Some sympathy for Kevin. No politician in Australia more attuned to what plays well with the mob than Kevin Rudd. Before his election victory, and since, he has been a master of the art of political spin. He has a highly disciplined ability to tell the people what they want to hear and normally does so in a voice full of conviction.

So when our Prime Minister discards the obviously popular response to a problem we can be pretty certain that something strange is going on. To witness Kevin Rudd and his Treasurer Wayne Swan abandon bank bashing when it comes to discussing home mortgage interest rates can only mean that the distance covered in a light year has just got considerably smaller. Not attacking hard and evil bankers for hanging on to a reduction in Reserve Bank official interest rates strongly suggests that the conditions facing our banks are not all that different to those confronting their European and North American peers.

But little for Malcolm. The Liberal Leader Malcolm Turnbull is taking the predictably populist course that oppositions normally follow with his sneers about Labor abandoning the ordinary workers to become a friend of the bankers. Perhaps it will give him some momentary popularity but for a former practitioner of the grubby arts of investment banking there are plenty of risks in this international financial crisis. Surely people will think it a bit rich that someone who profited so much from the wierd and wonderful financial engineering that created the crisis to be claiming the mantle of the home buyer’s friend.

Labor will have plenty of time when the immediate market horrors are over to examine the Turnup wealth making ways before he entered Parliament. There will be opportunities as well when the changes are made to the regulatory system in the hope of avoiding a repetition of the market collapse. Limiting the obscenely high bonus payments that ordinary bankers, and investment bankers even more so, know all about is bound to be on the agenda. If Molecule Turnup agrees to restrictions he will be a hypocrite who pocketed tens of millions himself as a merchant banker. If he disagrees he will just be showing his true colors.

In most countries, it seems to me, opposition leaders have wisely been staying away from criticizing governments struggling to finding solutions. Our Liberal Leader should be following their example.

The price of an interest rate fall. That the Australian Reserve Bank will today lower its official interest rate is taken as a near certainty by the pundits and the punters. The probabilities according to Bedford just before the announcement were:

The difficulties of international agreement. Why, at a time when free market philosophies have failed to the point where the world is tipping over the verge into a devastating recession, are we looking to free market philosophies to save us from the horrors to come from global warming? Exotic forms of tradeable securities are behind this financial crisis and now we are going to extraordinary lengths to create a whole new form of artificial market. I cannot help but think that the only winners from emissions trading schemes will be our mates the investment bankers.

The second fear I have developed over the last week is that Ross Garnet might be far too optimistic in his assessment that the odds are against world leaders being able to reach an agreement that will actually limit the production of climate changing gases. What we are seeing in Europe at the moment is good old fashioned national interest making a nonsense of the whole notion of a unified community. The Irish started with a beggar thy neighbor guarantee to its domestic banks followed by Greece and now Germany. Meanwhile the United States keeps showing that it cares no country other than itself.

The chances of a meaningful successor to the Kyoto accord? None.

Peter Fray

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