Trust us. We’re politicians and central bankers . Those very same Finance Ministers and central bankers who ran the world’s financial system when it crashed are now telling us that they know how to put things right. Not that they can tell us after their London meeting as the G20 what the recovery plan is yet. Just have faith while they work out a few details, like how to actually deal with those toxic assets of the world’s banks. Not that the American Government calls them toxic anymore I notice. Legacy assets is what the Obama administration now is calling them.

That sounds much more manageable doesn’t it? If you believe that you’ll believe anything! In the year since it became clear almost every major bank in the United States is actually insolvent because of those “legacy assets”, the US Government has not been able to devise a rescue plan that the country can afford. The once mightiest nation in the world is now reduced to pleading with an authoritarian Chinese regime to keep lending it the money to survive while they face up to the harsh truth that there really won’t be an answer other than completing the nationalisation of some key banks and allowing the others to go broke.

Even then the final solution will probably have to involve running the printing presses full speed to devalue the currency so that debts to the Chinese and Japanese can be repaid with dollars worth just a fraction of what they are now.

It’s not a cheerful prospect unless you are inclined to believe Federal Reserve Chairman Ben Bernanke is correct in saying that America’s recession will end “probably this year”. Overnight the US stock market did not give this Bernanke optimism a resounding endorsement as scepticism replaced an early enthusiasm.

I am very much in the school that believes politicians and bankers are far too terrified to tell us people the truth because of a misguided belief that we could not cope with it. But eventually the truth will out and the resentment of the rulers will just be greater because of the sense of betrayal that will accompany it.

The odds on an end to recession . What are the odds on US Federal Reserve Chairman Ben Bernanke being right in saying that the recession will be over by next year? The Crikey Recession Indicator, based on the market at the Intrade prediction market, is that the probability of there being two quarters of negative growth in 2010 is 45%.

One small Rudd victory . Prime Minister Kevin Rudd has had one small victory in his effort to give Australia a voice in changing the world’s financial system. The Australian Prudential Regulation Authority (APRA) has been invited to become a member of the Basel Committee on Banking Supervision, the global standard-setting body for banking regulation. The core mandate of the Basel Committee is to strengthen bank regulatory practices and standards worldwide. The Chairman of APRA and the Governor of the Reserve Bank will npw be included in an enlarged governance body of the Committee.

Spun out on alcopops tax . The Labor Government is being penalised for trying to be too clever by half in its approach to the alco pops tax. There’s no doubt that in its first budget it wanted to disguise a tax rise behind a concern about binge drinking but the Greens and Nick Xenophon saw through it. The spin in this case has hurt rather than helped.

Not sorry about emissions trading defeat . With the world economy declining rather than growing it is difficult to see why postponing the introduction of an emissions trading scheme until after the Stockholm conference will be any great tragedy. The sad truth is that the world recession is doing more to curb CO2 emissions than any curb planned by any government. Team Rudd will not be disappointed if its first legislative attempt is thwarted in the Senate. It will be able to say it tried without paying the price of actually doing anything.

Sunday Telegraph editor answers a charge that no one made . Sunday Telegraph editor Neil Breen is sticking by his Pauline Hanson pictures but the way he is doing so is nothing more than a joke. Last night he was on television explaining why he was sure that the photos were real. The newspaper’s photograph experts, he said , had checked the images using computer software before they were published. ”

You can see changes in the pixels … if they’ve been doctored, and they weren’t doctored,” he said. Yet proving that no one had interfered with the pictures does not prove who they are pictures of. That is still the big question the Tele has to answer.

Peter Fray

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