October 14 2021 Edition
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The strategic
competition between the US and China – and the proxy of the status of Taiwan –
has dominated the news this week – along with the worsening global energy
crisis caused by all sorts of factors including wrong demand predictions and a
shortage of supply. Europe being short 400,000 truck drivers is hardly helping. Right now the energy crisis is still getting worse!
The UK is looking like it will have a ‘winter of discontent’ like the 1970’s with shortages of all sorts of things – especially heating!
In OZ ScoMo
is now out of quarantine while we are all waiting to see how NSW goes with opening up. Thus far NSW goes pretty well (not so Victoria) and we are hoping to have some idea on what the PM will do in climate change in the next week or so. Exciting times!
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Major Issues.
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NSW must do better than Dominic Perrottet as premier
Writer, social activist and minister
October 4, 2021 — 5.00am
Reading the mind of God is a tricky business. Interpreting it with certainty, then bringing that to a position of power, is even trickier.
Few Australians would think of their nation as anything but inclusive and socially progressive, tolerant on most matters and certainly no haven for religious or ideological fundamentalism. Ask anyone if religion and politics are too closely entwined in 21st-century Australia and they may well shake their head.
Yet, within a day, it is possible that NSW, self-described as the most progressive state in the federation, may have, in Dominic Perrottet, a premier not only living under a cloud for mismanagement of the state’s workers’ compensation scheme, iCare, but who is also a highly conservative Catholic with views that represent the most extreme end of a rigidly male-dominated institutional church.
At the same time, we have in our federal Parliament a Prime Minister who genuinely believes his own election was a literal miracle. He lives alongside the oldest surviving culture in the world, the First Nations, that can trace their living history back 60,000 or more years. Sacred sites, geology, art, stories, anthropology, and earth sciences all attest to this. Yet Morrison and his fellow Pentecostal Christians believe the world was created a mere 6000 years ago. What’s more, the world as we know it will soon come to an end, with a Rapture seeing the “Elect” ascending to their eternal reward while the rest of us, including Christians of other denominations, will suffer for their ignorance, also eternally. That certainly puts climate concerns back in their corner.
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The economy can self-correct, but only up to a point
Economics Editor
October 3, 2021 — 1.40pm
As you’ve no doubt noticed, the crippling lockdowns in Sydney and Melbourne turn out to have one important side-benefit: NSW and Victoria have the highest rates of vaccination, which offers those states a path out of lockdown.
By contrast, the other states – which sensibly closed their borders to people coming from the two highly infected states – have the advantage of not needing to lock down, but the disadvantage of low rates of vaccination.
The two states that built the highest walls against the coronavirus - Queensland and Western Australia – have the lowest vaccination rates. (Which suggests they may not be feeling quite so superior once the lockdowns end and the virus’s chances of penetrating their borders are greatly increased.)
You don’t need me to tell you the two sides of the coin are connected. The incentive to get vaccinated has been greatest in the most infected states and least in the least infected states.
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Is wokeness really political kryptonite for the Left?
Deputy lord mayor of Melbourne
October 4, 2021 — 5.30am
It was meant to be the big reset for the British Labour Party after years in the political wilderness under Jeremy Corbyn.
Instead the headlines were dominated by a transphobia debate in which opposition leader Keir Starmer said it was “not right” to say “only women have a cervix”.
Starmer was correct, of course, trans men can still have a cervix. But it was probably not the outcome Labour was looking for as it desperately tries to make itself electorally competitive again.
It was also the latest episode in the culture wars and the other great debate: “Is wokeness like political kryptonite that is killing the Left?”
In the last two decades the major parties of the left have seen a significant drop in their vote in most advanced democracies.
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https://www.afr.com/politics/perrottet-emerges-as-the-great-right-hope-20211003-p58wrv
Perrottet emerges as the great right hope
The NSW Treasurer believes conservative values of thrift, self-reliance and morality can extend centre-right parties’ support into the working classes.
Aaron Patrick Senior correspondent
Oct 3, 2021 – 3.59pm
Dominic Perrottet – a lanky lover of God, family and tax reform – wants to be the man who demonstrates the conservative right is Australia’s natural party of government.
Since John Howard was removed from the House of Representatives in 2007 no true conservative has excelled in an Australian government.
Perrottet’s emergence as the great hope of a conservative comeback was demonstrated on Saturday when Howard bestowed his personal endorsement on the NSW Treasurer for premier of the state.
The left immediately circulated Perrottet’s celebration of Donald Trump’s presidential victory in 2016, which concluded: “It’s time for a conservative spring.”
To seize the office, he is going to have to convince the centrist Liberal MPs who control the party that the state wants smaller government, lower taxes and more freedom.
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Sucking it up and raising interest rates would be economic carnage
Richard Holden Contributor
Oct 4, 2021 – 12.06pm
It is always good to hear from a wise hand, formerly an important player in public policy. But Dr Stephen Grenville’s recent article on these pages “No point keeping money so cheap” was a rather surprising read.
Amid an avalanche of analogies, he basically made three points. First, monetary policy doesn’t work anymore. Second, what goes on in financial markets doesn’t affect the real economy. And third, that, as he put it, “the policy process has been captured by the financial industry”.
The notion that monetary policy no longer works is a rather unusual thing for a former central bank to say. His reasoning is that since interest rates have been low for some time and investment has stayed low, there must no longer be a connection between the two. In his words, “profits have been consistently high while the cost of borrowing, even long-term, has been historically low, without this triggering an investment boom. Whatever is holding investment back, it is not the cost of funds.”
Interest rates might not be negative in real terms forever, but they are very unlikely to go back to ‘normal’.
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https://www.afr.com/policy/foreign-affairs/defence-white-paper-gets-aukus-muscle-20211003-p58wug
Defence white paper gets AUKUS muscle
The three strategic objectives listed in the 2020 defence update looked like overreach. They now look credible thanks to Australia’s new partnership in AUKUS.
Peter Leahy Contributor
Oct 4, 2021 – 12.29pm
Not many people know that the marching song of the 1st Marine Division of the United States Marine Corps is Waltzing Matilda. They picked it up in 1942 when training in Victoria for World War II.
What other Australian tunes might US units adopt when training in Australia in the future?
Four recent events have dramatically changed Australia’s strategic calculus.
First, the United States’ much-delayed pivot away from the Middle East to the Indo-Pacific is materialising.
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Beware getting equity mix wrong in rising markets
Evaluating risk in your portfolio involves more than just focusing on the prospects of downside events.
Giselle Roux Contributor
Oct 4, 2021 – 5.00am
The two most frequently used words in investment circles are return and risk. Return is relatively obvious – a function of the gains or income received. Risk is not so readily measured and has an array of interpretations. More importantly, it may get lip service, with too much focus on the expected gains.
A fund’s product disclosure statement (PDS) typically has a list of risks. Today’s PDS has a prescriptive set of requirements, and while one can quibble on the rote nature of these documents, the language is less obtuse than before. Reading the PDS on ETFs, large equity or bond funds and alternative investments can be a simple reminder.
There are product-specific risks such as that it may not achieve its goals, change its approach or gate redemptions. Then there are market-related risks including regulatory issues, liquidity, currency, the pandemic or geopolitical conflicts.
Few investors consider these, and even fewer would pay heed as they represent a laundry list of possible events that are swept away in the interest of returns.
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https://www.afr.com/chanticleer/it-gets-harder-from-here-for-investors-20211004-p58x2h
‘It gets harder from here’ for investors
From Evergrande and inflation to fading stimulus and rising costs, the risks keep rising. It may not be a Minsky moment, but it is no time for complacency.
Oct 5, 2021 – 5.00am
Robert Almeida, portfolio manager and global investment strategist at the $US661 billion ($910 billion) fund manager MFS Investment Management, is too smart and too experienced to think he could ever call a coming bear market or a major correction.
Similarly, he’s not willing to suggest one of the four big risks currently roiling global financial markets – China’s Evergrande property crisis; surging energy costs across the globe; rising signs of inflation and even stagflation, and the lingering COVID-19 crisis – could lead to a Minsky moment that causes a sudden, major collapse in asset prices.
But Almeida isn’t dismissing either possibility.
“Any of these things could prove to be a Minsky moment – the spark that ignites the fire – and thus they all worry me,” he tells Chanticleer from his base in Boston.
But Almeida’s bigger concern is that the financial conditions that have been allowed to build up since the global financial crisis and into the pandemic – including rising debt levels, inflated asset valuations and dodgy business practices – leave markets susceptible to a hard landing.
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The beginning of something bigger: Signs the pandemic is reviving the centre-left
Political and international editor
October 5, 2021 — 5.00am
Is the pandemic helping centre-left parties to win power in Western democracies? It’s in vogue to say so. And there is some evidence. The centre-left has prevailed in pandemic-era elections in the US, Canada, Norway and, last week, Germany.
With the Labour Party’s win in Norway last month, the four main Nordic nations including Sweden, Denmark and Finland simultaneously are led by centre-left prime ministers for the first time in 20 years.
Further, centre-left parties head coalition governments in Spain, Portugal and Italy. Jacinda Ardern’s Labour retains its command of New Zealand politics and the Australian Labor Party is consistently ahead in the polls.
Common themes in recent centre-left victories have been a new emphasis on healthcare, on respect for essential workers, higher minimum wages, welfare payments and vaccine mandates, as well as interventionist economic rebuilding.
It’s harder ground for centre-right themes: Anti-immigrant campaigns lose their power when borders are shut; fiscal discipline and tax cuts lose their appeal in a crisis of survival.
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Federal government now the most distrusted: Roy Morgan survey
Tom Burton Government editor
Oct 5, 2021 – 4.27pm
Trust in government has fallen again, wiping away the spike in public sector trust caused by the pandemic response of last year, with the federal government now the most distrusted of all governments and services.
The trust scores come from a rolling Roy Morgan survey of 20,000 people who were asked unprompted to nominate private and public sector brands they trust or do not trust. The latest results were from surveys in August and September.
The federal government outranked Centrelink (now known as Services Australia) after a collapse in trust in the national government that, as noted by Roy Morgan, coincided with unproven rape allegations against a ministerial staffer and former minister Christian Porter. The rise in distrust also came as the federal vaccine program struggled.
Health services, Medicare, ambulances and the Australian Tax Office emerged as the most trusted government institutions and agencies.
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APRA tightens lending rules to target property boom
Oct 6, 2021 – 8.48am
The prudential regulator has moved to take some heat out of the housing market, raising the “serviceability buffer” that banks use to assess loans, which it says will reduce the maximum borrowing capacity for the typical borrower by around 5 per cent.
The Australian Prudential Regulation Authority has written to banks telling them to increase the buffer by 0.5 percentage points, from 2.5 per cent to 3 per cent. This buffer is added to the interest rate on the loan, and borrowers are assessed on whether they can repay with the buffer to ensure they can withstand higher interest rates in the future.
APRA said the move would have a “fairly modest” overall impact on aggregate housing credit growth. It will only apply to new borrowers.
This led some banks to suggest more macroprudential intervention would follow down the track, while APRA said it “does not rule out that the other measures might be used in the future”.
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ATO turns screws on ‘confused’ ETF investors
Different tax liabilities for ETFs compared to individual shares is causing investor confusion and ATO concern.
Duncan Hughes Reporter
Oct 6, 2021 – 5.00am
Tax authorities are tightening scrutiny of increasingly popular exchange traded funds (ETFs) amid concerns about the failure to report capital gains from share sales and income from dividends and distributions.
The number of ETF investors has doubled to more than 1.3 million in the past 12 years, with holdings in Australian shares estimated at some $34 billion. Analysts say younger investors are attracted by the ease of trading ETFs online using micro-investing apps on their phones.
Tim Loh, ATO assistant commissioner, says many investors, particularly those using the funds for the first time, are not aware of their obligations, fail to keep appropriate records and are more likely to make mistakes when lodging their tax returns.
“ETFs generally do not pay their own tax,” Loh says. “This is the responsibility of each investor. Due to the way taxpayers report income from ETFs, we cannot differentiate which capital gains, income or dividend amounts were realised from ETF investments by looking at a tax return.”
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Technical signs indicate sharemarket peak
By Michael Gable
October 5, 2021 — 10.30pm
The sharemarket is constantly climbing a wall of worry.
Since early 2020, there have been more than a few things to be concerned about.
One of the biggest mistakes I see investors make is that they try to call the top in the market or a particular stock before it happens. When markets are moving higher, they can continue pushing on for a lot longer than what seems rational.
The same is true on the downside. It is dangerous to step into a falling market because emotions and fear can drive it much lower than what seems rational.
We have seen a solid rally in the sharemarket and left in its wake are plenty of investors who thought it just could not go on much longer and sold some of their portfolios.
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Why we won’t dodge the global inflation spike
8:01AM October 5, 2021
Will Australia avoid the bout of higher inflation sweeping the world? It looks increasingly unlikely after the key inflation measure for the US recorded its biggest annual increase in more than 30 years.
The surge in the “personal consumer expenditure gauge”, a core inflation index, rose to 4.3 per cent for August – the highest rate since 1991.
Investors must now add the US inflationary pressures to a European inflation spike where a combination of supply disruption, soaring energy prices and labour shortages are running in tandem.
Across the EU, inflation is now at its highest since 2008, while Germany – the industrial centre of continental Europe – is enduring its highest inflation readings since 1993.
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The bull market’s foundations may be cracking as threats grow
Senior business columnist
October 7, 2021 — 11.59am
A wall of worries has battered financial markets over the past month, with sharemarkets tumbling and bond yields spiking amid concern that the foundations of the prolonged bull market might be cracking.
Since the US sharemarket peaked early last month it has fallen almost 4 per cent. The big technology stocks that have driven the bull market are down 6.6 per cent. Ten-year bond yields have spiked from 1.29 per cent to 1.52 per cent over the same period and touched 1.57 per cent on Wednesday.
There is no single reason for the sharp downturn in sentiment and investor confidence, although there is one major influence.
For much of this year there has been a debate among economists and market analysts about whether the sharp rises in inflation rates were transitory, as central bankers argued, or entrenched. As inflation has remained at unprecedented levels even the central bankers have shifted their stances.
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Our nuclear subs fantasy adds up to military net zero
11:00PM October 6, 2021
This week Beijing has been threatening Taiwan with war, as it sends more than 50 jet fighters a day into Taiwan’s air space, forcing the Taiwanese to respond with their own air force. The incursions have included Chinese nuclear-capable bombers. If Beijing ever decides to attack Taiwan directly, it will be impossible, at the start, for Taiwan to know whether an attack is beginning or Beijing is just engaging in another round of intimidation.
Beijing’s actions, therefore, are not only intimidatory; they are intensely irresponsible. They underline the accuracy of Scott Morrison and Peter Dutton repeatedly telling us we are living in a strategic environment as dangerous as the 1930s.
So this underlines the AUKUS agreement and the determination to acquire nuclear-powered submarines. Except that it doesn’t. The more we look into the AUKUS agreement, the more we see that its overriding practical consequence is this: for the next couple of decades at least, and probably quite a lot longer, Australia has determined it will have no submarine capability at all beyond our ageing fleet of six Collins-class boats.
If, God forbid, there were a big conflict in our region tomorrow, what could we do militarily? Maybe two of our six Collins boats would be available. If people claim the French attack submarines would have been floating coffins, that must surely be even truer of our Collins boats. We could dispatch two or three of our eight Anzac frigates. All of them are on their last legs. They are small combat ships with antique anti-ship missiles and eight vertical missile launchers. A typical Chinese ship has more than 100. Of our three Air Warfare Destroyers, at an extreme stretch we might manage to put two to sea at once. And if we could use US air bases far from home we could deploy some jet fighters and maritime surveillance aircraft.
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https://www.afr.com/chanticleer/is-magellan-good-value-or-a-value-trap-20211007-p58y6o
Is Magellan good value or a value trap?
Shares in the fund manager are languishing at two-and-a-half-year lows, leading to a debate about whether the stock is now a bargain, or has further to fall.
Oct 8, 2021 – 5.00am
There’s more than a little irony that after years of successfully riding the great growth stock boom, investors now ask whether global fund manager Magellan Financial Group has become something of a value play.
Magellan shares fell 1.3 per cent on Thursday, closing at a 12-month low of $32.11. This followed a 3.9 per cent fall on Wednesday after the group released its funds under management (FUM) report as at September 30.
While FUM sits at $113.3 billion, up 111 per cent on the same time last year, investors were spooked by $1.53 billion in net outflows over the September quarter, which follows a stretch of underperformance in Magellan’s flagship global fund.
According to Macquarie research Magellan has trailed the MSCI World Index benchmark 10 out of the last 11 months. Magellan’s latest numbers (up to August) put its one-year performance at 12.5 per cent, or 18.8 per cent behind benchmark. The fund also trails the benchmark on a three- and five-year view; bets on Alibaba and Magellan’s failure to ride the surge in cyclical stocks in late 2020 and early 2021 have proved costly.
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https://www.afr.com/wealth/personal-finance/smsf-rookie-errors-to-avoid-20211007-p58y2g
SMSF rookie errors to avoid
If you’re serious about running your own fund, this is what you need to know.
John Wasiliev Columnist
Oct 8, 2021 – 5.00am
To set up a self-managed super fund requires a number of important decisions you must be prepared to make to give your superannuation experience not only the right start but the best prospects for success.
The decisions go beyond the practical aspects of establishing a fund. That can be ridiculously easy if someone provides you with the necessary documents that simply require signatures. These include the trust deed, which will provide you with a legal arrangement that allows investment assets to be held for the benefit of you and any other members of your super fund.
A self-managed super fund is a special type of trust set up and maintained for the sole purpose of providing retirement benefits to its members.
What makes it different from other super arrangements (such as industry, government and retail super funds offered by financial institutions) is the trustee or trustees who administer the fund are also the fund members.
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Tony Abbott in Taiwan to build support among ‘like-minded countries’
By Eryk Bagshaw
October 6, 2021 — 3.27pm
Singapore: Tony Abbott will use a series of meetings with Taiwan’s President Tsai Ing-Wen and the head of her National Security Council to bolster Australia’s relationship with the threatened democratic island.
Australia’s former prime minister is the highest-level visitor to Taipei since Malcolm Turnbull spoke virtually at the Yushan Forum last year. Turnbull and former Labor prime minister Kevin Rudd have become increasingly vocal in their international criticism of their successor, Scott Morrison, making Abbott a valuable diplomatic asset for the Coalition government.
Abbott is officially visiting in a “private capacity” but his meetings with Tsai and the top brass of the foreign affairs and security establishment will allow him to act as an interlocutor with the Morrison government as it attempts to navigate an already fraught relationship with Beijing.
Sources with knowledge of his trip who were not authorised to speak publicly said, “where helpful”, Abbott – like Bob Hawke and Paul Keating who used their post-prime ministerial life to bolster Australia’s relationship with China – “wants to try and do the same with like-minded countries”. Abbott used other high-profile visits to the United Kingdom in 2019 to lobby for its pivot to the Indo-Pacific, and India in August to restart talks for a stalled Australia-India free trade deal.
A spokesman for the Taiwanese Foreign Ministry said Abbott “is a firm friend of our country and has spoken for Taiwan many times”.
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Abbott dumps on Beijing’s ‘new red emperor’ in provocative Taiwan speech
By Eryk Bagshaw
Updated October 8, 2021 — 7.52pmfirst published at 1.29pm
Singapore: China has committed human rights violations, breaches of international obligations, and cyber espionage under the “cult of the new red emperor”, said former Australian prime minister Tony Abbott, in a speech that marked a stark turnaround for a leader who once wanted to be a “true friend of China”.
Abbott, who led negotiations over a China-Australia free trade deal while he was prime minister between 2013 and 2015, used a speech at the Taiwan Yushan regional security forum on Friday to unload on the leadership of President Xi Jinping and accuse Beijing of bullying, self-generating belligerence and to warn it could “lash out disastrously very soon”.
“Our challenge is to try to ensure that the unthinkable remains unlikely; and that the possible doesn’t become the probable,” he told diplomats, politicians and business leaders at the annual forum in the capital Taipei.
China regards the democratic island of Taiwan as its own and has vowed to unite it with the mainland over the coming decades by force if necessary. Beijing has launched more than 100 warplanes including fighter jets and nuclear bombers towards Taiwan over the past week, threatening its airspace and forcing Taiwan to scramble jets in response.
“I don’t think America could stand by and watch Taiwan [be] swallowed up,” said Abbott. “I don’t think Australia should be indifferent to the fate of a fellow democracy of almost 25 million people.
“Taiwan will be the test.”
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Coronavirus And Impacts.
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Patients ‘beg for vaccination’ when it is too late: ICU nurses
Fiona Buffini and Edmund Tadros
Oct 3, 2021 – 5.23pm
Senior Victorian nurses have implored the vaccine hesitant to get the jab as they described very young patients with COVID-19 begging to be vaccinated as they are about to be put on life support.
Their plea came as the state recorded 1220 new cases, an 18 per cent fall from the record 1488 cases reported on Saturday, and third highest of the past seven days.
The jump in cases has been attributed to people becoming infected due to unlawful parties held for last weekend’s AFL grand final.
On Friday, the Victorian government mandated vaccination for up to 1.25 million workers across multiple industries and job types, ranging from judges and journalists to politicians, sports stars and taxi drivers.
Construction will resume in the state from Tuesday, with work on major sites to recommence at 50 per cent capacity. Residential construction will be able to begin again but will be limited to five workers and a site supervisor.
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Students head to Canada as Australia’s borders remain shut
Julie Hare Education editor
Oct 6, 2021 – 5.00am
Australia’s privileged position as one of the most highly prized destinations for international students has tumbled as Canada, the United States and Britain race to grab greater market share, a new survey has shown.
Australia’s share of demand from international students has declined from 16.8 per cent to 11.6 per cent over the past two years, according to data from IDP Connect. And with migration opportunities and face-to-face learning the most important factors driving decisions about where to study, Australia needs to quickly and clearly communicate to students that it will be open for business in 2022.
In research released on Wednesday, Andrew Wharton from IDP Connect said that Canada, with its open-doors policy, was stepping into the breach left by Australia’s closed borders and the lack of any clear road map to reopening.
The IDP Connect research coincides with new Australian Bureau of Statistics trade data revealing that export income from international education plummeted by nearly $10 billion in the past year. To September 2021, the sector generated $27.5 billion in export income, down from $36 billion in 2020 and $39 billion in 2019.
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Covid-19 lockdowns ‘delaying surgery on life-threatening cancers’
11:00PM October 7, 2021
Lockdowns have resulted in delays to surgery for life-threatening cancers, with one in seven patients having to wait on average an extra five months.
A study published in the Lancet, involving 20,000 patients from 61 countries, found that high-income countries, including Australia, had experienced severe delays because of the pandemic. Surgeons reported that lockdowns had had collateral impacts on cancer patients, with life-threatening bowel cancers, breast cancer and gynaecological cancers including ovarian and uterine cancers commonly delayed.
In Australia, elective surgery was suspended for several months last year and is currently suspended in NSW and Victoria, except for urgent Category 1 and Category 2 surgeries.
However, an Australian contributor to the Lancet study, Royal Adelaide Hospital colorectal surgeon Tarik Sammour, said even urgent surgeries had been delayed because of lockdowns and Covid-19.
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https://www.afr.com/world/asia/singapore-s-immunity-trap-a-lesson-for-australia-20211007-p58y2y
Singapore’s immunity trap a lesson for Australia
NSW says it’s ready for more cases as it opens up. That’s what Singapore thought too.
Emma Connors South-east Asia correspondent
Oct 8, 2021 – 11.26am
Singapore | In the last few weeks tents and other temporary structures have appeared at hospitals in Singapore as the city-state grapples with a per-capita load of daily infections that is suddenly the highest in Asia.
But, unlike in India or Indonesia earlier in the year, these spillover areas are not filled with desperately ill people. Rather, they are triage stations, sorting COVID-19 cases into those who can go home, those who need to be admitted, and those who need to be otherwise isolated.
The difference is vaccination. When the Delta variant ripped through New Delhi and Jakarta, vaccination rates were negligible. In contrast, about eight in 10 of Singapore’s entire population are double-jabbed. That’s one of the highest rates in the world and has kept serious illness to low numbers.
But vaccinations reduce, rather than stop, infections and Singapore’s Finance Minister Lawrence Wong describes the country as “COVID-19 naive” because it recorded a relatively low number of COVID-19 infections before vaccinations became widespread.
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https://www.afr.com/politics/perrottet-s-great-pandemic-experiment-20211007-p58y3a
Perrottet’s great pandemic experiment
NSW’s new Premier believes medical advice has been allowed to overwhelm other important considerations, including the right of children to attend school.
Aaron Patrick Senior correspondent
Oct 8, 2021 – 1.49pm
NSW’s new Premier couldn’t help himself. Dominic Perrottet cracked jokes, bantered with journalists, said what he really thought and didn’t come up with a simple message to assuage an uncertain state that its young leader will safely lead it out of the COVID-19 crisis.
What Perrottet lacked in premierial gravitas was balanced by action. The chief health officer, Dr Kerry Chant – the greatest official impediment to opening up society – was excluded from the group trusted to explain the accelerated opening up of NSW.
Asked if Chant endorsed the decision to open schools earlier, banish masks from offices and enlarge weddings, funerals, house parties and sporting events, Perrottet didn’t feel the need to mention the name of the public servant who developed a cult following through her almost-daily television appearances and emerged as one of the most powerful forces in Gladys Berejiklian’s government.
“I think the health minister has made it very clear the changes are supported and endorsed by the health team in the entire NSW government,” the Premier said. “It’s also an economic crisis as well.”
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Vaccination victories only highlight how much is left undone
Scott Morrison says the states should have been thinking about health funding long ago, but tardiness has been the hallmark of his own agenda.
Laura Tingle Columnist
Oct 8, 2021 – 4.32pm
Scott Morrison emerged from The Lodge on Thursday to celebrate “the first major milestone for Australians to start getting their lives back”: the fact that NSW had passed the “70 per cent double vaccination rate threshold, as set out in the national plan”.
And of course it was great news, particularly if you live in NSW and, in greater Sydney, which have been locked down for nearly four months.
Unfortunately, not everyone around the country is in quite as good a position.
The Prime Minister held out the NSW achievement as a beacon of hope for other states.
As of Friday, the other large states varied in their level of double doses between 50 per cent and 55 per cent (with Tasmania at 63 per cent and the ACT just nudging 70).
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Singapore opens up travel but long road ahead to reach ‘new normal’
October 9, 2021 — 5.08pm
Singapore: Cast as a test case for nations trying to make the jump from a COVID-zero approach to living with the virus, Singapore remains intent on reaching a “new normal”.
Yet it may be as long as six months before the south-east Asian city state returns to the kind of freedoms being experienced in Europe.
In a national address on Saturday, Singapore Prime Minister Lee Hsien Loong defended last month’s tightening of restrictions in response to soaring infections, saying it was needed to avoid the health system being overwhelmed.
Singapore is further opening up international travel, announcing quarantine-free corridors to welcome vaccinated passengers from the United States, United Kingdom, Canada, South Korea and several more European countries after a successful trial with Germany and Brunei.
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New Delta strain linked to returned overseas traveller from September
NCA NewsWire
11:44AM October 9, 2021
NSW Health officials are continuing to investigate a new strain of the Delta variant spreading throughout western Sydney.
Chief health officer Kerry Chant said authorities had linked the strain to a person who returned from overseas in September.
However, Dr Chant said exactly how the strain emerged and entered the community was still being examined.
“We've detected a genome of the Delta strain which is different from that that was previously transmitting in our community,” she said.
“What we’re investigating now is: was there someone else on the plane that was positive? How could it have got out What was the mechanism of that?
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Climate Change.
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World has ‘wake-up call’ over plunge into renewables: Angus Taylor
Mark Ludlow Queensland bureau chief
Oct 1, 2021 – 5.22pm
Federal Energy Minister Angus Taylor says the global energy crisis is a “wake-up call” for countries who want to dive head-long into renewable energy on the path to net zero emissions by 2050 without having proper back-up generation.
As Britain, Europe, China and North America deal with a raft of energy challenges – from soaring gas prices, fuel shortages and increased demand as economies emerge from the COVID-19 pandemic – Mr Taylor said it provided some valuable lessons going into international climate talks in Glasgow next month.
He said Australia already had its “wake-up call” a few years ago with reliability issues in South Australia – which was pushing ahead with renewables at the same time as closing down coal and gas-fired power stations – and the closure of the Hazelwood coal plant in Victoria that threatened grid stability.
“We received our wake-up call. And we’re determined not to have a third one with Liddell [AGL’s coal-fired power plant in NSW closing in 2023],” Mr Taylor said in an interview with AFR Weekend.
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https://www.afr.com/policy/energy-and-climate/kurri-kurri-s-a-gas-powered-folly-20211006-p58xlg
Kurri Kurri’s a gas-powered folly
Taxpayers should not be paying for a billion dollar generator that can only run for six hours for at stretch and won’t be able to compete with faster, cheaper batteries.
Ted Woodley
Oct 6, 2021 – 11.47am
The Commonwealth government is promoting gas-fuelled generators to provide dispatchable capacity – on-demand, long duration power – to support the transition from base-load coal-fired plant to intermittent renewable generation.
Snowy Hydro’s 750 MW gas power station at Kurri Kurri is one such proposal that has received enthusiastic government support, including a $600 million injection to date.
The claimed advantages of gas-fuelled generators are referred to repeatedly throughout Kurri Kurri’s Environmental Impact Statement (EIS) for “providing dispatchable capacity over days and weeks” and being “particularly well suited to managing prolonged periods of low wind generation, which may last for weeks or months”.
The clear impression is that Kurri Kurri will be able to generate for prolonged periods. But a single sentence in the latest batch of EIS documents, now totalling 1600 pages, shows Kurri Kurri will be incapable of doing so:
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Morrison’s tiptoe through the climate minefield shouldn’t lead him to a COPout
Columnist
October 9, 2021 — 5.00am
There is an increasing, but still cautious optimism on the Liberal side of Scott Morrison’s government that Australia won’t embarrass itself at next month’s United Nations climate conference in Glasgow. A commitment to net zero greenhouse gas emissions by 2050 – the bare minimum that our “forever” allies in Washington and London expect of us – appears to be within reach despite the sabre-rattling from a handful of National Party ministers and backbenchers.
There is even a chance that Australia will offer a more ambitious interim target to 2030.
The expectations for a historic policy shift, after 12 querulous years of climate obstruction by the Coalition in opposition and in government, is built on a simple political calculation. The Liberal Party has more seats at risk in the cities from continued inaction than the National Party has in the regions from net zero.
Accounts differ on the seats in danger. One senior Liberal familiar with the internal polling nominates up to six – the inner metropolitan electorates of Chisholm in Melbourne, Brisbane, Wentworth and North Sydney in the Prime Minister’s home city, as well as the outer-metropolitan electorate of Boothby in Adelaide, and Robertson on the NSW Central Coast.
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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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Time for a crackdown on ‘liar loans’ to douse home price bonfire
Senior economics writer
October 5, 2021 — 5.00am
Since deciding to become a property investor, I’ve experienced a range of emotions, including both guilt and pride - don’t let anyone tell you it isn’t possible to feel two conflicting emotions at the same time.
Both, however, have given way in recent weeks to the overwhelming force of FOMO – fear of missing out – resulting in a desperate race to find the best way to load myself up with as much cheap debt as possible.
I figure the more I borrow, the bigger property I can purchase, which, on any given percentage gain, will deliver me the biggest dollar return.
I am not alone.
Amid rapidly inflating home prices, all borrowers face a massive incentive to leverage to the hilt – out of necessity for home buyers and, for investors, to ensure maximum returns.
As Reserve Bank assistant governor Michele Bullock put it recently: “When prices are rising very rapidly and there are expectations that this will continue, borrowers are more likely to overstretch their financial capacity in order to purchase property.”
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Graduate employment surges back to pre-pandemic levels
7:04PM October 5, 2021
The level of graduate employment has climbed out of its Covid-19 trough and is back at pre-pandemic levels, according to the latest federal government figures.
The 2021 Graduate Outcomes Survey reveals the graduate full-time employment rate stands at 68.9 per cent overall for those who completed undergraduate courses last year. However, employment conditions for graduates were rapidly improving over the period of the survey.
The third of the three data collections – in May, when about two thirds of those surveyed gave their response – shows a full-time employment rate of 72.1 per cent, just fractionally below the 72.2 per cent recorded in 2019 before the impact of Covid-19.
Universities Australia chief executive Catriona Jackson said that as vaccination rates improved and more states opened up their economies, graduate employment conditions were likely to improve even further.
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RBA warns of a risk of ‘excessive borrowing’ as house prices rise
9:25PM October 8, 2021
The Reserve Bank has warned of a “risk of excessive borrowing” as it keeps the cash rate at a record low to meet its employment and inflation goals, potentially foreshadowing further lending curbs.
“There is a risk of excessive borrowing due to low interest rates and rising house prices,” the central bank said in its Financial Stability Review released on Friday.
“Low interest rates have contributed to high prices for financial assets and housing,” the RBA said.
“There has been some increased risk-taking and higher borrowing.”
It comes after the Australian Prudential Regulation Authority this week increased banks’ minimum home loan interest rate buffer to 3 per cent above their lending rate from 2.5 per cent previously.
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Health Issues.
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No entries in this category.
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International Issues.
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https://www.afr.com/markets/equity-markets/china-is-facing-a-coal-shock-20211003-p58wqe
China is facing a coal shock
China is facing a coal shock. This is bad news for the global economy, and good news for the global transition to net zero emissions.
Grant Wilson Contributor
Oct 3, 2021 – 2.30pm
China’s economy is a giant coal-fired machine. Thermal coal remains the predominant source of electricity generation, at about 60 per cent. And metallurgical coal remains an indispensable input to steel production, the dominant industrial process.
A coal shock is therefore a big deal, both for China and globally.
At a composite level, coal prices in China have nearly doubled this year to record highs. Most of this has happened in the past couple of months.
More may yet be to come. Coal inventories at ports are low, at about 550 million tonnes, comparable to levels seen in 2016. Back then shortages underpinned a strong rally into the winter months.
Moreover, Vice Premier Han Zheng was reported late last week as directing state-owned energy companies to do whatever it takes to secure energy supplies.
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China’s rise to global power faces obstacles
Without the population, property boom and power intensity to drive prosperity, there is no certainty that Beijing can continue to conduct its aggressive wolf-warrior diplomacy.
Alexander Downer Columnist
Updated Oct 3, 2021 – 2.33pm, first published at 2.27pm
It’s often said that it is relatively easy to predict trends but notoriously difficult to predict specific events. Predicting election results, referendum outcomes and other political events is indeed hazardous. Who would have guessed in the lead-up to the recent German elections that the Greens’ vote would suddenly collapse and transfer to the Social Democrats, who have now emerged from the political grave.
But what about trends? Australia’s geopolitical strategies are based on one key assumption: that China will continue to rise as a global power. Commentators fiercely debate whether we should accommodate that rise or instead contribute to a regional balance of power through our alliances with the United States and other like-minded countries.
I prefer the latter method. The idea of Australia becoming a client state of China and giving China a free run to set the rules and conditions of international engagement in the Indo-Pacific region doesn’t appeal to me.
But both these approaches are predicated on the same assumption: that the rise of China will continue along a straight-line projection. I have my doubts about that assumption, and recent events have confirmed my hesitancy.
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A desperate China is turning its lights off, but could there be a long-term gain?
By Eryk Bagshaw
October 4, 2021 — 5.00am
Singapore: The first time Chinese textile executive Eric Zhou heard the power was going to be turned off was in mid-September.
Chinese authorities had become alarmed at the level of demand for power as the northern part of the country headed into winter. There was not enough coal to keep the Chinese economy humming. The coal that was coming in was so expensive that the power stations were operating at a loss to keep the lights on. They had to prioritise homes over businesses and infrastructure.
Across the country, authorities reacted in different ways. In Liaoning province, a factory where the exhaust system suddenly stopped working had to send two dozen workers to hospital as they had suffered carbon monoxide poisoning. In Shenyang, they turned the highway and streetlights off, forcing cars to travel on one side of a busy highway in total darkness. In Shenzhen, the annual National Day light spectacular was called off.
“We were first told that electricity use would be limited from September 22 to 30 and all local factories were asked to stop production,” said Mr Zhou. “Power was actually cut for three days.”
By September 26, the companies in his city of Shaoxing were split into groups from A to D. High tech, low emissions, big taxpaying factories were put into group A were and told they were allowed to operate for eight days and stop for two. Those at the bottom of the pile – the low tech, high emissions, inefficient producers like steel, cement and chemical manufacturers in group D could operate for four days and stop for six.
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China’s counterproductive crackdown on the rich is risky business
The CCP’s efforts to control the private sector will deter innovation and investment. It will make transitioning towards a high-skilled, high-wage domestic economy much harder.
Raghuram Rajan Contributor
Oct 4, 2021 – 11.41am
Is there a larger purpose to the Chinese government’s recent actions against the country’s largest corporations, and does its clean-up of the financial sector fit into its economic strategy?
China has sought for at least 15 years to rebalance its growth from exports and fixed-asset investment to greater domestic consumption – efforts that have assumed a new urgency, owing to conflicts with the US and other countries.
As long as its domestic market expands, China will be able to reduce the strategic vulnerabilities its dependence on exports implies, and foreign firms will become more dependent on the Chinese market, giving China new sources of strategic leverage. But there are serious impediments to this strategy.
For Chinese domestic consumption to increase, both wages and household incomes from invested savings must increase. And for that to happen, China must depart from a growth model that has hitherto relied on significant repression to keep workers’ wages and returns paid to savers low.
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Central banks differ on dispelling nightmare of stagflation
When prices are rising because supply chains have broken, energy prices are increasing or there are labour shortages, monetary policy is often ill-suited to dealing with the shock.
Chris Giles, Colby Smith and Martin Arnold
Updated Oct 5, 2021 – 9.51am, first published at 9.49am
London/New York/Frankfurt | Central banks almost everywhere face the same bad dream: a mix of slowing growth and inflationary supply shocks that together threaten stagflation. So far, they are confronting the problem in different ways.
Interest rates have already risen in Norway and in many emerging economies, while the US Federal Reserve and the Bank of England have made moves to tighten monetary policy. In contrast, the European Central Bank and the Bank of Japan are sitting tight for now.
These different responses reflect the difficulty of dealing with what Harvard University’s Megan Green calls every central bank’s “worst nightmare” — a moment when global economic forces are both slowing growth and increasing inflation.
The orthodox economic view is that central banks should do nothing to offset inflation caused directly by a supply shock, such as this week’s rise in oil prices to a seven-year high. As Dhaval Joshi, chief strategist at BCA Research, puts it: “Responding to supply shock-generated inflation with tighter monetary policy is extremely dangerous.”
Peter Hartcher is international editor.
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Beijing issues warning to Taiwan: ‘War is real’
October 5, 2021
China flew a record 56 fighter jets near Taiwan on Monday as Beijing’s propaganda machine threatened “war is real”.
The latest wave of People’s Liberation Army Air Force aircraft included 12 nuclear-capable bombers.
“China will take all necessary measures to resolutely crush all attempts at ‘Taiwan independence’,” Chinese foreign ministry spokeswoman Hua Chunying said.
As China’s foreign ministry in Beijing was telling off the US for its “irresponsible remarks” about the fraught situation in the Taiwan Strait, fellow Chinese diplomats were being dressed down in Malaysia.
China’s envoy to the Southeast Asian country was summoned on Monday evening in protest after Chinese vessels entered its maritime economic zone in the disputed South China Sea.
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China’s airborne signal to Taiwan
Editorial
11:00PM October 4, 2021
The dispatch of 77 warplanes, including two Xian H-6 nuclear-capable bombers, by China into Taiwan’s air defence identification zone last Friday and Saturday sent an ominous signal at a time of rapidly rising tensions in the Indo-Pacific. Timed to coincide with Beijing’s national day marking the 72nd anniversary of the foundation of the People’s Republic of China, the incursions were much more than provocative, as the US State Department labelled them. China sent another 16 aircraft across on Sunday.
The incursions were preceded by a long editorial in the Chinese Communist Party’s febrile mouthpiece, Global Times. “Sending PLA fighter jets over the island of Taiwan is a step we must take … it will be a clear declaration of China’s sovereignty over Taiwan island and create unprecedented conditions for us to further implement this sovereignty,” the editorial said. The airspace over the Taiwan island belonged to the airspace of China, it claimed: “The mainland fighter jets’ flight over Taiwan island must be backed by large-scale and overwhelming military preparedness. Let us be fully prepared that there will be a showdown in the Taiwan Straits.”
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Evergrande’s fight for survival a threat to China’s shadow banking system
Senior business columnist
October 5, 2021 — 2.00pm
China Evergrande appears poised to rake in a large lump of cash. Where that cash might end up is, however, anyone’s guess.
On Monday shares in the reeling property giant’s $US7 billion ($9.6 billion) listed subsidiary, Evergrande Property Services group, were suspended in Hong Kong upending a “possible general offer for the shares in the company”.
Chinese media immediately linked the announcement to the simultaneous suspension of shares in another Hong Kong-listed developer, Hopson Development, “pending the release of announcement in relation to a major transaction of the company”.
The media reports speculated that Hopson plans to buy a 51 per cent stake in the property services unit in a deal that values it at about $US5.1 billion, implying a major haircut for Evergrande.
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https://www.afr.com/world/asia/the-economic-threats-from-china-s-real-estate-bubble-20211006-p58xml
The economic threats from China’s real estate bubble
The Chinese government is well aware that the great investment boom in property has gone far beyond reasonable limits. The economy needs different drivers of demand.
Martin Wolf Columnist
Oct 6, 2021 – 10.38am
How serious a threat to the Chinese economy might the difficulties of Evergrande, the world’s most heavily indebted property company, and now Fantasia, become?
The answer is not that China will experience a devastating financial crisis. It is rather that the economy’s dependence on demand from investment in real estate must end. That will impose a huge adjustment and create a big headache for the authorities: what can replace property investment in creating demand?
From the macroeconomic point of view, the most important fact about the Chinese economy is its extraordinary savings. In 2010, gross national savings reached 50 per cent of gross domestic product. Since then, it has fallen a little. But it was still 44 per cent of GDP in 2019.
While household savings are extremely high, averaging 38 per cent of disposable incomes between 2010 and 2019, they account for slightly less than half of all these savings. The rest consist mainly of corporate retained earnings.
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https://www.afr.com/companies/energy/energy-crisis-is-getting-scarier-by-the-day-20211006-p58xpx
Energy crisis is getting scarier by the day
Several forces are coming together that could make Vladimir Putin the king of Europe and enable Iran to thumb its nose at America and build an atomic bomb.
Thomas L. Friedman
Oct 7, 2021 – 11.02am
Every so often, the tectonic geopolitical plates that hold up the world economy suddenly shift in ways that can rattle and destabilise everything on the surface. That’s happening right now in the energy sphere.
Several forces are coming together that could make Vladimir Putin the king of Europe, enable Iran to thumb its nose at America and build an atomic bomb, and disrupt European power markets enough that the upcoming United Nations climate conference in Glasgow, Scotland, could suffer blackouts owing to too little clean energy.
Yes, this is a big one.
Natural gas and coal prices in Europe and Asia just hit their highest levels on record, oil prices in America hit a seven-year high and US petrol prices are up $US1 a gallon from last year. If this winter is as bad as some experts predict – with some in the poor and middle classes unable to heat their homes – I fear we’ll see a populist backlash to the whole climate/green movement. You can already smell that coming in Britain.
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China’s top coal region tells mines to boost output amid power crunch
Chen Aizhu, Muyu Xu and Tom Daly
Oct 8, 2021 – 5.17pm
Beijing/Singapore | Chinese officials ordered more than 70 mines in Inner Mongolia to ramp up coal production by nearly 100 million tonnes as the country battles its worst power crunch and coal shortages in years.
The move is the latest attempt by Chinese authorities to boost coal supply amid record-high prices and shortages of electricity that have led to power rationing across the country, crippling industrial output.
The proposed increase would make up nearly 3 per cent of China’s total thermal coal consumption.
In an urgent notice dated October 7, the Inner Mongolia regional energy department asked the cities of Wuhai, Ordos and Hulunbuir, as well as Xilingol League, or prefecture, to notify 72 mines that they may operate at stipulated higher capacities immediately, provided they ensure safe production.
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‘Starting a Fire’: US, China enter dangerous territory over Taiwan
The self-ruled island has moved to the heart of deepening discord and rivalry between the two superpowers, with the potential to ignite military conflagration and reshape the regional order.
Chris Buckley and Steven Lee Myers
Oct 10, 2021 – 7.44am
The 25 Chinese fighter jets, bombers and other warplanes flew in menacing formations off the southern end of Taiwan, a show of military might on China’s National Day, October 1. The incursions, dozens upon dozens, continued into the night and the days that followed and surged to the highest numbers ever Monday, when 56 warplanes tested Taiwan’s beleaguered air defences.
Taiwan’s jets scrambled to keep up, while the United States warned China that its “provocative military activity” undermined “regional peace and stability.” China did not cower. When a Taiwanese combat air traffic controller radioed one Chinese aircraft, the pilot dismissed the challenge with an obscenity involving the officer’s mother.
As such confrontations intensify, the balance of power around Taiwan is fundamentally shifting, pushing a decades long impasse over its future into a dangerous new phase.
After holding out against unification demands from China’s communist rulers for more than 70 years, Taiwan is now at the heart of the deepening discord between China and the US. The island’s fate has the potential to reshape the regional order and even to ignite a military conflagration — intentional or not.
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Trump’s insanity is right there in black and white
A new book by reporters Bob Woodward and Robert Costa confirms how frighteningly close we came to a global disaster, just days from the 2020 election.
October 8, 2021
The most frightening aspect of Peril, the new book by reporters Bob Woodward and Robert Costa, is how close the US came to a calamitous constitutional crisis and a catastrophic national security disaster with global ramifications in Donald Trump’s final months as president.
“It was a perilous time and things could have spun out of control,” Woodward, 78, tells Inquirer in an exclusive interview via Zoom.
“We missed the peril and the instability of that period from the presidential election in November to December and January until Joe Biden was inaugurated.
“We discovered that there was a big national security crisis that people in the US, Australia and around the world didn’t know. The idea that there was a worry that Trump might do something irresponsibly – it was not just a fantasy, it was a real possibility.”
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United States steps back from debt cliff... for now
By Sebastian Smith and Frankie Taggart
AFP
6:12PM October 8, 2021
The US Senate voted on Friday to stave off a credit default that would have sparked a recession and roiled world markets as Democrats and Republicans agreed to a stop-gap fix to raise the nation’s debt limit.
The breakthrough – which temporarily defers the crisis by adding another $US480bn ($657bn) to the allowable debt total – came with an estimated 11 days to go until the country would no longer have been able to borrow money or pay off loans for the first time in its history.
Democrats Senate leader Chuck Schumer announced the breakthrough deal after fractious negotiations in congress going into the early hours of Friday morning.
“Republicans played a dangerous and risky partisan game, and I am glad that their brinkmanship did not work,” he said on the Senate floor.
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I look forward to comments on all this!
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David.
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