The Wall St crisis: the end of capitalism?:

Ken Lambert writes: Re. “Rundle 08: A political and cultural crisis of capitalism” (yesterday, item 2). Although Guy Rundle’s insights are deliciously accurate about the American capacity for self-delusion and just plain dumbness, he goes too far in seeing socialism as the answer to its manifold sins. Milton Friedman could never explain how the Nordic economies worked and why we buy Volvos and Saabs and the Nords don’t buy Holdens, Fords or Chevvies. If Nordic is socialist enough for Guy, we all will be following him there soon.

The great American unsaid in this crisis is that the Greenspans, Bernankes and Paulsens were intimately woven into this Wall Street empire of greed and they were very smart insiders who must have known that the 1% credit boom and sub-prime bust had to happen sooner or later and would be very ugly. Paulsen is said to be mortified by the behaviour of his Wall St mates — a Goldman Sachs innocent abroad in the big bad world of venal sins. And now masses of US Taxpayers are discovering that the finance spivs have rorted a big chunk of their hard earned and are angry. So angry that they are writing and calling their congressmen — angry enough it seems to pull the bailout.

Tom Richman writes: I’d suggest that much of the world’s ruling elite, abetted by their political shills in respective legislatures or executive branches, knew in advance that the capitalist model was due for structural collapse. How else do you explain the ever so timely and convenient barrage of anti citizen/anti union laws that will forbid or brutally constrain the street protests or strikes that are bound to take place in response? And we thought it was all about terrorism.

Harry Goldsmith writes: Hard to find the time to read everything being said on the Wall Street meltdown, and its ramifications. But I would have thought to pay for the meltdown, the US is going to have to cut back on spending, and one of the obvious cutbacks is in defence (attack?) spending. What is the likelihood of the US returning to at least a shade of Fortress America, and what might be the effect on countries from which it might remove its “support”? Is this a non-issue? Are people writing about this but hiding it from me?

Gwilym Croucher writes: Who knows, we may even be heading for one of those all too rare moments when the capital “P” Politics-media universe (polemics, scandal and moral outrage) meets the small “p” politics-economy universe (complex policy problems, entrenched interests and limited options)? That would make for a bit of a change.

The death of Wall Street has saved the polar bear:

Olivia Harwood (who is obviously not an economist) writes: Could the end of the financial world, as we know it, be the saving of the planet? Am I a cockeyed-optimist? Here’s some of my reasoning:

  • The less discretionary income we have and the less access we have to credit, the less will be spent on “life-style” purchases such as that old villain the flat screen TV. This means less will be manufactured, which means less energy consumed and less petro-chemical products would be around.
  • We will become more careful about how often we’ll use the car and won’t be buying a car for the 17-year-old child on their 18th birthday.
  • We will be trying to save money through reducing our domestic energy bills — TVs, computers, DVDs, etc, etc, etc will be turned off at the wall at the end of a day’s use and heating and cooling systems will be used with more discretion. All this will reduce domestic energy consumption which, in turn, will reduce energy production.
  • Servings of food will become smaller and less processed food will be eaten — again an energy saving through reduced manufacturing. Not to mention less being thrown out — thus reducing methane gas from tips.
  • Less but fresh food would also improve health, which would reduce energy consumption by pharmaceutical companies.

I could go on… Okay, so the down side is mass unemployment, but oh, just imagine the clean air and the joy of knowing the death of Wall Street has saved the polar bear!

Philip Carmen writes: Re. Yesterday’s editorial. Crikey wrote: “As Guy Rundle said in our early morning edition: Absolutely no-one expected this.” Guy is wrong and patently wrong, to boot. Plenty of us DID see this coming and some of us even expected it as a matter of principle. Here’s my opening three para’s for my newsletter this week — perhaps Crikey (and especially Guy!) should subscribe?:

One can’t help but conclude that the proposed bailout not only keeps the party going longer (than it should??) but doesn’t direct energy where it should — keeping people fed, housed and working to help each other. Instead it pours more energy into a financial game of pass the parcel, or musical chairs… which is what got the US (and the rest of us) into this fine mess in the first place.

Stop Press — Breaking News that the Bill failed to pass the US Congress came as a shock to some (despite media reports that “absolutely no-one expected this”, we did) but it’s heartening to know that Congress didn’t just rollover and play dead, as was widely anticipated. They showed some spine in sending a message to Treasury Secretary Paulsen to come back with something better thought out and with less expectation of a free ride and little accountability. My faith in Democracy lifted a notch today, but my fears for capitalism haven’t changed one iota.

Make no mistake — the bailout WILL eventually happen — possibly even within the next week or so, but it needed to be watered down and it needed more protective controls for US taxpayers, so a delay was almost inevitable, in my view. Otherwise there was too great a risk that the billions would simply go straight out the back door to the financial wizards who have been inventing ways of passing risk to others for a fee.

And you should also be aware that this is not a case of wisdom in hindsight — I’ve been warning my clients for several years about this problem and advising them to hold 70% in cash for the past 4-5 years — but one of having some foresight. THAT’S what we get paid for and I would have thought it’s what your journalists should possess…if they are to pass the test of credibility. I’ll be the first to admit that I may be one in ten thousand in my industry, but having high standards is not a crime. It should be an expectation. Guy should strive for that, too.

The Wall Street crisis explained — The parable of the stock market and the monkey:

Crikey: Bede Doherty (yesterday, comments) asked “is it possible for someone to please explain in simple English with simple examples how this crisis came to be?” Here at Crikey, we like to help. So we bring you without further adieu, the first (and possibly last) episode of the Wall Street crisis explained. The first instalment is brought to you by fellow Crikey reader Tony Stott, and is titled, The parable of the stock market and the monkey:

Tony Stott writes: Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.

Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers.

“Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.”

The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man, nor his assistant again, only monkeys everywhere!

Now you have a better understanding of how the stock market works.

Simon Rumble writes: Bede Doherty needs to see this: It’s funny, but it’s also the best explanation I’ve seen of the whole subprime crisis so far.

Garnaut:

Dr Mark Duffett, Research Fellow in Geophysics, writes: Re. “Dismal logic: Garnaut at a glance” (yesterday, item 4). Australia’s “opportunities for biosequestration” may be nowhere near as great as Garnaut proposes, in chapter 22 of his report. The mooted “restoration of mulga country” and any other afforestation projects in southern Australia will at best have marginal climate benefits and may actually make things worse. The reason is the substantial darkening (i.e. absorption of solar radiation) that results from land-use conversion of grasses and exposed soils to tree cover. This, at temperate latitudes, has been shown to cancel out the cooling effect of the associated CO2 removal.

Petrolheads and politicians:

Alan Kennedy writes: Re. “Petrol heads take gold at Sydney Olympic Park” (yesterday, item 12). What happens to politicians when they get near Formula One Cars, 500cc motor cycles and V-8 supercars? Do the fumes overwhelm them forcing all intelligence from them? It has a sorry history this motor sport rapture. Think back to Nick Greiner’s disastrous attempt to steal the 500cc Motor Cycle Grand Prix from Victoria. Just ask the people of Canberra who took a huge bath on V-8s running around the Parliament and couldn’t wait to show the V-8s the way out of town. Tell it to the Victorians who still aren’t told how much they stump up each year for the circus at Albert Park.

Now Nathan Rees is sniffing the petrol and spinning us a line of bullsh-t on the economic benefits. Sad thing is he thinks we are as silly as he is as he tries to convince us that the economic benefits of using taxpayers money to justify what is in essence an elitist frolic. The promised economic returns are a fantasy. And now the NSW Government which according to the departing Costa is going broke can find $30 million to fund the V-8 race. How much longer do we have to suffer this cr-p?

Katherine Stuart writes: Apropos petrol heads and climate change, when are we going to give up motor racing with petrol-powered cars? It’s not so much the greenhouse gas emissions from the races themselves, but the idea that it’s fun/cool/macho to floor it and burn some rubber in general — in traffic. Eco-driving is all the rage in the EU — and so are significantly higher petrol prices at the bowser. I can’t help being reminded of a citation I read in a museum on Gotland (the original island home of the Goths) from a decree arguing for the end of human sacrifice on the island. It very matter-of-factly argued that it probably wasn’t such a good idea any more, considering the waste…

Vandalism politics at UQ:

Joshua Young, President, UQ Union, writes: Re. “Tips and rumours” (Monday, item 8). The Women’s Room is a space in the Union that is unlocked 24 hours every day. It is my understanding that the side entrance door that leads up to the Women’s Room remains unlocked until 10pm every night. Men are banned from entering this room at all times. On 17 September 2008, new graffiti appeared on the walls of the Women’s room written on with crayon and chalk. This new graffiti challenged the prevailing ideology of the pre-existing graffiti.

I personally found the new graffiti to also be offensive. As far as I understand, no property was permanently damaged and no individuals were injured while the new graffiti was being written. Members of the Women’s Collective chose to report the incident to the police and have requested that a forensic team pat down the building and that guilty individuals be arrested and immediately expelled from University. I asked to be kept informed by the police of any further developments. So far I have heard nothing.

Clearly, I do not support this situation. I personally do not support racism, sexism or homophobia and I do not tolerate language that it unlawful (e.g. slanderous or defamatory). As far as I am concerned, so long as the language used is not unlawful and no property was damaged, then the incident is a an example of the cut and thrust of student debate and politics. In the interests of keeping the peace though, I have asked for the offending graffiti to be removed.

In my personal view, the Union should be completely free of graffiti. Certainly no-one on my executive has openly admitted to me that they were responsible for the incident. The Union’s video footage is inconclusive as it only shows individuals entering and leaving the building from the main entrance and not the side entrance. The allegations that the perpetrators responsible for this incident are members of the Liberal Party, Young Liberals or any organisation associated with the Liberal movement are untrue and is nothing more than a smear campaign being undertaken by the left-wing students on campus. I am keen to reopen the Women’s Room as soon as possible.

A Shakespearean correction:

June Factor writes: Dear crikey — thanks for publishing my comment about John Kilner (yesterday, comments). However, someone has tampered with the last line, which happens to be a quote from Shakespeare’s The Tempest: “Oh brave new world, that [my emphasis] has such people in it.” Definitely not “who has”! Should you get a chorus of corrections from readers, I’d be grateful if you make it clear that the error was not mine.

Leigh at Crikey: That was my fault June. Crikey’s editor Jonathan Green has ordered me to attend a William Shakespeare boot camp this weekend to brush up on my knowledge of the bard’s collective works. I’ll be missing the first game of the cricket season for my editing error.

Send your comments, corrections, clarifications and c*ck-ups to [email protected]. Preference will be given to comments that are short and succinct: maximum length is 200 words (we reserve the right to edit comments for length). Please include your full name — we won’t publish comments anonymously unless there is a very good reason.

Peter Fray

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