03 April 2009

Playing the bastard

The economic situation in the United States is so grave that nobody wants to do the dirty work of identifying companies that have become such a drain upon the US (and global) economy that their legal status as a going concern has to cease, but in such a way that requires both considerable finesse and sheer scale of operation that is beyond the power of mere liquidators. Firms like Citibank and General Motors require dissolution in such a way that they will no longer encumber any prospect of recovery, but without the clumsy pole-axing or neglect that befell Fannie Mae, Freddie Mac and Bear Stearns.

So far, this has fallen to the President, a man whose political capital is significant but not infinite. The Treasury Secretary is reprising his mistake of the Asian crisis of '97 and striving to do too little. The Commerce Secretary, a job that has gone from being an irrelevance (the last occupant of that office to do anything with it was Malcolm Baldrige) to impossibly onerous, as no politician wants to wade into their donor/peer class and send one of their own into the library with a revolver. Bill Richardson and Judd Gregg shunned the office, so it finally fell to a small-state governor who would not pretend to be able to play the big-league commercial and political game - a man who, like Senator Burris, is such a narrow striver that it almost invalidates the attainment of First [member of disadvantaged group] to achieve [high office].

Some will have to play the bastard, someone tough enough to stick to his guns while at the same time consulting widely, negotiating the tides and undertow of politics, while not a captive of what might loosely be termed the US East Coast political-business establishment. Someone who can take the heat off elected officials like President Obama without usurping his power or his freedom to act in other areas of policy.

Who would do it? Nobody who has pocketed a fat Wall Street bonus cheque, like Henry Paulson or Robert Rubin, can escape the perception of having taken tainted coin - or worse, biting the hand that fed him and his. It's a hard ask: Henry Kissinger and Tony Blair have the stature but they'd probably find the Israel-Palestine conflict clearer and less fraught than the Global Financial Crisis. Neither has much purchase with east Asian powers who find themselves with the whip hand, though their may be some residual affection for Kissinger in Beijing.

God help us, there is a man who is actually lobbying for the job. He may be familiar to those in the US administration who were in the Clinton Administration, though they could be forgiven for struggling to place him. He hasn't played the big-league Wall Street-Washington axis, though he seems game and many would fancy his chances. He has some familiarity among east Asian powers. He has been writing articles and appearing on telly.

Of course I'm not referring to Peter Costello, but Paul Keating. John Hewson can fulminate against Tim Geithner and it looks like just another bit of commentary. John Howard may or may not have an opinion, but now that Bush has gone he's receded so far into history that even Federal Parliamentary Liberals realise he has little to offer. Bob Hawke is still interested in any deals that are going with China that he won't rock the boat for the sake of idle comment, and his thirst for the grandstand seems at last to be slaked. Keating is pawing the ground, wanting to get back into the big time, wanting to use the current crisis to burnish an economic legacy every bit as mixed as Tim Geithner's.

Keating is playing a wider game than wanting to be a corporate undertaker, or even defusing the complex arrangements surrounding the defunct behemoths littering the corporate landscape. His talk of restructuring arrangements like the World Bank and the IMF is grand enough, but in the execution of this new world order it will be necessary to navigate the rapids of Washington, and shirtfront some "zombie corporations" to encourage the others, and make people realise that a new order really does mean that the old cozy ways of kickbacks and soft regulation will not do.

Who else but Paul Keating could slip in the shiv and call it acupuncture?

Keating's turn of phrase would be "a breath of fresh air" in Washington and New York media. Murdoch would probably resist the urge to dust him up too much given current circumstances - Murdoch's operation is hardly likely to set their full might against him as they did in the political context of 1990s Australia.

He would be regarded warily in Europe but his task there is probably not impossible, with Labour/Social Democrats in government and receptive to one of their own who survived a recession politically (again, without any political mistake he might make attributed directly back to them). He has standing in Asia, but would have to start from scratch in Russia, India and western Asia.

This flurry of activity shows that Keating doesn't want to just comment on the global economy, nor does he want to be on some committee somewhere - he's actively seeking to get in and shape the architecture himself. There aren't many other takers. Gordon Brown is stuck in domestic politics and would have to see out the job he coveted for so long, and pretty much every other leader is either new to their national leadership or are so tainted by it that they can't transcend to the global level.

He's doing the big-picture stuff, but unlike his mentor Jack Lang wittering away in his little office in Surry Hills, Keating is out there getting noticed by people with the power to make these sorts of decisions. He has the opportunity to lift his legacy beyond the kuturkrieg. He won't be able to remake global economic frameworks Bretton Woods-style because the current predicament involves nothing like the devastation and geopolitical power upheavals of World War II. Don't worry, it isn't like Australia is getting ahead of the game to any extent, or that Keating's grandiosity is unfettered.

For Kevin Rudd, having Keating in a global role is squarely in line with his worldview and his ambitions for Australia on the world stage. Domestically, it also cements a perception that Labor is the party for getting Australia out of recession, while the Liberals are just good-time Charlies only capable of frittering away the boomtime gains (a perception that will be reinforced, not diminished, by putting up Costello as leader).


  1. A phrase worthy of Keating himself: Who else... slip in the shiv and call it accupuncture. How envigorating to imagine an Australian on the worldstage. Yes. I realise where Rudd has been but it hardly compares to the IMF and the World bank.

    Given the GFC confusion, on both sides, maybe Keating's politics are just what is needed; or maybe that's just nostalgia.

  2. Yeah Martha, Keating is something you look back on, not forward to. Like Paul Hogan a generation ago: 1970s for domestic consumption, 1980s foisted on the world. He could do some good in easing the American hands off the wheel to some extent and getting the Chinese to play nice, but we'll see.