Bank bosses are overpaid, Paul Keating

by Sylvano Lucchetti

If you're confused about the current financial crisis, then you need to watch the short interview with Paul Keating on the ABC's television program, Lateline (1^st Oct '08).

Listen to our ex-PM explain the world of finance to realise what a waste of time it is to consume the McMedia. Prior to this interview, I had not read and heard anyone else explain that this is not about liquidity. There's plenty of liquidity, Keating assures us. That isn't the problem. The problem is solvency: banks around the world are shit scared of lending to each other because they can't be sure that they're not about to pour wads of cash into an outfit that's about to declare it's insolvent. And if there is one thing that the media likes, it's the failure of yet another major bank. Now that's proper reporting. Death. Destruction. And collapse. So beware, be scared... for the end of the world is nigh!

It is worth watching Keating's facial expression as tries to be really polite about the fact that a 700 billion dollar bail out sounds big, sure, but it is actually somewhat smaller than the five trillion dollar shortfall that exists in the USA between the liabilities in property and the actual value of said property.

He also gives the Howard government a bit of a slap around in passing, which is always a cheap thrill, but only as a bit of spice on a solid meal of facts. And it's not irrelevant to the topic at hand for teacher Paul to remind us that he gave the Howard government an 'F' for its failure to address the national savings level in Australia.

What's particularly enjoyable and instructive is his mini lecture of what a bank really is: a utility... not really a proper industrial enterprise. And he's quick to state that there is no justification for the multi-million dollar incomes banking bosses are awarded for running what amounts to a glorified sewerage system.

It's all good stuff. I'm sure there are those of you reading this and shaking
your head, mumbling under your breath about yet another person praising
Keating, the father of 'the recession we had to have,' ready to point out the many wrong headed notions that Placido has about economics. And that's fine.

It will only amount to a quibble on some particular fact or a criticism for his suggestions for action, anyway.

What is most instructive when listening to Keating in this interview is that
atop his obvious passion for the subject and his intense desire to see the
right policies implemented to advance Australia, is the clear evidence that he
is someone who knows his stuff, uses his own brain to think about what the hell's going on and will put his own balls on the line to express his own view on what needs to be done.

Visit ABC Lateline for more.