Essential Research: 58-42

No Newspoll this week, but the always dependable Essential Research weekly survey shows Labor’s lead stuck at 58-42. Also featured are prime ministerial approval ratings (56 per cent for, 31 per cent against) and questions on the Productivity Commission’s maternity leave recommendations (trending negative), party leaders’ responses to the financial crisis and government plans to tackle climate change (don’t go far enough).

Author: William Bowe

William Bowe is a Perth-based election analyst and occasional teacher of political science. His blog, The Poll Bludger, has existed in one form or another since 2004, and is one of the most heavily trafficked websites on Australian politics.

361 comments on “Essential Research: 58-42”

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  2. The A$ is tied to commodity prices, these are falling, so the little Aussie battler is falling. This is not neccessarily a bad thing, coal and oil contract prices are locked in until march 2009.

    Exports will get a boost and imports will slow, good. 😛

    Plus my dad who gets a UK pension is very happy. 🙂

  4. Sure every other day the dollar is tied to commodity prices but I would have though that in these circumstances with stockmarkets and banks tanking all over the world and the US treasury printing money by the trillion that there’d be some kind of moderation in the fall – not 15c in two days.

  5. “She said mortgage holders, who had been stung with a string of previous rate hikes, should be getting “the fullest possible benefit, if it can’t be the full benefit”.

    Anna (the real) Bligh, as opposed to Malcolm Bligh Turnbull, has been verballed. 🙂

  6. Re. the dollar drop…

    I buy polished glass (high grade optical lenses) from China in American dollars. My latest prototype (custom ground 1-off) cost was US$5,999. At the time the quote arrived that ran out to AUD$6,500. The AUD equivalent is now – 8/10/2008 – AUD$8,500. A pretty big shift.

    The good thing about this is when I re-export this glass (to the US) it also goes out in US dollars. So I get my money back, plus a mark-up for the intellectual input. No real loss… on paper.

    The problem is I now have to find an extra AUD$2,000 from my Australian funds to kick-start the chain of transactions.

    Straight importers (e.g. plasma TVs, overseas rock band promoters etc.) don’t get to re-export what they buy in US dollars. They will suffer, greatly.

  7. Plus with high interest rates it was a breeze to get 8.5% return from buying the A$ and investing in cash deposits.

    The Market knows that Aussie interest rates will soon have a 4 in front of them, the $30 billion that has poured into cash in the past month will find somewhere else to go.

  8. Oz54

    Exactly. Its odd given that our interest rates are still much higher than the US. There is a lot of speculation in this IMO. Sympathy Bill; I dare say this affects a lot of people.

  9. On the plus side, maybe all this turmoil makes it easier for the govenment to start some structural reform via where any fiscal stimulus is put. Eg fund public transport versus roads, subsidies for more efficient local cars might actually bear some fruit too.

  10. The US dollar is the worlds “reserve currency” as BB points out his transactions are in $US. If Europe gets its act together and the Euro takes some ground from the $US then the USA is in deep poo.

  11. UK Govt pours 200 billion pounds into UK banks and guarantees inter-bank lending. But we quibble about our banks keeping 20 points of an interest rate cut. Yep light years.

  13. banks rubbish the rainmaker:

    [But Australian Bankers Association chief executive David Bell rejected Mr Turnbull’s assertion.

    “In these turbulent times, banks are making sensible and balanced decisions regarding their interest rate policies in a difficult environment,” he told The Australian Online.

    “While the ABA does not have any role in pricing bank products, I assume that banks would be considering their customers and shareholders first.

    “I don’t know whether Mr Turnbull’s comments would have been uppermost in the minds of individual bankers when they made this recent decision on interest rates.” ]
    http://www.theaustralian.news.com.au/story/0,25197,24465484-2702,00.html

  14. Adam in Canberra @ 62, I suspect they are just making it worse for themselves, because the U.K. doesn’t have 20 billion pounds. They’re in recession. This just keeps getting worse and worse.

  15. I of course meant to type 200 billion pounds. If Gordon Brown has 200 billion pounds to give to the banks, you’d think they could afford to open the antiquities wing of the British Museum, which I had travelled around the world to see. But, no. “Not open on Tuesdays, mate. Ain’t got the starf, mate.”

  17. I agree 200 Billion pounds is a lot, but UK GDP is over 2 trillion pounds, while government spending is over 600 billion. Still, its about 3000 pounds per citizen, so the impact is not trivial.

    The financial crisis has alrady cost more than the Iraq War, or the estimated cost to shift the entire US and UK economies to renewable energy sources. What a waste. The guilty should go to jail.

  18. I wonder what Turnbull can manufacture out of this. There are probably quite a few affected in his electorate and on the North Shore.

    Maybe another “every mother loves her baby” moment!

    [The JP Morgan/Fujitsu Australian Mortgage Industry Report says more than 800,000 households are now experiencing difficulties in making their mortgage repayments.]

    [“One of the most significant trends though that we’re seeing is in the affluent segments, people are really beginning to find it quite difficult because their stock portfolios have crashed, the margin calls that they had previously are now being compounded by yet more calls,” he said.

    “So we’re beginning to see some of the more affluent areas beginning to come to the fore.”]

    http://www.abc.net.au/news/stories/2008/10/08/2385869.htm?section=justin

  19. Janet Albrechtsen is using a shortened & modified version of her article in the Wall Street Journal to have a shot at Kevin Rudd. How lame and how desperate is she to try and get such a feeble hit on the government and help out the incompetent Libs.

    219 comments so far (9 pages), but I don’t advise anyone to go there. It’s too depressing reading that RWDB rubbish.

    [THE Prime Minister is back in the business of building up myths to justify policy intervention. In 2006 he was peddling the myth of “brutopia” under John Howard. It was a flagrant falsehood but it won Kevin Rudd the election.

    Now Rudd is using the financial meltdown in the US to flog a nightmare on Wall Street. It’s all the fault of “excessive capitalism” and unregulated markets, home to the 21st-century children of Gordon Gekko, he says.

    Rudd’s myth-making is dangerous if it presages an era of misconceived regulation. Alas, listening to and reading some of the local reaction to the $US700 billion ($973 billion) bailout in the US is to step into an uninformed parallel universe.]

    http://blogs.theaustralian.news.com.au/janetalbrechtsen/index.php/theaustralian/comments/house_of_cards_built_with_good_intentions

  20. You can put lipstick on a Albrechtsen but it will still be an Albrechtsen.

    Poor old John Howard, now totally forgotten and irrelevant except for heading a government that traded on racism, xenophobia, greed and wasted billions on buying votes over a decade – needs someone to keep the flame alight for him before he is totally discredited. Howard is in fact the myth and the poor old girl cant face the fact.

  22. Thanks Scorpio, that sounds like one to ignore. I guess JA can’t help herself. Like others here I read her original WSJ article and thought it made surprising sense.

    As for her argument, its pathetic. If all this financial wreckage can’t force the unregulated free-market fans to admit they were wrong then they are impervious to reason, as well as insensitive to the suffering of others. Still, whether the right wingers can admit their error or not, the citizenry is not likely to be receptive to their doctrine as they grapple with loss of retirement savings, home equity and possibly their jobs.

  23. Socrates’ I think there should be a separate section in all News Ltd publications for “Fiction”.

    In so way can the majority of rubbish produced by blatant political cheer squad members like JA, Bolter, Milne, Akerman etc be considered as “Opinion”. Most of it is fiction coming either from the authors or from Liberal Headquarters.

  24. I omitted Greg Sheridan. Sometimes his stuff makes our “ron” seem like an intuitive analyst.

    [SOMETIMES in politics when it’s almost certain you’re going to lose, you face a choice. You can be a statesmanlike loser, an avuncular figure destined not to be the main character but not expelled altogether from the family. This will minimise the scale of your loss and help your position in history.]

    http://www.theaustralian.news.com.au/story/0,25197,24467159-7583,00.html

  25. George Megalogenis is trying hard to prevent his blog from being turned into a version of Akerman’s & JA’s excuses for RWDB’s “rant” opportunities.

    [Ideally I’d like to separate reader comment into three categories: on topic; rant; and toxic. The third, of course, would go straight to the bin as per my warning in the previous post.

    I can’t, however, separate the first two without reconfiguring The Australian’s entire website. Fortunately for all concerned I don’t have that power. So I’m going to trial something a little simpler. The boring or completely off-topic rants will be held back from publication for a few hours to allow the first round of on-topic responses to work their way through the cycle.

    The deal is you still get the freedom to shriek, but in a different time zone to the rest of us.

    All bloggers should observe a couple of basic courtesies.

    First, play the issue, not the reader. But if you want to vent, aim your keyboard at me not anyone else.

    Second, terms such as “krudd” or “lying rodent” to denote the present or the previous PM are banned because they tell me the blogger has no sense of humour, and no interest in debate. This is an issues blog, not a forum for name-calling partisans.

    The obvious question is: what do I mean by the word “rant”. Put it this way, if the topic is middle class welfare and you reply with a repetitive post about Kevin Rudd being all spin no substance; or you make a token effort to address the topic then segue into a argument about how the Liberals stomped on the nation’s moral compass by locking up refugees here and butchering 5 trillion Iraqis over there, then, sorry you are ranting.]

    http://blogs.theaustralian.news.com.au/meganomics/index.php/theaustralian/comments/rule_one_obey_the_blog_rules/

    Best of luck George!

  26. There’s definitely a parallel universe.

    Mike Steketee has well and truly passed over to the other side. These constant polling figures must be driving them nuts.

    Uncle Rupert keeps telling them that they hold the future of the country’s governance in their hands and that they can, through the mighty power of the pen, influence political events and trends.

    [Turmoil threatens to make Rudd a one-term wonder]

    http://www.theaustralian.news.com.au/story/0,25197,24467158-5013457,00.html

  27. The phrases that they use now don’t even bother to hide their political bias.

    “…a one-term wonder” is not an impartial statement but reveals the writer to be Rudd hater. But they have been at trying to help the Liberal party for so long now they probably don’t even realise their language has morphed into Liberal party speak.

    As said many times The Australian has become a low class Liberal Party promotional rag with most of its ‘journalists’ of that standard.

    Just how bitter and twisted and viscous will their ‘opinion’ pieces and so called ‘journalism’ become when Rudd wins the next election? You can see them all going onto Pies blog to vent their bile.

    Poor old Rupert spawns low quality trash no matter what country he owns media.

  29. Socrates @

    The financial crisis has alrady cost more than the Iraq War, or the estimated cost to shift the entire US and UK economies to renewable energy sources. What a waste.

    Yes, for less than $600bill. the U.S. could generate all its power with renewables and ends its reliance on imported oil. Now that would have made a very big dent into global warming, especially if it then used its green status to pressure others into following. But it’s only a pipe dream. Sadly, I believe they’ll resist doing anything until the bitter end. 🙁

    The guilty should go to jail.

    If they did it would nearly double their already enormous prison population. Just the numbers of current and former politicians would require several new jails to be built. Maybe we could offer them an ‘Australian Solution’ using Howard’s now empty gulags!

  30. I had a blogger in the US lamenting to me about Rupert, and could we please take him back. I said I was sorry, and advised him that every country has its fair share of idiots, and it was only fair that considering what GW Bush had done to the world, they kept one of ours as penance.

  32. I was about to have a shower, and so I thought I’d read Pies’ blog first.

    Apparently the economic meltdown isn’t the fault of greedy Wall St. touts selling worthless mortgages. Pies has said we should…

    [Blame Labor-style socialist engineering]

    To horrible to go through the whole thing for youse. There was something in there about Therese who sold a house years ago for a windfall profit; and about how she underpaid her workers a bit (nothing about her being exonerated for it). Oh yes, and something else concerning Jimmy Carter (I think it was Jimmy). Anyway, the people who thought up “putting downward pressure on house prices” are the ones to blame (it sorta sounds like Janet on nasty pills). Whatever… who could blame Wall st. for packaging it all up and this flogging worthless paper off as AAA securities?

    Sheesh… I did need that shower after.

  33. Poor Pies. Not sure if he is feeding his flock of imprisoned souls there or if he is starting to consume himself. I’m sure the Lehamn brothers CEO who paid himself $250m would agree with him. And how lefty socialist is Theresa selling her house for a profit. Pies should open the windows; I think he is starting to hallucinate on some gasses.

  34. William
    I feel your pain 🙂

    ps did you ever check out riotact’s poster ranking system-newbie thru to seasoned rioter
    we could have -balanced thru to utterly deranged LOL

  35. I don’t feel much sorrow for Pies. He’s “made his own bed” with that ridiculous Heiner stuff, and his nasty, convoluted attacks on Rudd and his wife. I’m sure he can see the connections he makes, but hardly anybody else can (including his colleagues on Insiders who seem to have ganged together to cut him off every time he comes up with one of his wild theories).

    The man seems to be pretty-well consumed by a real hatred of all things “Rudd”. I can’t fathom why, unless it has something to do with the famous lunch he and KR had a couple of years ago.

    The thing about Pies is that he isn’t a journalist anymore, not a real one anyway. His rants are hardly distinguishable from those of the trogs who respond to his posts. You could be forgiven for thinking that if he was a little less malignantly unhinged, he’d do better.

    Yet, my next door neighbours read him (in printed form) assiduously. They take a lot of convincing to drop whatever the latest Pies mad theory happens to be. To them, Rudd is virtually the Anti-Christ and Pies is telling it like it is. A rellie of mine in MacQuarie often re-gurgitates Akerman talking points but denies reading him. So I guess he does have an audience, even if it seems to consist of the generally low-life, trailer trash variety, or (in my rellies’ case), the terminally confused and detatched country bumpkin.

    There’s a big demographic out there that feels hard-done-by. This is behind the delusion that the media are a hopelessly left wing Rudd cheer squad (I prefer my own delusion about them: that they work for their masters). It’s also behind the concept that they are “forgotten people” – pensioners, carers, unemployed, battlers and the like. Menzies tapped right into this. It’s been a mainstay of right wing politics for decades. I guess Pies has just taken it to its logical (and I use the word advisedly) conclusion.

  36. [This disaster is not created by greedy bankers, as Kevin Rudd tried to portrait; it is created by Government intervention into the market, some people who cannot repay borrowings should not borrow in the first place.]

    But all risk can be reasonably managed provided it is known. The problem was that this bad debt was then repackaged and sold and the risks were not made clear to the buyers down the line. If that had not occured then there would not be this problem. Sure there would have been some defaults on loans, but it wouldn’t have brought down the whole house of cards like we are seeing now.

  37. dovif
    the key point was that the borrowers could show that they could pay – that is, the loans were to go to people who did have the resources to pay back the loans.
    The information we’re getting about the American market is that this was ignored, quite deliberately, by salespeople on ‘piece rate’ payments – that is, they were paid by the number of loans they signed off on, without the necessary oversight from the lending institution that they had acted in the spirit of the legislation.
    The lending institutions believed this wasn’t necessary because they thought they were on a winner regardless – that house prices would inevitably rise, so even if the mortagee defaulted, the bank would still make money from the sale of the home (and the payments they had already pocketed).
    The fact is that many many many individuals and institutions across the world fell for the line that permanent growth was possible and that ‘boom and bust’ was a thing of the past (usually based on a blind belief that, because Russia had broken up, capitalism had ‘won’ and now would surge forward unchecked).
    Bottom line is: people who obviously couldn’t afford to pay loans back were given them.
    I’m sure you agree with me, dovif, that this shows that markets need some regulation and that a laissez faire attitude to the economy is not sustainable in the long term.

  39. Firstly to Dovif… you wrote that up pretty well without the hysterical ranting language that Pies would have used.

    Dario… I suspect you are right, too. The original fault, or perhaps “mistake” was with the letting of sub-prime loans. But it isn’t these that are the direct cause of the meltdown we are having now. The direct cause is that a bunch of smarties on Wall St. (and, yes, in the greedy echelons of those who bought in on what seemed like a free lunch) tried to turn sub-prime sow’s ears into AAA silk purses by a confidence trick, a securities laundering scam.

    This (for what it is worth) is my understanding of the sub-prime loan crisis…

    Bob owes his mortgage company $X. The mortgage company on-sells that debt, and a lot of others, up the line. They package it and call it a “Triple-A Enhanced Leverage Investment Fund” or similar. That fund is bundled up with other funds, some of the actually AAA, but really just a few, compared to the rest. By the time these have been onsold a few times, and have gone on a round-robin, where Companys A, B, C, D, E and all the way down to Z end up shifting their debt onto others, until company A is re-buying something, or part of something (or several somethings) it originally sold to B and so on. But at the bottom of it there was no capital, no real cash, and much less real value once house prices started falling.

    The more house prices fell, the more everything compounded. It may have started out with dodgy loans, but it was magnified literally a thousand-fold by the urgers and con men into something altogether bigger than it ever had a right to be. The total amount of money owed by the finance institutions to each other, over and over again, funny money upon funny money in some cases, far exceeds the actual dollar value of the entire tranche of bad sub-prime loans that were originally made (and let’s not forget that some of these are still being serviced). They invented money and assets that weren’t there. as long as everyone played the game the fortunate few could skim billions off the top.

    As of today it’s much, much more than just a couple of hundred billion dollars worth of loans – some bad, some not so bad, some actually quite good, but all lumped in together. It’s a crisis of confidence that has been caused by somebody finally asking “Is this money real?”.

    The antics of the stock markets resemble the panick-stricken moves of a school of herring being herded by killer whales. No-one wants to be on the outside, because that’s where the predators are. So the sell, sell, sell, then buy, buy, buy, then do it all over again as their numbers gradually get picked off. So much for the “rationality” and “wisdom” of the market. The best Pies could say was “Labor-style socialist engineering.” Every word in that phrase is wrong, or wrongly used, and he should be ashamed of himself for writing what he wrote.

    It was pure greed: “Radix malorum est cupiditas”

    That’s my understanding, at any rate, and why I think dovif’s explanation falls far short of the true culprits.

  40. Dario

    the repackaging of the loan are done by entities like Fannie Mae and Freddie Mac, as they are the original writter of these loans, they then trade these with other investment managers.

    Dawson
    A lot of American can shows that they can repay loans at 1% which was what interest rate was when the loan was written, and the Dannie Mae and Freddie Macs has an obligation to write these loans because of the US Government. When interest rate went up to 4% they cannot. Likewise when house prices dropped by 15%, they are better off giving the money back to the banks

    This is the difference between the Australian and US system, the US has regulation which forces banks to take the risk of Lending money out, ie bank must write loans to people who can show they can repay, ie no recourse loan- bank cannot take your car and make you bankrupt, must lend on fixed rate so the bank take the risk of higher interest rate. While the Australian system ask the consumer to take the risk, so that the bank are less likely to need government help

    The Bankers were at fault, but they were acting on instruction from the government.

    Itep
    Horrible government decision, led to improper regulation which favours consumers (and buys votes) that led to banking collapse

  42. [the repackaging of the loan are done by entities like Fannie Mae and Freddie Mac, as they are the original writter of these loans, they then trade these with other investment managers.]

    and?

  46. Dawson, Fannie and Freddie collapsed, or did you not notices, they would have ran into liquidation, if the government did not intervene

    This is the problem, the government saw social justice as a goal, they want everyone to want their own home, and all the benefit that comes with that. They have wanted that since 1947.

    But the US government did not want to put up any money or take risk themselfs, so they legislate to require banks to give money to people who are risky (sub-prime) They also set up 2 companies to facilitate these lending practices.

    When times are good, there are little problems, the customer buy a house, the value goes up and they get a home, the lender is happy, they got a good interest rate and the goverrnment making it a private problem. But when house prices went down, the banks who are forces by the government to give these loans are in trouble, because of government policy

    You can contrast this with Australian policy, if the Government wants to encourage home ownership, we gave taxpayers money to do it, we also make sure the banks are strong, by requiring them to keep enough capital, the bank also are not forced to give out subprime loans.

  47. [Dawson, Fannie and Freddie collapsed, or did you not notices, they would have ran into liquidation, if the government did not intervene]

    Yes, and Dawson said:

    [your reasoning would be sound if only Fannie Mac and Freddie had fallen over]

    and they weren’t the only ones to fall over

  48. The other banks also have to lend in this environment

    and Fannie and Freddie package these and sell it as investment vehicles, this is the american system set up by the government, the problems is not the defaults, the problems is the investment banks and other banks aren’t buying these investment vehicles, because they cannot sell them, and there are too much risk.

    Therefore the banking system collapses, and if a bank cannot write loans, and they still have the same amount of staff, they get into trouble

  49. Dovif

    You keep avoiding the points raised in the article by John Quiggan I linked to. The CRA is only part of the problem. It has been around for decades – since 1977. Your comment has been raised by many republicans lately in the (false) hope that they will not eb balmed for the current crisis.

    The current bank collapses have only happened after the development of CRA and CDS’s – since 2002. The problem occurred when financial instruments were developed that allowed trading banks to move to a regime of non-disclosure. Bear Sterns collapsed due to its hedge fund collapsing – not mortgages. In short, this crisis occurred not because (some) banks were required to give (some) mortgages to sub-prime lenders. They have been doing that for 3 decades adn not gone broke before. This problem occurred because they lent on over-inflated valuations, without adequate insurance, and failed to inform the investors of the risks. Its pure fraud, brought about by inadequate oversight.

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