October 17, 2019 Edition.
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Trump has really done it this time with his green light to have Turkey try to invade some Kurdish Territory occupied by fighters who up until a few days ago were US allies. He is really a wrecking ball on the whole international order. With Russia, Iran and Syria all sucked in I fear a great mess with huge loss of life will ensue. Hong Kong is also spiraling out of control
We are down to the pointy end on Brexit and the next few weeks will definitely tell. Big meeting tonight will be crucial.
In OZ parliament is back and we will see all how it turns out as all sorts of unexpected things happen when Parliament is sitting. Panicked response to the drought seems to be the main play at present!
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Major Issues.
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When good news is bad news for markets
Julian Beaumont
Oct 6, 2019 — 2.50pm
The global financial crisis (GFC) has had a lasting effect on the psyche of investors, who continue to be risk-phobic and flock to assets perceived to be safe. The irony is these assets are now among the riskiest.
As an obvious example, inflows into bond funds are running at their highest levels since the GFC. Meanwhile, bond yields continue hitting all-time record lows, meaning bond prices are hitting all-time highs.
History shows, quite logically, that flows into an asset class correlate with prices and both normally peak together. While we never know when we are at a peak, the risks certainly continue to build on the way up.
What we do know is there are trillions of dollars of negative-yielding bonds on which investors are certain to lose money over time.
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Franking credit plan created 'vulnerability and anxiety': Bill Shorten
Oct 6, 2019 — 10.29am
Bill Shorten has conceded Labor's planned crackdown of negative gearing and franking credits caused vulnerability and anxiety, declaring he's given up hopes of becoming prime minister.
The former Labor leader says he is fully responsible for the party's shock election loss on May 18 and accepted his campaign was too complicated for many voters.
“I think we had too many messages in hindsight," Mr Shorten told The Sunday Herald Sun.
"I also accept that our proposals, our tax reforms around franking credits, created a sense of vulnerability and anxiety among older Australians, which I clearly underestimated.
“In hindsight the risk was bigger than we realised.
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Bob Brown's convoy hurt Labor, says Richard Di Natale
By Eryk Bagshaw
October 7, 2019 — 12.27am
Greens leader Richard Di Natale has said Bob Brown's anti-Adani convoy hurt Labor's chances at the federal election, as the major parties gear up for a politically charged inquiry into transitioning jobs from coal to renewables.
The inquiry, which will hold hearings in Townsville and Mackay this week, is expected to hear from pro-coal and environmental activists, as local workers grapple with a transition to renewables in politically volatile areas struggling with stubbornly high unemployment and low economic growth.
Dr Di Natale said it "was absolutely correct" that the former Greens leader's convoy that travelled from Tasmania to northern Queensland to protest over the Adani coal mine harmed Labor's chances during the May election.
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Labor MP fears divide between religious and secular Australia
By Judith Ireland
October 7, 2019 — 12.15am
Labor senator Deborah O'Neill rummages around in her handbag. In among the mints, papers and sunglasses, she pulls out the two essential items that travel with her wherever she goes: a box of pink rosary beads and a copy of the Universal Declaration of Human Rights.
As a devout Catholic and a proud member of the Australian Labor Party, Senator O'Neill wants to emphasise that people have multiple identities. The rosary beads help her to be "still" in the midst of life's demands. The "little book" reminds her that everyone is equal.
But despite the easy co-existence of her rosary beads and the copy of the declaration, the NSW senator sees a worrying divide between religious and non-religious Australians.
As Parliament prepares to consider religious discrimination laws, she warns the country is in the grip of a "tribal fundamentalism", where "artificial divisions" are established between different groups. She told The Sydney Morning Herald and The Age this includes an "ascendancy of language around secularity" that is trying to silence the perspectives of people of faith.
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'Cognitive overload': Why we don't get more joy out of our super
Ross Gittins
Economics Editor
October 7, 2019 — 12.01am
When one of our top econocrats gives a speech about behavioural economics, you know we’re making progress. Take the ever-present problem of income in retirement. “BE” explains both why it’s a major area of government intervention in our lives and how that intervention can be made more effective.
One of the greatest limitations of conventional economics – based on the “neo-classical” model, which focuses on how prices are determined by the interaction of supply and demand – is its assumption that people are unfailingly “rational” – calculatingly self-interested – in their response to the prices they face.
Behavioural economics accepts that we’re not the financial automatons the model assumes us to be, and uses insights from the more empirical sciences of psychology and sociology to gain a much more realistic picture of the many non-monetary factors that also affect our behaviour in economic matters.
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What happens to the nation in a time of nationalism?
The nation-state never really went away. Scott Morrison has been thinking about how to adapt it to the new age of nationalism and populism.
Oct 7, 2019 — 10.29am
Critics of the Prime Minister’s recent Lowy lecture virtually have him suffering an allergic reaction from his recent visit to the United States. It is as if Scott Morrison has been afflicted by some kind of Trumpian eczema: a red-raw, irritable rash of impatience with internationalism that so epitomises the American president’s world-view.
Morrison’s speech certainly gave nods in that direction, in what at times became a jeremiad against ‘negative globalism’. Yet he neither raised the drawbridge nor dropped the portcullis on Australia’s openness to the world. What he did do was throw rocks at an ‘unaccountable internationalist bureaucracy’.
In essence the speech represents the prime minister’s reflections on this populist age. Here was Morrison’s take on the tectonic forces moving beneath the surface of events, as ‘a new economic and political order is still taking shape’.
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Construction in 13th month of decline
Oct 7, 2019 — 10.45am
The decline in house building eased last month but apartments and engineering work contracted at a faster rate, collectively pulling the construction industry into its 13th straight month of decline, the latest Performance of Construction Index shows.
The index based on a monthly survey of construction industry purchasing managers – a leading indicator of activity – fell 2 points to 42.6 last month, dragged lower by sectors such as weaker apartment construction and infrastructure-related activity.
The index comprises the balance of respondents saying conditions are better than the previous month with those saying they are worse. A score of 50 indicates no change, while above 50 shows growth and below 50 indicates contraction. The further from the 50 median, the faster the pace of growth or decline indicated.
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Older workers keeping interest rates low: RBA
Oct 7, 2019 — 12.40pm
People choosing not to retire, more women in the workforce and the "profound" changes caused by foreign retailers have all contributed to record low interest rates, according to the Reserve Bank.
The bank's assistant governor Luci Ellis said people are living longer and are healthier, so fewer workers are retiring earlier.
The demographic change, combined with more women working, helped lift the labour force participation rate to a record high 66.2 per cent.
Clothing prices to rise as trade war, weaker $A take toll
Oct 7, 2019 — 4.24pm
Clothing prices are set to rise as the trade war between the US and China pushes up retailers' sourcing costs, compounding the effect of the weaker Australian dollar.
Many Australian retailers are hoping the trade war will lead to spare capacity in China and therefore better deals from Chinese suppliers as major US companies such as Macys, GAP and PVH Corp shift away from China to cheaper countries such as Vietnam, Bangladesh and Cambodia.
But Australian Fashion Council co-chair John Condilis says sourcing costs are likely to rise as Chinese manufacturers close factories and increase prices in an attempt to protect their bottom line.
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Australia is rich, dumb and getting dumber
Oct 8, 2019 — 12.00am
Bangladesh, Cuba, Iran, Mali and Turkmenistan share an unexpected connection to Australia, and it isn't membership of a tourist destination hot list.
All are among the economies that are so lacking in complexity, and have such limited natural opportunities to develop new products, that Harvard University recommends they adopt industrial policy straight out of the post-colonial developing world: the "strategic bets" approach.
The advice comes from the Harvard Kennedy School's Center for International Development, which two weeks ago launched a online database of 133 economies that combines remarkably rich data with beautiful presentation.
Designed to map, literally, the economic progress and opportunities of the industrial and non-industrial world, the Atlas of Economic Complexity exposes an under-appreciated truth about Australia.
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QE 'most effective' with broader fiscal policies
Oct 8, 2019 — 5.30am
Reserve Bank of Australia (RBA) governor Philip Lowe has endorsed "valuable" crisis-era central bank tools, such as buying financial assets and negative interest rates to protect economies from recession, but warned their use must be supported by the government and prudential regulator.
In a landmark international report chaired by the RBA governor and released on Tuesday, a week after he cut the official cash rate to just 0.75 per cent, Dr Lowe noted unconventional monetary policy would become more common around the world as interest rates hovered near zero.
The Basel, Switzerland-based Bank for International Settlements (BIS) reviewed four tools employed by central banks since the 2008 global financial crisis; negative interest rates, central bank lending to commercial banks, purchases of financial assets such as government bonds and "forward guidance" pledges on stimulus by central bankers.
The BIS's Committee on the Global Financial System, chaired by Dr Lowe, warned of some negative "side effects" such as near-zero rates compressing commercial bank profits, the inefficient allocation of credit, spillovers to other countries, and weakening the private sector's incentive to deleverage.
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Why ScoMo is beating up on business
A recent speech by Ben Morton, one of the Scott Morrison's closest advisers, revealed a telling analysis of how the government judges the meaning of the election.
Oct 7, 2019 — 6.00pm
Labor MPs may be nervously awaiting the party’s official review into what went so wrong at the election. But the Morrison government remains confident it has this figured out – and the real effort will be on reinforcing that message at the next election.
Ben Morton, officially assistant minister to the Prime Minister and unofficially one of his closest confidantes, firmly told business of the new rules of engagement with Canberra and the community last month. Less noticed in Morton’s speech was an equally telling analysis of how the government judges the meaning of the election.
That makes it an abridged version of a Coalition review to counter Labor’s. And it helps explain the government’s sceptical – often dismissive – tone when it comes to dealing with big business, including “profiteering” banks, as well as with a more “progressive” agenda.
In one sense, Scott Morrison’s faith in his “quiet Australians” is just another iteration of voters whose faith in the Coalition was underestimated – as Morton pointed out. From Robert Menzies’ “forgotten people” to Malcolm Fraser’s “silent majority” to John Howard’s battlers to Tony’s tradies.
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Defence spending in the new great power era
Investing in Australia's defence capability will help ensure we never have to respond to coercion
Oct 8, 2019 — 12.05am
China’s parade of brand new missile technology in Tiananmen Square last week was a demonstration of the hard power that has come with this giant country’s astonishing modern revival. Perhaps Prime Minister Scott Morrison had Beijing’s arsenal in mind when he forcefully reminded during his speech to the Lowy Institute that, even while the world has been getting richer and state-on-state wars much rarer, “times of tension and disruption” are still more normal than not. Populism, trade warfare and global warming might top the current worry list, but new great power rivalries are up there too.
It is the reason for Australia’s greatest peacetime defence spend of $200 billion, of which $90 billion is for 12 long-range submarines and a fleet of heavily armed frigates and destroyers able to work with allies across the Indo-Pacific. “We are investing in this capability because we must,” Defence Minister Linda Reynolds will tell a naval conference in Sydney today. Power has moved to this part of the world, and the military – which has to think the unthinkable over time spans of many decades – needs to be prepared. The Parliamentary Budget Office says our defence outlay will double over the next decade, passing the West’s usual 2 per cent spending benchmark. It is still worth it. The only good wars are ones that never happen, because we ensured that the human and material cost would be too high. As strategist Hugh White writes ominously of China in his recent book How to Defend Australia, “No nation’s appetite for influence has ever shrunk as its power grew”. Investing in Australia’s armed forces will help make sure that "influence" never turns into "coercion".
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Investors are caught in a global tug of war
Mohamed A. El-Erian
Oct 8, 2019 — 5.31am
More than anything else, last week's market gyrations illustrated the tug of war that has dominated US stocks in recent months and confined them in a range despite significant developments in the underlying dynamics.
The intensifying tension between the two macro forces could lead to greater volatility and pose increasing challenges for investors.
The first part of the week was dominated by investor concern that international weakness in manufacturing had spread to the US and, more importantly, to the services sector, which dominates the domestic economy. The result was a harrowing two-day drop in stocks that erased the gains of the previous five months.
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The global economy: how bad is it and how does Australia fare?
Views on the global economic outlook seem likely to turn negative again as investors and commentators mull over the trade wars, the inversion of the US yield curve, flat wages, the growth of debt, the apparent ineffectiveness of monetary policy and serious political stresses in the US and Europe.
Worries about a global recession are likely to intensify — and bring with them fears of a new bear market in shares.
Is it time for investors to seriously reduce their holdings of shares in preparation for a sharp decline in market confidence?
Or might the build-up of negative sentiment in investment markets turn out to be overcooked — as happened in 2011 (after the widespread fears of a double-dip US recession), in 2016 (as worries abated about a hard landing for the Chinese economy), and in late 2018 (the excessive expectations that further increases in the US cash rate in 2019 would end the US economic upswing)?
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Slowdown a threat to investment, job intentions: NAB survey
Continued falls in consumer and business confidence, despite three Reserve Bank interest rate cuts, are feeding into fears companies will shelve even more investment plans.
According to the latest National Australia Bank business survey, confidence among Australian firms declined over September, while the ANZ consumer confidence index fell in the wake of last week’s RBA rate cut.
According to NAB, business conditions, which measures how positive the environment is for trading and industry, rose slightly last month but remains below the long term average and far below the levels seen just a year ago.
The RBA last Tuesday sliced the cash rate to a new record low of 0.75 per cent, but economists have been worried the rate cuts are doing more harm than good by scaring already nervous consumers into shutting their wallets.
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In naval warfare, just zapping attacking missiles can be cheap and effective
Malcolm Davis
The future of war at sea will increasingly be dominated by long-range, high-speed anti-ship weapons, both cruise and anti-ship ballistic-missile systems, and hypersonic weapons are on the horizon, too.
The survivability of our naval surface combatants against such threats will firstly depend on our ability to deny the adversary an effective kill chain from sensor to shooter, and secondly, to effectively defend against any attack by high-speed, long-range anti-ship weapons.
Speed and knowledge therefore matter a great deal. Our ability to understand the maritime battlespace is well developed, through advanced sensors such as the Ceafar2 radar system being installed on the Hunter-class Future Frigate, which will use the Aegis combat system, and the SAAB interface system for crew.
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'Ill-advised': Schott chides Taylor over coal
Oct 9, 2019 — 12.00am
Federal Energy Minister Angus Taylor is doubling down on a push to extend the life of coal power generators and provide incentives for new gas and pumped hydro plants, setting the Morrison government on a collision course with its top energy policy adviser who has deemed such moves as "ill-advised".
In his keynote address to The Australian Financial Review National Energy Summit in Sydney on Wednesday, Mr Taylor will highlight the need to strengthen the process for retaining coal generators.
He will declare that "some vague hope" of renewables, transmission upgrades and demand response filling the supply gap being left by the closure of AGL Energy's Liddell power station in NSW early next decade, isn't good enough.
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Analysts challenge Harvard's criticism of Australia's economy
Oct 9, 2019 — 12.00am
When it comes to Australia's economic relationship with the world, economists agree on the diagnosis. Reaching consensus on the prognosis and cure isn't so easy.
A new Harvard University database that says Australia has an economic "complexity" – the breadth and sophistication of its exports – similar to Senegal, Uganda and Morocco on Tuesday triggered a rigorous debate about the direction of industry policy, and Harvard's controversial advice that the government champion individual industries.
Some economists questioned whether complexity mattered at all. Australia's natural advantage in mining and energy extraction has made it one of the world's richest countries, they said.
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We must reverse course from energy failure
A pile-up of fixes have muted the price signals needed for private sector investment in energy.
Oct 9, 2019 — 12.00am
Malcolm Turnbull first declared a national energy crisis at The Australian Financial Review’s Business Summit in March 2016, calling an urgent meeting with liquefied natural gas company bosses ahead of threatened gas export controls: the first of the energy “big sticks”. Suddenly, Australia’s previously hailed big LNG exporters were being blamed, along with state government gas development bans, for undermining the national energy market.
Within six months, previous complaints about expensive “gold plating” of electricity grids were overtaken by South Australia’ statewide power blackout. That sounded the alarm that the world-leading penetration of unreliable wind and solar power threatened the security of energy supply and the stability of the eastern states electricity grid. Months later, French energy company Engie announced the imminent shutdown of the Hazelwood coal-fired power station in Victoria’s La Trobe Valley, leading to a spike in prices.
Six months after Hazelwood’s exit, Energy Minister Josh Frydenberg used our 2017 National Energy Summit to sideline chief scientist Alan Finkel’s proposed Clean Energy Target. This was replaced by the National Energy Guarantee, a product of the energy technocrats, which sought to deliver both lower carbon emissions and enough reliable energy supply. That aimed to provide a policy consensus that would give energy companies the confidence to invest in transforming Australia’s energy system – which in turn would lower prices. But within another year, the NEG was dead too, and had taken Mr Turnbull’s prime ministership with it. It was the fifth iteration of energy policy since 2007. The one constant has been the ending of Australia’s previous competitive advantage in cheap power.
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Business fears religious freedom laws
Oct 9, 2019 — 9.03am
The Morrison government's push for new religious freedom protections could undermine employers' ability to protect against harassment and enforce professional standards, with business groups and the legal profession calling for a rethink.
Public consultation on new religious discrimination protections promised by Scott Morrison during the federal election campaign have drawn a range of concerns from churches, charities and business organisations.
Ahead of debate in Parliament before Christmas, the Australian Industry Group has told a review that internal policies within workplaces could be undermined by the laws, leaving employers facing internal conflict and reputational damage.
Ai Group chief executive Innes Willox called for changes to the draft laws, saying they could spark disharmony and place unreasonable restrictions on businesses trying to protect brands and other commercial interests.
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Bankers have just signed off on policies that could increase risk of another GFC
Stephen Bartholomeusz
Senior business columnist
October 8, 2019 — 12.15pm
A report signed off by Reserve Bank governor Philip Lowe has endorsed the use of unconventional monetary policies in the post-crisis era. Disturbingly, however, it contains a voluminous list of material side effects and, more than a decade after the crisis, says it is too early to assess some of their long-term implications.
While the report from the Bank for International Settlements (BIS) describes the unconventional policies as valuable additions to the central banking toolbox and is largely positive in its commentary on their effectiveness, there is increasing debate within central banks about their continued deployment this distance from the crisis.
When the European Central Bank (ECB) decided to push its policy rate further into negative territory and re-start asset purchases last month, for instance, there were deep divisions within its governing council, with a significant group of its more powerful members concerned about the potential for unintended consequences for the eurozone financial system.
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A result of some concern': Consumer confidence dives to four year low after rate cuts
By Shane Wright
October 9, 2019 — 11.27am
Consumer confidence has tumbled to its lowest level in four years in the wake of the Reserve Bank's most recent cut in official interest rates and growing concerns about the state of the Australian economy.
Westpac's closely watched measure of consumer sentiment fell by 5.5 per cent in October to sit 8.6 per cent lower than a year ago. Confidence has fallen 8.4 per cent since the RBA started cutting rates in June.
Consumers are increasingly worried about the nation's short and long term economic fortunes. There was a 6 per cent drop in expectations about the economy over the next 12 months while sentiment about the economy over the next 5 years fell by 9.1 per cent.
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Religious freedom should not be an excuse for social engineering
The Herald's View
October 8, 2019 — 5.53pm
The passage of NSW's historic abortion bill shows that it is possible to stand up to conservative religious lobby groups in the interests of the wider community.
That should give the federal government some pause as it pushes ahead with a controversial bill to protect religious freedom.
It turned out that in NSW what religious peak bodies demanded for their flock was out of step even with moderates in their religion who have to live and work in a modern and multicultural world.
Attorney-General Christian Porter has argued that his bill will not be as divisive as the abortion debate. He says the freedom of religion bill is the logical extension of existing laws protecting people from discrimination on the basis of gender and race.
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Viking economics: How Nordic nations debunk a Scott Morrison mantra
Ross Gittins
Economics Editor
October 9, 2019 — 12.00am
I’d like to tell you I’ve been away working hard on a study tour of the Nordic economies – or perhaps tracing the remnant economic impact of the Hanseatic League (look it up) – but the truth is we were too busy enjoying the sights around Scandinavia and the Baltic for me to spend much time reading the books and papers I’d taken along.
But since I always like telling people what I did on my holidays (oh, those fjords and waterfalls we saw while sailing up the coast of Norway to the Arctic Circle!), I’ve been looking up facts and figures in a forthcoming book comparing the main developed countries on many criteria, by my mate Professor Rod Tiffen and others at Sydney University (including me).
But first, the travelogue. Prosperous countries have a lot in common but Scandinavia is different. I have seen the future and, while some might regard it as political correctness gone mad, it looked pretty good to me.
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We dig it: time now to make a stand on rare earths
There is a magic to rare earths, the set of 17 elements that appears halfway down the periodic table. Discovered at the birth of the industrial age in the late 1700s, rare earths were first used to make flints for lighting fires and mantles for gas lanterns.
During the past few decades their uses have multiplied. Phone touchscreens and camera lenses, wind turbines, LED lights, electric cars, jet turbine blades and magnetic imaging all depend on rare earth elements.
The air force’s F35 fighter aircraft each contain about 400kg of rare earth products, which helps explain why US Commerce Secretary Wilbur Ross is in Australia this week.
The US sees us as the best alternative source of rare earths to China, which accounts for about 80 per cent of world supply.
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Energy policy misfires on launch pad
The Morrison government is focused on getting more dispatchable energy into the system. But the industry tells Angus Taylor he's not providing the right signals for investment.
Oct 9, 2019 — 6.00pm
Angus Taylor acknowledges energy policy has polarised politics for most of this century, even if he insists his own party is now in perfect unanimity compared with Labor’s total dysfunction. (Got that, Malcolm Turnbull? )
But he still insists most “wise heads” can agree on some critical issues despite what he calls the “insanity” of various state government’s reckless renewable energy targets.
Consumers inspecting their bills are right to be sceptical – even as Australia leads the world in the take-up of rooftop solar as part of the “transition” to more renewable energy that is proceeding at such an extraordinary pace.
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Morrison's hubris shows he's turning his back on ordinary Australians
John Hewson
Columnist and former Liberal opposition leader
October 10, 2019 — 12.00am
Prime Minister Scott Morrison would have us believe that he is putting Australia "first", and is governing primarily to reflect the values and aspirations of the "quiet Australians" he would also have us believe gave him his "miracle" election win.
He would have us believe he was putting Australia "first" when he sat like a muppet through US President Donald Trump's excruciatingly embarrassing press conference at the White House recently, when he allowed Trump to turn the opening of an Australian manufacturing plant in Ohio into one of his cheap presidential campaign rallies, when he did Trump's bidding on the trade status of the Chinese and when he grossly misrepresented our climate actions in his address to the UN, including a sideswipe at the messenger Greta Thunberg and other student climate protesters.
How are we "first", when this ignorant, subservient behaviour at the White House has left us seriously exposed to the possibility of "mission creep" in the Middle East, especially if, as Trump claims, he can easily start a war there? How are we "first" when we are left risking Chinese retaliation for those trade remarks? How are we "first" when the world disputes the substance of our climate policies, indeed identifies us as a serious "climate laggard"?
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Of zombies and unicorns: the perils of low interest rates
Jessica Irvine
Economics writer
October 10, 2019 — 12.00am
In the ordinary course of events, central bankers are meant to be bland and boring.
To his credit, our Reserve Bank governor Phil Lowe usually does a pretty good job of delivering on both accounts, at least in his public persona.
But these are no ordinary times.
As the central bank he helms prepares to take Australian interest rates boldly where they’ve never gone before – to the zero lower bound and, perhaps, beyond – Lowe is fast approaching a level of exoticism that would make previous governors blush.
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The price of freedom for freelancers
Tony Featherstone
Finance writer
October 10, 2019 — 8.59am
To all the freelancers: would you give up self-employment for a full-time corporate job that offers greater security? A change that trades the autonomy and lifestyle of freelance work for the regular pay, benefits and interaction of an office job.
I would struggle with it. Having been self-employed for 12 years I cannot imagine commuting to and from work, taking instructions from a boss, wasting time in unnecessary meetings, being stressed by company politics or sitting at a cubicle all day. Or sacrificing income and relying on one employer to put food on the table, in a ruthless jobs market.
I’m not alone. About half of freelancers surveyed in the latest Freelancing in America Report said there is “no amount of money where they would take a traditional job”.
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Australia has 'deep concerns' about Syria
Australia has expressed its deep concerns about Turkey's incursion into Syria to the Turkish government and the United States.
Katina Curtis, AAP Senior Political Writer
Australian Associated Press October 10, 201910:44am
Australia is worried Turkey's military incursion into Syria will lead to the resurgence of Islamic State.
Turkey has begun its attack on northeastern Syria, launching a large scale air strike and ground offensive against Kurdish targets in the region.
Prime Minister Scott Morrison has been in direct contact with the Turkish and United States governments overnight and on Thursday morning to express his "deep concern" about the actions.
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Buyer confidence at new lows as experts query RBA’s strategy
Consumer confidence has crashed to the lowest level in four years after a series of interest rate cuts by the Reserve Bank enacted to boost household spending, leading top economists to question the effectiveness of the policy.
Westpac’s closely watched monthly confidence barometer dropped 6 per cent over the month to October, dragged down by a sharply gloomier outlook among respondents about how the economy will be tracking in five years.
“Consumers are looking behind the reason for the rate cut and arguably the absolute level of rates and getting nervous,” said Westpac chief economist Bill Evans.
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Avoid the trap, brush up on ancient Greece
ANDREW HASTIE
For an Australian reader, Harvard professor Graham Allison’s insights in Destined for War can be rather provocative and unnerving.
Why? Because he examines the rivalry between the US and China through the lens of history and confronts us with the possibility of war, using an apt metaphor called the Thucydides Trap.
He poses this central question: can the political leadership of both countries overcome the historical structural stresses that have brought other great powers to war? Australians will find little comfort in the 16 case studies Allison presents, with 12 of them in the past 500 years resulting in war.
Nor do the long shadows cast by Thucydides’s penetrating study of the Peloponnesian War (431-404BC) give us much cause for optimism.
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Careful, Trump may betray you too
By giving Turkey the green light to attack Syrian Kurds, the US President has once again demonstrated his unreliability as an ally. Scott Morrison should pay heed.
Oct 10, 2019 — 7.00pm
Memories still burn from 1991 when president George H.W. Bush urged the Iraqi people to rise up against Saddam Hussein after US-led forces had driven Iraqi forces out of Kuwait and back behind their own border.
Implicit in Bush's call was that the US would be there to help. The Shiites in the south and the Kurds in the north rose up as encouraged and were duly slaughtered by Saddam's forces.
One cannot forget those images of families fleeing over the mountains in freezing weather and being attacked from the air.
The attacks only ended when the US belatedly enforced a no-fly zone, a step that also gave the Kurds a measure of autonomy in the north.
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Australia will miss Paris goals even with a $US75 a tonne carbon tax: IMF
By Shane Wright
October 11, 2019 — 12.30am
Australia would fail to meet its Paris Agreement commitments to cut greenhouse gas emissions even with a $US75 carbon tax that would drive up Australia's electricity prices by 75 per cent over the next decade.
Research by the International Monetary Fund, released on Friday, shows Australia is still so dependent on coal and other greenhouse gas-intensive energy sources that even direct intervention to address climate change won't be enough for the country to reach its international commitments.
The government has repeatedly said Australia will reach its Paris commitment to slice greenhouse emissions by between 26 and 28 per cent on 2005 levels by 2030, in a "canter".
Since the abolition of the carbon tax in 2014, Australia's greenhouse gas emissions have increased. Latest figures showed that in the 12 months to the end of March, Australia's emissions were up by 0.6 per cent.
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Firms that ignore social issues risk going out of business: IMF
By Shane Wright
October 11, 2019 — 12.30am
Environmental and social concerns are core issues for business, the International Monetary Fund has declared, saying firms that ignore them will face growing financial pressures that could sweep them away.
In a special report released on Thursday night, the IMF said firms that incorporated environmental, social and governance factors into their business models would be better placed to deal with growing risks from investors, regulators and competitors.
The Morrison government has chided big businesses for engaging in social issues, effectively telling them to focus on "core" issues such as productivity, tax and industrial relations.
But the IMF said it was clear that firms had to engage in social issues because they affected their bottom line.
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Government dispatches ambassador in Turkey to urge a halt to Syria invasion
By David Crowe
October 11, 2019 — 12.01am
The Morrison government has dispatched the Australian ambassador in Turkey to urge a halt to the Turkish invasion of northern Syria amid growing fears of a humanitarian catastrophe after the withdrawal of US forces.
Prime Minister Scott Morrison warned of the "deeply troubling" threat from the Turkish operation, in a message also conveyed directly to the Turkish ambassador in Canberra on Thursday.
Kurdish militia are making overtures toward Damascus and Moscow as Turkish jets pound their territory in Syria and the US withdraws. It marks a new chapter in the war’s tangle of alliances.
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Got an SMSF worth less than $500k? Think again, ASIC says
Oct 11, 2019 — 11.02am
The corporate regulator is urging people with self-managed superannuation funds with balances below $500,000 to rethink their decision to create their own fund.
The Australian Securities and Investments Commission said on Friday that too many investors were setting up self-managed funds in inappropriate circumstances.
ASIC cited a Productivity Commission finding that balances below $500,000 produced lower returns on average than industry and retail funds.
At about 100 hours a year, running a self-managed fund was also time-consuming, ASIC said in a statement which identifies eight "red flag situations" that make it "extremely unlikely for an investor to gain any advantage from using SMSFs to create and safeguard their intended retirement lifestyle".
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Global rule-makers don't always get it right
From rugby referees to the world's central banks, high-level experts are being blindsided by the trending of politics against them.
Oct 11, 2019 — 4.13pm
When Scott Morrison had a go at the bureaucracy of global organisations earlier this month, some people were wishing he had named the World Rugby Council and its progressive interpretations of a high tackle.
Australia's ambassador to the US, Joe Hockey, did, pinning a tweet that said: "Inconsistent and incomprehensible refereeing is killing rugby union. Decisions are a mystery to players and fans alike. Stop just stop."
Morrison's point, though, regardless of the language he used in his speech, was to highlight that some organisations such as the United Nations, which he didn't specifically name, have leaned more towards populist left agendas, not populist right agendas.
Given the wave of conservative leaders who have come to power around the world, maybe his point has some credence.
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More power and less carbon is the future
There is everything to invest in with a big carbon challenge. If only we could drop the tribal politics.
Oct 11, 2019 — 6.26pm
Renewable energy is growing faster than any fuel source in world history, climbing at a pace literally off the graph scale compared with the penetration of coal and oil that powered the wonders of the first industrial revolution. But for the world to reach its Paris targets, explained BP’s group chief economist Spencer Dale at The Australian Financial Review National Energy Summit this week, it will have to get generating like Australians have been doing, where our rooftop solar panel fleet has increased by nearly a third in just the last 16 months. But even with the fastest forecast transition, renewables will still be only 30 per cent of the global energy mix in 2040. Oil and gas will still make up around half of the supply if energy use is to grow fast enough to keep shifting hundreds of millions more people into a better life.
Fossil fuels are not going out of business soon. That’s an important perspective when British activists want to get Mr Dale’s employer shunned, dumping it from sponsoring the Royal Shakespeare Company as if it peddled illegal guns. The Extinction Rebellion campaigners who lay down on the pavement outside the Summit venue enjoy the bounty of industrial capitalism, organising their protests by iPhone even while they propose transition to the Stone Age with zero net emissions by 2025. Their own anti-capitalism has never advanced human progress an iota outside of fanciful theories: capitalism getting its comeuppance through nature’s revenge would suit them nicely. Yet history says we will adapt rather than make ourselves extinct, and it will be driven by dollars-and-cents enterprise when we do.
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For Labor, the end of the beginning is nigh
Right now, Labor barely has a unified philosophy, let alone a policy agenda.
Oct 11, 2019 — 12.59pm
For Labor, November 8 cannot come quickly enough. For that is the date when party luminaries Jay Weatherill and Craig Emerson are scheduled to hand in their report into why the May 18 election was lost.
Given the propensity for these things to leak, it is likely the report will be released quickly after it is handed to Anthony Albanese. (Minus the bits containing sensitive tactical information about the campaign that Labor will not want the Liberals to know.)
Otherwise, the report is likely to make three key findings as to why Labor lost: unpopular leader; terrible campaign; and a large, expensive and unwieldy policy agenda that left it too vulnerable to fear campaigns and scared off aspirational voters.
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Snowy offers pointers to a constructive power plot
Voters are losing perspective on just how weird it is that a country like Australia can be in such an energy muddle.
Oct 11, 2019 — 3.34pm
Federal Energy Minister Angus Taylor has strong connections to the Snowy Mountains Scheme, a visionary Australian energy-irrigation program that marks its 70th anniversary next Saturday. He’s a grandson of Sir William Hudson, who ran the Snowy for 18 years, and a native of Nimmitabel, a Snowy town near Cooma, NSW, in the hauntingly beautiful Monaro high plains.
Nimmitabel featured in the 1960 movie The Sundowners. Based on a Jon Cleary novel, The Sundowners starred Robert Mitchum (the great American noir actor, but this time in a sunny role), Deborah Kerr, Peter Ustinov and Chips Rafferty, and explored tensions within a nomadic sheep-shearing family.
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Dutton takes aim at Chinese Communist Party for hostile conduct
By Fergus Hunter
October 11, 2019 — 1.13pm
Home Affairs Minister Peter Dutton has taken aim at the Chinese Communist Party, accusing it of conduct "inconsistent" with Australian values and declaring the government would call out cyber attacks, theft of intellectual property and undue influence at universities.
Following a long period of tension between Beijing and Canberra, Mr Dutton praised the Chinese diaspora in Australia and said the two countries' economic relationship was important but he insisted publicly addressing hostile activities was the right thing to do.
"We have a very important trading relationship with China – incredibly important – but we are not going to allow university students to be unduly influenced, we are not going to allow theft of intellectual property, and we are not going to allow our government bodies or non-government bodies to be hacked into," he said on Friday.
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China issues furious response to Peter Dutton’s comments
China has issued a fiery response to Peter Dutton’s critical comments, saying his accusations harm the relationship between the two countries.
Katina Curtis, AAP, staff writers
China has issued a furious response to Peter Dutton’s public criticism of the Communist Party.
A statement released late on Friday by the Chinese embassy in Canberra condemned the Home Affairs minister’s suggestions of hacking and intellectual property theft as “malicious” and “irrational,” and said the comments had harmed Australia’s relationship with China.
“We categorically reject Mr. Dutton’s irrational accusations against China, which are shocking and baseless,” the statement read.
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How to train your dragon
Australia must accept our future will be tied to China and its role as the dominant nation in our region.
By Allan Gyngell
October 11, 2019
In April, Kiron Skinner, until recently head of policy planning in the US State Department and a successor to the legendary George F. Kennan, architect of America’s Cold War strategy of containment, described US relations with China as “a fight with a really different civilisation” and the “first time we will have a great power competitor that is not caucasian”.
Her critics, understandably, piled on. Had she forgotten whose aircraft attacked Pearl Harbor? What did race have to do with great power competition? Didn’t the Marxism-Leninism of the Chinese Communist Party emerge from Western roots?
But Skinner’s comments were a revealing acknowledgment by a senior US policymaker of how China’s distinctiveness is shaping Western responses to its rise. America has never faced a peer competitor such as this.
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Royal Commissions And The Like.
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Labor could target banks over competition: Jim Chalmers
Oct 6, 2019 — 2.16pm
Labor has opened the door to targeting the big four banks over their refusal to pass on the latest cut to official interest rates, including through increasing a $6 billion banking levy.
Shadow treasurer Jim Chalmers said the opposition would look at all options to help pass the Reserve Bank of Australia's latest cuts to interests rates down to consumers and increase competition in the sector, potentially increasing the Coalition's bank levy and giving approval to a new ACCC inquiry.
He said Labor should also look again at its election policy of a $160 million banking fairness fund, collected through an annual levy on the major banks.
"All of these options should be on the table," Mr Chalmers told Sky News.
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Big banks: Profiteers or victims of populism?
Oct 5, 2019 — 12.00am
Who'd trust the banks?
Not the Prime Minister, who this week accused the big four of "profiteering", pouring petrol onto a debate about whether an ultra-low interest rate environment will crimp big four profits and dividends and damage the economy.
On Friday, the Reserve Bank of Australia cast further doubt on the bank supporters' line, arguing that local banks would fare far better than their global peers in an environment where the cash rate is below 1 per cent.
The main message: don't worry, they're big enough and strong enough to handle it.
Meanwhile, big investors, perhaps hooked on the bank's dividends (the big four and Telstra account for about half of the total dividends paid by the sharemarket), took the opposite tack.
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Should bank shareholders take one for the team?
An interest rate cut has sparked predictable outrage as to whether the banks' actions are justified.
Oct 6, 2019 — 3.53pm
The players are different but the game is the same.
In late 2010 it was banking chiefs such as Gail Kelly and Ralph Norris that were taking serious heat from Treasurer Wayne Swan for lifting mortgage rates by almost double the 25 basis point hike.
Now almost a decade later an interest rate cut has triggered the same jostling, the same rhetoric about whether the banks are justified for not moving in tandem with the central bank.
When Kelly and Norris were being scolded, the cash rate was 4.75 per cent and mortgage rates were 7.4 per cent. Such a high setting is as unfathomable now as a 75 basis point rate would have been back then.
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Banks face heat on home loan gaps
Oct 6, 2019 — 6.43pm
A push to narrow the gap between mortgage rates offered to new borrowers and higher rates charged to loyal customers is shaping as a new threat to bank profits as the competition watchdog promises to target the issue and the government weighs a fresh inquiry into the banking sector.
The big four banks last week blamed falling profits from ultra-low interest rates for their decision to not pass on all of the Reserve Bank of Australia's quarter-percentage-point cash rate cut to home loan customers. The central bank cut the cash rate to a record low 0.75 per cent last week.
But profit margins could fall even further if banks are forced to offer existing customers as good a deal on their mortgage rates as the deeply discounted rates being used to entice new business, which are typically around half of a percentage point lower, analysts warn.
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said the gap suggested the banks were disrespecting their "loyal customers" and that the longer that a customer stayed with a bank "the more out of kilter it seems to become".
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Stoush heats up over mortgage broker best interest duty
By Clancy Yeates
October 7, 2019 — 12.00am
A coalition of consumer groups is urging the government to extend upcoming laws requiring mortgage brokers to act in the best interests of home loan borrowers to other products such as bank accounts and mortgage insurance.
In response to the banking royal commission, the government is consulting on laws that would see mortgage brokers risk $1.05 million fines if they fail to act in the interests of customers when recommending loans, a move that is tipped to lift competition in banking.
Brokers and consumer groups support the new duty in principle, but are at loggerheads over how broadly the duty should extend, and the size of penalties for breaching it.
Seven consumer groups including Choice and the Consumer Action Law Centre said in a joint submission to Treasury the exposure draft had a "loophole" because the best interests duty would not cover all products brokers sell.
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Banks know they have a mortgage pricing problem
Why do the banks still quote these average standard variable rates that look so high? Because they like the lack of transparency.
Oct 7, 2019 — 12.00pm
Anyone could be forgiven for forgetting it’s less than 12 months since the chief executive of a Big Four bank admitted it wasn’t sensible to offer new customers big discounts while failing to pass on the same offers to existing clients.
The royal commission’s final report, a blizzard of regulatory actions, rate cuts and now even claims of profiteering have all grabbed the attention in the interim.
But it was only on November 1 last year that former National Australia Bank chief executive Andrew Thorburn – remember him? – released the bank’s full-year results and promised to limit the use of aggressive discounts for new customers and instead focus on existing customers.
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There's more to bank profits debate than home loans
Stephen Bartholomeusz
Senior business columnist
October 8, 2019 — 12.00am
The Prime Minister says the major banks are "profiteering". The shadow treasurer is canvasing an increase in the major $6 billion bank "levy". The Australian Competition and Consumer Commission wants to hold yet another major inquiry into a sector that has experienced continual inquiry.
The latest round of bank-bashing was triggered by the banks’ decisions not to fully pass on last week’s 25 basis point cut to the Reserve Bank’s cash rate to their home loan rates.
The backlash is predictable. It happens every time the banks’ interest rate decisions diverge from changes to the cash rate.
That’s despite the fact the cash rate influences only some of the banks’ borrowing costs; that home loans are only an element, albeit a large one, of what banks do and that lending is only one dimension of banks’ two-dimensional balance sheets.
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Bankers stung by the extent of their unpopularity
It's symptomatic of the poor standing of the country's major lenders that the banking regulator is pushing ahead with its widely condemned bonus proposal.
Oct 11, 2019 — 12.00am
It's an indication of the big banks' low standing at present that it only took Treasurer Josh Frydenberg a matter of hours to slap down the idea of holding a summit to discuss the implications of ultra-low interest rates as a "distraction from the failure by the big banks".
On Thursday, ANZ boss Shayne Elliott backed the idea of gathering together representatives from the Treasury, the Reserve Bank, the main regulators, the big four banks and their smaller regional rivals to discuss how unorthodox monetary policies would impact bank lending.
But at a time when the big banks are going through a decidedly rough patch in their relationship with Canberra, even Elliott's fellow bankers were keen to distance themselves from the idea of a summit, describing it as "bizarre" and "probably not very helpful".
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https://www.afr.com/companies/financial-services/amp-super-tops-list-of-dud-products-20191010-p52ze5
AMP super tops list of dud products
Oct 10, 2019 — 11.38am
Financial services company AMP has been named ‘the worst of the worst’ in a list of companies and products that take advantage of consumers by a leading consumer advocacy group.
Choice CEO Alan Kirkland called out the actions of AMP as the most egregious in a group of six winners from the magazine’s annual ‘Shonky awards’.
“Of the awards we are handing out today, I would put AMP at the top of the list” Mr Kirkland said.
Choice magazine also slammed providers of private health and pet insurance, naming Medibank’s Basic Accident and Ambulance Cover policy as a “basic rip off” and the entire suite of pet insurance products available as “worthless”.
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Aged-care homes ‘fail on staffing’
More than half of all Australian aged-care residents are in homes with staffing levels that would be rated one or two stars under a five-star US rating system, research shows, a level considered by researchers as unacceptable.
The study, commissioned by the Aged Care Royal Commission and published on Friday, also shows just 1.3 per cent of aged-care residents in Australia have staffing levels considered best practice.
Improving staffing to acceptable levels would require a 20 per cent increase in the aged-care workforce, which in 2016 stood at 98,000 people, the study shows.
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National Budget Issues.
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Get ready for low rates for a long time, say world's central bankers
By Shane Wright
October 8, 2019 — 5.30am
Interest rates will stay lower for longer and force institutions like the Reserve Bank of Australia into more "unconventional" policy to boost economies, a special global report into the response of central banks to the global financial crisis has found.
Compiled by the Bank for International Settlements (BIS) and overseen by RBA governor Philip Lowe, the report also calls on governments to do more to help strengthen their economies instead of relying on central banks deploying unorthodox measures more often.
The BIS, known as the central bank to the world's central banks, has been growing increasingly concerned about the state of the global economy.
Its research into unconventional monetary policies such as negative interest rates and the creation of money to buy government bonds that were used in the aftermath of the global financial crisis follows criticism in some economic circles about their unintended consequences.
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Shaking consumers out of their inertia is proving difficult to overcome
Elizabeth Knight
Business columnist
October 7, 2019 — 7.00pm
Another month, another set of underwhelming retail sales numbers.
This should be setting off alarm bells for the Reserve Bank which was hoping the estimated $16.6 billion stimulus provided by two sets of tax cuts and now three interest rate cuts would provide a big boost to consumer spending.
There was some evidence of purse string-easing in August but it didn’t come close to matching the hype.
The 0.4 per cent seasonally adjusted rise in August retail sales was better than July’s flat result - but August still came in below economist expectations.
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’Knee-jerk’ power policy scaring investors
Aussie households continue struggle with soaring power prices. Now, experts have pointed the finger at exactly who’s to blame for costly bills.
Knee-jerk government intervention in Australia’s energy market has pushed up power prices and is hurting investment in the sector, a think tank says.
The national energy market will need about $400 billion in new power-generating infrastructure over the next three decades, the Grattan Institute said in a report released today.
But policies such as the federal government’s touted “big stick” power legislation, which would allow it to break up energy monopolies, are hurting investment.
“Recent and current government actions imperil the success of Australia’s great energy transition,” the report says.
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Job ads stabilise after Aug decline: ANZ
· Australian Associated Press
A decline in new newspaper and internet job ads stabilised in September but ANZ researchers say a small monthly rise is not necessarily a sign the labour market has reached a turning point.
The 0.3 per cent seasonally adjusted rise for September followed a decline of 2.8 per cent in August, the bank's researchers said on Tuesday.
The total number of ads during the month - 156,638 - was a slide of 10.4 per cent compared with September 2018.
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QE would kill finance and capitalism, McKibbin warns
Oct 9, 2019 — 12.00am
Former Reserve Bank of Australia board member Warwick McKibbin has warned that ultra-low interest rates and unconventional monetary policy will wreck the financial system's allocation of capital and undermine capitalism.
Professor McKibbin said local banks and insurers would be among the firms hurt by the Reserve Bank of Australia's cash rate fall to 0.75 per cent and a potential future RBA move to buy government bonds, known as "quantitative easing".
He was speaking after a Bank for International Settlements report chaired by RBA governor Philip Lowe broadly endorsed the efficacy of crisis-era central bank tools, such as buying financial assets and negative interest rates to protect world economies from recession since the 2008 global financial crisis.
Signing off on the BIS report, Dr Lowe said QE policies must be complemented by government fiscal support, structural reform and actions by prudential regulators.
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Memo Scott and Josh: why surpluses aren't necessarily good, or deficits bad
Ross Gittins
Economics Editor
October 12, 2019 — 12.00am
According to the Essential opinion poll, only 6 per cent of people regard the size of the national surplus as the most important indicator of the state of the economy. I think that’s good news, but I’m not certain because I’m not sure what “the national surplus” is – or what the respondents to the poll took it to mean.
They probably thought it referred to the balance on the federal government’s budget. But the federal budget is not yet back to surplus and, in any case, it can’t be the national surplus because it takes no account of the budgets of the state governments that, with the feds, make up the nation.
Assuming respondents took it to be the federal budget balance, its low score is good news about the public’s economic literacy, but bad news for Scott Morrison and Josh Frydenberg, who are hoping to make a huge political killing when, in September next year, they expect to announce the budget finally is back in surplus.
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Health Issues.
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High healthcare costs suggest review is needed: report
Australia’s high out-of-pocket expenses on medical procedures and health cost growth suggest a review of the system is needed, according to a new report which calls for risk-adjusted rebates for health insurance.
The report by the Actuaries Institute, which compares Australia and other developed countries, finds possibilities for better integration between private and public health care.
The report examined health systems in 12 comparable countries, where Australia rates second in overall performance rankings, after the UK and ahead of the Netherlands.
It states out-of-pocket costs for healthcare are high in Australia, at about 17 per cent of total national healthcare costs.
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Call for government to help pay sick Australians' health insurance premiums
By Dana McCauley
October 8, 2019 — 5.59pm
Medibank Private's chief actuary Andrew Matthews has called for the federal government to subsidise older and sicker Australians' health insurance and let funds adjust their premiums based on risk, to reverse the decline in membership that has been described as a "death spiral".
Mr Matthews said a relaxation of the rules that prevent insurers from charging higher premiums to those with chronic health conditions – with the government to help fund the difference – would entice the young and healthy with cheaper premiums and increase access to services.
Private patients in New South Wales public hospitals could be hit with extra out-of-pocket expenses.
"As a country, we want great health outcomes with efficient costs," he said.
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Bid to blame doctors for illegal Medicare billing
Public hospitals will be audited to determine the extent of illegal Medicare billing — which some have estimated at more than $300m a year — and the states want individual doctors to take the blame.
Documents obtained under Freedom of Information laws reveal state and territory governments have finally allowed crucial data to be analysed by the commonwealth, with initial findings expected by mid-2020.
Hospitals are primarily funded under a state-commonwealth agreement but there have long been concerns over cost-shifting. For the past five years, two commonwealth funding agencies have sought to determine the extent of so-called “duplicate payments”, where hospitals use Medicare to pay for services that should be covered under their budgets.
The federal Department of Health recently engaged Ernst & Young to determine how it should account for such transactions.
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Scientists designed a drug for just one patient. Her name is Mila
By Gina Kolata
October 11, 2019 — 7.05am
A new drug, created to treat just one patient, has pushed the bounds of personalised medicine and has raised unexplored regulatory and ethical questions, scientists say.
The drug, described in the New England Journal of Medicine, is believed to be the first "custom" treatment for a genetic disease. It is called milasen, named after the only patient who will ever take it: Mila Makovec, who lives with her mother, Julia Vitarello, in Longmont, Colorado.
Mila, 8, has a rapidly progressing neurological disorder that is fatal. Her symptoms started at the age of three. Within a few years, she had gone from an agile, talkative child to one who was blind and unable to stand or hold up her head. She needed a feeding tube and experienced up to 30 seizures a day, each lasting one or two minutes.
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Hospital funding overhaul flagged
A potential overhaul of state and federal funding of hospitals could result in the dumping of the 25-year-old system that pays hospitals according to the number of services they deliver amid concerns about a blowout in unnecessary procedures.
Josh Frydenberg will ask state treasurers on Friday to consider a Productivity Commission proposal to ensure governments pay for high-quality healthcare, not just for the services delivered.
The Treasurer will also ask his counterparts to collaborate on road taxes for trucks, visas for skilled workers, environmental approvals and so-called green tape development blockages and other issues raised by the Productivity Commission in its landmark Shifting The Dial reform proposal.
A forum on population strategies will be convened with the president of the Australian Local Government Association, David O’Loughlin, Cities Minister Alan Tudge and Immigration Minister David Coleman. The forum is aimed at thrashing out a population planning framework.
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Blood, sweat and tears: how CSL went from ‘terrible’ to terrific over 25 years
12:00AM October 12, 2019
Biotech CSL’s future was in doubt when it listed on the market 25 years ago but the “quiet Australian” silenced its doubters to become a $110bn global company, amassing small fortunes for local investors.
The company will mark 25 years since listing on Monday, when its remarkable success will be recognised. It debuted on the Australian Securities Exchange at a price of $2.30, and while many questioned its future, its young chief executive Brian McNamee was prepared to have a crack.
His global growth strategy has seen it become a $244 stock, making it the second-largest publicly listed company in Australia. (This does not include BHP’s London-listed shares.)
Dr McNamee, who is now chairman of CSL, says a lot of “very decent” people who put their money in CSL, probably not understanding what it did, had been well rewarded. A $1000 investment at listing would be worth $483,591 today.
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Will there be blood? Medical companies can't find it fast enough
When unemployment falls, the cost of blood goes up. That's just one of the quirks working in the world's $US30 billion a year plasma industry.
By Patrick Hatch
October 12, 2019 — 12.00am
As the United States unemployment rate fell to multi-decade lows in the past year there was an unexpected side effect for the manufacturers of some life-changing medical treatments.
The cost of collecting blood went up.
That's just one quirks of the world’s $US 30 billion (44 billion) a year plasma industry, which is scrambling to find enough of the precious raw material that is the lifeblood of their business.
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Alcohol lobby campaigns against Australia's 'harsh' drinking guidelines
By Dana McCauley
October 12, 2019 — 12.01am
The alcohol industry is pushing for new Australian guidelines for alcohol consumption to take into account the "positive health benefits" of drinking, and consider raising the consumption level officially considered low-risk.
In a submission to a review of the guidelines by the National Health and Medical Research Council, Alcohol Beverages Australia claims the health benefits of drinking alcohol include "a reduction in the risk of development of heart disease, reduced risk of stroke and reduced risk of diabetes".
Public health advocates have disputed the independence and methodology of the scientific evidence presented and say softening of the guidelines would put Australians at risk, but fear the alcohol lobby's submission will influence the final recommendations approved by Health Minister Greg Hunt.
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Species membership should not carry instant right to life
PETER SINGER
On one issue, Greg Sheridan and I are in full agreement: every society should allow, and indeed encourage, full and frank discussion of controversial ideas, even if some people find them offensive.
That doesn’t mean that laws against hate speech or racial vilification have no place, but it does mean that their interpretation should not be so broad as to prevent people putting forward whatever ideas they wish, provided they do so in a form that seeks not to stir up hatred or malice but to appeal to our reason and our capacity to assess evidence. The proper response to a reasoned case for a conclusion to which we object is to expose the flaws in the argument or the evidence. It is not to abuse, threaten, “de-platform” or seek to intimidate the person putting forward that case.
Where Sheridan and I disagree is on the ethics of abortion. We disagree even on what it is that people who take different views on abortion are disagreeing about. Sheridan, in his piece “Debate that has the right to life”, which appeared in Inquirer last weekend and in which I am quoted at length, says that the key questions are “What is a human being? Who is a human being? When is a human being?” That’s a mistake, even if it is one that many people make.
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International Issues.
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Touch of Evil
Donald Trump drags us down to Chinatown.
By Maureen Dowd
Opinion Columnist
WASHINGTON — Forget it, America. It’s Chinatown.
Washington, once the guarantor of American values, is a crime scene. This capital of white marble is now encircled by yellow tape, rife with mendacity, cowardice and corruption. It’s Chinatown on the Potomac.
Robert Towne, the screenwriter of the 1974 classic “Chinatown,” wrote the movie as a eulogy to great things that were lost. He said that he was not conjuring a place on a map but a state of mind: the futility of good intentions.
Or, as Raymond Chandler, the premier chronicler of Los Angeles noir, once wrote: “We still have dreams, but we know now that most of them will come to nothing. And we also most fortunately know that it really doesn’t matter.”
“Chinatown” was set in 1937, right before the war. Like Jack Nicholson’s Jake Gittes, America was naïve about the forces of real corruption, real evil.
Towne wrote the movie in the early ’70s, in the dark years of Vietnam, Watergate and Richard Nixon’s doomed second term. Roman Polanski directed it a few years after his pregnant wife, Sharon Tate, was butchered by the Manson family.
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Second Trump whistleblower speaks with watchdog about Ukraine dealings
October 7, 2019 — 4.48am
Washington: A second whistleblower has spoken to the intelligence community's internal watchdog about US President Donald Trump's dealings with Ukraine.
Mark Zaid, an attorney who repesents both whistleblowers, on Sunday said that the second whistleblower, who also works in intelligence, had not yet filed a complaint with the inspector-general but had "first-hand knowledge" that supported the original complaint.
The first whistleblower, a CIA officer, filed a formal complaint with the inspector-general on August 12 that triggered the impeachment inquiry being led by House Democrats. The complaint alleged Trump was "using the power of his office to solicit interference from a foreign country" in the 2020 election.
The disclosure of a second whistleblower threatens to undermine arguments made by Trump and his allies against the first whistleblower: that the complaint was improperly filed because it was based on second-hand or third-hand information.
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Hong Kong's use of emergency law sparks warning from Payne
By Eryk Bagshaw
October 6, 2019 — 11.30pm
Foreign Minister Marise Payne has warned Hong Kong's government it "risks inflaming a delicate and sensitive situation" by using emergency laws for the first time in 50 years as thousands of protesters defy orders and return to the streets.
Delivering her strongest comments to date on the deteriorating situation in the Chinese territory, Senator Payne said"the invoking of emergency laws in Hong Kong with the prospect of further action" was "very concerning to Australia".
The intervention from Australia's top diplomat in the domestic affairs of another state marks a rising concern within the Morrison government that the situation is likely to deteriorate further, putting lives at risk in a city that is home to more than 100,000 Australians and destabilising the region.
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Chinese military warns Hong Kong protesters as they defy emergency law
By Kirsty Needham
October 7, 2019 — 9.06am
The Chinese military warned Hong Kong protesters from atop a People's Liberation Army barracks on Sunday, the first time it has become involved in the city's crisis.
After tens of thousands of protesters took to the streets in defiance at an emergency law banning face masks, a yellow flag warning protesters could face prosecution was unfurled from the roof of the PLA barracks at Kowloon Tong.
It was written in English and the "simplified Chinese" used on the mainland but not in Hong Kong.
Men in riot helmets and military fatigues also shone a spotlight down on the street where some protesters were shining laser pens at the building as they walked past.
One of the men reportedly shouted at the protesters in Cantonese, which is also spoken in the closest mainland city of Shenzhen.
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North Korea breaks off nuclear talks with US in Sweden
By Jari Tanner
October 6, 2019 — 9.38am
Stockholm: Nuclear talks between the US and North Korea have broken down after only eight hours, North Korea's chief negotiator confirmed, despite Washington's insistence that the two sides had "good discussions" in Sweden that it intends to build on within a fortnight.
The North Korean negotiator, Kim Myong Gil, said the talks in Stockholm on Saturday had "not fulfilled our expectations and broke down. I am very displeased about it".
Speaking outside the North Korean Embassy, he said that negotiations broke down "entirely because the US has not discarded its old stance and attitude" and came to the negotiating table with an "empty hand".
An envoy from North Korea says the US brought nothing to table.
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Recession fears are seeping into Wall Street
By John Authers
October 7, 2019 — 9.28am
Last week brought lots of bad news about the American economy. The stock market treated each new data point suggesting that activity was slowing down as bad news. And that, in itself, is bad news.
Here's why: Grim tidings for the economy aren't necessarily so bad for investors, because they tend to lead to lower interest rates. That, in turn, makes it cheaper to invest and justifies paying a higher multiple for stocks. Growth that is too strong can mean higher rates, and that's a problem. Hence equity investors yearn for "a Goldilocks economy" – one that is neither too hot nor too cold.
So it makes sense that bad news about the economy is often treated as good news for the markets. But that changes when investors truly fear a recession. In that situation, central banks will make money much cheaper, but that doesn't counteract the damage to stocks and bonds inflicted by the economy. With bad news plainly treated as bad news, the stockmarket has reached the point where fear of a recession is its greatest concern.
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The decline of US global leadership: Power without authority
It is breathtaking just how quickly Donald Trump’s recklessness has eroded the US position in the world.
The US House of Representatives’ inquiry into grounds for impeaching Donald Trump is yet another indication of the massive erosion of the President’s domestic authority. His authority as an international leader has similarly declined, not as a result of challenges by other international leaders but as a consequence of the President’s commentary and actions.
For power to enjoy legitimacy, authority is a necessary concomitant. The alignment of political authority with economic and military power enabled the pax Romana to endure for more than two centuries. It took more than 1300 years following the death of Marcus Aurelius in 180CE for Rome’s political authority to dissipate and for the eastern empire finally to fall.
As a large, rich, and massively armed power, but one that has forfeited its authority, the US risks locking itself into a three-way struggle with China and Russia that no one can win but everyone, including the allies and friends of the US, can lose.
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Future under Beijing’s yoke hangs over young
“Every parent in Hong Kong can tell you how old their kids will be in 2047,” a long-time Australian expatriate in Hong Kong told me last week.
That is the date when Hong Kong will officially return to full Chinese sovereignty, 50 years after the handover from the British in 1997.
It seemed like an eternity back in 1997, but with China defying all Western predictions at the time that it would liberalise its political situation by 2047, it does not seem so far away now.
While most people in the world hope for a better life for their kids, the prospect of 2047 now hangs over Hong Kong’s young people, who have known only traditional Western freedoms, like a looming cloud.
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White House: Turkey to invade northern Syria
Updated October 7, 2019 — 3.14pmfirst published at 3.02pm
Washington: The White House has said that Turkey will soon invade northern Syria, renewing fears of a slaughter of Kurdish fighters allied with the US in a yearslong campaign against the Islamic State group.
For months, Turkish President Recep Tayyip Erdogan has been threatening to launch a military assault on the Kurdish forces in Northern Syria, many of whom his government considers terrorists. The Kurdish forces bore the brunt of the US-led campaign against Islamic State militants, and Republicans and Democrats have warned that allowing the Turkish attack would send a troubling message to American allies across the globe.
US troops "will not support or be involved in the operation" and "will no longer be in the immediate area," in northern Syria, White House press secretary Stephanie Grisham said in an unusual late-Sunday statement that was silent on the fate of the Kurds.
It was not clear whether that meant the US would be withdrawing its 1000 or so troops completely from northern Syria.
The announcement came after a call between President Donald Trump and Erdogan, the White House said.
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A catastrophic mistake': Republicans blast Trump's Syria withdrawal
By Matthew Knott
October 8, 2019 — 5.43am
New York: US President Donald Trump, facing intense criticism from Republican allies over his decision to pull American troops out of northern Syria, has vowed to "totally destroy and obliterate" Turkey's economy if the country behaves badly in the region.
Senior Republicans lashed out at Trump's decision to allow Turkey to invade north-eastern Syria, saying it could expose Kurds in the area to ethnic cleansing and make America more vulnerable to a September 11-style terrorist attack.
In a tweet, the US President has threatened to obliterate Turkey's economy if it invades northern Syria. US troops are being withdrawn from the region in anticipation of the invasion.
The Trump administration announced the troop withdrawal in a late-night press release on Sunday local time (Monday AEDT), catching Washington's foreign policy community by surprise.
The area includes a camp that houses more than 70,000 people, including 20 Australian women and 46 children.
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EU, too, needs to flex its muscles under the new world order
The EU once dreamt the whole world would move towards a law-based system, but a world order, shaped by Xi Jinping’s China and Trump’s America, will be based on power rather than rules.
Updated Oct 8, 2019 — 10.06am, first published at 10.03am
In Britain and the US, the idea that the EU could aspire to be a superpower is usually treated as either ludicrous or sinister.
So when Guy Verhofstadt, a prominent member of the European Parliament, recently made the case for the EU to be part of an emerging “world order that is based on empires”, there was a predictable backlash.
At the Conservative party conference a few days ago, his words, taken from a speech to their anti-Brexit enemies the Liberal Democrats, were cited as evidence of the dangerous imperial ambitions of the EU – and proof that leaving the bloc is the UK’s only safe option.
Mr Verhofstadt can be arrogant. But, in this case, he also happens to be right. The rise of China and India, and the America First policies of Donald Trump’s US, makes it more important than ever that European countries defend their interests collectively.
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What Boris Johnson and Joseph Goebbels have in common
Updated Oct 9, 2019 — 10.50am, first published at 10.01am
In 1933, Joseph Goebbels stated that “The modern structure of the German State is a higher form of democracy in which, by virtue of the people’s mandate, the government is exercised authoritatively while there is no possibility for parliamentary interference, to obliterate and render ineffective the execution of the nation’s will.”
It is a measure of how far the UK has fallen that Boris Johnson, the prime minister, often sounds rather like this.
Mr Johnson sought to prevent “parliamentary interference” in Brexit negotiations, by proroguing (or suspending) it for five crucial weeks. He dissented from the Supreme Court’s unanimous decision that this was unlawful.
He has suggested he could ignore the Benn Act requiring him to seek an extension to the Article 50 deadline, should he not achieve a deal. He condemned this legislation as the “surrender act”. Worst of all, he plans to frame the next election as a battle of “people versus parliament”.
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Turkey ready to launch assault on Kurdish troops ‘at any moment’
Turkish president Recep Tayyip Erdogan says Ankara is ready to launch a military assault against Kurdish troops in Syria “at any moment,” after Donald Trump announced the withdrawal of US troops from the region.
As American forces began pulling out of the country’s war-ravaged northeast, Mr Erdogan told reporters: “We have made a decision. We said ‘one night we could come suddenly.’ We continue our determination.”
Syrian state media reported on Tuesday morning that Turkish forces had already begun bombing Kurdish positions on the border but this was denied by a White House official.
Mr Trump’s decision to withdraw troops has come under attack by even his strongest Republican allies, who warn it could result in the “slaughter of allies.”
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China bonds drive a 'tectonic' shift in global markets
Oct 8, 2019 — 3.54pm
The emergence of China's bond market as a challenger to the US will require sovereign wealth funds, central banks and large pension funds to radically rethink their asset allocation, says UBS Asset Management's Asia Pacific head of fixed interest.
Hayden Briscoe said the phased inclusion of China's bonds into closely watched fixed income benchmarks was a "tectonic shift", coinciding with the rise of the People's Bank of China as a powerful influence in driving the tempo of the global economic cycle.
China has the second largest bond market in the world and its inclusion in the Bloomberg Barclays Global Aggregate Bond Index – which started with a 6 per cent weighting in April – will compel global investors to include more Chinese fixed income in their portfolios.
"This is going to be the single largest change in capital markets in anyone's lifetime. There has never been a bond market this large in the history of the world that wasn't included in the global indexes," Mr Briscoe said.
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World economy in 'synchronised slowdown': IMF boss
Oct 9, 2019 — 4.50am
The world economy is moving in sync, "unfortunately, this time growth is decelerating", said Kristalina Georgieva in her inaugural speech as managing director of the International Monetary Fund.
In contrast with two years ago when nearly 75 per cent of the world, measured by GDP, was accelerating, more than 90 per cent of the world is expected to record slower growth this calendar year, Dr Georgieva said.
"This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade," she also said.
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Trump declares it in writing: he won't co-operate in impeachment probe
By Zeke Miller
October 9, 2019 — 9.03am
Washington: The White House declared on Tuesday it will not co-operate with what it termed an "illegitimate" impeachment probe by House Democrats, setting up a constitutional clash between President Donald Trump and Congress.
Trump attorneys sent a letter to House leaders bluntly stating their refusal to participate in the quickly moving impeachment investigation.
The Trump administration blocked an ambassador from testifying to the US House of Representatives’ impeachment investigation of President Donald Trump’s dealings with Ukraine, a move top House Democrats vowed to counter with a subpoena.
The letter threatens to cease co-operation with Capitol Hill on key oversight matters, accusing lawmakers of formulating their probe "in a manner that violates fundamental fairness and constitutionally mandated due process".
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Abandoning the Kurds confirms Asia's view that US power is waning
By Bob Carr
October 9, 2019 — 12.00am
The Syrian Kurds were more than allies. They were a US client, recruited by the Obama administration for house-to-house combat against the Islamic State caliphate. This America, however, cares little for core relationships and sweeps them aside. The decision shatters the US reputation in Arab states already doubting the reliability of Trump’s pro-Sunni gestures.
But this abandonment of a good friend will not go unnoticed in Asia.
In a tweet, the US President has threatened to obliterate Turkey's economy if it invades northern Syria. US troops are being withdrawn from the region in anticipation of the invasion.
Last year, a retired US diplomat was talking to Indian Prime Minister Narendra Modi. He explored Indian support for the Quadrilateral, a consultative mechanism linking that nation, the US, Japan and Australia. “I will put something into the quad when you do,” Modi said. Meanwhile, he added, he was off to his Wuhan summit with Chinese President Xi Jinping.
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Federal Reserve policymakers increasingly divided on way ahead
Lindsay Dunsmuir and Jason Lange
Oct 10, 2019 — 5.35am
Washington | Most Federal Reserve policymakers supported the need for an interest rate cut in September, minutes of the central bank's last policy meeting showed, but they remain increasingly divided on the path ahead for monetary policy.
The readout of the meeting, released on Wednesday (Thursday AEDT), also showed that the Fed agreed it would soon need to discuss whether to increase the size of its balance sheet following ructions in short-term money markets.
Fed policymakers at the September 17-18 meeting decided, in a 7-3 vote, to lower the benchmark overnight lending rate by a quarter percentage point to between 1.75 per cent and 2 per cent.
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Warren presidency, tech stock repricing ahead: Saxo
Oct 10, 2019 — 4.46am
Steen Jakobsen - who predicted both Donald Trump's move into the White House and the UK's vote to leave the EU - sees Elizabeth Warren winning the 2020 US presidential election.
"It’s a provoking headline, I know – but it’s my projection for the US 2020 election (for now)," Mr Jakobsen said in a blog post. "Not an endorsement but a prediction based on prevailing facts."
The Saxo Bank chief economist's bet is based on a simple assumption: elections are lost far more than they are won.
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Turkey launches offensive against US-allied Kurdish forces
El Deeb, Suzan Fraser, Mehmet Guzel, Nasser Karimi and Nataliya Vasilyeva
Oct 10, 2019 — 8.55am
Akcakale, Turkey | Turkey launched airstrikes, fired artillery and began a ground offensive against Kurdish fighters in northern Syria on Wednesday after US troops pulled back from the area, paving the way for an assault on forces that have long been allied with the United States.
Turkish President Recep Tayyip Erdogan announced the start of the campaign, which followed an abrupt decision on Sunday by President Donald Trump that American troops would step aside to allow for the operation.
Turkey has launched a military operation against Kurdish fighters in north-eastern Syria after US forces pulled back from the area.
Trump's move drew bipartisan opposition at home and represented a shift in US policy that essentially abandoned the Syrian Kurdish fighters who have been America's only allies in Syria fighting the Islamic State group. After Erdogan announced the offensive, Trump called the operation "a bad idea."
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Warren to remake capitalism
US Democrats don’t normally want to tinker with the heart of capitalism. Not Elizabeth Warren.
By Grep Ip
· From Dow Jones
October 10, 2019
For the past generation, Democratic presidential candidates have mostly talked of redistributing the rewards of American capitalism while leaving its basic structure intact.
Elizabeth Warren promises to break that mould. The Massachusetts senator, who has moved to the front ranks of the field, talks of remaking capitalism from the ground up. As president, she would drastically cut back the size and influence of big business, push private companies from parts of the economy altogether, and shift power to government and to labour.
Businesses are meeting the rising prospect of a Warren presidency with a combination of concern, scepticism and, for a few, a sense of opportunity.
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As Turkish bombardment begins, Kurdish families flee
Turkey has begun its assault on northern Syria with bombardments and troop movements, and in response we see again the signature song of Syria — women and children in refugee convoys, not knowing where they’re going, or why, just knowing that once more they must flee.
Probably the recent relative stability in Syria was never sustainable. Now, in any event, everything is going to be thrown in the air again in the most violent country in the world.
Donald Trump says he did not give Turkey’s Recep Tayep Erdogan a green light to invade northern Syria, and the assault is a “bad idea”. However, he did tell Erdogan the US would get out of the way and not impede his operation.
Many of Trump’s most impetuous actions come after telephone calls or meetings with strongmen whom he thinks he can do a deal with. Trump seems to share with Barack Obama the presidential delusion that the force of his personality, the chemistry he establishes with leaders, can change geo-strategic facts on the ground and the interests-based decisions of national leaders. It can’t.
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Australia to finalise joint strategy with US on rare earths mining
Australia and the US will finalise a joint strategy on rare earths and critical minerals within weeks, as the Morrison government commits to directly back new mines across the nation.
Resources Minister Matt Canavan, who will travel to the US next month, said the federal government would provide “support” in facilitating new mining operations and backed a push by US Commerce Secretary Wilbur Ross to work closely with Japan and South Korea.
Senator Canavan said it would be difficult for commercial players to set up new mines in a “concentrated market” and flagged the need for “joint co-operation among governments” to deliver new projects and combat China’s dominance in rare earths production.
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US, China announce trade war breakthrough, sending stocks soaring
By Matthew Knott
October 12, 2019 — 8.00am
New York: US President Donald Trump has announced "phase one" of a new trade deal with China, the first breakthrough in negotiations since the superpowers launched their trade war 18 months ago.
The agreement has raised hopes the countries will reach a final, more significant, deal in coming months, sending share markets soaring.
The partial deal, announced on Friday local time (Saturday AEDT), followed meetings in Washington between Trump and Chinese Vice Premier Liu He.
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Brexit deal in sight as negotiators start to thrash out details
Ian Wishart
Oct 12, 2019 — 6.40am
London | The UK and European Union signaled a Brexit deal is in sight, with negotiators heading into three days of intensive talks in Brussels.
On Friday, EU officials said that British Prime Minister Boris Johnson had indicated he was prepared to make sufficient concessions to allow detailed talks to begin. Teams from both sides will work over the weekend to explore whether they can arrive at the basis of an accord ahead of a summit of EU leaders that begins Thursday.
The pound posted its biggest two-day gain in a decade, while UK bank stocks soared -- but both sides cautioned that much work remains to be done if Britain is to leave the EU by Mr Johnson's October 31 deadline.
At issue are Mr Johnson's plans to take Northern Ireland out of Europe's customs union and give Stormont, its power-sharing assembly, a veto over the arrangement. The first would trigger the return of checks on goods crossing the border, something Dublin and the EU are opposed to, while the second would hand the Democratic Unionist Party an effective veto over the deal, something unacceptable south of the border.
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Luckily, Trump Is an Unstable Non-Genius
His mental deficiencies may save American democracy.
By Paul Krugman
Opinion Columnist
· Oct. 10, 2019
The surprising thing about the constitutional crisis we’re now facing is that it took so long to happen. It was obvious from early on that the president of the United States is a would-be autocrat who accepts no limits on his power and considers criticism a form of treason, and he is backed by a party that has denied the legitimacy of its opposition for many years. Something like this moment was inevitable.
What still hangs in the balance is the outcome. And if democracy survives — which is by no means certain — it will largely be thanks to one unpredictable piece of good luck: Donald Trump’s mental deficiency.
I don’t mean that Trump is stupid; a stupid man couldn’t have managed to defraud so many people over so many years. Nor do I mean that he’s crazy, although his speeches and tweets (“my great and unmatched wisdom”; the Kurds weren’t there on D-Day) keep sounding loonier.
He is, however, lazy, utterly incurious and too insecure to listen to advice or ever admit to a mistake. And given that he is in fact what he accuses others of being — an enemy of the people — we should be thankful for his flaws.
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Trump defends Giuliani amid reports of federal investigation
October 13, 2019 — 4.03am
Washington: US President Donald Trump has defended his lawyer Rudy Giuliani as a "legendary crime buster" and "wonderful lawyer" after a media report that prosecutors are investigating whether the former New York mayor broke lobbying laws in his dealings in Ukraine.
"So now they are after the legendary 'crime buster' and greatest Mayor in the history of NYC, Rudy Giuliani," Trump said in a statement on Twitter.
US prosecutors charged two foreign-born businessmen who have been helping President Donald Trump’s personal lawyer investigate political rival Joe Biden with charges of funnelling foreign money to US political candidates.
"He may seem a little rough around the edges sometimes, but he is also a great guy and wonderful lawyer. Such a one sided Witch Hunt going on in USA. Deep State. Shameful!" he tweeted on Saturday.
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Trump and China have a 'deal', but the world economy is still at risk
By Neil Irwin
October 12, 2019 — 11.27am
Financial markets are downright exuberant about the arrival of some trade peace — at least for now — between the United States and China.
President Donald Trump boasted Friday afternoon of a "substantial phase one deal," including Chinese purchases of US agricultural products and an accord on currency policy. The United States is also holding off on tariffs that were to go into effect next week. Over the past few days, the expectation of such a "mini-deal" between the two superpowers drove stocks up and helped ease recession fears.
There's no question that this is good near-term news for the economy and the markets. But anybody who has followed the ups and downs of trade policy in the past two years — or who understands the actual ways that the trade wars are affecting the economy — won't be nearly as optimistic as the president's words suggest are warranted.
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I look forward to comments on all this!
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David.
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