June 17, 2021 Edition
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The big news event in the last week has been the G7 meeting in Cornwall where ScMo was invited as a guest. There was agreement on many issues – such as need to live better with China and do better on Climate Change – with our PM dissenting on the second issue. Vaccination of the world also featured.
In Australia it was all about relief that we were coping with COVID and the Libs seeking to defang the issue of the Biloela Four.
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Major Issues.
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When will investors realise central banks are serious this time?
Ultra-low bond yields indicate that bond market investors are prepared to take on the central banks over the likelihood of them achieving their inflation targets.
Karen Maley Columnist
Jun 7, 2021 – 12.00am
Sharemarket investors have learnt through bitter experience to pay obeisance to the old Wall Street motto “Don’t fight the Fed”. The more pugnacious individuals in the bond market, however, appear willing for a tussle.
Even though the US Federal Reserve continues to vow that it will persist with ultra-easy monetary policy until it generates what it considers to be maximum employment, and even though it has now explicitly said that it will allow inflation to run above its 2 per cent target for a time to make up for past shortfalls, bond investors continue to shrug off the risk that rising inflation will erode the value of their fixed income investments.
Indeed, the yield on benchmark US 10-year bonds dipped on Friday as investors cheered the US jobs report for May, which showed the country’s labour market was improving, but not as rapidly as economists had predicted.
More importantly, investors concluded that the May jobs report would not increase the pressure on the Fed to taper its massive bond buying program, which sees it buying $US120 billion ($155 billion) of US government bonds and mortgage-backed securities each month.
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Too much disclosure is not in super members’ interests
The portfolio holdings disclosure required of superannuation funds under Your Future, Your Super is well intended, but poorly designed.
Grant Wilson Contributor
Jun 6, 2021 – 12.01pm
In financial markets, as in life, you can have too much of a good thing. So it is with the draft regulations of the Your Future, Your Super Bill that focus on portfolio holdings disclosure.
These regulations were published by Treasury on April 28 to facilitate a consultation process that ran to May 25.
They are part of a broader package of delegated legislation that first requires the bill to clear the Senate in the weeks ahead. The regulations will then be presented to both Houses, and can be disallowed only by a motion agreed to by either house.
If that does not happen, the Treasury Laws Amendment (Your Future, Your Super – Improving Accountability and Member Outcomes) Regulations 2021 will become law.
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Strategist saw through foreign policy myths in era of change
The late Neville Meaney’s warning not to let cultural loyalties cloud the pursuit of national interest remains of vital importance to determining Australia’s role in the world.
James Curran Columnist
Jun 6, 2021 – 3.49pm
Australia has lost one of its finest thinkers and its most eminent foreign policy historian.
The death last week of Neville Meaney, who taught history at Sydney University from 1962 until 2006, leaves a large gap in Australian intellectual life. His legacy for scholars and strategic policymakers is profound.
Meaney asked new questions about Australia’s self-image and its role in the world.
The first Australian historian to be awarded an American PhD, his career began in earnest at a critical time – the 1960s – when the certainties and orthodoxies of the nation’s British-centred past were crumbling under the weight of changing domestic and international circumstances.
The collapse of empire in Australia caused uncertainty about the nation’s orientation, a time when, according to Manning Clark, historians didn’t have the maps to make sense of a more fluid and multipolar world.
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Morrison needs the gumption to save business (and the unions) from their folly
Economics Editor
June 7, 2021 — 5.00am
Talk about don’t mention the war. The great and good – who miss jetting off overseas several times a year – keep telling us the economy won’t recover until we’ve reopened to the world. Seems they just can’t bring themselves to focus on the obvious: it’s wages, stupid.
It’s self-evident that, ultimately, it would be bad for our economy for us to stay a hermit kingdom. But these worthies are wrong if they imagine that re-opening our borders would immediately strengthen the recovery.
It’s true that our airlines won’t recover until the borders open, and our universities will remain crippled. But because Aussies normally spend far more on touring overseas than foreigners spend touring here, our tourism industry (including every country town) has been doing nicely thank you from the temporary ban on Aussies doing their touring abroad.
Our econocrats have been busy extending the fiscal stimulus to get unemployment down and skill shortages up, in the hope this will bid up wages, and so give the nation’s households more to spend through our businesses.
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How ETFs sometimes get it badly wrong
Doug Turek
Exchange traded funds have now become so popular that 10 per cent of Australian and 20 per cent of US listed companies are owned through “passive” index funds.
Among US-based funds, more money is now passively managed than actively. Indexing is the engine behind most ETFs, which capture more than $100 billion of Australian investments and $10 trillion worldwide.
Their appeal is their low cost, diversification and stated performance advantages.
But what if this is not true, at least not all the time? And not now?
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PM is playing a long game with focus on one result
Scott Morrison has resisted the temptation to take the gloves off with state premiers who have sought to use the slow vaccination rollout and quarantine failures to mask their own inadequacies.
To do otherwise would be counter-productive as he seeks to play a long game.
In the meantime, he is paying the price, on the basis that the issues hurting him politically are ones that are solvable.
This is a Prime Minister who is using his authority to wait it out.
Victoria, vaccinations and arguments over quarantine have dominated the political landscape since the budget provided the reset Morrison desperately needed.
There have been failings across all jurisdictions.
The latest Newspoll, while reflecting the damage to the Prime Minister, continues to show the next election will be a tightly fought contest with the polls running in a relatively narrow bandwidth for the past two years.
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Universities reel as international students dry up
Julie Hare Education editor
Jun 8, 2021 – 5.01am
The Australian higher education sector will have lost $3.8 billion in revenue by the end of 2021, with billions more expected to evaporate in the coming years as the pipeline of international students slows to a trickle.
The sector has taken a bucketing from closed borders compounded by a lack of government intervention and strategic planning in getting international students back into the country.
There is now, however, a glimmer of hope as some states – NSW, South Australia and to a lesser extent Victoria – advance plans to bring small numbers into student-specific quarantine facilities.
Experts say the aftershocks of the revenue shortfalls will be felt most keenly in the research capacity of universities.
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https://www.afr.com/wealth/personal-finance/why-bonds-still-matter-in-your-portfolio-20210607-p57yxe
Why bonds still matter in your portfolio
Given lower expected returns, they’re a diversifier of overall risk, with shares still likely to do the heavy lifting in delivering return requirements.
Aidan Geysen Contributor
Jun 8, 2021 – 12.00am
A recent narrative questioning the merit of a diversified portfolio of traditional equities and bonds has had many in the investment management industry asking: “Is the 60:40 portfolio dead?”
Generally referred to as a balanced portfolio, 60:40 refers to a mix of 60 per cent equities and 40 per cent bonds. It is a universal portfolio construct designed to deliver sufficient returns for a range of investor goals while providing adequate diversification to satisfy the risk tolerance of the investor.
Importantly, 60:40 is a guide only, with the exact mix of equities and bonds driven by the investor’s return requirements, risk tolerance, time frame and other factors that a qualified financial adviser is well placed to assess.
At the heart of the debate, however, is a question more fundamental than the exact asset allocation mix. That is whether there is still a role for traditional diversifiers, such as bonds, in today’s balanced portfolio, given the low-yield environment we are expecting for years to come.
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https://www.theatlantic.com/international/archive/2021/06/china-hong-kong-freedom/619088/
How Academic Freedom Ends
Beijing is using dismissals, arrests, and a repressive new law to curtail students’ and professors’ rights.
Timothy McLaughlinJune 6, 2021
Last month, a group of University of Hong Kong academics gathered on the third floor of the campus’s Jockey Club Tower for a highly anticipated town hall. Nearly a year had passed since Beijing imposed a new security law on Hong Kong, arresting dozens of people, reengineering the territory’s voting system, and seizing the assets of a publicly listed company linked to activists. Staff members at the prestigious university, the city’s oldest, were seeking reassurance about how this new reality would change the school, its research, and their jobs.
The takeaway, one of those in attendance told me, was that “help is not on the way.”
By the time of the meeting, the university had severed ties with its students’ union, issuing a scathing statement against the group that read like party-speak from Beijing; torn down colorful walls of protest art along a main thoroughfare; and instituted a heavy security presence on campus.
The May town hall offered its audience little to feel confident about, according to multiple people who attended the closed-door session. The two administrators who addressed the group admitted that they had been caught off guard by the speed and breadth of the crackdown across the city. The assembled faculty pressed them on whether HKU would provide legal assistance if they were arrested for allegedly violating the law while working, what to do if students reported professors on a government tip line, and what educators may be forced to teach. (The new rules require universities to “promote” national security.)
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https://www.afr.com/policy/foreign-affairs/appeal-for-united-front-on-china-20210608-p57z8q
Appeal for united front on China
By calling on fellow liberal democracies to work together, Scott Morrison is responding to criticism for getting out in front on China, with no strategy to back it up beyond slogans.
Jun 8, 2021 – 10.30pm
Scott Morrison will on Wednesday call on his fellow liberal democracies to work together as they did during the Cold War to preserve freedom in the face of autocracy and authoritarianism.
On Friday, Mr Morrison will meet the leaders of the world’s most powerful democracies at the G7 summit in Britain, along with heads of government from India, South Korea and South Africa.
Mr Morrison’s invitation to the meeting underscores that other liberal democracies are standing behind Australia following a year of economic coercion from China, aimed at some, but not all, of our exports.
The language in a speech he is due to deliver in Perth on Wednesday before his departure for Cornwall is unusually strong for an Australian prime minister. But Mr Morrison will speak from deep knowledge of China’s new assertiveness, which most of his fellow leaders have not experienced in the same way.
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The real reason crypto exists
The idea that digital currencies are just an innocent store of value is stupefyingly naive. So the sooner regulators finally step in, the better.
Kenneth Rogoff Columnist
Jun 8, 2021 – 11.31am
Ransomware – a type of malicious software that restricts access to a computer system until a ransom is paid – is not a good look for cryptocurrencies.
Proponents of these digital coins would rather point to celebrity investors such as Tesla founder Elon Musk, Dallas Mavericks owner Mark Cuban, star American football quarterback Tom Brady, or actress Maisie Williams (Arya in Game of Thrones).
But recent ransomware attacks, and cryptocurrencies’ central role in enabling them, are a public relations disaster.
The attacks include last month’s shutdown of the Colonial Pipeline, which drove up gasoline prices on the US east coast until the company paid the hackers $US5 million ($6.5 million) in bitcoin, and, even more recently, an attack on JBS, the world’s largest meat producer.
Such episodes highlight what for some of us has been a long-standing concern: difficult-to-trace anonymous cryptocurrencies offer possibilities for tax evasion, crime, and terrorism that make large-denomination bank notes seem innocuous by comparison.
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https://www.smh.com.au/world/asia/australia-we-do-need-to-talk-about-taiwan-20210608-p57z1o.html
Australia, we do need to talk about Taiwan
Nine News Political Editor
June 9, 2021 — 5.30am
At the end of October, 1964, a diplomatic cable was sent from Brussels to Canberra recording a meeting in Moscow between Australia’s foreign affairs minister, Paul Hasluck, and his Soviet counterpart, Andrei Gromyko.
The conversation was about China.
It was the height of the Cold War and eight years before Gough Whitlam established diplomatic relations with the People’s Republic of China. At talks in the Soviet Foreign Ministry, Hasluck raised concerns about the future of Formosa (Taiwan) if Communist China was admitted to the United Nations.
“Its population of 11 million wished to be separate from Mainland China and no one should compel them to be absorbed by another nation,” the cable records Hasluck as saying. “Australia happened also to be a country of 11 million and we would consider it an intolerable situation if our existence could be abolished by a United Nations resolution.”
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Australia ‘must act’ to halt Indonesia falling under China’s sway
Updated June 10, 2021 — 5.39amfirst published at 5.00am
Singapore: Australia risks Indonesia sliding further into the orbit of China amid an absence of face-to-face diplomacy with its nearest and biggest neighbours in south-east Asia during the pandemic.
Tom Lembong, a former Indonesian trade minister and investment chief, warns that Australia, the United States and like-minded countries will have to mount a co-ordinated and sustained effort if they want to stop Jakarta “going all in” with the superpower.
While Prime Minister Scott Morrison lands in Singapore on Thursday for a flying visit en route to the G7 summit in the UK, there hasn’t been a senior level visit with Indonesia since President Joko Widodo, known as Jokowi, flew to Canberra and addressed Parliament in February last year.
The virus, however, hasn’t stopped a slew of cabinet level and above figures from other countries passing through the archipelago in that time.
They include Chinese Foreign Minister Wang Yi, who has made three visits; Japanese Prime Minister Yoshihide Suga; Malaysia’s Muhyiddin Yassin; British Foreign Secretary Dominic Raab; then US secretary of state Mike Pompeo, and ministers or deputy ministers from France, Singapore, Turkey, South Korea, Iran, UAE and Hungary. The latest to fly in during the past fortnight were US Deputy Secretary of State Wendy Sherman and the European Union’s foreign policy chief Josep Borrell.
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Japan backs Australia against China’s economic coercion
By Eryk Bagshaw
June 9, 2021 — 7.00pm
Singapore: Japan has backed Australia’s campaign against China’s economic coercion, warning the superpower’s strikes have undermined the international order.
The move from Japan sandwiches China between the world’s first and third-largest economies after the United States said in May that it would not leave Australia to face Beijing alone.
It followed two hours of virtual meetings on Wednesday between Japanese Foreign Minister Toshimitsu Motegi, Defence Minister Nobuo Kishi and Australia’s Foreign Affairs Minister Marise Payne and Defence Minister Peter Dutton.
“We commit to opposing coercion and destabilising behaviour by economic means, which undermines the rules-based international system,” the four ministers said after the meeting.
The joint statement is the most comprehensive outline of priorities released by the foreign and defence ministers of the two countries in recent memory. It follows more than two years of escalating tension between Australia and China over national security and human rights that culminated in Canberra tearing up China’s Belt and Road investment agreement with Victoria and China suspending the China-Australia Strategic Economic Dialogue in May.
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Japan, Australia ‘hyping up so-called China threat’
Beijing has bristled at Australia and Japan’s joint pushback on Chinese aggression ahead of a G7-plus meeting in the UK that has put Xi Jinping’s administration in the spotlight.
China’s foreign ministry spokesman Wang Wenbin delivered the first official response to Tokyo and Canberra’s shared concerns over Beijing’s aggressive incursions in the East China Sea, militarisation of the South China Sea and economic coercion on Australia.
“Japan and Australia are hyping up the so-called ‘China threat’ theory, maliciously slandering and attacking China and wantonly meddling in China’s domestic affairs,” spokesman Wang said at a Wednesday evening briefing in Beijing.
“We urge Japan and Australia to abide by international law and basic norms of international relations including respect for other countries’ sovereignty and noninterference, stop meddling in China’s internal affairs and stop undermining regional peace and stability.”
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https://www.afr.com/chanticleer/market-rotation-may-be-closer-than-you-think-20210610-p57zze
Market rotation may be closer than you think
Randal Jenneke of T Rowe Price says the rotation to value may soon reverse as he hunts ‘quality’ stocks in oversold sectors like health.
Jun 10, 2021 – 3.55pm
If Randal Jenneke, head of Australian equities at T Rowe Price is right, Australian investors should expect a bit of whiplash in the coming months.
Jenneke believes that the rotation from growth to value that started on the Australian market last October may start to fade in the second half of the year, as stimulus-fuelled economic growth and inflation peak.
T Rowe Price, which has global assets under management of $US1.6 trillion ($2.1 trillion) is already starting to take profits in value positions that have done well – specifically banks and iron miners – and is now starting to position for a swing back to growth.
Jenneke is particularly looking to what he calls “quality growth” stocks, which T Rowe Price defines as stocks that have strong and durable profits and cash flows, pricing power and good management, and names healthcare as a sector he’s particularly keen on after it suffered its worst year in a decade in 2020.
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https://www.afr.com/politics/federal/dutton-flags-more-us-troops-in-australia-20210610-p5800r
Dutton signals more US troops in Australia
Andrew Tillett and Phillip Coorey
Jun 10, 2021 – 7.49pm
Defence Minister Peter Dutton has proposed expanding the US Marine presence and hosting more American warships in Australia, as he warns the nation must prepare for whatever threats loom “on or below the horizon” amid growing tensions with China.
Mr Dutton said while Australia wanted a “productive” relationship with China, there had been an “awakening” domestically and in foreign capitals about the challenge Beijing posed to liberal democratic values.
But as international support for Australia grew in the face of China’s economic coercion, so too did domestic opposition to the Morrison government’s stance on China.
For the second day, federal Labor questioned the government’s handling of the relationship while Western Australian Labor Premier, Mark McGowan, accused the Morrison government of risking WA’s China-dependent economy and, by extension, the national economy.
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Dutton left with a sub-standard mess
The new Defence Minister is being forced to make key decisions on the submarine fleet that will affect the nation’s security for decades, to say nothing of China.
June 11, 2021
Of all the problems Peter Dutton inherited when he became Defence Minister, none is more urgent or more strategically vital to Australia than sorting out what he calls the “mess” of Australia’s future submarine project.
Dutton is being forced to make key decisions on the submarine fleet that will affect the nation’s security for decades, in the face of a rising China which is aggressively boosting its own submarine war-fighting capabilities.
But the list of problems Dutton has inherited on the submarine program is daunting and a wrong move either way could cost taxpayers many billions of extra dollars or, worse, leave the nation without a potent submarine fleet.
First of all Dutton has to decide how he will deal with the French giant Naval Group which, having won the $90bn bid to build 12 Attack-class submarines in Adelaide, has tried to play hardball over the level of Australian industry content and, more recently, by asking for what Defence believes is an excessive amount to produce the detailed design of the boats. The project, now five years old, is at a temporary impasse with the government refusing to sign new contracts to allow it to move forward.
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$10bn refit for ageing Collins-class submarines amid China concerns
All six of the navy’s Collins-class submarines will be completely rebuilt to extend their life for another decade, under an ambitious, high-risk plan to safeguard the nation’s submarine capability in the face of growing Chinese hegemony in the region.
Defence Minister Peter Dutton will order the whole Collins fleet to undergo the major life-of-type extension, doubling the initial Defence plan to extend just three boats, as a hedge against the fact that the first of 12 new French Attack-class submarines is not due to enter service until 2035.
The plan, which will cost up to $10bn, aims to guarantee that the submarine fleet does not fall below six boats into the future, however the slow delivery of the new French boats means the navy will not achieve its aim of having a fleet of 12 submarines until the 2050s.
“We need to be realistic about what lies ahead by way of threat in our own region and the submarine capacity is a significant part of how we mitigate that risk and it’s important we get the program right,” Mr Dutton said.
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Debunking Dark Emu: did the publishing phenomenon get it wrong?
In 2014, Bruce Pascoe’s Dark Emu revolutionised interpretations of Indigenous history, arguing that Aboriginal people engaged in agriculture, irrigation and construction prior to the arrival of Europeans. Now, in a new book, two highly respected academics say that there is little evidence for these claims.
By Stuart Rintoul
June 12, 2021
The walls of Peter Sutton’s home in country South Australia are hung with ghosts – black-and-white photographs he has collected from second-hand shops over the years, the long-gone people he calls “poignant strangers”, staring out from the past, without families who want or remember them.
It’s a rambling old house of stone and timber, everything you would expect an anthropologist’s home to be: rooms filled with books, papers, a large volume of genealogies of Wik families from Cape York among whom he has spent much of his professional life, including some 2000 records of births and deaths. Sutton has spent many decades with the Wik people; danced with them, cried with them. There are other records, from western Arnhem Land, Daly River, the Murranji Track – ghost road of the drovers, Central Australia and the corner country of the Lake Eyre basin.
Sprawled across a dining room table is an almost-finished book about the early 20th century Queensland anthropologist Ursula Hope McConnel, who was brave and brilliant and solitary.
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Best Super Funds Over The Last Five Years
Money contributor
June 12, 2021 — 10.30pm
The good news is that, despite the coronavirus pandemic-induced recession and resulting sharemarket meltdown, your retirement kitty has probably bounced back amazingly well.
Fund researcher SuperRatings reports the median “balanced” fund, which holds growth assets of between 60 per cent and 76 per cent, has grown about 18 per cent in the year to the end of April.
So, that’s a stellar return but here’s the thing: One year is way too short a time period to gauge the investment prowess of super funds, which should always be judged on their long-term performance.
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Scott Morrison holds historic meeting with US President Joe Biden, UK Prime Minister Boris Johnson at G7 summit
Geoff Chambers
Scott Morrison has held a historic meeting with US President Joe Biden and British Prime Minister Boris Johnson, bringing together three wartime allies to discuss escalating instability in the Indo-Pacific and the need to work more closely in response to regional and global threats.
The Prime Minister’s most important bilateral meeting of the G7 summit was expanded to include both Mr Biden and Mr Johnson, with Australia, the US and Britain discussing enhanced collaboration in key strategic, defence, infrastructure and critical supply chain initiatives.
The Indo-Pacific step-up, Beijing’s economic coercion of countries including Australia and increasing disinformation and cyber campaigns linked to China and Russia has been a key focus at the G7-plus leaders’ summit at the Cornish seaside resort village of Carbis Bay.
“Prime Minster Johnson, President Biden and Prime Minister Morrison met in the margins of the G7 summit in Carbis Bay on June 12, 2021,” a joint statement from the three leaders said.
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Wolves in the weeds as Beijing’s harsh diplomacy backfires
Looking tired and anxious, Beijing’s ambassador Cheng Jingye has almost entirely retreated from Canberra’s diplomatic social scene. It turns out enemies are everywhere.
By WILL GLASGOW
June 12, 2021
Beijing’s man in Canberra, ambassador Cheng Jingye, looked tired and anxious.
There is a lot to worry about in the paranoid Xi Jinping era, especially for a cosmopolitan United Nations specialist like Cheng. For China’s diplomats, potential enemies are everywhere, inside and outside their walled compounds. Every encounter is a test of loyalty – and all recorded on their embassy’s or consulate’s Hikvision surveillance equipment.
“There’s a second Cultural Revolution going on,” says one senior Canberra-based diplomatic source, who agreed to speak on the condition of anonymity.
Once-common motions within the Canberra diplomatic community – such as a new ambassador paying a courtesy visit to their counterpart at the Chinese ambassador’s residence in Yarralumla – have now become fraught with risk.
In one such recent exchange, a new ambassador found that a junior Chinese diplomat sat by the worried-looking Chinese ambassador for the whole meeting, taking notes.
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Coronavirus And Impacts.
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‘The jabs are working’: Only three fully vaccinated people hospitalised in UK with Delta variant
By Bevan Shields
June 8, 2021 — 6.45am
London: Fully vaccinated people make up a tiny fraction of those being hospitalised with the new Delta variant of coronavirus, new figures show, giving officials more confidence in the success of Britain’s world-leading rollout.
Of 12,383 people infected with the variant, which was first detected in India and has also been identified during the most recent outbreak in Australia, 464 sought hospital care and 126 were admitted.
Of those 126, some 83 had not been vaccinated at all, 28 had received only one shot and just three had been fully vaccinated with two doses.
“The jabs are working,” Health Secretary Matt Hancock told MPs at Westminster.
Hancock made the announcement as scientists work to calculate how much more transmissible the variant is, whether it causes more serious disease, and whether it has a better chance of evading vaccines.
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‘We can treat it’: Mortality rate of rare condition linked to AstraZeneca shot plunges
By Liam Mannix
June 7, 2021 — 7.03pm
Doctors are now confident they can detect and treat the rare blood clotting syndrome associated with AstraZeneca’s vaccine, with just one death recorded so far.
When the syndrome, known as thrombosis with thrombocytopenia (TTS), was first identified one in four people with it died.
But the fatality rate has been dropping in Europe, where it was first identified. As of last Thursday, Australia had recorded 31 confirmed and 10 probable cases.
Of those cases, 23 are out of hospital and recovering, four require ongoing care and 13 remain in hospital.
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Covid-19: when governments started lying to us
When the New Zealand Prime Minister back in March scolded a 21-year-old for going to the gym after his Covid-19 test and ignoring “a full two-week period of sustained propaganda” — yes, she said that — she was right about one thing. Not since World War II have we endured so much propaganda. But it’s been a lot longer than two weeks.
Jacinda Ardern’s Freudian slip illustrates how democratic governments have been as guilty of “misinformation” or “disinformation” as any critics of lockdowns, masks and border restrictions. For 15 months they have trotted out fear-mongering slogans about “saving lives”, “staying alert” or (in Britain) “clapping for carers” on Thursday night.
Governments have avoided context and facts that would have put people at ease, amid the cacophony of hysterical reporting of a disease that remains a negligible threat to the vast bulk of people. The Victorian government’s “Staying Apart Keeps Us Together” could have been written by the government of Oceania in George Orwell’s 1984.
It’s been a 24/7 doom deluge for more than a year, and it’s all been extraordinarily successful. The British public thought 6 per cent of the country had died from Covid-19 (4 million people) according to an August 2020 poll. In the US, two-fifths of Democrat voters and a quarter of Republican voters thought the chance of hospitalisation from contracting Covid was more than 50 per cent, when it is between 1 and 5 per cent.
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International students welcomed back to NSW
Finbar O'Mallon Reporter
Jun 10, 2021 – 4.09pm
A plan to fast-track the return of international students to NSW is an attempt to boost the local economy and stop other countries poaching pupils, according to state Treasurer Dominic Perrottet.
Australia’s closed borders have wreaked financial havoc on the multibillion- dollar industry as the Morrison government keeps the country shut out of fear of COVID-19.
Under the pilot, 250 international students will be flown into NSW per fortnight from the middle of the year, with 50,000 estimated to be waiting to get back into the state.
Mr Perrottet expected the federal government to sign off on the plan in the next few days.
Federal Education Minister Alan Tudge said the plan appeared to meet the government’s criteria and he would work through the detail “carefully”.
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Climate Change.
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https://www.afr.com/companies/energy/rooftop-solar-is-a-populist-frankenstein-20210603-p57xnw
Rooftop solar is a populist Frankenstein
The bright idea of turning roofs into mini-power stations has become a monster destablising the grid. But imposing controls on this form of middle class welfare is generating howls of outrage.
Matthew Warren Contributor
Jun 6, 2021 – 2.10pm
In the politicisation of Australia’s electricity system, nothing has been more potent than rooftop solar. Household photovoltaic (PV) solar panels are a brilliant technology corrupted by political self-interest. A triumph of populism over technical and social benefit, of brazen middle-class welfare and the accelerating inequity that goes with it.
Australia now has more than 2.8 million solar rooftops installed with a combined capacity of about 13 gigawatts, the equivalent of more than a dozen invisible, intermittent power stations smeared across the suburbs of this wide brown land.
Because they generate behind the meter, rooftop solar systems mostly cannot be seen or controlled by the Australian Energy Market Operator (AEMO), the control room technicians who orchestrate all other generators to maintain a safe and reliable electricity supply.
A decade ago, this wasn’t much of a problem, but the addition of millions of solar panels has turned a fascinating experiment in distributed generation into Frankenstein’s monster.
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Royal Commissions And The Like.
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No entries in this category.
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National Budget Issues.
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Australia’s 1 per cent: Budget reliance on high and middle income earners grows
By Shane Wright
Updated June 7, 2021 — 7.25pmfirst published at 6.38pm
Four in five Australians earn less than $100,000 with new tax figures revealing the federal budget is increasingly reliant on the nation’s best-paid 1 per cent to cover the cost of growing services and infrastructure.
Data from the Australian Tax Office also shows that to be a member of the top 1 per cent of taxpayers requires a taxable income of at least $350,000. By contrast, an income of at least $700,000 is needed to get into the top 1 per cent of American taxpayers.
The annual taxation statistics from the ATO, covering the 2018-19 financial year, reveals there were almost 14.7 million individual taxpayers that year, a 2.7 per cent increase over 2017-18, who paid a combined $213 billion in income tax.
Eighty per cent of those taxpayers had a taxable income of less than $100,000, the lowest proportion on record. In 2012-13, 90 per cent of taxpayers had a taxable income below $100,000.
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Business conditions boom in May: NAB survey
“Booming” business conditions in May have added to expectations the economy has moved from rebound to expansion mode, as firms signalled an ongoing intention to hire and invest.
NAB’s latest survey showed operating conditions hit a record high for the second straight month, with gains spread across the country and industries.
“The strength in activity is evident everywhere,” NAB chief economist Alan Oster said.
The conditions gauge climbed 5pts to 37pts in May, the survey showed.
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Debt reality check: there are limits on governments spending to thrive
Senior economics writer
June 10, 2021 — 5.30am
One of the most remarkable byproducts of this COVID-19 pandemic has been the dramatic shift in the political debate about government debt and deficits.
For much of the 2000s and 2010s, I found myself needing to write explanatory pieces hushing fears about government debt. In them, I pointed out that governments are not like individual households when they borrow. Governments don’t die, for example, so they never have to rule off the books and repay debts.
Also unlike households, governments possess the coercive power of taxation. They can – in theory, at least – give themselves a pay rise at any time they wish.
Of course, raising taxes is incredibly unpopular with voters. So governments, historically, have tended to cover any revenue shortfalls by borrowing.
Government budgets are also unlike household budgets in that they play a crucial role in helping to smooth the economic cycle. When the economy hits the fan, so to speak, governments should, at the very least, allow the natural decline in revenue from taxes and increase in outlays on social security and welfare to occur.
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https://www.afr.com/policy/economy/budget-debt-a-great-cost-to-future-generations-20210608-p57z3b
Economic adviser sounds alarm on ‘dark clouds’ of debt
John Kehoe Economics editor
Jun 8, 2021 – 1.31pm
The federal government’s independent economic adviser says there is too much complacency about rising debt, warning of potential “great cost” to current and future generations of taxpayers if Australia abandons its long-standing fiscal discipline.
In a forthright speech, Productivity Commission chairman Michael Brennan said gross domestic product per capita growth over the past decade had fallen to its slowest pace in at least 60 years, undermining the improvement in living standards.
In contrast to Treasury and the Reserve Bank of Australia, which have encouraged ongoing government spending to recover from the COVID-19 economic downturn, Mr Brennan sounded the alarm on “dark clouds” from higher debt levels.
He said the emergency $250 billion fiscal response, including the JobKeeper wage subsidy, had shifted from an “insurance” policy during lockdowns to more recently a “Keynesian” stimulus to boost confidence and demand.
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Health Issues.
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Perfect economic conditions for healthcare to thrive
Aleks Vickovich Wealth editor
Jun 8, 2021 – 5.01am
Wealthy individual investors are bullish on healthcare stocks, but professional investment managers are split on whether the local sharemarket alone has sufficient diversity for those seeking portfolio exposure to the sector.
A survey of 400 sophisticated and wholesale investors by Citi in February found 46 per cent believe healthcare is the sector of the economy that shows “most promise” in the year ahead. The research was limited to sole or joint financial decision-makers with more than $2.5 million in net assets or annual income exceeding $250,000.
Almost 40 per cent of respondents indicated they hold shares in the healthcare sector, although the top three sectors most heavily featured in wealthy portfolios were finance, industrials and telecommunications.
The findings reflect stronger expectations for the performance of healthcare stocks among wealthier investors than even technology stocks, the best-performing sector in 2020.
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Pandemic catapults medical care into the future
Tom Burton Government editor
Jun 8, 2021 – 5.00am
Over 100 years ago, the Spanish flu nearly tore the young Australian federation apart, a lesson that Health Minister Greg Hunt says was behind the creation of the national cabinet.
“The PM and I looked at the deep history of the Spanish flu and the fact that it nearly tore the federation asunder,” Hunt told The Australian Financial Review.
“It is sometimes forgotten that in March [last year], you had all of these people outside of the chief health officers who were saying we’re the experts.
“Sometimes making claims about Australia becoming the next Italy or running out of ventilators, which were both inaccurate and creating fear.
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International Issues.
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https://www.afr.com/policy/economy/the-time-to-brace-in-financial-markets-is-coming-20210606-p57yld
The time to brace in financial markets is coming
Central banks have been unable to stop themselves printing money. That means a storm cloud of rising inflation, rising interest rates and rising deficits.
Adrian Blundell-Wignall Columnist
Jun 8, 2021 – 5.00am
Economist Paul Krugman wrote recently that he couldn’t understand what economic problem bitcoin was trying to solve - a nice point.
Advocates claim it is solving the problem of an alternative to the dollar with inflation on the way. Krugman brushes aside that rationale because money doesn’t cause inflation. Instead, excess printing of money simply causes the ratio of GDP to money (its circulation velocity) to fall.
Krugman is an inflation dove and supporter of US President Joe Biden’s fiscal expansion, because low interest rates are here to stay. But if that were so, then what problem has the US Fed been trying to solve by printing all that money that doesn’t affect nominal GDP and inflation?
With interest paid on reserves at the Fed, a floor is set for the Fed funds rate. This creates an extra instrument (quantitative easing). The Fed can keep printing money to achieve something else without piercing the floor.
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China’s banks are bursting with US dollars, and that’s a problem
By Winni Zhou and Tom Westbrook
June 8, 2021 — 10.10am
A mountain of dollars on deposit in China has grown so large that banks are struggling to loan the currency and traders say it poses a risk to official efforts to control a fast-rising yuan.
Boosted by surging export receipts and investment flows, the value of foreign cash deposits in China’s banks leapt above $US1 trillion ($1.3 trillion) for the first time in April, official data shows.
A previous jump, late in 2017, preceded heavy dollar selling which turbo-charged a steep yuan rally in early 2018.
Market participants say the size of the even bigger hoard this time raises that risk, and leaves policymakers’ efforts to restrain the yuan vulnerable to the whims of the exporters and foreign investors who own the cash.
“This positioning in particular, in our view, is susceptible to a capitulation if the broad dollar downtrend were to continue,” said UBS’ Asia currency strategist Rohit Arora, especially if the yuan gains past 6.25 or 6.2 per dollar.
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The Fed risks reacting too slowly if inflation keeps rising
The rise in inflation we are now seeing might be both modest and temporary and not affect inflationary expectations. But the Fed has locked itself into responding too slowly, especially given the fiscal expansion.
Martin Wolf Columnist
Jun 9, 2021 – 9.43am
The world economy is enjoying a vigorous, but divergent, recovery. This is what the World Bank’s June Global Economic Prospects is telling us.
The main reason for the recovery is the successes of the vaccine program. The main reason for the divergence is the limitations of the vaccine programme.
Some parts of the world economy may become too hot, while others are too cold. So, stay alert.
This time is indeed different: the recession was caused not by the need to curb excessive inflation, nor by an oil shock, nor by a financial crisis, but by a virus.
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Reddit, BBC, SMH, Financial Review go down in global tech outage
Miranda Ward Media writer
Jun 8, 2021 – 9.14pm
Major news outlets including The Australian Financial Review, The New York Times and BBC and other popular websites were hit by a mass web outage on Tuesday evening.
Websites around the world began showing “Error 503 Service Unavailable” messages at about 8pm (AEST), with some showing the more specific “Fastly error” pointing to an outage at content delivery network Fastly.
The problem lasted about an hour before services were restored around 9pm.
The Financial Review, The Sydney Morning Herald, The Age and Guardian Australia were among Australian news websites struck by the outage while major sites like Reddit, Paypal, Shopify, Twitch and Pinterest were also brought down by the technical issues. The UK government’s entire website also went down.
Fastly said on its status page that it was investigating the issue, which also brought down Australian catch-up television services including 9Now and 10Play.
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My new hero, Mathias Cormann, now valiant for truth and on the winning side
Economics Editor
June 9, 2021 — 5.30am
I find it hugely encouraging. Don’t know if you’ve heard the glad tidings but, on his road to Damascus – or, in this case, Paris – our own Mathias Cormann, former senator and minister for finance, has experienced a miraculous conversion. He’s gone from persecutor of those who care about climate change to being a leader of the cause.
As we said in my Salvo youth, there is much joy in heaven over one sinner that repenteth. I bet Brother Scott’s joy is unconfined.
And it’s clear from Cormann’s first speech as Secretary-General of the revered Organisation for Economic Co-operation and Development that he’s seen the light on a lot more than climate change. Indeed, the new man is exhibiting a distinct air of wokefulness. He’s now valiant for “stronger, cleaner, fairer economic growth”.
Speaking to a meeting of the OECD’s 37 rich and wannabe-rich member-country Council at Ministerial Level last week, Cormann said: “We need to continue to overcome the immediate health challenge, including by pursuing an all-out effort to reach the entire world population with vaccines.
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China’s ‘tit-for-tat’ sanction laws could prove counterproductive
Senior business columnist
June 9, 2021 — 11.59am
China is on the verge of finalising the details on its attempt to create a ‘tit-for-tat’ response to the sanctions the US and more recently the European Union have imposed on its companies and individuals.
China’s lawmakers are reviewing draft legislation that would give teeth to the proposed sanctions at the National People’s Congress in Beijing this week, with an expectation that the laws – described by state media as the “anti-foreign sanctions” laws – will be voted on and approved on Thursday.
The authorities had foreshadowed a response to the expanding web of sanctions by the US and Europe earlier this year and announced regulations that would enable Chinese companies and individuals to sue for damages caused by the sanctions in China’s courts.
The detail of the proposed legislation hasn’t been made available, but it would appear it’s aimed at providing a legislative framework for those regulations, which have been described as giving China a “toolkit” similar to the various pieces of US legislation that let it deploy sanctions extra-territorially.
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Deutsche Bank warns the global economy is ‘sitting on a time bomb’
The world is on course for a devastating economic event that will hit every corner of the planet, a leading bank has warned.
June 9, 202112:53pm
The global economy is on course for a “devastating” rise in inflation in the next few years that will hit every corner of the Earth, Deutsche Bank has warned in a stark new report.
It says the world is going thorough its biggest shift in direction in 40 years in terms of economics and that it could lead to levels of inflation, in just a few years, that would wreak havoc with our lives.
Inflation – the increase in prices of the goods and services that we all buy – has for decades now been seen as the bogeyman of the economic world.
When the prices of everyday stuff like bread and petrol goes up, people tend not to be happy about it. History has shown us that when it spirals out of control – as it did in the years before the Nazis came to power in Germany – things can get out of hand pretty quickly.
Former US president Ronald Reagan summed up this fear by describing inflation “as violent as a mugger, as frightening as an armed robber and as deadly as a hit man”.
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China factory inflation soars to 2008 high on commodity boom
Bloomberg News
Jun 9, 2021 – 1.01pm
Hong Kong | Surging commodity costs drove China’s factory-gate inflation to its highest level since 2008 in May, further adding to global price pressures.
The producer price index climbed 9 per cent from a year earlier, following a 6.8 per cent gain in April, the National Bureau of Statistics said on Wednesday. The median forecast in a Bloomberg survey of economists was for a 8.5 per cent increase. Consumer prices increased 1.3 per cent from a year ago, missing an estimate of 1.6 per cent .
Commodity prices have rallied this year, prompting Chinese policy makers to take targeted steps to curb soaring prices, including measures to expand supply of raw materials and crack down on speculation and hoarding. Still, consumer inflation remains relatively subdued, suggesting retailers aren’t hiking prices yet in the face of sluggish domestic demand.
The producer price inflation “cannot be passed on to the consumer completely” and may only start to affect consumer inflation in the fourth quarter of this year, Iris Pang, chief economist for Greater China at ING Bank said in an interview with Bloomberg TV. The latest COVID-19 outbreak in the southern province of Guangdong will dampen consumer demand in the coming months, while the recovery in overseas markets has just started, she said.
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https://www.afr.com/world/asia/unrivalled-xi-jinping-still-has-challenges-20210609-p57zi4
Unrivalled Xi Jinping still has challenges
China’s ruling party and its leader are now masters of everything they survey. But can the economy keep delivering when the private sector is cowed?
Richard McGregor Columnist
Jun 9, 2021 – 2.42pm
To understand the Chinese Communist Party on the eve of its 100th anniversary, and the importance of the private economy to its survival, a good starting point is the museum in Shanghai celebrating its first meeting in 1921.
Any Chinese visiting the city need only hop in a taxi and ask to go to the “First Meeting Hall” to be taken to the museum in one of the city’s fanciest districts, where the meeting and its attendees have been lavishly recreated.
The fact that one of Chinese communism’s “sacred sites” sits amid a yuppie wonderland of luxury shops and restaurants barely generates a resigned sigh in China these days. In fact, the opposite is the case.
What might once have been seen as a fatal contradiction has been turned by the party into a core strength, a reminder that Xi Jinping sits atop not just the biggest political party in the world, but the richest as well.
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PM to discuss regional tensions, travel bubble with Singapore
Emma Connors South-east Asia correspondent
Jun 9, 2021 – 6.40pm
Singapore | Amid rising regional tensions stoked by super-power rivalry and pandemic concerns, Singapore and Australia are set to consolidate decades of military and defence co-operation at the sixth annual leaders’ meeting.
Prime Minister Scott Morrison will meet his Singaporean counterpart Lee Hsien Loong in person for the first time in two years on Thursday. With Singapore still in semi-lockdown, the gathering will be short on pomp and ceremony and confined to just a handful of people, a reminder of the ongoing challenges of the global pandemic.
The timing of the meeting is a function of the G7 meeting in England, to which Mr Morrison will continue late on Thursday. Analysts say this does not diminish the importance of the opportunity for the leaders of these two like-minded nations, whose personal affinity seems to increase each time they meet.
Mr Morrison and Mr Lee are expected to discuss regional security, defence co-operation and reciprocal travel arrangements. Also likely to be on the agenda will be the crisis in Myanmar, the digital economy and the urgent need to boost vaccine supplies to poorer nations.
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G7 leaders contemplate a future ‘beyond Westlessness’
In a post-Trump world, the group of rich nations is looking to rebuild a global alliance to counter China’s rise.
Jeremy Cliffe
Jun 10, 2021 – 8.00am
The annual Munich Security Conference (MSC), a gathering of top Western foreign and defence officials, takes place in the southern German city in its name, but its leadership sits in Berlin. The nondescript office on Friedrichstrasse is just a stone’s throw from the former line of the Berlin Wall. The train station up the street was once a labyrinthine border crossing between East and West. Hundreds of jubilant East Berliners poured through here on the night of November 9, 1989, when the checkpoints were opened.
There is a certain melancholy poetry in the fact that it was here, so close to the spiritual home of Western triumph three decades before, that the West’s demise in our own time was perhaps most resonantly proclaimed. Launched at an event around the corner from Friedrichstrasse in February 2020, the MSC’s annual report declared a new age of “Westlessness”.
“It is hard to escape the impression,” went the analysis, “that the West is in retreat, in decline, and under constant attack – both from within and without.”
The term caught the mood and sparked a discussion across North Atlantic policy elites and the pages of international broadsheets. It would also resonate again and again over the course of the year as the COVID-19 pandemic took hold. Though it originated in China, the virus exposed how fragile, poorly co-ordinated and sclerotic Western states could be and showed East Asia – and particularly the rising superpower – at its dynamic and capable best.
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Markets face a toxic future as inflation fears grow
By Ambrose Evans-Pritchard
June 10, 2021 — 8.23am
Deutsche Bank has come close to accusing the US Federal Reserve of an economic crime. It does not think the inflation strategy of the world’s superpower central bank is remotely credible. Nor do I.
The language is unusual for a report by a big global lender: “chain of financial distress around the world”; “sitting on a time bomb”; “the effects could be devastating, particularly for the most vulnerable in society”. It stops short of flagging a synchronised equity and bond market crash, but that is the implication.
Much the same debate is raging at every financial house in London and New York, with some openly flabbergasted by willingness of the Powell Fed to keep printing money into an inflationary boom, while others mutter their deep misgivings sotto voce.
“The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation,” said the Deutsche Bank report, led by chief economist David Folkerts-Landau.
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‘Strike force’ to break Beijing’s grip on trade
· The Times
The United States will target China with a “strike force” to counter unfair trade practices after a review concluded that America had become too reliant on its rival for key technologies.
A “supply chain disruptions task force” is being set up to reverse the “hollowing out” of American production of batteries, raw materials, semiconductors and pharmaceuticals, officials in Washington said. The Senate is also set to approve the spending of $US250 billion to compete with Chinese technology, which is expected to lead to up to ten US semiconductor plants being built.
President Biden has set out to reduce America’s dangerous dependence on imports, highlighted by shortages of medical resources such as protective equipment during the coronavirus pandemic.
Biden was criticised by Republicans during the election campaign for supposedly being soft on China but has found that taking action to assert US manufacturing and technological independence from Beijing is almost the only policy area where the two main parties are united. He ordered a review of critical supply chains in February, and although it was not explicitly directed at China, it was part of a strategy to shore up American competitiveness.
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More than a decade after the GFC, the finance threat returns
Central banks’ long-evolving codependent relationship with the financial sector is creating a dangerous situation that has echoes of 2008.
Mohamed El-Erian Contributor
Jun 10, 2021 – 12.07pm
After the 2008 global financial crisis, governments and central banks in advanced economies vowed that they would never again let the banking system hold policy hostage, let alone threaten economic and social well-being. Thirteen years later, they have only partly fulfilled this pledge. Another part of finance now risks spoiling what could be – in fact, must be – a durable, inclusive, and sustainable recovery from the horrid COVID-19 shock.
The story of the 2008 crisis has been told many times. Dazzled by how financial innovations, including securitisation, enabled the slicing and dicing of risk, the public sector stepped back to give finance more room to work its magic. Some countries went even further than adopting a “light-touch” approach to bank regulation and supervision, and competed hard to become bigger global banking centres, irrespective of the size of their real economies.
Unnoticed in all this was that finance was in the grip of a dangerous overshoot dynamic previously evident with other major innovations such as the steam engine and fibre optics. In each case, easy and cheap access to activities that previously had been largely off-limits fuelled an exuberant first round of overproduction and overconsumption.
Sure enough, Wall Street’s credit and leverage factories went into overdrive, flooding the housing market and other sectors with new financial products that had few safeguards. To ensure quick uptake, lenders first relaxed their standards – including by offering so-called NINJA (no income, no job, no assets) mortgages that required no documentation of creditworthiness from the borrower – and then engaged in outsize trading among themselves.
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https://www.afr.com/policy/economy/us-inflation-lofty-for-longer-after-may-surge-20210611-p5802y
US inflation surges 5pc annually its fastest in 13 years
Matthew Cranston United States correspondent
Jun 11, 2021 – 5.32am
Washington | A higher than expected US inflation number - driven by a semiconductor shortage - may have been dismissed by financial markets, but there is growing pressure on the Federal Reserve to start canvassing options for dealing with rising wage and consumer price rises.
The annual inflation measure increased 5 per cent last month but that is seen as a distraction because such a number is based off the unusually low prices in the pandemic last year.
The more important measure - monthly inflation - showed that in May prices rose 0.6 per cent seasonally adjusted, after rising 0.8 per cent in the previous month, leading to the firmest two months of inflation since the 1980s. Core inflation, which excludes food and energy, rose 0.7 per cent in May and 3.8 per cent over the last 12-months, the largest increase since June 1992.
It is this persistent monthly increase that has some economists worried the Federal Reserve and the bond market are not properly considering how higher prices might stay.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said the market was not properly factoring in how hard it can be to remove increases in prices.
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How the US can avoid being trapped in a war over Taiwan
Michael Mazarr and Patrick Porter
Jun 11, 2021 – 5.00am
China’s rising power and threats of war are creating a growing risk for Taiwan. Imagine, for a moment, what happens if China chose to invade. With missiles flying and People’s Liberation Army landing craft on their way, the US would be trapped between two equally unpalatable options: fight alongside Taiwan or abandon it. Even in the build-up to war, as warnings flooded into Washington, a US president would have basically the same choices: threaten to go to war or stay silent, and desert Taiwan.
These extreme options now frame the debate over US policy. We believe that this situation must change – that a US president deserves more options in crisis or war than fighting or fleeing.
The current dichotomy is the product of 70 years of American policy that represents a shotgun marriage of commitments. On the one hand, the US avoids taking sides by respecting the “One China” mantra held by both Beijing and Taipei. On the other, US policy insists that it will not tolerate naked aggression to resolve the issue.
In the Taiwan Relations Act, official statements, and the Strategic Competition Act before Congress, the US is doubling down on both sides of this contradictory approach. It clings to ambiguity yet also erodes it by leaning further toward unqualified promises to defend Taiwan. But the truth is that movement too far away from ambiguity, in either direction, increases the risk of war.
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Japan had to confront its own past to take on China
By Eryk Bagshaw
June 10, 2021 — 6.05pm
Singapore: There are 800 kilometres between Shanghai and Nagasaki, little more than the distance between Sydney and Melbourne. Between the Chinese metropolis and the Japanese port city are centuries of culture, trade and war driven by two of east Asia’s great powers and most populous nations.
It is why, as China has embarked on its decades-long rise from developing economy to superpower, Japan has adopted a cautious approach. It has maintained its post-World War II alliance with the United States as its greatest asset while pushing for closer economic ties with China. It recognises Beijing’s growing clout while attempting to integrate it into global diplomatic norms.
As Ryo Sahashi from the University of Tokyo’s International Relations Institute notes: “Japan’s values are rooted in inclusiveness and progressiveness.”
But its patience appears to be wearing thin.
On Wednesday, it signed a joint statement with Australia that backed Canberra’s campaign against Beijing’s trade strikes. The sanctions have flowed over $20 billion in local industry after national security, human rights and business investment disputes.
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Hubris and overreach will come back to bite China
Beijing will cast the G7 as a democratic China-bashing weekend, but it has only itself to blame. Australia’s presence shows it is getting support from a growing list of nations.
By John Lee
June 11, 2021
There is a view liberal democracy is in its twilight years and this weekend’s gathering of the Group of Seven industrialised economies – with Australia, South Korea, and India also invited – could be little more than a heroic last stand by the so-called Democratic 10, or D10.
According to this perspective, Scott Morrison landing in Britain to rally democracies to resist coercion and preserve freedom is a fool’s errand and will needlessly provoke China. Why will he not accept the tide of history has changed and is washing away liberal practices in its wake?
The record shows arguments about inevitability are almost always wrong. That China is powerful is undeniable.
Even so, it is poorly appreciated that China, and the entire region more generally, cannot continue to rise without the resources, know-how and assistance of the democracies about to meet in Cornwall.
We know getting democracies to act together is more difficult than herding cats. But they are far from a spent force and democracies retain considerable strategic and economic agency. The summit will be one of the more consequential gatherings for Australia and the Indo-Pacific region.
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https://www.afr.com/world/asia/china-s-inflation-fears-could-spoil-the-party-20210610-p58016
China’s inflation fears could spoil the party
Michael Smith China correspondent
Jun 11, 2021 – 11.40am
With the 100th anniversary of the founding of the Chinese Communist Party just weeks away, President Xi Jinping needs the economy humming.
The ability of China’s leaders to ensure that quality of life keeps improving for its 1.4 billion citizens is the unwritten pact that has kept the population happy for decades, even in the face of rising authoritarianism.
After weathering the COVID-19 storm better than any major economy, Xi has a problem on his hands as the country prepares to celebrate the historic milestone that will be an important symbol of the party’s power.
China’s exports are declining as a wave of pandemic panic buying loses momentum and other major world economies start waking up. Raw material and labour costs are also soaring. China’s factories are struggling to pay wages and rents at a time when demand for their products is slipping. Iron ore and other commodity costs are at record highs and the value of its currency is rising.
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World’s biggest economies to keep spending taps turned on
Hans van Leeuwen Europe correspondent
Jun 12, 2021 – 8.20am
Carbis Bay, Cornwall | The Group of Seven large market economies have strongly signalled their willingness to keep the public spending taps turned on as their economies move past the COVID-19 pandemic, with a new focus on curbing inequality.
British Prime Minister Boris Johnson, who was hosting the opening session of the G7 summit with leaders from the US, Canada, Germany, France, Italy and Japan, warned an unequal economic recovery could be “a lasting scar”.
“We need to make sure that as we recover, we level up across our societies - we need to build back better,” he said.
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Back in China after 15 months, Chairman Mao gives way to QR codes
Former Australian Ambassador to China Geoff Raby returns to find a country that is cashed up, run by smartphones and more anxious than when he left.
Geoff Raby Columnist
Jun 11, 2021 – 3.57pm
Returning to China after 15 months of COVID-19-induced absence was smooth and efficient, if a little strange. From the time my partner and I boarded the China Eastern flight in Sydney to landing in Shanghai, we did not see a single crew member outside of full hazmat suits. That meant almost no service in business class and certainly no alcohol.
Being released into Shanghai after two weeks of hotel quarantine was also something of a shock – my partner and I had separate rooms to prevent a homicide investigation being inflicted on the local police.
It had been at least two years since I last visited Shanghai, and I was stunned by just how big, crowded, busy, expensive, youthful and rich the city was. Masks are widely worn but not compulsory.
And cash is now hardly ever used. When last in China, debit cards and smartphones were increasingly common but banknotes all bearing Chairman Mao’s face – he was never one to share the limelight – still witnessed most transactions. It took some time to relearn the different payment options, how to load the phone with cash, and remember PINs. And unlike in Australia where cashless transactions are completed with tap-and-go cards, in China it’s all about the smartphones and QR codes.
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https://www.afr.com/policy/foreign-affairs/morrison-is-up-for-post-g7-crusade-20210610-p57zxv
Morrison is up for post-G7 crusade
In the Trump era, Scott Morrison shunned binary views of China. But his language now is right on board with Joe Biden.
James Curran Columnist
Jun 11, 2021 – 2.03pm
Even before he departed overseas, the Prime Minister had billed his current visit to Singapore, Britain and France as a win for Australian diplomacy. At face value, the regional and global dimensions of the current Australian outlook are being brought together.
In Singapore, Morrison and Lee Hsien Loong consolidated defence ties against the backdrop of China’s assertiveness. Over the weekend at the G7 on the Cornish coast, he will accept the pledges of solidarity on facing up to Beijing from Atlantic and European leaders.
The world, we will consistently be told, has Australia’s back.
Morrison’s speech in Perth before his departure demonstrates the government’s supreme confidence that it has Australia’s foreign policy settings right.
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Did Trump destroy evangelical Christianity?
In a tragic and bitter irony, American Christians are deeply divided in the wake of Donald Trump’s presidency.
June 12, 2021
“The last decade saw a particularly significant decline within one subgroup: white evangelicals. While the ranks of white mainline Protestants and white Catholics have been shrinking for decades, white evangelical Protestants had seemed immune from the forces eroding membership among other white Christian groups. But since 2010, the number of white evangelical Protestants has dropped from 21 per cent of the population to 15 per cent.”
– Robert P. Jones, author of White Too Long
Have the tumultuous years of Donald Trump’s presidency destroyed or undermined the coherence and religious authority of American evangelical Christians?
This would be a tragic and bitter irony. It should never be necessary to categorise a Christian group by race. Christianity is universal and blind to race, or it is not Christianity. But in the US, while white evangelicals and black evangelicals share many religious beliefs, their politics are radically different. White evangelicals, in the wake of the Trump experience, are now deeply divided and in something approaching disarray.
Consider two startling statistics. According to the Pew Research Centre, white evangelical Christians are the single religious group most resistant to Covid-19 vaccination. Some 45 per cent of white evangelicals say they definitely or probably will not get vaccinated. This is astonishing, for the modern, commonsense, responsible America was in significant measure made by evangelicals.
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I look forward to comments on all this!
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David.
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