Libs take note of GOP choice: There is a lesson for the Australian Liberal Party from the emergence of Senator John McCain as the Republican presidential candidate — given a choice people will invariably choose a politician who is not too far from the centre. McCain for years has annoyed the hardliners of his Party by taking positions on economic and social questions that are not much different from many Democrats. It’s this moderation that’s been endorsed in the US primary and caucus votes although he is as strong on the need to keep forces in Iraq as any Republican. Back home we’re being treated to the spectacle of the Nick Minchin group in the Liberal Party struggling to maintain the extreme positions of the defeated Howard Government on matters like saying sorry to Aborigines and preserving the system of unfair individual employment contracts that Australians so overwhelmingly rejected in November. Labor under Kevin Rudd cleverly positioned itself as the party of the sensible centre just as McCain is now doing. I’m sure the PM could not be happier that his opponents rejected Malcolm Turnbull as its leader because of Minchin’s blinkered ideological approach.

Turnbull’s on to something: Perhaps the Opposition Treasury spokesman Malcolm Turnbull had a point when he chastised Treasure Wayne Swan for not demanding that Australian banks produce the evidence to justify increasing their home mortgage rates by more than the increase in official rates by the Reserve Bank. Around a quarter of the money our banks lend for housing comes from money they borrow overseas and the cost of that finance should be going down, not up unless the world’s money men believe that our banking system has suddenly become a very risky proposition. That major investment guru Warren Buffett put it nicely this week when he said he wouldn’t talk about a credit crunch. “Money is available, and it’s really quite cheap because of the lowering of rates that’s taken place”, Mr Buffett said. What had taken place was a “re-pricing of risk” leading to an “unavailability of what I might call ‘dumb money’, of which there was plenty around a year ago.” With money banks borrowing from the US now 1.25 percentage points cheaper than a month ago and with the rate on wholesale funds in Australia having increased by only marginally more than the 0.25% rise in the official rate, an explanation by the banks would be of interest.

Snazzing up the CV: The comment by NSW State Labor Party president Bernie Riordan that State Treasurer Michael Costa was trying to improve his resume so he could get a job with a merchant bank with a planned $15 billion sale of electricity assets might have been unfair but it does draw attention to  a growing cause for cynicism about this country’s political process. Politicians stepping out of Parliament and into lucrative employment where the only thing they bring is their contacts isn’t a good look.

A whale of a problem: The anti-whaling campaign really does threaten to get out of hand. Environment Minister Peter Garrett was virtually frothing at the mouth yesterday when he released video footage taken by Australian customs officers in Antarctic waters. Perhaps the Japanese Government should put a ban on all Australian meat imports on the grounds that we allow the completely inhumane export of live sheep to the Middle East where the cuddly creatures are tortured to death in a most barbaric fashion.

Swan’s cheap cuts: There’s something quite contradictory in the position the Treasurer Wayne Swan is taking to income tax cuts. He yesterday spoke of monetary policy being a blunt instrument when it comes to dealing with rising inflation and warned that any future windfall revenue would be kept as a surplus in the hands of government rather than passed back to taxpayers as a tax reduction. Yet he and his colleagues still maintain that delivering the $30 billion in tax cuts promised during the election campaign is the right thing to do. There is simply no logic to these two contradictory positions.

The chances of recession. I recall a decade or more ago the boss of a major US bank that had just written off billion of dollars in debt to South America pondering whether a suitable area for necessary cost cutting might be the myriad of economics departments the bank paid huge sums for in many countries around the world. Having looked back on the predictions he got for his outlay the banker realised that in a practical sense of deciding what the business should do they were of no help whatsoever. My memory on this matter was prompted by a recent Wall Street Journal report on its economic-forecasting rankings. The winner predicted an inflation rae of 3.6% which turned out to be 4.3%, an unemployment rate of 4.7% which was spot on and a federal funds rate of 5.25% which was a full point higher than the actual 4.25%. And that, I repeat, was the record of the contest winner! Which means I will treat with some caution the prediction of the WSJ panel of 52 respondents that the probability of a recession in the US is 49%, up from 40% in the January survey and 23% in June. Moreover, if a recession does materialise, the economists gave 39% odds that it will be worse than the past two recessions. For my part I will lean towards the somewhat gloomier prediction of the punters at Intrade who now put the chances of a US recession at 64.5%

The Pick of This Morning’s Political Coverage:

Swan to hoard surplus – David Uren, The Australian

Rack of lamb: delicious but very cruel – James Rose, Melbourne Age

Quit now, Labor chief tells Costa – Andrew Clennell, Sydney Morning Herald

Libs to seize parklands – Greg Kelton. Adelaide Advertiser

Minister Kevin Greene admits he smacks his children – Clare Masters and Simon Benson, Sydney Daily Telegraph

Walker set to quit Libs as Omodei move fought – Jessica Strutt, The West Australian

The Daily Reality Check: The Murdoch tabloids might be leading the fight against Japanese whaling but it’s the ABC and Sydney Morning Herald readers who seem to be the ones who care. The blatant attempts to stir up anti-Japanese feeling by the Sydney Telegraph continues this morning with another bleeding whale picture but there are no whale stories in the top five most read stories on any News website. There are, however, two on the ABC site and one at the SMH. On the 10 internet news sites that Crikey surveys it was almost a federal politics free day. The Oz had readers for its piece on Treasurer Wayne Swan’s promise of no further tax cuts and a bishop calling for different words in the apology to Aborigines scraped in at number five at Nine-MSN. The daily title for the most read subject was a toss up between Dodi two timing Diana and Heath finally being laid to rest. But a special mention must go to right brain v left brain which is still going strong on the most read list of the Melbourne Herald Sun months after its first appearance last year.

Peter Fray

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