February 2nd 2008

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Articles from this issue:

COVER STORY: TRANSPORT: End of the line for rail freight?

FINANCE: Sub-prime mortgage crisis paralyses credit system

EDITORIAL: East Timor's new beginning

CANBERRA OBSERVED: Economic storm facing new government

NATIONAL AFFAIRS: A stern test for multiculturalism

CULTURE AND CIVILISATION: Family values overlooked in the market-place

STRAWS IN THE WIND: Reading the signs for the New Year (Through a hedge backwards...) / Hijacking foreign aid / Sub-prime lending crisis / Was Hitler's defeat inevitable?

AFGHANISTAN: Confronting terrorists and the drug trade

WOMEN UNDER ISLAM: Silence of the "sisterhood"

EDUCATION: The threat to our literary heritage

OPINION: Who is the real Kevin Rudd?

Global warming? Stop and think! (letter)

Flaws in our voting system (letter)

Who is running the country? (letter)

Barack Obama on foreign despots (letter)

Alternative to capitalism and communism? (letter)

AS THE WORLD TURNS: Juvenile crime in Britain / Feminist magazine's anti-Israel bias

GOD AND CAESAR: Selected Essays on Religion, Politics, and Society by Cardinal George Pell

BOOKS: CULTURAL AMNESIA: Notes in the Margin of My Time, by Clive James

THE TORCH AND THE SWORD: A History of the Army Cadet Movement in Australia, by Craig A. Stockings

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Reading the signs for the New Year (Through a hedge backwards...) / Hijacking foreign aid / Sub-prime lending crisis / Was Hitler's defeat inevitable?

by Max Teichmann

News Weekly, February 2, 2008
Reading the signs for the New Year

(Through a hedge backwards...)

The New Year has opened somewhat inauspiciously. The gap between appearance and reality is beginning to look like a chasm.

The most likely medium-range situation for Australia seems to be stagflation - the old (pre-Thatcher) English disease of inflation, combined with economic stagnation and growing unemployment - although the number of corporate collapses is starting to appear more like the plight of the land-boomers of the 1890s. I realise that this is an apocalyptic prognosis, ignoring apparently the irresistible rise and rise of our exports to China. We will see how well that turns out.

The Rudd Government is manoeuvring in some new ways. First, the government spoke against further interest rate rises, as do all governments; but the banks raised their rates just the same, thereby letting the Reserve Bank and the government off the hook. Someone else did it! The banks received a small tap on the wrist, and the whole operation looked like collusion to me.

Simultaneously, the government is speaking of large expenditure cuts on the one hand, and new and presumably more desirable spending programs on the other. Let's leave aside the possible tax cuts.

The above formula looks ideal for getting rid of the bodies and the people you don't like - Tories, or just "not us" - and helping your mates and friendly lobbies with new spending programs and bold new initiatives. It's the American "winner-take-all" pork-barrel philosophy.

Such a philosophy, practised more and more widely in modern societies, makes for instability, waste, injustice to individuals, and corruption. The more interventionist the government, the more of these social and political delinquencies can occur. Which is not to say that small government, as favoured by many conservatives, doesn't allow for a variety of corruptions and injustices; it's just that fewer people appear to be dragged in.

But to return to the global economy: the West seems more and more focussed on China and India saving its bacon - the new cargo cult. If these countries can and do, it will come at a price. Which might include a country like Australia having to give up many of our traditional diplomatic and military attachments.


Hijacking foreign aid

I was studying in Oxford when Oxford Famine Relief started up in a little shop in the Broad. It would have been in the 1950s - the brainchild of John Ennals, head of Ruskin College - and Oxonians readily supported the new venture.

I, like so many, worked in the op-shop, for that is what it was: as a volunteer part-timer between lectures, and then later full-time during term breaks. As they got some money, they paid us five pounds a week for full time. I supported and followed their activities as I did other similar bodies for many years. But alas, no longer.

They all turned into charity multi-nationals - NGOs with more and more activity and time going to publicity, fundraising, lobbying governments, the media, the UN, and endless conferences, with lots of air travel. They became more and more political and politically correct, and intruded in the affairs of the peoples and countries they had contracted to help. They, or at least their elites, now see themselves as policy-makers, legislators for the world, unelected - and increasingly resented in many countries.

It had to happen - that is, the headline in a recent article which reads: "Tsunami aid 'spent on politics'" (The Australian, December 27, 2007). A survey by the paper of non-government organisations to the relief effort "found the donations had been spent on politically-correct projects promoting left-wing Western values over traditional Asian culture" (and African too, by the way).

Here are some of Oxfam's spectacles: "a travelling Oxfam gender justice show" in Indonesia "to change rural male attitudes towards women". Then there is a project to instruct Thai workers in "Australian-style industrial activism", and how to set up unions just like in Australia. Then there was the World Vision campaign in Aceh to advance land reform, so as "to promote gender equity", educate women in "democratic processes" and "encouraging them to enter politics". This in a war-torn province with the Indonesian military still breathing down everyone's neck.

The reporter, Ean Higgins, cites other provocative proposals introduced under the guise of tsunami aid. And it is true, as he says, that most of the mums and dads who contributed did not have such activities in mind. Rather they had expected houses, better roads and emergency health measures.

Clearly, we will have to be better informed about the kind of people who are distributing our aid in the future.


Sub-prime lending crisis

We don't yet know how the latest world financial crisis will finish, nor what the fall-out for Australia is going to be. This is partly because there is still insufficient information out there, and much of it is dodgy - people covering up their misdeeds; other people covering up their backs. 'Twas ever so.

There is a quite scandalous level of mistrust among the bankers and among the corporate directors. Fewer and fewer believe the others' statements, or think that the published accounts of others can be set in stone. One cause of the drying up of credit worldwide was that many banks, and governments, have been disinclined to lend to other banks when they don't know the extent of the latters' exposure to concealed bad debts. Sometimes the beleaguered bank or corporation doesn't know itself.

If the leaders of the world's financial system don't know which parts of the system are healthy and which are in serious trouble, what hope does the ordinary investor, or depositor in a bank, or member of a superannuation fund, have in divining what extra-mural connections their controllers might have arranged and how these new commitments are performing?

Accountability requires transparency, and modern governments, banking, and corporate institutions all seem devoted to reducing transparency in order to reduce accountability.

As this episode shows, the rich and powerful have done it again, while politicians and regulators look the other way. Once again, the costs will be borne by workers in unnecessarily doomed industries, and countless numbers of little people.

Incidentally, Australia is not - as portrayed by our press - an innocent victim of foreign, i.e., American, financial turpitude. We are just starting to learn how many of our big banks and conglomerates voluntarily entered the American sub-prime market, and which are now sustaining unpleasant blow-backs.

They did this - not the Americans! Nobody made Alan Bond buy Channel Nine. And we are as much in the dark as to the state of our involvement in sub-prime lending as are ordinary Americans about their corporations and banks.

But do our regulators know, yet? Yet PR men (viz., journos and economists) keep saying that the basic fundamentals are all right.

Probably they are, but the people in charge aren't. It looks just like an old-fashioned story about old-fashioned greed and imprudence.


Was Hitler's defeat inevitable?

Some excellent books have been coming out on the events of World War II, many of them based upon recently released Russian archives. Among these coming out in lightning succession, and mostly of a very high standard, is one by Adam Tooze. It is called The Wages of Destruction: The Making and Breaking of the Nazi Economy (Penguin Books).

What comes out is the semi-inevitability of Hitler's defeat - and how many of his associates already believed in 1942 that Germany could not win.

Of all the mass of Tooze's striking statistics, I'll quote just one. By the end of 1942, the Soviet Union managed to build four tanks for every one German tank, three guns for every German gun, and two combat aircraft for every German combat airplane.

Unless Germany could afflict a total defeat on Russia in the field, it was doomed from early on. Which is perhaps why Hitler set about exterminating European Jewry from early 1942: he unconsciously realised the game was already up.

One can easily understand Britain and America's later fears of the Russians one fine day deciding to march to the Channel.

- Max Teichmann

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