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.