Souffles rising twice


As the financial crisis has developed over the past year, I’ve been struck by the near-complete absence of any comment on the economy from Peter Costello. He would seem to have all sorts of reasons for commenting, from a desire to defend the previous government’s record, to enhancing his public profile and even, perhaps, contributing to public understanding of the issues and improving policy outcomes.

But, until the last couple of days, there’s been nothing. Now, however, he seems to be talking, and inevitably, this sudden end to reticence is being interpreted in terms of leadership aspirations.

For me, though, the more interesting question is how Costello performs without the Treasury, or even the staff allocated to a shadow minister to back him up. You can make your own judgements on this Lateline interview. My take: Costello performed reasonably well, as you’d expect from a sharp lawyer and Parliamentary debater, and he made some good debating points. But he didn’t give the impression that he had, or was interested in, any deep understanding of the financial crisis or the choices facing the Australian government, and other governments in responding to it.

50 thoughts on “Souffles rising twice

  1. We should judge Costello on his stewardship of the Commonwealths fiscal resources and AUSs financial governance.

    The verdict is still out on this but preliminary findings are hopeful.

    Leave the leadership gossip to the horse commentators.

  2. I agree John, without the apparatus of the Treasury bureaucracy to back him up he sounded out of his depth, especially in comparison to Keating’s performance the previous night on Lateline.

  3. The souffle is rising and Bowen has given us an estimate of how far- $200 billion.

    “Mr Bowen defended the need to provide the government with the ability to raise $200 billion in debt, saying as a percentage of GDP the amount was still much lower than many other countries.”

    My five year old doesn’t need treasury to tell him he will be paying it off for a long time.

    What is the better form of democratic socialism, tax and spend or just borrow and spend?

  4. Did Costello contemperaneously say that the Reserve Bank was wrong in raising Interest Rates in late 2007 when he was still Treasurer ?

  5. “We should judge Costello on his stewardship of the Commonwealths fiscal resources and AUSs financial governance.”


    Even shonky financial planners looked good in the boom.

    Now is the moment of truth and the protagonists (if indeed Costello can be so described) have shown themselves to be shallow opportunists.

    I really thought Turnbull was made of sterner stuff.

    I’m glad that the adults are in charge.

    OT…funny how both the Liberal Party and the Republicans want Tax Cuts. I wonder why that would be ?

  6. “My five year old doesn’t need treasury to tell him he will be paying it off for a long time.”

    You wanna hope that’s true Tony. To have a job that is.

    There is an alternative, but it’s not very pretty.

    BTW, do you have a mortgage ? Debt is a 2 edged sword.

  7. “funny how both the Liberal Party and the Republicans want Tax Cuts. I wonder why that would be ?”

    Dunno maybe its to try and build undistorted incentives for peoples working, saving and spending against the state built distortions of the like of the nuclear weapon of Fannie and Freddie, afterall its a social good to offer help to the poor isnt it?

    The problem being, 1. people are likely to save it at the moment we we need them to spend it. 2, they are likley to spend it on stuff from south east asia, which gets us back to square one. 3,
    we need property land reform first to make sure that wealth does not over accumulate in the ground.

    but their heart is in the right place i suppose, just need to answer the above questions first.

  8. Sarcasm alert on! 🙂

    Ah, the good old Liberal Party, Republicans and their rich friends! Champions of the undistorted incentive! Let me think of a few examples present and past; negative gearing, trust funds, fossil fuel rebates, cheap electricity for aluminium smelters, the superphosphate bounty, tax holidays for business, government money to promote “industries” like sport, racing and tourism.

    Sarcasm alert off!

    But I must admit the Labor party are thoroughly corrupted with the same disease. The distortions in our energy economy are a key reason why a logical energy policy cannot possibly be formulated (with respect to resource depletion, global warming and effective renewables).

    Distorting subsidies not only do damage economic now, they strangle any possibility of dealing logically with new challenges like resource depletion and global warming.

  9. Ikonclast

    I agree about the distortions in the energy economy being a (the) major problem.

    Once it is built it costs less per kwh to run a renewable energy plant than it does to create a kwh by burning fossil fuel.

    The finance costs of renewable energy plants are between 70 to 90% of the cost of renewable energy.

    We have a financial crisis where we need to put money into the economy. Why not reduce the cost of money going into renewable energy with zero interest loans. This brings the price of energy down below current energy costs while saving ghg emissions.

    Put enough money into renewables and we save the planet while fixing the finance system.

    It all seems so obvious. What am I missing?

  10. It all seems so obvious. What am I missing?

    Nothing. Zero interest loans for renewables — great — how about preferential tax treatment as well? We can do it for films, why not renewables?

    If Kev feels the urge to splurge, lets put at least half of it into rebuilding our energy infrastructure, public transport, inter-city rail, etc. The odds are we won’t avoid this recession whatever we spend the money on, so why not spend it something lasting that will set us up for the 21st century?

    Kev, its time to engineer a green bubble.

  11. #Sean said
    “funny how both the Liberal Party and the Republicans want Tax Cuts. I wonder why that would be ?”

    It was started by Reagan. They all loaded themselves onto the aggregate supply curve to shove it down with tax cuts (and in the process wages).

    Then the mighty tax cut became a cure for everything from migraines to gastroenteritis.

  12. Sean#12
    Re liberal party and republicans favouring tax cuts.

    Liberals and Republicans also happen to know that if everything comes as tax cuts, this process shrinks government and reduces the regulatory powers of government letting them get away with blue murder (unchains their greedy hearts)accrue excess surpluses above the fair value of the goods and services they provide plus a modest profit, pay themselves obscene salaries with the excess surplus which they then claim trickles down to the rest of society (be grateful for the casual insecure jobs we give you and eat the crumbs we pay you).

  13. My sad question is this, when the souffle sinks will it just trigger the rise of another one? Perhaps there was a mistake made way way back when we converted the rule of law that freed slaves (natural person) to one which freed companies and enabled them to buy shares in other companies. Maybe that was a mistake….

    I found this post (below) somewhere (which I censored) and it seems to get to heart of the short term focus of managements (and maybe I could ask the question…why should firms be allowed to trade the shares of other companies… maybe they should just be made to buy another business in entirety or sell their own business in entirety). Just a thought.

    “Goldman Sachs is, as far as I am concerned, the cause of almost every single problem in the corporate world. The pattern is as regular as clockwork. A company IPOs. Goldman Sachs buys every single share they offer. They hold them and get the price up nice and high, then might trade some. But they remain owning millions of shares, enough to control the price of the stock. Then, the company starts growing like companies do for awhile… then they slow down, which is entirely natural and INEVITABLE since they saturate their market, etc. What does Goldman Sachs do? They contact the company and let them know very politely that GS is not satisifed with profit. They are not satisfied with increasing profit. They require a certain rate of increase of the rate of increase of profit. If they do not see it, they will dump all of their holding in the company and crash their stock price. What does the company do? They have stockholders to consider, and all the people who have real control have a lot of their personal net worth tied up in the stock. So they do the only thing they can do – they start $#*….. over their employees and $%*…… over their customers, eating up their seed with no thought of the next plantin season, as it were. Eventually the company can’t meet GS’ standards without buying up other companies, so they do and immediately start slitting the throats of employees and their customers too, and it continues as long as they can get away with it, then once GS has wrung them dry of every drop of blood, they sell off the stock, crash the price, and move on to the next IPO.

  14. If as Jack Strocci says: Costello regulation makes us the economic envy of the world….

    Why is the Australian dollar LIBOR rate so high compared to other major currencies?

    Maybe Costello’s role was merely as the carpenter to the gallows. Would you really congratulate the carpenter if the gallows hung an innocent man?

    What was the inter-relationship between Wallis recommendations and the crucifying bank rip-offs perpetrated on the Australian public since the introduction of BankCard (1975?).

    The Liberals and right-wing Labor sold Australia to the global economy. Their supporters now want to have us congratulate individuals such as Costello and Keating for supposedly placing Australia on such a fine road of capitalist financial regualtion, competitiveness and efficiency – even though the Australian people may yet be crucified by debt, company bankruptcies, evapourating dividends, and (possibly yet to cone) weak minimum wage adjustments.

    Instead of praising Costello we should bury him and all his ilk.

  15. Chris
    Im inclined to agree.

    I also read something interesting in Packer’s Lunch – when the share price of onetel was rising it was accounted for by four main Australian entrepreneurs (you can probably guess ??Packers, Rivkin, Adler, Murdochs despite Rich doing the same scam with Imagineering only a decade before) meaning the majority of investors can see a rapidly rising share price but actually not know that its being driven by very few, very rich buyers. Therefore its really not a public company in the real sense of the word…also Rivkin was a massively controlling owner in a number of companies in the 1980s/90s but managed to avoid being declared as majority interest because he purchased the shares in tranches in Australian companies through a variety off shore swiss accounts and shelf companies (beneficial ownership confidential)….and when he was advising subscribers in his financial advice magazine to buy…of course he was selling to the same smaller buyers. When the financially powerful have the ability to manipulate share market prices the share market itself becomes a larger risk and investors may turn their backs on shares on mass (as we have seen).

  16. C W said,

    “Why is the Australian dollar LIBOR rate so high compared to other major currencies?”

    Is it a reflection of the currant political management and its reckless spending?

  17. Oh and Hawke and Keating and others in Labor (Richardson) at the time (1980s/90s) liked to hob nob with these characters while it all went on under their watch while they congratulated themselves (and Keating continues to do so) for his great iniatives to de regulate financial markets. Howard perpetuated the de regulation even further. Execs earning obscene multiples of ordinary wages? Oh – it was just the competitive outcome produced by the “superior” free market and the reward to entrepreneurial spirit.

    It wasnt. It was a distortion building (like a ballooning weakness in an arterial wall).

    All common sense and balance and moderation went out the window 30 years ago with economic policy with each government becoming more and more incrementally lax about their responsibilities for sound governance in the interests of the majority. The misdirection of policy was not restricted to one party or one party view.

  18. I tried watching Costello’s Lateline appearance. Four minutes in, I decided life was too short to waste any more time listening to his self-regarding nonsense. He’s an intellectual lightweight, and a complete waste of space.

  19. John, many may not agree with me but Turnbull is the only bright spark within the Liberal Party who deserves to be leader in comparison to Costello who keeps lamenting over what could have been if only he had bigger cajones than Turnbull.

  20. I know that Costello can often be relied on to provide more witty commentary than considered analysis, especially given he is now a backbencher.

    But one line he used in the interview that I thought was particularly clever was when he pointed out that Rudd had claimed economic policy had been in the wrong direction for the last 30 years.

    As Costello notes, this must mean that Howard, Keating, Hawke and Fraser are all to be blamed in some measure for the current problems. And which PM escapes any blame? – Gough Whitlam, the master economic vandal.

    Very good line. When the Libs were last in opposition, it was largely Costello who destroyed Paul Keating. He could probably do the same job another time.

  21. Costello is not alone in having a superficial understanding of economics. That is true of most politicans on both sides IMO. A politicians skill is in convincing voters that they are capable of running the country, not actually running the country. The better ones hopefully hire skilled underlings to do the running for them. The dangerous ones are so egotistical they imagine they can work it out on their own.

  22. Australians (almost entirely the private sector) as at 30 June 2008 owed loans and placements of $176 billion and had a liability for securities other than shares of $756 billion. This compared to gross assets for Australia as a whole of $8.1 trillion (ABS 5204.0) Net worth $6.0 trillion.
    These numbers have of course changed since the GFC, but it is in such a context that $100b or $200b or even $300b of government debt is not a problem.

  23. Sorry, off topic but got tired of waiting for “Weekend Reflections” to post:

    Rabid, Fundamentalist Climate Change Deniers On The Loose

    ABC News Radio Afternoon presenter John Barron has revealed that this week’s web poll: “Is global warming to blame for the current heatwave in Australia?” was corrupted because a small number of individuals voted hundreds of times. Needless to say, the fraudulent votes all clicked on “global warming is a myth”.

    As at 6.30 pm [6/2/09], 1,832 votes were counted, 6.9% said “yes”, 2.7% said “no”, and 90.4% said “global warming is a myth”.

    When the science is overwhelmingly against you, public opinion has turned on you and reality has melted your flatulent ‘reality’ bubble, what do you do? Well, lie and cheat of course! True to form. What could the deniers be so afraid of?

    PS- when last checked they had it up to more than 3,000 votes! And they had the “Yes” vote in the minority! These people are really devoted to their beliefs!

  24. 30# Megan

    This sort of thing is often organised by the extremist leadership of the young liberals… there has even been suggestions that Barry OFarrell should disasssociate himself from that group (or that group should remove its own leadership). It sounds very characteristic of the sort of fraudulent activity they would organise.

  25. Re: 30# Megan,

    Wot’ll they think of next? Might be little kids having a laff, or, some NSW liberals (I don’t need to say “far right”, as that is implicit in “NSW liberals”) doing something they learnt from a GOP How-to DVD. Tricky little pests, they be. Still, the ABC polls should be a little more robust to attack of the rampant right rats.

    A user registration and ABC account requirement would be the best system for simply reducing fraudulent voters. Users would have to login to their account before voting, thus detecting and junking attempts to vote multiple times.

    Hot’n’horrible here in Murray Bridge today, but it’s weather, in’it, not climate. Guess the previous bag of hot days is weather too. Add up all the weather and wot do you get…

  26. 32#Donald
    I think the ABC should be a little more vigilant as well – with bizarre results like that it schmacks of an organised little email trail doesnt it (pesky little varmints….when they grow up they will look back in horror at their own total stupidity).

  27. “Might be little kids having a laff”

    Seems you may be right. Bolt mentioned it yesterday but he forgot to mention that the poll had been corrupted, unsurprisingly he presented it as “there’s hope yet because 90% of ABC listeners believe global warming is a myth”.

    Must be heady having an ‘angry mob’ at your disposal.

  28. These polls are useless in any informational sense unless the politically motivated uber blitzkreigs (like politics and the branch stackings) get ruled out. Poll pollution.

  29. Peter Costello has been taking lessons from the souffle king. He didn’t bite his lip all those years to give up too easily. Besides he can cruise for a while, try to get more sales of his book and wait for Malcolm Turnbull to implode as he did when he was arguing unsuccessfully for a republic.

    Turnbull alienated his supporters then too. Charming and smart but doomed with the voters. So who will they turn to next?

    Costello must be thanking his lucky stars that he didn’t go to work for a merchant banker; or did he know something that he didn’t share with us when he was treasurer?

  30. “90% of ABC listeners believe global warming is a myth” because it is an myth.

    A mythical global warming extrapolated on the 95% of the globe that doesn’t have temperature readings.

    A myth where a presumed atmospheric composition discrepancy of one micro-millionth is causing cataclysmic changes to the worlds climate.

    The only thing not mythical about global warming is its taxing qualities.

  31. Tony G – utter rubbish that 90% of ABC listerners think global warming is a myth. Its the work of desperates to afflict a poll vote like that.

  32. Tony G: a myth.

    You really beieve that, don’t you?

    Do you have any scientific qualifications?
    Please post any science to support the idea that we should go on consuming unrenewable resources at an ever increasing rate.
    Is Faith in the Almighty Lord Jesus Christ your strongest argument?

    PS- the deniers have been busy over the weekend, it’s now 15,500 or so votes in favour of your ‘myth’ point of view. ‘Spose the people of FNQ and rural Vic may not agree with your absolute certainty on this issue, but you will have an answer for that.

  33. Never mind the typo,

    You really do believe it. You do, don’t you?

    You can’t just be a paid shill, you seem too passionate about this. Why?


  34. Tony G. Stop voting in that poll and call the young lib varmints off! You are on the way to exceeding the readership population.

  35. Alanna;

    I think they have taken that poll down. Any way it only let me vote once so how did the poll encounter multiple votes?

    How come you guys say computers are infallible when they extrapolate fictional temperature readings over the 95% of the globe that hasn’t got hard data, yet you wont trust one to tally a simple poll? Seems somewhat hypocritical, but consistent with an ideology that masquerades as science.

    Barb @ 39 said;

    “Is Faith in the Almighty Lord Jesus Christ your strongest argument”

    My middle name is Thomas so without direct, physical, personal evidence I have issues with both faiths, Christianity and AGW.

  36. 42# Tony G
    Then why does Malcolm Turnbull have green initiatives on his website Tony if global warming is a myth? To quote Malcolm himself

    “But, first, let me say to you straight up that the question of whether or to what extent human activities are causing global warming is not a matter of ideology, or “belief”.
    This issue is simply one of risk management.
    It is moreover not a question of Left versus Right – indeed it was Margaret Thatcher, nearly twenty years ago, who called for immediate action to reduce greenhouse gas emissions.
    Her words on our response to climate change are as wise and as relevant today as they were in 1990:
    “Many of the precautionary actions that we need to take would be sensible in any event.”

    Now does Malcolm know the young libs are likely setting up email chains to distort ABC polls on global warming (who else would bother to do it and it sooooo like them isnt it – the leadership of YL is seriously an embarrassment to the whole party – especially after their “dob in an academic” campaign). Nothing quite like them, thats for sure.


  37. 43# Tony,
    Id say “risk management” also means keeping those baby liberal rottweilers tied up.

  38. “Then why does Malcolm Turnbull have green initiatives on his website Tony if global warming is a myth? To quote Malcolm himself”

    I do not know why Malcolm Turnbull does what ever he does? you should ask him. He has nothing to do with me, although he is my local member and I did vote for him last time, only because George Newhouse the developers son and ALP bagman, known close associate of an infamous ex judicial perjurer was the other option.

    “likely setting up email chains to distort ABC polls on global warming (who else would bother to do it and it sooooo like them isnt it”

    Alanna where is the evidence the “young lib”[s] are doing anything? Why would they even need or want too? The Liberals have been hoodwinked by the AGW ideological myth also, that is why they support it.

    The non existent temperature readings for 95% of the planet are pluck out of thin air and everybody who is not getting a government grant knows it. ( the poll result which the biased ABC has now pulled clearly outlines that fact)

  39. 45#

    Come on Tony. The YL get up to all sorts on nonsense like this. Its pretty widely known…and you would know it too.

  40. 46#
    if the Young liberals believe AGW (as you say – lets ask whatsisname Angus?) and the young labor also beleive in AGW then I am really at a loss to explain the poll except for an influx of voting of some seriously extreme right rednecks from the country? Hmmm maybe Barnaby Joyce or someone else from the Nationals organised it? Its not beyond the realms of possibility…but unlikely to be as well organised at the young libs. Either way someone did.

    Either way the silly poll was hijacked Tony and ABC should have canned the whole thing. You can fool some of the people some of the time…..and thats all you can do..but you cant fool all. The sheer act of poll pollution to influence a position is damn pathetic.

    Its called organised dishonesty when you are only competing against the stray reader who may feel inclined with no push to register a vote.

    The poll result was absurd Tony – you could stop 100 people in the street and get a more meaningfuly result. Maybe I would suggest the ABC do exactly (get up and get out on the street to take a poll) to avoid the young email trigger happy poll manipulators (for Ill bet they are young – they think they own the net).


  41. Have changed my handle from my habitual marklatham to my real name to save confusion.
    Costello,julie bishop and most other politicians have convinced themselves and often the electorate that they actually have some ability.
    However their egos are bigger than their brains and the electorate is very gullible.
    Costello seemed unable to convince the private sector that he had anything to contribute on economics and poor julie cant even convince the critics.So much for that expensive private education.

  42. Well of late it looked like the souffle was rising again but Tony Abbott hosed it down (now Tony is another souffle patiently waiting his turn – as an aside Joe Hockey couldnt really be described as a souffle though – more like a bomb alaska).

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