I find Rudd's comments a little alarming. While it is true that the market has failed badly, it is also true the the record of government regulation and intervention is equally dismal. When the market pushed down the shares of HIH to reflect a high risk company, the regulator did nothing. In the US, the regulator ignored warnings about Madoff.

We must accept that both the government and the market will make mistakes and we should not believe in the infallibility of either of them. There has to be a middle way.

It's like watching a field of straw-men having a riot.
Both sides agree that government spending is needed. The argument is over what to spend it on.
Both positions start with ideals that are then spoiled with pragmatic exceptions.
The left at least seem to have some good objectives, but are sometimes clueless as to being manipulated. Idealism over pragmatism.
The Right are just a boys club when in power and are almost always clueless or careless of being manipulated. Pragmatism over idealism.
Wisdom is somewhere in the middle, and always with concrete examples.
Wealth is created in factories, fields and workers hands, *not* banks, insurance agencies or any other accounting practice.
It is not only the credit crunch that will cause the depression. By allowing a small bunch of traders, managers, directors to earn ridiculous returns in the boom they have sucked the space capacity from the economy. Individuals that would have had opportunity to start businesses have been denied because of the parasites' excesses.
Both sides of politics should be ashamed.
Rudd, alas is Howard 2.0 at this stage but still preferable to "which way is the wind blowing" Turnbull.

“because [the Howard government] aimed to reduce state power to the maximum possible extent”. Would that it had been so! Far from it, unfortunately.

As regards Rudd’s approach: policies which embrace openness, competition, change and innovation promote economic growth, while interventionist policies stifle it. Markets are imperfect, but their superiority to central planning is well attested; government failure is more common and more damaging than market failure. The World Bank has advised that “countless cases of unsuccessful intervention suggest the need for caution. To justify intervention it is not enough to know that the market is failing; it is also necessary to be confident that the government can do better.”

The Economist points out that government intervention must overcome three formidable difficulties: the tendency of regulated firms to “capture” their regulators, weak incentives for efficiency within the public sector, and missing information (where markets lack it, governments are likely to lack it as well). The record of intervention is poor - history suggests that the burden of proof should lie with those who would extend the government’s role.

A BIE assessment of 15 major Commonwealth interventions found that 13 had negative returns, results for the others were unclear. Similar results have been found throughout the world, and Kevin Rudd’s new interventionism threatens dire consequences.

There are some supporters of Ian Lowe on OLO. His contribution to this debate in today’s Australian is the bizarre claim that "the financial crisis was precipitated by the impact on US suburbia of fuel prices, the first tangible indicator of “peak oil.’" This runs contrary to all evidence and analysis, and far overstates any conceivable impact of a price increase for one consumtpion item. To believe that a minor shift in consumption expenditure in the USA could shatter the world economy suggests a complete ignorance of reality.

Good article.

Yes it laughable to represent the Howard government as standing for small government and unrestrained capitalism.

Both major parties are Marxoid/Keynesian with a bit of monetarism thrown in.

Both believe in government monopoly control of the money supply, and a policy of permanent inflation of the currency.

Both hold the Marxist belief that the relation of employment is intrinsically exploitative and abusive, and should be suppressed in myriad ways: "industrial relations".

Both believe that forcibly taking from A and giving to B is a valid function of government. This gives rise to endless redistributionist thieving, from the baby bonus, to the bailouts of billionaire corporations.

Both believe in governmental 'economic management', the fruits of which are there for all to see. The main governmental contribution to the crisis is not poor regulation itself, it is the permanent fiddling of the nerve centre of a market economy, the money supply. This has enormous economic consequences, which the ignorant then blame on capitalism: see http://mises.org/

Both believe in encouraging, by subsidising, the resulting unemployment, poverty and disadvantge: "social security".

Both believe in fielding Australian troops in foreign military adventures in support of the American empire.

Both believe in handing out billions of money taken from Australians every year to prop up corrupt overseas government to engage in similarly inept meddling generating similar disadvantages overseas.

Both believe in a grand vision of governmental meddling in any and every aspect of private life, to be enforced at the world level: the "United Nations".

Both believe in the official establishment of the new religion of environmentalism, and expansion of governmental power at whim.

Both believe in a tax system so complex that even the tax office can't be trusted to make consistent decisions on the same question.

It is in their interest to paint their differences large as possible, while simultaneously making them in fact as little as possible. Only a fool would believe it.

Neither of them believes in individual liberty and responsibility, private property, very low taxation, sound money, and free markets.

Socialism just keeps changing its name, that is all.

So let's see. On the one hand, our learned blogger opines that "the Howard government hardly deregulated, and radically expanded the role of the welfare state, it follows that it cannot be said that its agenda was small government and unrestrained capitalism."

Can this be the same Leon Bertrand who wrote here in December 2007:

"The Howard government was very much a government for the dries of the Liberal party, as it continued the economic reforms of the Hawke and Keating years, in many areas going further than Labor ever would have.

His government implemented tax reform, further reduced tariffs, introduced work for the dole, sold Telstra and introduced two separate waves of industrial relations reform."

Then again Howard was supremely opportunistic so I guess he can't complain when his once-faithful followers turn against him. I bet his BFF George W Bush knows just how he feels.

LB's soul searching article is skirting the abysmal truth relating to the Global Financial crisis enveloping Aust. Never fear, with our naked Emperor at the helm, and his long awaited Economic Management Hyperbole 7700 word thesis soon to be released, we ordinary folk in the meantime, can only wait for " Magnum Opus Mk1 ( Plan B ) " to restore faith in out fearless Leader, solve the Nation's fiscal recession, and boost our faltering lachrymose confidence.

Importantly, can Kevin save us ?

Laurie Oakes, and Glen Milne, through their G2 spy syndicate, assures it will be a bottler. Ridicule aside, his erstwhile Plan A where $ 10.4 B taxpayers dollars meant to revitalise the retail industry, was instead squandered on the pokies, magic million's, and assorted gaming venues. The remaining one third went into expatriates with dual citizenship living in Greece, Lebanon, Italy etc. The other stimulus windfall of $ 4.5 B Commercial Property Fund to reinvigorate the Big Four Pillar Banks resulted in a bailout of insolvency loans eg Storm Financial, Highrise developer Raptist, MFS etc. Money loaned to high flyers on shonky collateral. Worst, battling families, pensioners investing their only asset, their homes on Bank loans to put into a tenuously fickle stock market. Then theirs the GMH deal involving $ 6.2 B to boost flagging union membership.

One can be sure, the Coalition will be crucified abd scapegoated for being the root cause of the Global crisis, even though it's conviently forgotten JWH left a war-chest $ 20 B surplus, all of which lamentably been fritted away on schemes only the Govt is privy to. The Canberra lobbyist, ACTU, camarilla party-hacks, syncophants etc doubly ensure their wish list is aptly serviced.

The infamous Sub Prime debacle has it's origins in the USA. It's skewed thinking to blame the housing crisis, defaulting home owners, and sundry local collapses on the Opposition. The architects of the Sub Prime destruction comprise:

. Economic theorist/ budding fiscal whiz-kids/ gamblers
. Mortgage companies/insurance/ brokers
. Politicians and law-makers
. Banks/loan-sharks/lobbyist
. Hedging/short-selling/derivatives/leverage markets
. SEC ( Securities Exchange Commission )