Ken Veksler responds to last week’s TBS article by John Preston, which criticised Veksler’s recent comments on RBA governer Glenn Stevens.
Last week John Preston, a city facilities manager, father of three and concerned (Australian, I assume) citizen wrote a piece asking (among other things) what a “pompous Englishman” (as he described me) thought he knew about Glenn Stevens and the Australian economy.
Given the subject matter and way in which his piece was written, I have asked for the right of reply.
First off, let me clear up some inaccuracies which, as a result of John’s dire lack of fact checking, have been passed off as truths.
I am in fact an Australian, not an Englishman. It is true that I currently reside in England (London if we’re being pedantic), however I was born, raised and educated to a tertiary double degree level in Australia. In Sydney to be precise.
The first 30 of the 40 years that I have been on this planet were spent in Australia, and more to the point, over half of my 20-year career in financial markets was spent working there also. It has only been the last 10 or so years that I have been living and working overseas.
Secondly, I’m flattered that you think I have any influence over or input into the editorial decisions made by the Sydney Morning Herald and their staff. I in fact have no such power. What they choose to write, whom they quote and how they contextualise this, is all independent of my will. The fact that some may take umbrage with the articles they publish is neither new nor novel, but is also a matter to be taken up with them, not myself. To prove that you’re not alone in your dissatisfaction of their editorial choices, here’s what someone that actually knows what they’re talking about had to say on the matter
— Michael Pascoe (@MichaelPascoe01) May 7, 2015
And if you check, you’ll see that Mr Pascoe is himself a contributing editor to the very same publication.
But let’s move on. After all, unlike you, I prefer to play the ball not the man.
In your piece, you mount an unequivocal defence of Glenn Stevens – a central bank governor whom you believe to be infallible; whose work in your understanding is world class; and whose resultant labour has not only helped keep Australia’s economic ship steady in troubled global waters, but actually ensured safe passage to idyllic harbours. You cite a central bank led by Mr Stevens that in the last decade has:
- avoided the melt down of banks
- upheld employment levels
- and to quote, “kept the economy motoring along”
Australian banks have not in fact “melted down” – you’re correct in this instance – but this has nothing whatsoever to do with Glenn Stevens. Rather it has everything to do with his predecessors and ministerial counterparts. It is rather the “four pillar” banking policy and associated macro prudential framework and oversight which were put in place long before Glenn Stevens assumed his current role that have kept this eventuality at bay. These actions and subsequent policies were the result of a rather tumultuous period of Australian economic history in the late ’80 and early ’90s that involved the likes of Christopher Skase and Alan Bond. It were in fact former RBA governors Bernie Fraser and Ian McFarlane as well as (initially national treasurer then ultimately) Prime Minister Paul Keating that steered the treacherous banking waters. It was them that provided the playing field upon which you so triumphantly and erroneously now cheer Glenn.
During Glenn Stevens’ tenure (if you check official ABS data) employment levels have not been maintained and the unemployment rate has actually grown. Yes, that’s right, there are now more people unemployed than there were previously. How much of this is Glenn’s doing is arguable, but the fact is irrefutable.
Regarding an economy that you believe has been “kept motoring along”, well I suppose that all depends on your definition, really. Gross domestic production levels have diminished and the national current account deficit has grown rather quickly, and not in the least way negligibly. Couple these factors with the above mentioned growth in unemployment and you have what most would objectively call a not-insignificant economic slowdown, most certainly in relative terms. But hey, the housing market is going gangbusters, so that clearly means things are on the up and up, right? No. No, they’re not.
Australia has always been (and since the 1950’s almost exclusively so) a commodity-based and primary resource driven economy. The ability to extract and export the natural resources in which Australia is so abundant has been almost entirely the sole reason for several decades’ worth of economic prosperity. Naturally however, as the world changed post GFC and aggregate global demand slowed, so too did the need for what Australia had to sell to the world. In an attempt to answer the problems that this situation raised, the RBA, like practically every other G10 central bank, chose to cut interest rates in an effort to stimulate wavering demand and kick-start the global engine. Nothing (mostly) wrong with this, however, faced with governmental counterparts who were unwilling to perform the more unpopular tasks required of them, the balance of responsibility for economic reanimation was left on the shoulders of the central bankers alone. Note, the RBA is not unique in this instance. However the irony of the situation is that each and every one of these central banks, the RBA included, still claims their independence from political pressure to act in a particular manner despite the contrary to be true.
Until last week, the RBA was the only one that could actually say that was correct and hold their heads high. No longer.
My point, had you bothered to read the piece from which I was quoted, was that the decision to further cut interest rates to all time historic lows, was not spurned by economic reasoning or necessity but rather mounting political pressure from treasurer Joe Hockey and the Liberal government ahead of the federal budget which has just been handed down.
The fact (as you point out, and which was news to me personally) that Glenn Stevens is a banjo playing, licensed pilot who in your mind is a “thoroughly decent governor” is neither relevant nor anything more than your conjecture, and perhaps best saved for interesting (if not entirely immaterial) dinner party anecdotes. How Glenn Stevens can be paid as you say “just one million dollars a year” and still be “very familiar with the concerns of ordinary Australians” is clearly ludicrous.
Glenn Stevens is solely concerned with doing his job, until he no longer has to (next year). A job I might add that he’s being hindered rather than helped in performing by the ineptitude of the incumbent government. Your inability to distinguish between the RBA’s mandate and that of the serving government is the sole premise of the folly with which your piece was written.
Notwithstanding and despite your misinformed, ill mannered, grossly negligent and libellous diatribe, next time you’re in London give me a shout and I’ll buy you a pint.