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Rudd's popularity rises amidst economic woes -

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Rudd's popularity rises amidst economic woes

Broadcast: 27/10/2008

Reporter: Hayden Cooper

The global financial crisis may be tearing world markets apart, but it has done no damage to Kevin
Rudd's popularity. The Prime Minister's approval rating has risen, according to tomorrow's
newspoll.

Transcript

TONY JONES, PRESENTER: The global financial crisis may be tearing world markets apart, but it's
done no damage to Kevin Rudd's popularity.

The Prime Minister's approval rating has risen, according to tomorrow's Newspoll in 'The
Australian' newspaper.

The increase in support will be seen by some as an endorsement of the Government's handling of the
crisis, but the Opposition cites the worsening freeze on investment funds as proof of a blunder.

From Canberra, Hayden Cooper reports.

HAYDEN COOPER, REPORTER: The big funds are freezing over, but there are no guarantees from the
Treasurer:

WAYNE SWAN, TREASURER: Well there are no instant solutions.

HAYDEN COOPER: His assistant...

CHRIS BOWEN, ASSISTANT TREASURER: A market-linked investment, obviously, by its nature involves
some level of risk.

HAYDEN COOPER: Or their boss...

KEVIN RUDD, PRIME MINISTER: Providing guarantees to market-linked investments, that's quite
something else.

HAYDEN COOPER: In Canberra the industry was beating a path to Treasury's door, as the fund lockdown
got worse.

At more than $3 billion, Colonial First State is the latest and the largest fund to halt the flight
of investors seeking to withdraw their money.

At least 15 funds not covered by the Government's deposit guarantee have frozen withdrawals,
unlocking the cash might take time.

RICHARD GILBERT, INVESTMENT & FINANCIAL SERVICES ASSOCIATION: We had a very constructive meeting
and we will send the Government further information.

And hopefully we'll get... we'll be able to restore investor confidence in these markets... very
difficult markets.

WAYNE SWAN: The Government understands the hardship that people are going through. We are working
with the industry as assiduously as we possibly can to see what appropriate steps can be taken.

HAYDEN COOPER: One academic says the big banks should be called on to solve the problem.

DR. MILIND SATHYE, UNIVERSITY OF CANBERRA: All the banks are in good shape so they can provide
liquidity to the investment funds, and that will help tide over the immediate fears that some of
the people are having.

HAYDEN COOPER: The fears haven't escaped the Opposition Leader's attention.

MALCOLM TURNBULL, OPPOSITION LEADER: I'm just admiring your range of sausages.

HAYDEN COOPER: To Malcolm Turnbull it's a case of butchering the rescue effort.

MALCOLM TURNBULL: It's been a blunder. A lot of people are suffering real hardship because of that;
their assets have been frozen and that has been a direct consequence of Mr Rudd and Mr Swan's
mistakes.

KEVIN RUDD: We provide a guarantee for all banks deposits. The alternative being forward by Mr
Turnbull leaves 750,000 deposits out there with no guarantee whatsoever.

HAYDEN COOPER: Treating the symptoms of a faltering global economy was never going to be easy, but
Kevin Rudd's handling of the crisis has in fact done him no harm at all.

Tomorrow's opinion poll confirms the Prime Minister's standing is only getting stronger.

Newspoll in The Australian newspaper reveals a five-point increase in Mr Rudd's position as
preferred Prime Minister; a 34-point lead over Malcolm Turnbull.

And the Party vote is virtually unchanged, despite the shaky economic scenario.

The latest victim is the Australian dollar. Against the Greenback it's languishing at just above 60
US cents. Against the yen it's low too; as investors flee from commodities based currencies.

It prompted an unusual injection of liquidity from the reserve Bank.

SAUL ESLAKE, ANZ CHIEF ECONOMIST: There was almost literally no-one there to buy it when hedge
funds were rushing to sell, and so the Reserve Bank thought it was appropriate for it to be the
buyer of the A dollar when no-one else was prepared to.

CHRIS BOWEN: Well of course, some people would be very pleased about the situation of the dollar;
other people will be less pleased.

Exporters will be very happy. There are of course other impacts on the Australian economy. But it
is a matter for the market.

HAYDEN COOPER: The volatility could be here to stay.

SAUL ESLAKE: This, like many other developments in financial markets, is a reminder of something
Maynard Keynes said in the 1930s; 'That markets can remain irrational longer than you can remain
solvent'.

HAYDEN COOPER: For many the dictum rings true.

Hayden Cooper, Lateline.