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Another week goes by and President Trump keep firing people and sinking more into the mire on how he handled the COVID-19 crisis. One really wonders how he can expect to be re-elected with 35 million workers having lost their jobs in 6 weeks.
In the UK we are seeing nervous re-opening steps which really feel as though they will go wrong badly at some point. We await developments…
In OZ we are trying to slowly get back to normal. It feels like a day to day thing with considerable uncertainty! Just how we are going to manage a return to normal from a situation where over ½ our workers are on Government payments and not properly employed is a real challenge! Of course, where we are going with our Chinese relationship is really a worry as well!
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Major Issues.
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Ray Dalio sees Monopoly money as easiest way out of debt crisis
Nathan Crooks
May 11, 2020 – 7.54am
"Printing money is the most expedient, least well-understood, and most common big way of restructuring debts," Ray Dalio wrote on Thursday in an appendix to the latest chapter of his upcoming book on the changing world order. "It's like playing Monopoly in a way where the banker can make more money and redistribute it to everyone when too many of the players are going broke and getting angry."
The billionaire investor and founder of Bridgewater Associates said that money printing, when compared with the other tools that policy makers can use like austerity, debt defaults and higher taxes, feels "good rather than bad" to most people.
"It's tough to identify any harmed parties that the wealth was taken away from to provide this financial wealth, and in most cases it causes assets to go up in the depreciating currency that people use to measure their wealth in so that it appears that people are getting richer," Dalio wrote. "You are seeing these things happen now in response to the announcements of the sending out of large amounts of money and credit by central governments and central banks."
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Pandemic has shown us we've less in common with the US than we thought
Shaun Carney
May 10, 2020 — 11.32pm
For 20 years, Australia had existed comfortably in a fog of delusion. Successive governments and most Australians convinced themselves that the emerging world order was one in which they could do pretty well.
Our great and powerful friend the United States would provide strategic defence, just as it had since World War II. America was a country with which we had so much in common. It was a robust liberal democracy whose culture we believed we understood almost on a granular level.
The relationship didn’t come for free. We were required to join in the pointless invasion of Iraq, but that was mainly for show; our forces were deployed to places where the danger was relatively minimal.
While the Americans looked after us in what we regarded as a “special relationship”, China, an autocratic communist state seen as relatively benign because it was a developing nation, would provide the dollars through trade and investment.
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David Tepper sees biggest stock bubble since '99
Melissa Karsh
May 14, 2020 – 3.10am
New York | Appaloosa Management's David Tepper sounded a strong note of pessimism on the state of the stock market, calling it the most overvalued ever outside of the bubble of 1999.
Valuations on some individual stocks on the Nasdaq are "nuts," Tepper told CNBC on Wednesday.
Mr Tepper's remarks echoed those of Stan Druckenmiller, who said yesterday that the risk-reward calculation for equities was the worst he's seen in his career. Their views injected a note of pessimism in a market that has rallied almost 30 per cent since its March low despite the fact that the coronavirus pandemic has pummeled the US economy.
"People have to be very careful about some of these smaller Nasdaq names that are just nuts," said Mr Tepper. Some are "ridiculously" overvalued. One that's probably not, he said, is Amazon.
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Market rally is optimistic, says Costello
May 14, 2020 – 10.14am
The chairman of the $162 billion Future Fund, Peter Costello, says the recent stock market rally is "optimistic" and investors may have failed to factor in that the economy won't bounce back to its pre-coronavirus state.
The local S&P/ASX 200 Index is up almost 19 per cent from its March 23 low.
"Markets have decided the crisis is over," Mr Costello said. "I’ve got to say, its a pretty optimistic view that it’s all over now.
"I don’t know that it really makes a big enough allowance for … that even when we do come back, we’re not going to come back to 100 per cent of where we were.
"There will be an ongoing economic downturn which will take some time to overcome."
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Scott Morrison’s delicate dance with the China dragon
Scott Morrison is not for turning on China. But few people in our political and security system doubt that China has embarked on a campaign of intimidation of unknown duration to test Australia’s resolution. The nation has crossed a more dangerous threshold with China.
The danger lies not just in the conflict over the Prime Minister’s initiative for an inquiry into the origins of COVID-19. A showdown of some degree was destined to come given a deteriorating relationship for several years and flawed ministerial communication. The deeper risk is a locked-in conflict between two nations defined more as adversaries than partners.
This week Morrison was operating in two guises with China. His government works through the technical trade disputes on barley and beef while claiming in public this is merely a trade dispute, not political retaliation. Yet beneath the surface Morrison is drawing a line against China with his inquiry proposal — the calculation is that if Australia doesn’t push back against China now, even at a price, it will only need to push back later and pay an even higher price.
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The problem with alphabet forecasts
Every time I open an economic note these days I see Vs, as in V-shaped recoveries. Sometimes it’s a U, or a W. It seems every forecaster has an alphabet fixation, but they’re all basically the same: deep collapse, followed by return to previous level. Phew.
Even after Thursday’s shocking employment data the V’s kept coming. The thinking is that a fall must always be followed by a bounce. Childhood memories of trampolining are winning out over memories of falling out of trees onto the ground.
In some ways the ultimate V-shaped forecast was in Josh Frydenberg’s speech on Tuesday, although there was no chart therein, and while the Treasurer didn’t forecast a sharp recovery in so many words, he and the government seem to think that the private sector will lead us gloriously out of the wilderness within six months.
That’s pretty much exactly what he said: “Unleashing the power of dynamic, innovative, and open markets must be central to the recovery, with the private sector leading job creation, not government,” Frydenberg said
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Bushfire Crisis And Climate Policy
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Drought history in ice cores shows worst is yet to come
Major droughts have been common in Australia over the past 1000 years and dry spells more severe than the worst recorded by modern instruments are likely in the future, a new study has found.
Examination of ice core samples from Antarctica was used to reconstruct a more than 1000- year history of drought in southeast Queensland.
Results show Australia’s relatively short instrumental period is not representative of the full range of past climate variability.
“This means that current drought risk estimates are at best misleading and probably convey a false sense of security that is not justified, given the insights now available from palaeoclimate data”, a report in the Journal of Hydrology says.
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Coronavirus And Impacts.
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Coronavirus: Residential investment property’s darkest hour
Unlike the sharemarket, where investors are so keen on “bargain hunting” that the market regulator has been prompted to issue a warning, the residential property market is watching investors bolt for the doors.
Sharply lower new investor lending figures are the writing on the wall. Quite simply, many investors have lost heart on residential property.
The heart of the problem is that the numbers on running a residential investment property — which barely stacked up when things were “normal” — are now shattered by the prospect of falling house prices.
There is little point in seeking views from the property industry on the subject — absolutely everyone in the industry is invested in an endlessly rising market.
But the big banks are in an exceptionally useful position to shine a light on the national market. An ANZ report on the sector this week makes for a sobering read.
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Market gains are fools gold
Investors should prepare for another sell-off, warns equity fund manager David Pace.
May 10, 2020 – 11.59pm
David Pace, one of Australia's top-performing equity fund managers, says the days of market gains are numbered and investors should prepare for another sell-off.
The ASX has been on an incredible rally since hitting a low on March 23 as policymaker largesse and a willingness from investors to look through awful economic data has taken shares higher around the globe.
But Pace doesn't think the advance will last and investors should be wary about factoring in future gains. "I’m not expecting the upswing to continue," he says.
Describing the upswing in the weeks following one of the swiftest sell-downs in the history of the Australian sharemarket as "an inevitable rally" triggered by relief over signs of an eventual reopening of the global economy and some closing of short positions, Pace says the economic reality has yet to set in for investors.
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Real US joblessness is even worse than the official data
The official US jobless rate came in at a post-war record of 14.7 per cent on Friday. Actual unemployment could be as high as 33 per cent.
Updated May 10, 2020 – 11.47am, first published at 11.13am
Washington | America will take years to re-employ the 20.5 million workers made redundant just last month as the COVID-19 shutdowns generate “second-round” impacts on everything from customer-facing jobs to white-collar “knowledge” positions, economists say.
A catastrophic leap in the unemployment rate to levels not seen since the darkest days of the 1930s Great Depression has delivered a massive – but still incalculable – blow to the world’s biggest economy.
President Donald Trump and his top White House officials have conceded that April’s shattering 14.7 per cent jobless rate probably understates the true depth of unemployment, but on the other side have pointed to surveys of sacked workers showing around four in five believe they will be reinstated when the economy reopens.
“It is hard to exaggerate, taken at face value, how bad the jobs numbers are,” said Australian-American economist Paul Sheard from the Harvard Kennedy School.
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How COVID-19 will permanently change working life
COVID-19 has created many business challenges with no industry left untouched. While we have a long road ahead of us to emerge from this crisis, there are clear signs of a permanent and – I believe – a positive impact on how we all work. Within this period of rapid adjustment to modified work life, a permanence is setting in, and it’s difficult to see things reverting to what they were.
As a technology company dedicated to agile work practices, we believe colocation enables teams to do their best work. We support the principle that everyone should have equal access to information, and autonomy to make decisions. In a global business with engineering teams located all over the world, it was simplest to achieve this when people were in the same office. We’ve spent time and effort to create physical environments and ways of working to deliver on this vision.
Business agility in this new world is only possible where there has been an appropriate investment to create and support a workplace technology stack with strong foundations. It must be easy to use, enabling people to access information and connect with colleagues or clients. This was important before the pandemic but is now essential.
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There is no 'snap-back' coming
Consumers and exports are not going to tow the economy out of trouble. Only massive government action can do that.
May 11, 2020 – 3.48pm
Would you prefer to double your salary or to double the rate at which it will grow in the next few years? Personally, I would rather a high-income that’s growing slowly. But the Morrison government is telling anyone that will listen that we shouldn’t focus on the 10 per cent reduction in national income headed our way because that lower income will ‘snap back’ soon.
The Reserve Bank of Australia (RBA) is forecasting around a 10 per cent hit to GDP by June and, optimistically, that the rate of GDP growth will surge to over 6 per cent for the next two years. If all that pans out, we’ll be back to where we were in two years’ time. Isn’t that something to look forward to!
To put the expected 10 per cent collapse in GDP into perspective, the 1991 recession saw GDP fall by 1.4 per cent, and it still took 12 months before the economy was back to where it started. Despite the fact we’re now preparing for a fall seven times deeper than the 1991 shock, the RBA says it will take less than two years to recover from it – if you assume that GDP will grow at over 6 per cent for two years. It is heroic stuff, given the economy has grown at 2.5 per cent since the Coalition won in 2013.
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Deep negative rates the only way down the debt mountain
Until inflation and real rates rise from the grave, interest rates at minus 3 per cent or lower are the only way to manage crippling government and corporate debt.
May 11, 2020 – 1.08pm
For those who viewed negative interest rates as a bridge too far for central banks, it might be time to think again.
Right now, in the US, the Federal Reserve – supported both implicitly and explicitly by the Treasury – is on track to backstop virtually every private, state, and city credit in the economy. Many other governments have felt compelled to take similar steps.
A once-in-a-century (we hope) crisis calls for massive government intervention, but does that have to mean dispensing with market-based allocation mechanisms?
Blanket debt guarantees are a great device if one believes that recent market stress was just a short-term liquidity crunch, soon to be alleviated by a strong sustained post-COVID-19 recovery. But what if the rapid recovery fails to materialise? What if, as one suspects, it takes years for the US and global economy to claw back to 2019 levels? If so, there is little hope that all businesses will remain viable, or that every state and local government will remain solvent.
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Disconnect: Sharemarkets are ignoring the economic devastation the pandemic is wreaking
Stephen Bartholomeusz
Senior business columnist
May 11, 2020 — 12.29pm
On Friday, the US produced its worst unemployment numbers since the Great Depression. Its share markets rose.
The data – an unemployment rate of 14.7 per cent as 20.5 million Americans lost their jobs within a month – may be just a foretaste of what’s to come.
US Treasury Secretary, Steve Mnuchin, said at the weekend the job numbers would probably get worse before they get better, forecasting a "very, very bad" second quarter.
Including those who have lost their jobs since the April data was compiled, and those who have given up looking for work, he said the real unemployment rate could already be close to 25 per cent. During the Depression, US unemployment peaked at just under 25 per cent.
He also said that "next year is going to be a great year." It would appear that Mnuchin, like his boss, Donald Trump, believes in a "V-shaped" recovery.
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What the new economic world order will look like after the virus
By Tom Stevenson
Updated May 12, 2020 — 9.17amfirst published at 8.05am
Jim Callaghan, an underrated UK prime minister, put it best just before the 1979 general election. "You know there are times, perhaps once every 30 years, when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of. I suspect there is now a sea-change and it is for Mrs Thatcher."
Give or take a few years, his analysis was spot on. Looking back from the winter of discontent, he knew that the major shift to greater government influence in economic affairs that the Depression and Second World War triggered had run its course. He did not know what would cause it, but he also understood that the Reagan/Thatcher experiment that was turfing him out of power would be time-limited, too.
These sea-changes are never watershed moments, but an accumulation of finally unstoppable forces book-ended by crises. The Depression and global conflict transformed what the public wanted to create in the post-war era; the rolling crises of the Seventies provided the intellectual justification for the new small-state philosophy that followed; and it has taken 12 years from financial crisis to COVID-19 to see the pendulum swing back again to the economic and social order that will most likely dominate the next 30 years.
What might this new order look like? My investment strategy colleagues at Fidelity have just published a paper, The New Economic Order, which predicts three key features of the new world: state intervention, fiscal activism and continued Asian economic strength.
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Cash-strapped biotechs on the brink as sector faces more layoffs
By Emma Koehn
May 12, 2020 — 12.00am
The boss of Australia's largest life sciences investor has called for urgent policy action to ensure billions of dollars continue to flow into cash-strapped biotech businesses at risk of shutting their doors.
"There's a crop of fabulous, promising biotechs all five to 10 years old and they're at risk of being lost," chief executive of the Medical Research Commercialisation Fund Dr Chris Nave said.
Dr Nave, who has previously warned Australian medical research businesses will hurt in the face of coronavirus, is now calling for a national blueprint to address a shortage of private capital.
This includes scrapping the planned caps to the research and development tax incentive that would otherwise strip at least $1.35 billion from the rebates system and also fast-tracking this year's payment claims.
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NAB’s Ross McEwan: I have never seen anything like this
New National Australia Bank chief executive Ross McEwan has told parliament he has never seen such an immediate and deep impact on the economy as the one triggered by the COVID-19 pandemic.
In a letter to Liberal MP Tim Wilson, chairman of the House Economics Committee, Mr McEwan also said many of NAB’s customers had lost their jobs, and many businesses that were successful now had zero cash flow.
“In my 35-year career in finance, I have never seen such immediate and deep impact on the economy and the health of the global community as that caused by this pandemic,” said Mr McEwan, who last year moved to NAB after several years as the chief executive of the UK’s Royal Bank of Scotland.
“Our response to COVID-19 has required a rapid and significant change in the way our 34,000 employees work, with more than 80 per cent — including our customer-facing teams — working from home.
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Experts call for urgent research on coronavirus-linked child disease
By Rob Harris
May 13, 2020 — 5.00am
Urgent medical research into a mysterious COVID-19-linked illness suspected to have caused the death of at least three children in the United States has been commissioned by Australian health authorities ahead of a meeting of the nation's leaders this week.
Chief Medical Officer Brendan Murphy has asked Australia's leading paediatric experts for a report on Kawasaki disease, which is the closest known illness to that which has developed in almost 100 children in the US, including newborns and teenagers, in the past two months.
Authorities are also preparing for further potential COVID-19 outbreaks this winter, with a Bureau of Meteorology summary provided to medical experts predicting conditions in southern Australia, particularly in Victoria, over the coming three months will mirror those in European regions that had the highest infection rates.
Detailed minutes from a meeting of the nation's leading medical expert panel, seen by The Age and The Sydney Morning Herald, reveal Professor Murphy sought the latest up-to-date advice available on Monday in preparation to brief Prime Minister Scott Morrison and state and territory leaders on the situation at national cabinet on Friday.
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Why I cashed out of the COVID-19 rally
Clive Crook
May 13, 2020 – 7.11am
An investment strategy of "Don't just do something, sit there" has served me well over the years. So it was with some trepidation that I set it aside: As of Friday, alarmed by the recent surge of stock prices, I'm all cash.
It's clear, of course, that stock values in the aggregate are only weakly and unpredictably tethered to facts about the economy. History shows they're capable of departing from reality for impressively long periods. In terms of the fundamentals, former Federal Reserve chairman Alan Greenspan had good reason to complain of "irrational exuberance" in the US sharemarket at the end of 1996. Over the next three years the S&P 500 doubled before finally collapsing in 2000. At its lowest point in 2003 it was still higher than when Greenspan issued his warning. In 1996, "sell" was good economics, but terrible investment advice.
To be clear, there's little to be said for timing the market. And yet.
The initial sharemarket fall looked about right. The S&P 500 fell 34 per cent between February 19 and March 23, on the first estimates of the severe economic damage that COVID-19 and the measures needed to contain it would cause. What's perplexing is what happened after that. Between March 23 and the end of last week, the market rose 31 per cent, taking the index more than half of the way back to its previous high. Over the latter period, consensus forecasts of the likely output losses due to COVID-19 in the second quarter, and for the whole of 2020 and 2021, deteriorated.
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The wealthy know the right investing cliche to follow
With market volatility comes opportunities. Sophisticated family offices know that “cash is king” and are running high liquidity levels.
James Wright
May 13, 2020 – 8.23am
Industry wisdom such as “it’s not timing the market but time in the market” may be the right cliche to encourage retail investors to stay invested, but that’s not how sophisticated wealthy individuals invest their money.
Investing always requires looking into the future and making a range of often-heroic assumptions on geopolitical, climate, economic, consumer and technology issues. The rule of blindly being fully invested is not one wealthy investors follow. Liquidity is always undervalued until you really need it.
After the bumper rally in April, the smart money is banking some profits and again sitting on the sidelines.
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Don't expect a V-shaped recovery, says BHP
May 13, 2020 – 12.00am
BHP chief executive Mike Henry has warned the global economy will not recover quickly from the coronavirus and says his signature industrial relations reform has allowed BHP to respond ''nimbly'' to the challenges thrown up by the pandemic.
Mr Henry told investors on Tuesday night that BHP was continuing to sell all its products and receive prompt payment from customers, despite markets for oil, gas, coking coal, thermal coal and copper being depressed.
Mr Henry said BHP's biggest customer, China, appeared to be making a ''V-shaped recovery'' after its bout with the virus, but investors should not expect the same elsewhere.
''The G20 nations have committed more than $US7 trillion ($10.8 trillion) of fiscal stimulus. This has gone some way to cushioning the damage to underlying economies and commodity demand and will help support a faster recovery,'' he told the annual Bank of America Merrill Lynch conference.
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This is a deep hit to the budget -- but it can spring back
If the ticket to the economic normal is the economy itself, that says Australia is about to have a new Public Enemy Number 1.
May 13, 2020 – 12.00am
Only a handful of nations have succeeded in beating back the virus – and the great news is that Australia ranks among them.
So we’re well-positioned to open our economy back up from a position of strength at the same time that others (such as the US) are trying to open theirs from a position of weakness.
You’d rather be us.
But how fast will we reopen? Many of the facts and figures that the Treasurer outlined in his speech on Tuesday revolved around the continuing push and shove between the federal government and the states: he made it clear that “there is no money tree” and that every day lost means the loss of more livelihoods.
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Liberals get ready for a fightback
“Liberal” has turned into a term of abuse for both the nationalist right and the radical left.
May 13, 2020 – 6.40am
The poet Robert Frost once defined a liberal as a man too broad-minded to take his own side in an argument. Well, it is now time for liberals to ditch that habitual tolerance and get ready for a fight.
The post-coronavirus world is unlikely to be a hospitable environment for liberalism. Traditional liberal concerns – protecting privacy, limiting the power of the state and guarding the rights of individuals – threaten to be brushed aside as unnecessary luxuries, as nations struggle to restore economic and physical health.
The pandemic has already forced people to tolerate massive infringements on basic liberties, such as the right to work and to associate freely. Fully re-establishing those rights may take years.
Meanwhile, new forms of surveillance allow governments to track and control the movements of their citizens. Measures introduced in the name of disease control may prove too “useful” to be withdrawn after the pandemic. The economic disaster caused by COVID-19 has also caused a huge expansion of the state that will not be quickly reversed.
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Banks slash savings rates on back of RBA moves
By Clancy Yeates
May 13, 2020 — 8.04am
Banks have taken the knife to term deposit and savings interest rates and there are warnings of more cuts on the cards as extraordinary stimulus policies drive down the cost of money.
Major banks have in recent weeks cut rates across a range of term deposits, in what one expert calls an unintended consequence of the unconventional policies to support bank funding in response to the coronavirus pandemic.
Commonwealth Bank in recent days cut a key term deposit rate it had promoted as a special, following a reduction in bonus rates from Westpac last week, and these are just the latest in a string of rate cuts across the industry.
Comparison website Canstar reports there were 167 changes to term deposits last week, of which 164 were cuts, and its finance expert Steve Mickenbecker said the trend reflected ultra-cheap inter-bank lending rates.
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Health experts concerned Australians slipping back to pre-COVID habits
By Rob Harris
May 13, 2020 — 11.54am
Health authorities fear Australians are already relaxing social distancing measures beyond what is appropriate as they look to the private sector to help avoid further mass COVID-19 outbreaks.
As states begin to slowly reopen the economy, including restaurants and cafes in the coming days, a meeting of the nation's top health experts this week expressed concerned too many people would now disregard their coronavirus messages.
The National COVID-19 Coordination Commission is working with shopping centre management groups to plan for the return of shoppers as more and more Australians begin to venture out of their homes and return to visiting stores.
Extensive minutes of Monday's Australian Health Protection Principal Committee meeting, seen by The Age and The Sydney Morning Herald, details concerns from chief health officers that people will relax social distances measures, such as staying 1.5 metres away from one another.
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Just who is accessing their super early?
May 14, 2020 – 12.00am
The typical applicant for the government's early super withdrawal scheme is about 40 years old, employed in hospitality, arts or recreation and wants about $8000 from a balance of $50,000 or less, according to AMP.
The financial conglomerate analysed more than 53,000 applications from clients in the first two weeks of the scheme, returning about $370 million of superannuation to clients.
Key findings include:
- The average age of applicants is 40, with nearly 70 per cent under the age of 44.
- Seven-out-of-10 applicants have super balances of $50,000 or less.
- The average withdrawal amount is $8300.
- About 30,500 applied in the first week, falling to about 22,000 in week two.
Other funds, particularly industry funds in the hospitality sector, are likely to have a younger demographic than retail funds such as AMP.
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'This virus may never go away,' WHO says
By Emma Farge and Michael Shields
May 14, 2020 — 6.31am
Geneva: The coronavirus that causes COVID-19 could become endemic like HIV, the World Health Organisation says, warning against any attempt to predict how long it would keep circulating and calling for a "massive effort" to counter it.
"It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away," WHO emergencies expert Mike Ryan told an online briefing on Wednesday.
"I think it is important we are realistic and I don't think anyone can predict when this disease will disappear," he added. "I think there are no promises in this and there are no dates. This disease may settle into a long problem, or it may not be."
However, he said the world had some control over how it coped with the disease, although this would take a "massive effort" even if a vaccine was found - a prospect he described as a "massive moonshot".
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After COVID-19, how we can prepare for a new pandemic
· The Times
The virus hunters had spent five years tracking down their quarry, a colony of horseshoe bats teeming with an ominous collection of coronavirus strains.
In a single cave in the Chinese province of Yunnan a team of researchers found inside these small mammals all the genetic building blocks of SARS, a virus closely related to COVID-19 that killed nearly 800 people in 2003 while causing economic mayhem across Asia. They warned that all the elements were in place, as they presented their findings two years ago, for a new SARS-like disease to skip again from animals to humans.
As the world reels from the worst pandemic in a century, scientists are calling for new systems that react to these kinds of warnings.
They argue that we need new tools to track the emergence of exotic new pathogens and a battery of new anti-viral drugs to treat them. A pharmaceuticals industry incentivised to develop treatments for the rich world’s non-infectious diseases — diabetes, heart disease and dementia among them — should be nudged towards new priorities. Pandemic plans focused on influenza must be rewritten, experts say, while still recognising that the world is overdue a cataclysmic flu pandemic.
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Coronavirus-linked children's disease cases spike in Italy, France
By Vishwadha Chander
May 15, 2020 — 8.02am
Milan: Doctors in France and northern Italy, one of the areas hardest hit by the new coronavirus, have reported spikes in cases of a rare inflammatory syndrome in young children that appears similar to one reported in the US, Britain and Spain, according to a report in The Lancet.
The condition, "Pediatric Multi-System Inflammatory Syndrome Potentially Associated with COVID-19", shares symptoms with toxic shock and Kawasaki disease including fever, rashes, swollen glands and, in severe cases, heart inflammation.
Reports of cases have raised concerns that COVID-19, the disease caused by the novel coronavirus, could pose a greater risk to children than had been understood. COVID-19 so far has taken its greatest toll on the elderly and those with chronic health conditions.
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'Dysfunctional' mental health system needs boost in wake of pandemic: experts
By Dana McCauley
May 14, 2020 — 8.49pm
Experts are warning the current mental health system is ill-equipped to respond to a forecast 30 per cent spike in mental illness in the wake of the coronavirus pandemic, calling for a boost to services, similar to the response provided for COVID-19 patients.
Psychiatrist Ian Hickie, co-director of the University of Sydney's Brain and Mind Centre, said the "dysfunctional" public mental health system, in which patients cycle in and out of emergency rooms, was not equipped to respond to the crisis.
Former Australian of the Year and psychiatrist Patrick McGorry said there was "no shortage of solutions" to the crisis if decision-makers were willing to treat mental health with the same seriousness as the physical health challenge of the coronavirus, which sparked more than $2.4 billion in federal funding.
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Jobless queues will grow without direct help
By Shane Wright
May 14, 2020 — 3.45pm
The April job figures are terrible. But they are going to get worse.
While 104,500 people "officially" became unemployed, so dire is the nation's jobs market that total employment collapsed by almost 600,000.
That's 600,000 people without work, suffering financial pain as governments deal with the health threat posed by the coronavirus pandemic. Some of these people, if past recessions are a guide, will never work again.
The April jobless rate will go down in the history books as 6.2 per cent. But if you take into account the hundreds of thousands of people who simply gave up trying to find work, the true jobless rate is around 9.6 per cent.
Underutilisation - which takes into account unemployment and underemployment - is at 20 per cent.
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Pallas says fires cost state $500m, pandemic set to be '140 times worse'
By Benjamin Preiss
May 15, 2020 — 12.22pm
The coronavirus pandemic and the summer's calamitous bushfires have blasted Victoria's budget $773 million into the red – and Treasurer Tim Pallas has warned there will be much worse to come.
The latest economic figures for the year to March show the bushfires cost the Victorian economy about $500 million but that will be dwarfed by the pandemic's impact.
Mr Pallas said the economic hit from coronavirus could be 140 times worse. The fires equated to a decline in gross state product of 0.1 per cent but the pandemic would be much higher, at 14 per cent for the June quarter.
“That is a sign of the enormity of things that are really only just starting to unfold through these accounts,” he said.
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Alarm raised over pandemic-linked mental health crisis
By Noel Towell and Dana McCauley
May 14, 2020 — 11.30pm
Hundreds of thousands of Victorians could fall victim to a mental illness epidemic after the COVID-19 crisis, overwhelming an already stretched health system and costing hundreds of lives.
The Victorian government will publish scientific modelling on Friday predicting that without urgent action an extra 370,000 people in the state will seek treatment or be hospitalised in the next three years as a result of mental health problems related to the coronavirus emergency and there will be hundreds more deaths to suicide each year.
National cabinet will meet on Friday morning to decide on a major step in the nation's response to the looming mental health crisis, with the Victorian government urging its federal counterparts not to go for a cut-price option in their response.
The Victorian modelling, by Professor Patrick McGorry’s Orygen research institute, predicts the state’s young people will bear the brunt of the mental anguish with an extra 82,000 Victorians aged between 12 and 24 expected to be forced into treatment if substantial action is not taken by the state and federal governments.
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Markets 'fagile' but functioning: PM
National cabinet was briefed today by the treasury department head Steven Kennedy, Governor of the Reserve Bank Philip Lowe, and Wayne Byres, head of the Australian Prudential Regulatory Authority.
The Prime Minister Scott Morrison says the markets were “fragile” but stable and functional.
"We noted that our banking system has stood up well, but we must be conscious that the shock absorber in our system, whether it be the banking system or, indeed, in federal supports and other supports, they have limits. They are not endless”.
“And it’s essential that, as we move forward, that we continue to enable the credit to flow through our banking system, to support those businesses who are taking decisions to reopen, to re hire, and to move ahead,” he says.
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Top arts leaders use industry roundtable to call for rescue package
By Nick Miller and Nick Galvin
May 15, 2020 — 11.59pm
The Sydney Morning Herald and The Age last week convened a roundtable of some of Australia's performing arts leaders to discuss the current crisis and map a way forward. This is an edited transcript of the one-hour discussion.
Q - How are you going at the moment?
Rory Jeffes, CEO Opera Australia: Friday the 13th [of March] will live in my brain for a very long time, when the Prime Minister announced [no gatherings] over 500 people. It immediately looked like an existential threat for Opera Australia. We needed to build in a refund of $16 million on future ticket sales. And that would have put us into insolvency. We budgeted $75 million worth of ticket sales this year. And that's decimated. We've achieved stability but that doesn't mean we're not bleeding.
Sophie Galaise, managing director Melbourne Symphony Orchestra: We're still in survival mode. With JobKeeper, we have talked to our musicians and we have said, 'hey, let's come back and have you work on a part time basis'.
Brett Sheehy, artistic director and CEO Melbourne Theatre Company: JobKeeper was a godsend. [But] when that ends in September if it's not revived, and if the mass gathering bans remain in place, we're in a whole new existential world.
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There's a lot to worry about in the economy, but here's what matters most
Ross Gittins
Economics Editor
May 16, 2020 — 12.00am
If you’re wondering what shape the economy will be in when we come out of lockdown, how the recovery will go – what to worry about and what not to – there are three key issues: the economy and its growth, the budget and its deficit, and unemployment and its consequences.
These three are different but related. The trick is to understand how they’re related. What causes what. The media bombards us with information about them — without pausing to put them into context.
For instance, we hear so much about the budget and its deficit (which adds to the huge amount of debt) that I’m sure some people think the budget is the economy. If only we could get the budget balanced, the economy would be right, right?
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Banks, regulators discuss help for jobless once mortgage freeze ends
By Jennifer Duke
May 17, 2020 — 12.00am
Banks and regulators are in talks about extending the length of time lenders can support the one in 10 households who have deferred mortgage repayments once their six-month grace period ends.
The big four banks delayed home loan payments for 424,000 customers worth about $150 billion in the March quarter as coronavirus shutdowns forced people out of work.
Australia's biggest home lender, Commonwealth Bank, deferred 144,000 payments worth $50 billion, while Westpac and ANZ delayed 105,000, worth $39 billion and $36 billion respectively, and National Australia Bank 70,000 worth $26.5 billion.
This represents about 12.5 per cent of CBA's home loan accounts, including Bankwest. About 7 per cent of Westpac mortgagors have deferred payments, totalling 9 per cent of total balances, and about 14 per cent of ANZ's Australian home loan customers are in the same position. NAB declined to provide further data.
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Safe as houses? How COVID-19 will hit home buyers and builders
By Jennifer Duke
May 17, 2020 — 12.00am
The coronavirus pandemic has forced many households to think differently about how they work, educate their children and prepare for financial shocks. The Australian love affair with real estate is also about to be sorely tested.
The majority of banks, leading economists and academics believe bricks and mortar won't pass unscathed through the downturn and property prices may fall significantly for several years.
For the majority of home owners, whose personal wealth is often reliant on the state of the property market, this will be most unwelcome news. Just three months ago the owner of a median-priced Sydney house had just been named a millionaire – again – while Melbourne’s median prices were nudging $820,000.
At that time economists were just starting to mention coronavirus as a possible "dampener" on the property market.
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Royal Commissions And The Like.
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Code of conduct agreed on aged care visits
Aged care providers have agreed with seniors advocates on a code of conduct for nursing home visits during the COVID-19 pandemic, ending a sector stoush that was creating confusion among care residents and their families.
Residents and providers must navigate an agreed approach to visits, though the code will give providers control over the numbers of visitors inside the home and the option to replace where necessary face-to-face visits with visits through a window or another way to connect.
The exception is for residents who are dying, or those who have a visitor that contributes regularly with their care, such as the family of people with dementia who help with meals or behaviour support, who can have longer visits.
“Residential care homes, residents and visitors need to work together to find the right balance between protecting residents from COVID-19 and providing them with vital social connections and support,” the industry code says.
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National Budget Issues.
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Budget deficit to hit $143b this financial year: Deloitte
May 11, 2020 – 12.01am
The federal deficit could blow out to a record $143 billion this financial year due to the massive government spending and sharp economic downturn caused by the coronavirus, one of the nation's leading budget forecasters predicts.
The forecast, contained in the annual Budget Monitor by Deloitte Access Economics, comes as Treasurer Josh Frydenberg prepares to give an update on the state of the economy on Tuesday with the warning "there is no money tree''.
Deloitte predicts cumulative deficits across this and the next three financial years of $359 billion. It forecasts the deficits to shrink rapidly – to $32.6 billion by 2022-23, which is at the end of the four-year outlook period and the year the next round of income tax cuts is legislated to begin.
It forecasts income tax receipts alone will fall by $50 billion across this and the next financial year due to spiralling unemployment, while company tax receipts will plunge by $26 billion over the same period.
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How Morrison can give us new economic mettle
Ross Gittins
Economics Editor
May 11, 2020 — 12.00am
A big part of getting economic life back to normal involves restoring people’s faith that the future will be full of opportunity for advancement. But that ain’t easy because the gloom of recession kills our belief that things could ever get better. And the longer we think like that, the truer it becomes.
So Scott Morrison needs to accept the paradox that returning the economy to normal demands that we don’t return to squabbling politics as usual, nor to governing primarily in the interests of the Liberal Party base and its corporate donors.
Why not? Because it wasn’t working well even before the virus arrived. The economy’s growth was weak and, that being so, business was reluctant to invest. Morrison is right to say we must grow our way out of debt and deficit, and that – ultimately, at least – we need a private sector-led recovery.
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Card data shows strong spending recovery
May 12, 2020 – 9.42am
Credit and debit card data show Australians are out spending again in force with their food, alcohol and home furnishing spend now higher than this time last year as easing COVID-19 restrictions.
Commonwealth Bank data shows that while overall spending in the week to May 8 is still down 2 per cent on the same week last year, it has bounced from mid April where spending was down 20 per cent on the same week last year.
Smaller states and territories recorded positive growth compared to a year ago and Queensland turned positive, indicating its earlier easing in shutdown measures is working to stimulate the economy.
There is room for even further growth.
"We do expect to see more spending shifts as some restrictions are being lifted in each state," CBA's Belinda Allen said, "There are differences as to what is allowed in each state and we would expect to see this represented in this data."
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Westpac tightens credit for self-employed amid COVID-19 risks
By Clancy Yeates
May 12, 2020 — 12.00am
Westpac is tightening borrowing capacity for self-employed customers and people living in areas that are dependent on tourism, a move aimed at reducing risks sparked by the coronavirus pandemic.
The country's second-biggest bank on Monday said self-employed borrowers taking out new loans would be allowed a maximum loan-to-valuation (LVR) ratio of 80 per cent, or 85 per cent for some medical workers including doctors, dentists, vets, pharmacists and optometrists.
Previously the bank had allowed owner-occupiers who are self-employed to borrow up to 95 per cent of a property's value, or 90 per cent for property investors.
The banking giant will also introduce an LVR cap of 70 per cent for new loans in postcodes in tourism-heavy areas, mainly in Queensland. "With recent changes to Australia’s economic outlook due to COVID-19, we are making some temporary adjustments to our home lending criteria," a bank spokeswoman said.
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Business confidence bottoms out at worse than 1990s recession
May 12, 2020 – 11.58am
Business confidence has bottomed but is still well below the lowest point of the 1990s recession, and trading and employment conditions have weakened further.
The NAB Business Survey showed confidence rose 19 points in April as Prime Minister Scott Morrison started to discuss possible lifting of COVID-19 restrictions. But the improvement left the confidence index at -46 index points in the month – two times below the 1990s recession level.
"Confidence saw a rebound in the month after the sharp fall last month, but this provides little comfort given it remains around twice as weak as the 1990s recession," NAB Group chief economist Alan Oster said.
Confidence in business has now started to track confidence in households which has jumped more than 37 per cent since its record low in the last week of March.
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'We got this covered': PM buoyed by record $19b bond sale
Updated May 13, 2020 – 6.41pm, first published at 2.25pm
The Australian Office of Financial Management's chief executive Rob Nicholl says he was "taken aback" by the scale and speed with which investors rushed to buy a new 10½-year debt offering that at $19 billion is the largest government bond sale in Australian history.
Banks, fund managers, central banks and traders bid submitted over $53 billion of bids for the bonds, double April's record order book size before the deal size was set at $19 billion.
The total issue size makes the raising the largest capital markets transaction in Australian history, according to Citi.
"The world is riskier and if other investors are seeing that then liquid high quality sovereign bonds are going to find the wind behind them,” said Mr Nicholl, who heads up the debt management agency charged with meeting the government's funding task.
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Almost 600,000 people lost work in April
By Shane Wright
May 14, 2020 — 11.45am
Australia has suffered its single largest monthly fall in the number of people holding a job, with a record 594,000 drop in the number of workers through April.
Figures released by the Australian Bureau of Statistics on Thursday showed the unemployment rate spiking a full percentage point to 6.2 per cent last month. It's the highest jobless rate since September 2015.
It would have been even higher if not for the federal government's $130 billion JobKeeper wage subsidy scheme, which has officially kept many people in a job even if they are not working.
The participation rate, which measures the number of people working and also looking for it, fell 2.4 percentage points. This also helped to keep a lid on the overall jobless rate.
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House prices could fall 32 per cent under 'prolonged' slump: CBA
By Clancy Yeates
May 13, 2020 — 3.43pm
The Commonwealth Bank has released modelling showing house prices could fall by almost a third by the end of 2022 under a prolonged economic slump, as it braces for a sharp rise in soured loans caused by the coronavirus.
However, chief executive Matt Comyn also cautioned the outlook was highly uncertain and the housing market would be strongly influenced by the level of unemployment, adding that he did not expect a sharp drop in housing in the short-term.
The country's biggest bank on Wednesday became the latest lender to highlight the possibility of sharp falls in the property market if the economy faces a long and severe recession.
As the bank reported a 41 per cent drop in profits during the March quarter to $1.3 billion, CBA unveiled modelling of various scenarios that might face property owners as a result of the economic shock unleashed by coronavirus.
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Job subsidy plans are at breaking point
May 14, 2020 – 7.34pm
Prime Minister Scott Morrison has signalled the $130 billion JobKeeper program could face cost blowouts while the $14 billion JobSeeker may need to be reined in despite the biggest ever monthly collapse in employment.
After almost 600,000 jobs were lost and hours worked plunged 9.2 per cent in April, the government said it could start to reintroduce mutual obligation requirements for 1.6 million on JobSeeker payments by June 1 based on Treasury advice and the easing of COVID-19 restrictions.
Mr Morrison, who described the rising jobless rate as devastating and a harder situation than the last 1990s recession, said the biggest wage subsidy program in Australian history was now open to adjustment.
"This is a tough day for Australia, a very tough day," Mr Morrison said.
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'Clock ticking' on loan holidays, wage subsidies
May 15, 2020 – 6.36pm
Banks have deferred repayments on $220 billion of loans and 7.7 million people are being paid government welfare, triggering a warning from Prime Minister Scott Morrison that the economy must reopen because the "clock is ticking" on the financial support banks and the government can afford.
The number of people enrolled in JobKeeper has surpassed 6.1 million, putting the wage subsidy program on track to blow past the $130 billion budgeted cost with new applications from businesses still open until May 31.
A further 1.6 million unemployed individuals are on the old dole, known as JobSeeker, which has been doubled to $550 a week during the coronavirus crisis.
As part of an initial unwinding of the extraordinary support measures, Mr Morrison signalled the government's $1.6 billion "free" childcare program would likely end on June 28, and not be extended for a full six months, because it was not sustainable for daycare operators or the government.
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Health Issues.
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Hospital treatment 'doesn't get better' than when it's done at home
By Rachel Clun
May 11, 2020 — 12.00am
Dedicated teams of nurses and allied health professionals across the state have been treating coronavirus patients without those patients having to set foot in hospital.
While seriously ill COVID-19 patients are treated in hospital intensive care units, about 80 of the patients being looked after by NSW Health are being treated by "hospital in the home" teams.
In northern NSW, Lismore Base Hospital’s hospital in the home (HITH) team is made up of six staff who work around the clock seven days a week to deliver care to patients in their own homes.
Clinical nurse specialist Rebecca Lyon, who organises the team, says they have looked after 13 patients who were either COVID-19 positive or deemed at high risk of getting it in the past four weeks.
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Coronavirus: depression ‘a $5bn hit to productivity’
May 11, 2020
The looming mental health crisis linked to mass unemployment is set to cost up to $5bn in lost productivity and threatens to undermine the longer-term economic recovery, according to new modelling of the national wealth impacts of COVID-19.
The “tsunami of newly unemployed” and the disruption to education and training for young people is forecast to deliver at least a $4.5bn hit to economic productivity over the next five years and could lead to the greatest decline in national wealth since the Great Depression.
Under a worst-case scenario of a 15 per cent jobless rate, almost $1.2bn would be lost in productivity next year alone due to unemployment and its associated mental health issues.
This would accumulate over the next five years unless the unemployment rate could be turned around quickly. At least 10 per cent of the total loss of productivity could be attributed to an increase in mental health problems and suicide directly related to COVID-19.
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Drug shortages lower ICU capacity, stall elective surgery reboot
By Dana McCauley
May 11, 2020 — 10.06pm
Australian hospitals are facing shortages of crucial drugs needed to operate ventilators, putting at risk the capacity of intensive care units to respond to a surge in COVID-19 patients and delaying the ramping-up of elective surgery.
Hospitals are struggling to source drugs including propofol and cisatracurium, used to sedate patients before they are intubated, which are needed to take ICUs to full capacity if there is a second wave of coronavirus infections after restrictions are lifted.
"As part of Australia's COVID-19 response, hospitals are still on standby for a patient surge and remain concerned at the number of delayed or not-supplied orders from suppliers," Society of Hospital Pharmacy Australia chief executive Kristin Michaels said.
The society, which has been monitoring stock levels in recent weeks, found 18 per cent of the 60 hospitals it surveyed in early May did not have enough propofol to manage ventilated patients at full capacity for a single day.
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The hidden wave: what happens when everything else is put on hold
May 15, 2020 – 11.21am
When Australia's public health system pivoted to address COVID-19, many other serious diseases fell from view.
Australia is a world leader in the management of this pandemic but the health costs of this achievement are emerging and it looks like they will be high.
In the rush to build capacity to cope with the pandemic, hundreds of thousands of Australians had their regular health needs sidelined.
While they complied because it served the greater good, the consequences will be felt for years to come. Surgeons predict Australia will be hit by "an unseen wave" of overdue elective surgery.
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Coronavirus Australia: Hospitals facing 18-month backlog of elective surgery
12:00AM May 16, 2020
Hospitals will be under pressure to clear a backlog of elective surgery that is likely to take as long as 18 months to clear, as the nation’s Chief Health Officer gave the green light for surgeons to resume all non-urgent operations.
In states with low numbers of cases of COVID-19, or none at all, the elective surgery resumption will ramp up quickly, while NSW is taking a cautious approach and will proceed more slowly.
There will be an immediate full resumption of all elective surgery in South Australia, while Western Australia announced it would allow 50 per cent all categories of elective surgery to proceed from Monday. It’s expected that Victoria and Queensland will also shortly allow half of all elective surgeries to go ahead, while other states and territories are yet to decide on a timetable.
Chief Health Officer Brendan Murphy said on Friday there were now only about 50 patients in hospitals around the country suffering with COVID-19, with 12 on ventilators. “Our hospital capacity is around 50 to 60 per cent so there is now pretty good room for further expansion (of elective surgery),” Professor Murphy said.
Hospitals around the country are currently able to conduct elective surgery across all categories, capped at 25 per cent of capacity.
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International Issues.
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US and China on the brink of a new type of cold war
A global pandemic might have served as an occasion for more co-operation between the superpowers: instead, it has only made the divide more obvious.
James Kynge, Katrina Manson and James Politi
May 10, 2020 – 9.39am
Hong Kong/Washington | Matt Pottinger, a senior White House official, delivered a searing message to China last week in a video later posted on YouTube.
Speaking in pitch-perfect Mandarin, he praised Chinese historical figures who supported democratic ideals and helped in the 1940s to write the Universal Declaration of Human Rights, which remains a bedrock for liberal values today.
“The cliché that Chinese people cannot be trusted with democracy was . . . the most unpatriotic idea of all,” said Mr Pottinger, the US deputy national security adviser. He lauded the Chinese who keep the flame of liberty alive today, including 20 Catholic priests who “refused to subordinate God to the party and the millions of Hong Kong citizens who peacefully demonstrated for the rule of law last year”.
Beijing’s reaction was withering. “Mr Pottinger thinks that he really understands China but from this speech it seems that he does not really understand China . . . because he holds a virulent bias against China,” said Hua Chunying, a spokesperson for China’s foreign ministry.
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Why the US is in serious trouble
America’s official unemployment rate hit 14.7 per cent on Friday, or 20.5 million people.
Actually it’s more like 20 per cent, closing on 30 million people, and is already as bad as, or worse than, the Great Depression.
The broadest measure of US unemployment – U6 – is 22.8 per cent, according to the Bureau of Labor Statistics, and separate to that the BLS says a lot of people answered the survey incorrectly and if they had been counted as unemployed, “the overall unemployment rate would have been almost 5 percentage points higher than reported” (said the BLS in its April report).
So… what, 27.8 per cent actual unemployment? Probably heading higher in May. Another measure is the employment to population ratio, which fell from 61 in March to 51.3 per cent in April.
Any way you look at it, the United States – the world’s most important economy - is in grave danger.
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Hopes recede for Brexit deal by year's end
May 10, 2020 – 1.00pm
London | Britain and the European Union return to the virtual negotiating table this week for talks on a post-Brexit free-trade deal, as hopes fade that they can avoid a potentially damaging cliff-edge end to the transition period on December 31.
Both sides are working to a June 30 deadline, after which it won't be possible to extend the standstill Brexit transition period that began on February 1 this year.
The talks have been sideswiped by the coronavirus pandemic, which has distracted governments and which also put both lead negotiators, David Frost and Michel Barnier, into self-isolation in March.
And there's scant evidence that either side is willing to climb out of the trenches they dug at the outset of the talks.
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China's cereal killer threat to farmers
May 10, 2020 – 11.52am
Australia is not ruling out taking China to the World Trade Organisation should Beijing make good on a growing threat to impose crippling tariffs of more than 80 per cent on imports of Australian barley.
Souring relations between China and Australia are being tested further after Canberra was given 10 days to explain why Beijing should not impose the tariffs.
The ultimatum follows an 18-month Chinese investigation into claims by Beijing that Australia dumped barley into China where it is used to make beer and to feed livestock. The market was worth just under $600 million to Australian farmers in 2019 after coming off the multibillion-dollar highs of past years.
The Morrison government rejects the claims that Australian-based grain marketers exported barley at prices cheaper than those on the domestic market to the detriment of Chinese farmers along with a separate allegation that Australian farmers are propped up by government hand outs.
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A referendum on Trump': Republicans grow nervous about losing the Senate
By Seung Min Kim and Mike DeBonis
May 11, 2020 — 6.35am
Washington: US Republicans are increasingly nervous they could lose control of the Senate this fall as a potent combination of a cratering economy, President Donald Trump's controversial handling of the pandemic and rising enthusiasm among Democratic voters dims their electoral prospects.
In recent weeks, GOP senators have been forced into a difficult political dance as polling shifts in favour of Democrats: Tout their own response to the coronavirus outbreak without overtly distancing themselves from a president whose management of the crisis is under intense scrutiny but who still holds significant sway with Republican voters.
"It is a bleak picture right now all across the map, to be honest with you," said one Republican strategist closely involved in Senate races who spoke on the condition of anonymity to discuss concerns within the party.
"This whole conversation is a referendum on Trump, and that is a bad place for Republicans to be. But it's also not a forever place."
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Coronavirus: Financial pain is such that many Americans feel they can’t afford to wait any longer to reopen economy
Americans are now confronting the most dangerous phase of the coronavirus pandemic as they begin to reopen the world’s largest economy without having first subdued the deadly virus.
The contrast with Australia could not be more stark. Both countries are moving to restart their economies after months of lockdown but only one has succeeded in defeating the virus first.
It wasn’t supposed to be like this. When the US went into virtual lockdown in mid-March it was anticipated that the virus would be on a solid downward trajectory by now, as in Australia. Not defeated perhaps, but conquered enough via two months of social distancing, to allow for a semi-safe re-opening of the US economy.
But social distancing has not worked as well as was expected in America and now the clock has run out. While social distancing helped to flatten the curve to the extent that America’s medical system did not collapse under the weight of infected patients, it has not led to the falls in infections and deaths that health experts had initially hoped for.
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China's fury over steel is behind the barley threat
May 12, 2020 – 12.00am
Australian barley growers are set to become collateral damage in a broader dispute with China over the government's aggressive use of anti-dumping measures against its steel and aluminium producers.
Confidential documents seen by The Australian Financial Review indicate that China will claim a lack of co-operation from barley growers to justify imposing a 73.6 per cent duty on Australian imports.
The documents also allege the $10 billion rescue plan for the Murray-Darling river system, dating back to 2007, had provided irrigation subsidies to barley growers.
Beijing is set to impose the duties despite its own beer producers warning the levies would "hurt' the industry, push up prices and "increase trade uncertainty".
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Antagonism between China and US entering its most dangerous phase yet
Peter Hartcher
Political and international editor for The Sydney Morning Herald
May 12, 2020 — 12.01am
America had Rambo to stir jingoist swagger, and now China has its Wolf Warrior. Each muscled tough guy captures the psychology of a great power with a grudge and a point to prove. Unfortunately, the spirit of these violent action figures is animating both great powers as they move ever closer to full-scale confrontation. Each film franchise was made with the support of the military in its home country, and now their machismo is being mobilised for national service.
The coronavirus crisis hasn't brought the US and China together to face a common threat. It has merely given their sharpening rivalry a new field of competition.
The Rambo movies were successful because they struck a chord with an America seeking to recover some pride from its humiliation in the Vietnam War. Johnny Rambo returns to post-war Vietnam and rescues hostages, shooting a bow-and-arrow and riding in a tank along the way.
"The people are onto something," as Sylvester Stallone, who plays the rogue former commando, once put it. Ronald Reagan even admired his swashbuckling style once in remarks made at the time of a real-life hostage taking in during his presidency.
From the outset, Donald Trump's great cause was a continuation of Rambo's quest – to "Make America Great Again". Trump's 2016 campaign strategist, Steve Bannon, explained to me the essence of Trumpism was the angry rejection of America's "managed decline" by cosmopolitan elites.
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Ripple effect: The US is facing years of economic pain
By Neil Irwin
May 12, 2020 — 11.04am
The one great reason for economic optimism during this pandemic is that once public health concerns are addressed, the economy could quickly return to something like pre-crisis levels.
After all, if there were a safe way to return to normal behaviour, restaurants could fill up, planes could begin flying and millions of workers could return to their posts. But even if that happens in the coming months, the United States will still be facing waves of second- and third-order economic effects that could last years.
Although every recession is different and much depends on the details of how the federal government responds, there are some warnings from the last recession.
In the 2008 downturn, bank failures didn't peak until 2010, causing a shortage of credit to businesses even once the economy was comfortably expanding. State and local governments, after experiencing a collapse of revenue, didn't stop slashing jobs until early 2013.
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Indonesia cases spike, government says testing still inadequate
May 12, 2020 – 5.23pm
Sydney/Jakarta | The number of people to test positive to COVID-19 in Indonesia jumped by more than 1000 in just three days but with testing levels still low, public health experts say the true extent of the pandemic remains unknown.
By Monday evening, Indonesia had registered 14,265 COVID-19 infections and 991 deaths. An additional 31,994 people are showing symptoms but are either still to be tested, or are waiting on results.
Dr Pandu Riono, professor of public health and epidemiology at the University of Indonesia, said positive case trends would continue to rise. “As a result of the limited test capacity, there is still a queue, so it piles up,” Dr Pandu said.
Indonesia's testing rate of 590 per million people is well below neighbouring nations such as Malaysia, which has tested 8395 per million, and other south-east Asian countries including the Philippines, which has tested 1582 per million. Australia's testing rate is 33,845 per million.
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'Suffering and death' ahead if US states open too soon, says Fauci
Jacob Greber United States correspondent
May 13, 2020 – 6.27am
Washington | America could suffer even greater "suffering and death" and hamper its economic recovery if some states reopen for business prematurely, said America's top infectious disease expert, Anthony Fauci.
In a closely watched hearing before a Senate health committee on Tuesday (Wednesday AEST), Dr Fauci and other health officials issued a series of warnings that jarred against the Trump administration's recent calls for a rapid return to work.
"It would almost turn the clock back rather than going forward," the head of the National Institute of Allergy and Infectious Diseases told the hearing in testimony that sent the Dow Jones Industrial Average down more than 200 points.
"There is a real risk that you will trigger an outbreak that you may not be able to control, which in fact, paradoxically, will set you back, not only leading to some suffering and death that could be avoided but could even set you back on the road to get economic recovery."
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We’re all casualties of Trump’s war on science
By Michelle Goldberg
May 12, 2020 — 6.12pm
In 2004, 60 Minutes in the US aired a segment on what it called "virus hunters", scientists searching for bugs that can leap from animals to humans and cause pandemics. "What worries me the most is that we are going to miss the next emerging disease," said a scientist named Dr Peter Daszak, describing his fear of a coronavirus "that moves from one part of the planet to another, wiping out people as it moves along".
In the intervening years, Dr Daszak became president of the EcoHealth Alliance, a non-profit research organisation focused on emerging pandemics. EcoHealth worked with China's Wuhan Institute of Virology to study coronaviruses in bats that could infect humans, and, as Science magazine put it, "to develop tools that could help researchers create diagnostics, treatments and vaccines for human outbreaks". Since 2014, the EcoHealth Alliance has received a grant from the National Institutes of Health, until its funding was abruptly cut two weeks ago.
The reason, as 60 Minutes reported on Sunday evening, was a conspiracy theory spread by Florida Republican Representative, Matt Gaetz, who in March wore a gas mask on the House floor to mock concern about the new coronavirus. On April 14, Gaetz appeared on Tucker Carlson's Fox News show and claimed that the NIH grant went to the Wuhan Institute, which Gaetz intimated might have been the source of the virus — the institute may have "birthed a monster," in his words.
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Remember Y2K? There are five lessons that resonate in this pandemic
By Matt Chapman
May 13, 2020 — 10.44am
As we address the tragedies of COVID-19, we should learn from past calamities, whether epidemics or economic collapse. But we can also learn from a crisis that was successfully managed - the Y2K threat to computer operations 20 years ago.
For those too young to remember the late 1990s, the Y2K bug had the world on edge. "Will computers melt down? Will society?" screamed a Time magazine cover about "Y2K insanity." Newsweek warned of "The Day the World Crashes."
Survivalists stocked up on blankets and bottled water in anticipation of January 1, 2000, the day when the modern world might grind to a halt, and planes, perhaps, fall out of the sky.
At root of all this fear was a technical problem that went largely unnoticed for decades: Computer programs had long represented years using only two digits, not four. That system worked well enough for decades, but when 1999 turned into 2000, the concern was that computers would only see "99" followed by "00" and not be able to tell which year was current and which was past. That glitch might sound small, but if not corrected it would cause major malfunctions in manufacturing, aviation and financial services, among many other industries.
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UK economy shrank by record 5.8pc in March as COVID hit
David Milliken and William Schomberg
May 13, 2020 – 5.09pm
Britain's economy shrank by a record 5.8 per cent in March from February as the coronavirus crisis escalated and the government ordered a shutdown of much of the country to stop the spread of the virus, official data showed on Wednesday.
In the first three months of the year, gross domestic product contracted by 2 per cent from the last three months of 2019, the Office for National Statistics said.
That was the largest quarter-on-quarter fall since the end of 2008, during the depths of the financial crisis, though slightly smaller than the average 2. per cent forecast in a Reuters poll of economists.
It was also a smaller fall than a 3.8 per cent slump in GDP in the euro zone in the January-March period although several countries in the single currency area began their lockdowns before Britain.
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The Fed pleads for help as it warns of long-term US recession
Stephen Bartholomeusz
Senior business columnist
May 14, 2020 — 12.31pm
Jerome Powell offered a chilling perspective on the condition of the US economy on Wednesday - yet markets shivered rather than shook.
A day after Anthony Fauci, the Trump administration’s top infectious disease expert, sent his own tremor through markets with his equally sober assessment of the health implications of re-opening the US economy too quickly, the Federal Reserve Board chairman’s warning that the world's largest economy could become stuck in a deep, damaging and long-term recession unsettled rather than panicked investors.
For distant observers of the US economy, there wasn’t anything shocking about Powell’s comments. But the fact that he felt it necessary to spell out the state of the US economy and the damage of the pandemic speaks to the confusion and conflict within America.
The scope and speed of the US downturn, Powell said, were without modern precedent and significantly worse than in any recession since World War II. This downturn was also different to previous ones as it was caused by a virus, rather than the usual suspects of high inflation or asset bubbles.
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'They get you both ways': Trump lashes Wall Street heavyweights for sounding alarm
By Katherine Burton, Melissa Karsh and Sophie Alexander
May 14, 2020 — 10.10am
The biggest names in finance are coming around to a view that seemed unlikely a few weeks ago: Stocks are vastly overvalued- and President Trump is not happy.
Legendary investors Stan Druckenmiller and David Tepper were the latest to weigh in after a historic market rebound, saying the risk-reward of holding shares is the worst they've encountered in years. Druckenmiller on Tuesday (US time) called a V-shaped recovery - the idea the economy will quickly snap back as the coronavirus pandemic eases - a "fantasy." Tepper said on Wednesday that next to 1999, equities are overvalued the most he's ever seen.
It's a notion catching on among Wall Street money managers. And it's coming as investors start to suspect that the Federal Reserve's support, as well as $US3 trillion ($4.7 trillion) in Treasury stimulus, may not be enough to compensate for soaring unemployment, a wave of bankruptcies and no end in sight to the pandemic. Managers including Bill Miller, Paul Singer and Paul Tudor Jones have all voiced doubts about markets or the economy.
Such bearishness starkly contrasts with the optimism that pushed the S&P 500 Index up 26 per cent from its March low. And the warnings have caught the attention of Trump, who's facing re-election and has seen his plans to run on a booming economy shredded by the virus. Trump attacked "so-called 'rich guys'" in a tweet on Wednesday.
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The EU may never recover from Germany's ECB ruling
Future historians may mark this as the decisive turning point in Europe’s history towards disintegration.
May 14, 2020 – 10.49am
The 75th anniversary of the defeat of Nazi Germany was May 8. The 70th anniversary of the Schuman declaration, which launched postwar European integration, was May 9. Just days before both, the German constitutional court launched a legal missile into the heart of the EU. Its judgment is extraordinary. It is an attack on basic economics, the central bank’s integrity, its independence and the legal order of the European Union (EU).
The court ruled against the European Central Bank's (ECB) public sector purchase programme (PSPP), launched in 2015. It did not argue that the ECB had improperly engaged in monetary financing, but rather that it had failed to apply a “proportionality” analysis, when assessing the impact of its policies, on a litany of conservative concerns: “public debt, personal savings, pension and retirement schemes, real estate prices and the keeping afloat of economically unviable companies”.
Monetary policies are necessarily economic policies. But the ECB’s policies, including asset purchases, are justified by the fact that it was – and is – failing to achieve its treaty-mandated “primary objective”, which is “price stability” defined as inflation “below, but close to, 2 per cent over the medium term”. The EU treaty says other considerations are secondary.
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Trump says he doesn't want to talk to Xi right now
Doina Chiacu and David Brunnstrom
May 15, 2020 – 7.22am
US President Donald Trump signalled a further deterioration of his relationship with China over the novel coronavirus, saying he has no interest in speaking to President Xi Jinping right now and going so far as to suggest he could even cut ties with the world's second largest economy.
In an interview with Fox Business Network broadcast on Thursday, Trump said he was very disappointed with China's failure to contain the disease and that the pandemic had cast a pall over his January trade deal with Beijing, which he has previously hailed as a major achievement.
"They should have never let this happen," Trump said. "So I make a great trade deal and now I say this doesn't feel the same to me. The ink was barely dry and the plague came over. And it doesn't feel the same to me."
Trump's pique extended to Xi, with whom the US president has said repeatedly he has a good relationship.
"But I just – right now I don't want to speak to him," Trump said in the interview, which was taped on Wednesday.
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The ugly end of Chimerica
The coronavirus pandemic has turned a conscious uncoupling into a messy break-up.
Orville Schell
May 15, 2020 – 12.00am
Washington’s policy of engagement toward Beijing has been embraced, with a few bumps along the way, by eight successive US presidents – an incredible record of continuity.
The approach was born in 1972, when the fervently anti-communist President Richard Nixon and his national security adviser, Henry Kissinger, set off for Beijing to make a game-changing proposal: The US and China should end their decades-long hostility by allying against the Soviet Union.
As Nixon declared to Chinese Premier Zhou Enlai, whose hand former US secretary of state John Foster Dulles had refused to shake at a Geneva conference in 1954: “If our two people are enemies, the future of this world we share together is dark indeed”.
He went on to insist that the two countries had “common interests” that transcended their differences and that “while we cannot close the gulf between us, we can try to bridge it so that we may be able to talk across it”. He ended grandiloquently: “The world watches … to see what we will do”.
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'Completely decimated': Sacked whistleblower recalls ominous email
By Matthew Knott
May 15, 2020 — 6.41am
Washington: A top US health official turned whistleblower has painted a damning picture of the Trump administration's early response to the coronavirus, telling Congress he believes hospital workers died because of a failure to procure enough surgical masks at the beginning of the pandemic.
Rick Bright was removed from his post at the Biomedical Advanced Research and Development Authority, the agency in charge of overseeing the development of vaccines and therapeutic treatments for COVID-19, in late April after clashing with senior figures in the Department of Health and Human Services (HSS).
He told Congress he would never forget receiving emails in late January from Mike Bowen, an executive at a US medical supply company, telling him that America's supply of N95 masks was "completely decimated".
"And he said, ‘We’re in deep sh-t. The world is. And we need to act,’" Bright said.
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China’s island war games ‘simulating seizure’ rattle Taiwan
· The Times
Taiwan has vowed to defend its islands amid reports that China is building up forces and plans to conduct war games simulating their seizure.
Major-General Lin Wen-huang said Taiwan’s military was monitoring “hostile forces” in the South China Sea and had prepared measures to protect the strategic and disputed Pratas islands, after reports that Beijing was planning beach landing exercises on nearby Hainan island.
The Pratas islands, or Dongsha in Chinese, lie between Chinese-controlled Hainan and Taiwan. Beijing does not recognise self-governing Taiwan and has vowed to take it back by force if necessary by 2050.
Seizing the outlying islands would represent a serious escalation of hostilities and could drag in the US through its pact to defend Taiwan.
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China's big chill sets in as 'fear and greed return'
The demise of the China-Australia relationship, framed by fights this week over beef, barley and steel, may appear rapid, but there were plenty of signposts along the way.
May 16, 2020 – 12.00am
The bar at the Boao Forum Hotel was heaving. It was April 2014 and a dozen Australian chairmen and chief executives had flown into the southern Chinese island of Hainan to attend the annual talkfest.
Freed from their minders for the weekend, the likes of Qantas boss Alan Joyce, Macquarie's Nicholas Moore, Gail Kelly from Westpac and mining billionaire Andrew Forrest took up residence in the bar where they casually chatted with diplomats, journalists and other business types, all searching for an angle on China.
"It was a moment when everyone wanted to learn and better understand China," says Geoff Raby, Australia's former ambassador in Beijing, who was at Boao that year.
While understanding China would prove elusive for most, that weekend in 2014 remains the high point of Australia's business engagement with the mainland.
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'Darkest winter' ahead for US as jobless count hits 36.5 million
May 15, 2020 – 12.39pm
Washington | America faces an unprecedented wave of needless COVID-19 infections and deaths in the second half of the year because of a lack of planning and action, said a whistleblower removed last month from his job heading a major government vaccine R&D body.
As fresh labour market data showed almost 3 million more Americans lost their jobs last week – taking the eight-week tally to 36.5 million – Congress was delivered a series of bleak warnings from the former director of the Biomedical Advanced Research and Development Authority (BARDA), Rick Bright.
Dr Bright told lawmakers on Thursday (Friday AEST) that America's "window of opportunity is closing" to halt the pandemic's spread, which is already casting a devastating shadow across the economy.
"Without clear planning and implementation of the steps that I and other experts have outlined, 2020 will be darkest winter in modern history," he said.
The pandemic has killed almost 86,000 people in the US and infected 1.44 million, according to WorldoMeter's tally, and smashed the economy.
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Lancet editorial blasts Trump's 'inconsistent and incoherent' coronavirus response
By Derek Hawkins and John Wagner
May 16, 2020 — 3.27am
One of the world's oldest and best-known medical journals has criticised US President Donald Trump's "inconsistent and incoherent national response" to the novel coronavirus pandemic and accused the administration of relegating the Centres for Disease Control and Prevention to a "nominal" role.
The unsigned editorial from The Lancet concluded that Trump should be replaced. "Americans must put a president in the White House come January, 2021, who will understand that public health should not be guided by partisan politics," said the journal, which was founded in Britain in 1823.
The strongly worded critique highlights mounting frustration with the administration's response among some of the world's top medical researchers. It's not uncommon for medical journals to run signed editorials that take political stances, but rarely do publications use the full weight of their editorial boards to call for a president to be voted out of office.
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Farmer turmoil as China's hunger for Australia wanes
By Mike Foley
May 17, 2020 — 12.00am
Trade Minister Simon Birmingham has warned farmers not to become too dependent on Chinese trade as Beijing suddenly halts imports of major commodities and increases its own food production, and Chinese investment in Australian agriculture plummets.
Beijing hit back last week against Australia's pursuit of a global inquiry into the coronavirus, halting imports from four of our largest red meat abattoirs citing technical infringements and launching an anti-dumping investigation that could impose 80 per cent tariffs on Australia's $1 billion barley export trade.
"I would expect that given the regulatory actions of the Chinese authorities over the past week some businesses would be reassessing their risk versus reward profile," Mr Birmingham said.
"When unexpected regulatory disruptions occur it changes the commercial risk assessment that a business would logically undertake. Businesses and farmers always need to balance the reward and lucrative opportunities that trading in one place presents with the risks of over reliance on a single customer."
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‘US would lose Pacific war with China’
America would be defeated in a sea war with China and would struggle to stop an invasion of Taiwan, according to a series of ‘eye-opening’ war games carried out by the Pentagon.
By Michael Evans
From The Times
May 17, 2020
The United States would be defeated in a sea war with China and would struggle to stop an invasion of Taiwan, according to a series of “eye-opening” war games carried out by the Pentagon.
American defence sources have told The Times that several simulated conflicts conducted by the US resulted in the conclusion that their forces would be overwhelmed by the Chinese. One simulated war game focused on the year 2030, by which time a modernised Chinese navy would operate an array of new attack submarines, aircraft carriers and destroyers.
The analysis also found that Beijing’s accumulation of medium-range ballistic missiles has already made every US base and any American carrier battle group operating in the Indo-Pacific Command region vulnerable to overwhelming strikes. The Pacific island of Guam, a base for American strategic bombers such as the B-2 and B-52, is now considered to be wholly at risk.
“China has long-range anti-ship ballistic missiles and hypersonic [more than five times the speed of sound] missiles,” a US defence source said, meaning that US carrier groups could not oppose their Chinese counterparts in battle “without suffering capital losses”.
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I look forward to comments on all this!
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David.
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