Tuesday, 14 April 2009

Governments and the capacity for revenge

Any banker who thinks that the strategy of increasing lending margins by not passing on cuts in official interest rates is risk free should stop and consider what is happening to Telstra. There was an insightful piece in the Sydney Morning Herald on Easter Saturday by Peter Hartcher which suggests punishment of a big business that would not play ball was very much a motivating factor in the decision to announce construction of government financed fibre optic cable to the premises  not just the node on the corner. It should serve as a warning to all companies that rely on government  decisions for a privileged position: what governments give they can also take away.
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