The war on greed (and exec salaries):

Marty O’Neill writes: Re. “Kevin Rudd’s War on Greed” (yesterday, item 5). I find it very rich for Malcolm Turnbull and others (the spokesman for the Australian Shareholders Association comes to mind) to call on shareholders to peg back executive salaries. The truth is, that in this country, small shareholders have absolutely no power to influence the running of the company in which they have shares: the directors of Company A buy shares in Company B. Because of the volume of shares, Company A gets positions on the board of Company B. Both sets of directors make sure that all directors and senior executives are extremely well paid; Company B has shares in Company A and so repeats the process — the same with Companies C, D, E F, etc etc.

It is a self-perpetuating oligarchy run by a small cabal of men and women in this country, serving on the same boards, who continue to make sure they are well protected, while the fortunes of both ordinary shareholders and consumers suffer. It is within the power of the Federal Government, if they so choose, to change the corporation laws to outlaw this practice. It is also within the Federal Government to make a further change: make all directors personally responsible for the debts of the company. Maybe then — and only then — will there be a measure of integrity and justice in Australian corporate behaviour.

Simon Rumble writes: Listening to live interviews of politicians has become really tedious with the new government. Instead of actual answers to the questions the interviewers are asking, we get endless repetition of the same key sound bite, as parodied on The Chaser last year with Garrett’s “short and jocular conversation”. Yesterday morning’s ABC Newsradio interview with Assistant Treasurer Chris Bowen is a good example, “Australia’s financial institutions are well run and their executives are well remunerated” gets repeated half a dozen times without any extra light being cast on what that means, and we kept getting the “risky behaviour and outrageous remuneration”.

And it’s not just the juniors who aren’t being allowed to go off-piste. Even the Ruddbot seems to be talking from a few key sound bites without being able to weave them into a conversation. I’d love to see more interviewers prepared to say “you’ve already said that, how about answering the question” a bit more.

Rowen Cross writes: Rudd’s big talking on executive salaries is reminiscent of his “clamp down” on fuel prices and grocery prices. No doubt it will end up being all talk and no action. What’s the bet we end up with “Salary Watch”?

John Goldbaum writes: Who is the real Kevin Rudd? For ten months, he was Mr Masterly Inactivity — all talk, no action. All of a sudden, this month, he’s become Action Man — activity bordering on hyperactivity, but, so far, no sign of attention deficit.

The death of capitalism:

David Havyatt writes: Re. “Death of capitalism pronounced too soon” (yesterday, item 26). David Howarth is perhaps confusing his capitalism with his democracy. The tendency for politicians to “ensure markets work and welfare is maximised around the middle and upper levels of the bell curve, where most voters either are or aspire to be” is, after all, the ultimate claim of public choice theory. And if we analyse democracy we will note that in its relatively short life (230 years in the US, more like 150 years elsewhere), ideology has been something elected representatives respond to (along with the voting public) not lead.

As to the end of capitalism, I’m actually far more of a mind with Schumpeter than Marx. Capitalism won’t fail because of its inherent weaknesses but its inherent strengths. Capitalism requires ever bigger firms (or accumulations of capital) eventually driving real entrepreneurship out of business, relying on a managerial class of incompetents and feeding an intelligentsia not committed to the market model. Schumpeter famously said “Can capitalism survive? No. I don’t think it can” before going on to describe aspects of capitalism most often quoted by champions of capitalism including the phrase “creative destruction” and a defence of monopolies. A recent intellectual biography of Schumpeter (Prophet of Innovation) claims this statement and a subsequent defence of socialism is “ironic”. The irony however escapes me.

But we aren’t yet at the end or even the beginning of the end, but in the words of the Beatles Tomorrow Never Knows at the end of the beginning. That doesn’t mean the end is far away.

Reality check on stimulus package:

Jim Matthews writes: Re. “Rudd’s plasma and pokies package” (Wednesday, item 1). I read all the snide comments about buy shares in Harvey Norman and Aristocrat but my experience have been somewhat different, When the news came through that we are going to get $1,400 lump sum payment, I rang a friend to celebrate the news, and her response was, “good I will be able to re-schedule the appointment with the cardiologist that I had to cancel because I did not have the money and I can get two new tyres for the car.” So these glib summations that all this largesse will be frittered away on trivial excesses are somewhat misplaced.

Fixing the economy and Crikey’s sins:

Gary Morgan, executive chairman of Roy Morgan Research, writes: Re. “Turnbull’s weasel words to the nation” (yesterday, item 16). Read what we have been saying for months. There is no hindsight in what I said yesterday:

Last week’s massive falls in the Australian share-market have frightened Australians. Now 49% are expecting bad times for the Australian economy over the next year — the highest number since the recession of 1991-92.

Only 26% of Australians say that now is a “good time to buy” major household items — the lowest mark since 1991-92. This is especially worrying for Australian retailers given the importance of the Christmas shopping season to their profitability and continued viability.

This week’s Rudd Government stimulus package is a good start, but more is needed now. It is imperative for the Federal and State Governments to stimulate business with tax cuts otherwise both unemployed and “underemployed” will jump from its already high 1.319 million.

In addition the Reserve Bank must cut interest rates another 1% at each of its next two or three monthly meetings. It was a mistake for the Reserve Bank to continue to raise interest rates from last November, as we said in our paper — Reserve Bank turns up the heat on Australian workers.” (Released November 9, 2007) “

These important measures will prevent the “World Financial crisis” sending Australia into a painful recession. Kevin Rudd needs to provide real leadership or risk leading a one-term Government — the first since “Depression-era” Prime Minister James Scullin.

Malcolm Turnbull did say months ago interest rates should not have been put up — unfortunately he didn’t say why — “underemployment” needed to be added to the unemployed! The media at the time showed their bias using “Sins of omission”. Turnbull has not however so far acknowledged the Howard Government misled the electorate on unemployment and “underemployment” — he needs to and “take the flack” — then the debate on how to fix the economy is “on”!

Our thoughts are well documented in my paper given September 10, 2008 — which you should have published; unfortunately Crikey joined other the other media showing bias using “Sins of omission“. You need to look at what Hayden did when Treasurer, too late to save Gough but the saving of Australian business.


Stephen Koukoulas, Global Strategist, TD Securities, writes: Re. “Rory Robertson a lone voice on why inflation is not the issue” (yesterday, item 24). Unfortunately, Glenn Dyer is not on the distribution material that TD Securities prepares on the Australian economy. If he was, he would be aware that it was TD Securities and not my friend and competitor, Macquarie Bank’s Rory Robertson, as “a lone voice” on the inflation issues and recession risks in Australia.

On 11 March, seven long months ago, we circulated our view, “Australia: From Boom to Gloom”, where we outlined a case for interest rate cuts before the end of 2008 and with it, a fall in the AUD. At the time, the market was pricing in one or two more hikes. We followed up on 21 April with a view that suggested “within a year of starting the rate cutting cycle, there could be 200bps of easing and at the low point of the cycle; the cash rate could be around 4.5%”.

On 2 June, we noted, “The RBA remains on track to deliver an interest rate cut during the December quarter. The first move may be a 50bp cut in line with the start of previous easing cycles.” On 11 June we wrote an article comparing the current period with the 1990s recession, while on 21 July we noted that Australia was “on the cusp of a domestic recession”. We published plenty of other material to this end which those who follow the debate will know.

Our clients who followed our calls made good money with their strategic investments. This is not to say we have been perfect in picking the nuances and vacillations in the economy and markets, and we certainly did not think the RBA would cut 100 basis points earlier this month — we were plainly wrong. Indeed, we have been and still are shocked by the speed and severity of the move towards a global recession, but we remain very much on the gloomy side for growth globally and in Australia and have a high degree of confidence that inflation will rapidly slow under the weight of the collapse in commodity prices and global demand.

Unfortunately, I don’t see all of Rory’s work, but from I do see, he is clearly a superior analyst and RBA watcher. I note, nonetheless, that as late as 15 July, just seven weeks before the first RBA rate cut, Rory noted that “The RBA remains firmly on hold” and that “the case for a rate cut is weak, but strengthening”, further that “the first rate cut probably will be delivered in the first half of 2009”. This is in no way a criticism of Rory — just an observation.

That said, he is one of very few in the Australian market to see the nuances in the economy and to move quickly to calling the monetary policy cycles and his views are always worthy of attention. In the current cycle, he wasn’t and isn’t a “lone voice”. And I will add Glenn Dyer to our email list.

Australia a good target:

Michael James writes: Re. John Goldbaum (yesterday, comments) who wrote: “Next stop is the bond market crisis. The US dollar is not worth what it was. But the Asians can’t send their gunboats to the US to reclaim what they are owed because Uncle Sam has nukes. They will have to settle for not throwing good money after bad.” True, but they are smart enough to do better than that. As soon as a planned slowdown has wrong-footed the US and lowered the price of Australia’s resources companies sufficiently they will snap us up. Not that Australia is big enough to soak up that debt, but we are a good target. And, no nukes!

The global economic crisis:

John Bushell writes: Re. “US exports of economic gloom reaching record levels” (yesterday, item 25). Glenn Dyer’s article on the economic troubles is certainly concerning. The financial contagion is well entrenched in Britain and even the rich are affected as evidenced by this photograph.

Radio National:

David Hardie writes: Re. “The dumbing down of Radio National” (yesterday, item 4). It is one thing for the commercial media to report and even editorialise on the ABCs move away from specialist journalism. However, how of these media outlets will in turn step up their reporting of religion, science, media etc? As a career educator (still practicing in the classroom but mainly in administration now) I am continually disappointed by the mainstream media outlets’ reporting on education stories and I still bemoan the loss of the ABC RN’s Education Report. Ultimately for the commercial media (including Crikey!) bemoaning the loss of specialist reporting it is a case of put up or shut up.

Susie Dunn writes: A lot of — but not all by any means — RN listeners may be older. But there are a lot of us out here and we are used to thinking, acting and voting. We like our news and information by radio and we deserve to be taken into account. Don’t dumb RN down and give the constant repeats a bit of a rest please.

Jim Hart writes: Re. “Decommissioning the Religion Report: Radio National listeners respond” (yesterday, item 18). The discussion about the ABC’s Religion Report is not helped by those muscular non-believers who are glad to see its demise on the grounds that religion is irrational or “man-made hocus pocus”. I am not a religious believer but I am a fan of the Religion Report because it’s about belief systems in general, not just Christianity or Islam or whatever. Whether the anti-religion zealots like it or not, belief systems drive much human behaviour, and to ignore that severely limits our understanding of the world.

ASIO’s poetic side:

Neil James, Executive Director, Australia Defence Association, writes: Re. “ASIO infiltrates the poetic muse” (yesterday, item 7). Jeff Sparrow’s apparent surprise is itself very surprising. One of our greatest poets, the late Michael Thwaites, was a senior ASIO officer for many years including a significant role in the 1954 defection of Vladimir Petrov, then head of Soviet espionage in Australia. Michael entered Oxford as a Rhodes Scholar in 1937 to study English literature. In 1938 he won the Newdigate Prize for poetry and remains the only Australian to have done so.

In 1940 he was awarded the King’s Gold Medal for poetry, following on from such distinguished winners as W.H. Auden and Laurence Whistler. Michael wrote poetry all his life (including when at ASIO) and his collected works were republished in 2004 not long before his death at 90 the following year. Being a poet even got him his job at ASIO. After distinguished war service on a submarine-chaser in the North Atlantic, Michael was recruited from the English department at Melbourne University in 1950 because ASIO’s new director-general was seeking intellectual staff with imagination and developed analytical skills. The same skills Michael later used to great effect for many years in the Parliamentary Library. Michael’s 1980 history book, Truth Will Out: ASIO and the Petrovs, also remains the most accurate and dispassionate account of an incident often misrepresented in ideological mythology.

Finally, Jeff’s description of ASIO as “secret police” is as shallow as his literary research. As in the UK, Canada and New Zealand, and as a fundamental safeguard in Westminster-style democracies, the national security-intelligence function in Australia is deliberately segregated from a police service/force. ASIO is an investigatory and advisory body with no powers of arrest or other policing functions. Moreover, its answers to a Minister and Parliament, and its operations and procedures are also overseen independently by an Inspector-General and an all-party parliamentary committee. Justifiably secret at times to those without responsibility for its oversight perhaps, but a “secret police”, no.

Mark Latham:

Steven McKiernan writes: Re. Yesterday’s editorial. The AFR article by Green Valley’s favourite son is an amazing insight into an ex-pollie compiling his own mixtape. It’s a very “courageous” act for Latho to start talking about polls, climate change and carbon costs when Latho drove the ALP to disaster in a Fed campaign designed to target middle-class aspirational voters. Sometimes politicians are naïve enough to believe their own propaganda. The whole idea of signing Kyoto, IPCC reports, ETS yadda yadda is to finally internalise previously externalised pollutant costs. We can only hope that Mark’s carbon emissions have reduced since giving trips to Hungry Jacks a miss.


Jocelynne Scutt writes: Re. “Putting Australia back into the world of history” (Tuesday, item 16). How on earth can Australia figure from 1901 when we have the longest history of civilisation on the planet, namely Indigenous Australian history from at least 60,000 years ago, and on some counts 120,000 years. Indigenous Australian history predates Roman history by yonks!


Zachary King writes: Re. “Media briefs: Spam bust … Community radio listenership explodes” (yesterday, item 21). Regarding the brief titled “When did Wikipedia become a legit source?” Welcome to the new age pal. I would say it was in 2005 when a study by the pre-eminent peer reviewed scientific journal ‘Nature’ did a comparison of Wikipedia versus Britannica – and Wikipedia won.

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