39 With state-owned banks, we can beat Wall Street - Ellen Brown

(1) With state-owned banks, we can beat Wall Street - Ellen Brown
(2) China, financial superpower - but very poor (cf Japan "rich country, poor people")
(3) Goldman Sachs Celebrates while America Suffers
(4) Financial crisis not over - Roubini
(5) Australian politicians place Lobbies & Deals ahead of Democracy
(6) Australian politicians for sale to business donors

Labor to outlaw pay-per-view political donations

Stefanie Balogh and Rosemary Odgers

August 03, 2009 12:00am

http://www.news.com.au/couriermail/story/0,23739,25872619-953,00.html

FEDERAL Labor could follow Premier Anna Bligh's lead to outlaw the controversial practice of pay-per-view political donations which give cashed-up conference observers special access to ministers.

It comes as Deputy Prime Minister Julia Gillard and Treasurer Wayne Swan backed Ms Bligh's efforts to overhaul fundraising in Queensland.

Ms Bligh - one of three ALP national presidents - has banned all State Government MPs attending fundraising dinners, lunches or breakfasts with business leaders where the money goes to state Labor.

She has challenged every other political party in the nation to follow her lead.

"I'm absolutely determined in my resolve to ensure that we stamp out these sort of practices . . . and I'm happy to lead a debate nationally on stamping them out in other parts of Australia," she said.

On the weekend, business observers paid $7500 to watch the ALP national conference in Sydney and meet with senior ministers in a massive fundraising haul estimated at almost $1 million. Such events could soon be a thing of the past.

Ms Gillard yesterday said the practice of paying for access to politicians at conferences was long-standing for all sides of politics.

"We were elected with a change agenda on political donations. We've said we want to take that a step at a time in a methodical fashion," she told the ABC's Insiders program.

Mr Swan also backed Ms Bligh's shake-up.

"There is just no comparison between what is going on there (in Queensland) now and what went on in the Bjelke-Petersen years but it doesn't mean to say that there aren't challenges," he told the Nine Network.

Asked whether the issue of business observers programs - cash-for-access meetings - would be re-examined, Ms Gillard said: "Oh, look, I think all of these issues are on the table."

"I think Anna (Bligh) is doing this because she is obviously concerned about these questions and we share her concerns," she said.

The Rudd Government's Electoral Reform Green Paper - Donations, Funding and Expenditure, is examining a raft of issues, including "private funding, through donations and other contributions, to political parties, independent candidates and others participating in the political process".

The Rudd Government is also trying to establish new rules requiring political donations of more than $1000 to be disclosed. Currently only donations over $10,000 are disclosed but the changes are being blocked in the Senate.

(1) With state-owned banks, we can beat Wall Street - Ellen Brown

From: Ellen Brown <ellenhbrown@gmail.com>  Date: 06.08.2009 06:37 PM

http://www.huffingtonpost.com/ellen-brown/the-public-option-in-bank_b_252161.html

Posted: August 5, 2009 05:36 PM

The Public Option in Banking: How We Can Beat Wall Street at Its Own Game

Ellen Brown

President Obama has repeated his call for a public option in health care, in order to create some competition for the insurance companies and keep them honest. We the people need to call for a public option in banking, in order to create some competition for the private banks and keep them honest.

In Wall Street's latest affront to the public trust, the nine mega-banks graced with $125 billion in taxpayer bailout money under the Troubled Asset Relief Program (TARP) were reported last week to be paying out billions of dollars in bonuses to their executives. At least 4,793 bankers and traders received more than $1 million each in bonus payments, although it was one of Wall Street's worst years on record. After months of investigating banker compensation, New York Attorney General Andrew Cuomo said on July 30:

    "The repeated explanation from bank executives that bonuses are tied to performance in a manner designed to promote (national economic) growth does not appear to be accurate."

To say that it was an understatement would be an understatement. The bonuses paid to executives not only were not tied to national economic growth but were not even tied to some reasonable percentage of company profits. In fact they were generally greater than the net income of the banks. Morgan Stanley, for example, had $1.7 billion in earnings and paid $4.475 billion in bonuses. Goldman Sachs had $2.3 billion in earnings and paid $4.8 billion in bonuses. JP Morgan Chase had $5.6 billion in earnings and paid $8.69 billion in bonuses. JP Morgan's largesse involved showering 1,626 of its favorite execs and traders with bonuses of $1 million or more. For most people, a "bonus" is a few hundred dollars at Christmastime. A million dollars is what you work a lifetime to try to save, and few people reach that goal. Even Citigroup and Merrill Lynch, which have been called zombie banks, paid $5.33 billion and $3.6 billion in bonuses, respectively -- although they lost more than $27 billion each in earnings. The bar for merit is apparently so low that you're entitled to a bonus if your zombie bank simply keeps breathing!

These blatantly inflated bonuses are just the last in a litany of abuses by those same profligate banks that nearly destroyed our economic system. If the derivatives on their books were "marked to market" (valued at what they would fetch on the market), the banks would be bankrupt, and their employees would be out of a job. Instead, they have been allowed to inflate the value of their "toxic" assets -- and sell them to the U.S. government at the inflated value. Then they have taken the money they got from the government at these inflated prices and paid back the TARP money they received -- allowing them to post inflated earnings and reward themselves with inflated bonuses! Many people feel that these bankers are thieves stealing from the public till who should be looking at jail time. But who is there to stop their parade of outrages? No one in Congress, the White House, or the news media is calling them on the carpet for it. As Senator Dick Durbin said recently, Wall Street owns Congress; and that is also true of the major media.

We may not be able to stop them, but we can join them. We the people need to play the bankers' game ourselves. Even corporate giants such as General Motors and WalMart have now gotten into the banking game and are easing their credit problems by forming their own banks. The U.S. public sector is late to the party. States, counties, public universities could take the lucrative system the private banking industry has created for itself and turn it to productive use in the public interest.

Keeping the Banks Honest with Some Public Competition

In President Obama's July 17 weekly address, he repeated his call for a public option in health care, in order to "increase competition and keep insurance companies honest" and to "put an end to the worst practices of the insurance industry." The same call needs to be made for a public option in banking. In some countries, publicly-owned banks have operated alongside privately-owned banks for decades; and in those countries, the current crisis has served to show that public banks generally do a better job of serving the people and protecting their interests than their private counterparts.

In Canada, the trendsetter in public banking is the province of Alberta. Alberta's publicly-owned banking system, called Alberta Treasury Branches or ATB, was initiated during the Great Depression to give the private banks a run for the public's money. According to a government publication titled "These Are the Facts: An Authentic Record of Alberta's Progress, 1935-1948":

    The Treasury Branch system enables the people to pool their financial resources and to use these resources for their mutual benefit thereby enabling them to progressively free themselves from the stranglehold of the existing financial monopoly. These Treasury Branches provide effective competition for chartered banks thereby ensuring banking services at reasonable rates.

From 1929 to 1933, the average annual income in Alberta had fallen from $548 to $212, a staggering 61 percent drop. Interest payments continued to bleed the farmers of cash, and taxes had increased. In 1935, Albertans decided they wanted a change and swept the Alberta Social Credit Party into power. In 1938, the system of Alberta Treasury Branches was set up literally as a branch of the provincial government. The stated goal of the ATB was to "provide the people with alternative facilities for gaining access to their credit resources." Bankers initially scoffed at Alberta's attempts to establish a competing economic system, but Albertans had high hopes and rushed to deposit their meager savings in the Treasury Branches. The government invested in the ATB only once, contributing $200,000 in 1938. That was all that was necessary, as the system was self-funding after that. By 1946, the ATB was turning an annual profit of $65,000. According to a booklet titled "Albertans Investing in Alberta 1938-1998," by 1998 the ATB had remitted $68 million to the provincial government.

In India, public sector banks also operate alongside private sector banks. Privatization has made significant inroads into India's banking system, but fully 80 percent of the country's banks are still government-owned. Before the current crisis, neoliberals criticized India's public banks for being oriented more toward serving the customer than turning a profit; but studies showed that the public sector banks were out-performing the private sector banks in terms of customer satisfaction. Today, when the credit crisis has hit the aggressive private international banks particularly hard, customers are fleeing into the safety of India's public sector banks, which have emerged largely unscathed from the credit debacle. The public banks have been credited with keeping the country's financial industry robust at a time when the private international banks are suffering their worst crisis since the 1930s.

In China, private-sector banking has also made some inroads; but state-owned banks still predominate. In a June 2009 article titled "The Chinese Puzzle: Why Is China Growing When Other Export Powerhouses Aren't?", Brad Setser noted that nearly all countries relying heavily on exports for growth have experienced major downturns and remain in the doldrums -- except for China. When China's external markets fell off, the government turned its credit machine inward to domestic development. Its state-owned banks engaged in a huge increase in lending, with local governments and state enterprises borrowing on a large scale. The result was to create a real fiscal stimulus that put workers to work and got money circulating again in the economy.

In the United States, the trendsetter in public banking is the state of North Dakota, which has owned its own bank for nearly a century. North Dakota is one of only two states (along with Montana) that are currently not facing budget shortfalls. Ever since 1919, North Dakota's revenues have been deposited in the state-owned Bank of North Dakota (BND). Under the "fractional reserve" lending scheme open to all banks, these deposits are then available for leveraging many times over as loans. Other banks in the state do not see the BND as a threat because it partners with them and backstops them, serving as a sort of central bank for the state. BND's loans are not insured by the Federal Deposit Insurance Corporation (FDIC) but are guaranteed by the state. North Dakota has plenty of money for student loans, makes 1% loans to startup farms, has the lowest unemployment rate in the country, and is generally not feeling the pinch of the credit crisis at all.

Theory and Practice: The Proof Is in the Pudding

A bank charter brings with it the privilege of creating "credit" simply as an accounting entry on the bank's books. The flaw in the private banking scheme is that banks create the principal portion of their loans but not the interest, which is continually drawn off the top as profit. New borrowers must continually be found to take out new loans to create this extra profit, making private banking effectively a pyramid scheme; and like any pyramid scheme, it has mathematical limits. Today, those limits appear to have been reached. Personal and national debts have gotten so large relative to incomes that it is no longer possible to maintain the fiction of solvency. We soon won't have the money even to pay the interest on our existing debts, let alone to incur new ones. Public banking does not suffer from that flaw, because interest is not drawn out of the system but is returned to the public coffers. Public banking is thus mathematically sound and sustainable.

That is the theory, but there is nothing so persuasive as putting it to the test. Like with the public option in health care, we need to pit the public banking option against the private banking option and see which works best. My money is on the public option.

(2) China, financial superpower - but very poor (cf Japan "rich country, poor people")

http://blogs.cfr.org/setser/2009/08/03/china-new-financial-superpower-%e2%80%a6/#more-6127

China, new financial superpower …

Posted on Monday, August 3rd, 2009

By bsetser (Brad Setser)

One of the biggest economic and political stories of this decade has been China’s emergence as the world’s biggest creditor country. At least in a ‘flow” sense. China’s current account surplus is now the world’s largest – and its government easily tops a “reserve and sovereign wealth fund” growth league table. The growth in China’s foreign assets at the peak of the oil boom – back when oil was well above $100 a barrel – topped the growth in the foreign assets of all the oil-exporting governments. Things have tamed down a bit – but China still is adding more to its reserves than anyone else.

Yet China is in a lot of ways an unusual creditor, for three reasons:

One, China is still a very poor country. It isn’t obvious why it makes sense for China to be financing other countries’ development rather than its own. That I suspect is part of the reason why China’s government seems so concerned about the risk of losses on its foreign assets.

Two, almost all outflows from China come from China’s government. Private investors generally have wanted to move money into China at China’s current exchange rate. The large role of the state in managing China’s capital outflows differentiates China from many leading creditor countries, and especially the US and the UK. Of course, the US government organized large loans to help Europe reconstruct in the 1940s and early 1950s, and thus the US government played a key role recycling the United States current account surplus during this period. But later in the 1950s and in the 1960s, the capital outflows that offset the United States current account surplus (and reserve-related inflows) largely came from private US individuals and firms. And back in the nineteenth century, private British investors were the main financiers of places like Argentina, Australia and the United States. We now live in a market-based global financial system where the biggest single actor is a state.

Three, unlike many past creditors, China doesn’t lend to the world in its own currency. It rather lends in the currencies of the “borrowing” countries – whether the US dollar, the euro, the British pound or the Australian dollar. That too is a change from historical norms. Many creditor countries have wanted debtors to borrow in the currency of the creditor country. To be sure, that didn’t always work out: it makes outright default more likely (ask those who lent to Latin American countries back in the twentieth century … ). But it did offer creditors a measure of protection against depreciation of the debtor’s currency.

This system was basically stable for the past few years – though not with out its tensions. Now though there are growing voices calling for change.

China seems to be inching toward the position that those countries borrowing its funds should start to take on some of the risks that China’s government now assumes. The basic idea is simple: China keeps its lending, but gets a better renminbi returns while taking less (currency) risk. That, though, would be a fundamental change in the current international financial system. And it isn’t quite clear how China can change its external profile so long as it wants above all to maintain a peg to the dollar at a level that requires sustained intervention – and a controlled capital account.

Some of China’s borrowers, by contrast, are arguing that maybe China shouldn’t be quite so keen to lend the world quite so much …

Makes for an interesting world.

This entry was posted on Monday, August 3rd, 2009

(3) Goldman Sachs Celebrates while America Suffers

From: ReporterNotebook <RePorterNoteBook@Gmail.com> Date: 05.08.2009 12:50 AM

{image}
A Jewish cartoonist provides an effective visual aid.  It’s this kind of scenario that made the oligarchs so despised in Russia.{end}

What Recession?

By Ed Stein | July 18th, 2009 / LINK

Goldman Sachs has recovered quite nicely from the recession they helped create. They’ve paid back the bailout money already, and freed from the strings that came with it, they’re rewarding themselves for their business prowess with executive compensation above pre-crash levels. How did they do it? By being smarter than the other banks. Oh, it’s not that they didn’t play the same risky game with mortgage-backed securities and derivatives; they just saw the disaster coming before everyone else did and passed off their toxic assets to less prescient investors. To the victor the spoils. What’s especially troubling about all this is that neither they nor the government seems to have learned anything. So far the Wall Streeters in the Obama administration have shown little interest in actually fixing the system. The heart of the problem is precisely the executive compensation Sachs is lavishing upon itself. Without strict limits on how much these robber barons can help themselves to, the temptation to rig the game once more will be too great, and another economic meltdown is inevitable.

{photo}
Lloyd Blankfein, Jewish CEO of Goldman Sachs {end}

http://www.nypost.com/seven/07192009/business/good_for_goldman__bad_for_america_180130.htm

GOOD FOR GOLDMAN, BAD FOR AMERICA

July 19, 2009

CALL it the Goldman rally.

From the moment ace banking analyst Meredith Whitney turned bullish on the venerable firm Monday morning, through the after-glow of its blow-out profit report the next day, stocks were off to the races.

The Dow and S&P 500 put in their best winning streak since May, as pundits proclaimed that Goldman's record quarter on Wall Street meant that all is right again on Main Street.

Sadly, just the opposite is the case. In fact, to turn a famous phrase on its head, what's bad for America is good for Goldman Sachs.

How so? Well, a look at how Goldman makes its money tells the story. Although the firm morphed into a commercial bank to take advantage of a whole host of government handouts, Goldman is truly a trading machine, a hedge fund on steroids, with trading revenue accounting for 69 percent of gross revenue in the first quarter, according to an analysis by credit maven James Bianco.

Goldman gets the most attention for its deft handling of its own account, but a big chunk of its trading pie also involves the selling and trading of US government debt -- federal, state and local. Indeed, as one of the biggest primary dealers of US Treasuries, Goldman Sachs has a huge vested interest in the United States digging a deeper and deeper hole.

These days, trading Uncle Sam's IOUs is big business. It's also one of the few growth markets on Wall Street. The IPO business, private equity and mergers and acquisitions have yet to recover from the credit crash.

By Goldman's own estimates, the US will borrow a record $3.25 trillion in the current fiscal year -- almost four times as much as in 2008.

With its biggest competitors in this market (Lehman Brothers and Bear Stearns) out of business, Goldman is a major toll collector on Washington's red-ink railroad. Whitney labels it a "debt tsunami" that will lift Goldman's fortunes going forward.

To put it bluntly, Goldman Sachs is a play on the bankrupting of America -- the more we borrow, the more they make.

That's their business and it's all perfectly legal, but the American public should know this side of the Goldman profit miracle.

The ability of Lloyd Blankfein, the Goldman CEO, to show profits of $3.44 billion in the latest quarter, while the company has set aside $11.4 billion this year to compensate its employees is truly remarkable. The firm did it through savvy trading and management, but also while competing on a playing field that has been cleared of many of its top competitors and so soon after Uncle Sam bailed them out with $10 billion of TARP money -- and millions more through AIG, all paid for by taxpayers.

It also did so by benefiting nicely from the Washington borrowing binge that was triggered in part by the banking crisis that started in Wall Street's own backyard.

Sure, someone has to trade and sell all that government wampum, and Goldman is as good a firm to do it as any. But come on guys, it isn't brain surgery.

The average American might not be getting a $10 million bonus this year, but he is smart enough to figure that out.

TERRY KEENAN is anchor of Cashin' In, an investing program that appears on Fox News Channel on Saturday mornings at 11:30. E-mail terry.keenan@foxnews.com.

(4) Financial crisis not over - Roubini

http://www.theaustralian.news.com.au/business/story/0,28124,25877483-36418,00.html

Financial crisis not over yet, says Dr Doom

Matt Chambers | August 04, 2009

ECONOMIST Nouriel Roubini, who famously identified the causes of the global financial crisis, says Australia will ride out the storm better than most, but predicts a global recovery will not start until next year and even after it does, there is a high chance it will be shortlived.

The closely followed New York University economics professor also said the Reserve Bank was unlikely to start hiking interest rates this year.

Professor Roubini, labelled Dr Doom when in 2005 and 2006 he predicted that mortgage defaults would trigger a massive US housing bust and deep recession, said while there was light at the end of the tunnel, the global recession would not run its course until the year was over.

He said consensus was too bullish and a market correction was likely, and added there was the prospect of a double-dip global recession.

Delivering the opening speech to the annual Diggers and Dealers mining conference in Kalgoorlie yesterday, Professor Roubini also doused some of the recent optimism that has been returning to the mining sector.

He said there was little scope for further gains in gold prices and that China had overstocked on commodities during the boom, which could weigh on prices in the second half.

"My reading of the data is that the accumulation of inventory of commodities by China has probably run at a rate that is larger than the underlying demand for these commodities is going to be, even in the scenario where there's a meaningful return of growth in China," he told The Australian.

"There may be greater softness in demand in the second half of this year and into some time in 2010 ... it's a meaningful risk."

Still, he said demand from China and India was real and he saw both "green shoots" and "yellow weeds" in recent global data. Australia is in recession, but lower levels of public debt, resilient housing markets and strong exports mean it is in better shape than the US, Europe and Japan.

"The recovery in Australia is going to be gradual, so maintaining and monitoring the fiscal stimulus for a bit longer is going to be desirable," he said.

"Australia could be one of first countries to increase policy rates after a phase of cutting. In my view it's more likely than not that tightening will start to occur next year rather than this year. The recovery is barely starting, inflationary pressures are still very contained because of rising unemployment and slackness of demand (so) a cautious approach is more likely to be taken."

Globally, policymakers will have to tread lightly to avoid a double-dip recession, he said.

If they tried to address high deficits too early, economies could be plunged back into recession, he said.

On the other hand, increases in deficits for further stimulus packages could be too much for economies to bear.

Professor Roubini said that if the global economy grew next year, further gains in commodities prices were expected.

However, at a conference in the nation's goldmining capital, used to having gold bulls paraded before it, the yellow metal was singled out as one commodity not likely to go up until at least the end of next year.

The Turkish-born academic said the two catalysts for recent gold price gains that had sent prices near $US1000 an ounce -- first inflation during the boom and then fears cash was not safe and the world was heading into a depression -- were not likely to be repeated.

"This year and next, the big story will be deflation," he said.

The good news for goldminers was that he did not see prices falling too much from their historically high prices of about $US950 an ounce.

Another highly anticipated speaker at the mining conference yesterday, Ivanhoe Mines' billionaire boss Robert Friedland, did not show up due to an important meeting elsewhere.

Speculation immediately turned to Ivanhoe and Rio Tinto's Oyu Tolgoi deposit in Mongolia, where the pair are trying to strike a deal with the government that will enable the mine to start.

(5) Australian politicians place Lobbies & Deals ahead of Democracy

Fitzgerald warning puts powerbrokers in a spin

http://www.abc.net.au/news/stories/2009/07/29/2639951.htm

By Annie Guest for The World Today

Posted July 29, 2009 14:01:00
Updated July 29, 2009 15:25:00

Some of Queensland's most powerful people have been rocked by corruption buster Tony Fitzgerald's scathing analysis that the state is slipping back to its dark past.

The man who headed the Queensland corruption inquiry that resulted in sweeping reforms 20 years ago, says cronyism and secret deals remain alive and well.

His comments come just weeks after former MP Gordon Nuttall was jailed for accepting secret payments from businessmen, and amid new revelations of police misconduct.

The former and current Queensland premiers are today defending their records and a major lobby group is also in damage control - sacking its chief over a controversial success fee from a company chaired by a former treasurer.

Tony Fitzgerald has chosen the 20th anniversary of his ground-breaking inquiry to end his long public silence on corruption and explain how Queensland began what he calls the slide back towards its dark past.

Queensland's Labor Government has now been in power for 11 years and Tony Fitzgerald says ethics are tested by incumbency.

"Secrecy was re-established by sham claims that voluminous documents were Cabinet in Confidence," he said.

"Access can now be purchased. Patronage is dispensed. Mates and supporters are appointed and retired politicians exploit their connections to obtain success fees for deals between business and government."

Beattie legacy

As tangible examples of the rot, Mr Fitzgerald referred to the recent jailing of former Beattie government minister Gordon Nuttall for receiving secret payments and new police corruption. ...

Current Queensland Premier Anna Bligh has joined Mr Beattie in defending the Labor Government's record.  ...

Ms Bligh says her Government will outlaw so-called "success fees" for political lobbyists.

Some of the known success fees have caused public outcries, including the former deputy premier Terry Mackenroth reportedly sharing in $500,000 with former Keating government minister Con Sciacca over the airport road project.

One lobby firm is headed by another former deputy premier Jim Elder.

Neither he nor Mr Mackenroth returned the ABC's phone calls.

But today Jim Elder's Enhance Communications sacked its Queensland manager Ross Daley over a controversial success fee from a company chaired by a former treasurer, Keith de Lacy. He also did not return calls.

Little optimism

But Mr Fitzgerald did not only criticise Labor figures. ...

The Liberal National Party has recently been criticised for fundraising events where people pay for access to politicians. ...

Prime Minister Kevin Rudd says he has not read Mr Fitzgerald's speech, but he has responded by pointing out that the Senate is blocking the changes he wants to make to electoral donation laws.

"You could have a fundraising function with 10 people paying $10,000 each [or] $100,000, and no-one would ever know about it," Mr Rudd said.

"We have legislation in the Senate currently blocked by the Liberals which reduces that down to $1,000.

"The second thing we have is a proposed ban on foreign political donations to Australian political parties that's also being blocked by the Liberals in the Senate."

Federal Opposition leader Malcolm Turnbull says the Coalition has blocked the Government's move because he says Labor's changes do not go far enough.

He says there should be a ban on all donations except from individuals on the electoral roll.

"So no money from corporations, no money from trade unions, no money from associations - only a human being on the electoral roll can make a donation," he said. ...

(6) Australian politicians for sale to business donors

Labor to outlaw pay-per-view political donations

Stefanie Balogh and Rosemary Odgers

August 03, 2009 12:00am

http://www.news.com.au/couriermail/story/0,23739,25872619-953,00.html

FEDERAL Labor could follow Premier Anna Bligh's lead to outlaw the controversial practice of pay-per-view political donations which give cashed-up conference observers special access to ministers.

It comes as Deputy Prime Minister Julia Gillard and Treasurer Wayne Swan backed Ms Bligh's efforts to overhaul fundraising in Queensland.

Ms Bligh - one of three ALP national presidents - has banned all State Government MPs attending fundraising dinners, lunches or breakfasts with business leaders where the money goes to state Labor.

She has challenged every other political party in the nation to follow her lead.

"I'm absolutely determined in my resolve to ensure that we stamp out these sort of practices . . . and I'm happy to lead a debate nationally on stamping them out in other parts of Australia," she said.

On the weekend, business observers paid $7500 to watch the ALP national conference in Sydney and meet with senior ministers in a massive fundraising haul estimated at almost $1 million. Such events could soon be a thing of the past.

Ms Gillard yesterday said the practice of paying for access to politicians at conferences was long-standing for all sides of politics.

"We were elected with a change agenda on political donations. We've said we want to take that a step at a time in a methodical fashion," she told the ABC's Insiders program.

Mr Swan also backed Ms Bligh's shake-up.

"There is just no comparison between what is going on there (in Queensland) now and what went on in the Bjelke-Petersen years but it doesn't mean to say that there aren't challenges," he told the Nine Network.

Asked whether the issue of business observers programs - cash-for-access meetings - would be re-examined, Ms Gillard said: "Oh, look, I think all of these issues are on the table."

"I think Anna (Bligh) is doing this because she is obviously concerned about these questions and we share her concerns," she said.

The Rudd Government's Electoral Reform Green Paper - Donations, Funding and Expenditure, is examining a raft of issues, including "private funding, through donations and other contributions, to political parties, independent candidates and others participating in the political process".

The Rudd Government is also trying to establish new rules requiring political donations of more than $1000 to be disclosed. Currently only donations over $10,000 are disclosed but the changes are being blocked in the Senate.