Due Date: 24 April, 2013 Total Marks: 100 marks Weighting: 20%
Question One25 marks
On 21 January, 2011 Mike Mangan in the Eureka Report wrote:
“Most people accept that the pre-GFC “excesses” of massive financial leverage; and bonus culture contributed to the subsequent financial collapse. And for most people in the US, the GFC is now defined as lost jobs, lost houses, often lost families and, in some cases, lost lives. You’d think financiers would be chastened by this carnage. Nothing could be further from the truth. With a quick step and a dog whistle, they just mutter “bad trade”. And their DNA is such that bad trades are quickly forgotten. Another day, another deal. Barclays CEO Bob Diamond has even demanded the industry stop apologising and, presumably, just get on with making money. This as the US faces record home foreclosures and US unemployment near 10%. Thanks for your empathy, Bob. For those who have experienced the unique world of investment banking, Diamond’s insensitivity is typical among global financiers. They exist in a parallel universe, collecting art, fine wine and other trophy toys and spending very little time wondering what the poor people are doing. Mind you, bankers have learnt the GFC lesson: no more US real estate lending. So while the US Federal Reserve prints money, hoping to resuscitate US housing, financiers are busy spraying the freshly minted dollars into commodities and emerging markets in one of the more predictable displays of the law of unintended consequences. While Australian banks were angels in comparison to their northern hemisphere cousins, even they needed government guarantees to stay alive during the GFC. Having forgotten this corporate socialism, they too are back doing what they do best: rewarding themselves with barely a mea culpa in sight. So we have the spectacle of CommBank CEO Ralph Norris sneaking through a rate rise on Melbourne Cup...