July 01, 2021 Edition
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A quiet week in the US other than the awful disaster of the collapse of a large apartment block on the Florida coast. It seems about 160 people have died.
In the UK we have lost the Health Secretary for giving a passionate cuddle to a staffer. Hardly following the social distancing rules!
In OZ all the
news has been about 2 things. Barnaby being back and a 2 week lockdown in Greater
Sydney and the ever extending lockdowns elsewhere!. Sadly the vaccination roll out has been a mess so far - hope we can sort this out soon!
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Major Issues.
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Reserve Bank may have to hike rates sooner as unemployment dives
Dow Jones
6:58PM June 20, 2021
A career devoted to the understanding and implementation of monetary policy has left the governor of the Reserve Bank, Philip Lowe, unfulfilled.
While in the top job, he’s not had to raise interest rates, and if current expectations play out, his term will expire before he gets a chance.
It’s a curious thing about central bankers. They muse and rehearse in their minds for the day they will get to pull the interest rate policy lever, unleashing a blunt instrument that hits every corner of the economy. RBA governors are cloaked in enormous power.
To be sure, since becoming governor in September 2016, Lowe has cut official interest rates to record lows and deployed alternative policy measures like yield curve control and quantitative easing for the first time, so his dissatisfaction is not that acute.
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Why the RBA’s promise on rates is potentially dangerous
The central bank’s pledge to set rates in concrete has needlessly tied its hands. And if it breaks its promise, instability follows.
Neville Norman
Jun 21, 2021 – 1.37pm
The Reserve Bank of Australia’s (apparent) promise not to raise interest rates within its control until 2024 may go down as one of the most limiting, and damaging, public-policy pronouncements, ever.
Limiting, because it ties the hands of our main maker of interest rates, constraining its policy responses to future unknown developments, for at least 2.5 years ahead, by its own (avoidable) words.
Damaging, because to either leave rates unchanged, or to break the promise and lift them sharply, before 2024, might cause concerning surges and/or slumps in sensitive asset prices – property and equity prices especially – that could have been better managed. Confidence, profits, and jobs, at the least, could be damaged.
Let’s not forget what the RBA board minutes have said, every month since earlier this year. The Reserve Bank expects no significant rate lifts until 2024. The minutes do at least make this conditional on an intermediary consideration: the annual rate of (consumer price) inflation not returning to the band of 2-3 per cent, which for some reason is propounded as a target band.
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https://www.afr.com/policy/foreign-affairs/morrison-was-naked-at-the-g7-20210620-p582mo
Morrison was naked at the G7
What Australia took to Cornwall was an object lesson in how not to handle China, and it was rewarded with lukewarm support.
Geoff Raby Columnist
Jun 21, 2021 – 4.23pm
Far from being a vindication of the Morrison government’s China policies, the G7-plus meeting highlighted the abject failure of Australia’s reckless foreign policy towards China.
Australia alone of the 11 nations that were present has no official contact with China and significant parts of its trade suspended, which others at the meeting are busily backfilling.
Certainly, Australia was an invited guest to Cornwall at the same time as the G7 leaders were meeting, along with South Africa, India, and South Korea, because Britain as chair wanted to make a statement about democracies standing up to authoritarian states. And none matters more than China, or is more challenging for democracies.
Prime Minister Boris Johnson is also keen to promote, post-Brexit, the new “global Britain”. It is a measure of the extent to which the UK feels its global position is diminished after Brexit that it is inclined to embrace Australia at almost every opportunity now – trade, immigration policy, China.
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Joyce’s return ignites climate policy chaos
Phillip Coorey Political editor
Jun 21, 2021 – 7.59pm
The Morrison government’s climate policy has been plunged into uncertainty after Barnaby Joyce’s comeback as Nationals leader and Deputy Prime Minister ended any prospect of a Coalition commitment to net zero carbon emissions by 2050.
Upon deposing Michael McCormack in a tight party room ballot on Monday, Mr Joyce, who campaigned for the leadership opposing net zero, said he would be guided by his colleagues on the party’s new climate position.
But he indicated his mind was all but made up.
“If the
National party room believes that the best deal for regional Australia is to
make sure that we secure their jobs, is to make sure that we secure
their industries, is to clearly understand, clearly understand the
dynamics of an Australian economy as opposed to a Danish one or a
German one ... if that’s the view of the National party room, that’s the view
that I’ll support.”
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One in 10 Australian adults are millionaires, says report
Michael Read Reporter
Jun 22, 2021 – 9.30pm
More than 3 million Australian adults could soon be millionaires, according to a report by Credit Suisse, while Australian adults, with average net wealth of $US238,000 ($315,000), are the richest in the world.
Rock-bottom interest rates are expected to pave the way for an asset price boom that is expected to cause a dramatic increase in household wealth over the next five years.
Credit Suisse Australia head of private banking Michael Marr expects the number of US-dollar millionaires in Australia to increase “dramatically” by 70 per cent over the next five years to 3.1 million, based on trends identified in the bank’s annual global wealth report.
“This is primarily due to the ongoing performance of our two principal sources of wealth – housing and financial assets – underpinned by robust GDP growth,” Mr Marr said.
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Who wants to be a millionaire? Almost one in 10 Australians already are
Business columnist
June 23, 2021 — 4.47pm
Australia has become a land of McMillionaires. We’re now top of the global rich list — at least by one measure in an annual study by investment bank Credit Suisse — with the median level wealth for adults now at $A315,380, edging out Belgium.
Twenty years ago less than 1 per cent of Australians were millionaires - today it is almost one in ten, according to Credit Suisse’s annual Global Wealth Report. In the past year alone almost 400,000 Australians joined this now not-so-exclusive cohort. With 9.4 per cent of Australian adults millionaires, the nation ranks behind only Switzerland (15 per cent) for millionaire density, and ahead of the United States (8.8 per cent).
The report forecast that in four years the number of millionaires in Australia would rise by 70 per cent to 3.1 million - only slightly shy of one quarter of the adult population. Unlike some other wealth surveys, Credit Suisse’s figures include the value of owner-occupied houses, but it also takes into account an individual’s debt and measures net (rather than simply gross) assets.
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https://www.afr.com/policy/tax-and-super/no-applause-yet-for-super-shake-up-20210621-p582ua
No applause yet for super shake-up
The government’s plan to return $18 billion in fees to superannuation members will be applauded if successful, but critics say it bears little resemblance to the review that inspired it.
Aleks Vickovich Wealth editor
Jun 22, 2021 – 4.50pm
On the morning of the delayed federal budget in October last year, The Australian Financial Review phoned some of the nation’s myriad superannuation industry lobbyists for a last-minute pulse check.
“We’re not expecting anything much in this one,” said a veteran budget watcher and retirement policy wonk. “There has been more than enough super tinkering over the past decade.”
How wrong he was.
Without warning, and amid a global pandemic, the Morrison government unveiled a four-point plan to shake up the $3 trillion compulsory superannuation system.
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China warning: Joyce calls on MPs to prepare for end of Pax Americana
By David Crowe
June 22, 2021 — 6.43pm
Nationals leader Barnaby Joyce has issued a stark warning to government MPs about the risk to Australia from the waning power of the United States, calling for unity as China emerges as a new superpower.
Mr Joyce urged Liberal and Nationals MPs to unite behind the mission of making Australia “as strong as possible as quickly as possible” when it could not rely on the US to guarantee regional security.
The message resonated with government MPs who are increasingly concerned about the Chinese government’s construction of military bases in the South China Sea and provocations in the Taiwan Strait.
Liberals noted the remarks were made in Mr Joyce’s first speech to the Coalition party room after he regained the Nationals leadership on Monday and was sworn in as Deputy Prime Minister on Tuesday.
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Most Australians blame China for poor relations but ambivalent about government’s approach: poll
June 23, 2021 — 12.00am
More than half of Australians blame China for the deterioration in relations between the two countries but they aren’t sold on the federal government’s response either.
The Lowy Institute’s annual poll, to be released on Wednesday, shows trust in China has fallen to record lows, with most Australians holding little to no confidence in President Xi Jinping.
Diplomatic relations between Australia and China have fallen to their worst levels in decades over the past year after Being imposed more than $20 billion of trade strikes in response to Canberra’s call for an independent coronavirus inquiry as well as other national security decisions.
Labor has increasingly been critical of the government’s handling of the relationship, with opposition foreign affairs spokeswoman Penny Wong last month accusing Prime Minister Scott Morrison of deliberately encouraging anxiety about a conflict with Beijing.
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Why the superannuation reforms are a very big deal
The changes will divert billions of dollars from vested interests and ticket-clippers. They are the biggest reforms the Coalition has wrought so far.
John Kehoe Economics editor
Jun 23, 2021 – 12.08pm
When the Morrison government’s landmark superannuation shake-up came down to the wire in the House of Representatives last week, Transport Workers Union and industry fund representatives lobbied Barnaby Joyce and George Christensen near the whip’s office.
The Labor-aligned lobbyists warned the renegade conservatives that the “Your Future, Your Super” legislation would jeopardise super fund investments in mining and cause workers in dangerous jobs such as construction to have inadequate life and disability insurance.
Why did the unions and some industry funds oppose the new rules?
The hard-fought reforms will divert an estimated $18 billion over a decade from the super industry and other vested interests to the retirement incomes of super fund members.
The super changes narrowly passed by the Parliament arguably mark the biggest economic reforms achieved during the almost eight-year life of the Coalition government.
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https://www.afr.com/policy/economy/three-reasons-why-this-recovery-is-fragile-20210622-p5839i
Three reasons why this recovery is fragile
A region rife with infection, a recovery reliant on stimulus, and the downsides of debt could all derail the recent good economic news.
Satyajit Das Contributor
Jun 23, 2021 – 1.26pm
Reserve Bank of Australia governor Philip Lowe’s speech on June 17 was entitled “From Recovery to Expansion”. While some macro-economic indicators show welcome progress, there are three reasons for caution.
First, the COVID-19 pandemic may not be passed.
Vaccination programs are affected by supply constraints, indifferent roll-outs, vaccine hesitancy exacerbated by frequent advice changes, emerging side effects, and uncertain prophylactic effectiveness against variants. Modelling by the Burnet Institute in Australia and Institute for Disease Modelling in the US suggests that the levels of vaccination and vaccine efficacy required for herd immunity are unlikely to be met anytime soon.
As recent events illustrate, the risks of periodic outbreaks, sudden lockdowns and resultant economic interruption remain. For Australia’s less developed neighbours, first world vaccine nationalism and poor health infrastructure mean a long path out of the pandemic. Given their substantial contributions to growth, key roles in supplying essential commodities or within supply chains, Australia’s recovery will be retarded. Until the disease is contained everywhere, full opening of international borders may be difficult.
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ASEAN worker plan undermines our Pacific island job diplomacy
A quick fix for farm jobs robs Australia of a serious advantage in the contest with China for regional influence. There are better answers.
Jonathan Pryke
Jun 24, 2021 – 12.00am
The Nationals have dominated headlines this week with the resurrection of Barnaby Joyce. This comes a week after another National, Agriculture Minister David Littleproud, stirred controversy with the announcement that the party had secured a “seasonal agricultural workforce visa” for citizens of Southeast Asian (ASEAN) countries to come to Australia.
While here, they could work on farms for up to nine months in a year – returning home each year for at least three months – for up to three years.
This follows years of lobbying by the Nationals in response to demands from farmers to solve a labour crisis where, thanks to closed borders, they face shortages of 26,000 workers.
Things were set to get worse, with Australia losing the roughly 10,000 British backpackers annually who take up picking jobs after the new bilateral trade agreement removes requirements for them to work for 88 days on a farm to extend their visa by 12 months.
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The insecure superpower: a volatile mix that will make China our challenge for decades
By Frances Adamson
June 23, 2021 — 8.09pm
China has been experiencing a remarkable transformation, shedding some of the rigidities of its past and becoming better integrated into the international mainstream after joining the World Trade Organisation. It has seen urbanisation, the promise of further economic reforms, the beginnings of a legal system protecting civil rights, a middle class open to new ideas, new products and new experiences.
I was there for the elevation of Xi Jinping from vice-president to President in 2013, after he became general-secretary of the Communist Party of China in late 2012 at the 18th party congress, through to my return to Australia in late 2015. Arguably, it is in that period – and the time since then – that we have seen the most consequential change.
The clock has been wound back in terms of the priority accorded to ideology, quashing voices of civil society, and erecting new barriers to external connections and the free flow of information.
China speaks of a “new type of international relations”, as if it is a fairer way, an improvement. But underneath it is the same old power politics, the raw assertion of national interests. The implication being that China’s size and strength make its interests more “special” than those of others, and that these must prevail.
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PM faces carbon tariffs amid crumbling virus plan
Scott Morrison’s absence this week when the Coalition’s national COVID-19 response was crumbling, as was any semblance of sanity in its junior partner, was unfortunate to say the least.
Laura Tingle Columnist
Updated Jun 25, 2021 – 4.19pm, first published at 3.40pm
Politicians appreciate the value of a bit of theatre, a bit of a backdrop, to drive home the message they are delivering, or of just how in control of things they are.
So, in any other week, Scott Morrison may have been able to make a pragmatic assessment of just how bad the images of the PM sitting at the Lodge, in front of a slightly dodgy picture of Parliament House, surrounded by flags, and conspicuously reading his answers to Dorothy Dix questions.
It wasn’t just the images of course, it was the reality: the Prime Minister absent from question time, and the Parliament, and the party room, as he quarantined after all those photo opportunities in Cornwall, London and Paris.
Sure, he might have been able to sign an in-principle free trade agreement with the UK, have his say about China at the G7, and talk submarines with French President Emmanuel Macron.
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A wild ride with the bushwhacker: Barnaby Joyce’s return transforms Morrison’s easy dominance of his government
Political and international editor
June 26, 2021 — 5.30am
Barnaby Joyce, the closest thing Australia has to Donald Trump, stormed back into the Deputy Prime Minister’s job this week. And the Liberal Party is anxious.
Understandably. “The Nationals will never threaten supply or confidence, of course, but there will be discussions about our aspirations,” he tells me.
In other words, the junior partner in the Coalition won’t actually bring down the government, but everything else is up for negotiation. This has transformed Scott Morrison’s easy dominance of his government.
How could Joyce tear down his leader, Michael McCormack, and make demands on the Prime Minister while the country is in the middle of a global pandemic?
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Hard lessons: On unis, Coalition has embraced Howard’s way
June 26, 2021 — 9.55am
In March and April 2020, Treasurer Josh Frydenberg’s phone was melting down with calls from CEOs pleading for billions of dollars in immediate relief. He drew a line in the sand by saying no to Virgin, to send a message that the government would not be negotiating handouts on a company-by-company basis. The JobKeeper scheme gave Frydenberg the leverage to resist these demands because it was generous to all firms.
Given the gargantuan sums being borrowed and spent on the safety net, no one needed to be worse off. Yet the Morrison government chose to exclude universities from JobKeeper, and also to deny JobSeeker to many of their international students. I asked ministers, former ministers, public servants and vice-chancellors: why were universities singled out? One person familiar with the government’s thinking told me: “It’s not that complicated. The government hates universities.”
“There was a sense inside government that universities also had their own financial buffers,” Frydenberg tells me. “They had become very corporatised. They had relied very heavily on international students so they had shifted their business model over time. We were willing to provide very significant support for the universities, but they also had to adjust as other businesses did.”
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Whitlam on China and the US
We will never understand the Chinese unless we try to understand that above all they are determined never again to submit to humiliation.
By Gough Whitlam
June 26, 2021
‘I see no irremovable obstacles towards improved relations’, writes Labor leader Gough Whitlam in his exclusive report on his visit to Peking, published in The Australian on July 18, 1971.
The new China is Chinese first, Maoist second and Communist third. The distinction is crucial. The West’s failure to accept the difference has been the major cause of misconceptions about China and the mutual hostility between us over the past 22 years.
We should always remember that our post-war policies towards China developed in the atmosphere of the Cold War – the era of Stalin, Dulles and McCarthy. The West saw the victory of Chinese communism simply as a victory for Soviet communism. We saw the establishment of a communist government in China simply as an addition to Soviet global power and the extension of a monolithic communist empire stretching unbroken and united from East Germany to the China Sea.
To this Western view of the post-war world Australia added her own traditional racial and geographical fears, only changing the old formula by substituting Communist China for a defeated Japan as the source of menace to our security.
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Coronavirus And Impacts.
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Hunger for news, sparked by the pandemic, drops away
Miranda Ward Media writer
Jun 23, 2021 – 3.58pm
The hunger for news among Australians at the start of the pandemic has dropped, while the proportion of people willing to pay for news also has not increased, a new report from The University of Canberra says.
The report, produced by the News and Media Research Centre at the University of Canberra, also found public broadcasters the ABC and SBS remain Australia’s most trusted news brands, while The Australian Financial Review is the most trusted national newspaper. News Corp’s The Daily Telegraph was the least trusted source of news.
Coverage of the pandemic has resulted in Australians becoming more trusting of news in general, with trust rising to 43 per cent, just under the global average of 44 per cent, with concerns about misinformation remaining high.
According to the report, during the early months of COVID-19, 70 per cent of Australians accessed news more than once a day, while in 2021 those who followed the news closely fell to 51 per cent, 4 percentage points lower than pre-COVID-19.
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Australia warns world not to trample on human rights during pandemic
June 24, 2021 — 11.22am
London: Australia has warned other countries against using the coronavirus pandemic as an excuse to trample on human rights, in an intervention which advocates have likened to throwing stones in glass houses.
Australia’s ambassador to the United Nations in Geneva Sally Mansfield told the Human Rights Council this week that “governments must ensure COVID-19 response measures comply with international human rights obligations”.
“We reiterate our concerns that some states are taking advantage of COVID-19 to undermine or supplant established human rights,” Mansfield said in a statement to the 47th session of the council.
Last year the council asked United Nations High Commissioner for Human Rights, Michelle Bachelet, to report on: “the central role of the state in responding to pandemics and other health emergencies, and the socioeconomic consequences thereof, in advancing sustainable development and the realisation of all human rights.”
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‘The horse has bolted’: Experts warn two-week lockdown may not be enough
By Alexandra Smith, Lucy Cormack and Aisha Dow
June 27, 2021 — 12.00am
An explosion of COVID-19 has forced Sydney into two-week lockdown with the rest of the state of high alert for further transmission as health experts warned it could take longer than a fortnight to bring the highly contagious outbreak under control.
As the Delta strain of the virus continues to take hold across the city, residents of greater Sydney, the Blue Mountains, Central Coast and Wollongong have been issued strict stay-at-home orders.
However, leading epidemiologists warned the widespread lockdown would likely extend beyond two weeks, arguing for the NSW government waited days too long to take decisive action.
NSW Premier Gladys Berejiklian convened an urgent meeting of her crisis cabinet on Saturday, where NSW Chief Health Officer Kerry Chant recommended a two-week lockdown in a bid to contain the spread.
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Climate Change.
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No Entries This Week.
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Royal Commissions And The Like.
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No Entries This Week.
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National Budget Issues.
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No Entries This Week.
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Health Issues.
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Australia set to join the mRNA vaccine revolution
Colin Pouton
Professor of Pharmaceutical Biology at Monash University
June 21, 2021 — 5.58pm
By 2019, interest in the potential of mRNA delivery technology, for both vaccine development and other therapeutic applications, had been growing steadily for a decade. Relatively young innovator companies, including Moderna (US) and BioNTech (Germany), had embarked on clinical studies of a variety of products. But at that stage no products had progressed as far as regulatory approval for widespread human use.
Then came COVID-19. A soon as it was clear that the world was faced with a pandemic, the excitement amongst mRNA researchers was intense. Here was a perfect opportunity to demonstrate the value of mRNA as a rapid response system for deployment of vaccine against emerging viral infections.
What followed has changed the landscape of vaccine development forever. Two COVID-19 mRNA vaccines were approved within a year of the genetic sequencing of the first isolate of SARS-CoV-2 virus. The speed of development and the remarkable efficacy of the two mRNA vaccines took even the most optimistic researchers by surprise.
There are a number of reasons why the mRNA vaccines were developed so quickly. Most importantly, the time taken to identify and produce candidate vaccines using mRNA technology can be measured in days or weeks, allowing animal testing to commence almost immediately. Indeed, my team at Monash had vaccine candidates available for testing in April 2020.
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Grail blood test detects cancer among over-50s
By Kay Lay
The Times
6:06PM June 25, 2021
A simple blood test that can detect more than 50 types of cancer is accurate enough to be used as a screening tool for over-50s, a trial has found.
Britain’s National Health Service will begin a trial involving 140,000 people this year, and if that is successful it will be used for millions of patients by 2025.
A paper in the journal Annals of Oncology showed that the test, created by Californian company Grail, accurately detected cancer, including in people without symptoms, and had a low false positive rate. It also predicted with a high degree of accuracy where the cancer was located. Eric Klein, chairman of the Glickman Urological and Kidney Institute at the Cleveland Clinic in the US was excited about the potential impact this approach would have on public health. “Finding cancer early, when treatment is more likely to be successful, is one of the most significant opportunities we have to reduce the burden of cancer,” he said.
The test detected 65.6 per cent of cancers involving solid tumours with no screening options, such as oesophageal, liver and pancreatic cancers. For those where screening is possible, including breast, bowel, cervical and prostate cancers, the figure was 33.7 per cent.
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International Issues.
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https://www.afr.com/policy/economy/anglosphere-dreaming-a-drag-on-our-defence-20210617-p581xj
Anglosphere dreaming a drag on our defence
Believing that Britain is making up for abandoning us is the same kind of out of date security thinking behind the government’s handling of the American alliance.
James Curran Columnist
Jun 20, 2021 – 12.45pm
There are moments when Australia meets a challenging world with an old mind.
Revelling in the Western embrace against the backdrop of China’s assertiveness, some are even rewriting key moments in Australian history. Others recycle familiar patterns of alliance management.
Rambling through the graveyard of the nation’s British-centred past, they find new life among long forgotten tombstones. In speeches about the American alliance, their default position is to simply offer more.
Dated myths of abandonment by the “mother country” are being exhumed as question marks over US staying power persist and fear of being stranded in a Sino-centred region unsettles.
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America is back – and wants everyone to focus on China
There is little disguising the fact that the Atlantic is no longer the world’s most important geopolitical theatre in America’s eyes. That distinction belongs to the Indo-Pacific.
Edward Luce Columnist
Jun 20, 2021 – 11.33am
From Europe’s point of view, Joe Biden’s one-week visit could hardly have gone better. Having spent four years being pilloried by Donald Trump – for low NATO defence spending, trade surpluses, free-riding on US generosity and behaving like a “geopolitical foe” – Europe was craving Biden’s diplomatic balm.
The 46th US president did not disappoint. America’s friendship was “rock solid”, Biden said; Europe’s security was America’s “sacred obligation”. In addition to strategic reassurance, Biden also lifted punitive US tariffs on Europe and called off the long-running Boeing-Airbus subsidy dispute.
The relief among European officials was visible. Ursula von der Leyen, president of the European Commission, referred to America’s President as “Dear Joe” – an endearment it would be hard to imagine being used for many of Biden’s predecessors, not just Trump. “Biden’s language and tone was everything Europeans wished for,” says Jeremy Shapiro, research director at the European Council on Foreign Relations.
Long-running differences remain – not least over Europe’s low defence spending. But the larger purpose behind Biden’s trip, which began with the G7 gathering in Cornwall and wrapped up with the Vladimir Putin summit in Geneva, had more to do with the Indo-Pacific than the Atlantic.
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Taliban enter key cities in Afghanistan as US prepares to leave
By Thomas Gibbons-Neff and Najim Rahim
June 21, 2021 — 7.42am
Kabul: The Taliban entered two provincial capitals in northern Afghanistan on Sunday, local officials said, the culmination of an insurgent offensive that has overrun dozens of rural districts and forced the surrender and capture of hundreds of government forces and their military equipment in recent weeks.
In Kunduz city, the capital of the province of the same name, the Taliban seized the city’s entrance before dispersing throughout its neighbourhoods.
Kunduz was briefly taken by the Taliban in 2015 and 2016 before they were pushed back by US airstrikes, special operations forces and Afghan security forces.
“Right now, I hear the sound of bullets,” said Amruddin Wali, a member of Kunduz’s provincial council. “The Taliban have appeared in the alleys and back alleys of Kunduz, and there is panic all over the city.”
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Capital for the people – an idea whose time has come
Rather than soaking the rich to raise revenue, California is thinking about harnessing capital the same way investors do, and then using the proceeds of the capital growth to fund the public sector.
Rana Foroohar Contributor
Jun 21, 2021 – 12.32pm
If American states are, as former US Supreme Court Justice Louis Brandeis once put it, the “laboratories of democracy”, then it’s worth watching closely what’s happening in California right now.
The threat of rising taxes and a “soak the rich” political atmosphere has led some wealthy Golden State residents, including a number of technology entrepreneurs, to leave for cheaper pastures such as Austin or Miami. This has, in turn, prompted worries of a larger migration that would have an impact not only on the state’s tax base, but on the growth and innovation that have made California the world’s fifth-largest economy.
It is an exceptionally fraught situation. While nobody these days has much sympathy for wealthy individuals or companies (witness the recent justified fury about the ProPublica leaks showing how little tax the wealthiest Americans pay), or really believes in trickle-down economics, the threat of tax and regulatory arbitrage by other states is real.
The good news is that California is applying some typically creative thinking to the problem. What if there was another way to harness company and citizen wealth for the benefit of all?
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https://www.afr.com/world/asia/how-china-broke-the-asian-model-20210622-p58335
How China broke the Asian model
Unlike Taiwan or South Korea, which turned from one-party states to democracies as they got richer, China under Xi has entrenched the dominance of the Communist party.
Gideon Rachman Columnist
Jun 22, 2021 – 9.06am
“What do you think is unique about the China model?” That was the question posed to me by a television reporter, last time I was in Beijing. My answer was that I don’t think there was a specific Chinese economic model.
There is an east Asian development model of rapid, export-driven industrialisation that was pioneered by Japan, South Korea and Taiwan. What China did was to pursue the same model — at scale.
I added that China’s one real innovation was that the country had not liberalised politically as it had grown richer. This sets China apart from the South Koreans and Taiwanese.
After we had finished talking, I asked the reporter if she would be able to use any of my answer. “No, I don’t think so,” she replied. “But it must be nice to be able to say what you think.”
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Iron fist losing its grip: China’s latest crackdown looks destined to fail
Senior business columnist
June 21, 2021 — 11.55am
China’s latest effort to try to dampen soaring commodity prices is likely to have as fleeting an impact as its last.
Last week China announced plans to release government reserves of some key commodities – including copper, aluminium and zinc (but not iron ore) – to counter high prices and some supply shortages that are driving up raw material costs for its manufacturers.
That followed last month’s crackdown on excessive speculation, “fake news,” hoarding, price-fixing and other activities in commodities futures markets, along with efforts to lower steel production and therefore demand for iron ore and other steel-making ingredients.
In that instance, iron ore and other commodity prices fell sharply but recovered quickly to trade at levels close to their pre-crackdown peaks.
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The contradiction at the heart of China’s rise
Political and international editor
June 22, 2021 — 5.30am
The Chinese Communist Party can take credit for two breakthrough events that occurred on the same day last week.
In one, Beijing launched three astronauts into the stratosphere to build China’s first space station. In the other, 500 police officers raided a newspaper office in Hong Kong to arrest five executives for allegedly endangering national security.
The first showcases the stunning ascent of China into prosperity and advanced science; the second its dismal descent into tyranny.
As China prepares to celebrate next week the 100th birthday of the Chinese Communist Party, these two events, carefully stage-managed, capture perfectly the paradox at the core of the regime.
Its economic flourishing, on a scale without precedent, has liberated vast human potential. By raising 850 million people out of poverty in the last 40 years, according to the World Bank’s reckoning, China has given its people comforts and opportunities that earlier generations had always dreamed of but never attained.
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Keep calm and carry on: The Fed might have been right about inflation
By Paul Krugman
June 22, 2021 — 7.05pm
Remember when everyone was panicking about inflation, warning ominously about 1970s-type stagflation? OK, many people are still saying such things, some because that’s what they always say, some because that’s what they say when there’s a Democratic president, some because they’re extrapolating from the big price increases that took place in the first five months of this year.
But for those paying closer attention to the flow of new information, inflation panic is, you know, so last week.
Seriously, both recent data and recent statements from the Federal Reserve have, well, deflated the case for a sustained outbreak of inflation. For that case has always depended on asserting that the Fed is either intellectually or morally deficient (or both). That is, to panic over inflation, you had to believe either that the Fed’s model of how inflation works is all wrong or that the Fed would lack the political courage to cool off the economy if it were to become dangerously overheated.
Both beliefs have now lost most of whatever credibility they may have had.
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‘I want to understand white rage. And I’m white’: top US general
By Alex Horton
June 24, 2021 — 6.49am
Washington: The top US Army General Mark Milley admonished lawmakers over questions about critical race theory at a hearing, saying it is important for leaders to be well-versed in many schools of thought.
“I’ve read Mao Zedong. I’ve read Karl Marx. I’ve read Lenin. That doesn’t make me a communist,” Milley, chairman of the Joint Chiefs of Staff, told the House Armed Services Committee on Wednesday (Thursday AEST).
“So what is wrong with understanding . . . the country which we are here to defend?”
“I personally find it offensive that we are accusing the United States military, our general officers, our commissioned and noncommissioned officers, of being, ‘woke’ or something else, because we’re studying some theories that are out there.”
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Unintended consequences: China risks market panic as it tightens its grip
By Sofia Horta e Costa and Rebecca Choong Wilkins
June 25, 2021 — 7.45am
China’s campaign to cut leverage and instil corporate discipline is reshaping the nation’s $US12 trillion ($15.8 trillion) credit market.
One of China’s most prolific debt issuers hasn’t sold a single dollar bond in 17 months, the longest dry spell since 2013. An investment grade-rated conglomerate mostly owned by the government is facing a cash crunch in a test of state support. Analysts at UBS and Goldman Sachs now say the notion of ‘too big to fail’ no longer applies in China as defaults this year exceed $US23 billion, a record pace.
Beijing is taking advantage of a strengthening economy and stable financial markets to toughen up its corporate sector. The result is a repricing of risk that should discourage the kind of reckless debt-fuelled expansion that inflated some companies to a dangerous size. The spawning of such bloated empires created a threat to the financial system as well as a challenge to President Xi Jinping’s grip on power.
The danger for Xi is that smashing investor faith in government guarantees triggers precisely the kind of crisis he’s trying to avoid. It’s a dilemma that has frustrated Chinese leaders for decades: Ending moral hazard for indebted giants like China Huarong Asset Management and China Evergrande Group would make the financial system more resilient over the long run, but a major default would cause significant short-term pain.
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US intelligence warns Afghan government could collapse six months after withdrawal
By Gordon Lubold And Yaroslav Trofimov
7:38PM June 24, 2021
The US intelligence community concluded last week that the government of Afghanistan could collapse as soon as six months after the American military withdrawal from the country is completed, according to officials with knowledge of the new assessment.
American intelligence agencies revised their previously more optimistic estimates as the Taliban swept through northern Afghanistan last week, seizing dozens of districts and surrounding major cities. Afghan security forces frequently surrendered without a fight, leaving their Humvees and other American-supplied equipment to the insurgents.
The new assessment of the overall US intelligence community, which hasn’t been previously reported, has now aligned more closely with the analysis that had been generated by the US military. The military has already withdrawn more than half of its 3500 troops and its equipment, with the rest due to be out by September 11.
On Wednesday, Taliban fighters were battling government troops inside the northern city of Kunduz after occupying the main border crossing with Tajikistan the previous day and reaching the outskirts of northern Afghanistan’s main hub, Mazar-e-Sharif. Tajikistan’s border service said 134 Afghan troops at the crossing were granted refuge while 100 others were killed or captured by the Taliban.
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BOE warns against tightening too soon as inflation surges
Reed Landberg and Lizzy Burden
Jun 25, 2021 – 2.56am
The Bank of England pushed back against speculation that a surge in UK inflation means it’s preparing to boost interest rates, saying the economy still needs support to recover from the pandemic.
The central bank warned against “premature tightening,” toughening its language on the need to maintain stimulus. The remarks contrasted with a sharp increase in the bank’s outlook for inflation, which officials now see peaking at 3 per cent, a half point higher than their forecast just six weeks ago.
The BOE’s sanguine view follows heightened anxiety among investors and economists that consumer price increases may prove sticky. Last week, the US Federal Reserve brought forward its expectations of rate increases, while central banks in Hungary and the Czech Republic already started raising borrowing costs in recent days.
“Today’s decision reinforces our belief that the committee will continue providing monetary support through the economic restart,” said Vivek Paul, UK chief investment strategist at BlackRock Investment Institute.
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https://www.afr.com/world/middle-east/iran-bets-on-revolution-and-repression-20210623-p583kd
Iran bets on revolution and repression
Iran has a new hard-line ideological leader. That means the West’s 42-year crisis with the country is only going to get worse.
Bret Stephens Contributor
Jun 25, 2021 – 10.46am
In the summer of 1988, Iran’s supreme leader, Ayatollah Ruhollah Khomeini, ordered the secret executions of thousands of political prisoners. Iran then denied reports of the slaughter, calling them “nothing but propaganda” based on “forgeries.” It also ruthlessly suppressed efforts by the families of the disappeared to find out what had happened to their relatives, including the location of their burial sites.
More than 30 years later, the world still doesn’t know how many prisoners were murdered, although a landmark 2017 report from Amnesty International put the minimum number at “around 5000.” Other reports suggest a figure as high as 30,000.
But one point is not seriously in doubt: Among the handful of Iranian leaders most involved in the “death commissions” was Ebrahim Raisi. At the time of the massacres, Raisi, the son of a cleric and the product of a clerical education, was deputy prosecutor general of Tehran, later rising to become Iran’s chief justice. In 2018, he called the massacres “one of the proud achievements of the system.”
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How Chinese communism survived for a century
Only North Korea has an older communist movement than China, where the party is preparing to celebrate its centenary.
Michael Smith China correspondent
Jun 25, 2021 – 2.58pm
As far as historical anniversaries go in China, the warm-up for the 100th anniversary of the Chinese Communist Party has been surprisingly low-key so far.
Beijing’s Tiananmen Square was closed to the public this week as construction work started for the official celebrations. Unlike previous significant milestones where there have been extravagant military parades, the plans have been kept secret.
Still, it is unlikely the centenary of a revolutionary movement that has become one of the most powerful institutions in the world will go unmarked. President Xi Jinping is expected to take centre stage at an event that will be used to cement his decade-long reign.
Cities have been decked out with banners and billboards reminding citizens to obey the authorities and listen to the party, as underground metro stations in Shanghai are festooned with Chinese flags and cinemas screen propaganda films several times a week.
State media says 100 rappers have been engaged to perform patriotic songs while millions of students completing university entry exams this month had to complete an essay on party history that has been revised to play down the horrors of Mao Zedong’s Cultural Revolution.
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EU leaders to Orban: Hungary can exit if not happy to uphold values
By Samuel Petrequin, Lorne Cook and Justin Spike
June 25, 2021 — 4.03pm
Brussels: European Union leaders have clashed with Hungary’s Prime Minister Viktor Orban during a heated summit in Brussels, telling him a new law that bans LGBT information in schools goes against the bloc’s fundamental values.
The law prohibits showing content of any non-heterosexual sexual orientation in school sex education programs, or in films and advertisements aimed at anyone under 18. It has been widely criticised across the region and has angered human rights groups.
Its supporters claim it will help fight paedophilia.
But a majority of the leaders disagreed and insisted that discrimination must not be tolerated in the 27-nation bloc.
“Being homosexual is not a choice; being homophobic is,” Belgian Prime Minister Alexander De Croo told Orban during the meeting, according to an EU diplomat. The person spoke anonymously according to usual practice.
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I look forward to comments on all this!
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David.
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