Comments by His Bobness

Americans in Australia also rue telling strangers they'll be 'rooting' for them

In Australia, we're always amused when Americans tell us they're 'rooting' for someone - given the Australian meaning of that term as the reproductive act. And we snigger along with the Brits when we hear about their 'fanny bags'.

I noticed about 10 years ago that everyone in Sydney was talking like they were in an episode of Seinfeld on Friends I cringe when I hear "enough already"....or "Can I get"...or "do the math". Ugh.

By the way, American friends should not our irritation as criticism of their vernacular, but just as a reflection of the slavish behaviour of Australians and English when we have such rich colloquialisms of our own.

Australians never talk about "dunnies" anymore. We ask to go to "the bathroom". When we go to the pub, we don't get "blotto" but "wasted". And where once our kids went to "holiday camps", they now go to "vacation care".

Defenders will defend this as "globalisation" when in fact, it's just Americanisation.

The problem is you can't separate economics from politics. The notion that you can talk about the creation and distribution of wealth divorced from issues such as justice and equity is a fanciful one. Economics is not a science - the global financial crisis proved that once and for all - and it is time to start looking agaiin at issues of power and class

Australia is going the way of the US, where extreme partisanship and spin precludes the possibility of sensible policy discussion.

For instance, there were very strong rational economic arguments for the resource profits tax as Treasury originally proposed it - including reducing the possibility of Australia succumbing to 'Dutch Disease' - but any hope of a rational debate was destroyed by the rent-seeking hysteria of the mining sector with the support of an Opposition whose only strategy is to scare monger.

Both major parties are now in a race to the bottom to see who can best convince the least educated and most ignorant voters in the fringes of the major cities - people in marginal electorates whose votes swing federal elections. The real issues of climate change, international financial reform, Australia's over-reliance on non-renewable resources, its old and decaying infrastructure and under-investment in education remain undebated and ignored.

There surely needs to be a party of the centre that embraces progressive social ideas and liberal economic principles. Oddly enough Turnbull and Rudd together would make a formdiable combination - with Turnbull's appeal to the financial sector and Rudd's international credentials. But they were dumped by their own parties who now are both in an auction for the votes of the reactionary right.

It's another example of how politicians these days aren't allowed to be human beings. I'm sure even Abraham Lincoln lost it occasionally after encounters with ignorant constituents, once he was safely in the back of the handsome cab - but he didn't have to wear a microphone or appear smiling with his family on the front pages of women's magazines or go on celebrity talkshows to provide his opinion on Lady GaGa.

As someone else said, politicians are damned for being artificial and pre-constructed and then damned when they show their human side. Brown as clearly tired, frustrated and fed up with dealing with xenophobes and bigots. He called a spade a spade.

The media is never happy, which is why politicians these days all appear robotic and blandly manageria.

Armed insurrection is the only answer. The generals in Burman will never give up power. All they respect is armed force. So the opposition should give it to them. With both barrels.

America is a great nation, but the extreme and histrionic nature of its politics is a worry. Why are the tea party goers SO paranoid about government spending, when they are happy to endorse policies that waste so much money on defence?

America's great problem is its sense of exceptionalism - the notion that somehow it is different to the rest of the world. In this, its dogged and self-regarding idealism is its own undoing.

Look at Australia as an alternative. Like America, it is a federation, settled by the English in the 18th century. Unlike America, it has a pragmatic approach to social democracy, a publicly funded and comparatively efficient healthcare system and a centrist government . And it has an extremely healthy economy with a public debt to GDP ratio among the lowest in the developed world.

Americans need to get real. This hysterical hounding of a very sensible, middle-of-the-road politician like Obama as some sort of "socialist" is just ridiculous. The rest of the world looks at America's dalliance with a fruitcake like Palin and thinks "My God, who ARE these people??" It's a worry.

There are two contentions underlying the EMH - the first says prices are right and the second says here's no free lunch. The first is seriously in question. The second, if anything, has been reinforced by the GFC.

For practical purposes, for most people, it is best to work on the assumption that markets are competitive (in other words efficient in a relative sense). This doesn't have to mean prices are always right. Indeed, prices can go out of whack with fundamentals for long periods before correcting.

What Fama is saying is that is extremely difficult, if not impossible, to pick those turning points consistently. He's on record as saying that the EMH is just a model. It is not intended to be a reflection of reality. But it is a way to understand how quickly markets price in new information and how hard it is for any individual to profit in any consistent way from how prices might be wrong.

This seems entirely reasonable and is borne out by recent events. As Fama himself says, the vast bulk of the funds management industry works on the assumption that markets AREN'T efficient. So the idea that his philosophy was so influential that it caused the crash is a bit rich. The fact is the world still wants to believe that there are superbly insightful active managers out there they can consistently pick turning points. They can't.

Still, not everyone is an investor. And we can all express opinions about the macro-economic consequences of financial market bubbles. This is a different issue to the investment question of whether you can profit from over or under-pricing. That to me is where the argument gets confused.

Mark Nemeh, you are joking aren't you? Soldiers are public servants no more or no less than are nurses or teachers or firemen. The notion that a grunt in uniform with a gun has some mystical insight or carries some greater moral clout not available to any other civil servant is just nonsense and betrays the sort of wacky non-grounded extremism that has made the world such a mess this past decade.

And to all the neo-libertarians here, I find it frankly obscene that teachers and nurses and firemen should be asked to tighten their belts because of the excesses of fatcat bankers, lawyers and paper shufflers - the people who got us into this mess and who this past year have sucked on the public teat harder than the most idle public servant.

If there is to be a civil war against the Right, bring it on. The Left will not carry the can for this one, as much as The Economist and its economoic fundamentalist mates might wish it were otherwise.

Looking at the state the UK economy is in, I can't say that being a "global financial hub" has done much for you. You've merely created a highly leveraged financial sector that produces nothing of value, pays too little or no tax and then runs off to the state when its Frankenstein-like structured products run amok. I would say your problem is too little tax, not too much.

Yes, it is difficult, if not impossible, to profit consistently from how the market is wrong.

But fans of the EMH have used this argument to bolster a deeply conservative political ideology which maintains that any interference with "market forces" is counter productive.

Disquiet over this ideological rigidness is what is behind the quite reasonable criticisms of the EMH and its devotees.

The fact is many economists and non-economists saw an unsustainable bubble developing not only in US housing but in consumer credit throughout the Anglo economies, including Britain.

Financial intermediaries, using complex and opaque derivatives, were happy to exploit easy money by pushing people into increasingly burdensome and risky investments.

Regulators, academically weaned on efficient markets theory and rationalist economics, suppressed their growing sense of disquiet and just "let it rip".

We are now all living with the consequences. The wonder is that the efficient market disciples are STILL spreading their simplistic and muddle headed message.

Common sense is called for. That is all. It is time to recognise that "the economy" and "the markets" are not some abstract idea, but an expression of our choices as human beings. They work for us. Not the other way around.

Think about it. Who is going to pay a news report on an earthquake or plane crash or election or crime story when you can source that from Reuters or AP or Bloomberg?

That leaves opinion pieces and features. But are they really that valuable? And we all know how Murdoch's publications spin, so he is asking us to pay for his right wing propaganda. No thanks.

The only content I can see working in a subscription model is very specialist financial commentary. The WSJ and The Economist do that reasonably successfully, but it's never going to be a huge money spinner.

With Reuters, the BBC, the Guardian and other major sources still free, Murdoch is pushing the proverbial up hill.

I have difficulty in finding any substance in Robert Lucas' argument. So given the events of the past two years, exactly what does his brand of economics actually do for the world?

Is he saying that we can't predict these things, therefore the only recourse is to clean up the mess afterwards.

His school of economics may have failed to predict the crisis, because of its slavish belief in efficient markets, but plenty of other people were warning of a reckoning.

Even Greenspan now admits that his 40-year belief in the self-sufficiency of the free market system turned out to be wrong.

Some common sense is called for. And that, at base, is all the critics of his profession are saying.

Scholes’ comments remind me of quote from Robert Oppenheimer, inventor of the atomic bomb.

“When you see something that is technically sweet, you go ahead and do it and you argue about what to do about it only after you have had your technical success.”

Barrkel, I think the definition of conservative is someone who favours big government as long as the tax dollars are being spent on defence, national security and tax cuts for the rich.

Any other type of fiscal relaxation is socialist.

And don't you find it amusing that all the neo-liberal economists are sitting around lecturing the world about the inappropriateness of fiscal stimulation when it was their worldview that got us into this mess in the first place!

How typically doctrinaire of The Economist to dismiss the prospect of nationalisation because governments are hopeless at running banks.

As opposed to the great job that the bankers did in running them you mean??

Why can't the West put together a squad of mercenaries and knock this bastard off once and for all? It can't be that hard.

As Daniel observed above, the libertarians are in the marvellous position of being able to parry any criticism of their ideology by saying it has never been properly tried.

But, of course, it will never be properly tried, because it is antithetical to representative democracy. There forever will be interest groups in a complex economy, each with their own axe to grind. Politics is about balancing these competing interests in the service of what is supposed to be the common good.

Like the Marxists, the Libertarians are Platonists whose ideals can never be realised in the world where most of us live.

Congratulations to the US on a wonderful result. Obama seems to represent a break from a divisive, ugly past. McCain appears to be a decent man - his concession speech was extremely dignified - but his party had been captured by single issue ideologues, religious extremists, militarists, gun nuts and loopy libertarians. And could not shake off Bush's disastrous legacy that the whole world could see.

We in Australia had a similar election last year, when a once successfully conservative party that had governed for a decade found itself isolated on the far right and usurped by a party from the left that had quietly occupied the middle ground and elevated a young, good communicator as its leader.

The US election reminds us that most of us, for all our differences, are moderate in our politics. But we need to be wary of extremists from both ends of the political spectrum who would forment division for their own scurillous ends.

The world wishes America well at this time, hopes that your divisions heal and looks forward to a new era of global cooperation on the big international challenges that face us in the economy, the environment and geo-politics.

The rest of the world respects America, and that is why we care so much about the outcome of your vote. McCain appears to be an admirable man. And neither he nor his opponent can be questioned about their patriotism.

But it is painfully obvious that America, and by extension the rest of the world, needs a clear and decisive break with the past eight years of division, pointless cultural wars and real wars, cowboy financial speculation and economic incompetence.

In his every utterance, Obama has revealed himself as a civilized, sane, reasoned and level-headed American who is ready to re-engage with the world in a collaborative way, end internal division, put an end to the Iraq quagmire and express a more hopeful, benevolent and generous vision of America.

This vision is totally in keeping with the ideas upon which America was founded and which so inspired the world.

This is potentially a turning point in global history. The world is watching and hoping.