Possums Pollytics

Politics, elections and piffle plinking

Is he Australia’s most useless Editor?

Posted by Possum Comitatus on April 7, 2008

This was me in Crikey earlier today.

Image via Crikey.

It’s the question that has been asked over the weekend, or at least asked far more often than the question The Daily Telegraph posed on Saturday. David Penberthy, the Editor of the rag responsible for publishing the most outrageous piece of trash printed in an Australian newspaper for the last decade, now seems to be flailing around like some silly child caught throwing rocks at houses – desperately reaching for any excuse, however implausible, however pathetic, that could remotely justify the disgraceful behaviour of The Telegraph on Saturday.

After getting deservedly slapped around all weekend for one of the larger acts of stupidity undertaken by a major daily in recent history, one would think the Tele would have cut its losses, basked in its sensationalism and enjoyed the few extra eyeballs the exercise generated for their advertisers – but the collective slapping by the deep end of the economic and political gene pool apparently stung a little more than was expected, bringing the Telegraph not only the eyeballs it was after, but a large hit on the credibility of the paper itself – and that definitely wasn’t in the plan.

This morning’s sordid attempt by Penberthy to vindicate the odious cocktail of personal attack and economic fantasy that was thrown at the Governor of the RBA would be laughable if it weren’t so serious. Putting on his “everymans” face – the writing style that’s supposed to relate to the “common man” as if it somehow exonerates the piffle that will inevitably follow, Penberthy argues:

Stevens’ public relations problems started on March 27.

Channelling the unlamented Malcolm Fraser, he decided to give mortgagees a bit of tough love, mounting what has served as a defence of the (many) banks which have opted to (significantly) overshoot the bank’s current official cash rate of 7.25 per cent.

“The presumption that their lending rates should only move with the official rate isn’t really realistic in this period, and we’ve indeed seen bank lending rates moving independently of the cash rate,” he said.

“I think that’s just life in this environment.”

Maybe it is. But it was about as helpful as saying – shit happens.

Good grief – “shit happens”? We certainly know where. When the Governor of the RBA answers to the House of Representatives Standing Committee on Economics, his role is to answer any questions posed honestly, in his capacity as the head of the most powerful economic institution in the country. It’s one of, if not the most important presentations the Governor makes. To demand, as Penberthy seemingly does, that the Governor should put his answers to this Committee through a public relations meat grinder shows either a profound ignorance of the underlying importance of the Governors appearances before this Committee, or the depths of desperation that Penberthy is willing plumb to try and recover some of the major losses in credibility that this outburst has inflicted on the paper.

Just when we thought that these miserable excuses couldn’t get anymore obnoxious, Penberthy then has the audacity to start arguing that there’s serious policy consequences that legitimise the papers grubby attacks – he states:

More important is its effect in policy terms. That is, will it have the innocent effect of giving a context to the banks’ decision to raise rates above the official cash rate? Or will it have the much more alarming effect of giving the big banks a collective sense of legitimacy, where they can hide behind the skirts of the bank and hold up ANY additional rates increase as defensible in light of events overseas?

There is no doubt as to what the readers of The Daily Telegraph believe.”

Well there’s probably not much doubt now after the Telegraph went out of its way to pile this rubbish four foot deep through the minds of their readership on Saturday. And what great evidence does Penberthy produce to back this spurious nonsense up? Well, he continues;

…Whether he likes it or not, Stevens’ comments have clearly given the banks that sense of legitimacy. Within three hours of his appearance at the House of Representatives committee last Friday, where he amplified his defence of over-the-odds increases, the Commonwealth Bank jacked up its rates again, by 0.12 per cent, adding another $25 a month to the average mortgage.”

Penberthy would have us believe that the Commonwealth Bank, out of the blue and purely as a result of what Stevens said in the Committee, jacked up their rates faster than the Tele would splash a snatch shot of Lara Bingle across their front page should they ever get their hands on one?

Fair dinkum, what a load of dogs cobblers. The idea of the Commonwealth Bank being able to do anything within three hours is amusing in itself – initiating the not insubstantial process involved to raise their own rates in that time frame?

Pull the other one – it plays serious journalism.

The Telegraph goes in hard over “personal responsibility”, it’s a staple of their tabloid diet – parents should be responsible for their tearaway rugrats, criminals should be responsible for their crimes, politicians should be responsible for their policies.

David Penberthy needs to shoulder some responsibility of his own for the outrageous rubbish that the Telegraph engaged in – by taking a very long walk off a short plank and resigning.

—–

Also: Mark over at LP covers the bases and does a bit of poison dwarf tossing to boot.

Stephen Kirchner over at IE lays the boot into Milne.

And that’s possibly the first and only time in history you’ll ever see those two sites linked near each other, anywhere:mrgreen:

If anyone knows who wrote the piece in the Saturday version of the Tele, could they let me know? The online version was conveniently missing a byline.

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39 Responses to “Is he Australia’s most useless Editor?”

  1. pligg.com said

    Is he Australia’s most useless Editor? « Possums Pollytics…

    It’s the question that has been asked over the weekend, or at least asked far more often than the question The Daily Telegraph posed on Saturday. David Penberthy, the Editor of the rag responsible for publishing the most outrageous piece of trash print…

  2. wilful said

    I’m mostly concerned about where the missing question mark went to.

  3. Central banker in love triangle with Chelsea Clinton and Angelina Jolie!…

    Not exactly, but Possum Comitatus has hit the mark with his remarks on the tabloidisation of the coverage of Glenn Stevens’ ruminations to the House Economics Committee. (Though, parenthetically, Alan Greenspan used to encourage coverage of his l…

  4. […] exactly, but Possum Comitatus has hit the mark with his remarks on the tabloidisation of the coverage of Glenn Stevens’ […]

  5. Bobby said

    I am not one for conspiracy theories but it is interesting that boozy Glen Milne over at the Oz is also critical of Stevens…

    http://www.theaustralian.news.com.au/story/0,25197,23494251-7583,00.html

    I have heard that the Liberal party economic strategy (stop laughing) is centred around undermining the RBA and particularly Stevens…

    One other point where it the Daily Terror’s ‘personal responsibility’ when it comes to mortgages… where was the gun to the Westies heads when they signed up with Rams for their McMansions!

  6. Zombie Mao said

    I raise you a Paul Armstrong, Editor of The West Australian

  7. Amber Dekstris said

    A bit of an over-reaction, Poss? While Milne and Penberthy don’t quite rate 10 on the Albrechtsen scale, I don’t agree with them very often, but on this occasion they had half a point. Granted Stevens must be truthful when fronting the Committee; however, Stevens has mishandled, IMHO.

  8. Rates Analyst said

    I must say, there is a little more than half a point here….

    Stevens was completely right, that the banks are going to have to raise their rates, but I think they have actually got the rates up about the fair amount.

    The cost of 3M money is now about 50bp more than Cash. It was, historically, about 10-15bp more. So that’s an increase of about 25-40bp… And most of the banks have raised 30bp more than the official rate rises.

    On many levels we should be getting near the end of this widening cycle.

    Though I’ve oftened wondered if people realise exactly what is in their mortgage contracts – the banks have the RIGHT to change the price whenever they want. It’s a very strange contract, isn’t it? There’s none other like it in the world, that I know of.

  9. Possum Comitatus said

    Amber – The consequences of the type of drivel Penberthy and Milne are carrying on with are actually really important in a whole heap of under the radar ways. The first one is the basic notion of trust – our entire global financial system only functions because of trust, whether it be the capital markets trusting who to lend to (where the trust has declined and is why our domestic banks have no choice but to increase their rates – the money they’re buying costs more because people trust them less to pay it back), through to who banks trust to lend to, through to which banks the public trusts to keep their money with (avoiding the dreaded “run”), all the way down the line.

    Effectively, the global financial system is the biggest exercise in “we’re all in it together” ever created – we all live and die by the mass trust in the system. But underlying all the trust at the domestic level is trust in the RBA – and that trust is what prevents bank runs, or wage pushes, or massive volatility in consumer confidence – all the things that used to give us the destructive boom/bust cycles.

    Now that doesnt mean the RBA is beyond questioning, accountability or anything else – but it’s necesarry that we deal in reality, however unpleasant it might be to some parts of the country (including, it seems, the Tele HQ) when it comes to major issues like monetary policy and the functioning of our financial system. Penberthy basically talked through his arse over Stevens remarks, throwing a big bucket of vomit over the RBA that was little more than destructive fantasy done for audience ratings. If people start believing in horseshit like “the RBA is filled with evil bankers”, we set back trust in this country and that is extremely dangerous.

    The other part, and probably more practicably important, is that by dumping a bucket of vomit over Stevens (and the idiocy Mile was carping on with about his religion and how he doesnt look Australian or some horseshit), Governors of the RBA will become less willing to speak their mind, which means the RBA – the most important financial institution in the country – provides less information to the market about what it’s doing, what its thoughts are and why. It encourages them to essentially become less accountable. Why risk the type of fucktardery that Penberthy and Milne went on with for simply speaking the banks view? If that’s what you get, then they might as well STFU and not say anything – and if that happens we all are poorer.

    I’m normally a pretty laid back kind of marsupial not prone to going ballistic, but this sort of cheap, tacky, low rent, bullshit pretend journalism that damages our fundamental institutions on the basis of NOTHING, that encourages less accountability from our most important economic institution and fills the publics head up with nonsense is far more dangerous than the type of drama queen petty politics that politicians get up to like dog whistling.

  10. Possum Comitatus said

    RA – not only do most people probably not realise it, but too many journo’s don’t seem to either. It’s like that other great furphy that they carry on with, how “people are getting thrown out of their homes because they cant pay the mortgage”.

    Well fine – except for the little point that it wasn’t “their” home to begin with, it was the banks until they’ve finished paying that mortgage off.

    What the Tele should be doing is trying to explain the marginally complicated issue to their readers, not filling their heads with simplistic, and erroneous horseshit for the sake of a few extra eyeballs.

    If I were a banker – I’d be seriously considering withdrawing advertising from the Telegraph until they came to their senses.

  11. Grumps said

    Poss,

    To right, Tabloid Trash!!

    Took time to read the transcript, which was on Peter Martin’s site. Here is the Transcript .

    Look more deeply into the 43 pages of boring gooop. Past the economic stress in the west of Sydney, the ability for the major banks to raise rates independent of the reserve, to the discussion of looming problems from el Rodent’s management.

    Of concern through its impact on the economy and finally interest rates: privatisation of debt, lack of investment in labour (not just skilled and professional), climate change, lack of productive investment (both state and federal government along with private industry), recession in the good old US of A, for a few.

    Also look at the growing literacy of the economic debate in Australia. The questions from the school groups present at the hearing showed a deeper understanding of economics than some of the pollies at the committee. (Still don’t know what Aquaman was drivelling on about but it must have been something crafty to catch Labor based on information only Aquaman understood??!!??)

    One must ask, whom benefits from the rants of the tabloids. Obviously in the tele’s case it is to protect their own narrow fiscal interests as irrelevancy races up to meet them. As most of the population read their paper from the rear to the front, I doubt if most of the punters who buy the tele know who David Penberthy is. (Does he come from the same news mould as Shananana?)

    Sites like this make it easier for a mere technically challenged grump to read further and understand more fully what is argued.

    Long live the Poss.

    [ Apologies Grumps – you were hiding in the spam bin…. Poss]

  12. ruawake said

    Maybe it is a payback for Glen Stevens’ failure to praise Work Choices at the Senate Committee last week? After reading the Hansard transcript it appears that there was a concerted effort (by Turnbull)to get Stevens to agree that Work Choices was responsible for lower inflation – an effort that failed.

    Is there a “Sook him Rex David” button somewhere in Turnbull’s office?

  13. Completely agree – for a supposedly right wing paper, the Tele has thrown the switch to vaudeville in almost a (British) Sun like manner. Most of what Stevens is being criticised for is nothing to do with the remit of the RBA anyway – if the banks are overpricing mortgages (and I don’t think they are, as rates analyst says) then surely that’s an ACCC issue?

  14. Amber Dekstris said

    Possum, if I read the three of you correctly, you think it’s ok for Stevens to tell the banks it’s ok to raise their rates independently of the Reserve Bank while Milne and Penberthy do not. I don’t think Stevens should be doing this.

    On the notion of trust, I hope you don’t trust the Federal Reserve in the same way you trust the RBA.

  15. Possum Comitatus said

    Amber – Stevens isn’t telling the banks anything.He was simply stating the reality of what’s actually happening.

    He has no power to stop the banks from raising rates independently anyway. The whole thing is a giant non-sequitur.

    The reason the banks are raising rates is because they borrow money from overseas to lend to people that borrow from them domestically for mortgages etc. The cost of the money that the banks are borrowing has gone up because of the sub-prime fallout and a decline in trust on international capital markets, so as a result that cost is passing through to the consumer – i.e. the Australian population.

    The alternative is for the banks to absorb this cost, run down their balance sheets (which means they run down their actual net value) which would reduce their capability to ride out any financial shit storm as well as be treated as more risky for the loans they seek to take out internationally, meaning they would be charged a higher interest rate as a result. At some stage that would inevitably have to flow through to the Australian population unless we want our banks to go bankrupt.

    So rather than reduce the integrity of their balance sheets, absorb some of the costs but end up having to raise their own rates independently anyway – they are raising them now and staying in good financial shape.

    It’s in everyones interest in this country – from the poor to the rich, from the debt free to the heavily indebted to have our big banks in good financial shape.

    The alternative is chaos, credit rationing (i.e. the way loans used to be back when very few people could get them) and an unstable financial system that could bring down the real economy at the hint of a sneeze.

  16. bryce said

    Glenn, do you think you can raise rates during the campaign and we’ll just forget?
    Think again.

    The Murdoch minions.

  17. Amber Dekstris said

    According to the Telegraph, Stevens said on 29th March:

    “The presumption that their lending rates should only move with the official rate isn’t really realistic in this period, and we’ve indeed seen bank lending rates moving independently of the cash rate,” he said.

    “I think that’s just life in this environment.”

    I think Stevens is wrong for saying this: he should be telling the banks to pull their heads in and if they need a rate rise that badly they should give the RBA a private heads-up and let the RBA do the lifting. By letting the banks run their own race, the RBA is ceding their power to the banks. Why put the RBA in charge of the “official” rate if the banks can ignore it and set their own? It makes no sense.

    Politically, the govt would of course prefer Stevens’ position because it’s less that the Libs can hold over Labor in the future (“interest rates reached blah…”). But I’m not talking politics here.

  18. Amber Dekstris said

    hmm, cite=”http…” didn’t work
    url is
    http://www.news.com.au/dailytelegraph/story/0,22049,23493591-5001030,00.html

  19. Tom said

    Amber, banks (and non-bank lenders) are not able to finance all of their loans at the cash rate. For instance, lots of the securitise large portions of their loan books and are contractually obliged to pay investors BBSW (as a benchmark) plus a margin. Now, the risk margin between cash and BBSW has historically been extremely low but since the crunch it has increased massively.

    There has not been a single successful issue of AAA mortgage-backed securities in the Australian market of any note-worthy size since last November. The whole market is a shambles with many lenders making substantial losses and non-bank lenders such as Rams, Bluestone, Origin and Macquarie Securitisation either ceasing business or winding back their operations substantially.

    The big four banks have actually been increasing their rates by less than a lot of the non-bank lenders. This has been because they have been able to rely on deposit-based balance sheet lending as well as being in a better position to absorb the added costs with reduced margins. However, the issue this year (as opposed to last) has been not just the massive increase in pricing but also a liquidity issue.

    I think an important note to make is that what the banks are doing here is I believe necessary and advantageous to our economy. This is just a repricing for both default and liquidity risk and for political pressure to start being exerted on them when for once the banks are actually being quite prudent is ironic.

    Finally, I don’t see any endorsement of the banks’ practices in your quoting of Glen, he is just acknowledging that in the current market banks will naturally not be in lockstep with the RBA. All your talk of the “official” rate seems to be a misconception as well – the cash rate is not the official rate which all banks are bound to, it is just a rate adjusted by the RBA by manipulating liquidity in order to maintain their inflation target. Banks are well within their right to price their loans according to risk and rightly so.

  20. […] Possum comitatus and Mark from Larvatus Prodeo don’t much like the article […]

  21. Possum,

    In my mind, Penberthy & Milne’s rants belie their lack of economic understanding.

    Their comments are just…bazaar.

    Julian

  22. Dave55 said

    Poss,

    Is a lot of the problem here that most people just don’t understand how the loan market works and papers like the Tele play on this ignorance? My understanding of it all is that banks lend money to us the lenders, however the banks themselves don’t have all of the money to cover the loans so they must source it from various areas – They do have their own funds obtained from fees, for-ex trading and profit margins on loans etc, but they must borrow the rest to cover the loan. In turn, they will put their own margin on these borrowings. The other sources of these loans are: ‘borrowing’ from the money we deposit in the bank (the interest being what they pay the depsitor), borrowing from the RBA at the official cash rate, borrowing from other lenders, and securitisation of loans. As a hedge against one or more of these spiking in value, the banks use a combination of these sources in their loan portfolio. Accordingly, if there is an increase in one or more of these sources, the Banks will need to increase their rates to compensate – we see this most commonly when the RBA lifts it’s official rates. All in all, banks increasing their rates is simply a case of them passing through these increased costs so they keep their profit margin reasonably constant (however there is no reason why the banks can’t also increase these rates on their own simply for some added cream).

    IMHO, most people just don’t understand this. The average punters (read lender) probably believes that the RBA simply determines an official rate and the banks are expected to follow this. In all likelihood, a lot of people probably don’t think hard enough to realise that the banks are actually borrowing money from the RBA at this rate; or if they do, they probably don’t realise that the RBA funds aren’t the banks’ only source of funds. Penberthy and the Tele (and Milne) are really just playing on the lack of understanding of most of their readers and aren’t actually educating them. Articles like the one in the Journal of Repute on Saturday just perpetualte this type of misunderstanding. On this basis, I agree 100% with your criticisms Poss, this is sensationalism at its worst because it simply promotes further misunderstanding and mistrust of the banking industry (my god, I can’t believe I’m defending the banks).

  23. Tom said

    Dave55 good post although you’ll find that banks are not actually able to borrow from the RBA at the cash rate. As I mentioned in my above post the cash rate is just a tool used to curb inflation which is kept at its target through the RBA’s manipulation of liquidity in exchange settlement accounts. It is the rate at which banks will lend to each other in the overnight money market. This from the RBA website:

    “The cash rate is determined in the money market as a result of the interaction of demand for and supply of overnight funds. The Reserve Bank’s ability to pursue successfully a target for the cash rate stems from its control over the supply of funds which banks use to settle transactions among themselves. These are called exchange settlement funds, after the accounts at the Reserve Bank in which banks hold these funds.

    If the Reserve Bank supplies more exchange settlement funds than the commercial banks wish to hold, the banks will try to shed funds by lending more in the cash market, resulting in a tendency for the cash rate to fall. Conversely, if the Reserve Bank supplies less than banks wish to hold, they will respond by trying to borrow more in the cash market to build up their holdings of exchange settlement funds; in the process, they will bid up the cash rate.”

    Most of a bank’s borrowings are far closer to BBSW or the 90-day bank bill rate. The margin between BBSW and cash has significantly widened since late last year reflecting a repricing of risk and diminished liquidity. This has what has led banks to raise their rates up and above the RBA’s increases.

  24. Dave55 said

    Tom,

    Thanks for that; kinda proves my point though that people really don’t understand how it all works.

    So, just to get this straight, the ‘official rate’ is really just a target rate that the RBA acheives through its manipulation of the release of funds in the O/N funds market?

  25. Possum, You can see my considered thoughts on the crikey thread. Some yes, some no. And corroboration re Penberthy editorial raising the quality re sensitive ethnicity/race issues for the school gang intruder story today.

    You have to deal with David Marr and my and Penberthy’s point about interest rate rises as a blunt instrument. He has to deal with your strong case about emotional violence masquerading as news.

    By the way I agree with the comment above about the missing question mark in the headline. It’s is a large concern that the in house rule at Sydney Telegraph is to omit the “?” as redundant or implicit in the headline. But what it actually does is imply truth by omission of the correct punctuation, in other word taking a rhetorical question to a whole new level of nod wink, brainwash for the reader. This is the Outfoxed doco thesis over again.

    As for the byline – yeah cute to leave out online – it’s “JUSTIN VALLEJO and RYS HAYNES” to quote the typeface exactly. The break out to page two shows Justin is “Property Reporter”. Perhaps this all reflects the dominant religion in Sydney which is real estate speculation, way more than Catholic, Muslim or Jewish.

    You will notice today’s coverage brings in the federal political reporter heavies to back up said editor. As well as the Oz editorial. News Ltd are digging in though moderating some too.

  26. Amber Dekstris said

    Tom, I never mentioned any purpose to which the cash rate was put, only that Stevens shouldn’t be endorsing a widening of the gap between it and the retail rates that banks charge. If a bank’s losses in the US amount to about a billion dollars then it can recoup that via reduced profit over the next couple of years. Of course the bank and the market wouldn’t have a bar of that, which is the major problem of world markets IMHO: their obsession with record profits every successive year. If a bank’s losses are greater, the RBA can lift rates, as I already said.

    You disagree that Stevens was endorsing the banks’ practices, that’s your right.

    I will agree with McCrann on this point, though:

    And in supposedly “green-lighting” banks to lift rates by more, Stevens very specifically emphasised at this time in these conditions. The broader message is that when conditions change, banks should cut by more than any official cut.

    http://www.news.com.au/dailytelegraph/story/0,22049,23501962-5014099,00.html

  27. Tom said

    Amber,

    Firstly there has been no ‘endorsement’ by Stevens, merely an acknowledgement of the realities of the current climate.

    Secondly, I think it’s ridiculous that you feel that banks should not be allowed to raise their rates to reflect the massive increases in their cost of funding. If the banks were indeed capped at some unrealistic rate as indeed they were during the Howard Treasurer years the supply of credit would stop, people would find it impossible to get a mortgage and house prices would plummet leading to even more defaults.

    The fact of the matter is that any anti free market interventionist policies at the moment would only make things worse.

  28. Amber Dekstris said

    Straw man.

    I said earlier, “if they need a rate rise that badly they should give the RBA a private heads-up and let the RBA do the lifting”

    Re endorsement, if Stevens disagreed with the banks’ practice he would or could say so. The fact that he hasn’t is in my book a tacit endorsement. You disagree, I acknowledged that and your right to do so, so drop it.

    You said, “house prices would plummet leading to even more defaults.” ‘Nuff said.

  29. V said

    Think I’d prefer to know what each bank is putting on top of the RBA rate, shows publicly their exposure. If the banks could give the RBA “a private heads-up” then they are setting the rate anyway, just without our knowledge

  30. Amber Dekstris said

    No, because the deliberations of the RBA are transparent, moreso now that they publish the minutes of meetings. The RBA sets the rate as they deem appropriate given the circumstances, including submissions from one or more banks eg. “we need a rise because our expenses have increased.” My theme through all of this is that the RBA is in control and not abrogating authority to the banks, which is what this widening between cash rate and retail rates amounts to, IMHO.

    The exposure of the banks would surely be adequately reported in their reports to the ASX.

  31. JP said

    But why should the RBA have authority over the size of the margin between cash and retail rates? Surely that’s a matter for bank management and shareholders (and customers, when they decide whether to do business with a particular bank).

    And what happens to deposit rates if the RBA “does the lifting”? Should bank be obliged to lift deposit rates, too? Because that would make the exercise pretty pointless. And if they left them unchanged in the face of a rise in the cash rate, you’d be criticising the bank for increasing their margin and ignoring the RBA again.

    Frankly, I’d find it incredibly improper for the head of the RBA to tell the banks how he thinks they should be running their businesses – and even more improper for the RBA to announce in its minutes that they’ve raised rates in response to a private request from the banks.

    It’s entirely proper for Stevens to “endorse” the hardly controversial practice of the banks independently running their businesses as they see fit in the interests of their shareholders. After all, if banks did not do this, their directors could be jailed.

  32. Tom said

    Amber,

    Your suggestion is not practical. Firstly when the RBA changes the cash rate it alters the cost of funding for all businesses across the whole risk spectrum. You may have noticed that banks and non-bank lenders have been raising their rates by different margins according to the risk of underlying assets and their own liquidity constraints. I hardly think it practical for one bank to go to the RBA and ask for them to raise the cash rate by a uniform rate which will affect every retail and institutional borrower in the Australian economic system solely based on the needs of that firm.

    Regardless, your assumption is falsely based on the notion that banks’ cost of funding is somehow in lockstep with the cash rate. Historically this has been the case but as I have repeatedly stated in my above posts, this has changed in the current market with the difference between cash and 90-day bank bills greatly widening. If the RBA were to raise their rates this margin would not just magically diminish. Therefore I don’t see how your ‘solution’ would go any way in addressing the problem here.

    I am not sure how you managed to discern that the RBA has abrogated power to the banks when they never had the power to set their individual mortgage rates to begin with. Keating deregulated housing rates back in the 80’s ceasing the problem we had under the Howard treasury years where it was almost impossible to get credit due to legislative caps. Surely you can’t be advocating a return to such an interventionist policy?

    On a side note the rate increases mean that Australia is in quite a nice position should America’s downturn in growth start to hit us in a big way. At least we are in a position to cut rates and stimulate growth unlike America who I fear don’t have much room to move and might end up with a similar situation to Japan’s stagflation in the 1990’s.

    Tom.

  33. 2 tanners said

    Amber may or may not be old enough to remember what it used to be like to get a loan. You needed to wear your best suit, and better than credit references were the fact that you knew the bank manager’s wife, or your kids went to the same school. It was the most horrid, nontransparent market you could imagine, and it was played on for prestige by all those managers. No reason was ever given for refusal.

    Give me today’s transparent system any day, where banks are businesses, not would be social institutions.

  34. Amber Dekstris said

    Ha. I laugh at anyone who defends those poor defenceless banks.

    If a bank or any other company stuffs up, it should take responsibility for it via a reduced profit for the year, not ream its customers so as to “maintain shareholder value”. I know the system won’t change but that doesn’t make it right. The market’s outright demand for record profits every succeeding year is a fundamental and unsustainable problem.

    Market fundies should ponder what happens a decade (say) from now: when companies have sucked customers dry and transferred all the wealth to the shareholders, what then? Where do they get their record profits from then?

    …or is the whole point that that is then and we’ll worry about that then, and meanwhile I’m alright Jack, I’m filling my pockets.

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