He may have campaigned in 2007 as an economic “conservative”, but Rudd proved himself a skilled reader of public sentiment when, in February of this year, he declared that he was a ‘social democrat’ in his now-famous essay in The Monthly. At the time, various commentators in the media, as well as Kevin Rudd and Wayne Swan predicted rising unemployment and a period of recession. This prediction has, in technical terms, at least, failed to come to pass, but less than six months after the first shock waves of the GFC hit the world economy, few doubted that the worst was in store.
Rudd identified the tasks of his newly social-democratic government: “credit-market regulation, intervention, and demand-side stimulus in the economy”. The first of these – regulation of the finance sector – has the banks weeping and wailing before it has even begun. Nobody should believe that “regulation” can act as a panacea to stave off risk, in an inherently crisis-prone economic system. Nonetheless, the same newspapers that fudge the facts in the news section can sometimes refrain from bullshit in the business section, and that appears to be the case here. In other words, the same banks whose deposits were kindly guaranteed by the Rudd government are now seeking to avoid regulation because it may hurt “profitability”.
Admittedly, it was not Australian financial institutions that caused the GFC. All the same, we have seen the evidence, all around the world, of ordinary people being laid to waste, financially speaking, as a result of the recklessness of their nation’s banks. As Kenneth Davidson put it in today’s paper (in the context of bubbles in both the currency and housing prices), “there should be control of financial institutions”. Just who should be doing the controlling is a question that Davidson tactfully does not answer.