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John Spoehr
• The US Housing Crisis and Interest Rates
As you know, the Federal Reserve Board dramatically reduced interest rates, short-term interest rates, after 9/11. The multiplying effect of this was to make money very cheap. Banks had more money than they knew what to do with. Banks are in intense competition with one another. They wanted to get this money out the door and into the hands of borrowers as fast as they could. They sold out many borrowers who could not possibly pay back these loans if conditions became a little bit more severe. The Federal Reserve Board then raised interest rates and continued to raise them, leading long-term interest rates to go up as well. Many people could not repay their variable rate mortgages. The problem became even larger because the housing stock lost value and many people found themselves with homes that were less valuable than the houses they originally purchased. So they couldn’t refinance and, to make matters worse, large hedge funds and private equity funds and others bought up much of this debt. These large firms are unregulated and taxed at relatively low rates. There’s been a stampede into the funds and the funds have been risking money to a much greater extent than many investors know. Hence we see the beginnings of what could be a financial calamity. I hope not.
• The Presidential Race and the Democrats
I am optimistic, because I see the public waking up to the failed policies that began with the Reagan administration and that continued right through the present Bush administration: deregulation, privatisation, tax cuts for the rich, policies that have made it difficult to unionise. The public is not stupid. Congress is now in the hands of the Democrats. The public is showing every sign of becoming impatient with the right wing policies that have dominated the country over the last 25 years. Although most of the American public profess a preference for a Democratic President over a Republican President next time around, when you match-up specific Democratic candidates and specific Republican candidates quite often the Republicans win. We have never before had a prominent woman and a prominent black applying for office and this is just a huge question as to what’s going to happen. My personal view is that the Republicans would choose Fred Thompson, a movie actor, a lazy politician, extreme conservative following in the tradition of Ronald Reagan and we’re going to have a fight on our hands.
• Inequality and Jobs in the US
The working class is no longer able to get decent jobs. Fewer than eight per cent of workers in the private sector are in unions, they have no bargaining leverage to speak of and manufacturing jobs have been outsourced abroad. Most of the old working class finds itself in the local service economy, in jobs in retail, restaurant, hotel and hospitality services paying $9 to $12 an hour and now there’s just no way you can maintain a decent lifestyle that way. Meanwhile, much of the gains of economic growth over the past eight years have come under the top one per cent and we have not seen an inequality to this extent since the 1920s and by some estimates since the 1890s. Median wages are stuck in the mud, adjusted for inflation, the public is anxious about jobs and wages and the level of indebtedness that they have taken on. The situation politically is ripe for demagogues on both the left and the right who blame immigrants, international trade, and farmers of all stripes, some of whom want to blame the poor. We’ve seen that before. So I think this economic problem has got to be looked at more broadly in terms of this happening to the American labour force and a trend that actually began in the 1980s.
To some extent, the insecurities and wage losses faced by so many Americans are the direct result of a shift in power from workers and citizens to consumers and investors. In other words it’s not all a redistribution to the rich. It is a shift toward a much more intensely competitive market place. All this is good for consumers and investors, but it means that workers are necessarily less secure. It’s a matter of simple logic, the easier it is for consumers and investors to shift to another deal, or a better deal, the more precarious it becomes. When consumers go to Wal-Mart, as they do in droves, and Wal-Mart provides lower prices, those lower prices are the direct consequence of labour policies that are driving down the wages of the working class. So, to this extent, we’ve met the enemy and it’s us. Many Americans might be willing to pay a little bit more for products and services in return for a little bit more job security, but there’s no opportunity to make that choice in the political system as it now functions because the system is totally dominated by large corporations.
• Dr Haneef: Where should the buck stop?
By Michael Jacobs
Back near the start of what we will come to call the Haneef affair, it was being put about that Dr Mohammed Haneef had hurriedly sought to get on a plane to India, with a one-way ticket, without even telling his superiors at the Gold Coast Hospital where he was off to, or why. This soon became part of the mythology, having been routinely trotted out in each of the early stories and then entering the folk-memory. The trouble is it was not true. In fact Dr Haneef had been given leave (and whatever else may have got him moving, in fact there was a newborn child he might reasonably have been expected to need to see). The correction of the original story came a day later, but by then it was too late. The canard lived on in pubs and coffee-shops and supermarket checkout queues long after the cursory correction, for two powerful reasons: one, it came first; and two, the correction was put to air, or into print, far fewer times. Weeks later, as criticism swirled round the government and its agencies, a sniffy complaint appeared in a paper that would like to be a respected broadsheet: “the government” was blamed for letting it be put about that Dr Haneef had done a flit without telling his employer. The complaint is ill-based. It assumes that it was automatically acceptable to use the unsourced material. It was not, and for several reasons. The most obvious is that the story was so easily checkable. It is difficult to imagine what possible excuse a journalist could offer for not having immediately phoned the medical director of the Gold Coast Hospital and asked if their man Haneef was on leave. To complain about being fed this bum steer is to imply that if something has been said, nothing else matters, a journalist need do no more. Go for it! Report it! This cannot be right. It is a liar’s free gold pass into the headlines. Yet the Haneef case is only a single example of a disturbing tendency in Australian journalism – just get it down, and if anything goes wrong blame the source. This is never adequate, especially in relation to the use of background disclosures – for which, by definition, the journalist takes full responsibility. Meanwhile, the government continued to walk the tightrope, dribbling out more suggestive material while at the same time asking us to trust it about a whole lot of other, secret stuff. To get public acceptance is central to the legal challenge, and will have to be repeated in the Federal Court on August 8 and maybe later.
It is possible to be too pious about people trailing their coats in public to try to assemble a cheer squad for what they are going to argue in court. At the very least, though, the exercise is useless, because a court will decide without reference to newspaper opinion-writers or methodologically flawed media feedback polls. It is also potentially unhelpful, because if you do win a few hearts and minds, and then a court decides against you, the playing out of tensions between the pre-manipulated public opinion, and the rather different court decision, does nobody any good and may do a deal of ill. But your modern politician, the temporary guardian of the apparatus of state, has a daily media battle to win, and cannot afford to be distracted by such things as the enduring health of the commonwealth, so it would not be fair to pick on Kevin Andrews for joining the self-serving throng of political clowns who selectively pre-argue their legal battles on Lateline and talkback. But the seeds of its difficulties in this task, and of the unbelieving and hostile attitude of a still-stumbling media, were planted in the spring of 2001, when Captain Arne Rinnen, of the Tampa, and Commander Norman Banks, of HMAS Adelaide, sought to carry out their clear duties to those in peril on the sea, and this government had bigger electoral fish to fry than were contained by the law of the sea. The nature of its conduct then took a long time to become generally known and understood, but those episodes are now a dead albatross around its neck. The stench in your nostrils comes not from the rotting albatross, but from the rank cloud of hypocrisy polluting the clear air which citizens of this commonwealth are entitled to breathe. The cloud is being generated by an opportunist government and a sanctimonious media, each trying to have it both ways.
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