Former PM keating talks GFC

February 3, 2009 3:28 PM

Former Australian Prime Minister Paul Keating provides some observations on the GFC, including suggestions that the USA could become a defaulter, and identifying a need for a new international settlement to replace Bretton Woods.

This is one for the policy wonks.

This isn't a post about Paul Keating the man, though I think he deserves one some time.

The first half is probably of more interest for an international audience.

PJK was previously on Lateline in October 2008 discussing the GFC.

Further discussions on this blog.

posted by wilful (30 comments total)

That's a front page post, is it, Shakespeare? All tip and no iceberg. Get a job, boxhead. Just because you swallowed a dictionary at age 15 doesn't give you the right to pour a bucket of shit over the rest of us.
/PJK
good post, and it's nice to see LP linked-to
posted by Fiasco da Gama at 3:33 PM on February 3 [6 favorites has favorites]

I miss Keating. He was a character in Parliament who could always make you laugh no matter who he was aiming a shot at. The interview last night was no exception (shame that the transcript you linked to seems to be non-existent at the moment, though).

In other news related to the GFC, the Coalition is going to vote against Rudd's stimulums package. With me and pretty much everyone else earning under $100,000 waiting for the $950 cheques, this will not end well for Talkbull and his buddies on the Opposition benches, methinks.
posted by Effigy2000 at 3:35 PM on February 3

wilful: "This is one for the policy wonks."

The policy wonks are the very people we don't want seriously questioning how close the United States is to default.
posted by Joe Beese at 3:35 PM on February 3

The policy wonks are the very people we don't want seriously questioning how close the United States is to default.

Interesting - we have different definitions of 'policy wonk' (an ill-defined term at the best of times). For me, 'policy wonk' indicates someone interested in the details, able to parse lots of stats and with enough background in the issue to make sense of what he's saying. But not necessarily or even likely a decision-maker, the sort who led us into this sort of trouble.
posted by wilful at 3:45 PM on February 3

wilful: not necessarily or even likely a decision-maker, the sort who led us into this sort of trouble.

I see what you mean. But I'm assuming - perhaps incorrectly - that no one wonks in a vacuum. If ever an emerging consensus in wonkdom holds that a U.S. default is a significant risk, the actual decision makers will start edging ever more openly towards the door. That kind of thing can trigger a stampede.
posted by Joe Beese at 3:56 PM on February 3

Oh absolutely. And then we're all fucked.
posted by wilful at 4:07 PM on February 3 [1 favorite has favorites]

no one wonks in a vacuum

I'm stealing that line.
posted by Fiasco da Gama at 4:09 PM on February 3 [1 favorite has favorites]

no one wonks in a vacuum

some might, but i wouldn't recommend it.

if the vacuum is strong enough, it might harm your private member's bill.
posted by UbuRoivas at 4:17 PM on February 3 [7 favorites has favorites]

I wonk privately, in the dark, when no one else is around.
posted by jamstigator at 4:20 PM on February 3

You boxhead you wouldn't know, you are flat out counting past ten. I don't want to hear any of your mealymouthed talk.
posted by turgid dahlia at 5:01 PM on February 3

Watch yourself, turgid dahlia. I step out for one second and you try to spring that? From now on I'm sticking to you like shit to a blanket.
posted by Fiasco da Gama at 5:04 PM on February 3

I wonk privately, in the dark, when no one else is around.

Wrong. Ceiling Keating is watching you.
posted by UbuRoivas at 5:05 PM on February 3 [1 favorite has favorites]

This is like being flogged with a warm lettuce. You won't even be able to get a job cleaning shithouses when I become Prime Minister.
posted by turgid dahlia at 5:09 PM on February 3

flogged with a warm lettuce

More like watching a little dessicated coconut, araldited to his seat. How are you going over there, curly?
posted by Fiasco da Gama at 5:18 PM on February 3

One way to read the economic history of the 20th century is about the US trading the structural advantages of access to its large internal free market for peace, power and stability. During the great depression the US retreated from open trade policies; which lead to global political instability. During the second world war Japan and Germany sought to create large internal trade zones of their own which could create internal markets of sufficient size to remain competitive with US manufacturing and innovation. Meanwhile the British empire lost its internal market due to the inefficiencies of the colonial trading system. The post war modern IMF / WTO based trading system emerged to regulate trade with the USA and gain access to the US consumer. WTO and previous agreements were initiated by Truman as a means to bind the "free" world together in a global trading system.
The big questions now are:
-Will the EU and BRIC markets emerge in equal weight to the US domestic market?
-Are they sufficienly open and homogenius enough internally to provide manufacturers with a counterweight to the US middle class consumer?
-Will the US economy be so crushed by the housing bubble that its conusmer middle class will no longer be as attractive as these other markets?
Depending on how these questions are answered one can foresee any number of new trading systems emerging.
posted by humanfont at 5:26 PM on February 3 [1 favorite has favorites]

I live the "poor quality spend" from Costello on lateline last night.

Here's a man who believes himself to be the world's best treasurer (and strangely dudded from the prime minstership), who did absolutely nothing for ten years.

Stood back with his fucking silly smirk while the country boomed and tax dollars from Western Australia just rolled in. Such genius- engineering the mining boom and coming to power just after a recession.

Never had a crisis, never had to do one jot of hard graft- oh apart from buying the pensioner's votes in the GST election.

Give me a break. Poor quality spend- what's Pete's solution- tax cuts and preserve the surplus- wow, so bold and such initiative.

Intergenerational report I'll teach him to smugrah smerghra
posted by mattoxic at 9:24 PM on February 3 [2 favorites has favorites]

We really do seem to be in an odd situation with "post Bretton Woods" or "Bertton Woods II" in that it's in many ways an agreement not to have an agreement about the global financial system.

I never really had enough macroeconomics to grok why this was, but it kept me wondering how long it might be sustainable. And maybe where we are proves it wasn't.
posted by dhartung at 9:29 PM on February 3

Here's a man who believes himself to be the world's best treasurer (and strangely dudded from the prime minstership), who did absolutely nothing for ten years.

When I told caucus last year you were a low-altitude flyer, I was right, wasn't I?
posted by Fiasco da Gama at 9:38 PM on February 3 [2 favorites has favorites]

..... buffering .....

Anybody got a transcript or a download link?
posted by Afroblanco at 10:48 PM on February 3

If Bretton Woods II came into being, what would be the peg upon which currency values would hang? Gold again? Something else? Given the volatility in markets in the last year or so, it's an interesting question.

How would derivative currencies like the Euro fare in that environment?

I wonder if the question isn't about the middle class in the EU or BRIC vs the US. I think it's more about the question of levels of sustainable economic growth as a whole. The middle class is still the middle class, from an economic standpoint. They just aren't able to fund a lifestyle one rung on the ladder above their actual social class any longer. That aspirational spending is cut all across the world. It won't be enough to have your products be cheap and cheerful - people will push for greater quality when they have to make a larger payment or when the money for their purchase comes straight from their bank account and not on the never never.

How much would any such agreement allow governments to intervene directly in their economies? Protect consumers against themselves against things like housing bubbles, if only in the name of preserving a more sustainable tax income stream?
posted by Grrlscout at 11:22 PM on February 3

I wouldn't trust Paul Keating's opinion on the weather.

Seriously, listen to how quickly he can turn the conversation around to himself. The man is an egotist of epic proportions and should be largely ignored, even if one or two of his points sometimes appear to approach rationality.
posted by Henry C. Mabuse at 11:23 PM on February 3

Keating is an egotist, but if we ignore every politician with an ego...the world might be a better place, but I don't think it is a fair reason to ignore him.
PJK was a hero to me as a student, but he became pretty bitter after he left office. The bitterness is still close to the surface, but he is one of the few public figures who consistently will point out the emperor has no clothes.
I suspect he is frustrated (and a bit grateful) to be out of politics, so he can get on with being right, without having to play the political game to get things done.
He is dead right that 90% of the last coalition government's good economic fortune should be laid at the feet of the reforms of Hawke and himself.
Unfortunately, a lot of it was squandered, but at least we are in a position, unlike the US or UK, where we are hitting this economic turbulence with central finances intact.
posted by bystander at 1:43 AM on February 4

While Turnbull has clearly lost his fucking marbles (and any chance of ever being PM) in his "oh, a little tax break will solve all this" attitude, I'm severely pissed off with Labor for their attitude. They could kill two birds with one stone here. Use that money they're throwing about to re-tool Australia for the next century, in terms of addressing climate change and a new global order.

Instead, it's just an effort to prop-up the dying consumer-driven system one last time. Plasma TVs for everyone!

However, given that I just bought a Plasma TV a month ago on credit, and the "stimulus package" will pay that off in one fell swoop, I'm sure I'll be in a mood to forgive Rudd come March.
posted by Jimbob at 2:12 AM on February 4 [1 favorite has favorites]

Yeah, the cash-flinging stimulus package is such a short-term answer to a longer-term problem. We've got problems with our hospitals and schools and childcare centres, we're about to face climate change with no preparation, and where the hell is my high-speed broadband? But ok, give me some money to pay the next few months' worth of bills. That'll stop the recession for sure!
posted by harriet vane at 2:51 AM on February 4

JohnHoward: The man is an egotist of epic proportions and should be largely ignored, even if one or two of his points sometimes appear to approach rationality.
posted by UbuRoivas at 3:05 AM on February 4 [1 favorite has favorites]

I go out for a piss and they pull this one on me. Well that's the last time I leave you two alone. From now on, I'm sticking to you two like shit to a blanket.
posted by zog at 4:12 AM on February 4

It's intensely cheeky of Rudd to talk about his little plan as if it's part of some great revival of classical social democracy (especially after all that stuff about the "macroeconomic consensus"), but if the Liberals collapse, it might embolden the Labor left much as Labor's collapse in the 1990s emboldened the NSW right. That's what I'm hoping for, anyway. Give 'em Hell, Malcolm!
posted by stammer at 1:40 PM on February 4

embolden the Labor left

On reflection, I guess I'm hoping that it will create a Labor left.
posted by stammer at 1:41 PM on February 4 [1 favorite has favorites]

This isn't a post about Paul Keating the man, though I think he deserves one some time.

Well heck, I'd "give him one". Look at those fucking jowls - that's some SEXY MOTHERFUCKING GRAVITAS right there.

Basically, If coveting an injection of hot fiscal stimulus from Paul J. is "left," I don't want to be right.
posted by the quidnunc kid at 3:00 PM on February 4 [1 favorite has favorites]

In today's Crikey:

First heard the "f" word. Patrick B. de Fontenay, a former director at the International Monetary Fund and now an adjunct professor at the ANU's Crawford School of Economics and Government, while expressing agreement in a radio interview this morning with Paul Keating that the IMF needed reforming, had one interesting reminiscence about the former "world's greatest Treasurer". Mr Keating, it appears, has the distinction at the IMF's Washington headquarters of being the first and only world leader to use the "f" word during official discussions. All I can say is that the good professor was lucky not to be a journalist getting a phone call during those far off days as "f's" were just warm up words!
posted by wilful at 6:43 PM on February 4