Yesterday my post “Here Comes The Banksters’ Glee Club” rather surprisingly drew the attention of one of its “eminent” subjects.
Mr Saul Eslake.
Former chief economist for ANZ Bank. Now director of the Grattan Institute – a “public policy” “think tank” whose telling provenance we will return to shortly.
Mr Eslake responded to my post as follows (complete unaltered quote):
Oh what a cheap shot. I don’t work for a bank any more, and neither do two of the other signatories; while three others have, as far as I know, never worked for a bank. And while it is true that banks might make money from an emissions trading scheme, they could just as likely lose (as many banks have done from trading other ‘derivatives’. However there’s no way that banks would make any money out of a carbon tax. Moreover, none of the signatories of this open letter are likely to derive much if any benefit from whatever ‘compensation’ arrangements accompany whatever means is eventually adopted to put a price on carbon emissions.
So you are way, way off beam in accusing any of us of being motivated by self-interest – which is a typical accusation made by those who can’t be bothered debating the issue itself. Playing the man, not the ball, as we say in the southern states
Let us very closely examine each one of Mr Eslake’s comments.
In so doing, we will see clearly not only the heights of vanity and hypersensitivity to which much-lauded #JAFA‘s such as Mr Eslake climb (he has found and bitten at a post by a lowly and insignificant blogger, after all).
We will also see clearly the depths of deception to which they will stoop.
Shall we begin? (emphasis added):
ESLAKE: I don’t work for a bank any more…
1. Not working for a bank “any more” is misleading, and entirely beside the point. What is important to note is what Mr Eslake does not say. He does not claim to have abandoned all financial or other interest in his former employer (the ANZ Bank), its executive managment, shareholders, former colleagues, or those of any other bank or related financial entity.
Unless Mr Eslake will categorically state that neither he, his family, former colleagues, nor any other person associated with himself stands to benefit in any way, at any time, from the introduction of a “pricing carbon” scheme, then this simplistic defence is a Red Herring, and as such is, IMO, thoroughly misleading and (intellectually) dishonest.
2. Mr Eslake is director for the Grattan Institute. The Grattan Institute’s website states that:
Grattan Institute is grateful for the support of our founding members: the Australian Government, the State Government of Victoria, The University of Melbourne and BHP Billiton. They contributed to an endowment that provides ongoing funds towards Grattan Institute’s programs.
So, is Mr Eslake’s employer the Grattan Institute? Or, is his directorship of the institute entirely unpaid?
If he does in fact receive any form of remuneration from the Grattan Institute, then who is really his employer?
It is the Australian and Victorian Governments, a university, and/or … BHP Billiton. The CEO of whom (Marius Kloppers) appears on the Grattan Institute’s Board of Directors.
We have previously seen (“BHP’s 100% Carbon Tax Rebate, While You Pay Higher Electricity“) that BHP Billiton – the world’s largest miner – will likely not suffer losses under a carbon dioxide trading scheme. Rather, the mighty BHP Billiton stands to benefit from the incestuously cosy relationship it has formed with this Labor Government. Remember those closed-door, by invitation-only MRRT “negotiations”, that excluded the small-medium mining companies?
Mr Eslake too, appears to be intimately associated with the current and future fortunes of BHP Billiton, its executive management, employees, and shareholders, through his directorship of the BHP Billiton-funded Grattan Institute.
This fact alone – entirely separate to and irrespective of his former relationship with a major bank – raises a serious conflict-of-interest question mark over the integrity and credibility of any public policy “advice” that Mr Eslake chooses to make, wherever such advice or comment may influence public policy decisions relevant to the financial interests of BHP Billiton.
Moving on (emphasis added):
ESLAKE: … and neither do two of the other signatories;
There are “13 eminent economists” who co-signed the Open Letter in favour of a carbon “tax” / pricing scheme.
According to Mr Eslake, only three (3) of the thirteen (13) economists (himself included) “don’t work for a bank anymore”.
Can we take it then, that ten (10) of the thirteen (13) signatories DO work for a bank?
ESLAKE: … while three others have, as far as I know, never worked for a bank.
Ok. Let’s generously take Mr Eslake at his word on this, and accept that (a) 3/13 co-signatories “don’t work for a bank anymore“, and (b) another 3/13 have never worked for a bank “as far as (he) knows”.
So, let’s do the sums shall we?
According to Mr Eslake’s own words, we can take it as read that a clear majority 7/13 of the co-signatories to the Open Letter supporting a carbon pricing scheme, are presently employed by banks.
Another 3/13 have previously worked for banks.
Making a total of 10/13 signatories having past or present direct connections with the banking industry. The very same industry that “might make money from an emissions trading scheme”.
Leaving a mere 3/13 who have no past or present connections with the banking industry … “as far as I know”.
Enough said?
No, let’s go deeper.
Let’s move on to the nitty gritty of Mr Eslake’s defence of the banking industry – on behalf of whom we are expected to believe he is not arguing, despite his very post’s self-evidence to the contrary (emphasis added):
And while it is true that banks might make money from an emissions trading scheme, they could just as likely lose (as many banks have done from trading other ‘derivatives’.
Consider.
1. Mr Eslake openly concedes – though his concession is adulterated with the weasel word “might” – that “it is true” that banks stand to make money from an emissions trading scheme. Therefore, on the basis of this concession, the Open Letter co-signed by 13 economists, 10 of whom Mr Eslake concedes have past and/or present direct connections with banks – clearly represents a blatant example of lobbying, under the deceitful guise of “eminent” economic advice.
The moral and intellectual integrity of Mr Eslake and each one of his co-signatories is immediately called into question by the openly conceded profit-making opportunity that legislative passage of a CO2 pricing scheme represents to the current and/or former employers of the great majority (10/13) of the Open Letter’s co-signatories.
2. Mr Eslake openly concedes that banks “could just as likely lose” money from trading on the back of a CO2 pricing scheme. In particular, it is important to note that Mr Eslake concedes that “many banks have [lost money] from trading other ‘derivatives’.”
Conveniently, in conceding that banks “could just as likely lose” money, and that “many banks have” lost money “from trading other ‘derivatives'”, Mr Eslake fails to address crucially pertinent facts relating to the past and present state of the Australian banking industry.
Specifically, he fails to address the fact that in recent weeks, leading credit rating agency Moody’s has effectively stated that our banks are Too Big Too Fail and must continue to be guaranteed by the government (ie, by taxpayers) else they will be downgraded, which would inevitably lead to higher funding costs / reduced bank profits. While another leading credit rating agency Fitch’s has recently downgraded 54 ‘tranches’ of Australian Residential Mortgage-Backed Securities, indicating that “cash-strapped borrowers and tight-fisted mortgage insurers are a greater threat to Australian banks than previously thought“.
Nor does Mr Eslake address the fact that “other derivatives” were at the very heart of the GFC.
Nor does he address the fact that Australia’s banking system presently has $15 Trillion in Off-Balance Sheet “Business” versus a mere $2.7 Trillion in On-Balance Sheet “Assets”. Or that most of that “Off-Balance Sheet” $15 Trillion (more than 10 times our nation’s annual GDP) is “invested” in those “other derivatives” which nearly blew up the financial world in 2008-09.
Nor does he address the fact that he and his co-signatories are not only publicly advocating for a “carbon pricing mechanism”, they are also publicly supporting the Garnaut proposal for an “independent” – unelected, unaccountable – Carbon Bank to administer the money from the scheme. A “bank” empowered to borrow against future government “carbon tax” earnings – meaning the taxpayer is placed on the hook for any losses incurred by said “independent” Carbon Bank.
Nor does he address the fact that none of these “leading”, “eminent” economists had the wisdom, foresight, or indeed the simple commonsense to see and forewarn of the oncoming Global Financial Crisis. And hence, he does not address the fact that there is no logical reason why any sane citizen, government official, or elected representative, should ever again trust these same failed economists’ “wisdom” and “insight” when it comes to another, far bigger ‘derivatives’-based financial scheme, and/or the means of administering the finances thereof.
In light of all these concerns about our banking industry and the proposed Carbon Bank, for Mr Eslake to argue in defence of carbon pricing the view that banks “could just as likely lose” money, clearly represents a gross dereliction of moral and intellectual responsibility to the Australian public as a whole. As a “leading” and “eminent”, “high profile” economist, Mr Eslake should be utterly condemned for advocating a public policy that would – by his own tacit admission – manifestly increase financial risk to Australian taxpayers.
Especially when said public policy “might make money” for his and/or his co-signatories past and/or former employers, and/or any of their respective personal and/or professional connections in the banking and business world.
Moving on (emphasis added):
However there’s no way that banks would make any money out of a carbon tax.
Mr Eslake stoops to blatant dishonesty here. Either that, or he is ignorant of what this government’s own website has to say about the “carbon pricing” mechanism it is proposing, and that Mr Eslake and his co-signatories are publicly supporting. From the government’s official Climate Change website:
Broad architecture of the carbon price mechanism
A carbon price mechanism could commence with a fixed price (through the issuance of fixed price units within an emissions trading scheme)
http://www.climatechange.gov.au/government/initiatives/multi-party-committee/carbon-price-framework.aspx
The government is not proposing a carbon “tax”. Though they have apparently become content to have that misconception widely perpetrated by the media, and their own party members.
What the government is proposing, is a “fixed price” Emissions Trading Scheme. As a temporary, interim step towards a “flexible price” ETS. Once again from the government’s official Climate Change website:
Transition arrangements
At the end of the fixed price period, the clear intent would be that the scheme convert to a flexible price cap-and-trade emissions trading scheme.
There you have it. The government is proposing a “fixed price” ETS, for a limited period before a “transition” to a full, “flexible price” cap-and-trade ETS.
And what is it that Mr Eslake and his 10/13 majority bankster-connected Open Letter co-signatories really want? What sort of scheme are they advocating as their “preferred option”?
A group of senior economists has written an open letter advocating a price on carbon as an essential reform for the national economy, with an emissions trading scheme the preferred option.
In my opinion, it is highly implausible that an “eminent” economist such as Mr Eslake could be ignorant of the fact that the government is proposing an introductory fixed price ETS, and not a “tax”.
To argue that “there’s no way that banks would make any money out of a carbon tax” is misleading and deceptive. Furthermore, it conveniently distracts attention from the fact that Mr Eslake and his co-signatories are themselves not advocating a “tax” either, but rather, an ETS.
Moving on (emphasis added):
Moreover, none of the signatories of this open letter are likely to derive much if any benefit from whatever ‘compensation’ arrangements accompany whatever means is eventually adopted to put a price on carbon emissions.
Once again, Mr Eslake employs a misleading and deceptive misdirection.
Noone – certainly not this blogger – has either claimed or inferred that Mr Eslake, or any of his co-signatories, stand to derive benefit from “compensation arrangements” arising from a “carbon pricing” mechanism.
Having initially resorted to a misleading and deceptive Red Herring (“there’s no way that banks would make any money out of a carbon tax“), to very weakly (“much if any”) single out “compensation arrangements” as his sole remaining argument, is to have secondarily resorted to the use of the misleading and deceptive Straw Man fallacy.
If Mr Eslake’s moral and intellectual credibility is ever to be taken remotely seriously, he must cease from employing such blatant rhetorical dishonesties, and address the actual points of his opponent’s arguments, without obfuscation, distraction, misdirection, and diversion.
What has been inferred, both in this blog and in myriad commentaries elsewhere, is that the banking industry clearly stands to benefit from a “carbon pricing” mechanism.
And whilst still resorting to the deceitful use of weasel words (“might”), Mr Eslake has nonetheless openly conceded that this inference is in fact, true:
And while it is true that banks might make money from an emissions trading scheme…
Finally, it is noteworthy that Mr Eslake chose to respond again to my comments made in response to his assertions. What is remarkable about this is his failure to address the simple, direct questions asked, preferring instead to demonstrate remarkable hypocrisy by “playing the man and not the ball” throughout.
Indeed, Mr Eslake demonstrates this hypocrisy most ably in making this loaded comment in his follow up response:
It’s easier to argue by re-iterative assertion … than to engage with facts or arguments.
… and yet he proceeds to again avoid engaging with any of the facts or arguments himself, with regard to (eg) the banking industry, its profitability, derivatives trading history, and independently verified (by international credit rating agencies) risk concerns, that I have presented in my numerous arguments posited previously on this blog, and now again in direct comments in response to Mr Eslake.
Most notably, he either ignores or semi-skillfully attempts to sidestep the direct questions originally posed to him.
For interest and clarity, I will repeat verbatim each of the direct questions originally asked of Mr Eslake:
1. Will you come out and categorically deny that banks stand to make profits from an ETS?
2. What does recent history show us all very clearly about who picks up the cost when (“if”, to use your weasel words) those banks do “just as likely lose” from their trading on the back of a CO2 scheme?
3. Would you care to publicly and categorically state that (a) you, and/or (b) each one of your fellow signatories to your Open letter, will NEVER receive ANY personal financial benefit, either directly OR indirectly, from the introduction by government of the proposed scheme for “pricing carbon”?
I note that Mr Eslake did subsequently respond in part to the third of those questions, as follows:
I can’t speak for the other signatories to that letter…
[Interesting. Mr Eslake showed no such reluctance to speak out in defence of his co-signatories in his original comments]
But I can say, categorically, that I can think of no way in which I will personally benefit from the introduction of a carbon tax or ETS. (Hydro Tasmania, of which I am a non-executive director, thinks it will benefit from the introduction of a carbon price or ETS; but the remuneration I derive from that position is entirely unaffected by Hydro Tasmania’s financial results).
“I can think of no way” is, again, an example of the use of weasel words.
I would refer Mr Eslake to the very specifically worded question previously posed (emphasis added):
Would you care to publicly and categorically state that (a) you, and/or (b) each one of your fellow signatories to your Open letter, will NEVER receive ANY personal financial benefit, either directly OR indirectly, from the introduction by government of the proposed scheme for “pricing carbon”?
By way of particular example, I refer to Mr Eslake’s present directorship of the (Labor) Australian Government + BHP Billiton-founded/co-sponsored/co-funded Grattan Institute, and pose the following questions:
1. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, would in no way be affected were he to refuse to publicly support carbon (dioxide) pricing?
2. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, would in no way be affected were he to publicly denounce carbon pricing as representing an increased risk to the Australian banking sector, and thus to Australian taxpayers, whose explicit and implicit government-invoked “guarantee/s” are directly influential upon the banks’ credit ratings, cost of wholesale funding, and thus their ultimate profitability?
3. Will he categorically affirm that his relationship with the Grattan Institute, and/or BHP Billiton, and/or the Australian Government, would in no way be affected were he to publicly denounce the proposal for an “independent” Carbon Bank as representing an (unelected, unaccountable) increased risk to the financial well-being of Australian taxpayers?
4. Will he categorically affirm identical answers to each of the above questions, as pertaining to each and every one of his twelve (12) Open Letter co-signatories vis-a-vis their relationships with their respective past and/or present employers?
In closing, I note that Mr Eslake – in hypocritically accusing me of “playing the man and not the ball” before repeatedly doing precisely this himself – has indulged in the classically-totalitarian inclination to either proclaim, or simply infer, a willingness to exercise force in order to silence those who oppose their views:
Easy to tweet that I’m a “liar” – simply because my view is different from yours – free of the risk of being sued, because you don’t have the balls to identify yourself.
Mr Eslake expresses a threatening dissatisfaction with the fact that I am a (barely) anonymous blogger exercising my Universal Human Right of free speech in criticising his public position on a controversial proposed public policy.
It is truly remarkable – and telling – that an “eminent” and “high profile” economist such as Mr Eslake should even find, much less feel the need to retaliate against, the musings of a lowly and insignificant blogger.
One with a public-opinion-steering grand total of little more than 170 Twitter followers, across the entire planet.
I can only interpret Mr Eslake’s actions here – quite irrespective of his words – as being indicative of a most revealing hypersensitivity to any kind of public criticism of his position on this multi-billion-dollar topic.
Or perhaps more simply … of a guilty conscience.
Tags: ANZ, besa deda, bill evans, carbon bank, citigroup, ets, macquarie bank, paul brennan, richard gibbs, saul eslake, Westpac
Barnaby Is Right 
Comments