-----
In the US the big talking point has been the chances of a massive infrastructure package being able to pass Congress. It is hard to know what the chances are but the package is sorely needed. Otherwise we are seeing all sorts of efforts to supress minority access to the vote – which is simply antidemocratic!
In the UK vaccination continues while the economy seems to be improving especially as Spring is in the air!
In Australia Parliament has risen until the Budget in May. The PM is hoping his reshuffle will work to stabilise his Government and it is only time will tell. Elsewhere there seems to be an increasing worry that the vaccination program is not running as hoped and frankly that is a bad outcome for our health and for the Government!
-----
Major Issues.
-----
https://www.afr.com/policy/economy/tricks-to-kick-debt-habit-20210325-p57e4b
Tricks to kick debt habit
Honestly repaying unsustainable borrowings will be hard. History says the policy of choice will be financial trickery beginning with zero or negative interest and extending to writing off business loans.
Satyajit Das Contributor
Mar 28, 2021 – 12.54pm
To paraphrase Homer Simpson’s paean to alcohol, for more than three decades debt has been seen as the cause of, and solution to, all economic problems.
According to the Institute of International Finance, global debt surged in 2020 to 335 per cent of global GDP, an increase of 35 per cent. It is the largest annual increase on record, greater even than the increase after the global financial crisis of 10 per cent in 2008 and 15 per cent in 2009.
Government debt in 61 countries was greater than 105 per cent of GDP in 2020, up from 88 per cent in 2019.
No way to inflate out of debt: loose monetary policies have not boosted inflation due to weak demand, overcapacity and changes in industrial structure.
-----
Morrison government requires urgent political surgery
The Prime Minister is now facing the additional risks of leading a minority government to the next election. The alternative may be worse.
Jennifer Hewett Columnist
Mar 28, 2021 – 2.11pm
When things go wrong, they often go really wrong, really quickly. So along comes Andrew Laming with his harassment of women, online, via photographs and in person. The result is yet another government MP on leave to get counselling – just what this government doesn’t need.
Yes, Laming is a permanent backbencher (since 2004!) rather than a minister. But apart from providing more terrible optics about Coalition culture when it comes to women, it also means the Prime Minister has to immediately contemplate the practical risks of leading a minority government to the next election.
Scott Morrison is desperately attempting to persuade women he “gets it” and that his government is acting urgently to address real issues, but he remains highly visible and a stationary target for female anger and frustration. In contrast, Marise Payne as his Minister for Women remains inexcusably invisible.
Of course, much of this anger has little to do with his government and reflects much broader social forces and changes – or lack thereof from too many men. And there’s no doubt that Labor and others are weaponising the political debate to ensure it is as much anti-Coalition as pro-women.
-----
https://www.afr.com/policy/foreign-affairs/the-history-behind-who-killed-the-quad-20210328-p57epm
The history behind who killed the Quad
Contrary to Alexander Downer’s claims, it was the Howard government that shut the door on the first iteration of the Quadilateral Security Dialogue.
Kevin Rudd Former Australian prime minister
Mar 28, 2021 – 1.01pm
Former ministers have a lifelong responsibility not to spread lies about their own country. These falsehoods, once they take root, can easily become weapons in the hands of others.
Alexander Downer committed this offence here on Monday by claiming Australia unilaterally withdrew from the “quadrilateral strategic dialogue” – a proposed mutation of the US-Japan-Australia trilateral dialogue including India – under Labor after the November 2007 election. According to Downer, Labor’s radical move was announced in Beijing. India was so shaken that Australia was punished with exclusion from Indo-US naval exercises, this well-worn Liberal meme so often goes.
Unfortunately for Downer, none of this is true. The fact is his government, the Howard government, shut the door on the QSD – a fact he doesn’t want to acknowledge now that the Quad is back in fashion.
The documentary record is crystal clear, starting on July 2, 2007, when Australian officials informed Washington and Tokyo they would not accept quadrilateral defence and security arrangements. Instead, Australia would look to bilateral arrangements, according to a contemporaneous US diplomatic cable later released by WikiLeaks.
-----
https://www.afr.com/chanticleer/why-markets-can-stay-frothy-for-longer-20210328-p57eq4
Why markets can stay frothy for longer
While investors fret about pockets of froth in the market, one expert says the big lift in cash flows on Wall Street can underpin even higher valuations.
Mar 29, 2021 – 12.00am
Ask Jonathan Golub, chief US equity strategist at Credit Suisse, what the S&P 500’s price-to-earnings ratio should be and he’ll give you a simple answer.
“A lot more than what it is now,” he says from Miami, where he’s spending a few weeks in the sunshine.
Yes, there are lots of investors talking about frothiness in a speculative market. Yes, SPACs are going crazy. Yes, 2021 might be remembered as the year GameStop shares didn’t.
But as a quantitative analyst, that’s not enough for Golub. “Investors tend to anchor on narratives – storylines that everyone believes but most people don’t actually check,” he says.
-----
https://www.afr.com/policy/economy/jobkeeper-transparency-is-required-20210327-p57ely
Why the public deserves more JobKeeper transparency
A year has passed since the Morrison government reluctantly embraced JobKeeper. It was the right call. But to preserve its legacy, more transparency is now required.
Grant Wilson Contributor
Mar 28, 2021 – 2.46pm
A year ago on Monday we wrote in this newspaper that a wage subsidy was required in hibernation. In that pivotal week we had briefed the standing committee on economics, and our read was that the Morrison government was going to remain steadfast in its opposition.
It seems a distant memory now, but here is what the Prime Minister had to say: “The best way to get help to people is through the existing payment channels, through the existing tax system arrangements. That was the lesson from the GFC.
“Of all the money that went out in the GFC – and I’m not making a partisan point here – the key lesson was you must use existing channels for getting money to people, because that is the most effective way for that to occur. To dream up other schemes can be very dangerous.”
Fortunately, the technocrats at Treasury were doing precisely that. And to Scott Morrison’s credit, he changed his mind.
-----
JobKeeper’s success and failure has a thousand fathers
JobKeeper’s key goal to preserve the relationship between employers and their workforce has no doubt been achieved as payroll jobs have recovered to pre-COVID-19 levels.
Matthew Cranston Economics correspondent
Mar 28, 2021 – 10.29pm
This time last year in the blur of rolling out the country’s biggest financial support program, the $90 billion JobKeeper, a group of savvy Australian Taxation Office staff made a discovery that highlighted the enormity of what was taking place.
Each afternoon the ATO sends a file of daily payment instructions to the government’s banker, the Reserve Bank. The dollar value of the instructions usually bulges around tax return time, when millions of dollars flood back to households and businesses.
But never before had daily payment instructions been so high. A cap on the amount had been in place between the ATO and the RBA of $1 billion but that was about to be blown out.
The ATO negotiated with the central bank for an immediate lift in the cap before a blockage in the system jeopardised the smooth rollout of the scheme announced by the Prime Minister on March 30.
-----
https://www.afr.com/wealth/personal-finance/why-smsfs-need-to-audit-the-auditor-20210327-p57em5
Why SMSFs need to audit the auditor
Working closely with a fund’s auditor can help you spot potential problems and keep you on the right side of the ATO.
Ben Smythe Contributor
Mar 29, 2021 – 12.00am
When you make the decision to take greater control of your superannuation and establish a self-managed fund, the law assumes that you as the trustee have the skills and expertise to discharge the required responsibilities.
While that may seem like an onerous role when answerable to the ATO, part of your obligations include engaging an auditor for your SMSF, which provides you with a layer of support.
As has been shown with some recent high-profile cases, where an SMSF loses money as a result of fraud or theft, there is no “government guarantee”, and recourse is really only via the courts. However, the proper appointment of a suitably qualified auditor should identify concerns or shortfalls before you find yourself in this position.
The audit of your SMSF is governed by the Australian Auditing Standards, and more specifically the “approved SMSF auditor’s responsibilities” section. Importantly, the audit of your SMSF needs to be broken into two key parts.
-----
Liberal MP calls for ‘revenge porn’ investigation into lewd video of staffer
March 29, 2021 — 5.00am
One of the Federal Parliament’s strongest advocates for gay rights says the distribution of explicit images of a former Liberal staffer is a clear case of revenge porn and should be investigated by police.
Liberal MP Warren Entsch said although he made no excuses for the conduct of Nathan Winn, the Liberal staffer sacked after masturbating on a female MP’s desk and engaging in oral sex inside Parliament House, the man who provided images to a journalist should also be held to account.
Mr Entsch said the broadcast and publication last week of the images and subsequent claims by Winn’s former friend and occasional lover, Gavin Cuddy, that he possesses compromising images of other Liberal staffers, has triggered unfair scrutiny by journalists of any government staff who are openly gay.
He said it was “highly offensive” that political staffers were being suspected of improper conduct due to their sexuality.
-----
Payne’s silence speaks volumes about the Liberal Party
Kristine Ziwica
Columnist
March 29, 2021 — 5.00am
Last Monday at Senate estimates, Labor senator Jenny McAllister put to Marise Payne a question that I have long wanted to ask myself: “Is it an impossible job being a minister for women in a Morrison government?”
Now I have made no secret of my feelings about our Minister for Women and the fact she has been effectively missing in action on how the pandemic has disproportionately affected women. She has also been conspicuously absent from the debate over the past six weeks on the treatment of women in the Liberal Party and in Australia generally. This glaring omission culminated in criticism that she had not attended, let alone addressed, a meeting of 400 Coalition staffers which Scott Morrison held behind closed doors last week to acknowledge the “absolute rubbish” female Liberals have had to deal with.
I have also made no secret of my contempt for what has been referred to as the “handbag brigade”, the Liberal women paraded in front of the media to defend the indefensible, whenever it occurs. The most recent, egregious example: Anne Ruston, Linda Reynolds and Michaelia Cash’s spirited defence of “that” budget last financial year, which many women, including yours truly, rightly called out for failing to deliver for women. A highlight, no doubt, was Ruston feebly telling the ABC that women will enjoy driving on all those new roads that the government stimulus would fund.
Yet when McAllister asked Payne on Monday if it “is an impossible job being a minister for women in a Morrison government”, I have to admit even I felt for a minister so clearly under siege.
-----
What has QAnon got to do with Australians?
It is often called a cult, but that implies something limited and small. Others suggest it is better understood as a new religion, or political movement. It could be both.
March 28, 2021
It was mid-December, three weeks before rioters stormed the Capitol building in Washington, DC. I was driving through the Northern Rivers region, just south of the Queensland border, and listening to podcasts by Pete Evans, Australia’s most prominent proponent of QAnon conspiracy theories.
Controversial celebrity chef Pete Evans will run for Senate.
I had asked Evans for an interview. I told him I wanted to understand his path from celebrity chef to paleo diet enthusiast to Trump supporter and proponent of QAnon. He did not reply. But others had agreed to talk.
The hippies, everyone I spoke to agreed, had been the beginning of this region’s reputation as a place for those prepared to question authority or, as one naturopath and QAnon conspiracy theorist put it to me, to “seek their own truth”.
-----
House prices were expected to fall, now they’re tipped for a record rise. What’s going on?
Jennifer Duke
Economics correspondent
March 29, 2021 — 5.00am
Property prices are going to fall. Home values are going to rise. Apartments will be sold on the cheap but houses will be in high demand. Regional areas will outpace capital cities.
All of the above predictions has been made by reputable forecasters at some point during the last 12 months as housing market researchers frantically grabbed at disparate data-points in an attempt to make sense of the pandemic’s effects on the economy and, ultimately, the psyche of home buyers and sellers.
The consensus at the height of the coronavirus outbreaks was that there would be a deep and painful fall in home values in the most prized Sydney and Melbourne real estate markets, which would’ve shaved hundreds of thousands of dollars off the value of a median house. This type of fall could force some home owners into negative equity, where their debt is larger than the value of their asset, and weigh heavily on household spending with a worrying knock-on effect to other parts of the economy.
As it turns out, this expectation could not have been more wrong.
-----
Consumers endorse red tape rollback for financial advice
Aleks Vickovich Wealth editor
Mar 30, 2021 – 12.01am
Almost two in three Australians support simplifying financial advice and reducing the costs of providing it, even if that means a reduction in mandatory documentation or other regulatory requirements.
New research conducted by pollster Pollinate and commissioned by the Financial Services Council found 64 per cent of consumers believed reforms to reduce the cost of so-called simple financial advice were a good or excellent idea.
That figure jumped to 77 per cent among Australians already seeking professional advice. The findings stem from a survey of a “nationally representative sample” of 1000 people in October.
Just 7 per cent said a red tape reduction reform of this kind would be a bad or terrible idea.
-----
Marise Payne the ‘prime minister for women’ as Morrison adds women’s taskforce in reshuffle
By David Crowe
Updated March 29, 2021 — 2.30pmfirst published at 2.12pm
Prime Minister Scott Morrison has launched a bid to recover from weeks of political damage over the treatment of women by naming a new cabinet team, shifting problem ministers and punishing a disgraced Liberal MP.
Mr Morrison named Peter Dutton as the country’s next Defence Minister and leader of the government in the House of Representatives and Michaelia Cash as the new Attorney-General and Industrial Relations Minister in the two biggest appointments in the changes.
Industry Minister Karen Andrews will be elevated to Minister for Home Affairs, replacing Mr Dutton and taking a high-profile position as one of the cabinet’s most senior women.
The Prime Minister has faced a wave of anger about the treatment of women in the six weeks since former Liberal adviser Brittany Higgins alleged she was raped in Parliament House in March 2019.
-----
Summers warns US risks rising inflation amid massive stimulus
Margaret Collins
Mar 30, 2021 – 2.38pm
Former Treasury Secretary Lawrence Summers reiterated his warning that the US risks rising inflation amid massive government stimulus, easy monetary policy and an expected surge in consumer spending as the COVID-19 pandemic recedes.
“The idea that it can’t ratchet up quickly is just plain wrong,” Summers told David Westin on Bloomberg Television’s Wall Street Week on Friday.
The debate over the path of inflation has been intensifying among economists, legislators and Wall Street – especially with the Biden administration’s $US1.9 trillion ($2.48 trillion) stimulus package signed into law earlier this month.
Many officials expect a rise in prices this year as more businesses reopen, vaccines are distributed and consumers rush to spend after more than a year of pandemic-era restrictions. But Federal Reserve chairman Jerome Powell has repeatedly said in recent weeks that he does not expect those increases to be persistent.
-----
PM caught in crusade of women journos
Anger at the government over the abuse of women is being led by a powerful group of female journalists.
Aaron Patrick Senior correspondent
Mar 31, 2021 – 12.01am
When Scott Morrison inexplicably threw back a false account of sexual harassment at a Sky News reporter last week, his unlikely target was sitting a few metres away: a woman making a professional comeback by holding the most powerful man in the country to account. Him.
Samantha Maiden’s run of scoops had left Morrison’s government, and the Prime Minister, in disarray.
The political editor of News Corp’s free news site had exposed intimate and compelling information about the high school debater whose life fell apart after a teenage encounter with Attorney-General Christian Porter, who was removed from the position on Monday.
She broke and led coverage of Brittany Higgins’ claim of rape in a minister’s office, and the young adviser’s feelings of being abandoned by a government she served.
The ABC promoted her on its most prominent platforms, including Insiders, Q&A and RN Breakfast, where she became the surrogate voice of her victim sources.
-----
‘Clear fail for the political class’: faith in institutions crumbles
Ronald Mizen Reporter
Mar 31, 2021 – 12.00am
Only 22 per cent of Australians believe politicians act in the public interest, and just 27 per cent believe they prioritise voters over donors, highlighting a dangerous disconnect between electors and their representatives.
Half of Australians believe the nation is performing well as a Western liberal democracy, but among 20- to 29-year-olds, women and low-income earners, that aspiration is less important than for retirees and high-income earners.
Released in the wake of a swathe of allegations and scandals that have rocked federal politics, the annual Next25 Navigator Public Interest Index showed Australians, on the whole, are deeply unhappy with their public institutions.
“Our research found four in five Australians believe politicians have the most say in setting priorities for Australia, but only one in five believe politicians are acting in the public interest,” Next25 boss Ralph Ashton said.
“This is a clear fail for the political class.”
------
Morrison takes aim with $1b boost to missile manufacturing
Andrew Tillett Political correspondent
Mar 30, 2021 – 10.30pm
The federal government will invest $1 billion to build new missiles and guided weapons in Australia, in a bid to quell fears the military would quickly exhaust its supply of munitions during a conflict.
Prime Minister Scott Morrison will visit defence companies in Adelaide on Wednesday to announce the plan to fast-track the development of a local missile manufacturing industry, which the government has designated a “sovereign capability” for the Australian Defence Force to achieve self-sufficiency.
Under the plan, Defence, in close consultation with the US military, will select a foreign defence company to build a suite of missiles locally for use across the army, navy and air force. A location is yet to be selected.
Potential partners include Lockheed Martin, Raytheon, BAE Systems and Kongsberg.
-----
International students won’t return until 2022
Julie Hare Education editor
Mar 31, 2021 – 12.00am
International students will not return en masse to Australian campuses until the beginning of 2022 but individual universities can bring in students during this year if chief health officers agree and safe quarantine quarters are provided.
In a speech he is scheduled to deliver at RMIT University in Melbourne on Wednesday, Education Minister Alan Tudge will say the disruption to the prevailing onshore, on-campus business model of international education during 2020 “forces a rethink of that model, and more broadly the international education strategy for the nation”.
Mr Tudge will also put universities on notice about using international student revenues to fund their research. He will say this has undermined the learning experience of domestic students, failed to address skill shortages and has not been doing enough in the soft diplomacy space, according to speech notes.
Australia is the world’s third-largest provider of international education with student numbers doubling in the past decade. China now accounts for about one-third of all enrolments.
-----
Leadership is about more than being able to hold on to power
Shaun Carney
Columnist for The Age and Sydney Morning Herald
March 31, 2021 — 5.30am
Now that Scott Morrison has got woke on the treatment of women after so much seeing and hearing, he has diagnosed that social media is a big part of the problem. It is so big that he is going to do something about it, he says. Exactly what, he cannot say just yet, but he knows it requires action. Possibly some new rules that will have to be followed by “big tech”.
On the Prime Minister’s telling, social media is a form of social acid, “one of the key degraders of respect in our country”. In truth, the problem is not social media itself but some of the people who use it. Specifically, it is what those people post on social media platforms that is the cause of the trouble. They abuse or humiliate or threaten or just sort of stalk other users and anybody or anything else that displeases them.
Morrison knows about the misuse of social media because one of his backbenchers, Andrew Laming, is on leave right now so that he can undergo counselling after his online trolling of two women in his electorate was revealed.
On the weekend, Laming decided to leave parliament at the next election following a further revelation that he had taken a picture of a woman bending over at her workplace. Reportedly, underwear was visible and Laming had not asked permission before taking the photo.
-----
Platinum warns of bloody end to ‘speculative mania’
Richard Henderson Markets reporter
Mar 31, 2021 – 2.48pm
The global sharemarket is bracing for a sweeping reset that will knock the growth stocks that have fuelled a bubble graver than the dotcom bust two decades ago, according to Andrew Clifford, chief executive of Platinum Asset Management.
Companies such as Tesla and Afterpay have rallied strongly over the past year to record highs, on the promise of rapid expansion that will lead to big profits far in the future. But as the global economy recovers, rising interest rates will reduce the value of future earnings, triggering a brutal sell-off.
“The speculative mania in growth stocks will end badly for those who stay too long, just as it did in the tech bubble and countless other speculative manias,” Mr Clifford said in an investor presentation late on Tuesday.
“When you hear people say, ‘It’s not like the 2000 tech bubble’, I must say, I agree. This is a much bigger bubble,” said Mr Clifford, who is also co-chief investment officer of Sydney-based Platinum, which manages $25 billion in global equities.
-----
https://www.afr.com/wealth/personal-finance/boom-time-for-etfs-20210330-p57f7n
Boom time for ETFs
Exchange-traded funds have become a global investment phenomenon. Their main selling points? Low fees and the recurring collective underperformance of active fund managers.
Tony Featherstone Contributor
Apr 1, 2021 – 12.00am
The exchange-traded fund (ETF) market has boomed during COVID-19 as a new generation of investors uses index funds to bet on market rallies and global trends.
“In the past 12 months, the number of ETF investors in Australia has almost doubled to 1 million,” says Christian Obrist, head of iShares Australia. “We expect this uptake to accelerate.”
As young people pour into share investing, many first-time investors will buy an ETF before they buy a stock, either directly or via model portfolios built with index funds.
Almost one in two “next generation” investors (aged 24 and under) plans to invest in ETFs in the next 12 months, the latest ASX Investor Study found.
-----
https://www.afr.com/politics/federal/albanese-capitalises-on-morrison-s-misfortune-20210330-p57f9p
Albanese capitalises on Morrison’s misfortune
At the start of the year, the Opposition Leader was battling to hold onto his job. But after a shocking six weeks for the government and a reset of politics, he is back in the race.
Andrew Tillett Political correspondent
Apr 1, 2021 – 12.00am
For a man who has a beer named after him, Anthony Albanese has made a tough decision: he has cut back on his alcohol consumption.
Colleagues have noticed the Opposition Leader looking leaner in 2021, eating salads and stepping up the exercise.
Albanese’s mindset is that he needs to be match fit for the election campaign. Cutting back on booze is the perfect metaphor – or perhaps cliche – to signal his hunger for the job of prime minister.
Events, largely not of his making, are giving Albanese a second wind.
-----
Global, tech and ethical investments lead ETF boom
By John Collett
March 30, 2021 — 10.00pm
Exchange Traded Funds listed on the Australian Securities Exchange hold more than $100 billion of investors’ money, with global, technology and ethical funds growing the fastest.
It is a spectacular rise from about $50 billion in funds under management in June, 2019.
Despite the eye-watering numbers, Alex Vynokur, chief executive of BetaShares – one of the largest providers of ASX-listed ETFs – says the Australian ETF market remains “relatively immature” compared to markets in other developed countries, such as the United States.
“There’s no doubt that the Australian industry will go from $100 billion to $300 billion and beyond,” Vynokur says. “The only question is how long it is going to take.”
Most ETFs mirror the performances of particular financial investments – whether it is a benchmark sharemarket index or subindex, industries or themes, or even currency exchange rates. Their units are traded in the same way as shares.
-----
https://www.afr.com/chanticleer/the-etf-explosion-is-just-beginning-20210331-p57fq0
Why the boom in ETFs could reach $595 billion
The $100 billion in assets under management in exchange-traded funds is poised for a massive expansion if Australia follows the lead of investors in the United States.
Apr 1, 2021 – 4.45pm
The man regarded as the father of index investing, Blake Grossman, says the explosion in passive investing is only just beginning.
Grossman was on the ground floor at the birth of index investing in the early 1990s. He was a senior executive at Barclays Global Investors in 1992 when its advanced strategies group developed enhanced index products.
BGI’s index funds provided the platform for the aggressive global expansion of exchange-traded funds (ETFs) under the iShares banner, a business later purchased by BlackRock.
In an interview with Chanticleer from his home in California, Grossman says ETFs will continue to eat away at the market share of conventional managed fund structures because of their innovation and efficiency.
-----
https://www.afr.com/wealth/personal-finance/follow-the-money-in-etfs-20210330-p57fa5
Follow the money in ETFs
Gold, infrastructure and climate change are just a few of the hot trends in exchange traded fund investing.
Tony Featherstone Contributor
Apr 1, 2021 – 12.00am
Fund flows into exchange-traded funds (ETFs) provide insights on what retail investors are buying and selling – and their view of future market movements. Here are 10 key trends.
Broad-based sharemarket indices
When global sharemarkets tanked last year, more investors bought ETFs over the top 200 Australian shares, believing equities were oversold – a profitable view in hindsight.
Global equities ETFs remained popular, but there was a noticeable shift to domestic-focused ETFs. Investors retreated to the relative safety of Australian markets during COVID-19.
For all the interest in thematic ETFs, the bulk of funds still resides in ETFs over broad-based sharemarket indices, such as the S&P/ASX 200. The Vanguard Australian Shares Index ETF leads its market by size and has had strong funds inflows over the past 12 months.
-----
House price party will end in tears unless someone turns off lights soon
By Shane Wright
April 1, 2021 — 7.30pm
If the Australian property market were a party, it’s at that point where the drinks should be put away, the guests kicked out and the bed turned down for a good night’s sleep.
Unless the Reserve Bank, the Australian Prudential Regulation Authority and federal and state governments step in soon, the country is going to wake up with a hangover that will last for years.
CoreLogic data showing the biggest monthly increase in capital city property values since Kylie Minogue’s insufferable I Should Be So Lucky spent six weeks at the top of the Australian charts in 1988 is a sign of something very much amiss in the property market.
Sydney’s median house value jumped $50,000 in March, or $1600 a day. Since the start of the year, it has climbed $100,000, which, if it doesn’t slow, could see the median house price value reach $1.4 million by year’s end.
-----
Scott Morrison must beware of Churchill syndrome
Political and international editor
April 3, 2021 — 5.00am
It was only eight months ago Scott Morrison acknowledged he’d learnt from his disastrous mishandling of Australia’s bushfire season of 2019-20. After ducking that crisis in the most pathetic way, he was embracing the COVID-19 emergency with the zeal of a convert. In the first crisis of his prime ministership he was the archetypal anti-leader, refusing to accept responsibility to lead. He was the prime minimal. He was an object of national derision. In the second, a new prime minister emerged. He accepted responsibility and took charge. He was the archetypal leader, co-ordinating one of the world’s most successful economic and health responses.
The people recognised the new Morrison. Only one prime minister had enjoyed a higher approval rating in the history of Newspoll, and that was Kevin Rudd a decade ago. “The lesson I have learnt from those who have been in this job,” Morrison told me in July, “is they rarely made the same mistake twice”.
Yet that is exactly what he is doing. He failed to see the crisis of injustice to women even as it engulfed his government. His cabinet reshuffle is just the latest in a series of risibly inadequate responses. The old Scott Morrison, the one that The Betoota Advocate named “Scotty from Marketing”, is back.
-----
‘Criminal elements involved’: New CFDs laws welcomed as clean-up continues
April 2, 2021 — 3.30pm
As the corporate regulator trumpeted its long awaited restrictions on highly risky financial products the week before Easter, two insolvency practitioners were hard at work in their Sydney office.
Peter Krejci and Andrew Cummins from insolvency firm BRI Ferrier spent this week and the many weeks before that picking through the wreckage of one of the biggest local sellers of those high risk products, Union Standard International Group (USG).
With up to $158 million of investor money missing, BRI Ferrier is now actively considering holding public examinations of Australian and overseas individuals involved in USG’s operations to try and figure out what happened to the investor money.
The group, trading as USGFX, held itself out to be a legitimate business that sold risky financial derivatives known as contracts for difference; it even signed a $100 million sponsorship deal with Premier League upstarts Sheffield United. But now Krejci and Cummins have also told creditors that it was far from a legitimate business.
-----
Cutting workers’ pay and conditions worsens our productivity
Economics Editor
April 3, 2021 — 5.00am
It’s a long weekend, so let’s relax and think more laterally than usual. I’ve been pondering one of the great mysteries puzzling the rich world’s economists: why has there been so little improvement in the productivity of our businesses over the past decade or two?
I’m wondering if a big part of the explanation is that business people have been finding easier ways to make a bigger buck.
Economists worry about productivity – producing more output of goods and services from a given quantity of inputs of labour, physical capital and raw materials – because it’s the secret sauce that’s made market capitalism so hugely successful over the past 200 years. That’s made us many times more well-off materially than we were back then.
The key driver of productivity improvement is technological advance: mainly bigger and better machines, but also better roads, railways and other infrastructure, as well as more efficiently organised farms, mines, factories, offices and shops. Not to mention increased investment in “human capital”: better educated and trained - and thus more highly skilled - workers.
-----
‘I feel like a commodity’: COVID hit only beginning for Australia’s unis
The sharp fall in international students, the hits to university revenue, and an apparently unfriendly government, have exacerbated an existential crisis. So whither Australia’s universities?
By Royce Millar, Farrah Tomazin and Adam Carey
April 3, 2021
On an autumn morning early in first semester, the grounds of the University of Melbourne should be buzzing with youthful curiosity and adventure. Instead, the bike racks of Tin Alley and the dining tables outside Union House are mostly vacant.
A smattering of students sit outside scrolling on their phones and waiting for the few contact classes on offer. Some wear face masks, though social distancing is no challenge.
COVID-19 has smashed higher education in Australia, our closed borders a disaster for universities that have grown reliant on international student fees for as much as a third of their revenue.
The sector has already lost billions and responded by axing thousands of jobs and subjects. The futures of students, foreign and domestic, hang in the balance.
with Ashleigh McMillan
------
How low can super fees go? How new changes will affect what you pay
Jessica Irvine
Senior economics writer
April 3, 2021 — 11.00pm
I told my six-year-old son this week I was preparing to write a column about superannuation. Superannuation, I briefly explained, is when you save money to buy things when you’re old and don’t want to work anymore.
“You gotta have enough money until you die,” he responded, perfectly summarising longevity risks in one easy sentence. A proud mamma moment, indeed!
“You could just keep on working,” he continued. “Or, you could be a robber when you’re a grandma.” Ok, we’ll work on that last bit.
If you feel guilty sometimes that you haven’t paid enough attention to your super, don’t worry. Neither have successive Australian governments.
-----
Melbourne Uni cuts threaten to make us the ‘bogans of the Pacific’
By Adam Carey, Farrah Tomazin and Royce Millar
April 3, 2021 — 5.00am
Melbourne University is bracing for reputational damage as it prepares to cull science subjects and senior academic positions in the latest response by the state’s higher education sector to tumbling revenue.
Internal documents obtained by The Age reveal that 11 units in chemistry, physics, biology and earth science are earmarked for “discontinuation” or suspension in phase two of the university’s “pandemic reset program” in response to an expected $900 million budget shortfall over four years.
The documents reveal the university anticipates “reputational damage” from cuts to its renowned science programs and loss of senior academics “widely known to the Australian and international chemistry communities”. Australia’s richest university also fears the loss of research funding.
The cutbacks are the most visible example of what university leaders and education experts say is the most severe crisis in higher education in 60 years. The Age begins a series today investigating the impact of the pandemic on universities, a sector vital for Australia’s future education standards and research.
-----
Coronavirus And Impacts.
-----
How COVID-19 restrictions impacted NSW HIV rates
By Kate Aubusson
March 29, 2021 — 5.00am
The number of new HIV cases in NSW plummeted last year by more than 30 per cent due to COVID-19 restrictions that triggered a quasi-moratorium on casual sex.
A total of 206 people were diagnosed with HIV last year — 33 per cent lower than the average number of new cases over the previous five years, NSW’s latest HIV Strategy report shows.
Released on Monday, the report found only 31 per cent of these newly diagnosed people probably contracted the virus recently — within the preceding 12 months — a decrease of 47 per cent on the five-year average.
Dr Marianne Gale, public health physician and director of population and community health at South East Sydney Local Health District, said the restrictions imposed to quash the spread of the coronavirus also hampered the spread of HIV.
-----
https://www.afr.com/policy/economy/is-the-economy-in-recovery-or-restart-mode-20210322-p57d1w
Is the economy in recovery or restart mode?
There is a difference in approaching the expected upturn in economic activity as a restart or a recovery — one investors need to be aware of.
Giselle Roux Contributor
Mar 29, 2021 – 12.01am
It may appear as a nuance, yet there is a difference in approaching the expected upturn in economic activity as a restart or a recovery.
Restart assumes COVID-19 caused a temporary one-off halt to economic growth that will resume, naturally with some changes, but predominantly similar. At an equity level this means that sectors such as office real estate, airports and hospitality services will gain the most as consumers hanker for the pre-COVID era and lifestyle.
It is likely there will be plenty of evidence to support this contention. Work from home (WFH) still has adherents, yet increasingly more people are returning to their office.
The house is often sub-optimal as a setup for a working environment and misses out water cooler chatter, influence in the pre- and post-meeting commentary, colleagues, and the favoured stepping out for the coffee.
-----
NSW eyes mass vaccination hubs as federal documents show phase 1a two months late
By Michael Koziol and James Massola
April 4, 2021 — 5.00am
NSW will dramatically escalate vaccination efforts this week and is eyeing mass inoculation hubs, possibly including Sydney’s International Convention Centre, as federal government tender documents indicate the vaccine rollout in aged care is unlikely to finish until the end of May.
After the Morrison government accepted Premier Gladys Berejiklian’s offer to help vaccinate the state’s residents, NSW Health yesterday revealed it had been preparing behind the scenes and will open 36 new clinics this week.
Health authorities confirmed yesterday the delivery of the locally-produced AstraZeneca vaccine will proceed as planned despite a rare blood clotting condition being found in a Melbourne man who received a dose in March.
Inquiries continue into that case and experts will meet again Wednesday to discuss the blood clot issue, which has caused Germany to pause the rollout of the AstraZeneca vaccine to under 60s and Canada to pause it for under 55s.
-----
Climate Change.
-----
https://www.afr.com/chanticleer/why-nothing-will-hold-this-recession-back-20210331-p57fhp
Why nothing will hold this recession back
There is good reason insurers have failed in four of the past five years to estimate the cost of bushfires, hailstorms and floods - actuaries failed to predict the intensity of natural perils caused by climate change.
Apr 1, 2021 – 12.00am
Ask the nation’s most eminent scientists about the possibility of recession on the east coast of Australia and they will answer with a resounding “yes” and warn it will probably be worse than expected.
We are not talking about two quarters of negative economic growth.
This is a recession that goes hand-in-hand with inundation and is potentially more financially destructive than a temporary dip in economic growth.
Scientists define this recession as the inundation of coastal communities as the ocean surges past sandy coastal barriers.
An estimated 160,000 to 250,000 Australian properties are at risk of coastal flooding with a sea level rise of one metre by the end of the century, according to the latest climate change report released by the Academy of Science.
-----
Cheap low-emissions technology key to hitting net zero, Taylor tells world
By Rob Harris
April 1, 2021 — 9.52am
Emissions Reduction Minister Angus Taylor says lowering the cost of low-emissions technology will be a key driver in the world’s efforts to hit net-zero emissions, as he reaffirmed Australia’s ambition to reach the target “as soon as possible”.
Mr Taylor made the comments at the International Energy Agency’s net-zero summit, co-hosted by the Paris-based organisation with Britain as part of its presidency of the United Nations climate summit later this year.
Announcing $1 million in federal government funding for the international Clean Energy Transitions Program, which helps promote more sustainable energy production and use in developing countries, Mr Taylor said removing the green premium – the price difference between current technologies and low or zero carbon solutions – was the key to widespread global adoption.
He said in the lead-up to COP26, the global climate summit in Glasgow in November, that it was vital that countries work together to get low-emissions technologies to price parity.
-----
Australia’s carbon price is coming, one way or another
Jessica Irvine
Senior economics writer
March 31, 2021 — 4.00pm
I know a lot of people get quite dispirited when reflecting on the past decade or two of climate change and emissions pricing policy in Australia. For those deeply involved in the policy debate, the hours of work wasted in trying to design the various iterations of Australia’s attempt at a carbon emissions trading scheme a decade ago don’t bear thinking about.
But make no mistake. Australia is about to get a carbon price, one way or another. Unfortunately, the process is shaping up to be much more economically damaging than it could have been.
Economists believe, of course, that the best way to tackle the “negative externality” that carbon emissions do to our environment is to include that price among the costs of production.
Does your coal-fired power station impose an external cost on society through the degradation of air quality and the resultant impact on atmospheric temperatures? No worries. We will simply ask you – and your shareholders – to incorporate that cost burden into your business decisions, and not buck-pass it to future generations.
-----
Damning new report reveals why The Great Barrier Reef is destined to vanish
· NCA NewsWire
Up to 90 per cent of the world’s coral reefs are expected to vanish, even at low levels of warming, and there are grave fears for one of Australia’s most famous natural wonders.
The outlook for the Great Barrier Reef is considered “very poor”, according to a new report by the Australian Academy of Science.
And climate change is a major driver.
At 1.5 degrees of warming, the world will lose between 70 and 90 per cent of coral reefs.
“Substantial losses in ocean productivity, ongoing ocean acidification, and the increasing deterioration of coastal systems such as mangroves and seagrasses are projected to occur if global warming exceeds 2C,” the harrowing report states.
-----
Royal Commissions And The Like.
-----
Aged care by strangers puts paperwork ahead of people
The system is already run according to impersonal bureaucratic red tape. The royal commission’s recommendations will only make this worse.
Tanveer Ahmed Contributor
Mar 28, 2021 – 12.59pm
In the 148 recommendations of the aged care royal commission report launched this month, one thing was not made clear. Aged care services will be overrun by compliance procedures and overmedicalisation, threatening to render care increasingly impersonal.
Unsurprisingly, the sector needs more money, and a lot of it. The Grattan Institute estimates a 35 per cent increase in associated funding to meet the commission’s target of needs-based care for all. This will take us closer to countries such as Japan and those in Scandinavia.
I have been visiting aged-care facilities as a doctor for almost two decades, and it is sobering to witness the transformation of old age and infirmity.
Elders used to enjoy status and authority as guardians of tradition, knowledge and history. People used to lie about being older than they were. The dignity of old age was something to aspire to.
-----
National Budget Issues.
-----
Energy sector readies for Australia’s electric car ‘tipping point’
By Nick Toscano
March 29, 2021 — 5.00am
The uptake of electric vehicles in Australia is predicted to dramatically rise in coming years even without federal policy support, prompting the nation’s energy sector to prepare for a significant upheaval of the market.
Australia lags many countries in the transition to battery-powered cars – less than 1 per cent of Australia’s new car sales are electrics – but power giant Origin Energy forecasts that falling battery costs mean a tipping point is fast approaching.
“We feel like the tipping point for EV adoption will be when the upfront purchase prices starts to be competitive with petrol vehicles,” said Origin’s head of e-mobility Chau Le.
“The magic number is when batteries get to $100 per kilowatt hour, and we predict that will happen in the next couple of years.”
-----
APRA reveals metrics that could trigger a crackdown
James Eyers Senior Reporter
Mar 30, 2021 – 10.35am
Australian Prudential Regulation Authority chairman Wayne Byres has outlined the key metrics regulators will focus on to determine if risk levels are bubbling over as property prices surge.
One of the ratios APRA will examine while deciding whether any macroprudential intervention is required is the extent that housing credit growth is outpacing income growth, he said.
Australian Prudential Regulation Authority chairman Wayne Byres has outlined the key metrics regulators will focus on to determine if risk levels are bubbling over as property prices surge.
Regulators will also hone in on the share of lending at high loan-to-value ratios, high debt-to-income ratios and levels of broker-originated lending.
All of these are increasing, although Mr Byres said not at a “particularly rapid rate, and at least some of this is simply a product of the relatively high share of first home buyers entering the market”.
-----
Home prices growing at fastest pace in over 32 years: CoreLogic
A pre-Easter surge in new home listings has paved the way for the fastest property price growth in the residential market in over 32 years.
CoreLogic’s monthly property price index has revealed a 2.8 per cent national uplift over the month of March. It was the fastest rate of growth since October 1988, when prices rose 3.2 per cent.
The March rise has all but erased COVID-19 impacts on the property market. All capital cities are now back to pre-pandemic highs and are now outpacing the regions, while Sydney and Melbourne are now once again rising ahead of the smaller markets.
Only inner-city apartments continue to lag, but positive signs suggest a stabilisation in rent and selling prices.
-----
Health Issues.
-----
No entries this week.
-----
International Issues.
-----
Taking cold war comforts from Alaska is unwise
Australian euphoria after the Alaska dialogue is based on the assumption that reborn US power will put the rising competitor in its place. But in fact an assertive China is the new constant.
James Curran Columnist
Mar 28, 2021 – 12.52pm
Until a fuller picture emerges of what transpired behind closed doors at the recent US-China dialogue in Alaska, we are left with the theatrics of the respective opening statements, directed at American and Chinese domestic audiences.
Those pointed remarks from both sides may not signal the emergence any time soon of a genuine modus vivendi between the two powers. Nor does President Joe Biden’s recent proclamation that the global faultline is between democracy and autocracy.
On China, there was never really any doubt that the new administration would pick up largely where its predecessor left off, even if its adjectival hunt to precisely define the nature of US-China competition continues.
But Alaska is a start. And the current strategic review of the United States’ China policy will likely see Biden settle on the mix of co-operation, competition and confrontation often cited by his key officials.
-----
https://www.afr.com/world/asia/xi-flirting-with-taiwan-seizure-to-secure-legacy-us-20210328-p57eq9
Xi flirting with Taiwan seizure to secure legacy: US
Demetri Sevastopulo and Kathrin Hille
Mar 28, 2021 – 2.35pm
The US is concerned that China is flirting with the idea of seizing control of Taiwan as President Xi Jinping becomes more willing to take risks to boost his legacy.
“China appears to be moving from a period of being content with the status quo over Taiwan to a period in which they are more impatient and more prepared to test the limits and flirt with the idea of unification,” a senior US official told the Financial Times.
The official said the Biden administration had reached the conclusion after assessing Chinese behaviour during the past two months.
“As we prepare for a period in which Xi Jinping will likely be entering his third term, there’s concern that he sees capstone progress on Taiwan as important to his legitimacy and legacy,” the official added. “It seems that he is prepared to take more risks.”
-----
Australia condemns ‘day of shame’ as scores killed by Myanmar troops
Updated Mar 28, 2021 – 6.37pm, first published at 1.09pm
Australia’s military chief joined condemnation of a crackdown on pro-democracy protesters by security forces in Myanmar that killed more than 100 people, including children, in the bloodiest day yet since a military coup last month.
“A professional military follows international standards for conduct and is responsible for protecting – not harming – the people it serves,” General Angus Campbell said in a statement signed by defence chiefs from a dozen nations.
“We urge the Myanmar Armed Forces to cease violence and work to restore respect and credibility with the people of Myanmar that it has lost through its actions.”
It followed reports by witnesses and local media of a harsh crackdown by security forces on Saturday - Armed Forces Day, in which the military goes on parade.
-----
The puzzle of Biden’s ‘middle class foreign policy’
There is a striking gulf between the US President’s cautious approach abroad and his radical domestic agenda.
Edward Luce Columnist
Updated Mar 29, 2021 – 12.38pm, first published at 9.38am
If there is one thing on which Joe Biden and most of the world would agree, it is the failure of Donald Trump’s “America First” foreign policy.
The US global trade deficit grew by almost 40 per cent during Trump’s time in office – the yardstick he most cared about.
Biden, by contrast, has adopted a much fuzzier measure for diplomatic success – the health of America’s middle class. Every step will be assessed by its impact on ordinary Americans.
-----
Archegos fiasco poses hard questions for Wall Street
What on earth were some of the world’s biggest investment banks thinking when they enabled an opaque family office whose founder had a history of regulatory issues to rack up multibillion dollars worth of leverage?
Robin Wigglesworth
Mar 30, 2021 – 9.38am
It is still unclear exactly where Archegos Capital fits into the annals of spectacular hedge fund blow-ups. But the early signs are that it will probably prove the biggest since Long-Term Capital Management’s collapse in 1998.
The saga erupted into the open last Friday, when Goldman Sachs and Morgan Stanley broke cover and started dumping multibillion-dollar positions in US and Chinese stocks. They did it on behalf of an unnamed investment fund that had failed a “margin call” — essentially a demand to put up more collateral against its trades.
That sparked an epic whodunnit across markets, with Archegos — an obscure, remarkably opaque investment group run by Bill Hwang, a former Tiger Management hedge fund manager with a chequered past - quickly identified as the primary party involved. By Monday, Credit Suisse and Nomura were admitting that they would probably lose billions of dollars in the fallout.
At this early stage, there are still far more questions than answers. Here are some of the more pressing ones.
-----
Joe Biden’s first test against China is brewing as regime exploits the ‘grey zone’
Political and international editor
March 30, 2021 — 5.28am
The genius of China’s “grey zone” methods of warfare is once again on display. Three weeks ago the Philippines authorities discovered that a fleet of about 220 Chinese fishing vessels had entered the Philippines’ exclusive economic zone and anchored offshore at the Whitsun Reef in the West Philippine Sea. They are not the sort of low-slung fishing boats you might see unloading at an Australian harbour. The Chinese vessels are huge, steel-hulled, ranging in length from 30 metres to 100 metres, according to the Philippines’ National Security Adviser, Hermogenes Esperon. He calls them “an intimidation”.
And they haven’t been observed doing any fishing. They are lashed together in line formation. They run powerful lights at night but don’t move. The Philippines government has described it as “incursion”. On March 21 it demanded publicly that the Chinese government remove them. China’s ambassador to the Philippines, Huang Xilian, has said that the vessels were fishing boats that sought refuge at the reef due to rough sea conditions.
“How could they be ordinary fishing vessels seeking shelter, as Ambassador Huang says, when the weather is so good?” Esperon said to reporters on the weekend. “And they have been there in increasing numbers since November 2020. And they are not visibly there to fish.”
They are still there. Manila says the vessels are part of the China Maritime Militia; China denies this. Beijing says that they’re privately owned and operated fishing boats, end of story. They don’t have any weapons systems in evidence but, says Andrew Erickson of the US Naval War College, they don’t need to: “The ships themselves are the main weapon. Far larger and stronger than typical fishing vessels from the Philippines or other South China Sea neighbours, their comparatively robust hull designs – with additional rub strakes welded onto the hull’s steel plating aft of the bow, and – typically – powerful mast-mounted water cannons, make them powerful weapons in most contingencies, capable of aggressively shouldering, ramming, and spraying overmatched civilian or police opponents.”
-----
Tighter lending rules needed to deal with growing household debt: IMF
By Shane Wright
March 30, 2021 — 1.01am
The International Monetary Fund has urged the Reserve Bank and economic regulators to tighten lending standards to deal with the potential negative fallout from high levels of business and household debt caused by record low interest rates.
As the Australian Prudential Regulation Authority said it was closely watching the widening gap between higher house prices and slowing wages growth, the IMF said the low rates used to deal with the coronavirus recession would cause long-term pain without tougher limits on lending from banks and emerging non-banks.
The RBA has taken official interest rates to a record low of 0.1 per cent while undertaking a quantitative easing program worth at least $200 billion as it seeks to support the economy.
But such low rates, on top of federal and state government housing support programs, have helped drive house prices above pre-coronavirus levels. ANZ analysts are predicting prices to climb 17 per cent this year across all capitals, the single largest annual increase since the late 1980s.
-----
The Suez Canal crisis is over but the blame game begins
By Sudarsan Raghavan and Adam Taylor
March 30, 2021 — 10.31am
Ismailia: With the Ever Given freed and on the move, the spotlight is now likely to turn to the investigation of how the vessel got wedged into the Suez Canal, leading to billions of dollars in losses globally.
While strong winds during a dust storm are widely seen as a major factor, Lieutenant General Osama Rabie of the Suez Canal Authority told reporters that the investigation will not only focus on the weather and that human and technical errors cannot be ruled out.
Investigators are likely to examine the performance of the two Egyptian canal pilots aboard the Ever Given and their relationship with the ship’s captain.
The Ever Given cargo ship has been dislodged from the Suez Canal after blocking the major trade route for nearly a week.
-----
How Bill Hwang got back into banks’ good books – then blew them up
The man behind Archegos Capital Management was seen as a compelling prospective client by prime brokers. Concerns about his reputation and history were offset by a sense of the huge opportunities from dealing with him.
Tabby Kinder and Leo Lewis
Updated Mar 30, 2021 – 12.48pm, first published at 10.58am
Hong Kong/Tokyo | In 2012, New York-based hedge fund Tiger Asia Management pleaded guilty to using inside information to trade Chinese bank stocks, resulting in a massive settlement with US regulators.
It marked a fall from grace for its founder, Bill Hwang, one of the so-called “Tiger Cub” veterans of Julian Robertson’s Tiger Management fund.
In theory, Hwang might have found himself permanently blacklisted by investment banks everywhere. But just 12 months after he was forced to return money to investors, Hwang was back in the game. He set up a secretive new family office called Archegos Capital Management. And soon, many of the world’s top investment banks were fiercely competing for its business.
Banks including Credit Suisse and Nomura on Monday warned investors and regulators that they face billions of dollars in losses from their dealings with Archegos after it defaulted on margin calls. Between them, the banks had extended billions of dollars in credit to the family office to allow it to make highly-levered bets on US and Chinese stocks.
-----
https://www.afr.com/world/europe/eu-china-trade-deal-is-a-trojan-horse-sellout-20210329-p57f0e
EU-China trade deal is a Trojan Horse sellout
The short-sighted German-driven agreement betrays the European project and poses a major economic and political problem for the rest of the West.
Adrian Blundell-Wignall Columnist
Mar 30, 2021 – 2.24pm
Article 21 of the Lisbon Treaty states: “The Union’s action on the international scene ... seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity…”
Yet right at the end of Angela Merkel’s tenure, with unseemly haste, we have the sudden conclusion of the EU-China Comprehensive Agreement on Investment (CAI), just at the time when these very things are being taken away from China’s Muslim minorities and the people of Hong Kong.
Helmut Kohl broke the ice for Germany with China following Tiananmen Square. Since then, the two countries have always “understood” each other.
You don’t criticise China and the deals follow. The middle ground can be walked between China and the West with the line: “dialogue and personal relationships are more constructive”.
-----
Greed is not good: Hedge fund’s implosion hurts some of the world’s biggest banks
Stephen Bartholomeusz
Senior business columnist
March 30, 2021 — 12.00pm
We’ve seen this movie before. A hedge fund uses massive derivative positions to take extremely leveraged bets and blows up, spreading billions of dollars of losses among Wall Street banks and threatening the financial system.
In this latest instance, thankfully, it doesn’t appear the financial system is at risk but the extraordinary fire sale of Archegos Capital’s positions has roiled markets and racked up billions of dollars of losses for some of the world’s largest and supposedly sophisticated banks.
In 1998 it was Long Term Capital Management that blew up when the hedge fund was blindsided by the Asian financial crisis and the fund, with only $US5 billion ($6.6 billion) of capital but $US125 billion of debt – and more than $US1 trillion of off-balance-sheet derivative positions – was bailed out at a cost of about $US3.6 billion by a consortium of Wall Street banks orchestrated by the US Federal Reserve Board. It was subsequently liquidated.
-----
China approves radical overhaul of Hong Kong’s political system
· AFP
Chinese leaders endorsed a sweeping overhaul of Hong Kong’s electoral system on Tuesday, slashing its number of directly elected seats and ensuring a majority of the city’s legislators will be selected by a reliably pro-Beijing committee.
The new measures, which bypassed Hong Kong’s legislature and were imposed directly by Beijing, are the latest move aimed at quashing the city’s democracy movement after huge protests.
“President Xi Jinping signed presidential orders to promulgate the amended annexes,” China’s official Xinhua news agency said of the changes to Hong Kong’s Basic Law, the mini-charter that gifted the city special freedoms within China since Britain handed over the territory in 1997.
Hong Kong’s 7.5 million residents are still not sure exactly what the new law contains, with no hard details published.
-----
The Suez Canal blockage wreaked economic havoc. Working out who will pay for it could take years
By Motoko Rich, Stanley Reed and Jack Ewing
April 1, 2021 — 6.50am
It took six days to prise free a giant container ship that ran aground and clogged the Suez Canal, one of the world’s most crucial shipping arteries. It could take years to sort out who will pay for the mess.
Cargo companies, insurers, government authorities and a phalanx of lawyers, all with different agendas and potential assessments, will not only need to determine the total damage but also what went wrong. When they eventually finish digging through the morass, the insurers of the ship’s Japanese owner are likely to bear the brunt of the financial pain.
The costs could add up quickly.
There are the repairs for any physical damage to the Ever Given, the quarter-mile-long ship that got stuck in the Suez. There is the bill for the tugboats and front-end loaders that dug the beached vessel out from the mud. The authority that operates the Suez Canal has already said the crisis has cost the Egyptian government up to $US90 million ($118 million) in lost toll revenue as hundreds of ships waited to pass through the blocked waterway or took other routes.
-----
Joe Biden unveils $2.6 trillion infrastructure bill to beat China, move to green energy
By Matthew Knott
April 1, 2021 — 8.51am
Washington: US President Joe Biden has unveiled a massive US2 trillion ($2.6 trillion) infrastructure plan he says will allow America to beat China economically and position the country as a global leader in clean energy technology.
Biden has proposed paying for the plan by lifting the US corporate tax rate from 21 to 28 per cent, reversing a cut his predecessor Donald Trump signed into law at the end of 2017.
“I’m convinced that, if we act now, in 50 years, people are going to look back and say this was the moment that America won the future,” Biden said during a speech in Pittsburgh, Pennsylvania, a city in America’s post-industrial Rust Belt.
Biden said the plan would create millions of new jobs and show that democracies can still deliver for their citizens by helping the US “win the global competition with China”.
“It’s time to build our economy from the bottom up and middle out - not the top down,” Biden said.
-----
Biden’s radical attempt to remake America
Stephen Bartholomeusz
Senior business columnist
April 1, 2021 — 12.00pm
Joe Biden’s $US2.25 trillion ($3 trillion) “infrastructure” plan envisages far more than an upgrading of roads and bridges: it would create a radical and transformative overhaul of the US economy and its society.
Only about half of the massive spending package would be devoted to measures commonly thought of as infrastructure; the other half to aged and disability care, climate change, union-focused employment, skills-based training and manufacturing industry subsidies and incentives.
If it can be implemented – much of it will face fierce Republican opposition in the Senate and even from some moderate Democrats – it would represent a repudiation of four decades of a deregulationary consensus in the US and a vastly enhanced role for the federal government in the US economy.
Coming hard on the heels – only weeks after – Biden’s $US2 trillion COVID relief package – it would also significantly increase US deficits and debt over the near-decade envisaged for its implementation because it would be only partly funded.
-----
S&P 500 closes above 4000 for first time
· The Wall Street Journal
The S&P 500 closed above 4000 for the first time in its history, setting a record to begin the second quarter.
The broad stock gauge jumped 46.98 points, or 1.2 per cent, to 4019.87, after closing out a fourth consecutive quarterly advance on Wednesday. It took just 434 trading days for the index to set its latest 1000-point milestone, far fewer than the 1227 trading it needed to climb to 3000 from 2000.
The Nasdaq Composite rose 233.23 points, or 1.8 per cent, to 13480.11. The Dow Jones Industrial Average added 171.66 points, or 0.5 per cent, to 33153.21.
“There’s always some excitement starting a new quarter,” said Lindsey Bell, the chief investment strategist at Ally Invest, and having the S&P cross a milestone is another confidence booster. She cautioned, however, that the market can get stuck on these numbers, too. “Lots of times the market has to test that level a few times before it can go higher.”
-----
https://www.afr.com/world/north-america/us-economy-added-916-000-jobs-in-march-20210403-p57g90
US economy added 916,000 jobs in March
Christopher Rugaber
Apr 3, 2021 – 4.42am
Washington | America’s employers unleashed a burst of hiring in March, adding 916,000 jobs in a sign that a sustained recovery from the pandemic recession is taking hold as vaccinations accelerate, stimulus checks flow through the economy and businesses increasingly reopen.
The March increase — the most since August — was nearly double February’s gain of 468,000, the Labor Department said. The unemployment rate declined from 6.2 per cent to 6 per cent.
Even with last month’s robust increase, the economy remains more than 8 million jobs short of the number it had before the pandemic erupted a little over a year ago. But with the recovery widely expected to strengthen, many forecasters predict enough hiring in the coming months to recover nearly all those lost jobs by year’s end.
Regaining all those jobs, though, will be a daunting task.
-----
I look forward to comments on all this!
-----
David.
No comments:
Post a Comment