Right Pulse

From The Australian national affairs editor Mike Steketee and his take on the bank guarantee debacle:

The truth is that the Government has been making it up as it goes. It is understandable that it did not want to be caught napping by fast-moving developments overseas, but it overreacted and it has been scrambling to patch things up ever since. It changed the guarantee from unlimited to limited. It expanded it to the branches of overseas banks but without giving them the benefit of a fee-free threshold.

It announced a review by Treasury and the Australian Securities and Investments Commission of the difficulties facing market-linked funds. Remarkably, the Reserve Bank, the organisation with first-hand knowledge of how the money markets operate, again was excluded from a direct role, although it is being consulted.

Now the Government is offering the opportunity for the market-linked funds to come under the umbrella of the Australian Prudential Regulation Authority. But there are doubts about how many will be able to meet the APRA requirements and how quickly.

It is true that there seldom has been a more challenging time to make decisions. Events not only are moving rapidly, they are being driven by irrational behaviour. But while Newspoll shows the Government has managed to convince voters it is being decisive, the reality is that it has lacked a sure touch.

If you compare this to the Australian’s editor at large, Paul Kelly, and his apologetic nonsense arguing that this crisis has really been a victory for Rudd, despite his incompetence, then one wonders how far left the media have moved lately.

A further note on Rudd’s plan to turn market linked funds into banks. Apart from the idea being pure fantasy, Rudd demonstrates how little he understands of the economy and the financial crisis. Funds neither want to becomes banks and even if they could they would struggle to raise the billions in capital needed to be called banks. This in turn would increase overhead costs for the funds and therefore reduce the retirement benefits for millions of Australians.

A revealing ad. Apparently Obama supports infanticide.

Swimming champ Grant Hackett has expressed a desire to enter Federal parliament.

“I’m a very passionate person and I’m ambitious.

“Being a minister - of course I’d love an opportunity to do something like that and have the ability and talent and skills to be able to contribute at that level. It’s a long-term thing.”

Both Labor and Liberal MPs have articulated an interest in having Hackett as a candidate.

But the Melbourne-based swimmer has not yet decided which party he will join.

Well if he had a real interest in politics surely he would know which side to join. He would have voted before.

The Australian has been taking Rudd to task over his mishandling of the financial crisis. By providing an unlimited guarantee for bank deposits, financial money markets are moving funds into now secured banks. This risk was highlighted by the RBA to Treasury through email before the decision was taken by Rudd, but seems to have been ignored by Rudd. The crisis created by Rudd, has also lead to the freezing of many superannuation assets and therefore the retirement pensions of thousands, as people started withdrawing their life savings into the unlimited secured bank deposits.

Rudd keeps on claiming that he was only acting on regulatory advice, but the email from the RBA Governor to Treasury warning of the risks surfaced, via The Australian, puts this into serious doubt. We know that Rudd did not consult the RBA Governor over the decision, presumably because he didn’t want to hear what he would say, which is a damning indictment on his management. And it is probably the case that the Treasury head explained the full position to Rudd, but unions put pressure on Rudd after he had previously given an ABC interview where he said there would be no guarantee. In response to the freezing of people’s superannuation accounts, Swan told retires to go seek Centrelink help. And of course that advice has not exactly gone down well. As Alan Wood writes:

The Prime Minister’s least favourite economist, von Hayek, who Rudd seems to regard as “extreme capitalism” personified, made a powerful point many years ago. He said economies and societies based on socialist planning interventions would fail because no planner could incorporate into a planning model the myriad decisions made by individuals in the daily functioning of a market economy. For this reason von Hayek and other economists of the so-called Austrian school concluded that free markets were superior to governments when it comes to co-ordinating economic decisions.

It seems von Hayek is right, again.

From Sky News, with Turnbull and Abbott. Be warned that Sky News Australia is left-wing and basically in love with Rudd. From Turnbull on Rudd’s understanding of economic forecasts and policy development in the context of the financial crisis:

He’s either being disingenuous or he does not understand what he is talking about.

I think a bit of both from Rudd. In response to executive pay, Turnbull also says that Rudd does not understand the issue, and from Turnbull’s explanation, it is pretty clear that that is the case. All of this comes from real world experience, which Rudd does not have, of course.

Next, Abbott on state politics. While Abbott can be a bit of a ‘boof head’ some times, when he wants to, Abbott can really communicate to voters. He is clear, simple and concise, while not being ineffectual and unconvincing.

Turnbull has exposed Rudd’s economic incompetence. By Rudd giving an unlimited guarantee to all bank deposits, the financial markets have been distorted through the undervaluation of corporation bonds and other methods of capital raising. In other words, a dinky small bank has obtained a AAA credit rating overnight, because of the government backing, while large safe corporations like BHP are left looking for capital as funds race towards the banking sector. From Turnbull:

When governments intervene in free markets, they need to make no more intervention than is absolutely necessary, because you can have unintended consequences that (are) adverse.

Turnbull also had some kind and truthful things to say about Howard. A good strategy, no point killing the last 11 years of government.

I’ve already covered part of this video about how the US Democrats compromised themselves with their involvement with Fannie Mae and the resulting financial meltdown. Additional insight is given. WARNING: Mike Huckabee is on the video so paper bags at the ready.

Even Alex Baldwin likes Palin, and on NBC no less.

So much for Rudd’s ‘extreme’ capitalism. If that’s the best Rudd can do to describe what has gone on lately in financial markets he should give up now:

WITH turmoil in the world’s markets, politicians and commentators have been demanding more regulation and control of the financial sector. Kevin Rudd even says it was caused by extreme capitalism. Their reaction is predictable, but entirely wrong.

This crisis was not caused by capitalism being fatally flawed. It was caused by politicians forcing the banks to give out bad loans, monetary authorities flooding the West with cheap credit and regulators being asleep at the wheel.

Indeed, one can date its origin precisely, to October 12, 1977, when US president Jimmy Carter signed the anti-redlining law….

…for 10 years, economies boomed, the champagne flowed and everyone had a great party. But it was financed by fake money, printed by the authorities solely to keep the party going. When the realisation broke, the long party turned into the inevitable hangover we suffer today.

The regulators, meanwhile, were unconscious on the floor. The US mortgage institutions, Fannie Mae and Freddie Mac, had 200 regulators on their case but still went bust for $US5 trillion. These semi-governmental companies allowed investors to believe the bad mortgages were guaranteed by government, causing credit rating agencies to give their dodgy bonds high scores.

Interesting observation from The Corner:

Obama Doesn’t Pass the Mainstream Smell Test   [Peter Kirsanow] 

As Mark Levin notes below, Obama presents himself as mainstream. I suspect that almost every Cornerite could make each of the following statements:

• My career was not launched with the assistance of an unrepentant terrorist.
• My pastor has never said “God damn America.”
• I don’t think our troops are “just air-raiding villages and killing civilians.”
• My spouse doesn’t think America is a “downright mean country.”
• I’ve never sat on a board with an unrepentant terrorist.
• I’ve never directed millions of dollars to radical organizations.
• I’ve never opposed requiring medical care for babies who are born alive.
• I bought my home without assistance from a convicted felon.
• I’ve never taken my kids to a church whose pastor thinks AIDS was created by the government.

If Obama’s mainstream, most Americans are extremists.