Malcolm Turnbull, whose peregrinations around themes on economic management I documented earlier, might actually be revealing some method in his madness. Possibly the regular calls for bipartisanship always follow the beatups and ranting and raving over alleged government incompetence. It may be designed to suggest that he’s always willing to assist, and it’s only the partisan refusal of his expertise by the government that is the root of every conceivable problem. On the other hand, I might be reading a lot more into Turnbull’s frenetic pontificating than is justified – simply by reading too much reportage of his endlessly expressed views. Maybe he’s picking up some bad habits from Twitter?
In any event, it’s been interesting to see some more clarity emerging about the issues surrounding various types of investment funds freezing withdrawals – including the fact that there are 190 000 Australians with such investments. Turnbull has certainly been carrying on as if the problem is of much greater dimensions than that. Bernard Keane raises one salient issue in Crikey:
The demand by cash management funds and mortgage trusts that they also get a government guarantee is one of the more shameless try-ons in an era of particularly refined rent-seeking. Why don’t we guarantee all listed companies while we’re at it? It would be heartlessness of titanic proportions to dismiss the concerns of shareholders about their investments.
It’s also becoming clearer that some of these investment vehicles have been in some trouble for quite some time, though it’s worth noting that in most instances, investors still have access to distributions and dividends even if their capital is temporarily not liquid. But it does look as if the “all the fault of the government and that bank guarantee” narrative is – at best – vastly overstated. Meanwhile, as Keane also observes, the News Limited papers are full of heart-tugging stories about hardship which conveniently support the opposition’s “narrative”. Continue reading ‘We’re all rooned!’
One of the most puzzling lines Malcolm Turnbull came out with as shadow Treasurer earlier in the year was his claim that Labor had talked inflation into existence. This was part of some sort of complex juggling act which allowed the Coalition to try to claim that all had been going swimmingly until November 24 2007, and that Kevin Rudd and Wayne Swan had been jawboning the Reserve into raising interest rates and/or exaggerating the need for a $22 billion surplus. It was an appalling political theme because it was too confused to be simply communicated, and left Turnbull wide open to charges that he was out of touch with the strains folks felt from higher prices.
Now he’s at it again.
On the news last night, this grab from Turnbull’s appearance on Insiders featured prominently:
And Kevin Rudd has hyped up this crisis or this financial crisis by saying it’s a rolling national security crisis.
If you read the quote in the context of the whole interview, it makes more sense – because Turnbull’s making a reasonable point about accountability to Parliament (which Andrew Bartlett also makes in somewhat different terms). But the politics are just awful – it allowed Wayne Swan to quickly swat Turnbull away, again making him appear as if he was out of touch and disconnected with what voters are feeling and fearing.
Just before last year’s federal election, I read Neal Blewett’s Cabinet Diaries. The book is a good read, but I was also interested in reminding myself – in the dying days of the Howard Era – what a Labor government felt like. One of the things that really jumped out at me was regular discussions around the Cabinet table about assistance for the unemployed, and several of Keating’s measures to stimulate the economy were targeted to people on the dole, among others. Those with longer memories might recall Labor’s opposition to Malcolm Fraser’s “fight inflation first” austerity regime in the late 70s. Mike Steketee has a very good column today which shows just how much things have changed in the era of the deserving poor (and not so poor) and the undeserving poor. He rightly points out that some of the pensioners receiving payments will have substantial assets and incomes of up to $66000, and self-funded retirees with incomes up to $50000 for singles and $80000 for couples will also receive the one off payments. It would be very hard to argue that they are the folks in the community doing it toughest, and as Steketee suggests, there’s no guarantee the money will be spent rather than saved.
What we’re seeing here, I think, is a combination of Kevin Rudd’s very conservative personal values and political calculation.
With less than a month to go til America votes, barring any more mad game changing moves or even an October Surprise from Osama Bin Laden or the tattered remains of the Bush administration, all the smart money is on the financial crisis seeing Barack Obama translate the momentum he’s built up into a pretty impressive victory in the Electoral College. What does the GOP have left? It’s surely significant that there are rumours around that the GOP itself – the Republican National Committee – is thinking of pulling funding from McCain advertising and pushing it into Senate races to attempt to forefend a 60 vote filibuster proof Democratic Senate majority (the Senators defending seats this year are those first elected in the Bush first term post s11 surge of the 2002 mid terms). So how about the old white dude himself? There’s one more debate. There may be more lunacy. But there’s certainly lots of ugliness, as the Culture Warriors of the base show their ugly face.
[Via Majikthise, but it's just about everywhere on the web - it's so viral it might just be this cycle's Macaca moment.]
The McCain campaign has gone into full on negative smear mode, with Governor Sarah Palin playing the traditional attack role of the Vice-Presidential candidate.
Apparently Obama has been consorting with terrorists, because he once knew a member of the Weathermen (long afterwards and when Bill Ayers had become an educator and a Distinguished Professor at the University of Chicago). All these allegations were aired during the primaries – and no doubt the Rev. Wright stuff is being readied for an encore. Reading this article on the campaign in Florida really does show how much dissemination the loathsome “Muslim sleeper” stuff is getting as well, and Palin’s attack on Obama as some sort of terrorist sympathiser will reinforce that theme among those disposed to believe it, or to have doubts.
Bill Clinton is the only genuine political talent that creaking heap of donkeys, the beloved Democratic Party, has produced in an age. Damn that Twenty-Second Amendment.
Obama plays it safe yet again, basically following the line of least resistance by endorsing the Paulson bailout plan with some meaningless caveats. There were calls in the States for Obama to actually return to the Senate and get involved in the legislative process over the “plan”, which would be a useful contrast with what firedoglake correctly characterises as McCain’s “empty babbling on the economy”. That might be a smart move particularly given his very thin legislative record.
There’s an informative links post at Obsidian Wings from hilzoy. And a bit of food for thought:
I do not want to hear people tell me that regulation cripples the economy, unless they are willing to admit that a lack of regulation can also cripple the economy. Not ever. I don’t understand why anyone is so much as tempted to think that “regulation” is good or bad, as a whole: to me, that’s like being for or against “things” or “people”. Some regulations are good, some are bad; obviously, we want people in government who can tell the difference, and implement regulatory systems that work well. However, altogether too many of my fellow citizens were willing to listen to ideologues, and now we all get to pay for their mistakes.
Very oddly, Malcolm Turnbull has proposed that the federal government in Australia should also bail out Australian banks. Now, unless he’s suggesting that the banks should have their exposure to Lehman Bros. etc. paid for gratis by the Australian government, to the benefit of their share price or something, it’s hard to see how this makes any sense, particularly when Turnbull has been blathering all round the shop about Kevin Rudd and Wayne Swan “talking down” the Australian economy (and thus magicking inflation into existence – it wasn’t at all Peter Costello’s fiscal profligacy, no matter what the IMF may think). One can only infer from this call that there’s an implication that there’s some disaster waiting to happen domestically.
Unless Turnbull is suggesting that the Australian government should compensate the banks for their exposure to Lehman Brothers or whatever, it’s really quite hard to work out what he’s saying here. Obviously, it’s a bit of politicking, tied up in a neat package as it is with his “bipartisanship” theme, and it may also be designed to imply that while the Bush administration has a Plan, Rudd doesn’t. But it’s difficult to read it as anything other than irresponsible, despite the instant anointing of Messiah Mal with the all important “economic credibility” by the media.
As a supplement to earlier posts on the sociology of the global financial crisis from Kim and dk.au, I thought I’d note something very interesting written by Henry Farrell at Crooked Timber. Farrell traces the shift in paradigm in the regulatory architecture of finance, one that has supplemented the first shift away from direct involvement of the state in economic ownership:
The second is more specific and recent – the tendency to replace ‘heavy-handed’ forms of regulation with ‘regulation with a light touch’ and self-regulation. This has been most marked in Anglo-American economies, but other countries (in continental Europe and elsewhere) have faced persistent ideological pressures to move in this direction. This is a large chunk of the so-called ‘reform’ agenda that the Economist magazine, the OECD and other such bodies keep pushing. Both of these shifts are largely ideological – that is, they gained much of their impetus from changes in the ideas which constitute policy-makers’ shared collective wisdom about how to deal with the economy.
The second shift (the reform agenda) is now a busted flush. Its proponents are in disarray (if I’m feeling in a vindictive mood, I may well buy a copy of the next Economist to see how its editorialists try to rationalize all of this).
Any reasonable assessment of the actions of the Fed and the US Treasury would suggest that they’re driven by confusion and are very much ad-hoc measures. Neither Bernanke nor Paulson seems to have much of a big picture grip, and politicians reciting “the fundamentals are sound” is clearly not going to cut the mustard now, even, as with John McCain, precipitating something of a backlash.
John Quiggin has speculated on how all this will play out. The confusion has led to some quite bizarre moments, such as pundits on Lateline Business declaiming “capitalism is in crisis” and “the financial markets may not be viable”. What we’re seeing – among other things – is a decomposition of that abstraction “the markets” and a reduction of these so-called impersonal forces to the panicked reactions of individuals. If Robert Skidelsky is right, and a tipping point has been reached, it begs a very big question, which Farrell answers in terms of process (because no one can know the outcome of such a fluid conjuncture). Continue reading ‘The end of financialisation? II’
Having reached this point, it’s hard to see how the US can turn back from a massive extension of financial regulation, starting with the derivative markets where AIG got into so much trouble, notably those for credit default swaps (CDS). Along with winding up the affairs of AIG, Lehman and others, the authorities will need to oversee an orderly unwinding of the transactions in these markets which they are now effectively guaranteeing. More generally, it’s time for a partial or complete reversal of the financialisation of the economy that took place after the breakdown of the Bretton Woods system back in the 1970s.
That needs to be read in conjunction with a column in The Guardian by Robert Skidelsky, the distinguished biographer of Keynes. Skidelsky argues that we’re at a conjuncture – a tipping point where one “cycle of economic fashion” gives way to another.
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