June 15, 2017 Edition.
A big week internationally with Theresa May almost getting booted out – it may still happen – and President Trump being beaten up by the James Comey (Former FBI Boss) testimony. Trump is now saying he will testify under oath – always the sign of desperation. My guess is that all this will not end well for him.
On the Australian front we have seen a new energy plan from Alan Finkle and we still seem to have increasing talk of an economic slowdown. Time will tell just where all this will land up.
The two most interesting bits of news this week were these:
Sharemarket risk at highest level since before GFC, says Bill Gross
John Gittelsohn and Erik Schatzker
Published: June 8 2017 - 7:49AM
US markets are at their highest risk levels since before the 2008 financial crisis because investors are paying a high price for the chances they're taking, according to Bill Gross, manager of the $2 billion Janus Henderson Global Unconstrained Bond Fund.
"Instead of buying low and selling high, you're buying high and crossing your fingers," Gross, 73, said on Wednesday at the Bloomberg Invest New York summit.
Central bank policies for low-and negative-interest rates are artificially driving up asset prices while creating little growth in the real economy and punishing individual savers, banks and insurance companies, according to Gross.
The US economy is expected to grow 2.2 per cent this year and 2.3 per cent in 2018, according to forecasts compiled by Bloomberg. Trump administration officials have said their policies will boost annual growth to 3 per cent.
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National Accounts weakest since the GFC: Warning on housing as GDP growth slips
Peter Martin, Eryk Bagshaw
Published: June 7 2017 - 7:58PM
The OECD has named house prices as the biggest domestic threat to economic growth as new figures push annual growth to its lowest point since the global financial crisis.
The Australian economy grew just 1.7 per cent in the 12 months to March, down from 3 per cent three years earlier. The result is the worst since the 1.2 per cent recorded during the depths of the financial crisis in September 2009.
Gross domestic product grew 0.3 during the March quarter after growing 0.7 per cent, falling 0.4 per cent and growing 1.1 per cent in the four quarters before that.
"It has been very lumpy," said Treasurer Scott Morrison. "It's what I would describe as modest growth."
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Here are a few other things I have noticed.
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National Budget Issues.
http://www.smh.com.au/comment/uncertain-waters-ahead-for-the-australian-economy-20170603-gwjok8.html
Uncertain waters ahead for the Australian economy
Jessica Irvine
Published: June 4 2017 - 11:45PM
If the figures add up, we may be heading into our first technical recession in 25 years.
Beware out there this week, folks. There's a storm a'comin'. An economic data storm, that is.
Economists are tipping the good ship "Oz economy" has struck shallow waters in the first half of 2017.
Official accounts on Wednesday are expected to reveal the extent of the damage to our economic output in the March quarter from an unexpected drop in business investment and continuing caution among highly indebted households.
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RBA becomes a lonely rate-cut candidate on Aussie growth doubts
James Thornhill
Published: June 5 2017 - 8:10AM
A month can be a long time in economics.
Since the Reserve Bank of Australia's last policy decision on May 2, market bets on an interest-rate cut by the end of this year have doubled.
While that chance is still only less than 20 per cent, swaps traders late on Friday saw the nation as the only developed economy where cuts are possible in the coming year after data during May pointed to anaemic growth in the first quarter.
For now, a mixed picture means governor Philip Lowe will likely hold the benchmark rate at a record-low 1.5 per cent on Tuesday.
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GDP forecasts mixed as company profits soar, wages flatline
Peter Martin
Published: June 5 2017 - 6:09PM
Higher commodity prices pushed up company profits almost 40 per cent in the year to March at a time when the wage bill grew 0.9 per cent.
The so-called partial indicators released by the Bureau of Statistics ahead of Wednesday's national accounts have company profits climbing 6 per cent during the March quarter and wages only 0.3 per cent.
The wage measure is affected by both record-low wage growth and a drop in the number of hours worked.
Mining profits jumped 13 per cent in the quarter and non-mining profits 2.4 per cent. Retail profits were up 4.9 per cent, manufacturing profits up 2.4 per cent, utilities profits up 2.1 per cent, and wholesale profits down 5.8 per cent and finance industry profits down 2.8 per cent.
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Australia stumbles to economic record as cautious RBA leaves rates on hold
Eryk Bagshaw
Published: June 6 2017 - 5:41PM
Treasurer Scott Morrison has warned the economy's future is not yet secure as Australia prepares to stumble across the line on Wednesday to grab the world record for the longest period of consecutive growth.
The median updated forecast of all 23 economic institutions surveyed by Bloomberg is for growth of just 0.3 per cent, enough to put Australia on level pegging with the Netherlands for the longest run of uninterrupted growth.
But several banks have revised down their forecasts ahead of the release of the national accounts, with the Commonwealth Bank predicting growth of just 0.1 per cent. The National Australia Bank has forecast a negative result of -0.1 per cent.
Figures released on Tuesday showed Australia's current account [the difference between all imports and exports] recorded the smallest deficit in 15 years, but it may not be enough to stave off only the fourth quarter of negative growth since the recession of the early 1990s.
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Don’t fret the GDP score – watch the game instead
Michael Pascoe
Published: June 6 2017 - 6:50PM
It looks like déjà vu all over again for Scott Morrison as he fears another weak gross domestic product figure on Wednesday, perhaps even a repeat of the September quarter's fall.
That would be a little politically embarrassing so soon after doing the Little Orphan Annie impersonation on budget night, singing a heart-felt Tomorrow and following it up in subsequent interviews with variations on Happy Days Are Here Again and The White Cliffs of Dover.
But beyond the embarrassment, whether the March-quarter GDP score is high, low or indifferent doesn't matter nearly as much as the economic commentariat may presently be indicating.
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Reboot for flawed NDIS systems as agency acts on complaints
- The Australian
- 12:00AM June 7, 2017
The $22 billion National Disability Insurance Scheme will be overhauled to rebuild faith in the concept plagued from day one by critical staffing gaps, computer system malfunctions and planning bungles which have left participants confused and angry.
National Disability Insurance Agency chief executive David Bowen yesterday announced “major work” behind the scenes to redesign how the scheme reached 460,000 participants in 2020. Although details are scarce, the reform is expected to move away from Centrelink-style phone planning — revealed by The Australian last year — and back to face-to-face meetings with clients, new or improved IT systems and significant retraining of staff.
“It is now well recognised that before the commencement of transition to full scheme in July 2016, the quality of the NDIA’s internal preparation warranted significant improvement,” Mr Bowen said. “The NDIA’s processes and systems have not resulted in a participant and provider experience during transition that is of the consistently high standards that the NDIA expects.
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GDP: Australia grabs record for longest time without a recession
Eryk Bagshaw, James Massola
Published: June 7 2017 - 3:55PM
Australia has taken the record for the longest run of uninterrupted growth in the developed world, figures released by the Australian Bureau of Statistics have revealed.
Gross domestic product grew by 0.3 per cent in the three months to March, matching economists' expectations of the country crawling across the line to grab the record from the Netherlands, which suffered a minuscule recession after 82 quarters but otherwise grew consistently for 26 years.
It has now been 103 quarters since Australia had a technical recession, defined as two consecutive quarters of negative growth.
Treasurer Scott Morrison said the figures demonstrated the resilience of the Australian economy.
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Price hikes threaten to take shine off golden years
John Collett
Published: June 6 2017 - 7:00PM
The prices of electricity, health care and even taking companion animals to the vet have risen far in excess of price rises generally.
Figures released by the Association of Australian Superannuation Funds (ASFA), based on the consumer price index data from the Australian Bureau of Statistics, show the extent to which prices have risen over the past period of a little more than 10 years.
General prices, as represented by the consumer price index, have risen 28.6 per cent over the period.
However, electricity costs have risen 124 per cent, health care 60 per cent, insurance costs are up 72 per cent and property and charges are 83 per cent higher.
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Nine different reasons for record-low wages growth
Tony Featherstone
Published: June 8 2017 - 12:15AM
Economists are in a lather about Australia's record-low wages growth. Their models cannot explain technological, social and economic forces that are crushing pay rises and consigning millions of workers to years of static income.
Annual wages growth is the lowest since records began in 1997. Pay packets in aggregate rose a measly 0.9 per cent over the past year – not nearly enough to keep up with rising living costs or help consumers pay off a mountain of debt.
Official wages growth tells only half the story. On an hourly basis, many pay packets are going backwards as more people work longer to keep their job. Or take on greater responsibility and stress for the same pay.
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Low emissions target: On carbon schemes, no one says the same thing for long
Peter Martin
Published: June 8 2017 - 8:46AM
If you don't know the difference between a carbon tax and an emissions trading scheme, or a low emissions target and an emissions intensity scheme, it's time to wise up.
On Friday Malcolm Turnbull gets the report of the Finkel review of the electricity market and later this year the report of the official review of his government's climate change policies.
What he does next will affect how much we pay, how much we use, the types of electricity we use, how quickly we cut emissions and how often the system breaks down.
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The Finkel review explained: what's in it, and why you should care
Stephanie Peatling
Published: June 9 2017 - 8:07AM
Alan Finkel, Australia's chief scientist, is due to release his review of Australia's energy market on Friday afternoon. The review has the potential to dramatically shake up the future energy supply of this country. So what do you need to know about it?
First, what is the Finkel review?
The Finkel review is the shorthand name for a review of the national electricity market, commissioned by federal and state energy ministers last year.
It was prompted - in part - by the blackouts in South Australia, which focused national attention on energy security.
The review will provide governments with a blueprint for energy security across the grid. It will also look at affordability and sustainability, as more renewable energy flows into the electricity system, and coal-fired power stations close.
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http://www.smh.com.au/business/the-economy/who-says-consumer-debt-is-irrelevant-20170609-gwod0v.html
Who says consumer debt is irrelevant?
Danielle DiMartino Booth
Published: June 10 2017 - 12:15AM
Oh, but for the days the hawks had a hero in Sydney. Against the backdrop of a de facto currency war, the Reserve Bank of Australia stood as a steady pillar of strength. The RBA held the line on interest rates, maintaining a floor of 2.5 per cent, even as its global central bank peers drove rates to the zero bound and beyond into negative territory.
The abrupt end to the commodities supercycle drove the RBA to join the global currency war. The mining-dependent nation's economy was so debilitated that policy makers felt they had no choice but to ease financial conditions. In February 2015, after an 18-month honeymoon, the RBA reduced its official rate to 2.25 per cent, marking the start of a cycle that ended last August with the fourth cut to a record low of 1.5 per cent.
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Home loans fall for third month in a row
Eryk Bagshaw
Published: June 9 2017 - 3:50PM
The number of home loans being given to Australians has fallen to a two year low, fuelling speculation of a property downturn following a crackdown on investor loans by the federal government.
The figures, released by the Australian Bureau of Statistics on Friday, show loans to investors have fallen to their lowest level in seven months, down from a high of above 50 per cent in January.
The number of all home-loan approvals dropped 1.9 per cent in April after falling for the third month in a row, as banks begin to react to the orders of the market watchdog to tighten lending due to risks to the broader economy.
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Is Australia's economy really a world-beater? The spurious 26-year 'record'
Tim Colebatch
Published: June 9 2017 - 3:38PM
The claim that Australia has gone 26 years without a recession is true, but only if you accept three assumptions. Unfortunately, none of them has any official or intellectual basis.
The first is that a recession is best defined by a single measure: the total output of the economy, which we call gross domestic product, or GDP.
The second is that if GDP goes backwards for two consecutive quarters, however slightly, then you're in recession. And if it doesn't, you're not.
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Minimum Wage: Pay hikes don't cost jobs. Really.
Peter Martin
Published: June 11 2017 - 12:15AM
What was it thinking? On Tuesday, the normally hard-hearted Fair Work Commission drove up the cost of labour 3.3 per cent.
From July 1 the full-time minimum wage jumps from $34,975 to $36,135 – that's an extra $22 a week, the biggest increase in ages.
It will spread far beyond the lowest-paid. The Commission believes that 23 per cent of Australian workers, almost 1 in 4, will benefit from the flow-on increase to awards. And it'll spread further, to enterprise agreements that need to compete with awards.
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Health Budget Issues.
Damning AMA survey reveals the toll of overworking junior doctors
Kate Aubusson
Published: June 7 2017 - 5:00AM
Getting home safely after a gruelling night shift is not something Dr Tessa Kennedy takes for granted.
Three of her junior doctor friends have crashed their cars driving home after a night shift, one on her way to pick up her daughter from daycare.
She has caught herself falling sleep behind the wheel at the end of her 16-hour shifts and 90-hour weeks.
The paediatric trainee has battled sleep-deprived panic attacks before medical exams, and cried inconsolably as she sat in her car after a narrowly escaping a crash for which she says she would have been responsible.
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Healthcare atlas shows big differences in hysterectomy, spinal procedures between areas
Harriet Alexander
Published: June 7 2017 - 5:00AM
Patients presenting with identical conditions can be up to 21 times more likely to be given certain treatments depending on where they live and in some cases the interventions may not be warranted, according to a biennial report on healthcare variation.
The Australian Atlas of Healthcare Variation reveals Sydney's eastern suburbs are the national capital of lumbar spinal decompression procedures and Hawkesbury residents have one of the highest rates of appendix removal in the western world.
Meanwhile, Hurstville women are eight times more likely to sustain a third or fourth degree perineal tear during labour and Richmond women are four times more likely to get a hysterectomy than those living in Dubbo.
The report is the second produced by the Australian Commission on Safety and Quality in Healthcare Agency on variations in procedures between different geographic areas.
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After-hours home doctor services deemed poor value for money by taskforce
Harriet Alexander
Published: June 8 2017 - 12:08AM
Home doctor services that provide after-hours visits face stricter conditions on their Medicare billing practices after a government review found they did not represent value for money to the taxpayer.
As part of a broader review of Medicare items, the Medicare Benefits Schedule Review Taskforce examined after-hours services in response to concerns they were increasing far in excess of population growth.
Medical deputising services, which perform after-hours services on behalf of GP practices, have been booming since they expanded to regional areas and advertised their services, and providers such as the National Home Doctor Service and Dial-a-Doctor have become household names.
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Public health ‘needs private patients’ to help keep specialists
- The Australian
- 12:00AM June 9, 2017
Sean Parnell
Queensland Health Minister Cameron Dick has defended the practice of public hospitals billing health insurers, warning the commonwealth that any intervention would threaten the state’s ability to recruit doctors.
As The Australian revealed yesterday, Queensland public hospitals have been arguing with health funds over whether short-stay units were general wards or part of the emergency department. Queensland Health argued the former, which would have allowed them to bill treatment to health funds, but the seven insurers maintained they were the latter and therefore out of scope.
Federal Health Minister Greg Hunt has called on the states to curtail their private billing — more than $1 billion a year — out of concern it would drive up insurance premiums and the cost of the federal rebate.
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We're richer, but sicker and less equal, according to the Lateral Economics Index of Wellbeing
Jessica Irvine
Published: June 10 2017 - 12:15AM
Is life getting better in Australia?
Our record run of economic growth continues, according to Wednesday's official national accounts, which revealed tepid growth in economic output, but a jump in national income thanks to higher commodity prices.
As a nation, we pocketed $334 billion in the March quarter, on one important measure of national income.
Yippee.
But that can't be the end of the story.
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Health Insurance Issues.
Health funds refuse to pay as public hospital costs rise
- The Australian
- 12:00AM June 8, 2017
Sean Parnell
Public hospitals have been arguing with health funds over what constitutes a general ward, as the states continue to subsidise their operations by billing insurers more than $1 billion a year.
Federal Health Minister Greg Hunt has called on the states to curtail their private billing, out of concern it will drive up insurance premiums and the cost of the federal rebate. The states argue the billing is legal and necessary, but NSW Health Minister Brad Hazzard has vowed to help Mr Hunt address any concerns.
Documents obtained by The Australian under Right to Information laws show seven smaller health funds were refusing last year to reimburse Queensland public hospitals for the cost of treating members in the state’s short-stay units.
The health funds argued that the treatment was in emergency departments, and was required to be funded by the state government under national rules.
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International Issues.
London attack: 'We need to be prepared for more of this coming' experts warn
Deborah Snow
Published: June 4 2017 - 8:07PM
It took only eight minutes for three men armed with a transit van and knives to wreak havoc near the heart of London's popular South Bank entertainment district, packed with patrons on a fine Saturday night.
Eight minutes to leave at least seven innocent people dead and up to 50 wounded. "Can you imagine what would have happened if it had gone on for half an hour," says Neil Fergus, an Australian-based security consultant with extensive expertise in counter-terrorism.
"The response by British police and emergency services was outstanding, but it shows the amount of damage that can be caused by motivated people in a short period of time, just with a vehicle and bladed weapons."
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Trump was right to scrap Paris
Tom Switzer
Published: June 5 2017 - 12:15AM
This time the West really is divided, probably irrevocably.
In the early 1990s, my friend Owen Harries made a startling observation: that the collapse of Soviet Communism would mean the "collapse of the West". The West, he explained in Foreign Affairs, has been and would remain a culture defined by representative democracy, the rule of law, the market economy and so on. But a common civilisation is one thing; political unity is another.
"The West," Harries pointed out, has been usually divided politically: think of Europe's wars. "It took the presence of a life-threatening overtly hostile 'East' to bring [the 'West'] into existence" as a strategic entity. "It is extremely doubtful whether it can now survive the disappearance of that enemy." The political unity of the Cold War would give away to differences of national interests and strategies.
It has taken a quarter century, but Harries' prediction has come true. The clash between the Europeans and the Americans over NATO and the Paris climate treaty could prove to be breaking points in the political West. True, there have been earlier rifts: Suez, Vietnam, Iraq come to mind.
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China has defied the rules with impunity
Peter Hartcher
Published: June 6 2017 - 12:15AM
We hear a great gush of affirmations of the "rules-based order" that keeps the peace in the Asia-Pacific region. But whose rules? They must be Tinkerbell's rules – clap if you believe.
US Defence Secretary Jim Mattis referred to a "rules-based" order five times in his weekend speech to the big annual defence conference in Singapore, the Shangri-la Dialogue. "We have a deep and abiding commitment to reinforcing the rules-based international order," for instance.
Malcolm Turnbull spoke of the region's rules seven times in his speech to the same forum: "If we are to maintain the dynamism of the region then we must preserve the rules-based structure that has enabled it thus far."
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Address by Minister Freeland on Canada’s foreign policy priorities
Speech
June 6, 2017 – Ottawa, Canada
Check against delivery. This speech has been translated in accordance with the Government of Canada’s official languages policy and edited for posting and distribution in accordance with its communications policy.
Mr. Speaker,
Here is a question: Is Canada an essential country, at this time in the life of our planet?
Most of us here would agree that it is. But if we assert this, we are called to explain why. And we are called to consider the specifics of what we must do as a consequence.
International relationships that had seemed immutable for 70 years are being called into question. From Europe, to Asia, to our own North American home, long-standing pacts that have formed the bedrock of our security and prosperity for generations are being tested.
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At least Donald Trump is true to himself about climate change
Ross Gittins
Published: June 6 2017 - 1:50PM
We are trying – admittedly, without much success so far – to make our home a Tr*mp-free zone. It's just too depressing. Watching a great nation disgrace itself before the rest of the world.
The former proudly self-proclaimed leader of the free world suffering a loss of confidence and applying for early retirement.
A nation that every year scoops the pool of Nobel prizes, electing a crazy, ignorant, wilful old man, not so much Trump as Chump.
His latest stroke of genius – reneging on America's commitment to the Paris climate agreement – has been almost universally condemned, including by a great number of Americans, especially many business leaders.
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South Korea suspends US THAAD antimissile system
Motoko Rich
Published: June 8 2017 - 5:29AM
Tokyo: South Korea's newly elected president, Moon Jae-in, has suspended the deployment of a US missile defence system, an apparent concession to China and a significant break with the United States on policy toward North Korea.
In comments to reporters, a senior official from the presidential Blue House in Seoul said Wednesday that the two launchers of the Terminal High Altitude Area defence system that had been installed could remain but that four launchers that had yet to be deployed would not be set up until the administration completed an environmental assessment.
The missile defence system, known as THAAD, has been controversial in South Korea and has drawn sharp criticism from China, which views the system's radar as a threat. Beijing has taken retaliatory economic measures against Seoul, including curtailing the flow of Chinese tourists and punishing South Korean companies in China.
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Watergate 'pales' compared with Donald Trump, says former US intelligence chief
David Wroe
Published: June 8 2017 - 1:59AM
The infamous Watergate scandal "pales" in comparison to the allegations about the Trump administration's links to Russia, former United States intelligence chief James Clapper has said in an explosive set of remarks in Canberra.
Mr Clapper, who served as Director of National Intelligence under Barack Obama and in senior roles with Republican leaders as well, also said he would "understand" if US allies such as Australia withheld intelligence from American counterparts because of Mr Trump's demonstrated lack of discretion with such sensitive secrets.
The 50-year veteran of the military and the intelligence community painted a picture of disconcerting dysfunction in Washington with "assaults on American institutions coming from both external and internal sources" and most strikingly said the Trump-Russia links were much worse than the notorious scandal that toppled former US president Richard Nixon in the 1970s.
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US-Australia bond transcends transitory occupant of White House: James Clapper
James Clapper
Published: June 7 2017 - 5:27PM
I first came to Australia in 1984, visiting Alice Springs as commander of the US Air Force Technical Applications Centre. More than three decades of association with this country has reinforced my conviction of the importance of the United States' extensive relationship with Australia and its national security community.
Australia's outgoing Defence secretary Dennis Richardson said recently that "Australian governments have generally been pragmatic and hard-headed in weighing alliance considerations on matters of war and peace".
This is, of course, both true and proper.
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In two short sentences, Trump's White House just partially excused terrorism
David Wroe
Published: June 8 2017 - 10:47AM
Donald Trump has once again diminished his country with an appalling White House statement.
We're sorry. But you sort of deserved it.
That's the takeout from the White House's response to the Islamic State-claimed attacks on Iran's capital yesterday, in which at least 12 people were murdered at the Parliament building and the Ayatollah Khomeini mausoleum.
"We grieve and pray for the innocent victims of the terrorist attacks in Iran, and for the Iranian people, who are going through such challenging times," the White House statement reads. "We underscore that states that sponsor terrorism risk falling victim to the evil they promote."
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'A very big deal': James Comey testifies Donald Trump sought to change Russia probe
Paul McGeough
Published: June 9 2017 - 11:00AM
Washington: "It's my judgment," sacked FBI director James Comey told US senators, "That I was fired because of the Russia investigation - I was fired in some way to change, or the endeavour was to change, the way the Russia investigation was being conducted. That is a very big deal."
Americans watched agog on Thursday as Comey used his forensic legal skills and flashes of anger to inflict significant damage on US President Donald Trump, laying out a case of what seemed to amount to a presidential obstruction of justice.
But at the last minute, he declared it was not his job to write the charge. "Crazy" and a "nut job" this man is not.
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I look forward to comments on all this!
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David.
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