NSW Labor Leader John Robertson

April 10th, 2011 at 10:00 am by David Farrar

John Robertson got recently elected Leader of the NSW Labor Party. He is a former union boss who many hold responsible for the civil war which tore NSW Labor apart. Here’s what Paul Keating said to him, in a letter in 2008. Some extracts:

“Your manipulation of the union base in New South Wales, with the connivance and support of the Party President, Bernie Riordan, succeeded in destroying the political life of both men, and with them, probably the Labor Government of New South Wales itself.

“When I came to see you about the Iemma Government’s electricity privatisation proposals in April 2008, you will remember me telling you that reckless indifference by you and Bernie Riordan to the Government’s fortunes, may see the Government destroyed and for which, you and Riordan would be held accountable.

“This letter is about that accountability.” …

When I met you and went through the history of the establishment of the east coast electricity market by the Government I led in the 1990s, and why the privatisation of the NSW power stations was consistent with the benefits of that market, you never offered one serious point in rebuttal.Not one cogent economic argument to thwart the logic. You batted the argument to one side, implying it would somehow be sorted before any rupture arose.

But instead like a banshee on a rampage, you tore at the Government’s entrails until its viability was effectively compromised. …

Let me tell you, if the Labor Party’s stocks ever get so low as to require your services in its Parliamentary leadership, it will itself have no future … the people of New South Wales have their problems, but they would be way better rattling through than turning to someone like you in some hope of redemption.

It may be a novel concept for you, let me say that the conscientious business of governance can never be founded in a soul so blackened by opportunism. …

I am ashamed to share membership of the same party as you.

So that is from the former national leader to the current NSW state leader. I think it will be sometime until NSW is governed by Labor again.

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Advice from Keating

June 5th, 2010 at 9:00 am by David Farrar

The Herald reports that Paul Keating once tried to teach Tony Blair how to hate his opponents. He also advised:

Keating also had some tips for Blair on economic issues, telling him that if he ever became prime minister he should avoid income tax hikes at all costs.

“Tony, promise me you won’t raise income tax. It’s death.

“Labour parties around the world have enough to contend with without hanging that round their necks. It’s not worth it.”

Luckily in NZ, Labour is suggesting they will campaign in 2011 on a policy to increase income tax for rich pricks.

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Keating attacks Obama’s Treasury Secretary

March 9th, 2009 at 10:00 am by David Farrar

The Sydney Morning Herald covers former PM Paul Keating on new US Treasury Secretary Tim Geithner:

In a speech to a closed gathering at the Lowy Institute in Sydney on Thursday, Paul Keating gave a starkly different account of Geithner’s record in handling the Asian crisis: “Tim Geithner was the Treasury line officer who wrote the IMF [International Monetary Fund] program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis.”

In other words, Geithner fundamentally misdiagnosed the problem. And his misdiagnosis led to a dreadfully wrong prescription.

Ouch.

But the Asian crisis was completely different. The Asian governments that went to the IMF for emergency loans – Thailand, South Korea and Indonesia – all had sound public finances.

The problem was not government debt. It was great tsunamis of hot money in the private capital markets. When the wave rushed out, it left a credit drought behind.

But Geithner, through his influence on the IMF, imposed the same cure the IMF had imposed on Latin America and Mexico. It was the wrong cure. Indeed, it only aggravated the problem.

Keating continued: “Soeharto’s government delivered 21 years of 7 per cent compound growth. It takes a gigantic fool to mess that up. But the IMF messed it up. The end result was the biggest fall in GDP in the 20th century. That dubious distinction went to Indonesia. And, of course, Soeharto lost power.”

So is he calling the US Treasury Secretary a gigantic fool?

Exactly who was the “gigantic fool”? It was, obviously, the man who wrote the program, Geithner, although Keating is prepared to put the then managing director of the IMF, the Frenchman Michel Camdessus, in the same category.

Worse, Keating argued, Geithner’s misjudgment had done terminal damage to the credibility of the IMF, with seismic geoeconomic consequences: “The IMF is the gun that can’t shoot straight. They’ve been making a mess of things for the last 20-odd years, and the greatest mess they made was in east Asia in 1997-98, so much so that no east Asian state will put its head in the IMF noose.”

Is there anything to back up this assertion?

China, in particular, drew hard conclusions from the IMF’s mishandling of the Asian crisis. It decided that it would never allow itself to be dependent on the IMF, or the US, or the West generally, for its international solvency. Instead, it would build the biggest war chest the world had ever seen.

Keating continued: “This has all been noted inside the State Council of China and by the Politburo. And it’s one of the reasons, perhaps the principal reason, why convertibility of the renminbi remains off the agenda for China, and it’s why through a series of exchange-rate interventions each day that they’ve built these massive reserves.

“These reserves are so large at $US2 trillion as to equal $US2000 for every Chinese person, and when your consider that the average income of Chinese people is $US4000 to $US5000, it’s 50 per cent of their annual income. It’s a huge thing for a developing country to not spend its wealth on its own development.”

And does anyone else agree with Keating?

Is this some flight of Keatingesque fancy? The former deputy governor of the Reserve Bank of Australia, Stephen Grenville, doesn’t think so: “After the Asian crisis, the countries of east Asia decided that they would never go to the IMF again. The IMF is taboo in east Asia. Look at the evidence. The revealed preference of the region is that no one has gone to the IMF since, even when they needed the money.”

Sounds convincing. And how does this all relate to our current problems:

Keating went on to argue that, by frightening the Chinese into building their vast $US2 trillion foreign reserves, Geithner was responsible for the build-up of tremendous imbalance in the world financial system. This imbalance, in turn, according to Keating, contributed to the global financial crisis which has since devastated the world economy.

And he is now in charge of devising the solution, appointed by President Obama. Excuse me, while I go hide my cash under my mattress.

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