Month: May 2009

Rudd should just say no

Posted by Chief Blogger – 31 May, 2009

Rudd should not feel in any way obligated to solve Obama’s political problem:

The government has confirmed it is considering an appeal from US President Barrack Obama to settle Uighur detainees from China, who have been held in detention for more than six years, but have been cleared by the US of being enemy combatants.

If the Obama administration can argue before the US Supreme Court that these people have no right of entry into the USA, then surely Rudd should feel more than justified in saying no thanks. Obama’s election “…yeah but no but…”promise to close Club Gitmo is coming undone and so he is looking for other countries to bail him out – GM style. Instead of the unions stepping up to the mark, this time round it looks like a foreign take-over of Obama’s election promise. A bit of background on the issue can be found here:

The Obama Justice Department told the Supreme Court this evening that the Uighurs have no right to be released into the United States.

The Uighurs, Chinese Muslim detainees held at Guantanamo Bay, received terrorist training at al Qaeda affiliated camps (from an organization formally designated as a foreign terrorist organization under U.S. law) and were captured after the U.S. invasion of Afghanistan. They are the Left’s combatant cause célèbre.

A deluded MP – UPDATE I

Posted by Chief Blogger – 29 May, 2009

Liberal Federal MP Michael Johnson seems to have let all his air travel go to his head:

He told the Sky News Agenda programme yesterday that North Korea really was misunderstood as he was waxing lyrically about Pyongyang, declaring that he thought he could have been in Paris with its beautiful wide (and no doubt empty) streets….

Bizarrely, he decrees that North Korea’s six official haircut society “is very sophisticated, um people know what they’re doing, they know their place.”

He sounds awfully like he’s defending one of the world’s ugliest autocracies: “It’s very rigid, very mechanical, very clinical but I think in that society, in that regime, that’s a plus for them in controlling the people.”

A revealing article from the WSJ outlines North Korean images, of among other things, the graves of 2 million people who died from starvation in the 1990s. The words ‘plus’ and ’sophisticated’ don’t exactly come to mind when describing North Korea. A clumsy choice of words. The regime clearly did a good job deluding Johnson during his trip.

UPDATE I

It is clear Johnson is not exactly up to speed on current North Korean events, so I post the following transcript of an interview between US radio host Hugh Hewitt and Christopher Hitchens:

HH: North Korea is rattling many sabers today, announcing that they abrogating the 1953 Armistice, and that they are going to, they’re going to go to war, in essence, if anyone bothers their ships coming in and out of port. What do you think about that?

CH: Well, an abrogation of an armistice is in effect a declaration of war. And in some ways, as the armistice were, the armistice itself implied, there’s never been a serious peace treaty. What they’re doing, as they’ve done so many times before, is trying to blackmail us into doing what they cannot do, which is to feed their people. There’s another round of famine due for the long-suffering people of North Korea who are already six inches shorter than the average South Korean. Just let that sink in for a moment, and picture it for the children, the stunted, malnourished, enslaved generation. They expect that we will, because of this blackmail, give us the food that will keep their regime going. I don’t see how much long we can allow this relationship to go on.

A test of Rudd’s priorities

Posted by Chief Blogger – 28 May, 2009

Grant approval for a mine which will directly and indirectly employ 45,000 people during a time of rising unemployment, or reject the proposal to satisfy Big Green:

BILLIONAIRE businessman Clive Palmer claims he can start work on the $6.5 billion Waratah Coal project early next year if Queensland government approvals are forthcoming…He said it would create 6000 jobs during the construction period and 1500 ongoing jobs, but using the multiplier effect, the project would add about 45,000 jobs overall…But the project still needs EIS approvals from the state Government as well as federal approval for the port expansion, and Mr Palmer said he hoped he would get those approvals this year.

The project has already been delayed by Rudd:

The original project, proposed last year, involved a port at Shoalwater Bay near Rockhampton, but federal Environment Minister Peter Garrett did not grant permission for the port.

My best guess is that the project will likely be ‘approved’, with conditions that make the project financially un-viable.

De facto RBA position on Rudd cash-o-rama revealed

Posted by Chief Blogger – 26 May, 2009

From RBA director:

Professor McKibbin said yesterday many countries, including the US, were spending in areas such as health, education and infrastructure, which should have been funded a long time ago. “A number of countries have taken the stance of never waste a good crisis,” he said.

“The danger is you add too much to the fiscal deficit. Sure, some of it is temporary, but a lot is structural because it is based on ideology.”

Professor McKibbin said he was not passing comment on the Australian stimulus spending, although he said he stood by the criticisms he made before the Senate earlier this year that cash handouts were not an effective use of taxpayer funds.

It is hard to imagine that McKibbin is the only person on the RBA board that holds these views.

Growing media consensus of Rudd’s spin tactics

Posted by Chief Blogger – 23 May, 2009

The following is a list of media commentators that have come to accept that Rudd is more marketing spin than political substance. I’ve tried to avoid the usual suspects like Bolt, Akerman, Albrechtsen, etc…that have from the very beginning labelled Rudd as have I also. Starting with Paul Kelly. Yes even Kelly has come to accept Rudd’s spin credentials:

This is Kevin Rudd and Wayne Swan’s real problem. Keen to promote themselves as decisive leaders during an economic crisis, this week they looked scared, silly and subservient to political spin.

That’s about as much as Kelly is willing to concede. Christian Kerr on the private health insurance rebate:

…The Treasury assessment of Malcolm Turnbull’s tobacco tax proposal went to journalists on Sunday accompanied by some helpful if highly self-serving government spin explaining how the increased savings over time would help the increased expenditure on pensions at the new higher rates as the population ages.

It was audacious spin, tying a big budget nasty to one of the few bits of good news Wayne Swan had last week: audacious spin on spin, given the Government costed the Opposition proposal over 10 years, rather than the four-year period of the forward estimates.

George Megalogenis on Rudd’s refusal to say the word ‘billion’:

There were budget forecasts misplaced and economic concepts misapplied. Then there was the spin. In trying to avoid the phrase “billion dollars” when asked to nominate the figure for government debt, the Prime Minister produced a number too big for logic.

Mr Rudd said government debt would peak at $300 billion, although the words “billion” and “dollars” did not pass his lips.

Alan Wood on Rudd’s dealings with Treasury and the Budget generally:

The big threat here has nothing to do with economic growth forecasts. It has everything to do with Rudd’s chaotic and unpredictable leadership style and his obsession with political spin. This is a Government that couldn’t make the hard spending decisions in its first budget, has managed only a half-hearted effort in its second and is unlikely to do much in its third, an election budget.

A begrudging acceptance by ABC economics commentator Stephen Long in the context of Treasury forecasts:

And if it’s tough to make predictions, especially about the future, the whole game gets even tougher when it’s twisted by the force of political spin….Did you notice how Wayne Swan tweaked the rhetoric on Budget night, talking of “the sharpest” downturn since the 1930s? No wonder it was hard for the public and many commentators to accept the idea that we’re back on track within a few months and recording stellar growth in a couple of years.

But then he dug the knife into MT, of course. Ross Gittins even gets in on the act, in a way:

There’s nothing new about governments manipulating the media in an attempt to influence the public’s reaction to a budget. But we’ve never seen a more blatant effort than the one Kevin Rudd’s media minders turned on this time.

Fortunately for budget honesty, however, the spin doctors ballsed it up big time, turning what could have been a well-received budget into a yawn among the punters and a disaster among the opinion-leaders.

Gittins manages to protect Rudd by inferring that Rudd is not one of the “spin doctors”. Typical.

Aborigines get a taste of green medicine

Posted by Chief Blogger – 23 May, 2009

They’ll have to learn what’s good for them like the rest of the community are being forced to, with big government and big green programmes

Cape York leader declared Noel Pearson yesterday he could no longer trust the Rudd Government to properly consult and gain consent from traditional owners after state and territory environment ministers dismissed his objections and moved ahead with the first steps towards World Heritage listing for Cape York.

Mr Pearson is locked in a bitter dispute with the Queensland Government over plans to ban development of the cape’s “wild rivers”, which he argues will destroy opportunities for Aborigines to create economic development in the communities. He sees the Rudd Government’s silence over the issue and its failure to stop the move towards World Heritage listing as a breach of faith.

So out comes a bit of old fashioned racism from Warren Mundine:

“Why should Aboriginal people carry the can for white man’s abuse of the environment and locking us into a non-economic future. In native title, mining companies sign off with Aboriginal people before mining projects go ahead. We expect the same thing from Governments with environmental issues.”

So either you want the benefits of economic development or not? If you want the benefits then you carry the costs along with everyone else. The costs are not unique to a racial group.

This future is all ours – UPDATE I

Posted by Chief Blogger – 22 May, 2009

Looks like “Great” Britain is in a debt fuelled tail-spin:

Ratings agency Standard & Poor’s shocked investors Thursday with a formal warning that the U.K. must get its finances in order or lose its coveted triple-A credit rating…

The same happened to Japan on Monday, which lost its last remaining AAA rated debt, and it will certainly happen to Australia with Rudd’s debt funded cash-o-rama. And for the US:

“The triple-A rating is undeserved,”said Peter Morici, a professor of international business at the University of Maryland. “Because the U.S. can print its own money, it won’t formally lose its AAA, but in reality, the bonds are as risky as bonds that are below AAA.”

“If Washington were a state capitol, we would have lost the AAA with the current budget,” he added.

This is some very strange logic. The UK and Japan can also print money to fund their debt and yet have/will lost/lose their AAA rating. Furthermore, if a country starts to print money to devalue its currency and debt, then doesn’t that present investors with a high level of risk and provide cause for a downgrade? This is the double standard of the credit rating agencies at work. Australia, even with Rudd’s $300 billion in debt, is still low by USA standards, yet we face a greater prospect of losing our AAA rating than the USA which has debt approaching 100 per cent of its GDP. Former comptroller general of the US, David Walker wrote the following in FT this month:

The US government has had a triple A credit rating since 1917, but it is unclear how long this will continue to be the case…One could even argue that our government does not deserve a triple A credit rating based on our current financial condition, structural fiscal imbalances and political stalemate. The credit rating agencies have been wildly wrong before, not least with mortgage-backed securities.

How can one justify bestowing a triple A rating on an entity with an accumulated negative net worth of more than $11,000bn and additional off-balance sheet obligations of $45,000bn? An entity that is set to run a $1,800bn-plus deficit for the current year and trillion dollar-plus deficits for years to come?

For these and probably other reasons, US investors have been spooked by the UK downgrade warning:

Perhaps more important, for some investors, the move raised the specter in of possible downgrades in the U.S. or other major developed countries that have scrambled to prop up their economies since global crisis erupted last year.

“If you want to know what’s going to happen in the U.S., take a look at the U.K. They have similar economies with similar problems, though Britain is on a much smaller scale,” said Axel Merk, president of Merk Investments, a currency-focused firm in Palo Alto, Calif. “This is another sign that these countries are not going to be able to get out of their problems by printing money.”

Queue light over Rudd’s head. My previous posts on this issue can be found here, here, here and here. More→

What Treasury won’t admit

Posted by Chief Blogger – 22 May, 2009

From the Minerals Council regarding Rudd’s carbon reduction scheme:

The CPRS scheme will shed 23,510 jobs in the minerals sector by 2020 and more than 66,000 by 2030. These are direct jobs. All minerals sectors will be affected, whether in coal mining, gold and base metals, alumina refining, mining services, copper, zinc, lead and aluminium smelting and so on. No state, or the Northern Territory, will be spared, no mining region will be untouched. The impact on regional Australia will be severe, including thousands of jobs in the Illawarra and the Hunter in NSW, the Bowen Basin in Queensland, remote regions in Western Australia, including the Pilbara and Kalgoorlie, South Australia, Victoria’s Latrobe Valley, Tasmania and the Northern Territory.

You can add to these numbers the jobs of the council workers, the school teachers, the nurses, gardeners, and employees in the hundreds of small businesses in the towns and communities that service these mining regions.

And the National Party is the only opposition party opposing the scheme. Crazy! A recent study from Professor Gabriel Alvarez of the King Juan Carlos University has cast serious doubt on the capacity of ‘green jobs’ to make up the difference:

Alvarez estimates that each one of the 50,000 “green energy” jobs created since 2000 cost the Spanish Government $1 million in subsidies.

This was $50 billion that could have been invested in things that actually made money, rather than squandered to create power that cost seven times more, and forced many employers out of business or out of the country.

As a result, “the programs creating those (50,000 green) jobs also resulted in the destruction of nearly 110,000 jobs elsewhere in the economy”. And Spain, monstered also by the financial crisis, now has an unemployment rate at a frightening 17.4 per cent.

This is an election winning issue that the Liberal Party is letting go to waste.

“What a sad and sick society we’re becoming.”

Posted by Chief Blogger – 20 May, 2009

So says Town councillor and former mayor Brian Fines, 72, a former Lieutenant Colonel from the UK.

WSJ now slams Ken Henry – UPDATE III

Posted by Chief Blogger – 20 May, 2009

First the WSJ went after Rudd, now they are going after former ALP economics adviser and current Treasury Secretary, Ken Henry. This came after the Secretary went on the attack to support his department’s inaccurate estimates and poor policy recommendations:

Mr. Henry took issue with our assertion that Australia would have had a fiscal surplus were it not for the Labor government’s spending free-for-all. But his budget explains the economics. Treasury estimates annually the “effects of policy decisions” versus “effects of parameter and other variations” on the budget. The former is controlled by policy makers; the latter is not. The government started last year with a A$23.1 surplus projection. “Policy decisions” accounted for A$34.7 billion in revenue losses, while A$21.3 billion of losses were due to outside forces. You do the math.

As I have previously stated, the budget deficit is driven primarily by Rudd’s and Henry’s spending spree and their failure to control existing government expenditure. The WSJ also takes issue with Henry’s promotion of a Keynesian revival. This of course from a man who before the 2007 Federal election publicly criticised Howard for spending too much at a time of large budget surpluses. But now that his mate Rudd is in power, Henry thinks it’s okay now to spend too much during a time of large budget deficits.

Mr. Henry isn’t a political appointee, but his arguments largely mirror Prime Minister Kevin Rudd’s policy trend.

Condeluded in other words. Readers should bear in mind that the WSJ is the second largest circulating newspaper in the USA, and their editorials attacking Rudd and Henry appear  in the US online edition of their newspaper.

UPDATE I

Michael Stutchbury noted the following about Henry’s attack on the WSJ:

…it doesn’t help anyone for the Treasury secretary to start a slanging match over Keynesian economic doctrine with prestigious foreign news publications such as The Asian Wall Street Journal. This will just further complicate your story.

On Tuesday, you described Asian WSJ readers as “unfortunate”. Did you notice how the Journal’s retort yesterday turned its praise for Australia’s neo-liberal policy success into an attack over “blowout spending aimed at pleasing voting constituencies”.

This won’t help convince foreign investors that Labor will remain bound by your fiscal straitjacket of a 2 per cent limit on real government spending growth.

The Australian also had an editorial which basically told Henry to stop acting like a de facto Rudd minister, and not a very good one at that, “…who is not on top of his brief…” More→