The 10 Worst Cock-Ups Of 2008

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1. Kevin Rudd's emissions reductions target
As newmatilda.com's Anna Rose reported yesterday, Kevin Rudd's depressingly low 5 per cent target for carbon emissions reduction pretty much throws in the towel when it comes to fighting climate change. A decision which aims to please everyone has so far pleased almost no one, with green groups up in arms, scientists in despair, the Greens threatening to block it in the Senate and business and big carbon saying they're still not happy.

A weak decision like this erodes Rudd's political capital and moral authority, and also abandons any chance Australia might have had of leading world climate change negotiations in a direction which might actually save Australia's future environment. The scheme gives away carbon pollution permits for free and gives billions of dollars to the least deserving: big polluting fossil fuel industries. A disaster for young people and future generations.

2. Henry Paulson's decision to not bail out Lehman Brothers
Henry "Hank" Paulson, George W Bush's Treasury Secretary, is a former Morgan Stanley banker and titan of Wall Street who unexpectedly found himself in the middle of the worst market meltdown since 1929. Critics claim he should have seen it coming, but when the crisis hit he found himself in uncharted territories and subject to extreme pressure from wild market fluctuations and panicked politicians.

After successfully engineering the take-over of Bear Sterns in March, when another top merchant bank, Lehman Brothers, got into trouble in September, Paulson and his top advisors (including Federal Reserve Chairman Ben Bernanke and Obama's future Treasury Secretary Timothy Geithner) blinked — deciding to let Lehman Brothers fail. At the time, there was much talk about how saving Lehman Brothers would instill dreaded "moral peril" among bankers, and so Lehman was allowed to go bankrupt with more than $600 billion in liabilities — the largest bankruptcy in US history.

The consequences were mind-boggling. Markets plunged around the world, banks failed across three continents, the nation of Iceland faced bankruptcy and the entire world financial system teetered on the brink of total collapse. The US soon slid into deep recession and the crisis looks set to continue well into 2010.

3. People and companies with too much debt
2008 was not the year to be leveraged. As world credit markets ground to a halt, business credit became suddenly impossible to obtain and debt impossible to refinance. Companies with too much debt (or even just opaque management structures) went quickly to the wall.

In Australia the list begins with Allco Finance, Centro Property, MFS, ABC Learning, Opes Prime and it's lengthening daily. Individuals with too much debt suffered too. Day traders with big margin loans were wiped out, mums and dads with supposedly "safe" mining and banking stocks saw their wealth slashed and superannuation accounts across the nation were savaged. If you had merely bought shares with your own money — a traditional "long" position — you could wait it out; albeit painfully. But many who borrowed to buy shares near the top of the market lost everything.

4. Water policy
Fourth on the list of worst fuck-ups of 2008 is Australian water policy — or lack thereof. When Kevin Rudd came to power, uniting the Commonwealth and all the states under Labor governments, many were optimistic that the new Prime Minister's "cooperative federalism" could be used to sort out the mess of Australia's balkanised, 19th century water and irrigation policies. No such luck. Victorian Premier John Brumby played hard-ball, Queensland continued to tolerate the national scandal of Cubbie Station, and the Murray Darling Basin Authority was nobbled before it even had a chance to get on its feet.

Meanwhile Water Minister Penny Wong plodded on, apparently unable to exert enough authority with her state colleagues to achieve meaningful progress on irrigation over-allocation or even a scientific understanding of how much water we have left. On current policies it will take decades for the Commonwealth to buy back over-allocated water rights, by which time Rudd and Wong's inaction on climate change will mean there's no water left in the rivers to purchase. In the meantime, the states press on with commissioning giant, electricity-hungry water desalination plants — in effect burning coal to make water.

5. Wayne Swan's bank deposit guarantee
As the global financial crisis sucked trillions of dollars of panicked investor's cash out of anything that could be perceived as risky, governments around the world moved to try and stem the damage. When Ireland decided to guarantee its domestic deposits in October, there was universal condemnation from its EU partners over the potential for destabilisation, as money poured into Irish banks and out of other EU countries. Declaring that Australia was going through "the economic equivalent of a rolling national security crisis", Kevin Rudd and Wayne Swan quickly followed suit, guaranteeing all borrowing by Australian banks. The decision immediately caused huge distortions in money markets, as investors ripped their savings out of non-guaranteed vehicles like investment funds and put them into banks.

6. Julia Gillard's private schools funding bill
In another policy decision which might have been John Howard's, Julia Gillard neatly snookered the Opposition on the issue of private schools funding by adopting their own policy. The move made for some acute parliamentary embarrassment for Liberal spokesman Christopher Pyne, but obscured the fact that Labor had recommitted to the Howard Government's schools funding policy. The result is that billions more dollars now flow to the nation's private schools than to public and state schools. In fact, the Commonwealth gives more money to private schools than it does to universities. It was, as some wags pointed out, an education counter-revolution.

7. Joel Fitzgibbon's capture by the defence establishment
In opposition, Labor's then Defence spokesman Joel Fitzgibbon made a name for himself by attacking Brendan Nelson's dubious record on defence procurement — especially the rushed decision to buy 24 F/A-18 Super Hornet jets. But as Defence Minister, Fitzgibbon back-flipped on the issue, refusing to cancel the Super Hornet contract. The decision showed a Minister effectively captured by the defence establishment. Canberra's small coterie of defence insiders includes the top brass like Angus Houston and Stephen Gumley and high-profile analysts like the Australian Strategic Policy Institute's Rod Lyon and Carl Ungerer.

Fitzgibbon has shown little ability to think outside the square, continuing Australia's huge defence spending spree, our increasingly troubled mission in Afghanistan, and our commitment to hugely expensive and ineffective weapons systems like the F-35 Joint Strike Fighter.

8. Malcolm Turnbull's decision to run for Opposition leader
It must have seemed like a good idea at the time. When Brendan Nelson finally put himself and his party out of their collective misery in September, Turnbull became the man most likely. Indeed, with Peter Costello refusing to run, he was the only viable leader in the parliamentary Liberal Party.

But a few months in, he must be wondering about the wisdom of letting Nelson fall on his sword. Up against a ruthless opponent and hobbled by disunity in his Coalition and an increasingly hapless performance from his deputy, Julie Bishop, Turnbull is making heavy weather of his job. Worse, continued poor performances in the polls leaves the door ajar for a last-minute run by the ever-lurking Peter Costello just before the next election. Might it have been better to wait another 12 or 18 months? Only time will tell.

9. Barack Obama's appointment of Rahm Emanuel as Chief of Staff
At the time it was hailed as a shrewd move to bring a noted Democratic arm-twister into the White House. But in the wake of the Blagojevich scandal, the decision by US President Elect Barack Obama to appoint Rahm Emanuel as chief of Staff is beginning to look like his first significant mis-step. Emanuel, a legendarily ruthless operator who made millions on Wall St before returning to US Congress in 2006, is now implicated in wiretaps from the Blagojevich corruption investigation. A tainted staffer in the White House can have major impacts on an administration — as the Scooter Libby trial showed. Worse, it leaves Obama's rhetoric of change just a little tarnished.

10. The 2020 Summit
Not exactly a f*ck-up, the 2020 summit was a brilliant publicity stunt that delivered unsatisfyingly anodyne policy reccommendations that Kevin Rudd has been able to ignore safely. But the 2020 Summit makes it in at number 10 on this list because of what it shows about Kevin Rudd's style of leadership. Pitched as a love-in for the "best and brightest", what the Summit really showed is the Prime Minister's penchant for taking advice from a hand-picked group of influential operators. The 2020 Summit demonstrated what many had suspected for a long time: that Australia has developed a ruling class of political insiders whose voices and opinions are worth far more than those of ordinary voters'.

Men and women like Glyn Davis and Heather Ridout are examples of what has become the true power elite of Australia, a small group of unelected movers and shakers who shape the future of our nation. Meanwhile, the many worthwhile ideas that ordinary citizens submitted to the 2020 Summit were noted and duly ignored. For believers in representative democracy, the cynicism with which the Rudd Government convened and then discarded the 2020 Summit was a disheartening spectacle.

Dishonourable mentions:
Telstra's bungled broadband bid.
Morris Iemma, Michael Costa and the entire NSW branch of the ALP.
The planning department of Wollongong Council.
Fairfax's management implosion.
John Brumby's transport plan.
Anna Bligh's backflip on recycled drinking water.
Alan Carpenter's election campaign.
Peter Garrett's decision to axe, then reinstate, funding for the Australian National Academy of Music.
Ben Cousins's decision to "shave down" before the AFL draft.
Ricky Ponting's slow over-rate in India.
Sarah Palin.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.

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