27 07 09
Pain on the road to recovery – Prime Minister Rudd's 6000 word Essay in SMH 25 07 09 contains the sentence:
"However, as we later learnt , the glorious boom was built in large part on a three layered house of cards.”
“as we later learnt” is the bit to cavil with.
Everyone knew that this boom, as with all other booms, was a house of cards. All run-away booms always are.
What happened this time is that the voices of common sense were drowned under the skitings, urgings, negligences and silences of of everyone from second hand car salesmen, compliant and lazy financial journalists to merchant bankers (who are neither merchants nor bankers) and all our prudential authorities of which the Commonwealth and State Treasuries (especially in their research and supervisory roles), the Reserve Bank are possibly the most important
We all had notice from the time that the NAB bought US Homeside, believed to be a mortgage bank, but which had no actually mortgages.
Then our local government invested its reserves in deposits which turned out to be bets on interest rate changes, that is, not deposits at all. Not a single local government investment officer seemed ever to have looked at the underlying nature of these anti-securities. The resemblance to a bet on the Tote did not strike them.
And the Reserve Bank just jacked up interests rates to save itself from the trouble of finding out what was going on in the financial world.
And how are merchant bankers and race course touts related to each other ? The answer is that they are both commission agents, and other assorted jerk salesmen, gouging as much as they can in unstable markets.
And whether you agree with this formulation or not not a single one of the responsible authorities has ever bothered to apologize let alone explain themselves to the citizens.
And out members of Parliament – well – they might as well not have been breathing.
And absolutely nothing is being done to see that it wont happen again.
The real reason why Australia escaped the worst of the recession seems to have been in major part due to the late Bob Menzies. When he put Ben Chifley out as Prime Minister over bank nationalization he passed a strong Banking Act (as strong as Chifley actually needed) including social duty clauses and the Bank never seemed to free itself from some sense of obligation; notwithstanding the completely illegal exchange of letters which sought to free that Bank from all social control.
There is a strong case for the cancellation of the letters and the re-introduction of statutory reserve deposits which should be extended to all financial corporations including superannuation funds leading to the formation of the strongest possible internal bond market. There should be no element of gift to merchant banks in the arrangements and PPP arrangements should be re-balanced in favour of the public interest.
Under the heading of “The challenges of recovery” Prime Minister Rudd the sentence:
”The second new challenge is to build the foundations of sustainable growth.”
Later he says:
”Australia needs to work harder and smarter... “.
But there seems to be very little in the way of concrete ideas.
The huge infra-structure oriented growth stimulus may contribute very little to current employment growth and is said to be about to cost following generations a mint. But they will be there to use it and pay for it while they do. The cry of excessive debt on that account seems overblown.
On Sunday I drove through a number of country towns and also the outskirts of Sydney. Light industry areas are very prominent and the thought occurred that if each establishment took on one new employee that would go along way to reverse negative employments trends. How is this to be done ?
And so the abolition of Pay-Roll Tax sweeps into one's mind.
Wasn't this to happen when GST came in ? And would this be a comparatively small adjustment keeping the costs of the stimulus (stimuli) in mind.
And what would the abolition of stamp duty mean for the mobility of labour.
And did not Prime Minister Rudd just confirm Prime Minister Howard's ratting on both those undertakings.
There has to be some limit on blogs.
Much of Prime Minster Rudd's 6000 word monster SMH blog is not up to scratch What needs to be done require a lot more spine than he is presently showing