Politically, much of the resilience of Kevin Rudd’s government in the face of the economic downturn is explicable by voter perceptions that the causes of the crisis are external to this country – the Global Financial Crisis.
While that’s largely true, it doesn’t mean that only unseen structural forces are to blame. We could debate the responsibility of people like Alan Greenspan til the cows come home (and others have). But we don’t need to – we can look at a much more contemporaneous cause of the ongoing mess.
As Paul Krugman argues, the “dithering” of the Obama administration is a huge worry. There appears to be a bedrock ideological resistance to taking banks into public ownership (albeit temporarily). Hence all the talk of “zombie banks” and the continuing lack of liquidity in credit markets. Nothing has been done – effectively – to track down the toxic debt, and credit markets remain close to frozen.
Kevin Rudd is right to blame ideology for a large part of the world’s current economic woes. But the closest thing America has to a social democratic administration is compounding, not ameliorating the problems.