Pity the pigs who cried wolf

For so long we have been subject to heart-wrenching tales of onerous funding costs and tough conditions, even as the collective bottom line of the Big Four banks has shot majestically through the $24 billion mark.

Alas, with hard evidence finally emerging that their cost of funds might really be rising a tad - expanding credit spreads and the sharp contraction in NAB's first quarter net interest margins - the bank-basher bashing campaign has reached fever pitch.

Singing loudly and faithfully from their dog-eared song-sheets, the bank-basher bashers are at it again, lamenting the cruel plight of the banks. It started two weeks ago with stories by the bank lobby's favourite media pundits.

Then came the exclusive interviews, culminating in John Morschel's front page this week, "Stop bank bashing, ANZ tells politicians".

"I wish the politicians would get their facts straight before they start making public statements," said the ANZ chairman. "There was no capital provided to any Australian bank by the government and the only thing they did was guarantee wholesale funding, for which they charged a fee and earned a hell of a lot of money from."

Redolent of Monty Python's immortal line, "what did the Romans ever do for us?", it would be hard to know whether to start with clean water, roads, medicine, public health, education or law and order.

Morschel seems to be suggesting that politicians have no right to be expressing an opinion about the banks as the only thing the government ever did for them was to provide some shoddy wholesale funding guarantee.

He must have forgotten the world's most generous deposit funding guarantee - anything up to $1 million. That little beauty sparked a stampede of capital into the Big Four which sent the likes of mortgage funds to the wall.

Then there was that special protection from short-selling, a snap rule change which overrode normal market liquidity mechanisms to favour a big few institutions.

Let's not forget the corporate regulator's persecution of that poor little private client stockbroker who sent an email to his clients one morning in 2008 which correctly evaluated the risks facing Macquarie Bank. He got the sack. Other small players were rattled in the "rumourtrage" witchhunt.

But the greatest freebie of all - omitted from debate as the banking lobby and its loyal scribes rewrite the history - were the Reserve Bank emergency cash facilities.

Correct us, dear readers, if we are err, but didn't the RBA loosen up its rules on "repo" agreements and the like during the financial crisis? The banks were able to swap their risky assets for cash. No other business can dump its dodgy assets into the government in exchange for cash.

And now there is evidence to suggest this was more than a mere "liquidity window". Rather, it seems that the government did provide funds to bail out at least one bank during 2008, BankWest. In the months leading up to the deal to sell BankWest to the Commonwealth Bank, the RBA provided some $10 billion in support.

Read the full story on the mystery in BusinessDay on Monday.

"Correction warning IMPORTANT: I believe the conditions are in place for another major panic sell-off on the sharemarket. I don't know when it will happen and it is not a certainty that it will happen (nothing is ever a certainty) but I think the risk is now such that you must take action. On Monday I will be significantly reducing my already reduced exposure to equities possibly to zero". - Alan Kohler, The Eureka Report. December 19, 2011.

The market has been going up, virtually in a straight line, ever since. This will go down in the history of Australian punditry as one of the best-ever worst calls.

Your essayist can confess to some horrendous calls in his time - it is an unavoidable pitfall of predicting the future - but none yet as teeth-clenchingly ill-timed as this one from the ABC's finance guru.

It should be said - lest we stand accused of delighting in the misery of a competitor - that although his tipstering could do with some work, Kohler is a first-rate journo.

And he could still be right. On the seven-week time horizon he's down 6 per cent, but who is to tell where the market might head from here?

As soon as Alan had made his big call, Mario Draghi came out and showered ?500 billion on the European banking system. The unprecedented money printing continues later this month with another ?1 trillion in an LTRO (longer-term refinancing operation) tender.

When you see LTRO, think printing press. Europe has gone the US route and ramped up the presses. Kohler was probably right, until the former Goldman Sachs alumni Draghi stepped up with Europe's biggest ever bar tab.

The only market tip this downtrodden hack is willing to provide is an administrative one.

Any of you brokers, planners or tip-sheet peddlers out there who might be fretting over your compliance burdens, fear not.

For Kohler and co's Eureka Report - which rakes in a tidy $6 million or so in annual subscriptions - has legal advice that it does not require an Financial Services Licence as it is not providing investment advice, but rather a "media product".

It is indeed the age of the citizen journalist.