Home > Economics - General, Media > Meltdown continues at the Oz

Meltdown continues at the Oz

October 22nd, 2008

The Australian has long since ceased to be a serious newspaper. Its opinion pages are devoted to recycling talking points from the US-centred rightwing parallel universe (some more serious conservatives have described it as the “conservative cocoon”, a term coined by conservative blogger Ross Douthat, recently elaborated here). Its political writers, who straddle the gap between news and commentary have long been in the tank for the conservative parties or for particular conservative politicians. Its war on science (Tim Lambert is now up to instalment XXII and he’s not comprehensive) has long passed beyond the point of absurdity.

Even so, I don’t think I’ve seen a front page headline as brazenly defiant of the facts as today’s. Having claimed, falsely, that the Reserve Bank opposed the government’s deposit guarantee, and been put down, mildly but firmly, by RBA Governor Glenn Stevens, the Oz doubles down and announces a “backflip” on the basis of the marginal adjustments discussed here yesterday.

For the correct story, you have to go the Fin (paywalled unfortunately). While the Fin is just as rightwing as the Oz on most issues, its readership consists primarily of businesspeople who need accurate information, not delusional rightwingers who need their prejudices confirmed. From the Fin it is clear that the Bank pushed for an unlimited guarantee (for much the same reasons as given here) and that it was Treasury that initially wanted the silly $20 000 limit.

The Oz is now essentially worthless as a source of information. Some individual journalists are still pretty good, and articles with their bylines are worth reading. But if their weather report predicted sunshine, I’d pack an umbrella, just in case.

Update The Oz goes for the trifecta, despite their claim that the RBA opposed an unlimited guarantee now being denied outright by both Glenn Stevens and Ken Henry. They have a document showing that the RBA wants to charge wholesale depositors directly for the guarantee and using the term “cap” to describe the amount that would be used to distinguish between wholesale and retail. This kind of ex post tweak is unsurprising, but still news and if the Oz had stuck to that a couple of days ago, they (and the Opposition) would be in less trouble now. Instead they have beaten it up into a full-scale war with the Government, Treasury and RBA which is going to cost them a lot in the long run.

To restate the point, the original announcement said nothing (at least nothing I saw) to indicate that the government guarantee would be free, and deposit insurance schemes normally involve a premium. In due course, I expect that the government will charge the protected institutions for the guarantee. It’s turned out to be necessary to move more quickly at the wholesale level, but this is a step in the right direction. The silly pointscoring of the Opposition (and its representatives in the press) is grossly irresponsible.

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  1. Michael of Summer Hill
    October 23rd, 2008 at 10:27 | #1

    John, I just would like to say Turnbull’s arguments as to whether the fee for service by regulatory agencies is a “tax” has merit for the set levies are there to cover supervisory costs and for this reason I am in favor of such a system.

  2. wilful
    October 23rd, 2008 at 10:41 | #2

    I can’t believe Turnbull is running a line about the injustice of taxing million dollar deposits. Hmm, that one will really resonate, wont it?

  3. observa
    October 23rd, 2008 at 11:04 | #3

    This economic crisis was the first big test of the Rudd Govt and when The Oz asked some serious questions it set the hares running and exposed some deep deficiencies in the Rudd style, not to mention exposing the whole public sector belief mantra.

    Everyone from Terry McCrann to Bob Randall is jumping all over this train wreck of incompetence/confidence now. It’s clear Rudd loves the grand gesture and big promises only to move on from the messy details in its wake. We now know he trotted out the $10.4 bill impetus plan without any advice or modelling. Fine, if that’s the way he wants to play, but then he can’t fall back on Treasury and the Reserve when his King Canute grand gesture on deposit guarantees washes all over him. It seemed like a good idea at the time doesn’t cut it with inspiring financial confidence at a time when it’s so desperately required. His ego is getting in the way of sound policy and confidence building now and worse than that, Labor has now descended into the politics of envy and class warfare with its hasty, pasting over the cracks, ‘tax’ on million dollar deposit guarantees. It hasn’t taken them long to fall into bad habits when they’re under the pump. The honeymoon is over, except for the usual acolytes.

  4. observa
    October 23rd, 2008 at 11:11 | #4

    Oh and there’s nothing surer than the hue and cry will start up over the inevitable anomolies in taxing $1mill deposits, instead of the level playing field.

  5. October 23rd, 2008 at 11:45 | #5

    Observa – spoken like a true “Australian” reporter.

  6. October 23rd, 2008 at 12:14 | #6

    so many words, about such a trivial subject.
    Taking your words to heart, I’ve deleted the rest of your comment, Al

  7. observa
    October 23rd, 2008 at 13:24 | #7

    The last bastion of the politically inept- Blame the meeja!

  8. October 23rd, 2008 at 13:39 | #8

    Interesting article about this issue on Crikey by Bernard Keane.

    None of that matters much at The Oz. This is about attacking the Government regardless of the facts – and regardless of how much it makes them look like C-L-O-W-N-S.

  9. gandhi
    October 23rd, 2008 at 14:09 | #9

    This is all about who controls the discussion.

    Let’s go way back to March, this year, when Glenn Milne was attacking Ken Henry in the Oz. There was only one reason – Henry had publicly contradicted Moneybags Turnbull the week before:

    “I refer to recent claims that the Treasury recommended to the Government that it nominate a specific dollar figure in the Government’s submission to the Australian Fair Pay Commission on minimum wages,” Henry said carefully, without referring directly to the shadow treasurer.

    “These claims are false.”

    Then two months later there was Ken Henry’s opposition to the selection of US neocon favourite Robert Zoellick as World Bank President. Peter Costello did a quick backflip on that one, but Turnbull knows who butters his rightwing bread.

    Uncle Rupert and friends.

  10. gandhi
    October 23rd, 2008 at 14:37 | #10

    Sorry, that last bit didn’t come out quite right:

    “Peter Costello did a quick backflip on that one, but EVEN Turnbull knows who butters his rightwing bread. Uncle Rupert and friends.”

    I think Turnbull is angrily trying to smear Henry’s reputation and force him out of a job. Not a very responsible thing to do under the present circumstances.

    Let’s face it – the rightwing today is just a political front for the global business community, including Murdoch.

    Perhaps once upon a time there were ordinary people who really believed in lies like “small government”, “family values”, the merits of “privatisation” and “trickle-down economics”. Not any more.

  11. kymbos
    October 23rd, 2008 at 16:31 | #11

    Trying to predict the date of a bursting property bubble is like trying to predict the day of someone’s heart attack – there are very few circumstances in which it is possible.

    Keen got a lot right about this collapse, and it’s fascinating to watch criticism of him for it, by both economists and the economically-illiterate.

  12. Ikonoclast
    October 23rd, 2008 at 20:36 | #12

    Where I work I note that among hundreds of workers there is never a newspaper in sight at any time. On the train people read books, listen to ipods, talk on mobile phones or to each other or look out the window. Again there is scarcely ever a newspaper in sight except sometimes that rubbishy free “Metro”. (This is Brisbane.)

    I’d say the newspaper is about to go extinct. Certainly the Australian was rubbish last time I bought it many, many months ago. It sounds like it is even worse now if that is possible.

  13. observa
    October 23rd, 2008 at 21:23 | #13

    More newsdumps deleted

  14. October 23rd, 2008 at 22:49 | #14

    Observa’s self-interest is showing. Defending “speculative journalism”, touting the high-roller’s room as needy of protection from the risk/return equation they not only created but have unevenly profited from (until now).

    Observa’s gold interests are suffering, Murdoch’s shills aren’t providing any traction and thus average citizens are supposed to rise up in anger to defend those million dollar deposits in speculative/overleveraged/greed driven/usurious betting accounts for tax-payer protection. Obviously such “investments” should be given a 150% tax deduction to stimulate the much neglected lardy side of the Australian economy.

    There must be a kind of Godwin’s Law (perhaps “Murdoch’s Law”?) that if you quote a Murdoch sourced article you automatically lose the debate?

  15. El Mono
    October 24th, 2008 at 01:07 | #15

    #62 I brisbanes defence the Free MX is aggresivly given out and the “Here’s looking at you” section where people sms love messages to other commuters would entertain anyoe from any city

  16. October 25th, 2008 at 00:43 | #16

    The Australian may not be a serious newspaper, but let’s acknowledge that it, nevertheless, remains a highly effective privatised propaganda arm for the Bush regime and his co-thinkers in this country.

    By misreporting the election outcome in Miami in 2000 it made possible the subsequent stealing of that election by George Bush.

    Since then it has got us into the Iraq War and prolonged the life of the abominable Howard Government.

    Happily, its propaganda campaign to back Iemma’s privatisation of NSW electricity failed. My article about the misreporting of that issue by the Australian and other newsmedia, “Media contempt for facts in NSW electricity privatisation debate” of 18 Sep 08 may be of interest.

    I am also concerned that so many on the News Limited payroll are given air time on the ABC these days to further propagate its misinformation. Amongst the latest was Dr David Burchill who appeared on ABC Radio National’s National Interest to give what sounded like the News Limited spin on NSW politics in recent months. Others include Greg Sheridan, Paul Kelly and Phillip Adams. I made a complaint about this on the National Interest guest book recently.

  17. Alanna
    October 26th, 2008 at 00:01 | #17

    Quiggan writes

    “The Australian has long since ceased to be a serious newspaper. Its opinion pages are devoted to recycling talking points from the US-centred rightwing parallel universe (some more serious conservatives have described it as the “conservative cocoonâ€?, a term coined by conservative blogger Ross Douthat, recently elaborated here).

    I quite agree. Its so obvious that Australia is absolutely devoid of any unbiased media coverage – its rather disturbing, particularly the Australian. You wonder who owns it and who calls the shots – its atrocious for its extremism. Its like being hit over the head with a sledgehammer.

  18. observa
    October 26th, 2008 at 12:07 | #18

    Megan, et al, if you don’t understand what it’s all about I’ll let this bloke explain it to you-

    No you won’t. Please take another 48 hours off, and don’t post any more links to blokes who explain it – JQ

  19. observa
    October 26th, 2008 at 12:30 | #19

    The hypocrisy of leftist bank bashers down the years, with their response to this massive, implicit handout to banks and their shareholders, beggars belief. If our leadership seriously believed there was a threat to the financial system and fiat money and we collectively as taxpayers might have to pick up some of the tab, then it makes little sense to anoint winners and losers, a priori.

    As I outlined before, it makes more sense to offer Govt deposit insurance rather than a Govt guarantee. That makes the depositary institutions pay for the privilege, thereby levelling the cost of raising capital and at the same time setting up the taxpayer to have first call on any equity up for grabs in the event of an institutional failure. We need to demand that our leadership ditches their egos and backtracks on this current stupidity and pronto.

  20. observa
    October 26th, 2008 at 12:33 | #20

    Alright John I should have quoted the bloke, but thought it was relevant to the point about the inevitable hue and cry I predicted.

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