The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Saturday, December 18, 2010

The Australian's war on everything

Yes, The Australian seems intent on imitating a non-comedic version of The Chaser, with its ‘war on everything’. This weekend it returns to its war on the Press Gallery. A few quick observations.

First, The Australian appears to spend more time defending its own actions in pushing specific agendas and ideological narratives than any other serious media forum on earth (and I don't include the Global Times in the serious media camp!). This is revealing. It betrays a sense of insecurity. The Australian is clearly not comfortable in its own skin if it has to dedicate so many column inches to rationalising its own decisions. One might ask why...

Second, The Australian's crusade today is littered with logical inconsistencies. The editorial runs a familiar line, criticising both the Government and the Press Gallery for being out of touch with popular mainstream views on climate change and asylum-seekers. Yet in literally the same breath, The Australian assaults the Government (and the Press Gallery) for its 'vacuous' reaction to extraordinarily strong public views on the equity of our banking system. Sorry, but I am confused. You punish the government for listening to the vast majority of consumers on the question of fairness in a taxpayer-backed banking system, but concurrently punish them for ignoring a far less clear majority (minority?) on global warming and asylum-seekers. These are terribly weak intellectual foundations on which to base criticisms of others, and on which to justify your own behaviour.

This inherently contradictory logic is also reflected in Michael Stutchbury's column today. Stutch has relentlessly railed against any reforms to our banking system even though moral hazard and too-big-to-fail—two issues that even the normally incumbent-friendly RBA concedes are enormous problems domestically and overseas—are the single most topical policy questions in contemporary centre-right economics. (Indeed, the RBA recently argued that the too-big-to-fail dysfunction also affects smaller Australian deposit-taking institutions.)

Yet today Stutch trashes the Treasurer's banking reforms, many of which involve profound policy changes, such as establishing a listed exchange for the trading of government debt securities, making permanent the taxpayer guarantee of bank deposits, permitting the development of covered bonds, and getting Bernie Fraser to study what technology architecture is needed to foster true bank account portability.

One of Stutch's chief criticisms is that this is piece-meal policy on the fly that did not involve a coordinated inquiry by the key regulatory authorities. What Stutch does not tell his readers is that this is exactly what Joe Hockey, David Murray, myself, Ian Harper, and countless other leading academic economists, have repeatedly called for.

Stuch never engaged with Hockey's serious reform proposals because doing so would have precluded him from making these jejune caricatures. The only local media organisation that has gone missing-in-action on financial services reform—which remains the signal global challenge of our time—is, ironically, The Australian.

Here it is sobering to recall that the many sovereign debt crises we confront today came about because governments were forced to bail-out private banks and undertake extraordinary fiscal interventions to support economies on the brink of collapse care of the credit crisis. The socialisation of private sector debt has created a quite foreseeable public debt crisis. The Australian would do well to bear that in mind.

Postscript: See my follow-up analysis of The Oz's doomsday code.