Trust to deal with GFC

Jan 29, 2013

Q. If there was another Global Financial Crisis, which party would you trust most to deal with it?

 

15 Aug 11

7 May 12

Total 29 Jan 13

Vote Labor

Vote Lib/Nat

Vote Greens

The Labor Party

31%

25%

26%

68%

2%

23%

The Liberal Party

40%

42%

40%

4%

84%

6%

No difference

20%

23%

22%

18%

10%

52%

Don’t know

9%

10%

11%

10%

4%

19%

If there was another GFC, 40% would trust the Liberal Party more to handle it and 26% would trust the Labor Party more. This represents a slight shift to the Labor Party from net -17% to net -14% since May last year.

The Liberal Party was rated higher than Labor with all demographic groups except for low income earners – 35% of those earning under $600pw would trust the Labor Party more and 29% the Liberal Party. Those most likely to trust the Liberal Party more were aged 55+ (52%), full-time workers (45%) and income over $1,600 pw (44%).

Trust to Deal with Global Economic Problems

Jul 9, 2012

Q. Who do you trust most to deal effectively with global economic problems – Julia Gillard and the Labor Party or Tony Abbott and the Liberal Party?

 

Total

Vote Labor

Vote Lib/Nat

Vote Greens

Julia Gillard and the Labor Party

32%

80%

3%

68%

Tony Abbott and the Liberal Party

42%

3%

84%

11%

Don’t know

26%

17%

13%

21%

42% would trust Tony Abbott and the Liberal Party more to deal effectively with global economic problems and 32% would trust Julia Gillard and the Labor Party more.

Those more likely to trust Tony Abbott and the Liberal Party were aged 55+ (51%), full-time workers (46%) and income $1,600+ pw (48%).

Respondents earning less than $1,000 pw were more likely to trust Julia Gillard and the Labor Party  (39%) than Tony Abbott and the Liberal Party (35%).

Of those who had heard or read a lot about the crisis in Europe, 46% would trust Tony Abbott and the Liberal Party more to deal effectively with global economic problems and 41% would trust Julia Gillard and the Labor Party more.

A Smoking Gun on Corruption of Ratings Agencies: The Bankers Friends’ Scam

Jul 3, 2012

One of the things we rely on, as regular citizens, is supposedly independent agencies. We don’t have time to keep up with everything because we have lives to lead. But, what happens when an agency is not independent and lets corruption seize the day? A financial collapse, for example.

Although Australia avoided the worst of the 2008 financial crisis, some of what we worry about today–the possible collapse of the Eurozone, austerity imposed on Spain, Greece and other countries who must now pay for the bankers’ incompetence and greed–comes straight out of the lack of independence on trusted organizations. So, it’s relevant for us to look across the ocean at this story from  Gretchen Morgenson, one of the few denizens of the traditional press who questioned the worthiness of the securities, in the New York Times:

For years, the ratings agencies have contended that the grades they assign debt securities are independent opinions and therefore entitled to First Amendment protections, like those afforded journalists. But newly released documents in a class-action case in Federal District Court in Manhattan cast doubt on the independence of the two largest agencies, Moody’s Investors Service and Standard & Poor’s, in their work with a Wall Street firm on a debt deal that went bad as the credit crisis began[emphasis added].

And:

When Cheyne issued its various securities in 2005, Moody’s and S.& P. rated them all investment grade. Even though Cheyne’s portfolio was bulging with residential mortgage securities, some of its debt received the agencies’ highest ratings, a grade equal to that assigned to United States Treasury securities. About two years later, as mortgage losses began to balloon, both agencies downgraded Cheyne’s debt below investment grade, to what is known as junk

.

And what happened when a top rating was at risk?:

For example, when the primary analyst at S.& P. notified Morgan Stanley that some of the Cheyne securities would most likely receive a BBB rating, not the A grade that the firm had wanted, the agency received a blistering e-mail from a Morgan Stanley executive. S.& P. subsequently raised the grade to A.And when a Morgan Stanley colleague asked for information about the Cheyne deal, Rany Moubarak, an analyst at Morgan Stanley on the deal, wrote in an e-mail: “I attach the Moody’s NIR (that we ended up writing)” referring to the new issue report published by Moody’s in August 2005.[emphasis added]

The court filings also demonstrate a lack of methodology for analyzing the Cheyne debt. For example, in an e-mail before the deal was sold, S.& P.’s lead analyst wrote to a colleague: “I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it. The documents show that the lead analyst at Moody’s noted there was “no actual data backing the current model assumptions” for segments of the Cheyne deal.[emphasis added]

This is really not a surprise. It is startling, given their role in the financial crisis, that the ratings agencies are even taken seriously anymore.

Understand this, as the bottom line: the ratings agencies are about making money. They are not independent. And that still matters today to every person across the nation because what Moody’s and Standard and Poor’s do echos across the globe. When they do the bidding of the bankers, we get hurt.


@jonathantasini

Is superannuation at a crossroads?

Jun 19, 2012


Gerard Noonan explains why Australia’s superannuation scheme is a shining beacon amongst the world’s retirement schemes.

Australia’s super scheme is unlike any other in the world. Anticipating our ageing population and an unsustainable increase in pension payments, the Keating government introduced a scheme which required financial contributions from workers and employers. With generous tax concessions and 25 years under its belt, super funds are now worth over $1.4 trillion. Australians now have more money invested in managed funds per capita than any other economy.
That doesn’t mean there hasn’t been criticism. With the GFC still biting shares and Europe’s woes likely to contribute to a weakening market, many changes have been mooted by various quarters. Some are calling for more investment in local infrastructure while others are questioning whether there is an overinvestment in the sharemarket.
Gerard Noonan tells 3Q the reasons why super is well worth the investment.

Trust to deal with GFC

May 7, 2012

Q. If there was another Global Financial Crisis, which party would you trust most to deal with it?

 

15 Aug 11

Total

Vote Labor

Vote Lib/Nat

Vote Greens

The Labor Party

31%

25%

68%

2%

42%

The Liberal Party

40%

42%

5%

83%

5%

No difference

20%

23%

19%

11%

39%

Don’t know

9%

10%

8%

4%

14%

If there was another GFC, 42% would trust the Liberal Party more to handle it and 25% would trust the Labor Party more. This represents a shift to the Liberal Party from net +9% to net +17%

The Liberal Party was rated higher than Labor with all demographic groups. Those most likely to trust the Liberal Party more were men (47%), aged 55+ (48%), full-time workers (50%) and income over $1,600 pw (50%).

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Best Leader for GFC

Sep 5, 2011

Q. If there was another global financial crisis or a recession, which of the following would be best to lead Australia?

Total Vote Labor Vote Lib/Nat Vote Greens
Kevin Rudd 24% 34% 13% 37%
Tony Abbott 20% 4% 44%
Julia Gillard 13% 42% 1% 18%
Malcolm Turnbull 13% 7% 17% 17%
Joe Hockey 7% 1% 11% 3%
Don’t know 22% 12% 15% 25%

24% think Kevin Rudd would be best to lead Australia if there was another GFC and 20% favour Tony Abbott.

Among Labor voters Julia Gillard is preferred over Kevin Rudd 42% to 34%. Support for the current party leaders among their own voters is very similar – 42% of Labor voters prefer Julia Gillard and 44% of Liberal/National voters prefer Tony Abbott.

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Preferred Action on another GFC

Aug 29, 2011

Q. If the world has another GFC (Global Financial Crisis) and the Australian economy worsens, which of the following actions would be more likely to protect jobs and help the economy?

Total Vote Labor Vote Lib/Nat Vote Greens
Increase Government spending on new infrastructure and services 48% 62% 42% 53%
Cut spending on infrastructure and services 22% 13% 31% 19%
Don’t know 30% 24% 28% 28%

Respondents were more likely to want the Government to increase spending if there was another GFC.  Support for increased spending was strongest among Labor voters (62%), men (55%) full-time workers (53%) and people earning over $1,600pw (55%).

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Government Actions on Economy

Aug 29, 2011

Q. If the Australian economy weakens and unemployment goes up would you approve or disapprove of the Government taking the following actions?

Total approve Total disapprove Strongly approve Approve Disapprove Strongly disapprove Don’t know
Reduce interest rates 79% 11% 32% 47% 8% 3% 11%$
Cut taxes for both individuals and businesses 61% 25% 16% 45% 21% 4% 14%
Cut taxes on low and middle income earners to help with cost of living while offsetting the revenue loss with a carbon tax on the 500 big polluters 61% 27% 26% 35% 15% 12% 12%
Introduce a mining tax on the big miners and use the money for govt. investment in infrastructure and social spending to stimulate the economy 58% 26% 24% 34% 16% 10% 16%
Cut taxes on lower and middle income earners to help with cost of living with no offsetting carbon tax on the 500 big polluters 51% 33% 15% 36% 24% 9% 16%
Cut taxes and cut Government investment in infrastructure and social spending 39% 43% 12% 27% 30% 13% 18%

Actions most approved were reduce interest rates (79% approve), cut taxes for both individuals and businesses (61%) and cut taxes on low and middle income earners to help with cost of living while offsetting the revenue loss with a carbon tax on the 500 big polluters (61%).

Cutting taxes while offsetting the revenue loss with a carbon tax was more popular than not offsetting the tax cuts with a carbon tax (61% to 51%).

The only action not approved by a majority was cutting taxes and investment in infrastructure and social spending (39% approve/43% disapprove). This was approved by 48% of Liberal/National voters but only 33% of Labor voters and 27% of Greens voters.

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