SECTION FOUR, PART THIRTEEN

You Wonder, Why? Past christmas, and a number of technology users get frozen out of being able to access systems, either through inadequate servers, systemic overloads, or just straight poor design of load features. nintendo freezes all countries apart from Japan and US. Some "stores" can't open because of design flaws. See if we can spot the problem here. Some decision-making person, or cabal of people, have decided that even if you have legitimately paid your money to buy some Product/service which ultimately depends upon access to modern download, or WiFi technology, then you are arbitrarily chosen as the person not to receive that service. Let's try this in another format. I go to the market, give you my money to buy the potato, and you refuse to give me the potato. Do i get my money back. NO! That is apparently how it works these days. Some people pocket the money but immediately become unaccountable for the outcome, or delivery of anything. What a farce modern economic systems have become if this is tolerated as acceptable commercial practice. There is no sense of equality, or honesty for that matter any more. And if the behaviour is tolerated, then it will take on a more egregious form next time. That is how systems work...they tend to find the extremum of every behaviour type, until they are drawn back into line. Time for technology to be re-imagined as a public infrastructure asset, and removed from the whims, and peccadiloes of lesser, unaccountable decision makers. Time for the fraudsters of this world to be called out for what they are, and immediately give the money back, or go to gaol, or get frozen out of some markets. Time for honesty, and fairness, to be re-invented, and repositioned as IMPORTANT. AND TIME FOR OUR ELECTED REPRESENTATIVES TO RECOGNISE THAT THE POPULATION DOES NOT HAVE TO TOLERATE EGREGIOUS PRIVATE SECTOR MISBEHAVIOUR SUCH AS THIS. We need a revolution in thought, about how systems are supposed to work. We cannot tolerate some who get obscenely rich, but not accountable for the delivery of anything. Some assets deserve non arbitrary decision making, and the public deserves nothing less than fairness. A new mechanism is needed if these bare minimums cannot be delivered.

SECTION FOUR, PART TWELVE

You Wonder, Why? Christmas Cheer. We have Gonski leaving the Future Fund to the job of Chair of ANZ bank. Forget that he cannot run Investec! Give the FF to Peter Costello....he set it up. Shame that he doesn't know shit about the governance of a proper investment fund.....when has skill been a requirement for any task. Bernanke leaves, and the whole world suffers for his poor judgement, and ego. I just had a clown of a neighbour swearing loudly at his spouse all day. When i challenged him about his volume, he stated that he did not have to listen to me. Perfectly true. I wish i hadn't had to listen to him. Suffer manners these days. Do I call the police? Do they think i am a whinger? I wish to walk down the road....i do not need to feel threatened. If i do, then i can protect myself. I need to get some weapon to respond to the nastiness which surrounds us. People think they can tax me, cost me, impose upon me, threaten me, inconvenience me, interpret me, boss me, shit on me. I DO NOT DO THIS TO THEM. TIME TO RECLAIM THE LAND. Inequality has to stop. MERRY CHRISTMAS, and i hope you all get the weapons you need to defend your lifestyle.

SECTION FOUR, PART ELEVEN

You Wonder, Why. As i have commented previously, the social contract demands fairness, justice, honesty, and non arbitrary rules based application of judgement, so that we don't all just spin off and start killing or inflicting physical violence on each other to get by. Psychological violence is another matter, and probably left for the next series. Leadership requires that certain individuals are able to understand and apply these concepts for the public good. But a funny thing happened during the GFC. Decisions were so fragmentary and arbitrary, that it has left the current group unable to fathom what is required, and part of this arises, as i have commented before, because so of the perpetrators of what both caused, and resulted from the GFC, have not been adequately punished, at least from what the public sees. So the current crop of buffoons who pretend to be leaders have no prism by which to examine their frame of decision making. This weeks case-in-point, the current debate about General Motors closing its car manufacturing facilities in Australia. General Motors made the call based upon the argument that Austrlia's cost base is too high. This presumably relates to both labour and material costs, and in this regard, there is one singular cause.....the high relative value of the currency. You see, when the bean-counters in the US look at global costs, the high Australian dollar distorts both labour and material costs, and makes them appear quite high. Of course, the high Australian dollar is a direct descendant of the egregious money printing, and competitive devaluations, of major other currencies as they have attempted to out spoon each other over the period since 2008. So Australian motor vehicle manufacturing has been diminished as a direct response of policy decisions designed to destroy our manufacturing, and keep overseas manufacturing alive. Forget free trade, and allied protectionism, arguments. That a foreign company can determine to close australian activity, when it has been economically jeopardised by vacuous and egregious policies in their home country....then you have just established the policy argument for local ownership having priority over foreign. It is not in australia's long term interests to lose this capability....but there you go. Leadership......no the real problem is the bully boy behaviour. Julia gillard did the wrong thing on a number of her policies by falsely tipping the playing field towards her union mates as a reward for installing her as leader. MAKE NO MISTAKE HERE....the power-lust to be the first female leader was more important than fairness, and so it stained her decision making, and hopefully her legacy. The SRC minded current idiot of a PM knows that by losing car manufacturing in Australia, then he is continuing to hobble the union movement, because the auto manufacturing area is one of the last truly significant industries for union power, and representation. This is not about anything other that school yard policies, and Australia is worse off for it. What say some of the unemployed auto workers get their guns out, and shoot some bankers ( who seem to have done quite well out of the protection afforded to them during the GFC ). You see, fairness don't exist here, policy is arbitrary, and as such, since the leaders don't vouch-safe the social contract, then it really is the law of the jungle out there.

SECTION FOUR, PART TEN

You Wonder, Why? Mandela dead! Lots of public grief. If he really was an element of reconciliation, why are so many jarpies in Australia. Obviously they dont like the rainbow kingdom as much as they should. My problem. Jarpies are nasty people. The combo of dutch, jewish, and german generated a nasty type, who obviously hated africans, and years do not pacify. Time to go home....but Zuma dont help. The poms fought a war there. They should have finished the job. Nasty people, nasty style. Nasty is not a social contract concept....but i aint met enuf to change my mind, so they aint part of my world.

SECTION FOUR, PART NINE

You wonder, why? Quick one. David Gonski. Investec closing operations. Judgement. Not David's. people who listen to David. Too many people. Whose judgement is flawed. Too many people. Sorry. Not good enuf. The court's advisors are seriously flawed, and their recognition of his inadequacies, suggest their judgement is flawed. This world is flawed. Time to pull out the rocks. In Germany, 1930's, kristalnaght was close. Social contract deserves honesty....nay, demands honesty....self interest, and poor judgement by leader-aspirants, has no role. Time for barricades.

SECTION FOUR, PART EIGHT

You Definitely Wonder, Why? It didn't take long for Tony to be exposed. Within a few months of taking over as PM, the 50's thinking goober wants to play machismo with a country with 10 times Australia's poplation, by refusing to say sorry for spying on you, and your spouse, and your senior ministers. Forget the " everybody does it " excuse...everybody knows that everybody does it. You are making the same statement as I have two legs. But "respect" say that the line should have been.." If i had known i would have exercisd more,direct control over the policy". Tony receives a lot of very poor advice, by some obviously fervent supporters. How many times will we see foreign dignitary scenes, where the camera pan picks out images of Peta Credlin. His policy advisor appears just a little too frequently for me not to be unconcerned about her influence. Is Tony that bad a decision maker, that he cannot handle those set piece moments, without her looming into the frame. All too unelected for my liking. They say Tony likes Maurice Neumann, last week's special. He also listens to David Murray. David comes with some heritage. From his union busting/contract busting period as head of the Commonwealth Bank......if you ever meet him ask what did happen to the Admiral's outfit he wore to one major meeting of staff during the 90's, trying to both steer , and right the ship , no doubt..... Tony's given David the gig of examining the financial system, to ensure that it is competitive, and fair, and all those noble sounding concepts. Now of course, David was one of those coterie of banking heads who presided over the downsizing of the bank branch systems, so that in able to compete with the offshore banks, determined that it was good policy to treat retail customers with contempt, and significantly lift the needs for the banks to rely on wholesale funding markets...typically offshore. So David, and his cohort, were the very ones who jeopardised the nature of the financial system when wholesale funding dried up in 2007 and 2008. Luckily David had moved on by this stage...to head up the Future Fund....itself having a colourful role in 2008 when it became a form of lender-of-last-resort to banks to help supplement some of the foreign withdrawal of that wholesale funding. Suddenly all the bank strategies of showing contempt for retail deposits became horribly exposed for its short sightedness...and only an egregious taxpayer put option of government protection of deposits that steadied the banking system. So does David really represent the best, and most qualified, Australian to conduct a competitiveness audit of the financial system, let alone have any vague conception of what fairness really is? I am sure James Packer, and the Barangaroo casino/hotel thinks David is swell....just not sure about fair! Like Yellen, people who were part of poor prior decision periods don't seem to suffer for the damage they have inflicted. I really do feel that the social contract, and justice/fairness for the population, are coping an overwhelming drubbing at present. Maybe time will tell, but i really have my doubts, and leadership is not particularly inspiring. Tony....this ain't an SRC meeting anymore. Grow up, and start making better choices.

SECTION FOUR, PART SEVEN

You Wonder, Why? What a farce! Part of the reason that the social contract is meant to bind is that we accept the slings and arrows, but still travel along. Reality suggests that we cannot always win, and that every now and then we have to accept what comes along. I will call you out...Maurice Neumann....what an ordinary contribution, whilst masked as being successful. That you presided over the ASX during the GFC should immediately notify people of you credentials. But like Gonski, your desire to be important requires you to comment when you should shut your mouth. You CEDA address was appalling for a person who was paying out on a government, who saved them professionally during the GFC. You obviously have a terminal illness, which should take you out prior to any change of Government again, because sure as hell i would pay out on you for your infamy. The Whitlam Oration, by Noel Pearson, commented that racial discrimination can still be mandated under the Australian Constitution. For once, Noel, I do not want the Constitution changed just yet! Too many Court Advisors to be punished prior to the referendum!!

SECTION FOUR, PART SIX

You Wonder, Why? One of the interesting concepts of the George Orwell novel, 1984, was the efforts at press control as a way of ensuring that the ruling elite had control over the messages being received and discussed by the population. A number of differing causes are captured under the rubric of information supplied to the public. Some where the ruling dogma is to supply as much forward annoncement as possible, as a way of ensuring that expectations are well formed, and that no destabilised misinformation has capacity to built, and create its own life. This is the laudible concept, as theoretically argued by the Fed Reserve, as a way of controlling expectations about the future course of interest rates. Given the seeming consistency of this message, what is probably so surprising is that economic activity has not picked up more quickly. Perhaps, the banks were much more saddled with bad loan structures than became public ( seemingly inconsistent with improved communication? ), or the public does not think trust the Fed's ability to control the outcomes.......utterly reasonable expectation given the arbitrary, and complicit, behaviour of the Fed. But, the case in point, is I am currently viewing the "weekly update" on asylum seeker arrivals...a particularly contentious, and emotional, policy zone in Australia for a number of years. The public now effectively receives no updates, apart from anecdotal improvement in twitter hits, etc. the new government has moved to a no communocation framework, by arguing that all updates, are captured under being "operational issues" and cannot be publically discussed. The military personnell that has been placed in charge, produced one of the most testily ridiculous response to legitimate questions about a further boat in trouble, yesterday. So we have either supposedly lots of information, but this is rubbish. The idea is to supply as little as possible, BECAUSE, ONCE THINGS GET OUT INTO THE PUBLIC, it is increasing difficult to control the subsequent debates, because they take place in too many various media formats to know how the debate is heading. Same with recent news items which, shock horror, say governments spy on each other. The joke is not the spying, or the faux horror that it happens, but that people like Snowden, get pilloried for making these details public. I travel overseas reasonably regularly......i do not need to go to a country which has a dim view of Australia, because of some announcement of spying, which would not be potentially personally affronting, if governments had been honest with each other, and their public. Again, arbitrary decisions made by persons who have impacts on my freedoms, and without either appreciating that it does affect me, and not asking my opinion. Justice and equality require full population support, and acceptance, otherwise there is no framework for the deliverance of equivalence. You have no more right to bully me, than i do to you. If you create an environment where survival of the fittest is the only logiacl operating mode, then you create the framework for an inevitable civil war. Are people too stupid to see the logical extension of their policies?

SECTION FOUR, PART FIVE

You Wonder, Why? So Batista goes! Another asset pile which doesn't match the debt pile which built up against both the assets, and the promise. Too much money, chasing too little honesty. In medieval times, the marketplace was truly discoverable....cabbages on display...and the punter knew what they were buying, and being sold by the merchants. Somehow, we in modern society accept that increasing levels of market, and product sophistication, allow increasing degrees of less than honest commerce. I DON'T THINK SO. The philosophy of liberal democracy doesn't mean that dishonesty should become a high probability outcome.....so how do we short-circuit current trends which seem to reward it? One feature of medieval society was the role played by the Court advisors. Those close to the power base could exert all sorts of influencing on the ruling elite, and being able to be a Court advisor was a reasonably sure way to increase personal wealth. Just preferment really. Nothing intrinsic, probably just a bit more cunning than other citizens. Must have been fun really, trying to get ahead, by manipulating those around you to listen to you rather than someone else. Proper, and true, contest of ideas. The whole system of court honours, and titles, to indicate ranking...which over times turns into some perceived continued excellence...when it would have all been transitory when it first started. Australia still has an honours system, to reward something whcih leads to some advancement of society...Order of Australia, Medal of the Order of Australia, etc. Like anything else, these can be subverted by people who wish to garner one of these awards for their social advancement potential, despite being structurally dishonest. Australia has a number of examples, but the current case of the political figure, Obeid, would be a perfect example of social awards being advanced, when the individual is of a much more marginal nature, in terms of their true contribution to society. Lots of examples. What happens when a good example is in my opinion one of those cases where the overall contribution may not be as unalterably good, and correct, and belongs to someone who is seen as one of the scions of society...collecting plaudits over many years for being important, and powerful. Does that mean that we adopt differing measures, we in fact give them more latitude...because somewhere, somehow, there is a ledger of good/bad which allows greater degrees of freedom for our new version of Court advisors. I would contend, No. In fact, because they are trying to be authority figures, they should set a higher, and consistently higher, standard...because their leadership is something which demonstrates how the rest of society should behave. Again, our current liberal democracy seems to be being subverted..leadership is not in evidence, just simply self preferment/advancement. Who? Again, could be many. But let's get controversial again. If I said a society giant, we would need to provide some background. Chair of an investment bank, who presides over the appointment of an individual who worked at Allco, during its "glory?" days. Poor judgement at the bank. Who was on the Asx when trying to deal with the GFC, and some of the contingent, and arbitrary decisions, made during that period. Poor judgement at times by the ASX. Who was on a task to find a nominee for the chair of a sovereign wealth fund, and finds himself. Interesting concept of conflict of interest, or propriety of separation of tasks! Who is now on a PR campaign to get the Chair of one of the four banking majors...one of the banks that benefited fom the portfolio largess of that sovereign wealth fund, when the banks were running around to plug their wholesale funding deficits in 2008. Well recognised Court advisor. But that is all...Court advisor. No more preferred than you or me....but that is not how it works, is it? Have a government enquiry named after you, and you become immortal. Make it about Schools, and you look positively magnanimous. All very colourful, this Australia. Social contract regards leaders as persons who help to establish standards that all should aspire to. Sometimes the demonstrable standards could be higher, or more profound, shouldn't they?!!

SECTION FOUR, PART FOUR

You Wonder, Why? Likely to get controversial with this one, but sometimes metaphors are not understood. I had the need to travel along one of the major roads through the Blue Mountains on Wednesday. Why any significance? Well the Blue Mountains , while not of a high altitude by global standards, they are particularly rugged with significantly sharp valleys which fall away very quickly from the ridge line that the road largely follows. But they are also heavily wooded, with Australian eucalypts being the main variety. For anyone who knows or appreciates, the Australian bush burns with particular intensity, and a bushfire started in the region on the previous Thursday, and was still moving up and down some valleys on Wednesday. Worse still, Wednesday as slated as being a particularly nasty day, with expected wind gusts of 100 kms per hour, likely to fan the flames, and most persons were warned not to travel, and residents were told to get out. All dreadfully sensible. I have been in, and fought, Australian brush and bush fires a number of times over the years, and i do know what happens. More importantly, there seems to have been a "sea-change" a number of years ago in the policy by which fires are fought. I can understand why there was a change in policy......a number of volunteer bush fire fighters got caught on the wrong side of a flare up, and were unfortunately killed. From then on policy became let the fires burn until they get close to property ( defined as houses, and real estate), and then try to fight them at that point. In the meantime, if opportunities exist for back burning, then carry those out. Firefighters work extremely hard, in dangerous conditions, and deserve our full support. Most however, are sent to watch and aid locations, and do no real work, but receive strong local community support. Good luck to them, they are following orders, and have good equipment at their disposal. So where the controversy? Well, one of the fires has since been disclosed as being initiated by poor ordnance practice at a Federal Army base. How tragic that those employed to protect, actually cause the danger to the population. Provided the guilt is acknowledged, and compensation paid, then some recognition is publicly disclosed. I witnessed a koala getting bowled over by a semi-trailer, because it was so distracted it wandered across the main road. The army can't apologise to it, and compensation of a few gum leaves will not bring it back to life. But these things happen....there is no public announcement in relation to this at this stage. So we wait No...this will be the controversy. As indicated, we did the drive on Wednesday, prior to Midday. The wind was beginning to gust, but everyone knows that in Australia, the wind builds more momentum in the afternoon. We went through areas were it would be possible to see all of the firezones, by the chimneys of smoke which indicate burning, or smoking locations. nothing on the east of the mountains. Nothing. No significant fire spots. Doesn't mean it is under control, but it is semi-quiesant. Only one patch on the Western side, and that was being closely monitored by helicopter. Put that one out, and you do a fair amount to control further difficulties. but that wasn't done, and the fire later flared up, and burnt more forests, more houses, etc. we drove through again this morning, and ow smoking piles everywhere, and hazardous smoke everywhere. I will argue on what i saw, that cap off the wednesday smoker, and we would not have been dealing with the last two days of further distress. So to me, a change of policy was required. Flexibility. So who will be responsible for the damage for the last few days, when it should have been capped on tuesday/wednesday. Herein lies the social contract dilemma. Everyone is equal, and entitled to community efforts. If someone is in charge of an emergency situation, it is almost always with the communities full support. But that doesn't mean that decisions should not be challenged. If poor decisions stop decisive action from circumventing damage, then should those who suffer the damage be able to accuse those in authority, that their authority has not been exercised correctly. If judgements are poor, then those who exercise those judgements need to be replaced. Old operating policies need to be constantly challenged, and challengeable, to ensure that the BEST possible effort is expended at all times. If it isn't bushfires, but financial markets we are talking about, does not the same principles apply. All regulators need replacing. All authorities have exercised too many arbitrary powers, and not been responsible for their impact. Nothing should be beyond being examinable, because even that koala deserved an answer as to WHY?

SECTION FOUR, PART THREE

YOU WONDER, why? The West must have too much wildflower pollen in the air. In the 1970's, Western Australia had a particularly colourful reputation for trying to make up the size of mining resources as a way of getting the greater fools from the brokers/sharemarket community to pay silly prices for listed companies. Think about salting mines, and assay cores to try to get some inflated sense of the size of ore-body, or inferred resource. So notorious that some companies entered the lexicon of the day. Poseidon, Narbarlek. Australian even had major enquiries, and the NCSC was born as a result. Cowboy capitalism at its very worst. So the lesson......nothing changes, but the social contract lesson.....community perceptions of justice do not positively correlate with wealth, and rich bastards do not have a different standard of meeting the requirements to be honest. There are a couple of delicious switch-back loops this time. First the primary player...Andrew "twiggy" Forrest. His first foray at special Western Australian status relates to Anaconda, and he didn't cover himself in glory. Never mind...let's recalibrate. The calibration was Fortescue, and there was enquiries about whether FMG put out deliberately misleading press releases about the status of its business contracts. Twiggy was even being examined about whether he was a fit and proper person to be a Director. In the 70's it was falsifying assays, in the 00's it is press releases. See ....nothing changes. Not to mention, lots of early stories about poor grade resources, broken trains, dead workers in housing, aka, shipping containers. Still, he fought through to be able to make tax-deductible named scholarships donations,... No doubt so Western Australia can make an academic framework to its infamy. Is Twiggy alone...no, there are lots of money made from bullshit press releases, which overpromise, but are designed to short fuse a profit opportunity. Ask Richard Branson if he has ever seen the practice of this is any of his airline activities. Ask anytime, a broker puts out a tendentious comment, when he is looking to exit his positions via the patsies who are following the commentary's advice. So should the Twig be able to redeem himself by subsequently throwing his money to the great unwashed. Actually, no. Governments dont receive plaudits by throwing money to the unwashed...nor should they. Private philanthropy doesnt redeem illgotten. But the funny twist. The Twig thought he should be able to comment about last week's fuglie, by criticising Gina. Talk about the West eating its own. Thats like Narbarlek calling Poseidon crooked. Shouldn't there be some solidarity between sandgroppers. Maybe the twig thinks he is so important he can call out Gina. But Gina's got more money, and at least her resources have typically been pretty sound. The twig is almost as unappealing as Gina, but i must admit the press release concept really grates. You see, the bernank thinks that the world is controllable through announcements....part of his research is falsely attuned around announcement effects, and his belief that runaway inflation is controllable by saying that "we are watching it closely" will be fully supported by Yellen. She has said so in the past at speeches that i have heard her give.. I have a new press release.....i am always right...now send money as quickly as you can. Does this work for you?

SECTION FOUR, PART TWO

You Wonder, Why? So some Leightons ex-executives resign from other subsequent positions. The minor sacrificial lambs, but Wal King and others not affected yet. Progress, but the public doesn't accept partial solutions. Justice says all who are guilty must pay, or all we are left with is the "survivor" mentality. If others get found guilty first, that purges society's desires for revenge, and the latter offenders get away scot-free. NO, NOT THIS TIME!!!! So, what is lesson number two. If the first is that we shouldn't accept corruption, then surely the second is that we shouldn't accept indifference. So what is our current cause? Choose one....Batista in Brasil, the Kochs in the USA, the entire Italian government, Gina Rhinehart in Australia. The indifference is US if we continue just to ignore what these things mean, and refuse to demand higher standards. Gina didn't earn her wealth, she got it from Dad. Dad also gave her incredibly bad genes ( in terms of appearance, and capacity to get seriously fat) , and a common touch which moves beyond being attractive, into the really banal, and bogan, that only Australians can perfect. Gina also tried to bully her children, because she liked power over shareholdings, rather than love. Apart from representing so many distasteful verities, Gina likes to pretend that she should be listened to in terms of public policy. If she cannot have the bully pulpit, then she will try to force the media to support her positions by buying them. Does money always give some precedence? Where did this peculiarly USA mentality gain such almost benignly acceptable precedence. Don't we have ample evidence from the USA that money should give no power at all..think Ivana Trump as landlady to get the picture; or Kris Jenner, and her band of plastic surgeons. Gina is so in love with the desire to be important, she forgot to be important to her children. The sooner these people die the better...like for Rashkolnikov, she absorbs way too much oxygen for my liking. Indifference? We find these people, and use social media to call them out. In Gina's case, send round a gross of warm meat pies, or a free invite to one of those hot dog eating contests. Maybe she will die in front of us. Maybe she gets us to be indifferent no more.....people only have a right to a role in public policy formation when they do not carry the disingenuous baggage that this ugly fat woman carries. She is a giant bag lady. Show her the exit!!!! Let's rail against indifference, so that we are indifferent, no more.

SECTION FOUR, PART ONE

YOU WONDER, WHY? Been away, attending weddings and funerals. Plenty of scope to think about what the social contract means, but more importantly, how it is enforced. You see, the concept of justice and honesty applying equally to the whole population, which is why they will tolerate living next door to each other, without resorting to violence, or other forms of bullying to get their way. Everyone is supposed to have equal access to the rules, the adjudicators, the support systems, and this is why they will tolerate meritorious advancement by some individuals. Advanced social structures have a whole series of institutional interlocutors who, acting in the best interests of the whole community, will ensure that fairness, and honesty, tend to be the majority guiding principles, even if they can not be demonstrated as being in existence all of the time. Punishment, in various forms, exists for those who wish to deviate from social obligations to the particular advantage of themselves. Of course, the fundamental philosophical difficulty with this is the assumption that all recognise, and accept the guiding principles. You see, the contract only works if all people recognise that they need to comply with the contract. We have some serial abusers of the need to meet their side of the contract, and the pity is, they probably think that abusing the contract is a sign of their meritorious advancement. They don't think the same...do not feel the need to accept the same conventions...yet expect the support of the military/police structures to intervene against possible violence against themselves. They expect the general population to underpin the support superstructures, but don't wish to meet their obligations to that society. Case in point. Leightons is a stock exchange listed construction company in Australia. It has recently hit the news for what appears to be a reasonably systematic pattern of bribery over the last few years to win, pr maintain contracts....the stated bribery being for projects in jurisdictions other than Australia, but that is beside the point. From a social point of view, proxy advisers have been particularly aggressive in relation to the liberties this company takes in the rewarding of remuneration of its executives...way too generous with other peoples money. Some egregious payments would now seem to have been made to people firmly implicated in the offer of, or knowledge of, the bribery. Now lets break this down....this is a company which expects fairness to apply in the rewarding of Australian construction contracts, tries to sidestep fairness in other jurisdictions, pays high rewards to its executives for being dishonest, on the basis that this is their contractural "due", and says to hell with the general shareholders, and population which pays for its existence. Mindset? They don't quite think like you and me, do they? This is the Who Dares Wins behaviour of the banks over he last few years. There is no thought that these types of people will be able to be re-conciled to normal society values....we should not fool ourselves that these people have any conscience about anything...it is a get away with it if you can behaviour. These people are not self-redemptive. If we assume bribery is an unacceptable social behaviour, and the proponents are not self-redemptive, then the institutionalized punishment structures need to be invoked. There is no falling between the cracks here. But, No. Neither ASIC nor the Australian Federal Police have done anything. Even the ASX has not done anything....Shouldn't listed companies advise the exchanges if some of their revenues arise from bribery laced contracts, so that all the population of shareholders can form a view about the quality of the corporate culture. Doesn't people who advance themselves through bribery, and not be punished, just create an environment where the rest of the population will think that bribery is the preferred way to get ahead. See! The social contract has been subverted, and dishonesty becomes the guiding force in social relations. Do these people, like Wall Street, have some form of racial profile which creates a problem with particularism. Dishonesty rules, because there is no ethical or moral frame apart from the false advancement measured by the collection of money. Bribery is a form of bullying through the use of money. It is an attempt to gain an advantage against those who are morally framed not to bribe, or do not have the resources to match the bribe. Either way, they are not part of MY society, and they will not meet the needs of the social contract. It is either by force of money, or force of guns, that you get these people to comply with being human beings, in a just and fair society. Time for the interlocutors to step up, and punish them....and quickly!!!

SECTION THREE, PART SIX

CONGRATS. THE ARSEHOLES WIN. If you are reading this, then you are already dead!. Wht a joke! Doesn't the social contract talk to the acceptable behaviour of the population. Fifteen issues to come.

SECTION THREE, PART FIVE

Sliding Doors: The One that Shut on Lehmann. At almost the fifth anniversary of the September 15th bankruptcy, the trick is not so much a retrospective, as more like a "roast". What was it about Lehmanns that marked their card, when it was just as easy to line up Goldmans, Morgan Stanley, and Merrills, just as easily. For those with some corporate memory of the period, foreboding of doom, of " we will need to let one of you fail" had been floating around the markets for a few months prior, without providing any hint of which one would first go. Certainly, corporate and interbank lending had been experiencing straitened times for a number, if not six, months prior to September. That the risk management departments hadn't had multiple apoplexies by September would have to have been poor reflections of their roles. I can remember, using the existence of the Australian trading day hours to remove Lehmanns as a counterparty for some lines of business, prior to the formal closure at midnight, NY Sunday. A lot didn't move as quickly. But intrinsically, what about Lehmanns that led to such arbitrary decisions as to punish WaMu, cut Lehmanns as the poster child, save Merrills, and sucker the population with AIG, not to mention then lead to such distorting behaviours as the policy decisions of Paulson/Bernanke during the if " we don't do TARP, the whole world will implode". Such monumental, and arbitrary decision making, with unaccountable decisions, for unaccountable reasons. All done under the mask of necessity to save the banking system....strangely, to save the investment banking industry more like it. All we have had, is significant wealth transfers, underwritten by taxpayers, and those who became unemployed, and with no right of reply. And the inevitable, and companion piece banking fallout in other jurisdictions, who did not even have a Lehmanns, or a similarly obnoxious equivalent, playing a highly leveraged, poorly funded, investment banking model. THE US IS NOT AN EXAMPLE OF RIGHT THINKING RECTITUDE HERE, and so should have been thrown out of the global financial system, through the freezing of all its cross-border activities. The US will forever regret the arbitrariness evidenced during 2008, and the inevitable decline of the US dollar as a reserve currency, due to the overprinting during the unconventional policy period, just as sterling's eclipse was an inevitable feature of its dumb decisions.

SECTION THREE, PART FOUR

Sliding doors, How Broad Is It?: The thread behind the "sliding doors" series is the possibility of an alternate reality, where the real obligations behind the social contract are fulfilled, versus the arbitrary dishonesty that currently exists. I have commented before about financial market manipulation across a range of areas, but this week's announcement that there might be some form of investigation into the pricing dis-continuities that seem to occur around the London 4pm pricing "fix" within foreign exchange markets has caught my eye. I will explain how it works shortly, but the announcement of the news item on Bloomberg news a few days ago got the usual commentariat huffing and puffing about putting all the usual suspects behind bars, and I do not mean the ones that serve refreshments. When the idea of market manipulation within benchmark rates for foreign exchange, is combined with market manipulation for interest rates ( the LIBOR rate setting scandal ) , and market manipulation of securities in products ( the Goldmans/Paulson CDO scandal ) , and the general scandal for both commodities pricing ( again, Goldmans and its aluminium warehousing scandal) and electricity pricing ( JPMorgan ), it seems that there are very few areas which are not tainted by robber barons. The foreign exchange markets have now virtually universally used the rates determined at 4pm London time, as the benchmark forex rate for that trading day. In general, benchmark rates are no more than that, a guide...and not necessarily important. But they do have some financial importance. As a settlement rate, monies will change hands based upon this being the rate for determining valuations/ margin adjustments, and so there is a possible real financial gain to be made or lost, if rates were able to be manipulated. AND of course, they are able to be manipulated, by falsely driving the price one way or other, to suit the book. The usual culprits for the manipulation are typically the banks involved in intermediating foreign exchange rates, but not exclusively. Anyone with big enough clout can temporarily drive markets rates, if their orders are either big enough, or catch market makers by surprise. But being caught by surprise might happen six times a year, versus the other two hundred and fifty days where a traditional banking gouge can take place. The foreign exchange markets have always been bread and butter gouges for intermediary banks. Anyone who has physically exchanged one currency for another, knows that you pay some transaction fees for the privilege of exchange, and banks have always been the delivery tools for this cash exchange.....the European banks must have had apoplexy when their bread and butter exchange rate transaction gouge was single handedly devastated by the introduction of the Euro. And so, continuing the piracy tradition, banks must feel they are entitled to whatever gaming profits they can garner from manipulation of the "fix" rates. BUT the right to extraction profits, does not make it any less illegal. Any manipulation is dishonest, and since we expect that others will by nature deal honestly in the majority of dealings, the condoning of continual dishonest practices by banks, renders them as less than useful as bastions of society. That market manipulation occurs, is not surprising. Most markets are opaque, and the general public does not either have the know-how or the tools, or the access to identify and expose the market manipulation. So it goes unnoticed....except by those who profit from it, and they are hardly going to expose their own tawdry practices. BUT, once exposed, the dishonest practices need to be stopped, otherwise general society will believe that if we are going to continue to accept dishonest practices, then there is no point in being honest in the first place. We cannot have two rules, where physical infractions are punished by the legal system, but that white collar infractions are not. Otherwise, we have no benchmark, or "fix" on what constitutes honesty. Truth, and honesty, are fundamental constructs for the social contract....otherwise I may as well steal your property, or bust your head when you are not looking, because our current system refuses to punish transgression. The law of the jungle is not far away, when we are constantly allowing dishonesty/crimes to go unpunished. IT IS NOT CAPITALIST TO ALLOW DISHONESTY, and stealing money is not the preferred way to run a society. If I am left with no way to believe that society will encourage honesty as a fundamental principle, then there is little hope.

SECTION THREE, PART THREE

Sliding Doors: The More it Changes, .....: After a funeral and a wedding this week, it is possible to review both the beginning and the ending of things. Almost a metaphor for the Fed minutes indicating that they are giving serious consideration to "tapering". Again, using social media comments as a guide, and specifically, the Bloomberg news comments, as the litmus test, there seems to be a particularly vociferous view about what the population has been saddled with as a result of Quantitative Easing programmes, and the impact of its unwinding. Equally, the perception that the banks have been unduly supported, and not seen as giving sufficient community regard for being saved by taxpayers, and not playing their social dues for that, seem to scar the debate. The reward patterns certainly appeared skewed against the general public, both in terms of the speed of the transmission mechanisms by which the liquidity events have been noticed by the general worker, and the retiree with interest bearing securities as their main form of financial support, have been particularly damaged by the Fed's insistence that it is equity holders, and mortgage borrowers, who deserve special support. In terms of dictating which groups deserve preference, the Fed has unwittingly elevated arbitrary monetary impacts into the main role for monetary policy tools, and allowing those to operate for an extended period of time. To translate "arbitrary" into a real economy diagnostic, which says that unwinding preferencing policies only after the macro-economic measure of unemployment gets to certain levels must assume that the Fed. has accurately modelled the real economy effects of its created behaviours. Given that QE has always been defined as unconventional policy, means that the modelling could not have taken place. Again, one reason why the Fed should attract opprobrium from the general public. That the bond markets are beginning to more fulsomely gyrate to the uncertainty of the unwinding is about time. But what is left? A bitterly engaged population who perceive a world of winners and losers, and their particularly prism coloured by where they sit on that spectrum...no longer quiescent to the belief that central authorities, and regulators are honest negotiants in the management of an economic system. Five years has been too long to be seen as unequally supporting high finance. JPMorgans energy trading fiasco, and this weeks Goldmans options mispricing event only go to stoke the flames of discord, by re-informing that lawfulness has its own form of being arbitrarily defined. THIS IS NOT GOOD ENOUGH. It is time for the population to become engaged more directly by ensuring that their elected representatives recognise that there has not been enough punishment meted yet to the transgressors for 2007-2009 bad behaviours, and the savings buoys which were doled out so generously. Either justice appropriately, or out of a gun barrel, has been a historical precedent on too many occasions. Civilisation recognises either as valid, if the authorities become part of the problem, not part of the solution.

SECTION THREE, PART TWO

Sliding Doors, Which Reality?: One interesting development over the last week or so is the probability of a class action against Allco, one particularly notorious example in Australia in 2007 and 2008 of a number of objectionable behaviours. Just to remind ourselves what happened here; the class action, if successful, will be primarily based around the argument of material mis-statements to the majority so shareholders about the level of short term liabilities disclosed in Allco accounts. These mis-statements will stem from "review" clauses in lending conditions from some banks about the total market capitalisation that Allco had to maintain in order for the debt not to be called in for quick repayment ( or more typically a much more onerous interest rate applying to the re-set ). These types of clauses were not untypical as causing a number of debt reviews during the GFC, in particular in relation to listed property trusts ( or real estate investment trusts, REITS in some jurisdictions), but also applied to a whole range of non-property basd entities as well. Allco, I believe at the centre of this action, had a $2 billion bottom line, but the nature of falling below two billion, and having some debts recalled/reviewed had not been declared to shareholders. Fair enough, equity markets were very volatile during the downturn, and breaching market capitalisation levels on regular bases were almost de-rigeur for most companies during some of the periods of market free-fall. But what was galling about Allco was that an accelerant to the market decline was the forced margin sales of the main management and Directors as their margin loans got called in. The extent of the "margined" shares on issue, and held by the inner workings, were also not typically, or widely known, nor was the trigger points under which those margined holdings were going to forcibly appear on market. So a quick recap...shareholders were generally not aware that low market cap levels were going to breach debt agreements, and that the low market cap could be caused by senior company officials having their margined holdings sold out for under them. I would agree with the proponents of the class action that these material non-disclosures would have made a number of shareholders consider their continued investment in the company at the time if they were more widely known...and as a shareholder, these were disclosures that should have been made. Two things flow from this, however. One of the proponents of Allco has since died, and we were told at the time of his death that he was a good bloke, who did a lot of good things and helped people. He also went down with the ship in losing a lot of money in Allco. Quite apart from a couple of extremely dubious decisions that Allco made as it was slowly slipping to its death, I ( may appear uncharitable here ) did not think that individual who passed away should have been lionised at the time of his death. Forget the good, why don't we balance that with the bad....a number of shareholders....regular Joes and Joans... had their savings affected by the sleights of hand practised at Allco, and similar companies, who didn't seem at the time to feel morally affected by their non-disclosures. And as for losing a lot of wealth, since a lot of that wealth was the invented wealth of a falsely high share price, and margined up for good measure, then if the people had a rich life at all, it was garnered immorally on the backs of more restrained ownership types. The Allco fiasco is typically of a type where fundamental dishonesty ruled supreme for a while...and I ask the rhetorical question. If these people demonstrate that they will be dishonest when they are exposed to stress, who is going to ring the bell when the next period of stress begins to emerge. These people should not have been in a position of trust before, because they have demonstrated that they did not deserve to be in a position of trust in the first place. That should mark the card for a wole range of people during that period, but alas, there still seem too many survivors floating around...maybe further time needs to pass. I can only hope. But the sliding doors moments is when you think about the amount of government "printing" that has, and continues to inflate asset prices, the unknown event will be the equivalent as some trigger which will lead to a global call up of a range of "market cap" style debt agreements. Greece will not be the only example, nor will Cyprus be the only extreme case of unacceptable imposts upon populations. With the corpus of debt held by all major economies, it will not be like a Japan of the nineties. Japan could stand, because it was a one-off..the only country going through aan asset deflation of hat size at the time. This time around, ALL countries will be going through their own version of the deflation, and the issue of "in isolation" will not apply. Too many will be seeking the lifeboat, and again they will all be seeking their best bail-out structure. Again, no lionising this time....but the big question is about what we are not getting told. Allco is a metaphor for national economies this time around, and it is government revenue departments, and central bankers, who are playing the roles of the insiders. Not really too scary, is it? I want to be the leader of the class action on this one though...10% success fee should be sufficient!

SECTION THREE, PART ONE

SLIDING DOORS: Which Reality?. Globally, the current resuscitation event for domestic economic expansion has been left to monetary policy instruments by a very large number of countries, and by almost entirely the G20 countries. Theory tells us that monetary policy is, at best, a blunt tool by which to engineer tailored economic solutions, and the burden of bearing a disproportionate element of the adjustment is upon those with savings..low interest rates impose income burdens upon those who have already saved....surprisingly, those with the liquidity in the first place which saved the meltdown of 2007/2008 from being much worse. The main developed economies have argued that the low interest rate regime is in place to avert the possibility of deflation. Those with an (already) existing pool of savings would traditionally be the beneficiaries of deflation...their existing pool of assets would purchase more and more goods over time. But the central banks are trying to engineer an inflation, so that the debts of heavily indebted are erased more quickly. The difficulty with inflation is that it, by definition, is not fully controllable, and may break out in any range of avenues. The Fed seems to think ( in that very American way ) that wealth effects of higher asset prices, as reflected in share prices and real estate values, will be the feature which stabilises economic activity. A number of other countries are still too early in their adjustment cycle to be thinking about positive wealth effects....because they are still grappling with the issue of the extent of the economic adjustment. Apart from savers being disadvantaged, and by implication forced to take financial risks to achieve even adequate investment returns, the other disadvantaged componentry is the worker, who is still not dealing with normalised economic conditions in any event. Given that the inflation is, at the very least, Government sanctioned ( in some stunning belief or hubris that they will be able to both spot and control any outbreaks of unsatisfactory inflation ) , I am reminded to look to some past periods of inflation, and how it was able to be both spotted, and correctly dealt with. The next series will be quotes from prior periods..." It should be clear by now that one of the most fateful legacies...was a feeling throughout ..society that various groups and individuals were unfairly advantaged or disadvantaged by the ..economy, and that many of the social and economic consequences ...were unjust and illegitimate." Anyone following social media comments about any of the lawsuits/actions against financial market organisations or individuals cannot help but notice how vituperative some of those comments are. One simple recurring feature at present is that a broadening mix of people are feeling disenfranchised by the pay-out system which is flowing from the current policy responses of the authorities...and as I have commented before, the statute of limitations period is fast closing on a number of scoundrels. I am guessing the there will be an audible hiss when the first action is defeated by the passage of the actionable time. Lets hope the advantage/disadvantage argument doesn't rend the social fabric like the quoted country/ period did during last century.

AUSTRALIAN ELECTION WATCH - THREE

Leadership Matters: So, early days for campaign positioning, but the debate about Goldilocks economy...is it too hot, too cold, or just right.....got an "external" comment with the central bank dropping interest rates to 2.5%, a drop of 0.25% for the day. Widely anticipated, which doesn't make it right, just widely anticipated. INTERESTING, but for a whole series of reasons which raise their own questions. Australia has largely been seen as well served by its central bank, and I have observed too many people at the RBA over the years to have anything but respect for them. That, of course, does not mean that they do not become captive to policy perspectives subsequently. BUT....I can remember being at a function with the then Deputy Governor, now head honcho, Glenn Stevens, who at that stage had believed that the nominal value of house prices was too high, the householders were too indebted, that there was too much systemic risk flowing from housing, both to the population, and to the banks. In the meantime, banks have generally become more reliant on householder deposits ( by dropping the proportion of offshore wholesale deposits ) , and Basle which encourages mortgage debt for its ( Australian ) low risk of default. The "captive" also extends to the government guarantee to low level deposits, which is not for social stability, but for bank stability [ shame the banks do not reply to their saviours by recognising their social obligations not to reward themselves inordinately, and arrogantly...yes Mike Smith, you are a douche ]. The moral here is that Glenn's observations were in 2007. And house prices are now higher. One thing is better....those with existing mortgages have tended to reduce their indebtedness, but that was from a position of general negative equity, and so needed to right their balance sheets quickly. One thing that is not better...existing and new mortgage holders have principal loans at drastically low interest rates. I can remember mortgage rates at 17.5% in the late 1980's/early 1990's. Only low nominal mortgage principal saved that period from being disastrous for home buyers. If Glenn thought the household risk was high at 2007 principal, and 7% mortgage rates. What happens at 2013 principal, and rates move from 5% to 7%. Glenn was a contemporary at Sydney Uni with Tony Abbott. We know Tony doesn't quite cut the mustard yet as a possible leader. Glenn used to. Glenn would also know that the USA's Fed wants to falsely boost asset prices to try to turn the wealth effect positive in the US to break the negative rational expectations that existed there. We didn't need to follow that path...hopefully Glenn you are not responding to political, rather than the doubts you once had, about sustainability of economic behaviours.

AUSTRALIAN ELECTION WATCH - TWO

Gotta love it: perfect feed through by the two 55 year olds. Both born in 57/58....both mid to late teens through the inflationary 70's, university courses under the whitlam free education. I even remember Tony doing his early feminist hating during the SRC elections in the late 1970's. Were the rumours correct , Tony, about you unzipping your fly as an act of agression against the feminist "stars" candidate at one SRC meeting. All very 1970's. Just watched a Four Corners show on Afghan civilian injuries...why not project our "alien" hatred against boat people now, can't always bomb them directly. Hang on..when did Osama get toasted? Wy are we still hating, and maiming people. And opening a zip is our only exposure to foreign action, isn't it, TONY. Gotta love it. But the big one...Kevvie want to give more money to the pokies...refer edition one of these missives. Kevvie got credibility in the 2007 election by saying "these silly promises to spend money has got to stop". Kevvie does anything to win; and Tony unzips to dominate.....what was the choice that Australians have? I really do not want a hung Parliament....by all accounts Tony wasn't well hung!!!!

AUSTRALIAN ELECTION WATCH - ONE

Leadership Matters: [ this will be a special series based upon the campaigning period for the Australian Federal Election scheduled for September 7 ]. Early out of the blocks is the argument by the Labor Party that they got Australia through the Global Financial Crisis. I have commented upon this contention before, but lets put it to rest. The GFC started as a crisis of trust between banks who had almost exclusively relied on short-term funding, because of the positive carry they got from, say, borrowing at 3%, and buying shares/CDO's/etc which on the face of it was paying 5/6/7% if not more. Whilever the game was going on, the banks were booking good notional profits, provided they could continue to fund themselves. The corporate funding/ short term funding began to dry up in late 2007 and early 2008, and became much more obvious with the collapse of Bear Stearns in February/March 2008.... Much earlier than the Lehmans problems in September 2008. The Australian banking sector did not have the same sized investment banking bets, although they did have some short term funding issues, but principally some offshore funding issues...they relied upon offshore markets for their wholesale funding. As it became obvious that stresses in offshore financial markets were manifesting themselves in reductions in the volumes of money being lent to foreign banks, the Australian banks had to prevail upon both the Reserve Bank, and the investment portfolio of the Future Fund, to take up some of the shortfall in wholesale funding sources. When China decided that the GFC represented a serious threat to social stability, and went on a massive infrastructure spending spree, then Australia's immediate future was as safe as big mining holes-in-the-ground. The only policy steps the Labor Government did was to send out cheques to the lower income earners, who then used this free cash to buy TV's , and to put it through poker machines- one apocryphal story was that some hotels had to hire extra space for all of the cash they had received, and not yet had a chance to bank. Australia easily got through the GFC, but don't accept stories that it was leadership.....think about it, current revenue forecasting has been hopelessly inaccurate in being able to determine what is happening in the economy...so by extension of this, they could not have known what policies to adopt in 2007/2008/2009. To claim credit for happenstance is not leadership. Cash for poker machines, and pink batts to kill kids, and promises of building works within schools, did not save Australia....and was not good policy.

DIGRESSION THREE- please explain,?

FABULOUS, AND WHY? The news items on the Bloomberg news site about the conviction of the Fabulous Fab seemed to generate a significant interest from the general public, based I what I saw in terms of the comments which were posted. The majority of the comments seemed to say that he deserved the jury verdict, but then typically commented that a number of other people must also be similarly culpable, particularly his superiors who had given him the product to sell. I can understand that the US, in its inimitable fashion, would have a navel-gazing session about the jury system after the recent Trayvon case, but I just listened to a Bloomberg video, where the "talking head" was paying out on the jury's decision in Tourre's case, saying that he was just some foot-soldier in the Wall Street world of their version of "he was only following orders", so the implied comment being that he was not guilty. Let me get this right...it was a civil case where the fraud he was being charged with, was the fraud he committed against Goldman clients. Forget that Goldman paid for his defence, so impliedly supported his fraudulent behaviour, but the heart of the issue was deception/dishonesty. If Tourre was a foot soldier, and according to the Bloomberg expert, not responsible for his deception/dishonesty, then can I ask, " who was?" I really don't care that much for the use of the media to try to establish apologists positions, and I would hope that the typical Bloomberg audience is sufficiently intelligent to also look through these sorts of ruses for what they are...but the wording used by the videoed correspondent along the lines that as a foot-soldier, he needed to follow orders or he might die.....is starting to invoke metaphors and imagery which need to be more carefully considered next time. I would have thought that the " I was only following orders" defence was correctly demolished during the Nuremberg trials at the end of the Second World War. What I find so sadly ironic, and faux poetic, about the apologists position this time, is the reason the "only following orders" defence was correctly demolished was because the population was seen as being required to operate to a higher moral code, and even under pain of real death, the population was expected to ignore immoral orders/behaviours as part of its broader obligations to the human race through the social contract. Fab was found guilty of dishonesty/fraud.....he could have not followed orders, and possibly been sacked. If it is the orders which are at heart here, then there are a number of more senior Goldmans people who should also be up on charges, and so, a number of the general public comments on the Bloomberg site, would have some validity, about seeking out others within the Goldmans business, and its diaspora, and similarly charging them. That might be a much more effective way of trying to get the community to believe that the social contract still has some value, and is worth maintaining. I also must admit, I find it outrageously ironic if the Nuremberg defence is attempted to be invoked by people who worked for Goldmans. Not only has honesty seemingly been abandoned, but even irony sometimes disappears, when the pursuit of profit is the only thing that matters!

SECTION TWO, PART FIVE

Children of an Indifferent God; Are We There yet? Any one who has taken a driving holiday with children in the back-seat of the car will be aware of the refrain. Typically, the driver will answer, in frustration, that it is not much further. This is an appropriate time to ask the question about central bank responses to their on-going experiment with your and my money, and why I think it will fail badly. Let's break it down into bite size pieces. Firstly, collectively, government budgetary policies have been stretched to the point that they had little capacity to respond to what happened in 2007/2008/2009, because the freeze in economic activity destroyed the collective tax bases, at the time that the pressure on their social spending was not able to show the same elasticity, by falling in equal measure. Some countries responded differently, depending on their capacity to handle the loss of confidence, but in general, all have a constrained fiscal environment as a fundamental starting point. Flowing from this, where it was possible to do so, respective countries left it to their central banks to try to rescusitate their economies via monetary policies, i.e. the lowering of interest rates. Unless of course they reach the zero bound, where interest rates are zero, and there is no further capacity to influence the term structure of rates...which are designed to create points of indifference between savings, and consumption. The transmission mechanism at the zero bound has NO empirical history, unless we talk about Japan, and the outcomes are reasonably non-determinable for reserve currencies. This is why Bernanke's research in the early 2000's said that the zero bound should not be a policy objective. Secondly, what do central banks do. They create a false role for themselves. In the old days, central banks roles were limited to the preservation of the value of the currency. A logical role, given that central banks are typically charged with the printing and issuance of bank notes, i.e. the currency of a country. If that role becomes redefined as the stability of prices...then we can only assume that the country is a believer in the economic theory that the issuance of bank notes is a significant prima facie driver to inflation. Fair enough, if that is the accepted view, because at least the response has a reasonably well recognised series of expectations, and pathways. But when the central bank either gives itself further policy roles, or is gifted that role by gutless legislators - of fostering economic growth - and that role is seen as trying to artificially inflate asset prices. This is not consistent with price stability [ it is, after all, directly contradictory to price stability...it is designed to create instability]. At the very least, central banks' ability to control asset price inflation has been demonstrated as incompetent....so to give them that role is truly stunning. But the central bank in the US, which is solely designed to look after the welfare of its constituent banks ( and presumably the largesse which flows from sinecure appointments into other positions in the financial system ) is indeed different to the attempted central bank co-ordination which must take place in Europe, or indeed the central bank mechanism within China's technocratically driven managed economy. And so, one country's asset price inflation, will be different to another country's, and the solution set should correspondingly be different. The need for the difference is obvious...each country will have different transmission mechanisms and speeds, because each will have a population which carries their own cultural biases about how to build wealth, and get by. For instance, the US seems to think that it's stock market is important. If it was seen as the absolute way to acquire wealth, why did so many Russians quickly sell their share certificates to the caravans which lurked outside the factory doors in the 80's and 90's apart from a cultural desire to see cash quickly, rather than believe in the corporate system. Either way, central banks are ill-equipped enough at dealing with significant policy drivers as guardians of economic growth. Otherwise, why is that the untried practice of buying long dated securities to put a cap on interest rates seen as an adequate policy response? The 2007-2009 period was not just another economic downturn! It represented a ceasura in trust. That can be the only explanation why central banks have so blindly followed a path, from which they do not know how to engineer an exit...apart from the blind belief that they can "narrative" their way out of it, through constant policy re-affirmations. Does not everyone become fearful, when they see that simple announcements of quantitative easing tapering creates significant movements in fixed income markets. What happens when the game begins in earnest! Or are the central banks that stupid that they think that if it looks like it will go pear-shaped, that they can just start it again, with more quantitative easing. European governments have been bludgeoned into believing that the US methodology is sound. The sole, and devastating, problem here, is that there is no single central bank in Europe, and the first country that pulls the trigger will see its bond market devastated. Why should the UK be bound by continental Europes' solutions, and why should the continental Europeans be bound by the "special relationship" stupidity of the UK in its pattern of behaviour in following so slavishly the US belief/ methodology set. The mere fact that Individual European countries have differing cultural mores dictate that this policy will end in disaster. Only when all countries have set an almost inevitable path of currency destruction, will the true magnitude of this unknown policy be recognised. I hope the general population refuses to accept that this was a successful, or necessary feature of the wealth transfer systems which have been knowingly, or with reckless indifference, been foisted upon them.

SECTION TWO, PART FOUR

Children of a Lesser God: What I Didn't Tell You. I still haven't forgotten that I promised a European part to the Children of a Lesser God series, but I had another component to my favourite Wall Street house, and we (Australia) had the misfortune of having Lloydy in the country, pontificating on something, this week and he was picked up by the news with the sound-bite that it was risk aversion which was holding back economic growth. I couldn't leave that one on the table without some riposte! Lloydy built his line career skills in the commodities division of Goldmans, and I think specifically in the forex department. In the 80's there was a much more cavalier ( cowboy? ) reputation to the forex markets, where spoofing the market ( by falsely appearing to be a buyer, when really a seller; or spreading research/rumours when you were really in the other side to the transaction; or front running orders...which was even illegal then, but almost unenforceable due to the detection skills of the regulators, which relied almost exclusively on tattle-tails to be willing to adduce evidence) was the quick way to build dis-reputable profits. I suspect Lloydy was exemplary in assisting Goldies, otherwise he wouldn't have mounted the organisational ladder to his current position. I would have thought that risk aversion was a by-product of market participants trying to avoid dealing with Goldies, but there are too many chapters to be filled with those stories. The theme of the "lesser god" series is where lack of access to proper information/regulation, or deliberate use of legal jurisdictional elements create a differing and disproportionately slanted relationship between buyer and seller. Fair enough in the dog-eat-dog world of institutional investing, but what is totally imponderable is why did the regulators let such an egregious abuser as Goldmans escape Scott-free with a banking licence in September 2008, and not Lehmanns, without imposing controls on their prior or subsequent behaviour. The Goldmans diaspora must be a partial explanation, but it cannot be an complete one. The importance of the diaspora in a general sense cannot be underestimated, but the driver will always be money. The Children of a Lesser God moment which I wish to relate is, a number of years ago, the Capital Introductions team at Goldmans were doing a roadshow to raise institutional investor money, of around $1 billion, for a Merger/arbitrage/management buy-out fund called ESL Llc. Now ESL is the acronym of its founder, Eddie Lampert, part of the Goldman's diaspora. At the time of the raising, ESL had a significant holding in Sears, but you had the feeling that Eddie's business was already beginning to struggle, and he was wishing to right size his bets. Forget that the new capital raised was effectively helping Eddie do this; forget that Goldmans were going to receive significant capital raising fees; forget that Goldmans probably had Partners' funds in ESL, and were also downsizing. What I do know, is that as a privately determined unit price, struck just before Sears took a big bath, that anyone buying into that capital raise was going to be a chump....no disclosure/no honesty....who cares, it's a dog eat dog world. And Lloydy wonders why we haven't returned to the halcyon days of 2006 mindless risk taking. Maybe, just maybe, Lloydy, they got sick of the standard practice of two pages of legal disclaimer, without the honesty which should also accompanying dealing with clients...what did fabulous Fab, and Paulson cook up, which wasn't illegal, but certainly was immoral. Maybe, just maybe, Lloydy the clients now want relationships, not just "transactions ". But principally, Lloydy, maybe they just don't trust anymore. When groups behave appallingly, never show remorse, use their diaspora to arbitrarily advantage themselves, and then lobby to maintain an outrageous business positioning, maybe they don't deserve to exist...they have forfeited their social licence to operate, and when the regulators continue to allow that group to operate, they ( the regulators) also need to be replaced with someone/something that understands social obligations. Sure as hell, even in Australia, I am bearing some direct or indirect impost for the taxpayer guarantee that Goldmans received, and I am beginning to think that no taxation without representation is a more than reasonable clarion call. Lloydy, its time to repent! Society deserves better.

DIGRESSION 2A - STAND YOUR GROUND

Children of the Lesser God, Regulatory Failure: An essence of the social contract is that we all agree to the framework, including those assessing the application of regulation. Using the Medieval model, the village/town works because we all accept it. There is no king, or god, or any ruling deity....we exist within this boundary, because we define this boundary. Life following art, the thesis of the current TV concept of "the Dome", society totally self defined, implies that all power is endogenous and does not brook outside influences. But there seems something broadly inevitable about regulators failing to carry out their tasks at present. Case in point, the Fed saying that it will be reviewing the policy on banks' ownership of commodity trading, and related warehousing entities. Unlike FERC, no hairy chested disgorgement action here. Just an examination of the five year grace period as it applies to the investment banks who had received the tax-payer funded lifeline of the banking licence which hadn't been extended to Lehmans. What grace period? The policy that banking entities could not equally own commodity manipulation businesses. If someone had said to me that "you are under a grace period", particularly since my very existence has been preserved through arbitrary largesse of the extension of a banking licence, I would take that to mean I am being granted grace in relation to any commodity related businesses that I had owned PRIOR TO 2008, i.e. the granting of that licence. If I then decided to abuse the privilege by subsequently buying a business which is the subject of some complaints of market manipulation, the I would expect that the benevolent regulator would pull me to one side, and quietly ask me to stop, and to also dispose of my subsidiary. I have abused the benevolence which has been shown to me. BOTH Goldmans and Morgan Stanley are guilty here of buying these types of businesses, post 2008. There is nothing short of regulatory failure here. The Fed has to stand up here, and enforce the social contract. Anything less would mean that not only does the Fed not have the ability to feel sorry for past regulatory oversight, but that when confronted with a policy clear and present danger, it refuses to Stand its Ground. It is a pity that Trayvon Martin was not confronted by similar people.

SECTION TWO, PART THREE

Children of a Lesser God, Crime and Punishment: One of the premiere features of Dostoyevsky's character, Rashkolnikov, was that his gnawing sense of guilt could only be purged by receiving some "proper" punishment, almost in keeping with some social obligation. With almost the fifth anniversary of September/October 2008 upon us, it would be worthwhile to see if punishment has been correctly metered to some of the financial disaster perpetrators, or at least that there would be elements of demonstrable remorse floating around. With four elements of news this week, it seems social obligation has been slaughtered like the old woman, rather than embraced as an appropriate reconciliation. Those four elements are a legal suit against Barclays, legal case against Tourre, Bernanke's testimony to the House, and Wall Street profit announcements. Firstly, Barclays. They are under an action in the US for market manipulation of energy prices in the 2006 to 2008 period, with the remedy sought being a fine, and repayment of "unjust profits". I have no beef about the action, but I find that there seems to be an unequal expectation within this framework that market manipulation seems to be variably defined within the US. They still do not see high frequency trading and dark pools as fundamental to market manipulation, and broadly exercised by all the systemically important banks in the US. If only the punishment of disgorgement of unjust profits has been routinely sought, and enforced. Which brings us to the SEC case against Fabrice Tourre. It should be remembered that the Fab worked for Goldman Sachs, and was seen as instrumental in the Paulson fiasco which constructed products which were deliberately sold to investors, without them being told that the investments were meant to fail. The investors lost over $1 billion, but Goldmans settled for half. Nothing new here, Goldmans have a history of profiting by huge sums, but settling with regulators for part of the "gouge". They don't admit liability, and the regulator does not remove their license......I am not sure where the true corruption is here, but I am sure Barclays could learn a few tricks here from Goldmans. The offensive part to all this, is that we are now five years down the track, and we are getting close to Statute of Limitation restrictions to laying claims against the crooks. Is that a deliberate strategy by the regulators...so that they do not have to adduce evidence in legal actions that they were either negligent, or just too dumb, to properly supervise the financial markets. An "unjust profits" action against Goldmans would be a truly astronomic amount, particularly if it could be back-dated. I would love to see Lloydy in sack-cloth, as much as his operation has imposed on a significant number of clients. Which brings us to the primary regulator, the Fed. Bernanke's testimony was truly embarrassing...the regulator of banks, owned by banks, printing money without knowing how to reverse that policy, imposing the ultimate pain for this (as government debt) on the taxpayers...and his policy: we will keep doing this. Wrong statements, wrong policy targets, and completely adversarial to their sole goal of the preservation of the value of the currency. He talks about mandates, but does not have one...and his research says "you need to keep away from the zero bound". Since when is the sole role of the central bank to create a carry margin for the banks, and then not regulate those banks behaviour. How else can you explain the criticisms by Bernanke himself that some of the last two month sell off in credit markets is caused by leveraged positions. Isn't that what put us here? Which has never been controlled? Does the population not know how appalling they are being treated. My one comfort is that because the US refuses to rein in gun control, that maybe, rather than shoot kids, someone will train their sights on some really uncontrollable bad people who seem to think that they do not have to answer for their theft. And it would all be correct because, under the social contract, there has to be a reciprocal obligation to honour the legal systems, and the burdens that is contained therein...this is the rule of law, but some do not think it applies to them. Which brings us to Wall Street bank announcements. Some of the "surprise" arises from investment profits. With proprietary trading being banished, where do the investment profits come from....oh! Of course, security value assessment. Any Tier 3 stuff here? Profits on long bond securities? Leveraged positions? This is absolutely amazing stuff. When will the world wake up and see that the asset inflation of the last few years is false, with no theoretic foundation. All false! Without being conspiratorial, does anyone think that either recategorising, or lying about economic statistics would be perfectly consistent with the myth of economic improvement, if asset price movement is the sole objective of economic policies. As commented previously, social cohesion is vital, given the track record of previous historical examples of the printing of money. It was the desire for social cohesion which suggested to the Chinese authorities that they encourage such huge financial expansion in 2007/2008, and from this false floor level, countries like Australia were ble to benefit from a massive injection of mineral demand, which through flexible exchange rates, has destroyed -Australian manufacturing. The transmission mechanisms are multiple, and manifest, and still not fully understood or calibrated. BUT, the social contract has, and continues to be, poorly met, because the just and the arbitrary has not been reconciled. Maybe a Truth and Reconciliation Tribunal is required. And it needs to be global. Go on Barclays....you should not feel hidebound by the false legal system that the US projects.

DIGRESSION TWO - REGULATION

Children of the Lesser Gods - Regulation, and its social role. An interesting part of the current debate on the extent and quality of financial market regulation is the way it's sheriffs are themselves non-plussed about the nature of its effectiveness. I have commented previously about the multiple entities which regulate some elements of the Australian system, and those same features - multiple entities for the regulation and control of components of the financial markets - exist in almost all economies. The regulations themselves are legion, from Basel III, to Dodd-Frank, and FATCA, to the clearing house requirements for derivatives. This is, however, all superceded if we have the perpetuation of the globally significant banks/ too big to fail rubric which swamps all of the regulations. The regulation of national financial systems, and arbitrary assessments of what represents national significance, too often invade globally-relevent decisions. The ability of the US, either through its legal systems, or its regulatory system to impose burdens outside its geographic borders has created a cascade of copy-cat inflictions on dispossessed minorities. How else can the dire Cypriot decisions to impose effective penalties against normal bank depositors be otherwise interpreted than as a " who dares, wins" mentality which should over-shadow confidence for a generation. All because the European Union at least has one regard for the solidarity which is required to preserve the value of its currency, and the policy consequences which must flow from that. No such policy in both the USA and, for that matter Australia, where they would rather pass "dire" direct to the taxpayer....while letting the offending banks continue to give outrageous financial rewards to their executives. This is the regulatory effect of the deposit insurance or deposit guarantees for account holders....why, oh why, Australia did you give guarantees to corporate deposits, whilst at the same time those same banks also prevailed upon the Future Fund to take a slab of their wholesale funding needs ( did David Murray, as Chair of the Future Fund, influence any of these investments; why do we let the arrogant ANZ CEO carry on if and when his bank benefited from this 2008 largesse). Taxpayers were potentially on the hook any number of ways....where was the regulatory control here. Where does it exist now! By their nature, regulations are meant to moderate, and give effect to, legislative policy or powers. They tend to be hidden from the public's gaze, because they are technical, or detailed. But the public has a right to expect that they will not be so exercised as to massively increase the burden on those taxpayers without proper inspection, or at least, an appropriate review. The Fed already stands accused of being Semitic.... I leave the taxpayers to assess whether this is the Semitism they wish to pay for. But I, for one, wish to solely ensure that taxpayers have the social contract that they were born into. We did not agree to give unfettered support to banks, especially since they do not feel that they have any social obligation to pay homage to their fall-back options. Regulators have an obligation to be honest....I suspect too many have had " free tickets to the football " from their banking confrederes to properly regulate.

SECTION TWO, PART TWO

children of the lesser god; the ROOL of law: There is a seeming six degrees of separation between an issue ( almost ANY issue ) in the US at the moment, and somebody invoking the phrase "rule of law " as some form of talisman to justify some view, or form of, of action. Using some contemporary issues this week...two explicit, one implicit. Firstly, we should look at the current charge of subversion against Edward Snowden, a former technical exponent at the National Security Agency (NSA), who is seeking political asylum in almost any country. US spokespeople have been quoted as warning prospective grantors that Snowden is a citizen of a country which follows the rule of law, and by implication, he would naturally be treated fairly { and by subtext, you will be aggravating the US if you grant the leaker/whistleblower his request, given that he is accused of leaking material about the US's surveillance efforts against it European allies .... That is, the US's national interest is more important than other national interests }. To escalate the invocation, we have the President of the US suggesting that Egypt should return to the rule of law as quickly as possible. Of course the issue here is that Egypt is struggling to deal with multiple social challenges, one of which....the government voted in last year, has now fallen foul of not delivering to public perceptions, and after social protest, the military has asked the leader to step down while a new arrangement is put in place. Part of the process is that the government was being too slow at combatting entrenched special interest corruption. Of course, at the heart of this is...What is the rule of law? This is the social construct which organises society so that, under the faith system that says fairness/equality/justice/trust/honesty are exercised by government/institutions/courts, then I will exercise my control, and live in this society. I will not seek retribution against my neighbour for physical or financial harm, but rely on the legal system to deliver appropriate remedy or punishment for any wrongs, either arbitrary or negligent. Now for the implicit one: a number of banks in the US are complaining that the currently proposed capital requirements are unfair, because it will place them at a competitive disadvantage to the international system, because it gives them less to loan to potential customers. Not to be cute, let's name a few of those banks who are classified as globally significant: JP Morgan, Citigroup, State Street, Goldman Sachs, Morgan Stanley,etc. The global significance classification must be some strange USA definition....I do not understand it. The only significance seems to be the largesse that they received a few years ago......didn't Goldmans get a belated banking licence, so that they didn't have to follow Lehmans: didn't JP Morgan get classified as the agent provocateur for the merger/acquisition will to power of the FDIC/Department of the Treasury, by taking over Bear Stearns, and Washington Mutual: didn't State Street arbitrarily decide that cash funds can impose redemption freezes despite the dumb investments being by them, not their clients ( maybe the clients were the dumb ones after all!): didn't Morgan Stanley launch some highly leveraged wholesale funds: didn't Citigroup get nationalised in everything but name. Aren't a lot of these globally significant banks also being challenged by the European Union because they were trying to stop competition a few years in the trading of Collateralised Debt Securities by the exchanges.....these were the price-by-appointment securities which destroyed bank and other investor balance sheets a few years ago. But the real ROOL of law is this. Washington Mutual was one of those almost missed features of those particular hectic weeks of September 2008, where contingency over-ruled equity. Didn't JP Morgan get, effectively, a national retail banking network, at a time when retail deposits were better than gold.....(who did take their deposits out of WaMu in that final fatal few weeks?): did Goldman's have any short positions in WaMu prior to both its demise, and the freeze on short positions in financial stocks came into force. Didn't both the equity holders and the senior debt owners in WaMu take horrendous losses? Was the Bank of Ireland one of those debt holders.? Hadn't the Irish Government guaranteed their banking sector debts. So does that mean that the potato growers , and Corrs lovers, indirectly sponsored the acquisition of a cheap national retail branch network by JP Morgan. How silly of me..that must be what is meant by globally significance..able to gouge globally, while being laxly monitored by an unaccountable Federal Reserve system, whose sole role is to undermine its own currency, and create massive moral hazard for policies it does not know how to reverse. A number of seriously bad decisions were made in 2008/2009, for which no apology has been made, but which seem to have been treated as If they never happened. How could Dimon get away with the justification about their trading losses last year? The USA seems to think that subversion is a government owned concept - ask Indonesia, when despite whether they thought it a good idea, the US disagreed with that country's toying with communism last century. When the rule of law has no relevance, then it is replaced by the law of the jungle. Children of Lesser Gods shouldn't only exist in countries other than the USA. Social cohesion seems poorly served at present.

SECTION TWO, PART ONE

Children of a Lesser God: One of the intriguing things about the wash-up of the last few years is the capacity to try to shift blame/ responsibility to others to cover up for failings. The concept is not unique, unfortunately, because to admit some form of culpability either suggests indifference, incompetence, lack of understanding about the true nature of the occupation, or lack of professional gravitas. One or all of these may apply, but the blame shifting allows some economic effect to be passed to those who don't know better, and they don't know how to respond to the impost on them: they become children of lesser gods for the exercise of the impost. I'll focus on a US example next week, and a Euro special the week after, but let me give a home grown example to further the cause. Australia has its own special called Trio Capital...as close to a Madoff moment as we could deliver. [As an initial comment, can we climb over "how well" Australian did during the GFC....I do not think two cash splashes, and grossly ill-devised pink-batts insulation, and schools' canteen building programme, saved the economy. How about ginormous cash splash in China, and totally mis-understood bank guarantee, wholesale and retail, without proper guarantee payment, or bank-conscience for the taxpayer supported largesse, were the true heroes]. Australia's "Madoff" has some particular resonances. A quick re-cap. Trio offered some range of financial products to a number of market segments. It offered some pooled superannuation funds ( which are regulated by APRA ) , and also offered some pooled investment vehicles, called Managed Investment Schemes, which are available to the general public ( the licensing of these are regulated by ASIC ) . Both of APRA and ASIC have received prior references in these pamphlets: some laudatory, some more like lavatory. Superannuation/pension funds in Australia are divided into the institutional funds, under APRA's guidance; or effectively private individual arrangements, called Self Managed Superannuation Funds(SMSF's). These latter ones are really not regulated, but rather fall under the umbrella of the Australian Taxation Office, which has extremely rudimentary oversight of this ( now ) huge body of monies. It gets somewhat complicated, but let's reduce it to the fundamentals...... Trio had a fund which had fraudulently overstated market values. No matter that it involved Bear Stearns securities. BS went into pathetically terminal decline in February and March 2008, and arguably acted as the bell-wether for the GFC with its leveraged funds immolation in July 2007. ANYONE in the business would have doubts about ANYTHING with Bear Stearns. Well, maybe not everybody.....APRA and ASIC? Well, when did the regulators start to really pull Trio's chain? What, one and a half years later in late 2009, and then because of a whistle-blower.....it was only around $200 million; chump change in the oversight of a business which has the same value as the nominal economy. Who pays? Well, quaint rules allow fraud to be re-compensed for APRA regulated entities, but not for ATO regulated entities. So, institutional fools were made whole, but individual fools were not. BUT THERE IS MORE. The institutional make-good was by way of a levy on ALL APRA REGULATED superannuation funds, whereas the individual SMSF's investor lost the lot. Let's recap again: some institutional punter invests in something fraudulent, and most superannuation members will bear this totally hidden tax ( ? Wonder if they think this is fair/if they knew to form a view? What happens if it was a really big fraud, where the impost becomes very significant?). Some individual investor invests their superannuation in Trio, and they dust the lot. Obviously, the policy principle here is: individual care/individual beware. In Insto land, the regulators worry about their tardy culpability, but have hidden taxation powers. AMAZING !!!! No amounts of Parliamentary enquiries, or Departmental Review hoboken can cover this morass. There was only one fraud, but look how many ways the financial cost can be spread! Now, where did we,the population, agree to this style of bespoke regulation, you win or lose through powers/responsibilities that you cannot fathom, let alone influence.

DIGRESSION ONE - LEADERSHIP

In the movie, "the Prestige", magic performers use their bag of tricks to reveal an object, turn that object into something extraordinary, and then return the object back to its rightful place. One element in re-thinking the Social Contract is that some element of leadership will be required to re-galvanise the debate about justice as fairness, and any number of other equivalents to describe the debate. Before we move on to some further parts to the search for justice, we need to examine the state of leadership which will act as an element in helping correct-thinking. Unfortunately, the landscape here is not too encouraging. Authority is meant to act to facilitate the drive towards equivalence, and I have already tried to supply some examples of how arbitrariness has been used to protect elites, rather than chasten them. But the state of politics in Australia hopefully provides an example of how the Will to Power has become more important than proper leadership. Australia, like a number of countries, has seen an embarrassing rise in wedge politics, designed to identify, and isolate, a minority of "aliens" or "others" who can be vilified and scorned by the majority. The Co-alition government from the mid-1990's to 2007 played to a whole range of bogeymen, from the universally Allied-against Muslim-as-terrorist, to the legitimate refugee-as-claim jumper boat arrivee. All quite tawdry. But it played to the genuine "fears" of the general population, and therefore had an immediacy, and currency, to the debate e.g. No matter how many historical transgressions could be evidenced, the bombing of the World Trade Centre raised the stakes; no matter how illegitimate white man invasion might have historically been, the current population can have some control over immigration policies/routes of entry. The escalation in the wedge has also been an almost universal feature in a number of countries, but the form of the escalation in Australia is illustrative of a peculiar form of nastiness. To try to wedge 50% of the population against the other 50%, by way of gender wars, is politics in extremis. Ignoring the historical merits, read Gillard's misogyny tirade as a deflecting technique against the following-day release of misogynistic comments by a supporting member of her tight-as-drum hung parliamentary majority; read the announcement of a particularly long period of time to the election date as deflecting tactic to the following-day arrest of another member upon who's vote the Gillard government requires. Read the policies and administrative arrangements which have been put in place to assist Gillard's union-based support network as the ultimate deflecting tactic to ensure that those same unions don't use their connections to ( yet at least) move a vote to remove her as leader. All cosy-network tactics, with the dupes being the fools who think that Gillard is being authentic over the last seven to eight months. The Will to Power has produced a bizarre political framework not unlike the juvenality that emerges in the Student Representative Councils at university. What is just as disappointing is that the Opposition in the forthcoming election will have a mandate to wind back those policies, but nothing else. More useless Will to Power politics based around nothing more than saying "no".and the forthcoming period will be dominated by the spectre of Revenge, not unlike "The Carnival in Romans" where Emmanuel Roy de Ladurie described how the town's elite opportunistically and cynically extracted revenge on workers who had used the shortage of labourers arising due to the Black Death to claim higher rewards and status for themselves. Strong leadership is required to recognise the challenges that the GFC has both posed, and the opportunities that exist, to wrest some of the arbitrariness, and "elites" position-protecting that now needs to be wound back. This epoch will be squandered if the politics of recidivism, and revenge, becomes the only paradigm which is adopted by elected officials. It is as if the world has become too complex for our politicians to rise to the role that they so covetously seek.