Politics

So Philipp Hildebrand has quit. Not that he did anything wrong, of course. Hildebrand said "I came to the conclusion that it’s not possible for me to deliver a definite proof that my wife requested the currency transaction without my knowledge. Unfortunately, mistakes were made around this transaction.”

The only problem is that he can’t prove he didn’t do anything wrong! The Swiss National Bank released a series of emails between Hidlebrand and his banker. Here’s the Bank Sarasin guy’s email on 16 August:

I also remember your saying in our yesterday’s conversation that if Kashya [Hildebrand's wife] wants to increase the USD exposure then it is fine with you.

The SNB’s own investigation concluded that Hildebrand didn’t break any of the central bank’s internal rules or policies. They must be some pretty loose rules. In any case, it’s not the rules that are the problem. Too many participants in the finance industry see it as one giant game of Monopoly. The rules are there, and your aim is to maximise your profit within those rules, irrespective of the consequences. Then they wonder why the general public hates them when the whole system comes crashing down.

The Economist’s Shumpeter says the SNB’s code of ethics needs an update. That won’t make much difference. Instead of trying to rein in employees with 100-page codes of ethics, the finance industry should  try employing ethical people to begin with. You can't legislate morality.

I shouldn't be shocked. But seriously, is this Philipp Hildebrand stuff for real? I had to read this little snippet out of The Economist twice:

The Swiss National Bank published its internal regulations on staff transactions to try to dampen allegations swirling in the Swiss media that Philipp Hildebrand, the central bank's president, and his wife acted wrongly by buying dollars prior to the SNB setting a ceiling for the Swiss franc last year. The SNB also published the results of an investigation into the trades, which found that the transactions did not breach SNB rules [my emphasis].

It turns out that because Hildebrand's wife did the trade, two days before the SNB started intervening to push the Swiss franc down, and Hildebrand didn't know about it, he's done nothing wrong. The investigation didn't say anything about whether his wife knew about the imminent intervention.

What hope is there that investment bankers will behave themselves when the public servants are front running, insider trading and using exactly the same legalistic, unethical arguments to justify their behaviour? It makes me sick.

Dear Miss Gillard,

I read in this morning’s paper that the Greens are proposing a cap of $2m on executive pay. No doubt you think this is a silly idea. And it is. There has never been a surer way to end up with our best and brightest leaving Australian shores. But it is no sillier than the rest of your hare­-brained schemes on remuneration.

For some time I’ve felt somewhat sympathetic towards Wikileaks founder Julian Assange. Far too many decisions which should be discussed in the public arena are, instead, concluded behind closed doors.

The Australian banking sector is not competitive enough. It’s a cosy oligopoly where the profits made far exceed a reasonable return on capital. Contrary to popular opinion, Australia’s homeowners are the one group of borrowers that aren’t paying the price.

An unnamed politician was quoted in the AFR this morning saying that it would be a ‘matter of concern’ if ASX merged with SGX because the electorate would need to be sure that Australian investors would not be worse off.

How can we be worse off than the current situation?

The ASX charges The Intelligent Investor $16,000 per year for ‘data fees’. We pay another company, Bourse Data, for the feeds but the ASX hits us with another $16,000 for the privilege of publishing their stock prices (20 minutes delayed mind you – if we want live data we would have to pay more).

How can it charge such a ridiculous amount for something which surely should be publicly available? Well, it is a rapacious monopoly protected by legislation.

The government should forget about all this national interest garbage and get on with introducing competition to the market. That would be something of real benefit to investors.

France, along with most of its European neighbours, needs much bigger changes than a two year increase in the retirement age to meet its future obligations. Doing so is going to be a battle between politics and finances. The images of the past week are a timely reminder of a lesson repeated many times throughout history: it's usually the politics that wins.

Does anyone else feel slightly uncomfortable that a bunch of foreign owned mining giants can force a change of Prime Minister and renegotiate a substantially more favourable tax regime? Yes, I'm being naive, but shouldn't the government be more concerned about my opinion, as a voting citizen of Australia, than it is about South African Marius Kloppers' views of the world?

Malcolm Turbbull's political failure reflects the poor state of modern politics. There was once a time when people went into politics because they wanted to do something good. Or so I’m told.