July 13, 2017 Edition.
The G20 meeting has wrapped up and we see Trump as an isolated and distrusted and see world policy development basically on hold. Now, with the story of what must be close to treason re his son's working with the Russians during the campaign to damage Hilary Clinton it seems all bets are off. Where is goes from here who knows??
The North Korean problem is yet to be sensibly addressed and is seemingly utterly intractable. Trump is being noisy and chest beating but clearly has no solution.
In Australia we now have discussions regarding missile defence while seeing the SA Government buying a great big battery and losing the political capital (and votes) to pass their bank levy.
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Here are a few other things I have noticed.
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National Budget Issues.
Property investors should expect more interest rate pain
Clancy Yeates
Published: July 3 2017 - 6:06AM
For all the political heat on banks, the last few weeks have shown toxic relations with government are no barrier to an old-fashioned unilateral hike in interest rates.
The big difference this time around is banks have been more tactical about it, by targeting rate hikes at one group in particular: property investors.
And I'd bet it's not the last time the banks will make property investors bear the brunt of higher interest rates this year.
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'It's a national disgrace': Federal government slammed on PRRT
Eryk Bagshaw
Published: July 2 2017 - 5:31PM
The federal government has been accused of abandoning tax reform of the $200 billion gas export industry after it failed to consider replacing a regime that allowed some multinationals to never pay a cent in tax for the Australian resources they extract.
Treasurer Scott Morrison ordered a sweeping review of the petroleum resource rent tax in November following revelations that multinational companies exporting $60 billion worth of Australian gas overseas would not pay tax for decades.
Australia is set to eclipse Qatar as the largest exporter of gas in the world by 2020 but will receive just a fraction of the revenue, $800 million compared to Qatar's $26.6 billion, under the current arrangements.
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John Roskam blasts 'lazy, self-indulgent' Liberal Party facing 'existential crisis'
Michael Koziol
Published: July 2 2017 - 12:28AM
The "lazy" and "self-indulgent" Liberal Party is facing an existential crisis after a horror week that exposed deep wounds from which it may never recover, the head of the influential Institute of Public Affairs think tank has warned.
John Roskam, who on Tuesday hosted Tony Abbott for a speech in which he directly challenged Malcolm Turnbull's policy agenda, on Friday blasted both men for failing to deliver philosophical direction to the party, and took aim at "so-called conservatives" Peter Dutton and Mathias Cormann.
He said the significance of frontbencher Christopher Pyne's leaked comments was seismic because they addressed "the elephant in the room" of factional warfare and "let loose" the boiling tensions between moderates and conservatives.
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- Updated Jul 3 2017 at 7:10 PM
Record debt burden raises stakes ahead of RBA meeting
by Jacob Greber
The average debt of every household has soared to almost twice annual incomes and rising, according to data that increases pressure on the Reserve Bank of Australia and bank regulators to avoid a property market disaster.
Treasurer Scott Morrison said on Monday that he was confident this year's APRA crackdown on interest-only loans to property investors would ensure a "safe landing" by encouraging households to reduce their overall debt levels.
"There's a lot at risk," Mr Morrison said of the property market and current debt levels. "A hard landing in our housing market would have a quite devastating effect on our economy."
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- Updated Jul 3 2017 at 9:54 PM
Australia to take a hit from MSCI changes
by Giselle Roux
The announcement to include China A shares in the MSCI indices was described variously as "symbolic" and "immaterial". At a 0.1 per cent weight in the MSCI All Country benchmark and 0.7 per cent of the emerging market index in the first round, the relevance is not in the short-term numbers but in the long-term trend.
For those whose attention has wandered, China A shares are those listed in China. China stocks through Hong Kong (H shares) and listed in the US (as ADRs or American Depositary Receipts) are already represented in the global indices.
The MSCI, as the predominant base for measuring active fund performance and as the index for passive funds, is taking incrementalism to a new art. Of the 222 Chinese A stocks that qualify for inclusion, the process will only start in May 2018 with a 2.5 per cent partial inclusion (as a proportion of free float market capitalisation and accessible to overseas investors) with a similar amount to be included a few months later in August. To avoid a rush on the day, a provisional index is now available.
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The jobs puzzle: bad news for those waiting for a pay rise
Clancy Yeates
Published: July 4 2017 - 6:21AM
There's a paradox in the labour market, and it makes unhappy reading for those hanging out for a big pay rise.
In the past three months, official figures show the economy created about 140,000 jobs, and the unemployment rate has fallen to 5.5 per cent, a four-year low.
Indicators of future hiring are also strong. ANZ Bank on Monday said the number of job advertisements had also grown by 10.5 per cent in the year to June, more than double the rate of growth from six months ago.
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SA bank tax blocked by opposition
Clancy Yeates
Published: July 3 2017 - 6:01PM
South Australia's opposition has vowed to block the state government's bank tax in the upper house, after a fierce campaign against the $370 million levy from the powerful banking industry.
After a party room meeting on Monday afternoon, opposition leader Steven Marshall said the party would vote against the levy, which he described as "toxic" and "job destroying".
The opposition's decision means there will be enough upper house votes to block the tax, which shocked banks when it was announced last month. Several minor party MPs have also said they will oppose the levy.
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Morrison says housing policy is working, despite super warnings
- The Australian
- 1:02PM July 3, 2017
Rachel Baxendale
Treasurer Scott Morrison has cited new figures he claims show the government’s housing policy is helping to boost affordability, despite a warning to young Australians from the superannuation sector today that they cannot count on the Coalitions’s budget promise to help them save faster for a home deposit unless it is legislated.
The first-home super-save scheme started on Saturday and allows people to make up to $30,000 in voluntary super contributions over two years, with the expectation they will be able to withdraw those savings — plus earnings made — to put towards a house deposit.
The government wants first-home buyers to be able to be able to withdraw their super-saver savings from next July, but the superannuation sector has today warned that legislation will have to pass parliament for that to happen.
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Petroleum tax: Warning of 'significant damage' to Australian economy if PRRT is replaced
Eryk Bagshaw
Published: July 3 2017 - 5:43PM
The author of a landmark report into Australia's petroleum tax regime has warned replacing the existing tax would have damaging consequences despite claims Australia is missing out on billions of dollars in tax from multinational gas exporters.
Economist Michael Callaghan, who was selected by Treasurer Scott Morrison to chair a review into the petroleum resource rent tax, defended his findings at a Senate hearing on Monday.
"In an increasingly competitive marketplace for investment, I would place a high weight on avoiding policy changes that could potentially significantly damage Australia as an attractive investment location," he told the hearing by phone.
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RBA keeps cash rate on hold as retail rates rise and fall
Peter Martin
Published: July 4 2017 - 2:52PM
The Reserve Bank has kept its cash rate on hold at 1.5 per cent as retail banks push up rates on investor and interest-only loans and push down rates charged to owner-occupiers.
The Bank's decision, announced at 2.30 pm eastern time, means the cash rate will stay steady at the record low of 1.5 per cent for the twelfth consecutive month.
On balance, the forecasters taking part in the mid-year Scope BusinessDay survey released on the weekend expect another full year of steady rates, with the number expecting an increase roughly balancing the number expecting a cut.
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How China's debt binge threatens Australia
Matt Wade
Published: July 5 2017 - 12:16AM
No country can be indifferent to China's economy, especially not Australia. We're more exposed to what goes on in it than just about any other nation. China has long been the biggest market for our commodities, such as iron ore, coal and wool. And now it is the largest foreign buyer of our services, especially education and tourism. The upshot? Many thousands of Australian jobs depend on the health of the Chinese economy.
Big Asian economies in our region – China, India and Indonesia – are bound to become even more important to us during this, the Asian Century. Our politicians like to dwell on the opportunities presented by the historic economic transformation to our north. But we'll also need to be prepared for some nasty bumps along the way.
The aftermath of China's enormous corporate debt bubble could well be one of them. For some years now China's economic growth has been underpinned by an explosion in corporate lending. China has accounted for half – yes half – of all new credit created globally since 2005 according to the New York Federal Reserve. That's a huge share for an economy that now only accounts for about 15 per cent of the global economy.
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Tough rules on unions have stifled Australian wages
Josh Bornstein
Published: July 5 2017 - 12:05AM
When Reserve Bank governor Philip Lowe recently declared a "wages crisis" following a prolonged period of low wages growth, it appears to have caught the federal government on the hop. Quick to respond to crises about border protection, terrorism and rising energy prices, this is one crisis that renders the government mute. There is no plan, no working group, or commissioning of a white paper from the Productivity Commission. Instead, the government has announced a plan to pay up to 10,000 "interns" to work in the retail industry for as little as $4 an hour. This plan will only exacerbate the wages crisis.
Phillip Lowe is not the first prominent mandarin to observe that stagnant wages threaten economic growth. A new consensus has emerged since the Global Financial Crisis that anaemic wages growth and increased income inequality is retarding economies and stoking political volatility in developed economies. Nevertheless, Lowe is the first in Australia to join the chorus. His suggested remedy – that employees need to speak up more to request higher pay – is strikingly naive, inviting the obvious question. What if the boss says "no"?
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- Jul 5 2017 at 9:43 AM
Risks remain amid the global recovery
by Martin Wolf
The Bank for International Settlements is the stopped clock of international economic institutions. It has argued for monetary and fiscal tightening, whether that makes sense, or not.
Fortunately, policymakers, or at least the central banks that are members of the BIS, have ignored its apparent conviction that the world needed an even deeper and more prolonged recession.
Yet now, precisely because central banks wisely ignored its advice, a synchronised recovery has finally arrived.
Aussie bonds go to one mystery whale with record $800 million appetite
Garfield Reynolds
Published: July 5 2017 - 2:50PM
A single buyer snapped up all $800 million of Australian government bonds sold on Wednesday, the largest ever amount bought by one bidder in auctions that date back to 1982.
The sale of a nominal bond to just one entity hasn't happened since August 2013, according to data from the Australian Office of Financial Management, the government funding arm.
The 3.25 per cent notes maturing in April 2029 went off at a yield of 2.72 per cent, the office said on its website, without identifying the buyer.
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AustralianSuper 'not concerned' about bank tax
Clancy Yeates
Published: July 6 2017 - 12:15AM
The country's biggest superannuation fund has not changed its view on investing in banks as a result of the federal government's major bank tax, despite bank claims the policy will hit all Australians' retirement savings.
As AustralianSuper reported returns of 12.4 per cent in its key investment option last financial year, chief investment officer Mark Delaney said he was unconcerned by the impact of the federal bank tax on the country's five biggest lenders.
Although he predicted overall returns would be softer in the year ahead, he said that, for a long-term investor, policy changes such as the bank tax were part of the regulatory environment banks faced.
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Top rate to swamp 1.2m taxpayers by 2028
- The Australian
- 12:00AM July 6, 2017
Adam Creighton
The number of Australians paying the top tax rate will more than double to almost 1.2 million within 10 years, according to new modelling that has ignited a ferocious Liberal attack on Bill Shorten’s election manifesto to increase the highest bracket to an effective 49.5 per cent.
Scott Morrison last night seized on the analysis based on the release of Parliamentary Budget Office figures.
“Labor’s goal to have both one of the highest personal income tax rates and the highest corporate tax rates in the world is a dark economic vision for Australia,’’ the Treasurer told The Australian last night.
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NAB extends crackdown on interest-only home loans
Clancy Yeates
Published: July 7 2017 - 12:15AM
National Australia Bank will start automatically rejecting customers who want to borrow a high multiple of their income and only pay interest on their home loan, amid concerns over the growing risks created by rising household indebtedness.
From this Saturday, the bank will decline any customer applying for an interest-only loan who has a high loan-to-income ratio – an approach that banking sources said was not used by other lenders in the mortgage market.
NAB would not say what loan-to-income ratio it considered to be "high", but the move signals a further toughening in its stance towards interest-only borrowers, who are already facing higher interest rates, larger deposit requirements and shorter loan terms.
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Fears of a housing bubble in Australia are overblown, says HSBC economist
Emily Cadman
Published: July 7 2017 - 1:20AM
Soaring home prices in Australia's biggest cities are driven by strong demand and a lack of supply, rather than indicating a "bubble," according to one of the nation's top economists.
"At a national level, a key reason for rising housing prices has been housing under-supply," HSBC Holdings' local chief economist Paul Bloxham wrote in a research note on Thursday.
"This also suggests that a significant fall in Australian housing prices, as occurred in the US and Spain during the global financial crisis, is unlikely."
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- Jul 7 2017 at 10:40 AM
Traders left bewildered by huge spike in global bond yields
by Karen Maley
Beware overly tranquil markets; there are hidden dangers lurking in their depths treacherous.
That was the bruising lesson for investors overnight as a huge sell-off rippled through global bond markets, amid growing fears that the massive tide of liquidity created by central banks' bond-buying programs - and which has buoyed bond and equity markets worldwide - is finally beginning to ebb. Europe bore the brunt of the sell-off with the yield on benchmark 10-year German bunds climbing to an 18-month high. (Yields rise as bond prices fall).
Investors fear that bond markets could be in for even more pain, with the US central bank preparing to start whittling back the size of its massive bond portfolio, the Bank of Japan quietly reducing the amount of bonds it buys each month, and even European Central Bank likely to signal a further tapering in its bond purchases by the end of the year.
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- Jul 7 2017 at 10:00 AM
Once safe Australian fixed-rate bonds suffer losses
Australia's main fixed-income index — against which almost all superannuation funds benchmark — delivered its fourth worst return in modern history over the 12 months to June 30. In particular, the exclusively "fixed-rate" (rather than "floating-rate") AusBond Composite Index returned just 0.25 per cent over the last year before you deduct fees.
After accounting for Australia's 2.1 per cent inflation rate, investors in these fixed-rate bonds actually suffered a "real" return loss of 1.85 per cent from what is supposed to be a bullet-proof asset class dominated by super-safe bonds.
Indeed, the AusBond Treasury Index (which is made up of 20-plus AAA rated Australian government bonds) suffered an outright loss with a terrible return of minus 1 per cent over the year to June 30 (or minus 3.1 per cent after inflation).
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In search of the elusive American Dream
Ross Gittins
Published: July 8 2017 - 12:15AM
Recent political shocks – Brexit, Trump and the failure of Theresa May – are prompting much soul-searching and rethinking among the world's leading economists.
Last week, for instance, Ben Bernanke, former chairman of the US Federal Reserve, gave a speech to a forum of the European Central Bank in which he admitted that "recent political events" had "cast a bright light on some disturbing economic and social trends in the United States".
"Unfortunately, policymakers in recent decades have been slow to address or even to recognise these trends, an error of omission that has helped fuel the voters' backlash," he said.
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Australia should consider missile defence to counter North Korea: Kevin Rudd
Peter Hartcher, James Massola
Published: July 8 2017 - 1:43AM
Australia needs to consider deploying a missile defence system to defend against attack from nuclear-armed North Korea, according to former prime minister Kevin Rudd.
Mr Rudd has reversed the position he held in office, saying that North Korea's newly demonstrated ability to reach northern Australia meant it was time to consider homeland defence.
And top regional security and defence experts have backed that call, arguing Australia and its regional allies must invest heavily in missile defence as the "only alternative".
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Australia cuts resources export revenue forecast on iron ore outlook
Published: July 7 2017 - 1:30PM
Australia has revised down the value of its resources and energy export earnings in the financial year ended June by 4.6 percent, or nearly $10 billion, due largely to falling prices for iron ore, its most valuable export.
The downward revision to $205 billion mainly reflects an earlier than expected decline in iron ore prices since the previous forecasts were published three months ago, the Department of Industry, Science and Innovation said.
Iron ore, Australia's top source of export revenue, should average $US62.40 in calendar 2017, down from an earlier forecast of $US65.20, the department said.
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Elon Musk’s Tesla to build giant battery for SA
'World's biggest battery' to be built in SA
Verity Edwards
US-based Tesla and French company Neoen will build the world’s largest lithium ion battery in South Australia with plans to complete construction before summer.
The 129 MW per hour plant will be built at Jamestown, expanding Neoen’s Hornsdsle Wind Farm, two hours north of Adelaide.
Tesla owner Elon Musk, who is worth more than $US16 billion, arrived in Adelaide this morning for the announcement, where he pledged to build the battery storage facility within 100 days or provide it for free to the South Australian government. Mr Musk refused to say how much the battery system would cost.
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Health Budget Issues.
Healthcare: Call for royal inquiry into medical devices costs
- The Australian
- 12:00AM July 6, 2017
Sarah-Jane Tasker
Health insurance industry head Matthew Koce has called for a royal commission into the high cost of medical devices in Australia, arguing “powerful interests” were delaying reform.
Mr Koce, chief executive of hirmaa, which represents 22 not-for-profit and member-owned health funds, made the request yesterday when he fronted a Senate hearing into private health insurance.
“Every day big multinational national companies are permitted to obfuscate and delay and to continue charging grossly excessive prices in Australia (for medical devices),” he told the committee, which is chaired by Greens senator Rachel Siewert.
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Pharmaceutical Benefits Scheme 'left behind' by changing cancer treatments
Katie Burgess
Published: July 6 2017 - 7:25AM
The face of cancer treatment is changing and the Pharmaceutical Benefits Scheme is failing to keep pace, one rare cancer sufferer says.
When Matthew Owen was given less than a year to live in December 2014, he did a lot of living in between bouts of chemotherapy.
He jumped out of a plane, bungee-jumped, swam with whale sharks and had his last Christmas with wife Karen and son Will.
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7 July 2017
Sonic pulls out of pharmacy pathology plan
Sonic Healthcare has dissolved a lucrative tie-up to supply pathology testing for a new business expansion by pharmacies, bowing to scathing opposition from GPs.
The in-store pathology screening program, launched last month by Amcal pharmacies, was slammed by the AMA as “wasteful and opportunistic” and a risk to patient care.
In recent days, a number of influential GPs informed Sonic that they would boycott the company’s services in protest.
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Health cover at ‘tipping point’
- The Australian
- 12:00AM July 8, 2017
Sarah-Jane Tasker
Medibank Private boss Craig Drummond has warned that the health insurance sector is at a “critical juncture”, saying the time for policy reform is now, but industry heads say that the volatile political environment dents any hope of change.
Mr Drummond, fresh from a tour of European and US health systems, said affordability concerns were accelerating, adding it was not just a private health insurance issue but one that spread across industries including banks, telecommunications and utilities.
“The issue is more about the financial shape of Australian consumers relative to their debt burden,” he said. “We are at a critical juncture and the time to act on reform and change is now, for many industries, before the challenge gets even bigger.
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Drug companies spent $287 million in four years on 'educational' events for doctors
Esther Han
Published: July 7 2017 - 5:31PM
The drug industry is spending $72 million a year "educating" doctors, with one company splashing $750,000 on a weekend conference.
A new database of pharmaceutical company-funded events created by Sydney University researchers shows 42 companies shelled out $286 million on 117,000 events for doctors and nurses over a four-year period. The average cost of an event was $2500.
"This suggests an epidemic of drug company influence that is extremely unhealthy and extremely worrying," said Dr Ray Moynihan, an over-diagnosis expert at Bond University.
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International Issues.
'Provocative operations': US Navy sends warship into South China Sea
Elizabeth Dexheimer
Published: July 3 2017 - 7:06AM
Washington: The Trump administration has sent a guided-missile destroyer near Triton Island in the South China Sea, according to a US official, possibly complicating President Donald Trump's meeting with his Chinese counterpart this week.
The US Navy sent the destroyer USS Stethem within 22 kilometres of Triton Island on Sunday, said the official, who wasn't authorised to speak publicly. The warship was passing through those waters on the basis of innocent passage, the official said.
China, Taiwan and Vietnam all lay claim to Triton, a tiny speck that's one of the Paracel Islands in the waters between Vietnam and the Philippines. Operations such as this are typically planned at least weeks in advance, the official said.
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Qatar won't back down over Saudi ultimatum and returns fire on terrorism claims
Nadeem Hamid
Published: July 3 2017 - 12:42AM
The Qatari government, under a Saudi Arabia-led blockade of its air, sea and land links, is unwilling to concede to any demands that threaten its sovereignty or violate international law, Foreign Minister Mohammed bin Abdulrahman al-Thani said.
The small Persian Gulf emirate is prepared to let pass the deadline for complying with 13 demands set down by four nations in the region. The demands include closing the al-Jazeera television network and cutting back ties with Iran, Thani said on Saturday in Rome, where he met with his Italian counterpart.
"There is no fear from our direction. We are ready to face the consequences," he said. "There is an international law that should be respected and not violated."
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Radical new plan to remove ‘incapacitated’ President Trump
July 4, 201711:27am
US politicians are so seriously concerned about President Donald Trump’s sanity they are making a plan that could see him removed from the White House over it.
A group of Democrats has put forward a bill to propose a committee that could declare Mr Trump “incapacitated” and remove him from office.
The increasing level of concern over the deteriorating situation in the White House comes as questions have been raised over the President’s state of mind following a series of bizarre and even aggressive tweets.
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North Korea talks: US requests closed-door UN Security Council meeting
David Brunnstrom and Christine Kim
Published: July 5 2017 - 6:37AM
New York: A US spokesman said the United States has requested a closed-door meeting of the United Nations Security Council for urgent discussions regarding North Korea and its latest ballistic missile test.
The spokesman said the meeting of the 15-member council was likely to be scheduled for Wednesday.
Pyongyang said on Tuesday it had successfully test-launched a first intercontinental ballistic missile, or ICBM, which analysts said could put all of Alaska in range for the first time.
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North Korea claims ICBM launch, bringing US and Darwin within range
Kirsty Needham, Michael Koziol
Published: July 5 2017 - 12:26AM
Beijing: North Korea has claimed its first successful launch of an Intercontinental Ballistic Missile, defying a tweet by US President Donald Trump in January that "It won't happen!".
Experts estimated that if the missile had been launched at a "normal" angle, instead of the steep trajectory used in the test, it could have flown more than 6000 kilometres, a distance that would see it reach the US mainland.
This range also brings Darwin within reach.
A joint statement from China and Russia, released as presidents Xi Jinping and Vladimir Putin met in Moscow, called on North Korea to freeze its nuclear and missile activity, but also called for the United States to halt its military exercises with South Korea on the Korean Peninsula.
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In trying to tackle North Korea, Donald Trump risks creating a crisis with Beijing
Paul McGeough
Published: July 5 2017 - 3:28PM
Washington: North Korean dictator Kim Jong-un has seemingly crossed a threshold - he now has missiles that go halfway around the world, despite a January warning, when then president-elect Donald Trump declared: "It won't happen!"
If Trump's tweet was an implicit threat of a pre-emptive strike by Washington, it stands out in the administration's menu of possible responses as the only one that has not been attempted.
All the others - containment, sanctions, negotiations and cyberwar - have been tried in various configurations by previous administrations, to little effect.
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US ambassador Haley threatens force against North Korea
Michelle Nichols
Published: July 6 2017 - 7:34AM
United Nations: The United States said on Wednesday it was ready to use force to stop North Korea's nuclear missile program but said it preferred global diplomatic action against Pyongyang for defying world powers by test launching a ballistic missile that could hit Alaska.
US Ambassador to the United Nations Nikki Haley told an emergency meeting of the UN Security Council that North Korea's actions were "quickly closing off the possibility of a diplomatic solution" and the United States was prepared to defend itself and its allies.
"One of our capabilities lies with our considerable military forces. We will use them if we must, but we prefer not to have to go in that direction," Haley said.
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Donald Trump's tweets have suddenly grown a lot more dangerous
Sarah Posner
Published: July 6 2017 - 7:45AM
The Los Angeles Times reports Wednesday morning that foreign policy experts are worried that President Donald Trump could be caught flat-footed at his upcoming meeting with Russian President Vladimir Putin at the Group of 20 summit in Hamburg on Friday.
Even Trump's aides acknowledge the president's unwillingness to read the briefings they have compiled about his cunning Russian counterpart.
As a result, they have opted for their best chance of penetrating the president's consciousness: "a list of tweet-length sentences that summarise the main points Trump could bring up with Putin."
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Ready or not, Trump may be about to face his first full-blown international crisis
Paul Waldman
Published: July 6 2017 - 10:21AM
On the many occasions over the last five months where President Donald Trump demonstrated his deep ignorance, his alarming impulsiveness, his bottomless need for praise, or his tendency to lash out when criticised, one common response has been to ask, "What happens when he faces a genuine crisis with the need to make difficult decisions and lives at stake?"
Well it looks as if we may be about to find out.
North Korea has launched what appears to be its first genuine intercontinental ballistic missile. Though it landed near the Japanese coast, it was launched on a high arc that American analysts say indicates it has the capability to reach the United States (Alaska, at least). This is an outcome national security experts have worried and warned about for some time, and one that Trump himself pledged would never happen under his watch. We could be headed for a military crisis with the potential to cost thousands or even millions of lives, the outcome depending on Trump's strategic thinking and good judgment.
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North Korea: there is only one acceptable endgame
Michael Pembroke
Published: July 6 2017 - 12:05AM
It is a truism that there is nothing much to like about North Korea. It is harsh, authoritarian, repressive and secretive. And its economic structural problems are largely of its own making - a direct result of the huge expenditure on its "military first" policy, its socialist economic principles and the greed, graft and moral obloquy of the ruling elite. But there has never been a popular uprising and the regime is likely to continue. And China has a vital interest in its ongoing survival.
As with Mark Twain's death, predictions of North Korea's imminent collapse are misplaced. Such imaginings tend to be the preserve of enthusiasts in the Pentagon and the State Department; the same ones who insist foolishly that Kim Jong-un is irrational; who refuse to deal with Pyongyang, hoping for collapse.
The geopolitical reality is that North Korea is committed to being a nuclear state. At some point in the not too distant future, it will miniaturise nuclear warheads on intercontinental ballistic missiles. Refusing to engage with it will not make that prospect go away. Washington's policy of non-engagement serves only to maximise the fear, antagonism and pugnaciousness that have characterised North Korean policy for years. The Pentagon's frequently expressed mantra that it will not reward bad behaviour is unwise. China's recent criticism was pointed. It counselled the United States that by not talking to Pyongyang "you will only drive them in the wrong direction", and that a policy of non-engagement is "only making things worse".
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North Korean missiles can strike Australia and we can't stop them
Peter Hartcher
Published: July 8 2017 - 12:00AM
This week we learnt that the rogue state of North Korea has the ability to launch an intercontinental ballistic missile with the range to reach northern Australia. And we know they are working to miniaturise nuclear warheads to put on top. Question: If the North Korean regime were to fire a nuclear weapon at Australia, what would stop it? Answer: Nothing.
This will come as a surprise to many Australians who trust their government to protect them and trust that the $34.6 billion in the annual defence budget will cover it. But Kim Jong-un's new capability did come a lot sooner than expected. A year ago, the US government said its best guess, based on CIA assessments, was that the North Koreans were about four years away from an intercontinental ballistic missile. This week we watched it streak across the sky on TV, three years early.
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Trump isolated again as G20 sees US slowly detach from rest
Josh Wingrove, Gregory Viscusi and Arne Delfs
Published: July 9 2017 - 4:24AM
World leaders forged a fragile compromise at a summit in Germany that failed to conceal the reality that Donald Trump's America is increasingly going its own way.
The Group of 20 nations meeting in Hamburg agreed to fight protectionism while tacitly recognising Trump's concerns about excess steel capacity and what he says are unfair trade practices. On climate change, the US was again isolated, with all 19 other members agreeing that the Paris accord on cutting emissions was "irreversible."
"I always said that this wouldn't be easy and that we shouldn't hide areas of discord," Chancellor Angela Merkel, the summit host, told reporters on Saturday at the end of two days of talks. "The communique has to reflect those areas where there is no consensus."
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I look forward to comments on all this!
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David.
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