Bernard Keane and David Howarth in Crikey:
It’s disappointing that Crikey, like others in the liberal media, have fallen for the nonsensical line that the so-called “financial crisis” is either real or requires urgent action. Anyone who disputes this claim, which is advanced with evangelical fervour by its advocates, is howled down as a heretic and a “denialist”. The days of the witch-hunt are truly back.
Put simply, there is no evidence of a human-induced financial crisis, regardless of the hysterical claims advanced in trendy films like Al Gore’s Inconvenient Loot. The financial environment moves through cycles unrelated to human activity. Financial records from the distant past demonstrate that key indices have previously been much lower than they are today, and move up and down of their own accord. Man’s contribution to these movements is dwarfed by the natural rise and fall of markets.
The following graph shows that the long-term financial trend is — inconveniently for crisis fanatics — resolutely upwards:
And to anyone objecting that the market is now declining — what happened yesterday?
Another rise. So much for the purported, so-called, alleged myth of anthropogenic financial collapse, which is not real at all, but actually made up.
Any recent, temporary falls in the Dow Jones Index are nothing to do with human-induced crises. Quite apart from natural ups and downs, recent sun spot activity has increased the cash burn rate, contributing to a mild reduction in credit availability, but again it is a wholly natural cycle, unrelated to human activity. The current cycle of solar activity is due to end in the next couple of years, returning credit availability to normal.
If there is to be any attempt to mitigate this wholly fictional crisis, it should be done with moderate, balanced measures that take into account the needs of businesses and the importance of maintaining job growth and profit share. The fanatics urging us to take immediate action must be rejected.
We should take no unilateral action, but await a comprehensive international agreement that includes the big financial emitters like China. To do otherwise would be to risk our own economy without having the slightest impact on the problem we’re trying to fix. Local jobs will be lost due to “bailout leakage” as firms simply move offshore to countries where taxpayer money is not being wasted propping up uncompetitive firms.
Other industries will simply be wiped out due to massive increases in their costs arising from the additional tax burden. Our LNG (Lots of Noxious Gits) industry is particularly vulnerable.
If we are foolish enough to take unilateral action then we must ensure full compensation for affected companies so that they are not required to contribute to the bailout. A special Bailout Liability Underwritten Banking certificate (BLUB) crediting firms with the amount of money contributed to the bailout must be provided to all trade-exposed industries, particularly those in bailout-intensive sectors.
But before we proceed, further work needs to be done on an appropriate bailout target. Setting too high a bailout target risks imposing a massive burden on the economy. A low bailout target would provide a sensible transitional pathway to stabilising the financial sector at $550 million ppm (payouts per manager) by 2050.
This prudent, moderate, sensible, balanced course of action, while opposed by trendies and financial crisis fundamentalists, will ensure we protect the very jobs and businesses most at risk from this new secular religion.
[With thanks to Michael Mainelli.]
