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In Australia, with Parliament to return in the next week or so, we have the Sen. Bridget McKenzie saga and the bushfires competing for top billing. For what it is worth both are pretty awful and distressing in their own ways. Sadly anything hopeful and uplifting seems to be drowning with ongoing rancour regarding our national treatment and recognition of our ‘first peoples’.
It is also hard to believe Australia is going to escape a recession with tourism stuffed by the coronavirus and bushfires and the economic damage we are seeing internally with the fires and national morale. We are in deep dodo I believe.
In the UK Boris has finally signed the EU withdrawal agreement and the UK will now leave at the end of the year.
In the US Trump is attending anti-abortion rallies, hating that Mike Bloomberg has so much money to use to advertise against him and defending impeachment! Busy man!
In all countries we are now being overwhelmed with news about the spread of the corona virus and its implication for the whole world both health wise and economically. Where this all goes is very hard to know from here.
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Major Issues.
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Why McKenzie must resign or be sacked
The nation will laugh the next time the PM attacks the integrity of unions or banks unless Bridget McKenzie is sacked for putting politics first.
Jan 20, 2020 — 12.00am
Senator Bridget McKenzie’s brazen indifference to the findings of the Australian National Audit Office report on her administration of a now infamous sports grant scheme tells us all we need to know about the quality of political leadership in this country.
Showing how ethically bereft our governments have become, the former minister of sport, who now holds the agriculture portfolio, has defended her conduct by invoking two of the worst arguments available: that "no rules were broken" and that "the ends justify the means".
The question now is this: do McKenzie’s colleagues – including the Prime Minister – endorse this approach? If so, then let’s hope that the whole nation laughs out loud the next time a Coalition minister attacks "union corruption", throws a bank executive under the bus or invokes the concept of integrity when criticising others.
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We are more anxious despite never having it so good
Jan 20, 2020 — 12.00am
It is ironic that in an economy where a large chunk of the workforce is devoted to risk management, we appear to be getting worse at calculating risk in our personal lives.
Banks and insurance companies are considered the fourth largest sector of the Australian economy. Over the past half century we have seen a steady increase in the dominance of the financial sector, whose principal task is to evaluate and spread monetary risk.
The language of the industry has seeped into daily life. People talk of their stocks rising, or hedging, in their everyday activities. Relationships are often described as investments. The currency of social media in the form of likes and followers mirrors the capital markets.
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Unprecedented number of store closures could hit landlords and other retailers
January 20, 2020 — 12.00am
An unusually high number of store closures and retail collapses in the first weeks of 2020 has prompted concern over the impact on Australia's major landlords, with one expert warning the closures could have a flow on effect for the local retail market.
Since the new year, a total of 169 closures have been announced at retail locations around the country as a slew of high-profile merchants raise the white flag in the face of a persistently challenging trading environment.
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RBA should stop pretending there is any more it can usefully do
Economics Editor
January 20, 2020 — 12.00am
Every institution – even, as we’ve learnt to our sorrow, the Christian church – is tempted to put its own interests ahead of its duty to the greater good. Now it’s time for the Reserve Bank to examine its own conscience. If it cuts interest rates again in a fortnight’s time, in whose interests will it be acting?
Many of the Reserve’s immediate customers in the financial markets expect it to cut the official interest rate at its meeting early next month and then again a few months later, at which point the rate will be down to its "effective lower bound" – 0.25 per cent – and it will be time for it to move to using purchases of government bonds to lower the risk-free rate of interest more widely in a program of "quantitative easing".
That’s what its market customers expect of it and it will be tempted to comply, showing it’s still at the wheel, in charge of steering the economy, doing all it can to get things moving and keeping itself at the centre of the macro-economic action.
What could be wrong with that? Just that it’s unlikely to do any good, and could do more harm than good. It’s hard to see that yet another tiny interest-rate cut will do anything of consequence to stimulate spending.
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Why McKenzie's sports rorts defence is wrong
Australia's constitutional rulebook doesn't allow federal governments to splash money on local sports groups without parliamentary approval.
Jan 20, 2020 — 2.42pm
Government pork-barrelling using sports grants is nothing new. Labor’s Ros Kelly made it an art-form in 1994, but at least had the sense to wipe the evidence off her great big whiteboard.
What is astonishing about the latest sports-rorts affair is its brazenness, culminating in the assertion that "no rules were broken". The public seems largely to have swallowed this heroic assertion. But is it true?
From a lawyer’s perspective, there seem to be at least three areas in which rules are likely to have been broken.
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Rot and rorts can't distract Morrison from core issues
The Financial Review’s take on the principles at stake in major domestic and global stories.
Jan 20, 2020 — 12.00am
The Morrison government should be starting the political year by preparing the ground for economic reforms to encourage business to invest in growing the economy and delivering prosperity.
Instead, the Prime Minister is consumed by the need to regain political ground lost in his initial response to the bushfire crisis. And the government is stubbornly setting itself up for more pain by refusing to acknowledge the untenable position of Bridget McKenzie and her brazen attempt to slough off the damning "sports rorts" affair.
As another matter of principle, the federal government should not be splashing cash on local sporting projects. The reason it does is because local councils refuse to be accountable for levying rates and charges to meet community needs.
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Does the Fed's mandate include bailing out risky hedge funds?
Investment legends might warn that global share markets are risky, but investors know the Fed will have to treat risky, debt-laden investors with kid gloves.
Jan 21, 2020 — 12.01am
It's not often that you get not one, but two, of the most highly regarded and successful investment managers urging investors to beware the ongoing stampede in global equity markets.
But as asset prices across the board – equities, properties, low-grade corporate debt –have continued their surge, top executives from the world's biggest hedge fund, Bridgewater Associates, and from leading alternative asset management firm Oaktree Capital have both sounded a note of caution.
Bridgewater's co-chief investment officer, Greg Jensen, who helps manage some $US160 billion ($232 billion) in assets, gave a good explanation for the ferocity of the global share market rally in an interview with the Financial Times last week.
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Market optimism ignores economic reality
Super Retail Group's impressive gains, and the reaction to its fresh profit downgrade, help tell the story of investors' cast-iron confidence.
Jan 21, 2020 — 12.00am
It seems there’s very little that can shake the cast-iron optimism of Australian investors now – certainly not anything as trifling as more bad news from the real economy.
The accepted wisdom has long held that prices can’t outrun earnings – or more specifically, a lack thereof – forever. But any suggestion that this current rally could be upset by a run of poor earnings results during February’s reporting season suddenly looks less likely, after investors greeted Monday’s bad news with a metaphorical shrug.
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Sports rorts expose Coalition's tame corruption watchdog plan
The government's plan for a federal integrity body would let politicians off the hook for blatant misuse of their power.
Jan 21, 2020 — 1.23pm
Senator Bridget McKenzie’s actions were much worse than mere pork-barrelling, detestable though that practice is.
Here, there was a large-scale program appropriately informed by a carefully laid-out assessment and selection process. In good faith, community sports groups, both large and small, submitted applications in the expectation that the selection process would be fair and in accordance with clear guidelines.
Sport Australia painstakingly assessed each project against a set of criteria, giving each applicant an overall aggregate score. This process was designed to ensure that, irrespective of political considerations, the most deserving and worthy applications would receive the benefit of the grants.
This did not happen. More than 400 of the applicants who ultimately received funds fell below the score Sport Australia considered necessary to succeed.
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Has the world's GDP growth maxed out?
It is hard to see where a fresh spurt of the world's economic growth for the 2020s will come from – unless India and Africa step up.
Jan 22, 2020 — 12.00am
At the start of a new decade, many commentators are understandably focused on the health of the global economy.
GDP growth this decade will most probably be lower than during the teens, barring a notable improvement in productivity in the West and China, or a sustained acceleration in India and the largest African economies.
Until we have final fourth-quarter data for 2019, we won’t be able to calculate global GDP growth for the 2010-2019 decade. Still, it is likely to be about 3.5 per cent per year, which is similar to the growth rate for the 2000s, and higher than the 3.3 per cent growth of the 1980s and 1990s.
That slightly stronger performance over the past two decades is due almost entirely to China, with India playing a modestly expanding role.
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Look beyond the hype on ethical investing
How to avoid being drawn into headline marketing of investment options that are all wrapper and little reality.
Jan 21, 2020 — 12.18pm
Many Australians are reflecting on investment portfolios, given the confronting fires and other environmental considerations. A big swing towards protecting a portfolio from the repercussions of the ravages of changing climatic conditions as well as skewing the investments towards companies that may offer solutions is well underway.
This month BlackRock has made much of "putting sustainability at the centre of how it invests", joining an ever-crowded space of fund managers that proclaim they will change the way they consider their options.
The dilemma for investors is that marketing can overtake reality.
There is a cacophony of terminology, a lack of benchmarks and an obtuse range of service providers. Do you want environmental, social and governance (ESG) and/or sustainability? And what about impact?
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Environment now trumps economy on Australian list of biggest worries
January 22, 2020 — 12.00am
The environment has catapulted to the top of the list of Australians' biggest worries, leapfrogging cost of living, healthcare and the economy.
When asked to pick the top three biggest issues confronting the nation – out of a potential list of 19 – 41 per cent of participants in an online poll conducted by Ipsos Australia this month put "the environment" in their top three, up 10 percentage points since last month.
"Cost of living" and "healthcare" ranked as the equal-second biggest concerns, appearing on the top three lists of 31 per cent of about 1000 people surveyed. The "economy" featured on 25 per cent of lists and "crime" on 21 per cent.
Ipsos social researcher Daniel Evans said the summer's bushfire crisis and continuing drought had focused minds, but environmental concerns had been climbing steadily for half a decade.
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A huge meteorite hit Australia 2 billion years ago. Did it lead to life as we know it?
January 22, 2020 — 3.01am
In the middle of Western Australia’s vast desert, at a place called Yarrabubba, lies a mound of granite.
At first glance, it looks like another lump in a lumpy, undulating landscape.
But it’s a very unusual lump. On one edge, the granite has formed columns, a typical sign of cooling rock. Cut into it and you’ll find the granite riddled with long spidery lines like a shattered car windscreen.
There aren't many things can make rock look like that. The short list includes nuclear bombs and huge meteorite strikes.
On Wednesday, a team of Australian scientists announced they believe the mound was the last remaining trace of a huge meteorite that struck Yarrabubba about 2.229 billion years ago.
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With no credible answers, McKenzie has to go
With no explanation for the damning findings, Senator McKenzie, deputy Nationals leader and now Agriculture Minister, surely cannot stay in office.
Jan 23, 2020 — 12.00am
A week after the sports rorts story broke, the Morrison government is no closer to a credible answer to the key question.
Was a political filter applied by then sports minister Bridget McKenzie to distort a $100 million sports grant system supposedly run by the independent Sports Australia – as found by the Auditor-General – and improperly divert large amounts of money to marginal Coalition seats?
The matter has been sent off to fellow minister, Attorney-General Christian Porter. But Prime Minister Scott Morrison has also asked his own office for advice on ministerial standards. This is more about basic ethics than legality.
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Why the big banks almost always pay up for class actions
Cases are reaching further and faster into the pockets of corporate Australia. No one can argue the principle but the cost to business is rising.
Jan 23, 2020 — 5.01pm
No one is going to feel sorry for the banks, given the roll call of shame dramatised to such effect in the Hayne royal commission.
But class actions are almost certain to mean more big hits to the banks’ bottom lines. Even if the amount paid per individual in a successful case is relatively minor, especially after the lawyers’ fees and litigation funders’ generous percentage cut of the returns, the overall amount will be large because of the numbers of people involved.
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January 24 2020 - 7:42AM
Dutton defends Health Minister Greg Hunt
Peter Dutton defended Health Minister Greg Hunt over claims he interfered in a independent review.
Peter Dutton has leapt to the defence of Health Minister Greg Hunt, who has been accused of improperly interfering in the review of a medical product.
Mr Hunt has denied helping a Liberal Party donor push for a regulator's review a self-testing flu kit.
Emails obtained under freedom of information laws show the health minister's office was "very keen" for the Therapeutic Goods Administration (TGA) to review the devices.
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Listed funds are 'toxic time bombs'
Legends Paul Moore and Geoff Wilson wade into the LIC debate, with Moore joining the call for Treasurer Josh Frydenberg to accept ASIC's advice on banning kickbacks.
Jan 24, 2020 — 11.06am
“Listed and unlisted funds are the same product being sold to the same client profile and should have the same rules,” says Moore, founder of PM Capital, a $2 billion equities and fixed-income fund manager that runs two listed investment companies (LICs) worth more than $500 million.
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Australia to pursue gas reservation policy: Canavan
· January 24, 2020
Australia will pursue a national gas reservation policy to ensure enough supplies are available for manufacturers and heavy industry and introduce a price measure to the gas export trigger to ensure the national market is operating efficiently.
The move by Resources Minister Matt Canavan, foreshadowed by The Australian in December, would see the east coast replicating a system similar to that in Western Australia to provide relief for big gas users still struggling with high tariffs.
“I am going to work with states and territories during the next 12 months to consider options to establish a prospective national gas reservation policy,” Mr Canavan said in a statement. “We can’t repeat the mistakes of the past in just letting our gas be shipped overseas with no thought to our domestic requirements.”
WA’s regulations require 15 per cent of gas reserves at LNG export projects to be set aside for use within the state and Mr Canavan said he would be “mindful” of the major contribution LNG exporters in Queensland had already made to ensuring domestic energy security.
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Doomsday Clock moves closest to midnight in 73-year history
· By Agencies
· AP
· 6:32AM January 24, 2020
The keepers of the Doomsday Clock have moved the symbolic countdown to global disaster to the closest point to midnight in its 73-year history, citing “existential danger” from nuclear war and climate change.
The Bulletin of the Atomic Scientists, which was founded after the creation of the atomic bomb in World War II and focuses on the greatest threats to human survival, said it moved the clock from two minutes to midnight to 100 seconds to midnight — a 20-second advance.
The decision was made by the group’s science and security board, in consultations with its board of sponsors, which includes 13 Nobel laureates.
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Australia's colonisers wanted better for this land
Utopian ideals for the settlement of Australia gave way to a betrayal of the Indigenous people, that is only now being recognised.
David Kemp
Jan 25, 2020 — 12.00am
Australia Day on January 26 remembers the arrival of the First Fleet and its cargo of over 1000 convicts, commanded by Captain Arthur Phillip, at Sydney Cove on that day in 1788.
In 2020, however, the dates that will stand out in national memory will be April 28-29, for this will be the 250th anniversary of the arrival of the navigator and explorer, Captain James Cook, in HMS Endeavour at Botany Bay in 1770.
The arrival of Phillip and the 11 ships of the First Fleet was a direct consequence of Cook’s journey, for it was advice flowing from the observations of Joseph Banks, the brilliant young botanist who accompanied Cook, that encouraged Lord Sydney to set in motion the plans for British colonisation of the continent.
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Economics isn't as highfalutin' as the jargon makes it sound
Economics Editor
January 25, 2020 — 12.00am
If you’ve ever had the feeling you ought to know a lot more about economics than you do – even if only to make it harder for economists to bamboozle you – here’s my long-weekend special offer: the key concepts of the discipline explained in one article. As many as I can fit, anyway.
More than a year ago, the boss of the Australian Competition and Consumer Commission (ACCC) Rod Sims – surely the most experienced senior econocrat evading retirement in Canberra – began a speech by saying economics had become too mathematical and that to be a good economist all you needed was a deep intuitive feel for 10 or 15 concepts.
He then rattled off what he regarded as the 15 most important concepts, “in no particular order”. From those I’ll explain, in order, the five I consider to be most significant.
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An epic Endeavour, a vexed debate about Captain Cook voyage
· By Geoffrey Blainey
· 12:00AM January 25, 2020
It was one of the most hazardous explorations in the history of the sea, and this year is the 250th anniversary of its high and low points. How it will be celebrated in Australia, the main beneficiary of that voyage, may well become a burning question.
James Cook, aged 39, had sailed from the English port of Plymouth in August 1768. His naval ship Endeavour, which originally carried coal along the east coast of England, was a three-masted barque no larger than a tennis court. Calling here and there at Atlantic ports his wooden ship reached the stormy tip of South America and then ventured into the windswept waves of the South Pacific Ocean.
Cook’s voyage was testament to Europe’s fascination with science. His first destination was Tahiti because its cluster of islands was favourable for observing the rare transit of Venus, an astronomical event that would take place for six hours on Saturday, June 3, 1769. The event would not occur again for 105 years. To observe it accurately, in many different parts of the world, would provide valuable information for navigators.
Curiously, this voyage also foreshadowed today’s China-US rivalry. However, in Cook’s heyday France and Britain were the world’s great powers, and France held more people than did any other nation in Europe, Africa or the Americas. For these two powers the South Pacific was like the South China Sea is for the two great powers of today. Indeed, the South Pacific region was the more important because it was believed to possess, far out in the unexplored ocean, a huge inhabited continent rich in gold and tropical plants and the home of enterprising Jewish merchants.
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Gloves come off in unholy war as Popes Francis and Benedict butt heads over celibacy rules
· 4:29PM January 24, 2020
“Please keep this letter confidential and share it only with those directly involved … not with others or with the media. Please do respect these guidelines.’’
Such a directive from head office is irresistible to mischief makers. So given the unholy war tearing the highest echelons of the Catholic Church asunder, it was leaked almost immediately.
That might not have surprised the signatory, Brazilian Cardinal Claudio Hummes, a major player at the Amazonian Synod in Rome in October.
Cardinal Hummes wrote to bishops around the world to prepare for the unveiling, by early February, of a new instruction from Pope Francis “to present the New Paths for the Church and for an Integral Ecology’’.
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The good news about the new shamelessness of our politics? We will get used to it
Columnist and senior journalist
January 26, 2020 — 12.05am
I am beginning to suspect the Morrison government is using the Australian public to conduct a giant experiment in exposure therapy, whereby the phobic patient is given close contact to the thing that initially disgusts or scares them – spiders, public speaking, or, say ... awarding $100 million in sports grants despite the apparent conflict of interests that no one tried very hard to conceal from the public.
Over repeated exposures to their aversion, taxpayers will adapt and become less reactive, purely as a survival mechanism. Much in the same way that catastrophic fish kills used to be a source of apocalyptic horror, but have now been downgraded to a minor story which must get in line behind carbonised koalas, tragic property loss, and the deaths of front-line bushfire heroes.
A large storm rolled in over Sydney Harbour as the city woke up to a blanket of smoke and dust.
On Friday it rained red dust in Sydney. My first thought was, oh well, at least it’s not so smoky that my four-year-old leaves the house in the morning saying "It smells like barbecues!" as she did over December. Low expectations are the key to a happy life.
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Melbourne is set to become the country’s most populous city by 2026 – with vast ramifications
The rise of the Victorian capital is shaping up to be the social and economic story of the 21st century, forcing us to change the way we think of ourselves as Australians.
January 25, 2020
It was the most Melbourne event of the year, and it startled those who thought they understood the city’s cosmopolitan personality. On a mild Friday morning last October, in the void between the end of the footy season and the start of the Spring Racing Carnival, more than 2000 people packed Melbourne Town Hall on Swanston Street to farewell ABC Radio’s Mornings host Jon Faine.
Every available seat was occupied, while a spillover of local identities, from federal and state politics to music and comedy, stood along the walls and at the back of the auditorium. The venue was in constant motion over the three-and-a-half-hour show, which doubled as a send-off for Faine and his final program.
Members of the audience snuck out of their seats to compliment idols they’d spotted in the crowd and politely ask for selfies. Others shushed the celebrities whenever their chit-chat and backslaps carried across the aisles, distracting from the conversation on stage.
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Hang tight in world’s dearest stockmarket
· 6:54PM January 24, 2020
You probably knew our residential property market is among the dearest in the world, but it might be news — unwelcome news — to hear our sharemarket carries the same dubious honour.
So how dear is it?
If you want to know, don’t ask a local broker, who just wants this market to move higher. Ask a global broker, who operates with the double responsibility of keeping local clients happy but must also tell “head office” what’s really going on in their division.
No surprise, then, to read that the most sceptical notes are from Wall Street brokers with Australian subsidiaries. This week JPMorgan spelled it out for head office over in Park Avenue, New York, calling Australia “the most expensive market in the world”.
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Bushfire Crisis And Climate Policy
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Albanese says 45pc emissions target was a 'mistake'
Jan 19, 2020 — 2.57pm
Labor leader Anthony Albanese has admitted it was a "mistake" to take the 45 per cent emissions reduction target to last year's federal election, opening the way for Labor to reduce the target.
Mr Albanese said that while Labor wanted "ambitious" targets, the plan to cut emissions by 45 per cent below 2005 levels by 2030 was a policy developed in 2015 and should have been reviewed before last year's election.
"Frankly, I think it was a mistake in 2019 to continue to say 'well, we'll do exactly what we're doing in 2015" – as if it hadn't changed," Mr Albanese told Sky News on Sunday.
Mr Albanese would not commit to outbidding the Coalition target – a reduction of 26 to 28 per cent – saying he hoped the government would take action before the 2022 election.
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Bushfires and the Australian economy
09 Jan, 2020
Key points
· The bushfires are expected to result in around a 0.4% hit to GDP mainly in the March quarter followed by a rebuilding boost.
· The hit to consumer spending and tourism is likely to linger longer.
· The drag on economic activity has increased the pressure for more monetary and fiscal stimulus. We still see the RBA cutting the cash rate to 0.25%.
· The bushfires likely increase the pressure for more action on climate change and highlight the need for investors to be aware of industries and businesses that are vulnerable to climate change risk.
Shane Oliver
Introduction
The Australian bushfire season that began in September has been horrific with more than 7 million hectares of bush destroyed, more than 25 deaths, significant loss of livestock, estimates of more than a billion wildlife animals killed and more than 1800 homes destroyed. More than 200 fires are still burning. Following the intensification of the bushfires over the Christmas/New Year period attention has now turned to the impact on the economy. This note looks at the key impacts.
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'Green swans' will trigger the next crisis: BIS
Jan 20, 2020 — 11.00pm
Moving too fast or too slowly to mitigate climate change risks, dubbed "green swan" events could trigger the next systemic financial crisis the Bank of International Settlements says.
The world's bank for central banks warns about the risks of economic and financial losses from increasing frequency and severity of extreme weather, in a new report Central banking and financial stability in the age of climate change.
Climate change, BIS said, could have long-standing impacts on agricultural yields, and lead to frequent resource shortages.
BIS refers to so-called "green swans", or “climate black swans”, which it uses to describe highly unexpected events that have wide-ranging or extreme impacts and can only be explained after the fact.
"These include what we call 'green swan' risks: potentially extremely financially disruptive events that could be behind the next systemic financial crisis."
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RBA told to 'mobilise all forces' to save the economy from climate change
January 20, 2020 — 11.45pm
The Reserve Bank has been warned it may have to buy up coal mines and fossil-fuel power stations as part of extraordinary actions to save the economy from climate change-induced financial disaster.
As Australian business leaders grow increasingly worried climate change will hit their bottom lines and the International Monetary Fund warns global warming is now a major financial risk, a new warning issued by the world's top central bank says the RBA could be forced into rescuing the economy and the environment.
The RBA is warning climate change could lead to the next global financial break down.
Three separate reports released on the same day, coinciding with Australia's worst bushfire season and ongoing political division over environmental policy, point to increasing fears among economic policy leaders that climate change could cause the next global financial breakdown.
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After Australia's bushfires, climate change high on the agenda at Davos talkfest
January 21, 2020 — 6.36am
London: The International Monetary Fund says the Australian drought and bushfire catastrophe could help trigger a sharper than expected fall in global economic growth, as world leaders are warned they need to show more "political will" on curbing greenhouse gas emissions.
Australia's devastating summer blazes have captured the attention of the political and social elite who have gathered at the Swiss ski resort of Davos for the World Economic Forum, with fresh fears that climate change poses a serious risk to the economy.
On the eve of the annual World Economic Forum in Davos, the focus is on teenage activist Greta Thunberg as she prepares to challenge the global financial elite to fight climate change.
In a sign of how closely Australia is linked to the issue of climate change, some environmental activist protesters dressed as koalas.
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Economic effect of disasters runs deeper than we think
Senior economics correspondent
January 20, 2020 — 4.00pm
One of life's simple pleasures is a run. Out in the sunshine, gentle breeze, maybe a dog at your side and friends around you.
Every Saturday morning, tens of thousands of Australians embrace this via the volunteer-driven Parkrun program.
These five-kilometre non-competitive events, managed online and helped along by people prepared to spend an hour of their week marshalling runners or taking photographs, are a growing force in physical activity participation.
From Cowra to Cohuna, Parkruns are everywhere around this country.
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Bushfires a blow to consumer confidence: Westpac
· January 22, 2020
Consumer confidence has dived in January in the wake of Australia’s worst bushfire crisis.
The Westpac-Melbourne Institute index of Consumer Sentiment fell 1.8 per cent to 93.4 per cent in January from 95.1 per cent in December.
That’s the lowest consumer confidence reading since October, when the index hit a more than four-year low of 92.79.
Westpac chief economist, Bill Evans said it was “entirely reasonable” to expect confidence to fall due to the devastating bushfires and it was “somewhat surprising” that the fall in the index was not more severe.
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Hazard reduction may be fatal in a changing climate
Jan 22, 2020 — 4.33pm
Traditional methods of reducing forest litter that has inflamed this summer's bushfire crisis could themselves become lethal as climate change makes the danger season longer and hotter, experts warn.
The caution comes as extreme bushfire conditions were forecast to return to NSW on Thursday, when low humidity and strong north-westerly winds are expected to combine with temperatures exceeding 43 degrees in Penrith and 40 degrees in Sydney.
Authorities say recent rains in parts of NSW and Victoria in recent days have not been enough to extinguish all of the fires scorching the country, and that the fire season that has killed 28 people and razed thousands of homes is far from over.
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Bushfires may crimp living standards long term as insurance costs hit $2b
January 25, 2020 — 12.00am
The insurance bill for this season's bushfires and hail storms has risen above $2.1 billion as economists warn the country will pay for the disasters with lower living standards long term.
Economists believe the full impact of the fires will be felt over the next six months, particularly in areas directly reliant on tourists and household consumption, before a rebound by year's end and into 2021.
But as governments seek to "adapt and mitigate" against the threat of future fires and climate change, there are growing concerns resources that would otherwise make the economy more efficient will have to be diverted into delivering everyday services.
The fires, together with this week's hail storms, are on track to be one of the most expensive natural disasters in terms of insurance claims on record.
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'New situation': Record 81 days of bad air quality in Sydney
January 24, 2020 — 4.13pm
Sydneysiders experienced 81 days of hazardous, very poor or poor air quality last year, more than the combined total for the previous 10 years, and health experts say new policies are needed for this unprecedented length of exposure to bushfire smoke.
Of those 81 days, 28 were classified as hazardous, the worst-possible level, another 21 were very poor and 32 were poor at one or more monitoring station in Sydney.
Last year was the first time since at least 2009 that the city has had more than 18 days in a calendar year when the air quality reached poor, very poor or hazardous levels, a Herald analysis of NSW Department of Planning, Industry and Environment data shows.
There have already been 14 such days this year.
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The science behind climate change and its impact on bushfires
Australia’s catastrophic bushfire season has sparked intense debate over whether it’s linked to climate change. Here is the science.
When considering the science around climate change, one expert believes it’s useful to compare it to another famous hypothesis – the theory of gravity.
Not many people would think to cast doubt on the theory of gravity, and according to Professor David Karoly, who leads the Earth Systems and Climate Change Hub in the Australian Government’s National Environmental Science Program at CSIRO, the evidence that human activity is causing global warming is so strong it is equal to this theory.
“The theory on the human impact on climate change is just as strong, or stronger, than the scientific basis for the theory of gravity,” Prof Karoly told news.com.au.
Prof Karoly said that there was also evidence climate change was a factor in recent devastating bushfires in Australia.
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International fallout from bushfires a big risk for investors
Jan 25, 2020 — 12.01am
Clint Feuerherdt took over as chief executive of SeaLink on January 16, just as 50 per cent of the pristine tourism mecca of Kangaroo Island, from which the ferry and tourism group generates about 15 per cent of its overall profits, lay smouldering from devastating bushfires.
It was truly a baptism of fire. He's optimistic there can be a quick rebound as heavy spending by the state government on a marketing campaign, and discounted fares for passengers on the 16km ferry service from Cape Jervis on South Australia's Fleurieu Peninsula to Kangaroo Island rebuild demand.
"The immediate reaction has to come from the domestic market,'' Mr Feuerherdt tells AFR Weekend.
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The bushfires have changed the way that we look at ourselves
The national confidence and rational debate that was so striking a few decades ago has been torched by our relentless partisanship.
Jan 24, 2020 — 4.57pm
If there is one thing that unites the nation on Australia Day, it is clichés. And on Australia Day weekend 2020, we seem to be surpassing our usual ration of clichés about beaches, barbecues and revelling in our egalitarian ordinariness.
Of course these days we pay at least some respect and recognition to Indigenous Australia, while skirting around the controversy of what Indigenous Australians think about the marking of our national day on January 26.
But this year there are more than just the usual clichés about Aussie-ness. We have drought and fire and rain all at once, and on a scale that has made the world sit up and take notice.
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Soft power goes up in smoke
A unique connection to nature is at the heart of our international appeal. Foot-dragging on climate is squandering it.
Jan 25, 2020 — 12.00am
As we mark Australia Day amid the bushfire crisis, few can dispute that our global image has taken a hit. The Lucky Country, a label which has stuck since Donald Horne’s 1964 tome, is looking decidedly less lucky. Where once Australia existed in the popular imagination as a place of pristine natural beauty, we are now viewed as the developed nation most ravaged by climate change.
Images have been broadcast across the globe of this season’s conflagrations turning blue shimmering skies blood red, world-class beaches into evacuation zones, and eucalyptus forests into killing fields for one billion native animals. The outpouring of sympathy and international solidarity reflects the fact that, in the eyes of the world, this disaster strikes at the heart of the Australian way of life.
If Australia is now seen in a different, darker light, it is not just because of the damage done to the environment but also to our reputation as global citizens. The international media has made a link between the bushfires and our climate policy. The cat is out of the bag.
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Fires have nearly doubled Australia's annual greenhouse gas emissions
Andrew Freedman
Jan 25, 2020 — 8.12am
The Australia bush fires, which are still burning and claimed an additional three lives this week, have released enough greenhouse gases to double that country's annual greenhouse gas emissions from burning fossil fuels, new scientific estimates show.
Guido van der Werf, who helps maintain the Global Fire Emissions Database, says the fires in New South Wales and Victoria in particular have emitted around 400 million tons of carbon dioxide so far, "pushing country-level estimates for all of 2019 to a new record in the satellite era" of about 900 million tons of carbon dioxide.
The smoke plumes from the fires have circled the globe, and have coated glaciers brown in New Zealand, led to reddish sunsets in South America, and may have reached Antarctica.
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Royal Commissions And The Like.
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Financial advisers brace for regulatory crackdown
· 6:19AM January 20, 2020
It’s hard to see how asset-based fees and brokerage commissions can survive the new ethics regime for financial advisers that kicked off on January 1.
It’s early days and the grim reaper of government regulation scythes but slowly through the paddocks of vested interests and conflicts, and stray heads of wheat are sometimes left standing, protected by powerful lobbies.
But a few things have been done that will be difficult to undo.
In response to the Hayne royal commission, the government has created the Financial Adviser Standards and Ethics Authority, which has in turn issued a code of ethics with 12 standards covering ethical behaviour, client care, quality process and professional commitment, which apply from January 1 this year.
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Cuts to key government interest rates make aged care more affordable
By Rachel Lane
January 23, 2020 — 3.50pm
Many people can’t afford aged care without some form of borrowing.
However, there's good news for these retirees as a drop in two key government-set interest rates arrived in the new year.
The Pension Loans Scheme (PLS) interest rate dropped significantly, from 5.25 per cent a year to 4.5 per cent a year, while the Maximum Permissible Interest Rate (MPIR), which applies in residential aged care, was cut to a new low of 4.91 per cent a year.
The PLS is like a reverse mortgage, except you can’t take it as a lump sum.
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Aged care system ‘underfunded and understaffed’
· 12:01AM January 24, 2020
Australia’s aged care system is underfunded and understaffed compared with other developed countries, and has a higher proportion of older people living in nursing homes.
A new study prepared for the aged care royal commission examined aged care systems across 22 countries and found government spending on long-term care for older people in Australia was among the lowest of the countries in the study. Australia’s spending was about 1.2 per cent of GDP, compared with between 3 per cent and 5 per cent in Denmark, Sweden, Japan and The Netherlands, the paper prepared by Flinders University found.
It also found staffing in Australian nursing homes sits at the lower end of the range internationally, both for total staff and nursing. “Australia appears to provide lower levels of staffing overall in residential care in comparison to the US, Denmark, New Zealand, Switzerland and Germany,” it said. “Australia also appears to provide lower levels of nurses in relation to care recipients in residential settings than the US, Canada, Germany and Switzerland.”
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National Budget Issues.
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Lack of confidence condemns Australia to slow growth: Deloitte
· 12:00AM January 20, 2020
A collapse in consumer and business confidence has locked Australia into slow growth, with the economy expected to tread water as the nation navigates through the impact of drought, housing-related weakness and scared consumers, according to the latest business outlook report from Deloitte Access Economics.
The Reserve Bank’s quest to lift inflation, meanwhile, would see it slash the official cash rate twice this year but hold fire on quantitative easing, Deloitte partner Chris Richardson said.
“Australia has been battling the dual demons of drought and housing-related negatives ... But now there’s a third threat: cratered confidence among consumers and business,” Mr Richardson said.
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No pay rises in 2020 as economic confidence in a 'crater'
January 19, 2020 — 11.59pm
Workers are unlikely to see substantial pay rises in 2020 as unemployment remains stubbornly stuck above 5 per cent and confidence in the economy continues to diminish, challenging the Morrison government as it begins work on the May budget.
The Deloitte Access Economics Business Outlook, released on Monday, forecasts global economic growth is unlikely to get much worse as phase one of a trade deal between the US and China spurs global markets, while Australia gets locked into a slow growth pattern for the forseeable future.
"We don’t expect unemployment to drop or wages to accelerate through 2020: we’ll be comfortably treading water rather than roaring into recovery," said the report's author and former Treasury official, Chris Richardson.
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Another year of muddling through: Deloitte
Deloitte Access Economics expects the Australian economy faces another year of treading water, undermined by 'scared consumers'.
Colin Brinsden
Australian Associated Press January 20, 2020 12:05am
Australia's economy looks set for another year of muddling through with crumbling confidence adding to the dual demons of drought and housing-related negatives that has left growth at a decade low.
In its quarterly business outlook, Deloitte Access Economics says consumer and business confidence has been "cratered" by a few causes and this summer's bushfires will not have helped.
Partner and economist Chris Richardson says the Reserve Bank, which slashed the cash rate to a record low of just 0.75 per cent last year, hasn't covered itself in glory in its communications with the public.
"That has left confidence worse that the economy itself, which in turn risks becoming a self-fulfilling prophecy," Mr Richardson says in the report released on Monday.
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Major overhaul mooted for ‘too complex’ NDIS
· January 21, 2020
The National Disability Insurance Scheme is too complex, difficult to navigate and needs to become more flexible for its 310,000 participants, an independent review found amid calls for legislative changes.
Former public servant David Tune’s report of the six-year scheme also said children, indigenous Australians, those with mental illnesses and from non-English-speaking backgrounds were not adequately supported.
The federal government will consider the review’s 29 recommendations, including that new legislated time frames be introduced from July 1 for the vast majority of the National Disability Insurance Agency’s decision-making processes.
Under the proposed rules, participants would from mid-next year be on their first plan within eight weeks of being found eligible and they would have 90 days to provide information to the NDIA to support an access decision, a significant increase from the current 28 days.
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Surplus 'price that needs to be paid' to boost economy
Jan 22, 2020 — 4.04pm
The forecast budget surplus should be sacrificed to support consumers, according to Westpac's chief economist Bill Evans, who argues that the federal government should provide more help to the Reserve Bank ahead of what traders see as a 50-50 chance of a historic rate cut next month.
"I want them to bring forward the stage two tax cuts," Mr Evans said. "If it turns out that's at the expense of the surplus, then that's the price that needs to be paid given the state of the economy at the moment."
The Reserve Bank itself "is obviously seeing the need for fiscal stimulus as being complementary to their own needs," the chief economist said.
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ANZ cuts deposit rates to all-time low
January 23, 2020 — 10.58am
One of the nation's biggest lenders, the ANZ, has cut a key deposit interest rate to just 0.05 per cent as markets prepare for the Reserve Bank to take the official cost of cash to an all-time low.
The ANZ cut its base rate on its online saver account from 0.1 per cent to the new rate of 0.05 per cent on Thursday, the lowest deposit rate from any of the big four banks. Inflation is currently 1.7 per cent.
It has retained its promotional introduction rate of 1.5 per cent on the product.
Apart from cutting its day-to-day deposit rate, the ANZ has also cut the majority of its term deposits by between 0.05 percertange points and 0.1 percentage points. Its best rate is 1.15 per cent on a standard five year term deposit.
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Scott Morrison’s tougher pension means test ‘a tax on average retiree’
· 7:34AM January 24, 2020
Retirees with average superannuation balances face a heavy “tax” from the Coalition’s toughened Age Pension means test, encouraging them to spend extra savings or invest in risky assets, according to new research that questions the retirement system’s effectiveness.
Retirees with superannuation balances between $350,000 and $600,000, which encompasses the average balance for over 65s, lose more in Age Pension from extra saving than they would gain in income from it, according to analysis from Betashares, an exchange-traded funds provider.
“Because the pension is means-tested, increased wealth of superannuation assets does not automatically translate to a retiree being better off with more income,” the analysis by Roger Cohen, a senior investment specialist at Betashares, concluded. “The system results in a strong incentive to either spend, or to move investment towards ultra- high-potential returns, with resultant increased risk,” it added.
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Health Issues.
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The warming planet is already killing people, so health policy must catch up
By Chris Bowen
January 20, 2020 — 12.00am
The devastation wrought by Australia’s worst bushfires has elevated the health effects of climate change right to the top of the national conversation. It used to be the case that we said we can’t pin a particular natural disaster down to climate change, but that natural disasters would occur more frequently. We’ve moved beyond that.
Saying "Australia has always had bushfires, so climate change is irrelevant" is about as accurate as arguing that "murders happened before guns came along, so therefore there is no impact".
We can’t limit the discussion on climate change and health to natural disasters, as important as they are. There is a political danger to raising climate change and health, as the shouting soon begins. People on one side of the argument shout that it’s alarmist. Others argue that incorporating climate change into health policies is defeatist.
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Child cancer survivors five times more likely to develop cancer again
January 20, 2020 — 12.01am
Despite advances in treatments, Australian children who develop cancer are five times more likely to be forced to fight the disease again, new research has found.
The authors of the research, published in the Medical Journal of Australia on Monday, said the findings showed childhood cancer survivors needed to maintain vigilance well after their initial cancer had been treated.
“Survivors of childhood cancer should be monitored for second primary cancers as they remain at increased risk well into adulthood,” the authors wrote.
“Research is needed to minimise the deleterious late effects of cancer treatment early in life.”
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The triple hit behind NIB’s plunge
In a sector where the pool of insured members is getting older and riskier, how can insurers stay ahead of what looks to be an almost inevitable rise in claims costs while also lifting returns to shareholders?
Jan 20, 2020 — 12.07pm
NIB chief executive Mark Fitzgibbon sounded unusually subdued as he spoke with analysts and investors on Monday morning.
A 15 per cent profit downgrade will do that, of course. As will a 13.5 per cent fall in your share price in the space of a few hours. NIB shares were down at near 10-month lows at $5.68 near 12pm AEDST.
“We sure didn’t expect this level of decline in underlying profit,” Fitzgibbon admitted, sounding like any break he managed to get over the Christmas period is now a distant memory.
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Human-to-human transmission confirmed in China coronavirus
January 21, 2020 — 3.32am
Beijing: The head of a Chinese government expert team says that human-to-human transmission has been confirmed in an outbreak of a new coronavirus, a development that raises the possibility that it could spread more quickly and widely.
Team leader Zhong Nanshan, a respiratory expert, said two people in Guangdong province in southern China caught the virus from family members, state media said. Some medical workers have also tested positive for the virus, the English-language China Daily newspaper said.
Human-to-human transmission could make the virus spread more quickly and widely.
The late-night announcement capped a day in which authorities announced a sharp uptick in the number of confirmed cases to more than 200, and China's leader called on the government to take every possible step to combat the outbreak.
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Data reveals the poor health of the poor
New data has revealed that the poor and the most disadvantaged in Australia have increasingly worse health outcomes.
Tim Dornin
Australian Associated Press January 21, 202010:11am
The gap in the quality of health between the disadvantaged in Australia and those more affluent is continuing to widen, new research has found.
While the number of Australians overweight and obese is the highest on record, the rates of obesity, smoking, asthma, diabetes, cardiovascular disease and psychological distress are worst amongst the disadvantaged.
The poor can also expect to die younger.
The Public Health Information Development Unit at Torrens University in Adelaide has drawn the conclusions after analysing data from the Australian Bureau of Statistics.
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Why coronavirus may turn into global epidemic
· By Tom Whipple
· The Times
· January 21, 2020
The number of cases of novel Chinese coronavirus, we now know, may be ten times higher than initially thought. It is not the raw numbers that are worrying, though. It is that these latest estimates corroborate what Beijing has now admitted: the disease is spreading from person to person.
The difference between an outbreak and an epidemic comes down to one number, the most important number in disease modelling. That number is called R0, and it is known as the reproduction number – the number of cases created by each newly infected person.
If R0 is less than one, if it is even 0.9999, then a disease will die out.
More than one, and it will conquer the world.
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Long work hours linked to doubled risk of mental illness, suicide in junior doctors
January 22, 2020 — 12.05am
Junior doctors who work long hours are at twice the risk of experiencing mental illness or suicide, compared to junior doctors who work fewer hours, according to new research.
Chief psychiatrist at the Black Dog Institute and UNSW Associate Professor Samuel Harvey said researchers were expecting to find a link between work hours and mental health, but they were "surprised by just how strong that link was".
The research, published in BMJ Open on Wednesday, found junior doctors who work more than 55 hours a week are at twice the risk of mental illness or suicide compared to their counterparts who worked between 40 and 44 hours a week.
"It's an extraordinary finding given that it's not at all uncommon for junior doctors to be working those hours," he said, adding the results were the same for men and women.
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Head of federal health department resigns
Australia's Chief Medical Officer Brendan Murphy has been announced as the next boss of the Department of Health.
Australian Associated Press January 22, 20209:52am
The man responsible for Australia's response to the deadly coronavirus will soon take over the federal health department.
Chief Medical Officer Brendan Murphy will replace Gladys Beauchamp when she retires at the end of next month.
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Hunt denies helping Liberal donor push for regulator's review
By Jonathan Kearsley
January 23, 2020 — 6.30pm
Health Minister Greg Hunt has denied accusations he interfered in a regulator's decision on whether to review a self-testing flu kit made by a Liberal donor's company.
Emails obtained under freedom of information show Mr Hunt's office was "very keen" for the Therapeutic Goods Administration (TGA) to review the use of self-diagnosing devices, including for the flu.
It followed an enquiry about Ellume, and its flu-test device, to Mr Hunt's office. Ellume's chair is multi-millionaire entrepreneur Paul Darrouzet, who donated $100,000 to the federal Liberal party in 2017 and has also donated to the Queensland Liberal National Party.
In May last year, John Skerritt, the deputy secretary at the TGA, emailed colleagues: "Had another call from the MO (minister's office) - they are very keen for this issue to be reviewed."
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Hunt denies pressuring TGA in attempt to help party donor
The donor, who ran a business selling DIY flu testing kits, donated almost $600,000 to the Liberal Party
24th January 2020
Federal Minister for Health Greg Hunt has denied accusations that his office pressured TGA staff to review restrictions on the sale of self-testing medical devices to benefit a major Liberal donor.
At the time, it said the review was needed because self-testing kits were readily available online, and patients may be better protected with products sold in Australia under the supervision of Australian regulators.
But there have been claims that the review was being pushed directly by Mr Hunt’s office in the wake of donations to the Liberal Party by the chairman of a start-up called Ellume, making DIY influenza testing kits.
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Australia's first coronavirus case confirmed in Victoria
January 25, 2020 — 12.04pm
Australia has recorded its first case of coronavirus, a man aged in his 50s, Victorian Health Minister Jenny Mikakos announced today.
Authorities warn it is "highly likely" there will be other cases in Australia and it is still possible more passengers on this man’s flight will be diagnosed with coronavirus.
The man is a Chinese national and is being treated at Monash in Clayton, Ms Mikakos said.
He arrived in Melbourne on January 19 from China and displayed no symptoms on flight to Melbourne, she said.
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Coronavirus: Pandemic threat has serious implications for global economy
· By Oliver Kamm
· The Times
· 7:51PM January 24, 2020
The coronavirus that has spread from the Chinese city of Wuhan and killed at least 25 people has sparked worldwide concern.
It may sound callous to discuss the economic implications, but infectious diseases cost money as well as lives.
Stockmarkets have fallen this week on the risk that the new virus might cause a pandemic. Policymakers need to estimate what these sums might amount to, and assess what economic countermeasures are available.
Even if the quarantine of Wuhan by the Chinese authorities is rigorously implemented, the economic impact will already be far beyond the costs of medical treatment. We have a point of comparison with the severe acute respiratory syndrome (SARS) epidemic that broke out in China in 2002 and lasted seven months.
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International Issues.
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Financial markets are deluded on Iran
The impact of the US strike on Iran, and the retaliation, has only just started to be felt in financial markets. The full effect is likely to be much worse than markets currently reckon.
Jan 20, 2020 — 12.00am
Following the US assassination of Iranian Quds Force commander Qassem Suleimani and Iran’s initial retaliation against two Iraqi bases housing US troops, financial markets moved into risk-off mode: oil prices spiked by 10 per cent, global equities dropped by a few percentage points and safe-haven bond yields fell.
In short order, though, despite the continuing risks of a US-Iran conflict and the implications that it would have for markets, the view that both sides would eschew further escalation calmed investors and reversed these price movements, with equities even approaching new highs.
That turnabout reflects two assumptions. First, markets are banking on the fact that neither Iran nor the US wants a full-scale war, which would threaten both the Iranian regime and US President Donald Trump’s re-election prospects.
Second, investors seem to believe that the economic impact of a conflict would be modest. After all, oil’s importance as an input in production and consumption has fallen sharply since past oil-shock episodes, such as the 1973 Yom Kippur War, Iran’s 1979 Islamic Revolution, and Iraq’s 1990 invasion of Kuwait.
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Vladimir Putin’s vision for a stable Russia
· 12:00AM January 20, 2020
There has been a frenzied response to Vladimir Putin’s announcement of extensive constitutional changes for the Russian Federation. Analysts have debated how he will retain his grip on power when his presidency ends in 2024.
But these assessments are wide of the mark. The holy trinity for Putin is stability, certainty and security. They are the foundation of the Russian President’s succession planning. If we unpack the constitutional changes flagged by Putin with these principles in mind, it is evident his endgame is far from consolidating power or entrenching his autocratic rule.
It is too simplistic to assume Putin plans to install himself as ruler for life. There is a much deeper layer here. This is about a larger effort to protect the system that Putin’s power enabled him to build. Putin’s plan is not a Machiavellian effort to cling to power; it is about fortifying Russia and future-proofing the system.
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Lights are being switched off in South Africa
· 12:00AM January 17, 2020
I have always returned from South Africa aghast, anxious but ultimately hopeful. It surely can’t become too corrupt or inefficient, I think. The triple forces of capitalism, democracy and a free press will prevent it. Rotten politicians can be replaced; crooked state employees and the individuals paying them off can be exposed. Too many people and profitable businesses have an interest in keeping the state functioning, the trains running and the lights on for it to fall apart.
This year, as in the last, the lights literally are being switched off, and I’ve lost that confidence. For the first time I fear the country may be sliding towards irreversible decay. Corruption has siphoned so much money from the state and twisted so many people’s motivations that it has gone from being a private, hidden tax on the public to a burden that threatens everyone’s daily lives.
It may have been the fifth power cut in five days that tipped me over the edge. Both the President and the national power company had assured South Africans last month that there would be continuous electricity until mid-January. It was, it turned out, a baseless assertion.
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IMF sees an end to global downturn
Jan 21, 2020 — 12.00am
Washington | It's early days but the International Monetary Fund says the global economy's 2019 trade-war induced slowdown may be coming to an end, even as it cited the brutal bushfires among "new challenges" facing Australia's economy.
Last week's "phase-one" deal between the US and China, if it sticks, will lessen the drag on global growth from all the tariffs Donald Trump and Xi Jinping have slapped on each other's economies to a cumulative 0.5 per cent of global GDP by the end of this year from a previous forecast of 0.8 per cent.
The IMF says global growth will accelerate from 2.9 per cent in 2019 to 3.3 per cent in 2020 and 3.4 per cent next year – that's a reduction of 0.1 percentage point for 2019 and 2020, and a 0.2 per cent cut for 2021 from its predictions in October.
And while the IMF has again trimmed its outlook for GDP growth this year and next, it blamed those revisions on slower growth in emerging markets like India.
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How I became a China sceptic
The Xi Jinping era is looking increasingly like one-man rule, rather than one-party rule. And it is hard to think of many places — from Ceausescu’s Romania to Stalin’s Russia — where that has worked out well.
Jan 21, 2020 — 9.23am
I first visited China in the early 1990s and its transformation since then is still a source of astonishment. The country’s wealth, power and prestige have risen as fast as the new skyscrapers on the Shanghai skyline.
Throughout this period there have always been sceptics, who predicted that the country’s miracle was about to end. Books with titles such as The Coming Collapse of China (published in 2001) appeared at regular intervals and were just as regularly proved wrong.
My own take has always been that China’s rise is for real, that it will continue and that it will transform the world. I even wrote a book about it, called Easternisation.
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India’s woes weigh on global economy
· 1:00AM January 21, 2020
A sharp slowdown in the Indian economy has prompted the International Monetary Fund to mark down its forecast for global economic growth for the third time in a row, warning “the risk of subpar growth remains tangible” without greater efforts to “enhance inclusiveness”.
However despite the IMF markdown of 0.1 per cent for next year’s estimate, global growth is expected to pick up over the course of this year.
Global growth is forecast to rise from 2.9 per cent in 2019 to 3.3 per cent this year and 3.4 per cent next year. A year ago the IMF pencilled in global growth of 3.6 per cent for 2020.
Growth for China, the world’s biggest economy, was upgraded 0.2 percentage to 5.8 per cent following a trade deal with the US. Brazil was the only other economy to enjoy an upgrade in 2020.
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Official tells why Australia’s ties with China are strained
· 12:27AM January 21, 2020
China is unhappy with Australia’s criticism of its human rights record in the western province of Xinjiang, its move to ban Huawei from its 5G network rollout, and its slow action on giving visas to some Chinese students, according to the head of a government-backed think tank.
In an interview with The Australian in Sydney on Monday, Wang Chao, president of the Chinese People’s Institute of Foreign Affairs, said Australia-China relations had begun having problems from the second half of 2017.
He believes delays in students getting visas to study in Australia could have a “psychological impact” on future Chinese students.
Mr Wang was speaking as part of a delegation to Australia for the sixth annual Australia-China high-level dialogue.
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‘I don’t want to die in office’, says Vladimir Putin, as opponents voice fears
· By Marc Bennetts
· The Times
· 7:11PM January 20, 2020
President Vladimir Putin has said he does not plan to follow in the footsteps of Soviet leaders who died in office without paving the way for a smooth succession.
Mr Putin, 67, is due to stand down when his final term of office expires in 2024 but most political analysts believe that he intends to prolong his long rule as either prime minister or unelected chairman of the state council, an advisory body to the Kremlin.
“It would be very worrying to return to the situation we had in the mid-1980s when state leaders stayed in power until the end of their days and left office without ensuring the necessary conditions for a transition of power,” he said.
His comments came after a World War II veteran urged him to scrap the limit on the number of terms served.
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Rival views of political power set for a joust
The Economist
· 6:31PM January 21, 2020
The impeachment trial of Donald Trump in the Senate is at heart a clash of world views and of operative theories about the nature of political power.
The House of Representatives’ brief has a straightforward argument: Trump abused his power and obstructed congress, and was impeached on those grounds. “The impeachment power,” it argues, “is an essential check” on presidential authority, “and congress must exercise this power when the president places his personal and political interests above those of the nation. President Trump has done exactly that.”
The brief alleges that Trump abused his power by exerting pressure on a foreign country to interfere in a US election for his own personal political benefit, thus undermining America’s electoral process and its foreign policy. He wanted Ukrainian President Volodymyr Zelensky to announce an investigation into Joe Biden, and the Ukrainian energy firm on whose board his son Hunter sat, and into allegations that Ukraine interfered in the 2016 election. The brief argues that “there is no evidence that vice-president Biden acted improperly”, and the Ukrainian-interference theory is “not only pure fiction, but malign Russian propaganda”. He sought those investigations, the Democrats say, “for personal and political reasons rather than legitimate foreign policy reasons”.
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EDITORIAL
21 January 2020
Australia: show the world what climate action looks like
The fires are a wake-up call. The country’s leaders must now act on overwhelming evidence and public opinion.
Last November, as bush fires began to roar across large swathes of Australia, people started to ask: could such an extreme event be connected to climate change?
Prime Minister Scott Morrison dodged the question. Gladys Berejiklian, the premier of the state of New South Wales, where the fires have had the biggest impact, said that during the unfolding disaster was not the time to talk about climate change. Two months on, this season’s devastating conflagrations have killed at least 28 people and an estimated one billion native animals; burnt about 10 million hectares of vegetation; and destroyed more than 2,000 homes.
The top priority is to protect lives and ecosystems. But the nation’s leaders must surely realize that they not only need to talk about climate change, but also need to act decisively to reduce the emissions that are driving it.
Australia’s leaders have known for many years that climate change would make bush fires worse. They were warned in an independent report commissioned by the national and state governments in 2008 that from 2020 onwards, fire seasons would start earlier, end later and be more intense.
But as Nature has frequently reported, the country’s politicians delayed meaningful action through a wasted decade of arguments over whether human activities are causing climate change — in the face of overwhelming scientific evidence that they are. Undoubtedly, one reason for this is that Australia — which is the world’s largest coal exporter — has repeatedly prioritized the coal industry’s needs over the planet’s.
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Virus fear goes global
As Chinese New Year looms, Beijing confirms a new strain of coronavirus can be spread from human to human.
January 21, 2020
Just as the world’s largest annual migration of people has begun this week in China, and among ethnic Chinese populations globally, health authorities there have confirmed a new and potentially deadly strain of the coronavirus is now spreading from human to human.
The timing could not be worse.
Hundreds of millions of people are taking boats, planes, trains and automobiles back to their families to celebrate Chinese New Year, fuelling fears of a major outbreak.
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The strength of the US consumer is overstated
The hard economic data shows growth in jobs, total pay and total hours worked are stuck in cyclical downswings.
Lakshman Achuthan and Anirvan Banerji
Jan 23, 2020 — 7.35am
The consensus is that the US consumer is still strong enough to propel the economy forward even though the manufacturing sector has weakened. This view underpins expectations for improved corporate earnings in 2020. But the hard economic data strikes a discordant note.
In particular, growth in industrial production on a year-over-year basis remains in a decisive downturn, sliding deeper into negative territory. Indeed, the production actually declined in 2019 amid losses in manufacturing job in recent months, fuelling talk of a recession in that part of the economy.
The undeniable weakness in manufacturing has caused the consensus to trumpet the strength of the consumer. Yet, the consumer, while reportedly confident, is not spending hand over fist. Rather, weakening sales trends underscore a sustained slowdown in consumer spending.
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Facts trump the fears
The US President Donald Trump was the clear winner at the World Economic Forum at Davos, despite the best efforts of climate doomsayers.
January 22, 2020
The theme for the World Economic forum in Davos this week is “Stakeholders for a Cohesive and Sustainable World”. It’s a noble aim but one that’s looking increasingly unlikely.
“Davos Man” — the pejorative shorthand for the rich liberal elite who catch up in the Swiss Alps each year — is still in control of the agenda of the world’s most elite conference. The vague nouns beloved of Davos men and women — inclusion, resilience, climate action, sustainability — peppered the program, which is in full swing this week with more than 3000 delegates in attendance.
But their political power is slipping away, starkly illustrated when the conference’s two highly unlikely protagonists — Donald Trump and Swedish teen activist Greta Thunberg — were anything but cohesive on Wednesday.
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Trump's Fed nominees will mean easier money
If confirmed, Shelton and Waller's preference for easy money could lead the Fed toward lower interest rates, implying higher employment and faster inflation.
Narayana Kocherlakota
Jan 24, 2020 — 3.11am
There are two vacancies on the Federal Reserve Board of Governors. President Donald Trump has nominated monetary policy experts Judy Shelton and Christopher Waller to fill them, subject to confirmation by the US Senate.
The president picked Shelton and Waller because they are seen as favouring easier monetary policy. As governors, how would the views of Shelton and Waller affect the Fed's choices?
Here are some relevant facts: No governor has dissented from a Federal Open Market Committee decision since 2005. There has been no FOMC meeting in which more than one governor dissented since 1993. Three governors have dissented at the same meeting only twice since 1936.
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Federal Reserve's repo market fix is no fix at all
In essence, the Fed has become the lender of first resort when it should be the lender of last resort and offer repo at a penalty rate.
Jim Bianco
Jan 24, 2020 — 4.10am
With their best intentions in mind, central banks and governments have instituted rules to ensure that financial institutions have enough liquidity to withstand another crisis.
But liquidity coverage ratios, high quality liquid assets rules, Basel 3 compliance, global systemically important bank charges, and the soon-to-be-implemented net stable funding ratios have made supplying the all-important repo market's needs so byzantine that no one really knows what exactly is required, least of all the Federal Reserve.
The Fed understood these new rules posed an uncertainty risk, which is why they regularly surveyed and consulted primary dealers for feedback. And yet, with no real experience with these new rules, everyone was essentially guessing.
Add massive issuance of US Treasury securities to meet trillion-dollar budget deficits and by mid-September the all-important repo market broke, unable to handle ever-increasing demand.
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‘New chapter’: Boris Johnson signs withdrawal agreement
· AFP
· 12:47PM January 25, 2020
British Prime Minister Boris Johnson on Friday hailed “a new chapter” in UK history as he signed its divorce treaty with the EU, clearing another hurdle before the country exits the bloc next Friday.
It allows Britain to end its decades-long membership of the European Union and leave its closest neighbours and trading partners after several years of domestic acrimony and delays.
“The signing of the withdrawal agreement is a fantastic moment, which finally delivers the result of the 2016 referendum and brings to an end far too many years of argument and division,” Johnson said in a statement.
“This signature heralds a new chapter in our nation’s history,” he added on Twitter, alongside a photo of the occasion.
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I look forward to comments on all this!
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David.
