March 24th 2018

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Articles from this issue:

COVER STORY Media ensure a comfy rise for Bill Shorten

CANBERRA OBSERVED Can Liberals' broad church survive schism?

INTERNATIONAL AFFAIRS Middle-East time bomb: youth unemployment

ENVIRONMENT Europe's freeze further proof of global warming!

NATIONAL AFFAIRS Cashless debit card records positive results

NATIONAL AFFAIRS Liberals' Tasmanian victory: the implications

OPINION The height of absurdity: education as business

ECONOMICS AND CHINA Eyes averted from the dragon in the marketplace

RELIGIOUS FREEDOM The state attacking the Church: lessons from history

FAMILY POLITICS A Trojan horse for monitoring children

NORTH AMERICA The cultural and political mosaic that is Canada

CINEMA Mary Magdalene on film: a new interpretation

MUSIC Audio-visual: or, how to watch your music

CINEMA The Adventures of Tintin: A light amid the bleakness

BOOK REVIEW Taking arms against the gender fluid fad

BOOK REVIEW Narrative history from a great writer



INTERNATIONAL AFFAIRS Sexual exploitation at Oxfam symptom of culture of death

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News Weekly, March 24, 2018

Not left, nor right

I am happy to reply to Hal Colebatch’s letter in News Weekly, January 27, 2018, responding to my review of Robert Reich’s Saving Capitalism (“Disentangling the free-market fraud”) in the December 2, 2017, edition. This is the prevailing view: that the global financial crisis (GFC) was the fault of governments. It was actually governments’ leaving of the role of governing that allowed the traders to take over.

By “deregulating” the financial markets – a logical impossibility because finance “is” regulations – governments allowed the derivatives markets to balloon. The stock of derivatives rose to about $US700 trillion in value, about double the financial assets of the world (see the Bank For International Settlements triennial survey for data).

The key people to blame were U.S. President Bill Clinton and U.S. Federal Reserve chairman Alan Greenspan, but everyone got in on it. The banks (including Australian banks) put the derivatives off balance sheet (although reporting the profits), leading to the question: what is the point of having a balance sheet if you can do that? But I can guarantee that the CIS and the like thought that was a blow for market freedoms. (It has finally been corrected in Australia: the Australian Prudential Regulation Authority (APRA) has moved on it).

Likewise, the daily foreign-exchange trade is about $US4 trillion, mostly derivatives. So, four days’ trade is the equivalent of the U.S. government’s debt.

In other words, what we have is market freedom on steroids – and then some. It has led to almost zero interest rates across the developed world as governments desperately have tried to bail out the banks with cheap money. Of course, the banks have been exploiting that cheap money to make loans with their ears pinned back, which has resulted in the huge global burden of debt we now have. Then, in a  spectacular display of hypocrisy, the free marketeers turned around and blamed government.

This is a critical part of the scam. To cover up the debauch, you have to make it look like it is all governments’ fault.

Here is the sequence:

Step 1. Tell the umpire that you are going to make your own rules of the game up, because central government control is immoral and inefficient.

Step 2. Make up your own rules and award yourself with goals at every point.

Step 3. Realise that you don’t trust your fellow players, because they are all making things up, just like you. Then stop trusting everyone else, just as they don’t trust you (this loss of trust, specifically, caused the inter-bank lending rate to soar, thus drying up credit in the global system).

Step 4. Blame the umpire. After all, they left, so they must be to blame.

Step 5. Start milking the umpire for all he is worth and make sure everybody else pays except you.

The result of “financial deregulation” was that the very notion of money was put at risk. It went within hours of a collapse in September 2008, when there was a $US550 billion drawdown on money market accounts in a couple of hours.

The U.S. Treasury pumped in over $US100 billion and realised they could not stem the tide. They closed down all the money accounts and announced a guarantee of $US250,000 for every deposit in the United States (this was behind the bank guarantee in Australia). Treasury’s estimate was that by 2pm $US5.5 trillion would have been drawn out of the money market. As then U.S. Congressman Paul Kanjorski noted, it would have caused a collapse in the U.S. economy and in 24 hours the world economy.

Kanjorski explained: “it would have been the end of our economic and political system as we know it.” Quite. And the end of money as we know it (banks lend out at least 20 times their capital base, so if $6 trillion disappears, a $120 trillion of capital also disappears). Which is what happens when you allow the traders to make it all up to benefit themselves.

A final point. Many say that that the GFC could not have been anticipated. Not true. This writer wrote repeatedly about the impending collapse of the financial system in BRW magazine for nine years before it happened (to resounding silence, of course). The canary in the coalmine was what happened with derivatives firm Long Term Capital Management in 1998, which also nearly brought the system to its knees.

Amazingly, the nonsense (and it is nonsense) about financial “deregulation” persists. Few seem to notice that the emperor has no logical clothes (economist Michael Hudson is a notable exception). Of course, Adam Smith and many of the classical economists knew perfectly well that the “market” for money is fundamentally different from other markets. But the neo-classical economists, who furnish the intellectual framework for neo-liberalism, do not acknowledge it.

Hence the endless blather about it being all the governments’ fault. In fact, the governments had to bail out the system because the very nature of money was under threat, and still is. They should have sent legions of investment bankers to jail – that was a huge failing – but they did not have much of a choice when it came to trying to fix the system.

Ten years later, the after-effects have still not been dealt with. If there is another crisis, governments will not have the weapons to deal with it; what they did in 2007–08 was a once off.

David James,
Oakleigh, Vic.


Big change

The news of Peter Westmore’s retirement came as a big surprise/shock. For so long he has been the face and voice of the NCC and AD 2000 that it seemed he was a permanent feature. But, I guess we all age and there comes a time when grey shades tell us that its time to bring in the shingle and go fishing or play golf.

Nonetheless, it will be unusual not seeing his polite face as he walks around the office; and worse still not offering me a cuppa when I go into office for some meeting.

I would like to say, thank you, Peter, for rescuing me at a time when I was ready to bring in my own shingle. I have appreciated your strong support. God bless you and enjoy your retirement.

Anne Lastman,
Vermont South, Vic.

All you need to know about
the wider impact of transgenderism on society.
TRANSGENDER: one shade of grey, 353pp, $39.99

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