There’s nothing like being caught out to infuriate journalists.

Dennis Shanahan revived his Comical Ali persona today to claim The Oz got it right in its initial RBA story on Tuesday, in essence calling Ken Henry a liar. It was great to see Shanahan back to the sort of form he so impressed us with last year in his role as Newspoll spinner.

Admittedly he has only one trick, but it’s a good one — shift the goalposts. You’ll recall how, according to Shanahan, the really key polling indicator, the one that showed John Howard was on track for a surprise victory in 2007, moved first from 2PP numbers to preferred Prime Minister, then to favoured economic manager, and finally to favoured national security manager, as one by one the numbers turned against him. Eventually Shanahan had to give up, although by then the sinking shop had left the rat, with The Oz itself editorialising in favour of Rudd.

We got the same act today. Shanahan quoted some minor issues and insisted the original report was correct.

As much as one might be tempted to take Dennis’s word for it, let’s have a look at what the initial report by Jennifer Hewett said.

The Government ignored the RBA’s strongly voiced concerns about the impact of an unlimited guarantee scheme in its rush to announce a guarantee of all deposits in Australian deposit-taking institutions on October 12.

This is the guts of the story — that Rudd in his rush the weekend before last ignored the RBA’s “strongly-voiced concerns” about an unlimited guarantee. It’s wrong in every way, according to Rudd, Ken Henry and Glenn Stevens.

The Government is belatedly considering the introduction of a new deposit cap of $5 million…

There is no cap, the threshold to which the statement might apply isn’t to be set at $5m, and the Government wasn’t belatedly considering it, unless you consider Swan discussing the issue in his Second Reading Speech last week as “belated”.

Despite the Government’s assurances that it is working closely with the regulators on the global financial crisis, the argument has strained relations between the RBA and Canberra.

A very serious claim. At a time of unprecedented economic turmoil, any dispute between a critical institution like the RBA and the Government is not merely disturbing, but likely to undermine investor confidence in Australia. The story provided no evidence for the claim and The Australian has provided none since. Glenn Stevens explicitly declared his support for the Government’s measures on Tuesday. But perhaps The Australian thinks any discussion between officials amounts to “strained relations”.

The RBA has told the Government that the best way around the problem is the combination of a cap for deposits while charging a relatively high premium for insurance for wholesale short-term borrowing for up to 12 months.

No one has suggested a cap for deposits of any kind. This was the bit that Coalition senators wasted several hours on yesterday. Even now, one suspects Eric Abetz thinks there’ll be a “cap” on deposits despite several thousand assurances from Ken Henry that there won’t be.

What’s happened is that The Oz has joined the Government, the Opposition, and for that matter Ken Henry, in going over the top. It has obtained the RBA note from a source in Treasury and misinterpreted it, assuming it was a magisterial statement from Stevens rather than part of an ongoing exchange. The nuance about the exact meaning of “cap” has been missed. But quite how it was somehow backdated to before the Government’s decision is incomprehensible.

As if in part-expiation for getting it wrong, they’ve exhumed John Stone to claim that Glenn Stevens’s absence from the crisis meetings was “inexplicable”. Putting aside the fact that Stone’s views were last relevant in 1982, he appears to have missed the fact that the Reserve Bank’s independence has been established since his alas-too brief comic turn as a National Party senator. The notion of the RBA Governor sitting in a Cabinet sub-committee participating in Government decisions is wholly at odds with the notion of central bank independence — and wholly unnecessary given Henry, an ex officio member of the RBA Board — was participating.

None of that matters much at The Oz. This is about attacking the Government regardless of the facts – and regardless of how much it makes them look like C-L-O-W-N-S.