Capitalism and learning nothing from the sub-prime meltdown:

John Goldbaum writes: Re. “Climate Change 1: Wrestling the debate back from Wall St” (Friday, item 1). There is far too much misunderstanding of the meaning of capitalism. Capitalism is simply the system of raising large amounts of money from those who have it in smaller amounts and deploying the aggregation of funds into worthwhile investments. It can operate in both a democracy and in an authoritarian state, but it seems to achieve higher growth rates in a dynamic democracy.

There is no such thing as “extreme” capitalism. That is simply a neologism for laissez-faire capitalism as opposed to government-regulated market capitalism. Crises invariably lead to the weak being consumed by the strong but there is always a remedy. When the crisis has passed, governments can break up monopolies using anti-trust laws. This is precedented. Of more interest, is the squealing of Australian bankers and executives concerned that their salaries will shrink. They defend their excess on the basis that they have to maintain parity with world-wide excess.

The fallacy in their argument is that it is not just Mr Rudd who is criticizing their salaries and bonuses. The targeting of greedy executives began in America. Australian executives will have no choice but to follow their salary packages lower.

Greg Angelo writes: World financial markets are in turmoil and barely a week after the Australian government provided indemnities in relation to bank deposits, the Westpac Banking Corporation is behaving in a grossly irresponsible manner. I nearly choked on my Weeties when I saw that its subsidiary RAMS is offering no deposit loans using a government First Home Owner Grant and of the State government First Home Bonus Grant as the sole requirement for a deposit for a housing loan.

Through this process they are encouraging financial commitments from individuals with no savings history as might be represented by the borrower having a significant deposit. Have we learned nothing from the sub-prime meltdown in the United States? Is my understanding that many financial institutions around the world have a shortage of liquidity and that rapid expansion of housing loans by financial institutions can only be financed by on balance sheet assets arising from customer deposits or from off-balance-sheet borrowing, generally from offshore.

It would appear that the flight to quality of Australian deposit to the trading banks, backed up by government indemnity, is now providing Westpac with the opportunity to flood the market with low deposit loans which must be of a higher risk because of the savings pattern of the potential borrowers. This supports the assertion that bankers have no shame.

Moira Smith writes: Re. “Rudd’s plasma and pokies package” (15 October, item 1). It is insensitive and insulting for Bernard Keane to dismissively describe the Government’s latest financial initiative as a “plasma and pokies package”. Look at who the package is targeting – those who are on welfare long-term and probably forever; who don’t have the ability to save but who still face household and medical bills and the need to replace appliances and furniture. I doubt a new thinner TV or a night at the club will be among their priorities. Not all pensioners are stupid, ill-educated idiots. In general we are poor through no fault of our own.

Ben Aveling writes: You may remember Loki Carbis’s prediction made in Crikey that: “It’s highly unlikely that there will be a meltdown of an American nuclear power plant between now and election day — but if there is, John McCain will have a much harder time getting out of than Republican presidential candidate Arnie Vinick did.” Technically, it wasn’t a literally nuclear meltdown, but figuratively speaking, the financial meltdown is pretty nuclear. And indeed, John McCain is having a very hard time getting out of it. Perhaps if he adopted Vinick’s strategy: tell the truth.

Australian history:

Stephen Martin writes: Jocelynne Scutt (Friday, comments) speaks of Aboriginal civilisation extending back 60,000 years. Certainly Aboriginal society and culture extends back many thousands of years, possibly even 60,000 years — but civilisation? My understanding of civilisation is from when humans moved into towns (latin: civis) and started to develop complex social relationships; possibly about 10,000 years BP in what is now known as the Middle East, from where it expanded over the eons. It does not denigrate Aboriginal culture to be factual. After all the inhabitants of the British Isles and Europe were uncivilised barbarians until comparatively recent times.

Michael Kennedy writes: I presume that Ms Scutt is suggesting that, apart from Australia, the remainder of the world was unpopulated (terra nullius). I would’ve thought that Africa (from whence I recall archaeogenetics shows that the genus homo arose) has a longer history of “civilisation”. In fact, most places between Australia and Africa probably experienced a longer period of settlement/civilisation, or did Qantas fly direct in those days? I also thought that, posited by achaeogenetics, Oceania (including Australia) was not settled until about 40,000 bce about the time Haplogroup K(M9) arose. I also suspect that Ms Scutt is confusing “colonisation” with “civilisation”. Alternatively, is Ms Scutt suggesting that we move from “out of Africa” to “out of Australia”?

Airbus:

Magnus Vikingur writes: Re. “QF 72 plunge: Wild ride but nobody died” (8 October, item 7). I’m flying Sydney/Perth in a couple of weeks. If it’s an Airbus I’ll run screaming from the departure gate and grab the next Taxi home. I wonder if Qantas will refund my ticket if I give my reason as being terrified of Airbus. I don’t think so.

Another James Packer?:

Ken Borough writes: Re. “Can the Murdoch and Fairfax families support their debt laden public empires?” (16 October, item 3). In Stephen Mayne’s item he wrote “Why not a gesture similar to the practices of James Packer and his late father, who have always donated their services to various public companies for free?” Are you sure that this is a true statement? The 2007/08 Annual Report of Qantas at page 63 indicates that a one James Packer received a cash FAR of $20,795 for the year ended 30th June 2008 while by comparison he received $118,349 for the equivalent earlier year. There is no mention of the quoted James Packer having donated his services. Perhaps there is another James Packer in our midst!

Oxymoronic:

Geoff Perston writes: Sorry Jim Hart (Friday, comments) but you can’t have it both ways: “anti-religion zealots” has to be oxymoronic surely? Zealots, by definition, were a militant Jewish sect that fought the Romans in the first century AD. Jews are anti-religion? Last time I checked they definitely weren’t, so I’m guessing you meant “atheists”?

Blazing Saddles:

Tony Barrell writes: Re. “Last night’s TV ratings” (Friday, item 21). Glenn Dyer really must stay in more. “Lee Marvin and his horse” in Blazing Saddles? Try Cat Ballou.

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

Save 50% on a year of Crikey and The Atlantic.

The US election is in a little over a month. It seems that there’s a ridiculous twist in the story, almost every day.

Luckily for new Crikey subscribers, we’ve teamed up with one of America’s best publications, The Atlantic for the election race. Subscribe now to make sense of it all, and you’ll get a year of Crikey (usually $199) and a year’s digital subscription to The Atlantic (usually $70AUD), BOTH for just $129.

Peter Fray
Editor-in-chief of Crikey

JOIN NOW