Talking their own books up. It was amusing, to say the least, that the representative of one of those leveraged buy-out groups was taken seriously by Glenn Milne in The Australian this morning as part of what is turning into quite a vicious attack on the Governor of the Reserve Bank Glenn Stevens. Milne quoted a letter written by the executive chairman of department store Myer, Mr Bill Wavish, to Mr Stevens in which he complained about the impact higher interest rates were having on the economy, particularly in Victoria and NSW, and on the retail sector in particular. What was not made clear in the article was the impact higher interest rates are having on the owners of Myer who largely used borrowed money for their takeover of the Myer stores – money that is now far more expensive than it was at purchase time. To back up the Wavish view of the impact of higher interest rates Milne refers to “senior banking figures at board level” who tell him of consumer demand “going over the cliff” at least three weeks ago. The conclusion reached was that “the bank may have failed to get off the interest rate bus a few stops back, where it ought to have alighted.” Normally the views expressed by an op-ed columnist can be safely ignored because hardly anyone apart from politicians and my fellow political tragics ever read them but The Australian clearly did not want this message to be missed. It had economics correspondent David Uren turn the Milne comments into a page one lead. On its own that would not be significant either because of the paper’s small circulation but it followed on from the amazing page one of another News Limited paper, the Daily Telegraph, on Saturday. Alongside a picture of Mr Stevens with hand on forehead it asked “Is this the most useless man in Australia”. The story, which has no byline on the internet version, said “the nation’s most powerful economic figure has committed a double betrayal of working families – urging big banks to ignore the RBA’s official interest rate and saying taxes could be increased.” A rather tough assessment, I would have thought, of a man doing what the law requires him to do but then I am not a major media company facing a considerable decline in advertising income as the higher interest rates cause the slow down in the economy which Mr Stevens and his fellow Reserve Bank board members judge to be necessary to stop inflation running rampant.
Why defend banks? If curbing inflation is one major task for a Reserve Bank Governor, then keeping public confidence in the banking system is another and more important one. Yet while the Governor can speak openly about the inflation fighting it is difficult to utter anything other than platitudes about the financial position of our banks for fear that frankness might provoke the kind of run seen on Northern Rock in Britain. Hence, perhaps, the silence by Governor Glenn Stevens about the behaviour of the ANZ Bank in lending billions to help the rorting of the share prices of a multitude of small and speculative companies. If proof was needed of the capacity of smart people in finance to circumvent rules designed to ensure that banks act prudently, the last few months have provided it. Unfortunately the day of retribution must be postponed until the crisis has passed and a Reserve Bank Governor determined to ensure the continuance of a safe banking system must defend banks increasing their interest rates to protect their capital position, by making up for losses caused by folly, rather than worry about the impact those increases have on their innocent borrowers. I guess all we can be grateful for is that successive Australian Governments resisted the pressure to allow mergers of our major banks. Imagine the mess we would be in if the people running the ANZ had been able to play in the big league with UBS et al!
The Language of Leadership. Words as well as actions have the travelling press corps amused with Prime Minister Kevin Rudd. His little salute to George W. Bush gave them something to write about when they could not understand what his words meant. As for the words, well the commentators have been savage as this selection shows.
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- Rudd says he’s no robot, yet he talks like one – Michelle Grattan, The Age
- Alas, poor language (Kevin Rudd and the art of gobbledegook) – Tom Hyland, The Sunday Age
- Meaning left far behind as Rudd tours the acronyms – Phillip Coorey, The Sydney Morning Herald
Like recruits like. Western Australian Premier Alan Carpenter knows a good background for politics when he sees it. The former Channel Seven political journalist turned politician turned Premier has asked Channel 7 Perth political reporter and weekend newsreader Reece Whitby to run for Labor pre-selection in the seat of Morley. “I am extremely happy that Reece Whitby has put up his hand for pre-selection for the Labor party,” Mr Carpenter said. It makes a change from recruiting only from the ABC!
Crime fighter has a conflict. That intrepid crime fighter Peter McGauran will join Thoroughbred Breeders Australia as its chief executive with a nice little conflict of interest to deal with. As Agriculture Minister in the Coalition Government Mr McGauran was negotiating with the horse industry for an agreement over who should pay what when the government had to act to deal with a disease outbreak. Other livestock industries had negotiated arrangements on this user pays principle years ago but the horse industry is a little different from pigs, cows and goats because horses are kept as pets as well as the commercial animals Mr McGauran will soon be representing. How much your average pony club member should pay to cover quarantine costs compared with multi-million dollar thoroughbred breeding interests is not easy to determine. Little wonder that Mr McGauran left it to his Labor successor to try and work out.
With friends like these. Those friends of Peter Costello truly are a disruptive lot. They spent years trying to get John Howard to quit so their man could have a go. That was unsettling enough. Now they are at it again, this time promoting the great spoiler as a rival to Brendan Nelson. Surely the Liberal Party could not be so silly as to think that Peter Costello is a potential saviour. All it tells me is how unpopular Malcolm Turnbull is in some sections of the party!
The Daily Reality Check
There is only one big news story of the day – the most read story for weeks actually: the “loving” dad and his daughter who have s-x and a child. The supposedly taboo subject of incest makes it to the top of the five most read stories list this morning on seven of the 10 websites Crikey surveys and twice on an eighth – versions as the third and fifth most popular. It missed out only the ABC and The Australian and that’s no wonder because they decided it was not news and didn’t run it at all. People can draw their own conclusion from the decision of Hobart’s The Mercury to give it a miss as well. Perhaps it tells us something about the age range of ABC and Oz readers that Charlton Heston’s death made their lists but was absent everywhere else.
The Pick of this Morning’s Political Coverage
- Rudd faces Olympic hurdle – Michelle Grattan, The Age
- Bigger VIP aircraft – Phillip Coorey, The Sydney Morning Herald
- Rate rises ‘dividing the nation’ – David Uren, The Australian
- Confidence in central banker on the wane – Glenn Milne, The Australian
- Parents face tough laws to curb drunken children – Kate Sikoura, The Sydney Daily Telegraph
- Thousands of SA child abuse cases ignored – Colin James & Kim Wheatley, Adelaide Advertiser
The Pick of the Weekend’s Political Coverage
- Is this the most useless man in Australia – Reserve Bank Governor – The Daily Telegraph
- Are the banks having a lend? Commonwealth Bank raises mortgage rates 0.12% – John Rolfe, The Daily Telegraph
- Costello urged to stay — and bid for leadership – Michael Gordon, The Age
- Budget surplus ‘at risk’ – George Megalogenis, The Australian
- Kevin Rudd salute starts making waves – Gerard McManus and Mark Kenny, The Herald Sun
- The developer donations the Greens say the minister must explain – Matthew Benns, The Sydney Sun Herald