Wednesday, November 26, 2008

ACTU: Charges dropped - ABCC must go

The dropping of charges against union official Noel Washington is a victory for common sense and shows why the Australian Building and Construction Commission (ABCC) must be immediately abolished.

ACTU Secretary Jeff Lawrence said the decision by the Commonwealth Director of Public Prosecutions not to proceed with the charges was a welcome development.

He said the prosecution of Mr Washington for refusing to attend an interview with the ABCC had been a futile waste of taxpayers’ money and resources.

"The decision by the DPP to drop the charges renders the ABCC and its discriminatory laws even more obsolete,” Mr Lawrence said.

"The ABCC is an unaccountable organisation that discriminates against construction workers.

"New laws introduced into Parliament yesterday to replace WorkChoices will establish a fairer and more balanced system of workplace relations.

"It is fundamental that all workers should have the same rights under this system and there can be no place for the ABCC in it.

"The ABCC is an unwanted relic from a bygone era.

"Even the Liberal Party has disowned WorkChoices.

"It is now time for the rest of the unfair and discredited laws from the failed Howard-Costello experiment on industrial relations, including the ABCC, to be swept away," said Mr Lawrence.


ABCC disarray: DPP drops Washington charges

Australia’s Building and Construction laws are in disarray today as the DPP dropped charges against union official Noel Washington.

Mr Washington was charged for refusing to attend a compulsory interview. As a matter of principle he had refused to attend an interview with the Australian Building and Construction Commission. He was due to appear in court on 2 December. Mr Washington was not being investigated for any matter, but was required by the ABCC to attend an interview about what had occurred at a union meeting.

Dave Noonan, CFMEU Construction Division National Secretary said the first cracks are appearing in the ABCC laws, but the campaign would not be finished until the laws were scrapped.

“For months now we have spoken out how the laws are unfair. The decision by the DPP today to drop the laws shows that they are fundamentally unworkable.

“This decision is a clear message to the Government that the laws are in disarray and need to be abolished,” said Dave Noonan.

“The fact that over 100 workers have already been dragged before the ABCC and threatened with imprisonment should not be forgotten. These laws were created by a Government determined to destroy building workers rights, and it is time that they were removed.

“Construction workers should have the same rights as other Australians, and this decision today is a terrible slap in the face to an unaccountable organisation that is a hangover from the Howard era.”

Tuesday, November 25, 2008

Industrial Relations: rights returned

ACTU President Sharan Burrow said the industrial relations legislation is the result of a concerted campaign by unions to scrap WorkChoices, which undermined the wages and conditions of Australian workers.

“The Bill is another step towards reversing the damage done by a decade of anti-worker legislation by the former Howard Government,” Ms Burrow said.

“From what we already know, it will be a major step forward from WorkChoices, which removed workers’ rights.

“Workers and activists campaigned like never before to rid us of WorkChoices, and a year ago millions of Australians said the Liberals and Nationals had gone too far with their assault on our rights at work.

“We have more than 10 years of harm to undo, but we have turned the tide.

“Everyone who campaigned or voted against WorkChoices should take some pride in what has been achieved so far.”

Ms Burrow said unions expect the legislation would deliver:

Strong rights for workers to collectively bargain and be represented by their union.

An industrial umpire with powers to settle intractable disputes.

A new role for the courts to enforce awards and the National Employment Standards, providing a strong deterrent against infringement of workers’ rights and entitlements.

A ban on further use of Australian Workplace Agreements, and a requirement that existing AWAs must comply with new national standards.

Unfair dismissal rights for all workers.

A fair and transparent process for setting minimum wages.

Ms Burrow said under the new laws, unions would be well-placed to deliver improved wages and conditions for workers, and to protect their income and jobs in an uncertain economic environment.

“This legislation is a major achievement but does not mean the campaign for better rights is over.

“Unions remain concerned that there are important areas of unfinished business.

“We will never stop pushing for improvements in the workplace and better mechanisms to safeguard the jobs and living standards of working Australians,” Ms Burrow said.

Saturday, November 22, 2008

Howard legacy: ABC Learning debacle

Alan Ramsay 

By the year 2006 the Howard government was pouring $1.7 billion a year of public money into its child-care benefit scheme, including $128 million a year in subsidies straight into the pockets of Fast Eddy's booming company. Thirty-two months later and ABC Learning has collapsed under debt exceeding $1 billion, Groves has been forced to resign, his estranged wife is suing him for $40 million, and the Rudd Government is temporarily propping up ABC Learning's 1100 child-care centres across Australia with a $22 million handout that ends on December 31.

What happens after that, who knows?

But clearly, back in March 2006, when the Groves corporate bandwagon was belting along, sweeping up admirers and investors as fast as it was piling up 44 per cent of its income from Howard government subsidies, nobody was listening to people like Jennie George (Federal Labor MP), not even her own party. George's parliamentary speech that March night came during debate on a piece of 2005 budget legislation the Labor Opposition was trying to amend.Now that Fast Eddy's career has collapsed, leaving chaos and family heartache in the child-care industry in this country, ( George's speech is worth recalling. Some excerpts:

"When you look at the [latest] data, in June 2002, which is quite dated now, we see around 113,000 children [across Australia] were not able to access child-care, either because no places were available or the cost was prohibitive. So something is fundamentally wrong with the administration and planning of child-care services in this country. This bill has a very limited scope in proposing one minor change when I think the system needs drastic overhaul…

"At a time when [government spending] on child care since 1990 has risen tenfold to around $1.7 billion a year … the Howard government has allowed the system to become dominated by private providers for whom the profit motive is primary. Child-care provision has become a licence to print money. As Mr Groves, CEO of the largest private conglomerate, said recently, 'You cannot help but make money.' He confirmed ABC Learning Centres had received 44 per cent of its income from government subsidies - that is, $128 million of its $292 million last year. This company has spent around $700 million on acquisitions and takeovers. It now controls about 930 centres, with the aim of expanding to 1300 by mid-2008…

"No wonder their recent announcement of $88 million in profits was described as appalling by the National Association of Community Based Children's Services [which] argued these profits could go to far better use in making child-care more accessible and more affordable. The truth is companies like ABC Learning have tapped into a rich seam of taxpayer funding underpinning its earnings and profit levels. What worries me is that often these healthy profits are coming at the expense of decent staff conditions and quality facilities …

"Companies like ABC Learning can cherry-pick the market, free of government constraints. Company profits are under-pinned by taxpayer funding, yet taxpayers' interests are left to the mercy of the marketplace, free from government intervention, free from any overall consistent planning, and free from any form of regulation …"

Federal Judge condemns ABCC

The Age 22 Nov 2008
Former senior federal court judge Rod Madgwick has condemned the controversial workplace law for construction workers in a union TV advertisement starting tomorrow night.

The advertisement will run for three weeks, putting pressure on the Federal Government over the Australian Building and Construction Commission with unionist Noel Washington due in court on December 2 for refusing to attend the ABCC to answer questions. Washington, from the Construction, Forestry, Mining Union faces jail.

In the advertisement, authorised by ACTU secretary Jeff Lawrence, Mr Madgwick says: "Unfortunately, not all Australian workers are equal before the law. Construction workers are subject to industrial laws such as we've never before seen in this country.

"They can be fined up to $22,000 for stopping work and jailed for up to six months for refusing to answer questions about a workplace meeting".

Wednesday, November 19, 2008

Katoomba: Electricity Privatisation

Bad for the environment, the economy and the community

8pm Thursday 20 Nov 2008
Upstairs - Blackburn's Family Hotel
15 Parke Street Katoomba

Speaker : Dr John Kaye
Member for the NSW Legislative Council, Member for the Greens

Before entering parliament, John taught and researched electrical engineering at the University of NSW where he specialised in sustainable energy and greenhouse issues. John has a PhD from the University of California Berkeley and over twenty years of research and teaching experience. He has been a vocal critic of electricity industry privatisation and a strong advocate for renewable energy and energy efficiency.

Friday, November 14, 2008

FSU fight for jobs

The Finance Sector Union vowed to fight for the 5000 jobs that are at risk following St George shareholders approval of the Westpac takeover, creating Australia’s first mega bank.

Bank workers including Branch Managers, Customer Service Officers, Mortgage Officers and IT staff from Bank SA and St George made their voice against the takeover heard at today’s Extraordinary General Meeting.

Leon Carter, National Secretary Finance Sector Union, said this is a dark day for St George bank workers and bank customers.

“The popular voice from the floor of the shareholders meeting today was overwhelmingly against the takeover. Mum and Dad shareholders, bank workers and retirees all spoke passionately about the need to keep St George bank as Australia’s strong, independent and fifth largest bank.

But in the end faceless institutional share holders passed the vote, shutting the door firmly on competition in the Australian banking sector,” said Leon Carter.


Thursday, November 13, 2008

Public Education For Our Future

Want the Best Public Schools For Our Children?

Public schools have a vital role in ensuring every child gets a high quality education. But they are under-resourced. Teachers and parents are joining together to convince the Federal Government to invest more in our public schools.

The Federal Government is in discussions with the state and territory governments about the development of a new National Education Agreement. This agreement provides an opportunity for an increase in the general funding for government schools and the development of new targeted programs to address disadvantage and issues associated with quality teaching.

The Australian Education Union has launched a national campaign calling on parents and teachers to work together to get more Federal Government funding for public schools.


Tuesday, November 11, 2008

Miriam Makeba 1932-2008

Miriam Makeba was an exquisite singer who was a big star in her native South Africa in the 1950’s. Things started going wrong for her in her homeland in 1959 with an appearance in the anti-apartheid film Come Back Africa, although this appearance lead to an invitation to the Venice Film Festival where she formed a Grammy-winning partnership with Harry Belafonte.

The Grammy was for the album An Evening With Belafonte and Makeba, released in 1963, attracting major attention for this incredible voice. This attention led her to use his new status to highlight the problems back home by speaking at the United Nations and seeking international condemnation for South Africa’s policy of apartheid. Exile from her homeland followed.

She was particularly renowned for her performances of songs such as what was known as the Click Song — named for a clicking sound in her native tongue — or "Qongoqothwane," and Pata Pata, meaning Touch Touch in Xhosa. Her style of singing was widely interpreted as a blend of black township rhythms, jazz and folk music.

In an interview in 2008, Miriam Makeba said: "I’m not a political singer. I don’t know what the word means. People think I consciously decided to tell the world what was happening in South Africa. No! I was singing about my life, and in South Africa we always sang about what was happening to us — especially the things that hurt us."

Nelson Mandela has paid tribute to legendary singer describing her as "South Africa's first lady of song … She richly deserved the title of Mama Afrika". 

"Her music inspired a powerful sense of hope in all of us. Even after she returned home she continued to use her name to make a difference by mentoring musicians and supporting struggling young women," Mr Mandela said.

She only returned to her homeland with the crumbling of apartheid in the early 1990s.

"It was like a revival," she said. "My music having been banned for so long, that people still felt the same way about me was too much for me. I just went home and I cried."

Monday, November 10, 2008

Teacher training = best school results

Nations with the best student performances have focused on developing a highly trained teacher workforce rather than publishing school results.

Finland, the world's top performing nation in international student tests, has no national system of tests but every teacher has a master's degree and differences in school performance are minimal.

A co-author of the study, Professor Brian Caldwell says school results published in the media could give parents a false impression because research showed that the difference in student performance between classrooms within an individual school is often greater than the differences between schools.

"Teacher expertise is the biggest in-school influence on student performance," he says. "If we are to follow Finland and the Federal Government's intention of creating an education revolution we need a highly skilled profession that knows how to interpret data about a child's performance and knows how to take action if a child falls behind.

"If we have that across all schools, a national testing program becomes superfluous because it won't matter what school your child attends: they will do very well as students do in Finland."

Professor Caldwell, the former dean of education at Melbourne University, says the Federal Government should use its power as the funding source of tertiary places to encourage university education faculties to upgrade their teacher-training courses to a master's degree or equivalent. Almost all teacher training courses now are undertaken as a four-year undergraduate degree or a one-year post-graduate diploma.

"There's a sense of urgency here because we've had about 20 reviews of teacher education over the last couple of decades and there hasn't been much change. We should be insisting that every teacher be very well trained to at least a master's level and not allow any child to fall behind."

The five-year study by Professor Caldwell and researcher Dr Jessica Harris examined successful secondary schools in countries as diverse as Britain and China, including seven government and non-government schools in Melbourne.

It concluded that, despite the differences in culture and student populations, all of the schools shared crucial common practices that led them to be successful. Some of the practices were strong links with neighbourhood organisations, including businesses, and each school was led by a valued and visionary leader.

"Secondary schools in many communities have simply lost contact with their communities," Professor Caldwell says. "School councils were intended to overcome that but they've had a limited impact. If we want our schools to be a central part of community life they need to engage with the wider community. The study highlights the importance of social capital and engagement in the schools that have been transformed."

Friday, November 07, 2008

MUA congratulates US labour on Obama victory

By MUA news -

MUA National Secretary Paddy Crumlin congratulates International Longshore and Warehouse Union and US labour movement for the role unions played in the US Democrat election victory - a victory for all workers

The following is his letter to Bob McEllrath, ILWU, with letters also going out to the ILA and SIU

Dear Bob and all our ILWU brothers and sisters,

Congratulations on behalf of MUA members and staff, dockworkers and maritime workers of the world on the election of Barack Obama as the 44th President of the USA. It is something we know the ILWU and the US labour movement played a major part in. You've done Harry Bridges proud. Your campaign embodies the values of the union and its leaders - industrial rights cannot be separated from political leadership.

We were with you on November 4, along with working men and women around the world, because we know this election will benefit workers and their families worldwide, not just in the US.

In fact if the world could have voted Obama would have won by a landslide (According to a global poll by Reader's Digest magazine widely published here 16 out of 17 nations surveyed gave him their vote - 76 per cent of Australians!)

We heard the president elect acknowledge that the Democratic campaign was "built by working men and women who dug into what little savings they had to give" and we know the ILWU dug even deeper. Bob you were among the first to endorse Barack Obama as the Democrat candidate on behalf of the ILWU months before other unions and long before the vote was counted.

We also know that before you were photographed alongside Obama shaking hands, you got his written commitment to workers' rights, a commitment to include labour and environment standards around the world in trade agreements, to support Blue Diamond workers, the Employee Free Choice Act, the rights for workers to organise and collectively bargain, the right to union representation on the National Labor Relations Board, a commitment to give workers a voice in the workplace and to educate the American public about the importance of unions and our essential role in the political process, in democracy and in the economy. We know you also have Obama's written commitment to universal health care, to curb the cowboys who run the stock market, an end to the war in Iraq and to replace warmongering with diplomacy.

Bob, congratulations again on your vision; for getting together with the leadership and membership of the ILWU behind this man and behind this historic change.

Congratulations go also to the ILWU members in the swing states of Oregon, Colorado, Alaska, Nevada and New Mexico - longshore workers like George Romera and his wife Diane, De Andrew Hollywood Whitten and Sal Pardo who went door to door talking to people about their vote.

Special congratulations, too, for Willie Adams, who as an African American leader and serving ILWU official would take special pride in seeing the first black president and world leader take the stage and continue the Martin Luther King dream of a civil rights/labour coalition that gives black workers dignity and pride. Over the years his initiative with Celebrations of Black History and Labour have gained both national and international recognition. I was fortunate on two occasions to participate. It continues to be one of the finest experiences of my trade union life.

To Ray Familathe - this is one birthday you'll never forget, brother. We appreciate your ongoing work by our side on the international stage and recognise the pride and emotion you shared on the special day of the election.

Our responsibility now, as labour leaders both in the ITF and our two unions is to ensure Obama's inspiring words translate into actions; that this new world leader you have given us moves even further along the progressive path of world peace, human rights and decent work.

Yours in Unity

Public services vs private profit: 8 Nov

Public services vs private profit: What can be done?

Special seminar by Power To The People

Speakers include:
  • Bob Walker (Professor of Accounting, University of Sydney)
  • Betty Con Walker (former Treasury official and co-author with Bob Walker of Privatisation—sell off or sell out?)
  • Frank Stilwell (Professor, Political Economy, University of Sydney)
  • Sharon Beder (author Power Play: the fight for control of the world's electricity and Professor, School of Social Sciences,Media and Communication, University of Wollongong)
  • Steve Turner (Public Sector ssociation assistant general secretary)

Time & place: 2pm-5pm Saturday November 8, Tom Mann auditorium AMWU Building, 136 Chalmers st, Surry Hills (walking distance from Central station).

The campaign against privatising electricity in NSW has exposed the desire for an end to the continual sell-off and decline in quality of public services. While the campaign successfully defeated plans to privatise power stations, other privatisations and cutbacks are still on the agenda as the NSW government prepares its "mini-budget" for release in November. This seminar will examine the alternatives to privatisation, and how we can restore quality, well-funded public services from electricity to water, to hosptials and schools.

Organised by Power to the People--a coalition of ALP members, unions, the Greens, Uniting Church groups, Socialist Alliance, Solidarity and environmental and community groups that formed to oppose the sell-off of the power industry in New South Wales.

Contact Colin Drane 0419 698 396 for info

Thursday, November 06, 2008

Mandela: Letter to Obama

Dear Senator Obama,

We join people in your country and around the world in congratulating you on becoming the President-Elect of the United States. Your victory has demonstrated that no person anywhere in the world should not dare to dream of wanting to change the world for a better place.

We note and applaud your commitment to supporting the cause of peace and security around the world. We trust that you will also make it the mission of your Presidency to combat the scourge of poverty and disease everywhere.

We wish you strength and fortitude in the challenging days and years that lie ahead. We are sure you will ultimately achieve your dream making the United States of America a full partner in a community of nations committed to peace and prosperity for all.


N R Mandela

Newcastle unions oppose power sell-off

Gary Kennedy (Secretary Newcastle Trades Hall Council)
Newcastle Herald 5 Nov 2008

Last week an internal ALP committee voted to accept, albeit not unanimously, a new plan outlined by Premier Rees for the privitisation of the retail arm of NSW Electricity and agreed that it meets the party policy platform.

To say we in the Hunter were bitterly disappointed at this decision is an understatement and an already growing resentment toward the NSW ALP from workers and the community at large has increased as our previous leaders support this decision.

The new deal will see the leasing of the retail arm as well as selling off the generation development sites with some strict guidelines and the lease of the trading function to private enterprise.

The Government claims this will transfer the risk to private enterprise while guaranteeing generation, transmission and distribution remain 100 per cent in public ownership.

The generation development sites were buffer zones kept for the future expansion of generation and can now be bought by private enterprise who can construct and run generation in tandem with the current generators. Simply put, this means not a single extra megawatt hour will be constructed by the Government. This has serious ramifications.

Employees will be given guarantees on wages and conditions for five years and a job in their current location if they do not wish to transfer to the new private entity, and consumers will be protected from price gouging until 2013.

If this a such a great deal for employees and consumers who will want to buy/lease the assets?

Let's not kid ourselves, there are overseas organisations queuing up to jump on board.

The press release from the Premier stated: "Under the Government's outsourcing model for generation trading, electricity price and trading risk will be transferred to private-sector operators, who will pay the state-owned generator a fixed fee to cover the cost of producing the electricity. This guarantees the State a low-risk return on its assets."

This will provide a low risk but also a low return to the Government as private enterprise plays the market with our electricity touting for the best price it can get.

The point has not changed that private enterprise is driven solely by the need for profit and despite all the spin and fluff someone has to pay the piper.

The Government is handing over the control of our product, electricity, to a bunch of suits who will gouge a profit at every opportunity.

The retention of the generators was a magnificent win for the community, but we have not achieved all we could have and should have and we were so close to seeing the issue of electricity privatisation disappear for the foreseeable future.

In the current economic climate it is beholden on governments, both state and federal, to forget about budget surpluses, which are funds that have been paid for by taxpayers, and build necessary infrastructure.

Selling off assets that return huge dividends to Treasury is still a false economy and financial experts are clearly saying that a controlled level of deficit to build infrastructure is good for the economy.

This plan does neither and I worry we are going to see more government assets sold off at bargain-basement prices instead of spending our taxes on job creation and stabilising the economy.

However, we cannot change government policy on our own in the Hunter. We will need to work with everyone at all levels of government to fully understand what will happen and ensure the Hunter is well and truly looked after.

US Unions: Obama victory

After eight years of an administration hostile to unions, America’s union members helped bring about much-needed change by electing Obama and working family-friendly candidates up and down the ballot.

AFL-CIO President John Sweeney says Obama is a leader who reached out to workers and spoke to their economic concerns, and workers responded by getting behind Obama with strong support and volunteer efforts.

"Barack Obama brings new hope to America’s working families, and our increased majority in the Senate means we can translate that hope into reality.

We salute labor leaders and volunteers all across our country for a record turnout of voters from union households—they made the difference in critical states like Pennsylvania, Michigan, Ohio and so many others. We congratulate Barack Obama and Joe Biden. Our prayers and our continuing support are with them as we begin the arduous task of turning our country around."

Obama earned the trust of working families on the economy, and he proposed strong policies on crucial working family issues like health care, job creation, retirement security and the Employee Free Choice Act. He opposes the anti-worker policies of George W. Bush and John McCain on trade and taxes. Throughout the campaign, he’s focused on those issues, not trivia and misleading attacks.

Obama has stood with America’s workers, whether marching on a picket line during the presidential primary or joining volunteers at a Labor 2008 phone bank as his final act of the campaign. Obama’s success is a sign of what’s possible when a candidate speaks to workers’ concerns and pledges to fight with them, not against them.


Wednesday, November 05, 2008

USA: President-elect Barack Obama

"Change has come to America"

Barack Obama used his victory speech to thank US workers for the part the played:

"Above all, I will never forget who this victory truly belongs to: it belongs to you.

"I was never the likeliest candidate for this office; we didn't start with much money or many endorsements; our campaign was not hatched in the halls of Washington."

He said his campaign "began in the backyards of Des Moines (Iowa)" and was built by working men and women "who dug into what little savings they had" to give small donations to the campaign.

"It grew strength from the young people who rejected the myth of their generations apathy, who left their homes and their families for jobs that offered little pay and less sleep.

"It grew strength from the not-so-young people who braved the bitter cold and scorching heat to knock on doors of perfect strangers.

"And from the millions of Americans who volunteered and organised and proved that more than two centuries later a government of the people, by the people and for the people has not perished from the earth."

"This is your victory."

Monday, November 03, 2008

Finance crisis: temporary or systemic?

Kenneth Davidson
The Age 03 Nov 2008

Is the crisis the result of a temporary liquidity problem or is it the result of systemic insolvency?

The free market fundamentalists are in denial. They are demanding increasingly large doses of government intervention in failed financial markets to restore sound market fundamentals.

It is a bit like asking the devil to save God according to Henry Lieu, chairman of a New York private investment group writing recently in the online magazine, The Asian Times.

The fundamentalist ideological inconsistency is shameless. The implications are more serious if the problem has been misdiagnosed. There is a big question still to be resolved: is the crisis the result of a temporary liquidity problem or is it the result of systemic insolvency?

The crisis itself has built up over decades in part because the response of central bankers to any downturn has been to ensure plenty of liquidity to avoid the risk of a major depression.

This was the lesson that central bankers learned from the Great Depression. Despite their public disavowal of Keynesian economics, they understood that pro-cyclical policies to tighten money supply would increase the amplitude of any downturn in the business cycle.

In Australia, the 1931 Premiers Plan involving a 10% cut in wages led to an even larger cut in prices. Those who held their jobs and had no debts did well out of the Depression. All the burden fell on the 30% of unemployed people and their families. But the plan achieved the main objective of its architects - protecting the interest of the London bondholders.

But the other half of the lesson, that the banks should be kept under tight regulatory control to ensure they played their subordinate role to facilitate the functioning of the "real" economy was forgotten after the generation that experienced the Depression and World War II retired in the 197os.

The iron law of financial deregulation is that competition to increase market share leads to self-destruction because the only way banks can increase market share at the expense of their competitors is by lowering lending standards.

Australia experienced this after financial deregulation in the early 1980s. The increase in the number of banks led to a collapse in lending standards as the banks competed for the dubious multibillion dollar business of the paper entrepreneurs such as Alan Bond and Robert Holmes a Court.

The major product of the period was $20 billion in non-performing loans, the November '87 sharemarket crash, the transfer of many of Australia's finest assets into the hands of foreigners and the response of the monetary authorities in the form of a huge injection of debt/liquidity that financed the subsequent property boom and led to the "recession we had to have" in 1989.

Now the systemic problem is more deep seated. In Australia the problem of household debt has been ameliorated so far by the continuation of the housing bubble. The bubble has burst in Britain and the because of their housing glut.

But the housing bubble is arguably bigger in Australia than Britain and the US and it is reasonable to expect the bust will be proportionately bigger when it comes.

In Australia, the systemic risk to financial markets has been fuelled by capital gains concessions and negative gearing, squeezing first-home buyers out of the market.

Wage earners have no choice but to see their savings flow mainly into domestic and foreign financial markets that are mainly vehicles for speculation rather than productive investment.

The amount going into public infrastructure is inadequate and infrastructure priorities are being distorted by the public-private partnership industry, which is controlled by the financial engineers whose financial "products" have been the major factor in creating the financial crisis that is still threatening to lead to a 1930s-style debt/deflation depression.

What is apparent so far is that the monetary authorities (the central banks seem to have quietly given up their independence for now) have the ability and the financial resources to keep the banking system from failing. What the authorities do not have is the experience and the resources to keep the much larger non-bank intermediaries and capital markets necessary for the operation of the real economy from failing.

Lenders are afraid to lend because they are no longer confident they can assess the credit worthiness of borrowers because of the corruption of the risk assessment process.

And borrowers are afraid to take on more liabilities while there is the risk of an economic slump.

According to Liu "the current credit crisis has evolved from the unregulated global growth of structured finance with the pricing of risk distorted by complex hedging which can fail under conditions of distress. "The proliferation of new market participants such as hedge funds operating with high leverage on complex trading strategies has exacerbated volatility that changes market behaviour and masked a heightened level of risk in recent years.

"The hedging against risk for individual market participants has actually increased an accumulative effect on systemic risk," Liu writes.

How the world goes depends on the US - and how the US goes will depend on the presidential and congressional elections.

Based on the opinion polls, it would appear that Barack Obama will not only win the election but even have a sufficient majority in the Senate to prevent Republicans from frustrating the Democratic legislative program.

The most important legislative reform will be to reverse the 1989 legislation that deregulated hedge funds so they were exempt from supervision and scrutiny.

The new administration must understand that under the present deregulated system, the US Federal Reserve is faced with a Hobson's choice: impose a depression to cut off a long period of stagflation as occurred in Japan in the 1990s or flood the market with unproductive liquidity.

According to Liu, insolvency cannot be solved by injecting liquidity without the penalty of hyperinflation. The new administration should be able to avoid this invidious choice by taking a few sensible measures that show recognition of the true systemic nature of the crisis and by indicating the administration is prepared to co-operate with the major European economies such as Britain, France and Germany, as well as China and Japan, to repair the damage to the Bretton Woods system by the market fundamentalists since the 1971 Smithsonian Agreement to float the US dollar against major European and Japanese currencies.

The Johnson administration foist that deal on the rest of the world to finance the Vietnam War and the "Great Society" without increasing taxes by exporting stagflation to the rest of the world for over a decade.

Saturday, November 01, 2008

Protest against NSW power sell-off

United Services Union (USU) members protested against the state's retail electricity sell-off outside the ALP country conference in Port Macquarie.

NSW Premier Nathan Rees is expected to address the meeting before visiting the Port Macquarie Hospital on the NSW mid-north coast.

The NSW ALP on Friday gave Mr Rees the green light to sell off the state's electricity retailers.

USU spokesman Scott McNamara said about 2,000 retail electricity workers' jobs could be lost throughout NSW.

"If retail gets sold, you no longer have call centres in Port Macquarie and regional-based areas, and the intimate service regional people currently get will no longer exist," Mr McNamara said.

About 250 jobs would be lost in Port Macquarie and potentially 2,000 jobs would be lost statewide, he said.

"This is the first step, we've been campaigning on this issue for over a year, we intend to take the government's package back to our membership after the meeting and seek further direction," he said.

The union had put up alternative proposals to the government, he said.

"By simply selling off one branch, it is simply the first step to further privatisation and the first step to reducing the government's income stream," he said.

"We've suggested some reforms to make the electricity sector stronger so it's more competitive in the market."