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Monthly Archives: January 2009

Last night I attended the public lecture at the Sydney Institute entited ‘The World Financial Crisis How Did It Happen’. Speakers were Mark Johnson, former chairman Macquarie Bank, Timo Henckel, Research Fellow, Centre for Applied Macroeconomic Analysis, ANU and Dr. John Edwards, Chief Economist HSBC and formerly Economic Advisor to Paul Keating.

Mark Johnson
Mark Johnson spoke first, and most entertainingly. He started his speech by approvingly quoting US Federal Reserve Chairman Ben Bernanke who summed up the crisis by saying (to paraphrase) that the trigger was

‘the turn of the US housing cycle in 2006 with its associated cascading delinquency in sub-prime mortgages which was then itself triggered the collapse of the mountain of associated instruments and securities such as Mortgage Backed Securities, Collateral Debt Obligations and Credit Default Swaps all of which were funded by debt (borrowing). The securities were made to look more attractive than they really were due to improper US Underwriting standards and poor regulation of the financial industry.’

Johnson discussed how the US Credit Boom was funded by Global Current Account Imbalances i.e. The US borrowed while China (especially), Japan, Germany and OPEC loaned to the US by the purchase of US Government Securities (e.g Treasury Bonds). Successive US Administrations deliberately ran deficits as a response to challenges such as the Asian Financial Crisis, Y2K Bug, 9-11 and the DotCom bust.

Johnson said that Alan Greenspan and the US policy-makers had an over-confident ideological, (I would say quasi-religious) belief in the ‘Doctrine Of Efficient Markets’ i.e. that markets do not require regulation and automatically self-correct (NB Doctrine – see I told you it was a religious system) and so tolerated the growth of an unregulated ‘shadow banking sector’ which revelled in the cheap credit churned out by Washington, produced the weird securities mentioned above (MBS, CDO, CDS) and created the horrendous varieties of sub-prime mortgage which fuelled the melt-down.

Conventionally regulated banks were far from innocent however, also producing and trading in these instruments but moving them to ‘off-balance sheet vehicles’.

Such regulation that did exist was outmoded, confused (conflicting Federal-State laws) and politicized. The Financial sector lobbied for and got a repeal of the Glass-Steagall Act of 1933 which prevented Commercial Banks behaving like Investment Banks and vice-versa. After repeal of Glass-Steagall ‘everybody got into everybody ele’s business’ and the borrowing to deal in the ‘opaque’ MBS, CDO and CDS securities ran amok.

Greenspan later said that he watched the system collapse in ‘shocked disbelief’ so convinced was he that ‘free’ financial markets would self-correct. It is a brutal thing to see one’s most confident opinions shredded by reality.

US Rating agencies comprehensively failed the public and the world during this time. There were 37,000 AAA issues on the NYSE during 2007 most of which are now rated as Junk.

Opacity and the Liquidity Crisis

The meaning of ‘opaque’ in relation to the MBS and CDO securities is that third-parties cannot tell what they are composed of. Sub-Prime mortgages were bundles with good mortgages into MBS parcels which were then sold, combined with other MBS parcels -re-sold, sliced and diced some more and then re-sold again. The end result was a ‘mortgage porridge’ where no-one can tell which specific mortgages are where, or how many sub-prime mortgages you hold.

The opacity of MBS was of crucial importance because when the sub-primes started failing, lenders suddenly became very interested in knowing how many sub-prime mortgages say Bear Sterns, had parcelled up in their MBS. The answer was ‘We don’t know’ and so the lenders wouldn’t lend. This is where the ‘Liquidity Crisis’ came in and inter-bank lending dried up.

Timo Henckel

Timo Henckel took the podium and said that he essentially concurred with Mark Johnson’s view of the origins of the Global Financial Crisis, describing it as a ‘perfect storm’, a confluence of many factors, some of which taken by themselves were innocent or good in an isolated context.

He was specifically critical of the Ratings Agencies who, he said, acted as both ‘referee and player’ in the financial markets, pointing to their conflicts of interest. Dr. Henckel also pointed to outdated Accounting Rules as a contributer to the crisis as well grossly insufficient liquidity requirements, which the US Security and Exchange commission lowered to 33 to 1 (itself stupidly insufficient). According to the balance sheet of Lehmann Brithers their leverage ratio was 40 or 50 to one but their real position would have been far worse than that.

Dr. Henckel specifically mentioned the Community Reinvestment Act as amended in 1995 which he said (to paraphrase) ‘encouraged a loosening of lending standards, thus fuelling the sub-prime mortgage sector..’ I followed up on this point during question time.

Dr. Henckel’s most interesting points were those regarding the modelling of Financial Markets. As mentioned above, Greenspan and the policy-makers, indeed the consensus amongst economists today (prior to the crisis) was that Financial Markets were not different to any other market and function most efficiently when deregulated.

Henckel described the work of the economist, Hyman Minsky, who said that Financial Markets are a special case, characterised by very large ‘Information Assymetry’ which means that they are intrinsically unstable i.e volatile. In order to correctly regulate financial markets the correct model of their operation must be understood. The work of Minsky is now enjoying a renaissance. 🙂

John Edwards

John Edwards took a different perspective to the previous speakers. Instead of trying to assemble the fullest explanation possible, he tried to concentrate on the essential components.

For example, he said that Global Current Account deficit imbalances were not an essential factor in the explanation because interest rates could plausibly have been lower even if the whole world was not loaning to the USA to support their deficits.

Edwards was very critical of Greenspan and the regulators. He described the regulators as ‘irresponsibly negligent’. He noted that in inquiries into the crisis three seperate US Agencies claimed jurisdiction over regulation of Credit Default Swaps (CDS).

Edwards fingered the sub-prime mortgages as an indispensible part of the explanation, Greenspan (poor economic policy) and poor regulation. He noted that the adjustable-rate sub-prime mortgages products being peddled during the US Housing Bubble 1998-2006 could only be serviced in a phase of rising housing prices. As soon as that stops, defaults are inevitable.

On their own, however, sub-prime delinquencies would merely have decimated the US Housing Market as the bubble burst in 2006. What turned the whole show into a Global Crisis was the link between sub-prime mortgages and MBS/CDO securities. The collapse in these securites is what made Lehmann Brothers insolvent with cascading effects that now affect the entire world.

Edwards muted Henckel’s appraisal of the role of the Community ReInvestment Act, noting that it did not require or reward sub-prime loans. He may have also said, but did not, that the CRA actually mandates normal, prudential oversight but leaves the specifics of how loans should be structured to the expertise of the banks themselves.

Question Time

I directed a question to Dr. Henckel:
“Many people have fingered the CRA as the trigger to the crisis saying that the CRA caused large numbers of sub-prime loans to be held by poor (ethnic) minorities who then defaulted. I have read data that said that 60% of sub-prime loan defaults were held by middle-class and affluent borrowers. Is this true and how did they end up holding sub-prime loans ?”

Dr. Henckel replied:
“I would like to see that data. It does not correspond to data that I have.”

At the conclusion of the evening I handed Dr. Henckel a copy of my source which is the article The Community Reinvestment Act and the Recent Mortgage Crisis by US Federal Reserve Governor Randall S. Kroszner, December 3, 2008 .

Our analysis of the loan data found that about 60 percent of higher-priced loan originations went to middle- or higher-income borrowers or neighborhoods. Such borrowers are not the populations targeted by the CRA…Putting together these facts provides a striking result: Only 6 percent of all the higher-priced loans were extended by CRA-covered lenders to lower-income borrowers or neighborhoods in their CRA assessment areas…

In correspondence with Dr. Henckel, he said that he had misunderstood my question at the time and noted that ‘the sub-prime mortgage sector was concentrated in four states – Arizona, California, Florida and Michigan and indeed the majority of sub-prime mortgage holders there were white households.’

When I asked my question, the Sydney Institute audience let out a discontented murmur. I don’t think they were comfortable with the concept that the middle-class or affluent have contributed to this enormous problem. They were quite comfortable with the concept that poor minorities could have.

A Visit To The Institute

It was a good evening and very good value for $10 as a non-member. The talk was held on Level 61 of Governor Phillip Tower just behind Circular Quay, so there were panoramic views of the Harbour and the Botanic Gardens. Really stunning.

I would say there would have been about 200 people there, maybe more. We sat in rows in a big seminar room. Average age would have been maybe late 40’s or ealy 50’s. I went by myself but talked to a few people. Three worked in the Financial Industry, one was a retired man who has been a Sydeny Institute member for 3-4 years. He said the quality and number of speakers has been continually increasing. I didn’t notice any politico-celebs or IPA Members (I scanned the guest list) in the audience.

The line-up of speakers for this year is very good: Julia Gillard, Julie Bishop, Wayne Swan, Helen Coonan, Maxine McKew: and they have people with a leftist viewpoint e.g. Helen O’Neill (Refugee Advocate). Gerard Henderson should be congratulated for assembling a range of speakers that do not necessarily accord with his conservative viewpoint.

It went for two hours (80 mins talk, 40 mins questions) though the schedule for was 60 mins talk, 60 mins questions. Never mind, the speakers were very interesting. Gerard Henderson gave a very brief intro. and didn’t waste any time. No party pies or quiches afterwards (rats) but light refreshments are promised at future talks (see the Sydney Institute website).

So it makes for an good evening. I would recommend it. Come prepared with a good question and look enthusiastic and you’ll probably get a chance to ask it.

I am considering the following one for Senator Coonan, ‘Do you, like John Howard, consider the ABC to be the enemy of the Australian people’. Strewth. They’ll throw me out!

Example Of Sub-Prime Contagion
Here is an example of how Sub-Prime mortgages triggered failures in other securities.

The linked article describes how ‘Commercial Paper’ issued by investment and asset management companies e.g. Ottimo Funding, an affiliate of Aladdin Capital Management, an investment manager in Stamford, Connecticut was linked to sub-prime mortgages and hence how defaults in the latter flowed on to defaults in Commercial Paper.

Commercial Paper is a fancy term for an IOU. They were bought by pension funds, insurance companies, hedge funds and short-term money market funds. Commercial Paper became increasingly backed by sub-prime mortgages. In August 2007 more than one-third of all US Commercial Paper was backed by various forms of consumer debt such as residential mortgages, credit card receivables, car loans and other bonds.

The funds generated by Commercial Paper backed by sub-prime mortgages were used to buy…more sub-prime mortgages!

As sub-prime mortgages defaulted, the companies issuing Commercial Paper could not repay their debts to the Pension Funds etc. who became likewise compromised.

Blimey – its a house of cards!

Credit Default Swaps

Wikipedia has a good page on these. These operate like a form of Insurance where you pay a premium over time and get a payoff if a specified event occurs e.g. Lehmann Brothers go bankrupt or Sub-Prime Mortgage Parcel #1005 gets downgraded to Junk

You do not actually have to own any of the security (e..g Mortgage Parcel #1005) to be able to buy a CDS on it, so you can make money out of things you don’t own. Consequently the majority of the CDS market is a huge casino disconnected from the actual buying and selling of stock or bonds.

The role of CDS in the Financial meltdown was that

1) They introduced Systemic Risk into the Financial system which contributed to the ‘Liquidity Crisis’
2) They were responsible for the collapse of AIG

As Wikipedia explains on Systemic Risk, CDS and Liquidity:

imagine if a hypothetical mutual fund had bought some Washington Mutual corporate bonds in 2005 and decided to hedge their exposure by buying CDS protection from Lehman Brothers. After Lehman’s default, this protection was no longer active, and Washington Mutual’s sudden default only days later would have led to a massive loss on the bonds, a loss that should have been insured by the CDS. There was also fear that Lehman Brothers and AIG’s inability to pay out on CDS contracts would lead to the unraveling of complex interlinked chain of CDS transactions between financial institutions…

Some commentators have noted that because the total CDS exposure of a bank is not public knowledge, the fear that one could face large losses or possibly even default themselves was a contributing factor to the massive decrease in lending liquidity during September/October 2008.

Many thanks to Dr. Henckel for taking the time to enter into correspondence on his talk.

I sent the following email to Cardinal Pell via his office at the Catholic Archdiocese Of Sydney. If Mr. Pell should reply and gives permission, I’ll blog it here. His work email address is:

Dear Mr. Pell,

In discussions with my family, who are not Catholic, your rejection of the Climate Change thesis convinces them that the Climate Change position is weak. They say ‘Pell knows many scientists who are afraid to speak out against Climate Change’. They consider you to be honest and fair. I would guess that many other pretty normal and not necessarily Catholic middle-class households also consider you to be credible on Climate Change and have a lot of respect for your Moral and Intellectual authority.

I decided to research your statements on Climate Change and came to the following conclusions:

1) You consider Climate and Ecology a second-order issue behind matters of Faith and Mission
2) You consider the Climate Change camp dangerously compromised by neo-Pagan influences
3) You consistently but not intentionally misuse Climate data in service of first-order issues of Faith and Mission
4) You are not impartial on the Climate Change debate but biased because of points 2) and 1)
5) You have been consistently incorrect in your use of Climate data.
6) You do not understand or try to understand the foundational arguments of the Climate Change proponents

I have written a Blog article expanding on these points which you can read here

I would be very interested in your response to this article.

If you should have time and inclination to read this article may I have permission to use your reply on my blog ?

Best Regards,


Pell’s Moral and Intellectual Authority

Cardinal Pell occupies a strategic position in the Climate Change debate in Australia. He is sometimes cited (e.g here and here, and Greg Sheridan here) by the ‘Denialist’ side as an intelligent, impartial skeptic, but as a very senior clergyman, he is assumed by many ordinary Australians to be impartial and honest and consequently becomes an authority on Climate to them also.

In discussions with my family, who are not Catholic, Pell’s rejection of the Climate Change thesis convinces them that the Climate Change position is weak. They say ‘Pell knows many scientists who are afraid to speak out against Climate Change’. They consider him to be honest and fair. I would guess that many other pretty normal and not necessarily Catholic middle-class households also consider Pell to be credible on Climate Change.

The Source Of Pell’s Bias On Climate

In my opinion Pell is not impartial on Climate Change. He has a bias toward rejecting the Climate Change hypothesis as a result of his theological positions on Ecology, Population and Faith. This bias is evident in his rhetoric which displays a reactionary slant not compatible with an ‘open’ position on the subject.

For example, in a Sunday Telegraph column in Feb 2007 entited ‘Scaremonger’, he described the Climate Change case as ‘propaganda’ containing (but not limited to) ‘a lot of nonsense’ and ‘mild hysteria’ which is ‘dangerously close to superstition’ pushed by (but not limited to) ‘scaremongers’ and ‘some zealots’.

To my knowledge Pell never describes the Climate Change Skeptical case in these terms.

Pell’s reading on Climate Change is selective. He quotes various data from Skeptic sources, but does not cross-check the assertions against Proponent sources. As far as I am aware Pell has never retracted an assertion of his later shown to be incorrect. This indicates he is not interested in ‘further evidence’ as he claims.

Pell Gets It Wrong

In ‘Scaremonger’ Pell said:

The East Anglia university climate research unit found that global temperatures did not increase between 1998 – 2005.

Pell is apparently unaware that Client Change Proponents know that there are large natural short-term variations in Global Temperature. The cooler temparatures of 1998-2005 will probably become even cooler due to a La Nina event commencing in 2007. Pell knows that the long-term trend is the important indicator but then uses short-term data to bolster his own case while tarring Climate Change Proponents as harbouring those who use short-term data to magnify their case.

Scaremongers have used temperature fluctuations in limited periods and places to misrepresent longer patterns.

Pell quotes spatial variations in temperature to support the Skeptic case but is unaware that the pattern of spatial variation matches the Climate Change Proponent modelling.

Pell knows that CO2 levels rise during inter-glaciation periods but does not know that this is a different CO2 phenonemon than anthropogenic C02 which causes warming for reasons unrelated to natural global temperature cycles.

Pell notes that NASA has reported that the temperature on Mars has risen by 0.5C, uses this to refute the Proponent claim but is not aware that scientific opinion does NOT ascribe the increase in Martian temperature to an increase in Sunspot or other solar activity, which would be the only way that Mars and Earth could suffer Climate Change from the same source.

In fact, the Sun’s energy output has remained stable since 1978 and the most commonly suggested reason for the Martian temperature increase is a dust-blanket forming in its atmosphere due to prolonged violent winds.

Pell mentioned the Kangerlussuaq glacier in Greenland in an official statement as Archbishop Of Sydney in October 2007, saying that it ‘is not shrinking but growing in size’.

Pell’s source knew but did not say that:

1) Kangerlussuaq has had massive ice-loss from 2000-2006;
2) 2006 showed a seasonal variation with parts of the glacier thickening but with an overall slight loss of ice mass.
3) The pattern of ice-loss is consistent with global warming.
4) The article warns of the possibility of major long-term melting of Greenland’s ice mass.

Pell was deceived by his source, Bjorn Lomborg, who intentionally misrepresented the facts, cherry-picking an article without being faithful to the article’s conclusions, actually reversing them.

I am not aware of Pell denouncing Lomborg as a hysterical, propogandist zealot, as being in the grip of a pagan worship of money or power or peddling nonsense and superstition. These terms Pell reserves for Climate Change Proponents, indicating his lack of objectivity.

Pell’s assertion that Greenland was warmer in the 1940’s than it is today is true, but once again ignores long-term trends. Pell has pulled one period from a century of data and made THAT period normative. Considering the period 1915-1965 as a whole, Greenland is 2 degrees Celcius warmer over the past decade.

On Antarctic temperatures, in ‘Scaremongers’ Pell said that ‘the Antarctic is getting colder and the ice is growing there’ but did not say or did not know that:

1) His reporter considerd only the two decades from 1978 but the primary source discussed a 40 year series showing Antarctica getting slightly warmer on average;
2) Climate models predict a lesser Climate Change effect in the Southern Hemisphere, and less the further South you go.
3) Antarctic wind currents and ocean dynamics mitigate local warming
4) Warming is unambiguous on the Antarctic coast
5) Only in the interior was cooling supposedly present.
6) In Jan-March 2002 the Larsen B sector collapsed and broke up, 3,250 km² of ice 220 m thick disintegrated, meaning an ice shelf covering an area comparable in size to the state of Rhode Island disappeared in a single season.

In short, on Antarctica, Pell was selective to the point of myopia. Really, he doesn’t want to know and if Pell is serious about being open to further evidence he will be interested in this report Antarctica ‘melting faster than first thought’
summarizing an article in Nature magazine regarding latest Australian research in Antarctica.

Pell The Climate Change Lyre Bird

So, taking Pell point by point on Climate, he is wrong every time. Far from assembling a cohesive intellectual case against Climate Change Pell has merely accumulated a melange of factoids disconnected from any integrated understanding of the issue.

What is interesting about Pell is that every time he is interviewed on Climate he throws out different nuggets of Climate data indicating he is constantly gathering denialist material, much as a Lyre Bird might collect any bright and shiny piece of junk it finds in the scrub, just because it thinks its attractive.

The Lyre Bird, like Pell, has no interest in connecting the junk materials together or understanding what they really are or constructing something useful out of them, it just stuffs them into his nest which is the structure it is really interested in attending to.

Pell’s ‘nest’ is Catholic theological positions on Ecology, Population and Faith. These are the larger and more important structures that Pell is really interested in defending. Climate Change is only salient for Pell as it intersects his true areas of concern. Pell is quite happy to misuse Climate Change data in order to bolster his theological perspectives and faith mission.

The fact that Pell has a consistently replenishing source of denialist literature indicates he is reading some denialist websites or magazines. It would be interesting to trace the pattern and timing of Pell’s assertions on Climate to see where he is getting his material from. Any takers ?

Pell On Paganism and Climate

Pell’s real concern about Climate Change is that it is a modern expression of Paganism, a quasi-religious belief based on dialectical fear and worship of the natural world, not whether or not Climate Change is real.

In this article in The Catholic World Report, January 2008, Pell ‘indicated his disappointment’ with the way Australians ‘have embraced even the wilder claims about man-made climate change as if they constituted a new religion.’

some of the more hysterical and extreme claims about global warming appear symptomatic of a pagan emptiness, of a Western fear when confronted with the immense and uncontrollable forces of nature … In the past pagans sacrificed animals and even humans in vain attempts to placate capricious and cruel gods. Today they demand a reduction in carbon dioxide emissions!’

Climate Change Diverts Clergy From Their Proper Calling

Pell also believe that as Christian clergy succumb to what he describes as the ‘green fundamentalist faith’, this will reduce their effectiveness at proclaiming the Gospel of saving faith in Jesus, which is the core business of Jesus’ church.

Pell said:

Radical environmentalists are more than up to the task of moralizing their own agenda and imposing it on people through fear. They don’t need church leaders to help them with this, although it is a very effective way of further muting Christian witness


Jesus Christ didn’t say anything on global warming

so therefore, generally-speaking, neither should His ministers or disciples. Climate Change and Ecology should be issues of lesser importance to Christians.

Pell does not say that environmental issues are irrelevant for Christians – he is in favour of developing ‘clean’ (CO2 emission-free) power – but that environmental issues are second-order issues such as proclaiming faith in Jesus

There are many measures that are good for the environment that we should pursue… [but] I strive to argue rationally towards God the Creator, and reject substitutes

and inter-personal social issues such as marriage breakdown and abortion

It’s much less important than the faith of the five or ten or fifteen per cent of the poorest Australians; it’s much less important than the problem of marriage breakdown, it’s much less important than the problem of abortion.

Pell On Climate Change And Population

Pell strongly criticized the Medical Journal Of Australia for publishing a letter from Obstetrician Dr. Barry Walters, who proposed an annual Carbon tax on families with more than two children.

As the blog Cafe Theology reported, Pell, speaking in Seoul, where he was awarded the Mysterium Vitae Grand Prix award for his outstanding efforts for the pro-life movement, said

this is a striking illustration of where a minority neo-pagan, anti-human mentality, wants to take us

The connection from Pell’s views on Climate Change and Paganism to those of fertility are explicit, indicating Pell’s approach to Climate is integrated at the Theological rather than the Ecological level and it is the Theological level which forms the basis and context for his thinking about Climate, not the supposed ‘evidence’ from Skeptical sources which Pell adduces in a haphazard, opportunistic manner.

Pell explicitly rejects any connection between population and climate change. In a statement made during Catholic World Youth Day in July 2008 he said:

I’m a bit of a sceptic about the claim that human activity is likely to produce a man-made catastrophe. I’m well aware that over the years, there have been great changes in the climate.

The accommodation between this statement and the Catholic position on fertility is obvious.

Summarizing Pell On Climate

Pell rejects Climate Change because, for him, it interferes with the issues with are truly important: proclaiming the gospel, protecting society from false or empty religion and obedience to Catholic teaching on fertility.

He has collected a melange of disconnected factiods on Climate from Denialist sources which he spinkles into the public debate as an innoculation against the competing pagan faith of Climate Change. He does not attempt to integrate his melange into a cohesive explanation of Climate Change, being content to opportunistically misuse Climate data in the service of faith issues he feels are truly important.

Yet Pell presents himself as an open-minded inquirer who has carefully studied the issue of Climate Change while portraying Climate Change proponents as fear-mongering propogandists. He loosely associates himself with scientists as a means of cultivating the appearance of objectivity. These scientists are always Denialists.

He never corrects himself on Climate and makes no real effort to understand the arguments of Climate Change Proponents. He never contradicts specific denialist assertions, limiting himself to a vague statement that industrial activity must have some mild but insignificant effect on climate. This ‘concession’, while sincerely believed, is also projected to cultivate the appearance of objectivity.

I suspect Pell may be self-deluded. He may genuinely believe he has considered the evidence for Climate Change, but like all self-delusions, it falls to pieces as soon as the surface is scratched.

Get Your Game Together, George

I am somewaht disappointed in Pell. Any one of his specific assertions about Skeptic data can be disproved in five minutes by Googling the relevant counter-argument. It is apparent that Pell has not done basic cross-checking of Skeptic-sourced facts. In this way he has become an uncritical conduit for bad science and lazy commentary which serves the ‘ruthless commercial forces’ he so accurately said prey upon youth and society in general.

Pell’s community deserves better than that and as a custodian of an influential moral position which even non-Catholics respect, he is letting all of Australia down on this issue. He has become a patsy for the Denialists.

Pell must know that Climate is a particularly cutting-edge issue amongst youth. If Australian Catholic youth come to believe that their Cardinal is untrustworthy on Climate then he may just hasten the departure to Paganism he is so desperate to prevent.

In my opinion, it is in Pell’s interests that he upgrade his knowledge on Climate and correct his own record on the topic. In his shoes I would start immediately. Next time he is interviewed on Climate he should repudiate some of his own prior assertions such as those above. In this way he can gain proper credibility on Climate Change based on facts, not merely his position.

Last Word On Lyre Bird

I do not think Pell is a liar, but blinded and controlled by bias emenating from otherwise worthy motivations. I also suspect Pell possesses an innate conservatism unrelated to his Catholicism which may cause him to reject almost any progressive cause thus further predisposing Pell to deny Climate Change. It is this innate conservative which leads him to describe consider for the Climate Change thesis as a mere ‘enthusiasm’ which will soon pass.

But its time to wake up, George. Get that junk out of your nest.


Here’s a great, brief encapsulation of argument against the Denialist position by David Karoly the brilliant Professor Of Earth Sciences at Melbourne University.

Tom Switzer was kind enough to reply to a personal email about his article No Need For The Libs To Move Left which appeared in the SMH last week.

In his article Tom gave an opinion, with which I agree, that despite Kevin Rudd’s election victory last year, the ‘centre of political gravity in Australia remains conservative’ and in fact has moved further to the right. I asked Tom if he agreed with John Howard’s asessement that the media and Universities were “dominated by the soft left” and if so how does he (Tom Switzer) account for the rightward movement of the Australian polity.

In reply, Tom referred to an article of his “Conservatives Are No Longer Losing The Culture Wars,” Quadrant (CIA Love-Child), 2007, which was reprinted in Tony Jones’ ed. The Best Australian Political Writing 2008 (Melbourne University Press), as well a feature article for the London Spectator last October.

Man Of Steel, Brains To Match

Tom extracted the core of his argument from this piece which was that John Howard has PERSONALLY both arrested and reversed the leftward avalanche, the combined weight of all media and Universities, by the sheer force of his intellect and example.

In this piece, I deal with your specific question which to whch you could easily refer:
“Many conservative thinkers, such as the columnist Gerard Henderson, lament that Howard failed to win the culture wars.

Then again, he was by no means alone in failing to transform the nation’s culture entirely. Recall that Margaret Thatcher and Ronald Reagan themselves were unable to change substantially the entrenched attitudes of the Guardian, Oxford and the BBC in one case, or the New York Times, Harvard and Hollywood in the other.

Nonetheless, a strong case could be made that just as the Gipper helped set the scene for Bill Clinton’s New Democrats and the Iron Lady paved the way for Tony Blair’s New Labour, John Howard has pushed the ALP in a more conservative — and politically appealing — direction.

After all, during his nearly 12 years in power he was never afraid to challenge the old assumptions and provoke people into thinking and then arguing about the new attitudes on so many cultural and public policy issues. And although Rudd expresses himself in different ways, his government’s record thus far confirms this conservative trend.

Hero Worship

Many thanks to Tom Switzer for taking the time to reply, and permission to use his references but respectfully, I find it hard to believe that even the great John Howard could overcome all the massed (albeit sickly-minded and morally deficient) battalions of TEH LEFT on his own; though Howard did attempt to the limit of his influence by stacking the ABC Board with conservative ideologues and personal friends and by destroying Student Unions, considered by him to be dangerous purveyors of radical politics and thus inappropriate to be associated with education.

Try It From This Angle

In my opinon the right controls the most influential media and the most influential University faculties. Simply, this is why the polity is conservative – the most important opinion-forming institutions in Australian society behind the family (ok AND J.W. Howard, Order Of The Stealth Bomber, AEI Centrefold for December and Special Consultant to the Australian Wheat Board) are conservative.

The ABC, the Humanities/Arts and the opinion pages of The Age are mere niche markets. Real power is wielded by Alan Jones, the Daily Telegraph, the owners of commercial TV and the Economics and Commerce faculties. Nary a lefty among THEM.

Mr. Howard (and Mr. Rudd) treat Alan Jones et. al. like royalty because he’s speaking to the ‘Howard Battlers’ who, as Tom Switzer said in his SMH article, currently decide Australian elections. And they read The Telegraph.

Most of them, plus most of the rest of us are concerned about their Super and/or paying off Mortgages. These are long-term projects and provide a conservative inertia to economic thinking amongst the mass of voters. My apple-cart takes 40 years to pay off in Apples. I don’t want no flamin’ Marxist redistributing any before they are ripe.

In addition the collapse of the Soviet Union means the major alternative has been discredited while we all looked on.

Why Humanities Professors Do Not Appear On ‘Sunrise’

Business has got money. Humanities professors do not. Hence Business can buy media time whereas Humanities professors can not. Thus commercial media supports the interests of Business, not Humanities professors. Business lives on consumption. Hence the dominant message on commercial media is ‘consume’ not ‘share’.

Leftist Freak Show

I recall an appearance by the Middle East academic Dr. Robert Springborg on commercial breakfast TV at the time of the First Gulf War. Springborg gave an opinion that the USA has done morally repugnant things in the Middle East at which point the disgusted presenters treated him like human vomit.

Non-conservative politics are simply obscene to the breakfast TV crowd. The media is dominated by the right, not by leftists. When a leftist appears in Prime Time it’s for the purposes of a freak show, intentionally or not.

Where The Left Wins

Where the left HAS gained ground is where their agenda intersects with the basic self-interest of the masses e.g sexual permissiveness, killing unwanted babies; or where this is in not in conflict with the right e.g. Women in Work equals increased labour force, should equal cheaper wages; or sometimes where the left cause strikes popular appeal e.g Climate (crucially supported by scientific consensus).

But the fundamental gravitational pull toward the hip-pocket nerve is always salient. This is why the right attacks Climate on the basis of ‘it’ll cost yer’ and its also why disapproval on the Iraq War did not shift votes in 2004. Australians were much more concerned that Latham would cost us money on the Mortgage than we were about half a million dead Iraqis.

Once again, Tom, thanks for taking the time to reply. Any further correspondence welcomed.

Tom Switzer, former senior Liberal Policy advisor to Brendan Nelson, former Op-Ed Editor at the Australian and Research Fellow for the Institute of Public Affairs, is confident that the right is in control of the political agenda in Australia.

Writing in the SMH this week he said:

notwithstanding the loss of conservative government, the centre of political gravity in Australia remains conservative. No longer, for instance, is welfare seen as an unconditional right. No longer are activist judges rewriting our constitution. No longer are Australians ashamed of our past, pessimistic about our future and unsure about our place in the world. In this environment, why should Liberals lurch left when Labor could only win power by moving right?

Switzer’s fundamental political and cultural (as in Culture Wars) orientation is exactly that of John Howard’s. Just read that second last sentence again. Its almost verbatim what John Howard said was the greatest achievement of his regency.

Given that, I wonder if Tom Switzer shares Howard’s views that the media and Universities are dominated by an adversarial soft-left. And if so, how does Switzer account for his assertion, with which I agree, that the political centre of gravity in Australia is firmly controlled by the right.

Are the soft left so ineffective that even with control of both the media and Universities, the two most powerful opinion-shaping institutions in the world (behind the family) that they cannot change anyone’s mind ?

I wrote the following email to Tom Switzer. If he gives permission to quote from his reply you’ll be the first to know.

Dear Mr. Switzer,

I read your article No need for the Libs to move left in the SMH and found myself largely in agreement with it, particularly these thoughts of yours:

“notwithstanding the loss of conservative government, the centre of political gravity in Australia remains conservative. No longer, for instance, is welfare seen as an unconditional right. [snip] In this environment, why should Liberals lurch left when Labor could only win power by moving right?

I was wondering if you share John Howard’s beliefs that the media and Universities are dominated by the soft left (presumably since at least the Keating era) and if so, how is it that the centre of political gravity in Australia is conservative ? What conservative forces are countervailing the media and Universities to produce this rightward shift in our polity ?

Here are John Howard’s comments:

To the American Enterprise Institute inter alia Iraq:

“But perhaps the most convincing sign of all that some progress has been made is the significant decline in media coverage of Iraq – noticeable both in the United States and Australia. The dominant left-liberal elements in the media in both our countries apparently cannot bring themselves to acknowledge good news stories coming out of Baghdad.

To Quadrant Magazine 2006:

“Despite a more diverse and lively intellectual environment in Australia compared with past decades, we should not underestimate the degree to which the soft left still holds sway, even dominance, especially in Australia’s universities.”

Best Regards,


Hey cool…

A milestone for Under The Milky Way
Blogotariat just added me to their Blog Roll and subscribed to a feed.
That’s my first one.

I am a Blog. 🙂

In August 2004, Margot Kingston asserted that John Howard was creating a ‘pre-fascist’ society in Australia, a characterisation that Gerard Henderson in this article, ‘Fascist Australia’ in The Age described as ‘nuts’ and a ‘fantasy’ and elsewhere as ‘psychotic’

To suggest Australia or Britain or the US today are fascist is just, well, nuts. The use of such a label in a modern context indicates a total misunderstanding of both democracy and fascism

To make his case, Henderson cited two scholarly works on Fascism, Roger Eatwell’s Fascism: A History (Pimlico, 2003) and Robert O. Paxton’s The Anatomy of Fascism (Allen Lane, 2004). Paxton typified Fascism

as a form of political behaviour “marked by an obsessive preoccupation with community decline” and by “compensatory cults of unity, energy and purity”. All this combined with the creation of “a mass-based party of committed nationalist militants” that “abandons democratic liberties” and embraces “redemptive violence”.

Henderson summarized:

It does not sound like Australia in 2004.

Contrary to Henderson, I think that certain of Paxton’s hallmarks of Fascism are readily discernable in John Howard.

The Redemptive Violence Of Cronulla

Howard’s embrace and support of the prominent broadcaster, Alan Jones, even when Jones had just been found guilty of inciting racist violence leading up to the infamous Cronulla Riots as well as Howard’s refusal to condemn the use of the Australian flag by the rioting thugs as a banner for racist thuggery indicates that Howard is willing to tolerate the redemptive violence of the Anglo rioters as they attempted to reclaim Cronulla beach from aggressive, lewd Lebanese-Arab-Muslim youth.

It is characteristic of Fascism that symbols of state are employed during attacks on unwelcome minority populations.

Howard tried to draw a distinction between pride in the Australian flag and the thuggery of those wielding it at Cronulla. If Howard loved Liberal Democracy and the Flag as much as he continually claimed then he should have been disgusted at the use of the Flag as a rallying cry for brutality. His inability to express disgust at the desecration of the Flag by the Cronulla thugs leaves open the suggestion he may have approved of its use in that context i.e. that of beating up wogs and telling them to get out and go home.

Cleansing The Media

Further, under Howard, police were desptached to “cleanse” (close enough to Paxton’s ‘purify’ for me) the media of anti-Howard elements using the violence of physical destruction of journalists’ computers

[Journalist] Travers later described to SBS Dateline how the officials spent all day trawling for information and smashed computer hard-drives with hammers in what they called an act of ‘cleansing’ that they performed regularly (‘We do this every day’) , and that they’d carried out perhaps ’70, 72 or 73 times.’
From ‘Conservative Correctness’ By Mark Davis, ‘New Matilda’ 21 November, 2007

Howard’s intimidation of the media, so shockingly demonstrated by the assault on those sympathetic to Wilkie, was not designed to protect national security but simply to warn media to stay away from Howard’s vulnerabilities. Indeed, Howard was quite happy to leak national security documents to friendly media when it suited him, doing just this by sending classified security materials thought to contradict Wilkie to Howard-friendly journalists.

Is This Where You Live?

Did you catch those words from Howard’s Goon Squad ? Every day they were out there smashing the hard drives of persons inicimal to Howard. This is behaviour characteristic of Totalitarianism. I would expect merciless intimidation of the media in say the former USSR or current day Turkmenistan, but we got it under Howard.

Abandoning Democratic Liberties

Howard professes a love for “liberal democracy” and considers himself a faithful conservative with reverence for noble tradition but introduced counter-terrorism legislation which removed democratic rights and liberties from the general population. While many in the general public sympathised with the temporary need for additional police powers and even the reduction of some much cherished democratic liberties, Howard prevented Parliament from debating his Bill and tried to hide its existence from the general public. Howard does not love democracy, parliament or tradition so much that he will abandon any of them when he feels appropriate.

The counter-terrorism laws were introduced into Parliament on Melbourne Cup Day. Howard fully realised of course that the Melbourne Cup would fully divert the general public’s attention from any political news and thus lessen public scrutiny of the Bill. He also insisted that Paraliament vote on the Bill on the same day that it was introduced.

It is almost impossible to believe that Howard could hold the Parliament and Australian people in such contempt. When democratic liberties are sneakily done away with, when Parliament is trampled on, one must ask serious questions about the totalitarian tendencies of the government, which during Howard’s tenure was, in a practical sense, a regency.

The Fostering Of Exclusivist Nationalism And The Taking Of Political Prisoners

Fascism is associated with an unhealthy exclusivist nationalism. Howard’s dog-whistle 1996 Election slogan ‘For All Of Us’ along with his condemnation of ‘vocal minorities’, his assertion that non-mainstream elite interest groups were appropriating an unfair proportion of public resources and legal advantage, his protection of the bigotry of Pauline Hanson, his support for the racist invective of Alan Jones, his encouragement of hostility toward and rejection of Middle Eastern boat people allowed sour concepts of intolerance and racially-based suspicion to settle in the public imagination.

Howard frequently voiced his veneration of the Australian flag while mixing the volatile brew described above. While it is perfectly acceptable to love and respect the national flag and to encourage citizens to likewise respect Australia’s best traditions and national symbols, Howard’s overall tone in regard to nationalism and patriotism always carried with it a menacing tinge for those outside Howard’s mainstream which even sickened and alienated many who otherwise qualified for Howard’s unqualified acceptance by reason of Anglo heritage.

Howard’s nationalism always left someone feeling under threat and political prisoners (Hicks and Haneef) became a reality on his watch.

Henderson feels that Kingston misunderstands both democracy and fascism. I say that Henderson failed to understand what was happening right in front of his eyes.

More on Pre-Fascist Australia here