In the hands of the communist capitalists: It is a bit strange to think that the immediate fate of the prosperity of your country is in the hands of the Communist Party rulers of an almost, sort of, capitalist country. How Australia fares during this financial upheaval is well and truly out of our own control. The United States has done the damage and the Europeans are compounding it and nothing we can say and do will influence any of them. Perhaps the fact that we have an Australian Prime Minister who can speak to Chinese leaders in their own language is an advantage after-all because theirs is the country that will determine the immediate future of our country. If China keeps growing at around 10 per cent then we will continue to be insulated from the worst of the recession that is about to strike the rest of the western world. If the Chinese leaders make the wrong decisions then we will be going down the gurgler with them.
Praised be the bureaucrats: When I look at the happenings around the world with this financial crisis I cannot help thinking that Australia’s rulers have done a pretty good job over the last decade or so in not succumbing to the worst of the free market nonsense that has caused the devastation in the United States and Europe. Our governments since the early 1980s, Labor, Liberal and now Labor again, have managed to make ours a more competitive economy without falling for all the neo conservative rhetoric. Perhaps most important of all was resisting the call for government to allow our big banks to become monster banks.
The thing that saved our bankers from the same major mistakes of avarice that have caused the mighty to fall elsewhere was the ban on mergers by any of the big four. Their managers all wanted to become giants so they could strut on the world stage and claim even bigger bonus payments but good and sensible public servants kept saying no and successive Treasurers actually agreed with them. Australian banks were simply not big enough to participate in the stupidity that has caused the American and European bank crashes. Praised be the bureaucrats!
Australian banks not alone: It doesn’t really make you feel any better if you are paying off the mortgage, but Australian banks are not alone in keeping part of a reduction in official interest rates for themselves. The same thing has just happened in Canada as this report in the National Post shows: