures should be timely, targeted and temporary.
The timely principle says governments should apply their stimulus as early in the downturn as possible.
Well that kills off Julie Bishop's "wait and see strategy".Similarly, the targeted principle says the stimulus should go to those people or on those purposes most likely to get the money spent quickly. This favours governments spending the money themselves so that, at least in the first round of the money's flow around our circular economy, all the money is spent on consumption or investment.
This explains the support for spending the stimulus on capital works (now grandly named "infrastructure"). Trouble is, major capital works programs such as expressways, bridges and railways can take years to plan and get approvals for.
Almost 70 per cent ($29 billion) of the $42 billion is going on capital works projects. But Swan has tried to ensure the money is spent quickly by targeting it towards lots of quite small building projects.
Cue the phrase "shovel ready". Yep Snowy Mountains Scheme II sounds good, but how long do you think it would take to get going? Too long is the quick answer. It is a lot quicker to build a new library, science lab or school hall, especially as that building is not being done only in one place. (Still will need to get trained people to do it though... ah the skills crisis remains...)
Clearly, Swan's approach scores well on timeliness and reasonably on targeting, although this time the cash bonuses are going to many middle-income families who'll be more inclined to save them than would poorer people.
So get out there you middle class people - spend some money!
Malcolm Turnbull's argument that people would be more inclined to spend a "permanent" tax cut than a once-off bonus - based on the economists' "permanent income hypothesis" - isn't a strong one empirically.
"isn't strong" is a nice way of saying "complete bollocks"
Finally, the temporary principle says everything you do must be a once-off (even if spread over a few years) so that it leaves no impediment to getting the budget back into surplus once the economy is well clear of recession. Swan gets full marks on that bit.
OK, look Gittins is just one opinion, but the criticism that the government is just wasting the money in cash payouts lacks credibility. It asks you to believe that the Treasury went to the Government as said, look we need to pump up demand in the economy; you can do this two ways, spend $12b on a cash payout, or spend $12b on a huge infrastructure program the like of which you have been dreaming of for the 12 years you were in opposition. And then you'd have to believe the Government said, hell, we don't want to spend money on a big incredibly popular infrastructure program, we want to throw away $12b to buy votes because we have only won every single opinion poll since 2006, so we're feeling a little bit nervous given the election is 2 years away.
Please. The ALP LOVES infrastructure programs. It is embedded in its DNA. Every ALP PM worth his (or hopefully one day, her) salt would love to do Snowy Mountains Scheme II - if only because (if you want to get cynical) a lot of labourers and construction workers vote Labor.
Peter Hartcher (no doubt with a lot of inside info) writes how the stimulus package actually was worked out:
The hardest part would be to stimulate the early part of the year. Any projects big enough to influence the overall growth of the economy take years to mobilise. Rudd and his ministers wanted results in weeks and months.
They decided to simply send out cheques in the mail. It was the fastest way of getting money out the door.
The Government had done the same thing in December when it mailed $8.7billion to pensioners and lower-income families. Now they would do it again, handing out $11billion in "bonus" payments, most of it in $950 wads for families, in the first half of the year.
Cash handouts, however, are a poor kind of investment. They leave nothing of any value for the economic productivity or the social capital of the country. Rudd and his group decided that the cash would taper out and the emphasis would switch as quickly as possible to investment.
OK, so they knew cash is bad (but a necessary choice), so what to do about longer term investment:
But what sort of investments? For speed and effectiveness, the economic advice was to make them geographically diffuse.
Gillard's office had suggested for last year's stimulus package that schools be allocated big construction grants. This was rejected for the December package, but now its time had come.
Rudd proposed a grant for any householder who wanted to insulate a home. Officials were sent away to develop the details. Among other things, they had to covertly research Australia's capacity to produce, and install, pink batts.
In the final package, schools were awarded a total of $14.7billion over three years for building and maintenance. A further $3.8billion will go to home insulation.
But what about that horrible debt Malcolm Turnbull cares so much about (I swear you'd think Turnbull bought his own house with cash)?
Rudd was worried that the stimulus plan would get the Government into serious debt and wanted a plan to get it out again. He asked the Treasury for some fiscal rules. Henry came back with a number of alternatives, and Rudd adopted the Treasury's preferred option.
This was a pair of guidelines. First was that once growth returned to its long-run trend of 3per cent, any extra revenues would go towards reducing the deficit. Second was to limit the rise in government spending to 2per cent in real terms once the crisis had passed.
So there you are readers - hold them to it.
Hartcher writes one final thing:
The Strategic Policy and Budget Committee of the cabinet considered many scenarios and hypotheses, and, so far, only one event has taken Rudd and his ministers completely by surprise - the decision by the Opposition to oppose it.
I guess they foolishly assumed the Liberal Party didn't want Australia to go into a recession.
Friday, February 6, 2009
Flick of the Week: Sense and Sensibility
This week we move from 18th century China to early 19th century England by way of director Ang Lee: from Crouching Tiger, Hidden Dragon to the wonderful adaptation of Jane Austen's Sense and Sensibility.
The film was Lee's first English film, and he got the job on the back of his work directing Eat Drink Man Woman. It was an inspired choice by whoever chose him, because he is one of the best directors of love stories going around (he also did Brokeback Mountain).
The novel was adapted by Emma Thompson (she won the Oscar for it) and as her next screenplay was the very good kid's film Nanny Mcphee a whole 10 years later, I can only say I think she should write more often.
The adaptation is excellent - fast paced, and while it must (as all films must) cuts out parts of the book that would have survived had it been a mini-series (and which indeed were kept in the excellent BBC version), it still retains the spark and brilliance of Austen's early work.
It was Austen's second published novel, and while I rank it below Persuasion, Emma and Pride and Prejudice it is a great read that survives multiple re-reading, as this film does re-viewings.
The story of the two Dashwood sisters Elinor (Emma Thomson) and Marianne (Kate Winslet) who approach love in very different ways is almost Shakespearean in its comedy plot intrigues - secrets, mistaken impressions, intertwined characters, resolution, fall, triumph. It's all there, and in this film it's all a delight to behold.
The biggest failing is that Emma Thompson plays Elinor, despite the fact that Thompson was 35 at the time and Elinor is supposed to be 19. But fortunately Emma Thomson is so damn good, you don't really care. In some ways having Thompson as so "old" works for the modern viewer, as it is somewhat hard to believe that a 19 year old might be destined for the shelf should she not quickly marry.
The other casting is brilliant - Winslet in her first big role (she had been in Heavenly Creatures before this) gives a performance that suggested she could be a great actress (which indeed she is). Alan Rickman is perfect as Colonel Brandon, and Greg Wise is suitably raffish and caddish as the bounder Willoughby.
Hugh Grant as Edward Ferrars is not quite as described in the novel: "He was not handsome, and his manners required intimacy to make them pleasing". In fact he plays the role almost like a 19th century version of his stuttering Charles in Four Weddings and a Funeral.
But no matter, the film is wonderful to watch - it certainly feels English (a concern for many when Lee was first announced as the director), and regardless of casting, the acting is top notch by all.
I love Austen's writing ; for me she is the first genius novelist, and she is rarely surpassed. Her numerous adaptations have helped keep her popularity high. I think one of the reasons is that Austen's stories and characters as so well constructed that it's almost impossible to stuff up.
Thompson certainly did not stuff up with her script, and her and Winslet in particular make the most of their characters. The two work off each other superbly, and their work here reminds you that great drama and emotion does not mean we have to have stories about people whose lives have been trodden on by humanity.
Austen may at times be quaint - I always like the scene of the girls out "working in the fields" pulling reeds, and perhaps it's hard to care too much about people who are still wealthy enough to have servants (and let's be honest the 'cottage' they rent looks idyllic) - but just because her playing field was not the sewers or slums of England, does not mean her work is lacking drama (nor vicious humour).
The following scene is my favourite from the film. It involves the moment when it comes out that Edward Ferrars is secretly engaged to Lucy Steele. Marianne, who was sure Edward was to marry Elinor confronts Elinor on how long she has known about the engagement.
The two women give a master class of acting - both were nominated to Oscars - Thompson lost ot Susan Sarandon in Dead Man Walking, and Winslet to Mira Sorvino in Mighty Aphrodite (yep, you read that right):
The film was Lee's first English film, and he got the job on the back of his work directing Eat Drink Man Woman. It was an inspired choice by whoever chose him, because he is one of the best directors of love stories going around (he also did Brokeback Mountain).
The novel was adapted by Emma Thompson (she won the Oscar for it) and as her next screenplay was the very good kid's film Nanny Mcphee a whole 10 years later, I can only say I think she should write more often.
The adaptation is excellent - fast paced, and while it must (as all films must) cuts out parts of the book that would have survived had it been a mini-series (and which indeed were kept in the excellent BBC version), it still retains the spark and brilliance of Austen's early work.
It was Austen's second published novel, and while I rank it below Persuasion, Emma and Pride and Prejudice it is a great read that survives multiple re-reading, as this film does re-viewings.
The story of the two Dashwood sisters Elinor (Emma Thomson) and Marianne (Kate Winslet) who approach love in very different ways is almost Shakespearean in its comedy plot intrigues - secrets, mistaken impressions, intertwined characters, resolution, fall, triumph. It's all there, and in this film it's all a delight to behold.
The biggest failing is that Emma Thompson plays Elinor, despite the fact that Thompson was 35 at the time and Elinor is supposed to be 19. But fortunately Emma Thomson is so damn good, you don't really care. In some ways having Thompson as so "old" works for the modern viewer, as it is somewhat hard to believe that a 19 year old might be destined for the shelf should she not quickly marry.
The other casting is brilliant - Winslet in her first big role (she had been in Heavenly Creatures before this) gives a performance that suggested she could be a great actress (which indeed she is). Alan Rickman is perfect as Colonel Brandon, and Greg Wise is suitably raffish and caddish as the bounder Willoughby.
Hugh Grant as Edward Ferrars is not quite as described in the novel: "He was not handsome, and his manners required intimacy to make them pleasing". In fact he plays the role almost like a 19th century version of his stuttering Charles in Four Weddings and a Funeral.
But no matter, the film is wonderful to watch - it certainly feels English (a concern for many when Lee was first announced as the director), and regardless of casting, the acting is top notch by all.
I love Austen's writing ; for me she is the first genius novelist, and she is rarely surpassed. Her numerous adaptations have helped keep her popularity high. I think one of the reasons is that Austen's stories and characters as so well constructed that it's almost impossible to stuff up.
Thompson certainly did not stuff up with her script, and her and Winslet in particular make the most of their characters. The two work off each other superbly, and their work here reminds you that great drama and emotion does not mean we have to have stories about people whose lives have been trodden on by humanity.
Austen may at times be quaint - I always like the scene of the girls out "working in the fields" pulling reeds, and perhaps it's hard to care too much about people who are still wealthy enough to have servants (and let's be honest the 'cottage' they rent looks idyllic) - but just because her playing field was not the sewers or slums of England, does not mean her work is lacking drama (nor vicious humour).
The following scene is my favourite from the film. It involves the moment when it comes out that Edward Ferrars is secretly engaged to Lucy Steele. Marianne, who was sure Edward was to marry Elinor confronts Elinor on how long she has known about the engagement.
The two women give a master class of acting - both were nominated to Oscars - Thompson lost ot Susan Sarandon in Dead Man Walking, and Winslet to Mira Sorvino in Mighty Aphrodite (yep, you read that right):
Wednesday, February 4, 2009
On the QT: Free Kick Day
Today Malcolm Turnbull, in one go, bet his entire political life on wining the 2010 election. In my opinion he has won it for Kevin Rudd
It's not often a beleaguered opposition decides to give the Government a helping hand; but today, Malcolm Turnbull in a massive misreading of the public's feelings decided to oppose the $42 billion stimulus package announced yesterday.
Just before we get to that, here's some of the commentary on the package in this morning's papers:
Ross Gittins in The Age:
...don't take much notice when people say nothing the Government has done so far to combat the downturn has worked. They're talking through their hats.
I guess the silliness we are hearing is an inevitable consequence of it being so long since the last recession that many people have forgotten how recessions work.
Worrying about the budget going into deficit is like being told a friend has been killed in a car crash and then inquiring about the fate of the car. At such times there are more important things to worry about. National government budgets are a means to an end, not an end in themselves. They're intended to act as a kind of shock absorber. When the economy turns down because businesses and households cut back their spending, the budget is intended to move into deficit automatically because this has the effect of cushioning the economy's fall.
...
To measure accurately the effect of the measures, you have to know something we'll never know: what would have happened in the economy had the authorities not done what they did. So all we can say is that cuts in interest rates and government spending and tax cuts have worked in the past — eventually — so they should work this time, too.
Economics Joshua Gans:
Overall, despite appearances, the stimulus is strikingly economically conservative. Ignoring those one-off investments, the Government has not created a structural deficit. Structural deficits are hard to get rid of. In contrast, one-off items can be paid back over time and the pain smoothed accordingly. This insulates us from an adverse private economic response.
The Coalition has proposed an alternative plan based on tax cuts. But the rhetoric of that proposal (which differs from its actuality) is not fiscally conservative. It is to give tax cuts that raise permanent income. To do that, the tax cuts must be permanent and a deficit based on those would be structural and something that we would not necessarily grow our way out of.
The Australian's editorial (usually pretty anti-ALP spending) comes up with this:
Even with this spending, the Treasurer's estimates show unemployment increasing by 300,000. And some Australians may even lose sight of the fact that the private sector, not the state, generates economic growth. But it is hard to see what choice Mr Rudd had to a big hit yesterday. Tax cuts take time to work through the economy and it would have made no sense to defer spending to protect a budget surplus being destroyed by the decline in corporate tax income.
I could pretty much take any other bit of commentary and it would be positive - Chris Richardson from Access Economics on the 7:30 Report last night described the package this way:
It certainly makes sense... and I think historians will look back and say that today is the day that Australia started to turn the corner. You're seeing the Reserve Bank stomp on the accelerator, you're seeing the Government stomp on the accelerator to an even greater extent. And we do need it. We need it both from the Bank and from the Government because what's happening international is diabolical.
So this morning after hearing all that, Turnbull comes out, opposes the packages, and is about to learn a big lesson in political irrelevancy.
Now I could possibly understand him opposing the $950 cash handouts - he could keep saying that tax cuts would be better, but, nope, he opposes all of it. What even the funding for schools? Yep:
The Opposition also opposes the $14.7 billion which will be spent upgrading schools infrastructure.
Mr Turnbull has proposed that only $3 billion over three years be spent on school buildings.
"We have to ask this question, is the most urgent infrastructure deficiency requirement in Australia primary school assembly halls and libraries?" he said.
Yes, Turnbull thinks opposing funding for school and handouts to the public will win him votes (don't believe for one second he is doing this out of any "greater economic good" belief). The problem for him however, is that he has totally misread the mood of the public, and also totally misread the economic times.
When Kevin Rudd in the 2007 campaign demanded an end to all the mad spending, he caught the mood of the times. By now upping the spending, he is also catching the mood of the times. That is because Rudd is a cunning politician (perhaps as cuning as has ever been - after all he outwitted Howard), and Turnbull is a political dill.
By taking this stance the Libs are now out of the loop. Sure the Greens, Fielding, and Xenophon will want to look at the package closer, and will send it to a Senate committee for a couple days. They'll try and get a few things... but in the end they will vote for it. There is no way on God's earth that they will vote against giving low and middle income earners $950. There is no way in Hell that they will vote against $28.8 billion in funding for schools and infrastructure.
And so it will pass, and all Malcolm Turnbull will have to show for it is people thinking he is just being anti the package for the sake of being anti; and worse, that he is an economic illiterate.
Bernard Keane in Crikey puts it perfectly:
Turnbull is saying what he has done isn't popular, but the right thing to do. Commendable. He actually offered some sensible suggestions this morning for alternatives, particularly in relation to reducing small business costs. But he can't begin to understand how unpopular this will be, and the way in which it will erode his party's support among voters. Remember the bollocking Kim Beazley copped when he tried to amend the Howard Government’s tax cuts in 2005? This is like that -- multiplied a hundred-fold, because it's not about handouts so much as economic survival.
You fools. You utter fools.
Which brings us to Question Time.
Rarely have so many dumb questions been asked; and rarely has a Government had so much fun.
Turnbull for example referred to the fact that retail sales in December increased by 'only' $700 million over the sales in November. Where he asked had the other $8.9 billion gone?
At this point you could hear Lindsay Tanner remark "The stupidity of the question".
Rudd shook his head in disbelief (no doubt wondering why he had been at all worried about Turnbull taking over the leadership).
After QT, Turnbull kept sprouting this bull. He somehow he believes that a 3.8% increase in retail sales in December - the biggest ever monthly jump since 2001 - means nothing. What a complete economic idiot. By his logic, without the stimulus package, sales would have stayed flat. He does not grasp that without the stimulus package, sales would have most likely fallen, and fallen sharply, therefore a $700,000 rise in sales is not the only sign of impact.
The Commonwealth Bank believes "about 40-45%" of the cash was spent - more than what was expected.
Now there was a Dorothy Dixer to Swan which allowed him to reel off these figures - pretty substantial proof that the stimulus package worked (especially when compared with how retail spending everywhere else in the world tanked), and yet then the Lib's Tony Smith got up and asked Swan to "point to a country where one-off payments have worked".
Gee now, what is the name of that big, brown, flat country, known for kangaroos, skin cancer, Ramsey Street, and a formally great cricket team?... Hmmmm oh yeah - Australia!
By the time Swan had got to the dispatch box the entire Government benches well yelling "Australia!". Swan was able to say "The liberals are so out of touch they don't know what country they're living in."
The questions just got worse and worse. My favourite was Warren Truss asking Swan about the fact that "newspaper reports suggest $18 million of the stimulus package went to people on social security living overseas", and he wondered how this helped the Australian economy"
Swan got up and pointed out that Australia has reciprocal social security arrangements with other countries (ie Australian pensioners living in Italy get the Australian pension, and Italian pensioners living in Australia get the Italian pension), and he was surprised that Truss as a former Minister for Social Security didn't know this, because Swan was sure Truss would have negotiated some of the arrangements himself.
It was just one hit after another. Truly the mercy rule should have been brought in - especially as the entire thing went for over 2 hours. But for those on the Liberal front bench it must have felt like 20 hours.
It's not often a beleaguered opposition decides to give the Government a helping hand; but today, Malcolm Turnbull in a massive misreading of the public's feelings decided to oppose the $42 billion stimulus package announced yesterday.
Just before we get to that, here's some of the commentary on the package in this morning's papers:
Ross Gittins in The Age:
...don't take much notice when people say nothing the Government has done so far to combat the downturn has worked. They're talking through their hats.
I guess the silliness we are hearing is an inevitable consequence of it being so long since the last recession that many people have forgotten how recessions work.
Worrying about the budget going into deficit is like being told a friend has been killed in a car crash and then inquiring about the fate of the car. At such times there are more important things to worry about. National government budgets are a means to an end, not an end in themselves. They're intended to act as a kind of shock absorber. When the economy turns down because businesses and households cut back their spending, the budget is intended to move into deficit automatically because this has the effect of cushioning the economy's fall.
...
To measure accurately the effect of the measures, you have to know something we'll never know: what would have happened in the economy had the authorities not done what they did. So all we can say is that cuts in interest rates and government spending and tax cuts have worked in the past — eventually — so they should work this time, too.
Economics Joshua Gans:
Overall, despite appearances, the stimulus is strikingly economically conservative. Ignoring those one-off investments, the Government has not created a structural deficit. Structural deficits are hard to get rid of. In contrast, one-off items can be paid back over time and the pain smoothed accordingly. This insulates us from an adverse private economic response.
The Coalition has proposed an alternative plan based on tax cuts. But the rhetoric of that proposal (which differs from its actuality) is not fiscally conservative. It is to give tax cuts that raise permanent income. To do that, the tax cuts must be permanent and a deficit based on those would be structural and something that we would not necessarily grow our way out of.
The Australian's editorial (usually pretty anti-ALP spending) comes up with this:
Even with this spending, the Treasurer's estimates show unemployment increasing by 300,000. And some Australians may even lose sight of the fact that the private sector, not the state, generates economic growth. But it is hard to see what choice Mr Rudd had to a big hit yesterday. Tax cuts take time to work through the economy and it would have made no sense to defer spending to protect a budget surplus being destroyed by the decline in corporate tax income.
I could pretty much take any other bit of commentary and it would be positive - Chris Richardson from Access Economics on the 7:30 Report last night described the package this way:
It certainly makes sense... and I think historians will look back and say that today is the day that Australia started to turn the corner. You're seeing the Reserve Bank stomp on the accelerator, you're seeing the Government stomp on the accelerator to an even greater extent. And we do need it. We need it both from the Bank and from the Government because what's happening international is diabolical.
So this morning after hearing all that, Turnbull comes out, opposes the packages, and is about to learn a big lesson in political irrelevancy.
Now I could possibly understand him opposing the $950 cash handouts - he could keep saying that tax cuts would be better, but, nope, he opposes all of it. What even the funding for schools? Yep:
The Opposition also opposes the $14.7 billion which will be spent upgrading schools infrastructure.
Mr Turnbull has proposed that only $3 billion over three years be spent on school buildings.
"We have to ask this question, is the most urgent infrastructure deficiency requirement in Australia primary school assembly halls and libraries?" he said.
Yes, Turnbull thinks opposing funding for school and handouts to the public will win him votes (don't believe for one second he is doing this out of any "greater economic good" belief). The problem for him however, is that he has totally misread the mood of the public, and also totally misread the economic times.
When Kevin Rudd in the 2007 campaign demanded an end to all the mad spending, he caught the mood of the times. By now upping the spending, he is also catching the mood of the times. That is because Rudd is a cunning politician (perhaps as cuning as has ever been - after all he outwitted Howard), and Turnbull is a political dill.
By taking this stance the Libs are now out of the loop. Sure the Greens, Fielding, and Xenophon will want to look at the package closer, and will send it to a Senate committee for a couple days. They'll try and get a few things... but in the end they will vote for it. There is no way on God's earth that they will vote against giving low and middle income earners $950. There is no way in Hell that they will vote against $28.8 billion in funding for schools and infrastructure.
And so it will pass, and all Malcolm Turnbull will have to show for it is people thinking he is just being anti the package for the sake of being anti; and worse, that he is an economic illiterate.
Bernard Keane in Crikey puts it perfectly:
Turnbull is saying what he has done isn't popular, but the right thing to do. Commendable. He actually offered some sensible suggestions this morning for alternatives, particularly in relation to reducing small business costs. But he can't begin to understand how unpopular this will be, and the way in which it will erode his party's support among voters. Remember the bollocking Kim Beazley copped when he tried to amend the Howard Government’s tax cuts in 2005? This is like that -- multiplied a hundred-fold, because it's not about handouts so much as economic survival.
You fools. You utter fools.
Which brings us to Question Time.
Rarely have so many dumb questions been asked; and rarely has a Government had so much fun.
Turnbull for example referred to the fact that retail sales in December increased by 'only' $700 million over the sales in November. Where he asked had the other $8.9 billion gone?
At this point you could hear Lindsay Tanner remark "The stupidity of the question".
Rudd shook his head in disbelief (no doubt wondering why he had been at all worried about Turnbull taking over the leadership).
After QT, Turnbull kept sprouting this bull. He somehow he believes that a 3.8% increase in retail sales in December - the biggest ever monthly jump since 2001 - means nothing. What a complete economic idiot. By his logic, without the stimulus package, sales would have stayed flat. He does not grasp that without the stimulus package, sales would have most likely fallen, and fallen sharply, therefore a $700,000 rise in sales is not the only sign of impact.
The Commonwealth Bank believes "about 40-45%" of the cash was spent - more than what was expected.
Now there was a Dorothy Dixer to Swan which allowed him to reel off these figures - pretty substantial proof that the stimulus package worked (especially when compared with how retail spending everywhere else in the world tanked), and yet then the Lib's Tony Smith got up and asked Swan to "point to a country where one-off payments have worked".
Gee now, what is the name of that big, brown, flat country, known for kangaroos, skin cancer, Ramsey Street, and a formally great cricket team?... Hmmmm oh yeah - Australia!
By the time Swan had got to the dispatch box the entire Government benches well yelling "Australia!". Swan was able to say "The liberals are so out of touch they don't know what country they're living in."
The questions just got worse and worse. My favourite was Warren Truss asking Swan about the fact that "newspaper reports suggest $18 million of the stimulus package went to people on social security living overseas", and he wondered how this helped the Australian economy"
Swan got up and pointed out that Australia has reciprocal social security arrangements with other countries (ie Australian pensioners living in Italy get the Australian pension, and Italian pensioners living in Australia get the Italian pension), and he was surprised that Truss as a former Minister for Social Security didn't know this, because Swan was sure Truss would have negotiated some of the arrangements himself.
It was just one hit after another. Truly the mercy rule should have been brought in - especially as the entire thing went for over 2 hours. But for those on the Liberal front bench it must have felt like 20 hours.
Tuesday, February 3, 2009
On the QT: Anything interesting happen today?
The first day of Parliament for 2009 was a pretty dull affair. Before Question Time Kevin Rudd made the usual announcement of a $42 billion fiscal stimulus package, and then just as QT began, the Reserve Bank cut interest rates to their lowest level since 1964.
Ho hum.
Geez, the toughest job at the moment is for sub-editors to come up with a heading for tomorrow's newspapers that don't break the hyperbole world record. The Financial Review must be handing out respirators to its staff. This is truly as good as it gets for financial and political journos.
Due to the standard condolence motions that usually mark the start of a new parliamentary year, and the mention of Trooper Donaldson being awarded the Victoria Cross, things didn't get going till late. And even when they did, it wasn't Question Time that started things off, but rather Kevin Rudd handed down a budget. He spoke for a good half hour, whereupon Malcolm Turnbull did likewise.
Now poor Turnbull obviously didn't have long to prepare (which he noted, saying it was another example of Rudd not being bipartisan - just stupid; it's time Turnbull dropped that line, it just comes across like he's a big sook) and thus he decided to pretty much restate everything he said last night on the 7:30 Report.
It was all pretty lame.
He did well to say it would be nice to see some figures to back up Rudd's claim that the $42 billion will support 90,000 jobs. But really he was stuffed. The 'best' he could do was say Rudd should have used tax cuts, and then deride Rudd for having written his Monthly essay. He also laughed (in his usual superior manner) when he mentioned that Rudd had said the $28.8b towards school spending would build 21st Century libraries and science labs. Turnbull wondered what else could they be - after all we are in the 21st Century (yep that's how bad he has gotten).
He dithered around seemingly saying the budget shouldn't be in deficit, that the government wasn't doing enough to encourage private investment, that it was doing too much and would crowd out private investment... he was all over the shop really. And to be honest, he could hardly be otherwise. At least he didn't do his usual "I support the Government 100%" line.
But really what is he or any of the Senate going to do? Vote against giving voters $950? Vote against improving schools? Good luck with that Malcolm.
QT began with Turnbull attacking Rudd for writing how bad neo-liberalism was - essentially (and they have a bit of a point) he was trying to say Rudd used to say he was an economic conservative, but now doesn't like economic conservatives.
What this shows however is that Rudd has a lot better political antennae than all of the Liberal Party. Rudd savaged Turnbull with his answer - linking Turnbull with right wing economic policy and saying that Turnbull was a Milton Friedman supporter through and through. OK, 18 months ago such a statement would be a badge of pride, but times have changed, and the entire Liberal Party is lagging well back. Rudd knows that in the current climate no one is going to stop voting for him because they no longer think he is an economic conservative (whatever that means), so long as they think Rudd is doing all he can to keep the economy going.
The first Dorothy Dixer of the year went to Wayne Swan, who had a lot of fun with Julie Bishop's statements over the past week on tax cuts increasing tax revenue. When he referred to last December's stimulus package the opposition called out that it had all gone on the pokies (a dumb statement, but the kind of thing you believe if you only listen to rabid right-wing talk back radio). This allowed Swan to rip the opposition a new one and place himself as the patron saint of low income and pensioners (God bless you St Wayne of Lilley).
After a dull question and answer from Turnbull to Rudd on the basis for the 90,000 job claim, Julia Gillard got a Dorothy on the education spending. She probably had a few lines prepared, but once Turnbull used his 21st Century library line she changed her script and ripped him by pointing out those using 19th century style science labs will be pleased to finally get 21st century equipment. She then kept up the 21st Century phrase, again and again and again.
Note to Malcolm, Julia doesn't need help, so when you think you've got a funny line, best to keep it to yourself.
At this point some protesters in the gallery began shouting "Stop the intervention, human rights for all". This went on for 5 minutes or so, and at this point my viewing of QT was finished, until I got home from work and was able to see Julie Bishop make a fool of herself by asking Rudd what he had to say to all those people who took out a fixed home loan when interest rates were 7.25% in March 2008.
Yep, Rudd is responsible for the the financial decisions of everyone in Australia - and here I thought the Liberal Party was the party of individual responsibility. The sooner she is dumped to some portfolio like Tourism and the Arts the better for the Liberal Party*.
*So of course, I want to her to stay right where she is!
Ho hum.
Geez, the toughest job at the moment is for sub-editors to come up with a heading for tomorrow's newspapers that don't break the hyperbole world record. The Financial Review must be handing out respirators to its staff. This is truly as good as it gets for financial and political journos.
Due to the standard condolence motions that usually mark the start of a new parliamentary year, and the mention of Trooper Donaldson being awarded the Victoria Cross, things didn't get going till late. And even when they did, it wasn't Question Time that started things off, but rather Kevin Rudd handed down a budget. He spoke for a good half hour, whereupon Malcolm Turnbull did likewise.
Now poor Turnbull obviously didn't have long to prepare (which he noted, saying it was another example of Rudd not being bipartisan - just stupid; it's time Turnbull dropped that line, it just comes across like he's a big sook) and thus he decided to pretty much restate everything he said last night on the 7:30 Report.
It was all pretty lame.
He did well to say it would be nice to see some figures to back up Rudd's claim that the $42 billion will support 90,000 jobs. But really he was stuffed. The 'best' he could do was say Rudd should have used tax cuts, and then deride Rudd for having written his Monthly essay. He also laughed (in his usual superior manner) when he mentioned that Rudd had said the $28.8b towards school spending would build 21st Century libraries and science labs. Turnbull wondered what else could they be - after all we are in the 21st Century (yep that's how bad he has gotten).
He dithered around seemingly saying the budget shouldn't be in deficit, that the government wasn't doing enough to encourage private investment, that it was doing too much and would crowd out private investment... he was all over the shop really. And to be honest, he could hardly be otherwise. At least he didn't do his usual "I support the Government 100%" line.
But really what is he or any of the Senate going to do? Vote against giving voters $950? Vote against improving schools? Good luck with that Malcolm.
QT began with Turnbull attacking Rudd for writing how bad neo-liberalism was - essentially (and they have a bit of a point) he was trying to say Rudd used to say he was an economic conservative, but now doesn't like economic conservatives.
What this shows however is that Rudd has a lot better political antennae than all of the Liberal Party. Rudd savaged Turnbull with his answer - linking Turnbull with right wing economic policy and saying that Turnbull was a Milton Friedman supporter through and through. OK, 18 months ago such a statement would be a badge of pride, but times have changed, and the entire Liberal Party is lagging well back. Rudd knows that in the current climate no one is going to stop voting for him because they no longer think he is an economic conservative (whatever that means), so long as they think Rudd is doing all he can to keep the economy going.
The first Dorothy Dixer of the year went to Wayne Swan, who had a lot of fun with Julie Bishop's statements over the past week on tax cuts increasing tax revenue. When he referred to last December's stimulus package the opposition called out that it had all gone on the pokies (a dumb statement, but the kind of thing you believe if you only listen to rabid right-wing talk back radio). This allowed Swan to rip the opposition a new one and place himself as the patron saint of low income and pensioners (God bless you St Wayne of Lilley).
After a dull question and answer from Turnbull to Rudd on the basis for the 90,000 job claim, Julia Gillard got a Dorothy on the education spending. She probably had a few lines prepared, but once Turnbull used his 21st Century library line she changed her script and ripped him by pointing out those using 19th century style science labs will be pleased to finally get 21st century equipment. She then kept up the 21st Century phrase, again and again and again.
Note to Malcolm, Julia doesn't need help, so when you think you've got a funny line, best to keep it to yourself.
At this point some protesters in the gallery began shouting "Stop the intervention, human rights for all". This went on for 5 minutes or so, and at this point my viewing of QT was finished, until I got home from work and was able to see Julie Bishop make a fool of herself by asking Rudd what he had to say to all those people who took out a fixed home loan when interest rates were 7.25% in March 2008.
Yep, Rudd is responsible for the the financial decisions of everyone in Australia - and here I thought the Liberal Party was the party of individual responsibility. The sooner she is dumped to some portfolio like Tourism and the Arts the better for the Liberal Party*.
*So of course, I want to her to stay right where she is!
Monday, February 2, 2009
Downer's Holiday Planner
For some unfathomable reason, The Adelaide Advertiser lets Alexander Downer write a column. Mostly it is drivel; but today's was a new low.
His beef today was with Kevin Rudd's essay published in this month's edition of The Monthly. The essay, part of which got a run in The Weekend Australian under the contemptuous heading of "Kevin Rudd's Plan to Rescue Capitalism", outline's Rudd's belief about how Governments need to respond to the Global Financial Crisis.
In the article, Rudd, writing as a 'social-democrat', says the following:
The intellectual challenge for social democrats is not just to repudiate the neo-liberal extremism that has landed us in this mess, but to advance the case that the social-democratic state offers the best guarantee of preserving the productive capacity of properly regulated competitive markets, while ensuring government is the regulator, that government is the funder or provider of public goods and that government offsets the inevitable inequalities of the market with a commitment to fairness for all.
For social democrats, it is critical that we get it right - not just to save the system of open markets from self-destruction, but also to rebuild confidence in properly regulated markets, so as to prevent extreme reactions from the far Left or the far Right taking hold.
Hardly inflammatory stuff. He also wrote:
Social-democratic governments across the world must rise to the further challenge of developing a practical policy response to the crisis that rebuilds shattered economic growth, while also devising a new regulatory regime for the financial markets of the future. This is our immediate challenge. But if we fail, there is a grave danger that new political voices of the extreme Left and the nationalist Right will begin to achieve a legitimacy hitherto denied them. Again, history is replete with the most disturbing of precedents.
We therefore need a frank analysis of the central role of neo-liberalism in the underlying causes of the current economic crisis. We also need a robust analysis of the social-democratic approach to properly regulated markets and the proper role of the state, in a new contract for the future that eschews the extremism of both the Left and the Right. And we must integrate this analysis with the unprecedented imperative for global co-operation if governments are to prevail in their task.
Woah! Talk about fire and brimstone!!! If you're like me, right now you're thinking Rudd must be pretty bloody fun to be around if this is how he relaxes on his holidays!
Basically he is arguing that markets need to be regulated; that the era of a free-for-all has to end, but also that Governments should not go overboard and regulate too tightly.
It's a good argument. One I happen to agree with. I'm also pretty impressed that we have a leader who is confident (and intelligent) enough to write an essay on such big-picture stuff.
But here's Alexander Downer take the essay.
It would be fair to say Kevin Rudd is facing a crisis. The great test for Kevin Rudd is this; can he face that crisis and deal with it or will he just use it for political purposes as a partisan opportunity to attack his political opponents?
Well, while you were having your Christmas dinner, Mr Rudd was writing a new manifesto. Instead of spending his summer holidays trying to work out how to save many of you from the dole, he's been writing an ideological tract condemning what he calls "neo-liberalism" or what most people call market-driven economics.
Yep, that's right, Rudd has committed the crime of spending his holiday writing an essay (presumably on Christmas Day according to Downer's reasoning - the bastard, how dare he write on Christmas Day, doesn't Rudd know he was meant to be putting in a 23 hour day on Dec 25 like none of the Howard ministry ever did).
Perhaps Downer is used to only doing one activity at a time, and thus cannot comprehend Rudd writing an essay and also being able to do other things on his holiday. As most uni students would know, generally you can write more than one essay at a time, though perhaps Downer only did one subject a semester...
But let's cut to the quick here - Downer is having a go at Rudd for not spending his holiday working! According to Downer, Rudd should have spent his holidays working out how to solve the global financial crisis. Eerr sorry Alex, but isn't that Rudd's actual work? Funny thing about holidays Alex, that's the time you don't do work - you refresh, you take time out, you recharge your batteries; if it involved work, you wouldn't really call it a holiday would you, you would call it... oh what is that thing where you are doing work... oh yes, work!!
Look, I understand why Downer is so confused, after all this is the guy who last year thought attending parliament was too beneath him and so went to lunch instead of Question Time. He's also the guy, who while still a serving MP, thought the best way to serve his constituents and earn his pay as an MP was to go on Adelaide radio with his wife for a truly embarrassing performance as talk back host. So I guess it's understandable that Downer does get messed up about the whole work/holiday thing.
However it's not just the fact that Rudd had the temerity to spend his holiday writing (yep, Kevin Rudd is a guy who relaxes by writing political essays) that annoys Downer, it's who he wrote it for:
...as our Prime Minister he should be working for Australians, not wasting time writing a nearly 8000-word ideological rant for a left-leaning magazine.
Oh dear Alex, I guess if he wrote for a right-leaning magazine it would be alright. OK then, what should Rudd have been doing on his holidays Alex?
In particular, he should have spent his holiday time finding out why financial markets collapsed and how the political initiatives of American politicians sent financial institutions broke. Mr Rudd should have spent his holidays reading, not ranting.
Ah yes Alex, your old chestnut that the reason for the Global Financial Crisis is all those government initiatives such as the Community Reinvestment Act that encouraged some institutions to lend (under strict conditions) to people from lower-socio-economic backgrounds. Well read this Alex, it's an article that I referred to a few months back, which shows it was not banks under that regime that caused the sub-prime crisis, it was the ones not subject to the same tight regulations. But then I guess facts don't come into play - especially when you figure Downer is calling Rudd's essay a "rant".
But look, I'm being unfair - it's not as though Downer lacks balance, take this for example:
Australia is emerging from one of its greatest periods of prosperity. No one is going to blame Mr Rudd for the sub-prime crisis.
At this stage the public only ask one thing of Kevin Rudd; take decisive steps to fight off a recession. He'll be cut a fair bit of slack by voters and that's fair enough. But his policies had better work and work soon.
Oh good, Rudd didn't cause the global financial crisis, that's big of you Alex, you only demand that Rudd solve it. Well that should be easy. I guess the fact that you guys blew one of the greatest periods of prosperity is irrelevant...
And Downer even ends by giving out some friendly advice:
Spending the summer writing an ideological tract has been a mistake. Mr Rudd should get back to work on economics. He should not even dream of using a crisis for political advantage.
Oh geez, yeah, you would never have caught Downer's political idol John Howard using a crisis for political advantage... (the bile, it rises I swear...). And yeah Rudd, stop spending your holidays thinking about big picture things; last thing this country needs is a PM who thinks ideas. (After all, Howard stopped having ideas in about 1967, and it served him OK - according to Downer anyway, who, if his stint as leader of the Liberal Party is any guide, is an idea free zone).
But look; it's all pretty harmless - Downer is a nobody after all. Tomorrow the real stuff begins again; and the "rants" of former Ministers will just be chip wrapper material (and a much better purpose they will be serving). What is important are the words of current Liberal Party members - on tonight's 7:30 Report, Malcolm Turnbull derisively (with his usual superior laugh) refers to Rudd spending his holidays writing a socialist "novel" - so obviously the memo on how to criticise Rudd has been sent around the Liberal Party HQ. Julie Bishop obviously got it.
Watch her performance on this morning ABC Breakfast. She still thinks the Budget shouldn't be in deficit, and believes that cutting taxes will actually increase taxation revenue. She also complains that at the moment businesses are subject to "high taxes" which create disincentives. Given that the ALP didn't increase the Company Tax rate last year, I'll leave it to you to ponder what that says about the tax rate under the Howard Government.... I guess what's good for the goose isn't good for the gander, especially when you actually are a bit of an economic goose.
Can't wait for QT tomorrow.
His beef today was with Kevin Rudd's essay published in this month's edition of The Monthly. The essay, part of which got a run in The Weekend Australian under the contemptuous heading of "Kevin Rudd's Plan to Rescue Capitalism", outline's Rudd's belief about how Governments need to respond to the Global Financial Crisis.
In the article, Rudd, writing as a 'social-democrat', says the following:
The intellectual challenge for social democrats is not just to repudiate the neo-liberal extremism that has landed us in this mess, but to advance the case that the social-democratic state offers the best guarantee of preserving the productive capacity of properly regulated competitive markets, while ensuring government is the regulator, that government is the funder or provider of public goods and that government offsets the inevitable inequalities of the market with a commitment to fairness for all.
For social democrats, it is critical that we get it right - not just to save the system of open markets from self-destruction, but also to rebuild confidence in properly regulated markets, so as to prevent extreme reactions from the far Left or the far Right taking hold.
Hardly inflammatory stuff. He also wrote:
Social-democratic governments across the world must rise to the further challenge of developing a practical policy response to the crisis that rebuilds shattered economic growth, while also devising a new regulatory regime for the financial markets of the future. This is our immediate challenge. But if we fail, there is a grave danger that new political voices of the extreme Left and the nationalist Right will begin to achieve a legitimacy hitherto denied them. Again, history is replete with the most disturbing of precedents.
We therefore need a frank analysis of the central role of neo-liberalism in the underlying causes of the current economic crisis. We also need a robust analysis of the social-democratic approach to properly regulated markets and the proper role of the state, in a new contract for the future that eschews the extremism of both the Left and the Right. And we must integrate this analysis with the unprecedented imperative for global co-operation if governments are to prevail in their task.
Woah! Talk about fire and brimstone!!! If you're like me, right now you're thinking Rudd must be pretty bloody fun to be around if this is how he relaxes on his holidays!
Basically he is arguing that markets need to be regulated; that the era of a free-for-all has to end, but also that Governments should not go overboard and regulate too tightly.
It's a good argument. One I happen to agree with. I'm also pretty impressed that we have a leader who is confident (and intelligent) enough to write an essay on such big-picture stuff.
But here's Alexander Downer take the essay.
It would be fair to say Kevin Rudd is facing a crisis. The great test for Kevin Rudd is this; can he face that crisis and deal with it or will he just use it for political purposes as a partisan opportunity to attack his political opponents?
Well, while you were having your Christmas dinner, Mr Rudd was writing a new manifesto. Instead of spending his summer holidays trying to work out how to save many of you from the dole, he's been writing an ideological tract condemning what he calls "neo-liberalism" or what most people call market-driven economics.
Yep, that's right, Rudd has committed the crime of spending his holiday writing an essay (presumably on Christmas Day according to Downer's reasoning - the bastard, how dare he write on Christmas Day, doesn't Rudd know he was meant to be putting in a 23 hour day on Dec 25 like none of the Howard ministry ever did).
Perhaps Downer is used to only doing one activity at a time, and thus cannot comprehend Rudd writing an essay and also being able to do other things on his holiday. As most uni students would know, generally you can write more than one essay at a time, though perhaps Downer only did one subject a semester...
But let's cut to the quick here - Downer is having a go at Rudd for not spending his holiday working! According to Downer, Rudd should have spent his holidays working out how to solve the global financial crisis. Eerr sorry Alex, but isn't that Rudd's actual work? Funny thing about holidays Alex, that's the time you don't do work - you refresh, you take time out, you recharge your batteries; if it involved work, you wouldn't really call it a holiday would you, you would call it... oh what is that thing where you are doing work... oh yes, work!!
Look, I understand why Downer is so confused, after all this is the guy who last year thought attending parliament was too beneath him and so went to lunch instead of Question Time. He's also the guy, who while still a serving MP, thought the best way to serve his constituents and earn his pay as an MP was to go on Adelaide radio with his wife for a truly embarrassing performance as talk back host. So I guess it's understandable that Downer does get messed up about the whole work/holiday thing.
However it's not just the fact that Rudd had the temerity to spend his holiday writing (yep, Kevin Rudd is a guy who relaxes by writing political essays) that annoys Downer, it's who he wrote it for:
...as our Prime Minister he should be working for Australians, not wasting time writing a nearly 8000-word ideological rant for a left-leaning magazine.
Oh dear Alex, I guess if he wrote for a right-leaning magazine it would be alright. OK then, what should Rudd have been doing on his holidays Alex?
In particular, he should have spent his holiday time finding out why financial markets collapsed and how the political initiatives of American politicians sent financial institutions broke. Mr Rudd should have spent his holidays reading, not ranting.
Ah yes Alex, your old chestnut that the reason for the Global Financial Crisis is all those government initiatives such as the Community Reinvestment Act that encouraged some institutions to lend (under strict conditions) to people from lower-socio-economic backgrounds. Well read this Alex, it's an article that I referred to a few months back, which shows it was not banks under that regime that caused the sub-prime crisis, it was the ones not subject to the same tight regulations. But then I guess facts don't come into play - especially when you figure Downer is calling Rudd's essay a "rant".
But look, I'm being unfair - it's not as though Downer lacks balance, take this for example:
Australia is emerging from one of its greatest periods of prosperity. No one is going to blame Mr Rudd for the sub-prime crisis.
At this stage the public only ask one thing of Kevin Rudd; take decisive steps to fight off a recession. He'll be cut a fair bit of slack by voters and that's fair enough. But his policies had better work and work soon.
Oh good, Rudd didn't cause the global financial crisis, that's big of you Alex, you only demand that Rudd solve it. Well that should be easy. I guess the fact that you guys blew one of the greatest periods of prosperity is irrelevant...
And Downer even ends by giving out some friendly advice:
Spending the summer writing an ideological tract has been a mistake. Mr Rudd should get back to work on economics. He should not even dream of using a crisis for political advantage.
Oh geez, yeah, you would never have caught Downer's political idol John Howard using a crisis for political advantage... (the bile, it rises I swear...). And yeah Rudd, stop spending your holidays thinking about big picture things; last thing this country needs is a PM who thinks ideas. (After all, Howard stopped having ideas in about 1967, and it served him OK - according to Downer anyway, who, if his stint as leader of the Liberal Party is any guide, is an idea free zone).
But look; it's all pretty harmless - Downer is a nobody after all. Tomorrow the real stuff begins again; and the "rants" of former Ministers will just be chip wrapper material (and a much better purpose they will be serving). What is important are the words of current Liberal Party members - on tonight's 7:30 Report, Malcolm Turnbull derisively (with his usual superior laugh) refers to Rudd spending his holidays writing a socialist "novel" - so obviously the memo on how to criticise Rudd has been sent around the Liberal Party HQ. Julie Bishop obviously got it.
Watch her performance on this morning ABC Breakfast. She still thinks the Budget shouldn't be in deficit, and believes that cutting taxes will actually increase taxation revenue. She also complains that at the moment businesses are subject to "high taxes" which create disincentives. Given that the ALP didn't increase the Company Tax rate last year, I'll leave it to you to ponder what that says about the tax rate under the Howard Government.... I guess what's good for the goose isn't good for the gander, especially when you actually are a bit of an economic goose.
Can't wait for QT tomorrow.
Friday, January 30, 2009
Patient Zero: Finding out who caused the Global Financial Crisis
If there's one thing wrong with the Global Financial Crisis it is the lack of a good bad guy; someone everyone can focus their blame on. A patsy if you will. If the GFC were a disease, we would be searching for patient zero - the first carrier; and to be honest, the media really have dropped the ball here.
Some "lefty" commentators have sought to blame the CEOs of investment banks, such as Merrill Lynch's John Thain (why wouldn't he deserve a $10m bonus?), or even the US Government (especially that superlative President George Bush). But really do you understand what went wrong? Mortgage back securities? Derivatives? Currency exchange swaps? Sounds like journalistic gobbledygook to me, and let's be honest when it come to finding a good easy-to-blame patsy, invoking economic theory ain't gonna do it. The main problem is such arguments focus on "what" caused the GFC. "What!?" Who cares about "What"? You think you can stick a "what" on a wanted poster? Nope, that dog won't hunt; we need a "who".
So let's work it through CSI style.
Australians at the moment are losing jobs because,
Chinese companies don't want to buy so much of our iron ore because,
American stores aren't buying as much of the stuff that gets made in China out of our iron ore because,
Americans have not been buying as much of the stuff from the American stores that gets made in China out of our iron ore because,
Americans have been losing their jobs because,
Americans have not been buying as much of the stuff from the American stores that gets made in China out of our iron ore because,
Americans' loans have been too big to allow them to buy the stuff from the American stores that gets made in China out of our iron ore because,
American banks have been giving out bad loans to Americans who work in stores that sell stuff to Americans that gets made in China out of our iron ore because,
The American Government looked the other way while the banks gave out bad loans to Americans who work in the stores selling the stuff that is made in China out of our iron ore.
So there you go. Now as I said most "lefty", "tree-hugger", "kumbaya-round-the-campfire" type of commentators have been looking at the US Government - say former President Bush and asked why he looked the other way while the banks gave out these bad loans. Or other pinko-probably-had-pictures-of-Che-Guevara-on-their-university-dorm-room-wall types blame the American banks for giving out the bad loans and bundling them up as "mortgage securities" and calling it risk management.
But c'mon it doesn't take an Andrew Bolt or Janet Albrechtsen to see that there was nothing wrong with the loans so long as the mortgage holder tightened his or her belt, kept his or her job, and went without those "luxury" items the lower classes always seem to be buying. You know what I'm talking about. Stuff like clothes and food. Yep. Greed, plain and simple. Just another case of them trying to get above their station. You know it, I know it, heck, John Thain sure as hell knows it.
And remember as well, up until the arse fell out of the world last year, things weren't too bad. OK unemployment was rising in America, but let's be honest only those not up to scratch would have been getting the sack. So why shouldn't banks give out the loans?
And it's not like the debt crisis just happened. Things like this, don't just happen. World War Two didn't just "happen". There had to be one loan that tipped the scales. One final mortgage that just didn't get repaid that caused say Lehmann Brothers (that great, bold bastion of all that is good about capitalism) to go bankrupt.
All we have to do is find the person who stopped repaying the loan that was this final straw.
Now the "lefties" (those Rudd-loving, Julia Gillard is the greatest types) would want to find the boss who sacked this guy who had the loan that required about 60% of his income to repay. Tut, tut, tut I say. Times were good last year (well not 'good', but let's not quibble over statistics like unemplyoment rates or anything); so long as you were prepared to do an honest day's work for a dishonest day's pay you would have nothing to worry about.
Now obviously this guy was American. And I'm going to say he lived in Scranton, Pennsylvania, because during the VP Debates Joe Biden went on and on about how life was tough growing up in Scranton, Pennsylvania, so I'm thinking given Biden is a left-wing Democrat, no doubt the town is full of like minded dead-beats who think they deserve to own a home even though they don't work in an office, or didn't go to university.
I'm betting he has three kids, a wife who works part time at the local A&P (I have no idea if Scranton has an A&P , but they get mentioned a lot in American films set in the suburbs, so I'm guessing she works at one). I'm also betting they live on West 64 Street (I don't know if Scranton has a West 64 Street, but American movies are always talking about streets with numbers and points of the compass so I think it's a good chance). No doubt he (let's call him Bob) worked at the local mill (I don't know if Scranton has a mill, or what actually gets done at a mill, but Bob would've worked there).
The problem though I'm betting was that Bob didn't work very well at the mill. No doubt he was late to work once or twice (well maybe not, but hey, there's no need to bring in the truth at this point). Heck he probably had to go do some service in Iraq because like a fool he joined the national guard because he felt kinda patriotic.
Whatever Bob, talk to the hand, cos I ain't listening. Times are tough (for slackers anyway), and so you're gone. Hit the bricks, here's your severance pay - try not to blow it all on 'luxuries' (c'mon you know what I'm talking about).
And so there you have it; Bob Jackson (yep Bob Jackson sounds like a good blue collar doesn't want to pay his bills kinda name) goes along to his local bank, says he can't pay his loan which means Lehmann Brothers (that great big, bold bastion of all that is good about capitalism) which has bought a percentage of the loan as part of a high-interest (supposedly low-risk) derivative goes under, and as sure as the knee bone is connected to the thigh bone, Australians start losing their jobs.
So there you have it world: Bob Jackson of 28 West 64 Street, Scranton, Pennsylvania is responsible for the whole Global Financial Crisis.
Whew! Glad we got that sorted out. Problem solved. Now, let me just get back to working on that Middle-East thing...
Some "lefty" commentators have sought to blame the CEOs of investment banks, such as Merrill Lynch's John Thain (why wouldn't he deserve a $10m bonus?), or even the US Government (especially that superlative President George Bush). But really do you understand what went wrong? Mortgage back securities? Derivatives? Currency exchange swaps? Sounds like journalistic gobbledygook to me, and let's be honest when it come to finding a good easy-to-blame patsy, invoking economic theory ain't gonna do it. The main problem is such arguments focus on "what" caused the GFC. "What!?" Who cares about "What"? You think you can stick a "what" on a wanted poster? Nope, that dog won't hunt; we need a "who".
So let's work it through CSI style.
Australians at the moment are losing jobs because,
Chinese companies don't want to buy so much of our iron ore because,
American stores aren't buying as much of the stuff that gets made in China out of our iron ore because,
Americans have not been buying as much of the stuff from the American stores that gets made in China out of our iron ore because,
Americans have been losing their jobs because,
Americans have not been buying as much of the stuff from the American stores that gets made in China out of our iron ore because,
Americans' loans have been too big to allow them to buy the stuff from the American stores that gets made in China out of our iron ore because,
American banks have been giving out bad loans to Americans who work in stores that sell stuff to Americans that gets made in China out of our iron ore because,
The American Government looked the other way while the banks gave out bad loans to Americans who work in the stores selling the stuff that is made in China out of our iron ore.
So there you go. Now as I said most "lefty", "tree-hugger", "kumbaya-round-the-campfire" type of commentators have been looking at the US Government - say former President Bush and asked why he looked the other way while the banks gave out these bad loans. Or other pinko-probably-had-pictures-of-Che-Guevara-on-their-university-dorm-room-wall types blame the American banks for giving out the bad loans and bundling them up as "mortgage securities" and calling it risk management.
But c'mon it doesn't take an Andrew Bolt or Janet Albrechtsen to see that there was nothing wrong with the loans so long as the mortgage holder tightened his or her belt, kept his or her job, and went without those "luxury" items the lower classes always seem to be buying. You know what I'm talking about. Stuff like clothes and food. Yep. Greed, plain and simple. Just another case of them trying to get above their station. You know it, I know it, heck, John Thain sure as hell knows it.
And remember as well, up until the arse fell out of the world last year, things weren't too bad. OK unemployment was rising in America, but let's be honest only those not up to scratch would have been getting the sack. So why shouldn't banks give out the loans?
And it's not like the debt crisis just happened. Things like this, don't just happen. World War Two didn't just "happen". There had to be one loan that tipped the scales. One final mortgage that just didn't get repaid that caused say Lehmann Brothers (that great, bold bastion of all that is good about capitalism) to go bankrupt.
All we have to do is find the person who stopped repaying the loan that was this final straw.
Now the "lefties" (those Rudd-loving, Julia Gillard is the greatest types) would want to find the boss who sacked this guy who had the loan that required about 60% of his income to repay. Tut, tut, tut I say. Times were good last year (well not 'good', but let's not quibble over statistics like unemplyoment rates or anything); so long as you were prepared to do an honest day's work for a dishonest day's pay you would have nothing to worry about.
Now obviously this guy was American. And I'm going to say he lived in Scranton, Pennsylvania, because during the VP Debates Joe Biden went on and on about how life was tough growing up in Scranton, Pennsylvania, so I'm thinking given Biden is a left-wing Democrat, no doubt the town is full of like minded dead-beats who think they deserve to own a home even though they don't work in an office, or didn't go to university.
I'm betting he has three kids, a wife who works part time at the local A&P (I have no idea if Scranton has an A&P , but they get mentioned a lot in American films set in the suburbs, so I'm guessing she works at one). I'm also betting they live on West 64 Street (I don't know if Scranton has a West 64 Street, but American movies are always talking about streets with numbers and points of the compass so I think it's a good chance). No doubt he (let's call him Bob) worked at the local mill (I don't know if Scranton has a mill, or what actually gets done at a mill, but Bob would've worked there).
The problem though I'm betting was that Bob didn't work very well at the mill. No doubt he was late to work once or twice (well maybe not, but hey, there's no need to bring in the truth at this point). Heck he probably had to go do some service in Iraq because like a fool he joined the national guard because he felt kinda patriotic.
Whatever Bob, talk to the hand, cos I ain't listening. Times are tough (for slackers anyway), and so you're gone. Hit the bricks, here's your severance pay - try not to blow it all on 'luxuries' (c'mon you know what I'm talking about).
And so there you have it; Bob Jackson (yep Bob Jackson sounds like a good blue collar doesn't want to pay his bills kinda name) goes along to his local bank, says he can't pay his loan which means Lehmann Brothers (that great big, bold bastion of all that is good about capitalism) which has bought a percentage of the loan as part of a high-interest (supposedly low-risk) derivative goes under, and as sure as the knee bone is connected to the thigh bone, Australians start losing their jobs.
So there you have it world: Bob Jackson of 28 West 64 Street, Scranton, Pennsylvania is responsible for the whole Global Financial Crisis.
Whew! Glad we got that sorted out. Problem solved. Now, let me just get back to working on that Middle-East thing...
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