Take a chill pill people:

Alan Kennedy writes: Bernard Keane makes a good point in his calling for cool heads in reporting the economic problems besetting the world (Crikey yesterday Item 2 “Can everyone calm the fudge down about the economy”). He could add Stephen Long the Henny Penny of the ABC whose increasingly tabloid whines on PM are like listening to fingernails on a blackboard. Pull yourself together Stephen for God’s sake. Wall Street bankers are being loaded into the tumbrels, public executions await  Madame Guillotine will be busy for months. But things will improve or they should once the US election is over as that country is currently leaderless. Every time George W gets on television to reassure the markets they go down the toilet. The best George could do is take the rest of his term off.

Things couldn’t get any worse and there is lots of brush to cut and mountain bike trails to ride down at Crawford. John McCain’s homes policy on the run thought up without telling anyone is populism of the Weimar republic kind. He adds another $300 billion to the $700 billion bailout and the money would go to the bankers not the home owners. Old cool Obama is the only one who looks calm and that he has a plan.  He exudes confidence. FDR did it in the 30s “The only thing we have to fear is fear itself” was his campaign slogan accompanied by the song happy days are here again and he bolted in mainly because Hoover was still singing Buddy can you spare a dime. If Obama wins things will start looking up mainly because he isn’t a Republican. If old McCain and Annie Oakley get up we are all in deep trouble. PS Bernard after your excellent call for cool heads you wrote this further down the blog…….”As the financial crisis mounts”… shame on you.

Miguel Cobas writes: It’s time for the banks to step up to the plate and stop acting like rabbits frozen in headlights. As regulators around the world pour money into the system, global banks continue to hoard their cash. For decades the banks have been chucking money around like drunken sailors, offering loans to people with little ability to repay and credit cards to those with little opportunity to do anything other than cop exorbitant interest rates. Now that the regulators are chucking money at them they should do what is intended and put the money to work, using all those risk management tools they neglected before! Forget the ratings agencies; they should all hang their collective heads in shame. Be prudent, stop hoarding and end the fear. There are people and businesses out there that need fuel to keep the economy ticking over.

On unemployment:

Nigel Martin writes: re Unemployment rate climbs as economy slows (Crikey yesterday Item 1). There are number of factors that will provide a buffer the unemployment figures in Australia. (at least temporarily).

1) The ‘real’ unemployment rate has been in decificit for some time and many businesses have long term unfilled vacancies or have just simply given up trying to find staff

2) There are a large number of foreign workers in the country on temporary visas, you would expect that these would be reduced or adjusted first and their numbers won’t show up in the unemployment figures.

Afghanistan:

Graham Bell writes:  Reports of a “mutiny” by 24 Dutch soldiers in Afghanistan (Crikey yesterday Item 5 ‘Troops Mutiny in an Afghanistan campaign first’) gave me a wry chuckle. Looks like some journalists and other commentators don’t know the difference between a “mutiny”, an armed, and sometimes murderous, uprising by soldiers against their own officers and their own government, and a “jack-up” which is usually the refusal by weary, overstretched, frustrated soldiers to carry out manifestly stupid or dangerous or purposeless orders or their refusal to serve under particular officers. Mind you, as the French found out in the First World War, if commanders really bungle their handling of a series of jack-ups, they can soon turn them into a full-on mutiny.

KJ Lewis writes: On that Afghan front, why is it that a few weeks after our forces took a hit and the Rosi Khan debacle (that our Defence Minister wasn’t “to sure” about), we were presented with our media embedding to bring us the “good news” from there (that in the circumstances looked more like a rectal cushion, considering that for those intervening years from entry to now, there was sod all such PR), when the likes of Carlton-Smith and the US is saying that “winning” there at present levels of involvement, was probably impossible, our Brass is painting such a rosy picture, that “we” are winning — could it be that the PR assault is just an a-s-covering exercise?

Bill Henson:

Cathy Bannister writes: Bill Henson isn’t quite the least likely poster boy for freedom of expression. That honour would have to go to the Marquis de Sade, defended by Simone de Beauvoir and later, Angela Carter, the latter of whom nearly eulogised him as a force for feminism. Having read these when I was an impressionable 20-year-old, I decided that if said feminist luminaries could read Sade, so could I. I can still recall the size of the grin on bloke behind the counter at Smith’s Bookshop as he handed this sweet young thing a copy of the most violently filthy writing ever penned. For the three of you who don’t know, Juliette celebrates and glorifies serial s-xual murder. I could only read it to the first deaths before deciding that I didn’t like what it was doing to me. Ever since then, I’ve not been quite as rabidly anti-censorship.
Certainly there are some materials that at least teenagers should be protected from. Maybe, instead of being blanket anti-censorship, people ought to realise that censorship defines the boundaries of a society’s collective morality, and that it’s only a problem when the moral boundaries move faster than social structures, censorship boards and the like, can keep up. Perhaps that’s what’s happening with Bill Henson — we are collectively moving to a less liberal society, but the Office of Film and Literature Classification is still stuck in the more liberal 1980s and 1990s.

One term Prime Ministers:

John Bannon writes: Bernard Keane (and/or Mike Steketee) claim Scullin (Crikey yesterday Item 2 ‘Can everyone calm the fudge down about the economy), hapless inheritor of the Great Crash, was the only one-term Australian Prime Minister. Assuming this means a PM winning an election from opposition and being defeated at the next one, then we have to add Andrew Fisher (1910-13) and Joseph Cook (1913-14 – Fisher defeated him in the first double dissolution election and was sworn in six weeks after WWI began; he was as lucky as Scullin and Curtin). Only Billy McMahon failed to win his first election as an incumbent, and Menzies (in his 1939-41 incarnation), Holt (in circumstances beyond his control?) and Gorton failed to capitalise on a first victory by surviving to fight for a second.

On borrower friendly laws:

James McDonald writes: Bernard Keane (Wednesday, item 11 Albrechtsen recycling right wing drivel’) says the US Democrats are not to blame for making borrower-friendly laws, and mentions “the fact that early-exit fees are an anti-competitive rort entirely unrelated to the ‘cost’ of borrowing long-term money”. It’s not so simple. Some of those US laws, such as full income-tax deductions for mortgage interest and almost all other ongoing expenses of owning a home, show a commendable support for American home-owners. But they also paint a picture of a society regarding home-ownership as an almost fundamental right, and one to which the banks have been expected to contribute, even if it’s at their own expense. Laws restricting early-exit fees allowed borrowers to lock in very long-term fixed rates during low-rate periods. This meant that when rates went up, borrowers did not refinance their loans, but banks still needed to borrow money from depositors, sometimes at higher rates than they were receiving from many of their home loans, just to stay liquid. This made banks a de-facto part of the welfare system, and forced them to come up with imaginative ways of funding the American dream, or else slowly bleed to death without cashflow.

But the biggest mistake was made not only by the government, the banks, and the anachronistic ratings agencies, but by all of us who assume property prices to be a bedrock security we can borrow and lend against on a large scale. Suppose you own a home which is now valued at a million dollars. The fastest-growing component of that value is the home’s scarcity – the fact that most of the best spots are already taken and are not for sale. Ten such properties? Great, you’re worth ten million dollars. A hundred? Well, if they are geographically concentrated, you can’t sell without changing the scarcity value and running into a liquidity problem – but until recently that didn’t stop you borrowing against the full hundred million. Of course other asset classes have liquidity limitations too, but most types of security, at the end of the day, are valued based on discounted forward earnings.

We talk of property “growth” and “fundamentals” when we really mean supply-demand mismatch; the only valid fundamentals for property are rental yield and development (growth) potential. We fool ourselves. So when an entire financial system is based on a very large and very concentrated portfolio of homes, each of which is valued with an underlying assumption that its neighbors aren’t for sale – that is a great big bubble. In Australia we’ve been so busy booing the Americans for causing the crisis, we’ve failed to do a sanity check on our own obsession with property “growth” and “fundamentals” and our beloved practice of borrowing against home values – with or without any complex tranched securities. It’s very easy to throw around blame, but we’d better look to our own assumptions and practices before we find that we too have built a great big pie in the sky.

The demise of newspapers:

John Taylor writes: You have had several items in recent days about the demise of newspapers in their printed on paper form. To all those who suggest that reading a computer generated newspaper will replace the old format, I have one question: when have you ever looked at an advertisement on your website newspaper? If anyone says they have I suggest they are gilding the lily. Nobody reads online advertisements and eventually this will be recognised by the adverting industry, who will take their business elsewhere: “paper” papers. 

On the Republicans:

Francis Johns: “The Palinites would disagree, but it seems clear that America likes the calm joined up thinking better than the scattershot attacks.” (Crikey yesterday Item 6 Rundle08: Grit your remaining teeth John and get on with it) WTF? Hasn’t Rundle just spent the last month bellyaching about how the Democrats lack the aggression of the Republicans? Now that the polls show the Obama approach is paying off he’s changed his tune.

Peter Fray

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