John Goldbaum writes: Re. “What’s next ASIC? Ban trading altogether?” (Yesterday, item 3). Michael Pascoe’s criticism of ASIC for jumping on “the global anti-short-selling bandwagon” is misconceived. If the ASX was the only market in the world open to short selling this week, all the world’s hedge funds would have attacked Australian equities in concert. Pascoe seems to have been unaware of the final regulatory changes in the USA and the UK on Sunday (our time) which extended their ban on naked shorts. While I have no sympathy for Macquarie Bank’s participation in infrastructure spin-offs loaded with debt, it does hold a licence to take deposits. A run on Macquarie Bank’s deposits would have harmed ordinary savers and caused dislocation to their direct debits and direct credits.
Pascoe’s wish to see Macquarie Bank broken up may still occur but should be allowed to proceed in an orderly fashion. The traditional bank may yet be taken over by one of the majors, the advisory bank may survive as a stand-alone entity, and new fees for managing future infrastructure spin-offs, which was their high P/E multiple growth story, may have come to an abrupt halt in the new world of less credit and more expensive credit. If Michael Pascoe wants to see a wild ride, let him watch what the bond market does to the US Government once it has underwritten the one trillion dollars of toxic housing debt. Washington deserves a bigger spanking than Macquarie.
Les Heimann writes: Re. “Shorting ban causes bedlam as Macquarie recovers again” (yesterday, item 22). So much angst from Crikey scribes! What is right about short selling stocks? There is no doubt — no doubt at all — that anything other than the simple buying and selling of shares is just punting. Australian investors (and that means every Australian with superannuation) essentially invest to grow their capital. Any economy must not allow wealth creation to be a casino game. Similarly, any economy should regulate credit provision far more so as to ensure the US experience is not exported here. As we can not trust self regulation to act responsibly governments need to legislate. Laws encompassing a minimum percentage of capital contribution to a loan (say 25%) and maximum capital exposure to loans (say 75%) are required. Laws prohibiting “share gambling” would also be of great assistance. Now, like climate change, it’s regulate or perish.
Peter Wotton writes: In most other avenues of commerce, selling something which you do not own would be considered fraud! I find it difficult to understand why the short selling of shares can in anyway be considered respectable. Maintaining the ban on this action should be entirely appropriate
Greed and capitalism’s house of cards:
Christopher Ridings writes: Re. “US bank bailout not a cure-all” (yesterday, item 23). It all goes to show that the stock market, the investment banks, and the type of capitalism now practised remind us well of what Lewis Carroll’s Alice said, “You are nothing but at house of cards”. Just think that all this money flow has been based not on any science or morality but on those two five letter words “greed” and “panic”. Have we learned nothing from the South Sea Bubble in 1720?
Kevin McCready writes: Ken Hammat (yesterday, comments) is right that capitalism is a model that has only ever been an ideal. But greed based capitalism may be sustainable. The model needs perfect information (perhaps within reach with modern technology). Greed (sometimes a useful human characteristic), altruism, stupidity, laziness, risk aversion profiles etc all have a role. High on the list of perfect information would be bank liquidity ratios and reporting standards (before they were changed a couple of years ago to allow banks and “ethical” investor institutions to hide behind “privacy”).
John Shailer writes: Following a short break between overseas jaunts, Kevin 747 is jetting off again to grandstand at the UN, and enhance his post-politics career. “Nero” Kevin is fiddling while the superfunds of Australian workers and retirees are burning! We need a forceful leader to make some tough decisions to deal with the current economic crisis, rather than a vacillating bureaucrat, who believes every problem can be solved by another enquiry/review/summit etc. Perhaps someone who has overcome his humble origins for a successful career in the real world before entering politics — anybody spring to mind?
Turnbull’s Shadow Ministry:
Michael Bailey writes: Re. “Mungo: Turnbull en route to global conquest” (yesterday, item 11). I dare any Crikey journalist to write an article about Malcolm Turnbull and not mention his ego!
Martin Pike writes: Re. “All change as Turnbull names his team” (yesterday, item 1). Bernard Keane wrote: “awkward, portfolio of Infrastructure, COAG and ETS design (try conjuring an acronym out of those).” ICE, Minister for Ice. Has a nice ring doesn’t it?
Carbon and global warming:
John Bushell writes: Re. “Targets underestimate carbon cycle feedback effects on global warming” (yesterday, item 17). Of all the issues related to climate warming the longevity of CO2 is arguably the most critical and least understood. On the IPCC’s assumption of “atmospheric stabilisation of CO2” this would give the human race an annual maximum “budget” of 15 Billion Tonne of CO2 equivalent in greenhouse gas (GHG) emissions per annum in perpetuity (64% below the 42 BT CO2 equ. emitted in 2000). This assumes no reduction in the ability of the biosphere to absorb CO2, which in itself is highly questionable. Andrew Glikson’s analysis, if verified, would move this budget down significantly. Andrew’s work needs to be peer reviewed as a matter of urgency as it appears to accurately reflect this carbon dynamic resulting from the extraordinary long life of this gas.
In any event humans must agree an upper limit of GHGs that may be emitted and allocate responsibility for achieving those maximum emissions sooner rather than later. Even under the 15 BT CO2 equ. emissions ceiling coal (“clean” or otherwise) has no part to play because aggregate emissions are simply too high to avoid significant climate warming. Natural gas (methane) can be used to generate power but only in conjunction with local power consumption and co- and tri-generation, which significantly improves energy production compared to stand-alone gas-fired power generation. Some US$22 trillion will be invested in electricity generation in the next 20 years and all indications are that the vast majority will need to be in renewable energy. This is hardly on most politicians’ radar screens at present.
Ken Lambert writes: A simple question for Andrew Glikson; what is the relevance of the historical record to the CO2 based AGW theory which is by definition unique in the history of the planet? Further, the grab-bag of facts assembled in your article was incoherent, and needed an editor to sort out the logical thread. At one point you suggest that Solar triggered ice melting did the abrupt climate changes in short time scales and then state baldly that AGW works in reverse since the mid-18th century! What then is the relevance of the solar triggered ice melting to the AGW hypothesis?
James McDonald writes: Re. “Blow up the pokies… but not at the expense of the pub” (19 September, item 14). Alex Mitchell wrote: “While every right-thinking person wants an end to Australia’s pokie addiction, [Senator] Fielding’s plan [to throttle the rate at which money can be put into poker machines] is shallow populism.” Mr Mitchell, it’s not clear from your article why ending the addiction to pokies is good but weaning society off them by degrees is “cheap populism”. You estimate losing half a billion in NSW state revenue, and you quote a warning that it would “devastate pubs and clubs and wipe many of them out of existence”. What do you think will happen under the cold-turkey alternative? If you’re going to argue the priority of business and revenue, then shouldn’t you also campaign against nicotine patches, Alcoholics Anonymous, and fuel-efficient cars? Businesses and governments are going to have to make ends meet without sucking people’s blood through their psychological weaknesses. Those that can’t do that are vampires and we can do without them.
Jonathan Holmes, Presenter, Media Watch, writes: Re. “We’ll bail out Wall St, but let’s leave climate change to the market” (yesterday, item 4) & “Rundle08: Bail out blues and the two-point bounce” (yesterday, item 5). I know there are more “American adults” than there are “ordinary American workers”, but if both Jeff Sparrow and Guy Rundle have their figures even vaguely right, it would appear that only one in six American adults are OAW’s. What are the other five doing? Collecting the dole? Living off the bonuses they earned on Wall Street in the good times? Or have I misunderstood? Jeff Sparrow: “We’re talking, in other words, about a huge transfer of the liabilities from some of the world’s richest people to ordinary American workers, who will be handed something like a $20,000 debt each.” Guy Rundle: “There is no guarantee that the $700 billion — say that again SEVEN HUNDRED BILLION, three thousand five hundred dollars from ever American adult — being proposed by the Bush administration, will actually fix the gaping hole in the global financial system.”
Real current affairs:
Derryn Hinch writes: Re. “Anna Coren’s departure highlights talent shortage at Seven” (yesterday, item 18). Glenn Dyer said yesterday about the hosting of TT and ACA: “After two years or more in the hosts’ chairs at both programs, even the toughest of people are battered souls.” I did it for six years on Hinch and Willesee did it even longer in various guises. But that’s when they were real current affairs programs.
Rod Metcalfe writes: Re. “The Age: transformation makes us free” (yesterday, item 19). What chance for the Melbourne Age when even its senior executive makes a plural of a collective noun: “Our local retail sales team are going from strength to strength with their new territory management structure.” No, it should be team is…. There is only one team for God’s sake (and there is only one structure too it seems).
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