He’s a lad is that Morrie Newman.
If someone from the ASX or the ABC had have written a letter to a publication like The Economist magazine, do you think the studiously fair thinking Morrie might has whispered, “you can’t divorce yourself from the institution, you should have identified yourself, especially when the subject matter is so close to home…”
And so it was with Morrie, AKA Morris Newsman, just retired chairman of the ASX, former broker and investment banker (Bain and Co, Deutsche Bank) and current chairman of the ABC.
His letter this week to The Economist magazine seeks to excuse the banking and finance classes from any responsibility for the subprime disaster and credit crunch;
SIR — It was the actions of politicians rather than the greed of capitalists that caused problems in the financial system to build up until they collapsed under their own weight. Politicians presided over habitual national deficits, undisciplined borrowing and exploding money supply. It is they who claimed it was impossible to spot asset bubbles, except in hindsight, despite systemic, irrational exuberance in property prices and stockmarkets.
They are the ones who turned blind eyes to the concoction of credit and who validated the new paradigm of leveraging inflated assets as a way to spend, rather than saving the old-fashioned way. Let the facts speak for themselves. If politicians had not behaved so recklessly, the world would be a safer, more prosperous place and prudently governed countries like Australia would not have to take costly action to avoid the worst of the contagion.
Government irresponsibility is why we are where we are and if that original sin had not been committed we wouldn’t now be talking about bankers’ salaries.
Maurice Newman
Sydney
So, according to Morrie, those nasty profligate governments put all that money on the table and seduced/tempted corrupted innocent bankers/executives and others who couldn’t resist the temptation on offer. No wonder the regulation of the Australian Securities markets under the ASX, when chaired by Morrie was so spotty and haphazard.
It’s a curiously detached argument which seeks to blame everything on the Government and accepts no responsibility whatsoever for the way the private sector (aka investment and other bankers around the world) rode the cheap credit, low risk, high leverage years to their death, creating the financial crisis.
Morrie, like others on the right in Australia (Gerard Henderson, Janet Albrechtsen, Greg Sheridan etc) are united seeing the financial crisis in political terms, to the exclusion of the lurk merchants and others in the finance sector (such as Babcock And Brown, Goldman Sachs, Merrill Lynch and so on). That’s bone headed. No one forced the bankers etc to take the subprime mortgage idea and pervert it beyond recognition and in doing so claim they knew what they were doing, reward themselves into the bargain, and lead us to where we are now. Some responsibility lies with politicians, but it isn’t as black and white as Morrie seems to think.
Newman’s letter only reaffirms what we already know about this man, though its nice of him to remind everyone what sort of chappie he is…. i wonder if Rupert thrhear Murdoch trashing the Australian education system, look forwad to the next installment on that one…. probably how we should model ourselves on the US.)
Frank Birchall: I think you’d have to agree that the Magdalen Mirror (aka The Economist) should be used to backing the wrong horse e.g the US half term Senate election outcomes post Lewinsky, Castro’s imminent overthrow in ’03 (?) etc etc. You’ve got to admire their reliance on their tried but untrue methodology involving a stridently argued position — which happens to be completely wrong. I think the US State Department uses the same methodology.
But it is a great read…sometimes very droll writing & full of eclectic facts that have the power to turn a dinner party bore into a crashing dinner party bore.
As a long-term subscriber to The Economist, I strongly suspect the editorial staff would have been aware of Newman’s former position with the ASX. Furthermore, their ideological commitment to free markets and competition usually makes it easier to get a letter published if it is supporting that position. The Economist has been hugely embarrassed by the global financial meltdown because it has called capitalism into question. Newman’s letter is attractive to The Economist because it attempts to entirely deflect blame away from the banks, mortgage lenders, financial engineers, irresponsible borrowers and other free market agents, on to politicians and governments. The downside of this attraction is that, if Newman is right, governments should respond with more and better regulation of the markets. That response is not one that The Economist would normally welcome.
Another corporate sociopath tells yet more porkies.
Until all of these sociopaths infesting our financial system are weeded out and put in jail where they belong, there will be more lies and excuses from them.
At least Allan Greenspan had the decency to admit his failure owing to a reliance on ideology, rather than common sense.