“There is instability in world financial markets”

I’ll have to get around to installing the ad blocker plug-in on the Firefox browser installed on my laptop. I have it on my desktop at home, but I’m writing this from my hotel room in Surry Hills, and every time I go to have a look at a political story on the Smage websites, I’m assaulted by ads metaphorically screaming at me about teh evil union bosses, the red haired Gillard fanatics, and “Crash is coming: warns investor”. I don’t dare to unmute the sound in case they actually are screaming at me.

I have one simple question. Given that the credit crunch has led the Commonwealth Bank (and others) to contemplate raising their mortgage rates independently of the Reserve’s cash rate, and that they’ve already tightened up on loan discounting, how are we to square this with the government’s claims about the superiority of their “economic management”? Not only are they apparently powerless to act (the banks already having treated the Subprime Minister’s portentous warnings with contempt), but it really does expose the implausibility of the fear campaign. Whereas the ACTU’s ads have been based on facts, and inferences that can be reasonably drawn about how WorkChoices could affect voters’ lives, the ranting of the Coalition floats free from reality. It may have succeeded in scaring off a few “soft Labor” voters, but it’s also a fitting epitaph for the baseless claims they’ve made over the years about their economic skills.

Cross-posted at PollieGraph.

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Posted in federal election '07
11 comments on ““There is instability in world financial markets”
  1. […] Cross-posted at LP in Exile. […]

  2. harry says:

    It’s the old line that covers multiple F-ups: “Yes we broke it, but only we can fix it”.

    The Iraq logic is very much the same.

    I thought it was very interesting that Ms Kelly et al were actually INCITING racial hatred with their “funny” leaflets. These are the people who are supposed to be PROTECTING us from terrorists? In fact, the whole B.S. GWOT has been farcically counter-productive. As study after study shows, it has made us LESS SAFE!

    Bud Rudd and Swann are “learners”? Well, let’s hope they have learned from Howard’s mistakes. He doesn’t seem capable of learning anything he doesn’t want to know.

  3. mbahnisch says:

    On the first point, their powerlessness to “fix it” is being exposed as a lie as we speak. The banks aren’t taking any notice. What’s the next shot in the locker? Nothing.

  4. Liam Hogan says:

    Here’s what you want, Mark.

    There is instability in world financial markets

    Well I think we all know what the issue is here. It’s the fractional reserve ratio.

  5. goodtobewithyou says:

    Try switching javascript off in Browser options, that gets rid of them. Who knows what else I’m missing, but I don’t care, anything to be rid of !!ALARMIST!!UGLY!!DISHONEST!! liberal ads.

  6. frmad says:

    Congratulation! Your weblog’s high ranked in “The professional WordPress weblog ranking” at http://weblogrank.edu.ms

  7. Andrew says:

    Mark,
    Bank interest rate setting is an additive process – with the cost of funds at its base. The cost of funds include such things as the amount of government borrowing, the amount of other borrowing in the market, the supply of funds etc. On to that is added the internal costs of that lending, a profit margin and then the credit margin.
    The fact that the government has been reducing its borrowing steadily over the last 10 to 11 years has greatly reduced the cost of borrowing for everyone else.
    If government borrowings were heavy then the cost of funds would be considerably higher than it is and the liquidity (not credit) issues we are currently having would be considerably larger. The government is not “powerless” on interest rates, but they are also not able to determine them. Low government borrowings help – but there are many other factors that go into interest rates than just the fiscal deficit.
    To answer your question, then – it is easy to square off the claims against the reality. If we had had a huge deficit and continued borrowings by governmetn then this may well hve been a trigger for a big crunch. As it is we are like to get away with only up to 50 bps added on to our cost of funds for a short period.
    .
    goodtobewithyou,
    Get firefox and install adblocker. I have not seen ads on my browser much, if at all, since doing that.

  8. Chris says:

    Unfortunately I think this campaign will reinforce the belief that parties need to run fear campaigns to win. In this case its just that the Labor one is much more effective than the liberal one this time around (probably because the liberals don’t really have a “new fear” this election cycle.

    Am rather disappointed there is very little positive campaigning at all.

  9. Gaz says:

    Comment by Chris —

    Your a little tricker Chris, a little tricker ?.

  10. Graham Bell says:

    Harry [2]:
    Excellent distillation. Pity it is not in 20-point typeface on the front page of every newspaper in Australia.

    Chris [9], you said
    ” “Unfortunately I think this campaign will reinforce the belief that parties need to run fear campaigns to win.” ”
    That may well be a belief …. the reality is that a lot of people [apart from a handful of my-party-right-or-wrong National Party fanatics] in Central Queensland are angry at fear campaigns, smear campaigns and pork-barrelling. Whichever party uses them in the next election will go down the gurgler.

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