July 20, 2017 Edition.
It has been a big week with Trump Jr and his e-mails letting us know he was keen to dig dirt of Hilary Clinton and Trump himself having a sojourn in Paris with the French President and his wife.
Just how illegal or not any of this is we will have to wait and see. There has already been on call for impeachment, predictably from the Democrats.
In Australia we have ongoing energy difficulties and huge fondness for coal. I really would like to some apolitical sanity to appear but I fear I am dreaming. I really despair of our polity at present.
The energy ministers had a COAG meeting last Friday – and basically failed to move forward of the main issue the CET.
Heavens we seem to be in a mess!
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Here are a few other things I have noticed.
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National Budget Issues.
Analysts trim commodity forecasts, shining spotlight on miners
Myriam Robin
Published: July 9 2017 - 8:56PM
Several agencies have downgraded their forecasts on key Australian commodity exports, potentially posing problems for Australia's listed resource exporters.
Last week, the Department of Industry, Innovation and Science downgraded its forecasts for iron ore, meteorological coal and copper.
Iron ore could yield just $US48 a tonne by 2018 - a sharp fall for the metal that sold for $US62.80 per tonne on Friday. The price touched $US94.86 in February.
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US seen raising rates one more time this year
Timothy Moore
Published: July 9 2017 - 8:51PM
Investor sentiment has been stoked by expectations that the US Federal Reserve will lift interest rates for a third time before the end of the year following another strong month of jobs data.
All three US benchmarks advanced after the US economy added 222,000 jobs last month, with the number beating economist expectations. Employment increased in healthcare, social assistance, financial activities and mining.
US markets ended the week on a stronger note after the data, with the Dow Jones Industrial Average finishing the session up 0.4 per cent, while the S&P 500 rose 0.6 per cent and the Nasdaq ended 1 per cent higher.
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How Treasury lost its way on economic reform
Ross Gittins
Published: July 10 2017 - 12:31AM
From the almost stony silence of the nation's economists, you'd never know that Malcolm Turnbull's successful move to needs-based funding of schools is the most significant economic reform in many a long year.
It's notable, too, that this reform seems to have been achieved with little or no involvement by the high priests of economics at Treasury and the Productivity Commission.
Only a few economic reform projects are more important than raising the efficiency and effectiveness of federal and state spending on primary and secondary education.
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The one very expensive Tony Abbott promise that Malcolm Turnbull is keeping
Michael Pascoe
Published: July 10 2017 - 9:30AM
A key boast in Scott Morrison's 2017 budget speech was: "Tonight, we announce we will deliver $75 billion in infrastructure funding and financing over the next ten years." That was much smaller than the budget's other capex splurge.
Elsewhere in the budget papers was a pledge for $200 billion in defence capital "investment". And that's just part of the cost of keeping one particularly expensive Abbott-era economic promise: to spend two per cent of GDP on defence.
Morrison's speech didn't spell out what it means in dollars, just that: "In 2020-21, we will meet our commitment to increase defence spending to two per cent of GDP, three years ahead of schedule."
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The death of the Phillips Curve
- The Australian
- 7:54AM July 10, 2017
Alan Kohler
The economic puzzle of our time is the decoupling of wages and employment.
It used to be a foundation of economics — of modern civilisation really — that as unemployment fell, wages would rise, and with them, inflation, and vice versa. William Phillips invented the Phillips Curve in 1958 to describe the relationship, and the NAIRU (non-accelerating inflation rate of unemployment) is supposed to be the rate below which unemployment shouldn’t be allowed to go, for fear of causing a “wages break-out” and inflationary spiral.
Not any more: rising employment and falling unemployment no longer lead to rising wages. A pillar of the dismal science has crumbled.
Exhibit A is the latest Monetary Policy Report from the Federal Reserve on Friday, released at the same time as the Labor Department report that employment growth accelerated in June but wages growth lagged again.
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Malcolm Turnbull's swipe at critics: 'Menzies named us the Liberals, not the conservatives'
James Massola
Published: July 11 2017 - 12:01AM
LONDON: Malcolm Turnbull has hit back at internal critics of his government's policy direction, declaring the political centre ground is the "place to be".
In his only major speech of a week-long trip to Germany, France and Britain, the Prime Minister delivered a rebuke to Coalition conservatives who criticised his government's second budget, recent school funding deal and other policies as being 'Labor lite'.
Chief among those critics has been former prime minister Tony Abbott, who last month released an alternative policy manifesto for the Coalition and who recently described the May budget as "second best".
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ACSI says one in three ASX200 companies don't disclose climate risks
Clancy Yeates
Published: July 11 2017 - 12:15AM
A third of Australia's biggest listed companies are keeping investors in the dark about how they are managing the potentially large financial risks of climate change, a survey has found.
Despite mounting pressure for companies to assess the business impacts of climate change and policies to contain global warming, the Australian Council for Superannuation Investors (ACSI) says 70 firms on the ASX 200 index did not make any climate-related disclosures in 2016.
The finding comes after a powerful business taskforce reporting to the G20 last month called for sweeping changes to how much information big companies should give investors about their climate change exposure, and how they manage these risks.
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Investor loans fall to lowest level in 12 months as banks react to tighter APRA regulations
Eryk Bagshaw
Published: July 11 2017 - 1:56PM
Tough new regulations are pushing investors out of the housing market and allowing first-home buyers to creep back in, figures show, as home loans to investors fall to their lowest level in more than a year.
Figures released by the Australian Bureau of Statistics on Tuesday show home loans to investors as a proportion of all loans dropped to 46 per cent, down from a high of over half of all home loans in January.
House prices went into reverse across the country for the first time in 18 months in May, falling by 1.1 per cent. The latest figures from CoreLogic show capital city prices were still up 10.6 per cent on the same time last year.
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Sharemarket investing for the smashed avocado generation
Jessica Irvine
Published: July 11 2017 - 12:01PM
So, you've given up the dream of home ownership – for the moment, at least.
What do you do now with that pitifully inadequate deposit you have sitting in the bank earning one-point-diddly-squat per cent interest?
It's unlikely to be your best strategy to quit your job and become a day trader on the sharemarket.
Nor should you necessarily go ploughing your money into an actively managed investment fund with historic returns that do not justify their high management fees.
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David Gonski's next task is to work out how to spend schools money effectively
Ross Gittins
Published: July 11 2017 - 6:07PM
I was in Moscow, recovering from a 12-day train trip from Beijing via Mongolia and Siberia, when I heard that Malcolm Turnbull's Gonski 2.0 shift to needs-based funding of schools had been passed by the Senate in the early hours of the morning.
So forgive me for being late to the party, but I can't let this key economic and social reform – surely one of the Coalition government's greatest achievements – go without acknowledgement and explanation.
The new act seeks to allocate government funding to schools, public and private, on a rational basis – the needs of individual students – rather than on what you got last year and what special deals you've done with politicians.
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Know the score: what the new credit reporting system means for you
Nina Hendy
Published: July 12 2017 - 12:15AM
Like many Australians, Bernard Stahr didn't know that two years of credit repayment history is about to be introduced to his credit report.
The 49-year-old public servant, from Kensington in Melbourne, wants to buy an investment property in the near future but is yet to apply for a loan.
He welcomed news that lenders must share at least 40 per cent of new positive data by the end of this year and is confident his good financial habits will stand him in good stead.
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It's gas, not renewables, that is pushing up electricity prices, report finds
Peter Martin
Published: July 13 2017 - 12:15AM
High gas prices, not high renewable energy prices, are responsible for the latest outsized increase in electricity prices, the second-largest on record, according to a new analysis by one of Australia's leading experts.
From July 1, Sydney prices climbed 15 to 20 per cent, Adelaide prices 16 to 20 per cent, and Canberra prices 19 per cent. Melbourne prices rise on January 1. After introduction of the carbon tax in 2012, prices jumped 19.3 per cent in Sydney and 23 per cent in Melbourne.
"When the rises flow through, retail prices will be the highest ever in real as well as nominal terms," writes Australian National University specialist Hugh Saddler in a report to be released on Thursday by the Australia Institute.
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‘It’s too late’: Seven signs Australia can’t avoid economic apocalypse
July 7, 20175:49pm
AUSTRALIA has missed its chance to avoid a potential “economic apocalypse”, according to a former government guru who says that despite his warnings there are seven new signs we are too late to act.
The former economics and policy adviser has identified seven ominous indicators that a possible global crash is approaching — including a surge in crypto-currencies such as Bitcoin — and the window for government action is now closed.
John Adams, a former economics and policy adviser to Senator Arthur Sinodinos and management consultant to a big four accounting firm, told news.com.au in February he had identified seven signs of economic Armageddon.
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Mid-year Australian Update - Have we turned the corner?
13/7/2017
This week Guy Carson provides a mid-year-update to his 2017 Outlook for the Australian economy. Have things been playing out as expected in the two-speed economy or is there more yet to come?
At the start of the year, in our 2017 Outlook, we wrote about our concerns over the two speed nature of the Australian economy. Our fears seem to be largely playing out through the first quarter as GDP came in at a very soft +0.3% q/q and +1.7% y/y. However, as the year has progressed a few things have surprised us, primarily the strength of the Australian job market and as a result the recent rebound in consumer activity. The strength of the Western Australian job market in particular has been a significant surprise. Given this new information at hand, it seems worthwhile to revisit our views.
The change of course for the Australian economy seems to have started around March when the employment data took a significant turn for the better. Over the three months starting March we saw employment gains of 60k, 46k and 42k. For a steady unemployment rate a figure of around 15k is needed to keep pace with population growth. As a result the unemployment rate has fallen from 5.9% to 5.5%. The biggest improver somewhat surprisingly has been Western Australia where the unemployment rate has fallen from 6.5% to 5.5%. The other main improver is New South Wales which continues to have the lowest unemployment in the country.
The change of course for the Australian economy seems to have started around March when the employment data took a significant turn for the better. Over the three months starting March we saw employment gains of 60k, 46k and 42k. For a steady unemployment rate a figure of around 15k is needed to keep pace with population growth. As a result the unemployment rate has fallen from 5.9% to 5.5%. The biggest improver somewhat surprisingly has been Western Australia where the unemployment rate has fallen from 6.5% to 5.5%. The other main improver is New South Wales which continues to have the lowest unemployment in the country.
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What Elon Musk's investment tells us about our energy crisis
Perry Williams and Jason Scott
Published: July 14 2017 - 10:34AM
Elon Musk's intervention in Australia's energy crisis is widening a divide over the future of coal.
The billionaire Tesla founder, who's promised to help solve South Australia's clean energy obstacles, sees no place for the fossil fuel.
That conflicts with the federal government's push for it remaining a mainstay source of electricity generation, as well as the "clean, beautiful coal" technologies that US President Donald Trump sees helping to save American mining jobs.
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JUL 10, 2017 12
How Healthy Is the Global Financial System?
Mohamed A. El-Erian
LONDON – In recent weeks, policymakers on both sides of the Atlantic have affirmed that the financial system is sound and stable. The US Federal Reserve announced in June that all US banks passed its latest annual stress test. And Fed Chair Janet Yellen has now suggested that we might not experience another financial crisis “in our lifetimes.”
At the same time, the Financial Stability Board (FSB) – which monitors regulatory practices around the world to ensure that they meet globally-agreed standards – has declared, in a letter to G20 leaders, that “toxic forms of shadow banking” are being eliminated.
In short, ongoing measures to buttress the global financial system have undoubtedly paid off, especially when it comes to strengthening capital cushions and cleaning up balance sheets in important parts of the banking system. The latest assurances from policymakers are comforting to those of us who worry that not enough has been done to reduce systemic financial risk and to ensure that banks serve the real economy, rather than threaten its wellbeing.
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- Updated Jul 15 2017 at 7:57 AM
Australian dollar surges to two-year high on weak US economic data
by Timothy Moore
The Australian dollar has leapt more than 1.3 per cent, topping US78¢ for the first time since May 2015, as weak American economic data dimmed prospects for a third US interest rate hike later this year.
That's positive for the Aussie as it keeps the gap between Australian and US rates from widening further faster. The currency rose 1.3 per cent to US78.32¢ at 4.57pm on Friday in New York (Saturday AEST), reaching as high as US78.34¢ a little earlier in the session. It's now 8.6 per cent higher against the greenback this year.
"The data from the US has been relatively uninspiring, particularly on the inflation side and the numbers today will have done nothing to give policy makers any more confidence," Oanda's Craig Erlam said.
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A return to world trade's glory days appears unlikely
Ross Gittins
Published: July 15 2017 - 12:15AM
One thing you can be sure of is that international trade grows much faster than the world economy. It's the classic proof of growing globalisation, and it's been happening for ages. Except that it seems to have stopped.
For two decades from the mid-1980s, world trade – measured as exports plus imports – grew at more than double the rate of growth in gross world product.
Between 1986 and 2007, the volume of trade grew at an average annual rate of 3.4 per cent of world real gross domestic product, meaning it went from being equivalent to almost 30 per cent of gross world product to almost 60 per cent.
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Four states strike out on their own to build a clean energy target without the Commonwealth
Peter Martin
Published: July 14 2017 - 5:51PM
South Australia, Victoria, Queensland and the Australian Capital Territory have effectively declared no confidence in the federal government as it grapples with the question of whether to set up a clean energy target, deciding to go it alone and ask the Australian Energy Market Commission to draw up plans for one.
The clean energy target was the only recommendation of 50 made by chief scientist Alan Finkel not to be adopted unanimously when the state and Commonwealth energy ministers met in Brisbane on Friday.
The communique noted that the Commonwealth was still "carefully considering" the target and said the four states would separately ask the Commission to design a target as they were entitled to under its rules.
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Australia in search of a match to fire-up energy policy
Peter Hartcher
Published: July 15 2017 - 12:05AM
It was once said that Brazil was a poor man sitting on a bag of gold. It could today be said of Australia that it's a cold man shivering in front of a fireplace stacked with wood, but with no matches.
Australia is the world's biggest exporter of coal for generating electricity. It accounts for a whopping 30 per cent of all global exports, more than double the share of another energy superpower, Russia, according to the International Energy Agency.
Australia is the world's second biggest exporter of liquid natural gas. It sells 12 per cent of all the LNG traded in the world, three times Russia's share, according to the International Gas Union.
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Health Budget Issues.
Australian doctors get a massive dose of marketing
Ray Moynihan
Published: July 11 2017 - 1:17AM
Don't let anyone tell you drug companies wining and dining doctors is a thing of the past. Sadly, these hidden flows of influence are at epidemic proportions, with almost 30,000 events every year where pharma picks up the tab.
I've been researching this field for more than two decades and while transparency and public scrutiny has grown steadily, unhealthy promotion continues. Today, I'm part of a team at Sydney and Bond Universities who've just published an analysis in BMJ Open of 116,000 events that took place over four years to 2015, at a cost of $290 million. To give a flavour, there was the $82-a-head meal at Sydney's Banjo Patterson restaurant, where lucky GPs learned about the latest evidence on cholesterol – courtesy of Pfizer, the maker of one of the best-selling anti-cholesterol drugs of all time. And then there was the single conference for 300 specialists at a flash hotel for which Roche splashed out around $750,000.
While many of these "educational" events happen in hotels and restaurants, often with lashings of good wine, most of them happen in hospitals and doctor's surgeries, with sandwiches and sushi.
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Radiologists launch Medicare campaign
July 11, 20178:24pm
Radiologists fear patients will soon be forced to pay more for scans used to diagnose some of the most common forms of cancer if an impasse over the Medicare rebate freeze is not resolved.
Accusing the Turnbull government of breaking a promise to thaw the rebate freeze, radiologists are launching a potentially bruising campaign in surgeries across the country.
In its May budget, the Turnbull government pledged to lift the freeze on targeted radiology and diagnostic imaging services in 2020.
But the freeze will only be lifted on 7 per cent (59 of 891) of radiology items listed on the Medicare Benefits Schedule, which the sector argues does not come close to what's needed to detect and treat cancer.
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Choice says health insurance is too complex and stopping people from switching
Esther Han
Published: July 14 2017 - 6:00AM
Consumer group Choice is urging the government to simplify health insurance policies after it found nearly half of Australians believed the process of finding a suitable policy too difficult.
Its survey found 44 per cent of policyholders believed comparing policies was "difficult", while the rest was split between "neutral" and "easy".
"Health insurance is so complex that it's become toxic," said Choice's Matt Levey. "People are buying or sticking with policies that they may not understand or may not work for them."
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International Issues.
Donald Trump’s son met Russian lawyer after being promised damaging information on Hillary Clinton
Jo Becker, Matt Apuzzo and Adam Goldman
Published: July 10 2017 - 7:22AM
Washington: The US President's eldest son, Donald Trump jnr, was promised damaging information about Hillary Clinton before agreeing to meet with a Kremlin-connected Russian lawyer during the 2016 campaign, according to three advisers to the White House briefed on the meeting and two others with knowledge of it.
The meeting was also attended by his campaign chairman at the time, Paul Manafort, and his son-in-law, Jared Kushner. Mr Manafort and Mr Kushner only recently disclosed the meeting, though not its content, in confidential government documents described to The New York Times.
The Times reported the existence of the meeting on Saturday. But in subsequent interviews, the advisers and others revealed the motivation behind it.
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Mosul liberated as Islamic State faces total defeat in Iraq
Caroline Alexander and Donna Abu-Nasr
Published: July 9 2017 - 11:37PM
Iraqi Prime Minister Haider al-Abadi arrived in Mosul to declare it liberated from Islamic State, three years after the city's abrupt fall to the jihadists alerted the world to the group's growing strength, territorial ambitions and barbarity.
Al-Abadi congratulated the Iraqi people and fighters on a "great victory" after the last pockets under Islamic State control were retaken, according to a tweet from his media office.
The campaign to free Mosul from Islamic State entered its final phase in the narrow streets of the Old City mid-June, eight months after thousands of Iraqi troops and Kurdish fighters backed by US-led airstrikes began their offensive. Lieutenant General Stephen Townsend, commander of the coalition, has described it as the toughest urban warfare he has seen in 34 years of service.
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Iran and Saudi Arabia, not democracy, the winners from the invasion of Iraq
Peter Hartcher
Published: July 11 2017 - 12:05AM
The Iraqi government has declared victory over so-called Islamic State in the city of Mosul. That must be counted as a good thing for the cause of civilisation over barbarism.It's important that Islamic State be shown to be incapable of maintaining a state, that its leader may call himself a caliph but that he has no caliphate.
The movement is based on the appeal of the idea of the caliphate as a territorial entity, so discrediting the movement demands that its territory be extinguished. It's only a beginning in the long campaign against Daesh, but a vital one.
It's also a moment to consider the wider state of the Middle East since the threshold moment when the US-led coalition invaded Iraq in 2003, with the enthusiastic support of John Howard and Tony Blair.
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John McCain: GOP health care bill likely 'dead'
Sen. John McCain, R-Ariz., said Sunday the Republican bill to repeal and replace Obamacare is “probably going to be dead.”
"My view is that it's probably going to be dead," he said on CBS’s Face the Nation.
Support for the bill has been eroding over the July 4th recess, and McCain said he believes Republicans should work with Democrats to craft health care legislation.
That is a possibility floated last week by Senate Majority Leader Mitch McConnell, who said “No action is not an alternative.”
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Congressman introduces articles of impeachment against Donald Trump
Christine Mai-Duc
Published: July 13 2017 - 6:15AM
Los Angeles: A Californian lawmaker has introduced articles of impeachment against US President Donald Trump, making good on a promise he made to move the process forward.
Brad Sherman, an 11-term Democrat who represents part of the San Fernando Valley, was the first to draft and circulate articles of impeachment last month. He formally introduced the measure, titled HR 438, on the House floor Wednesday afternoon.
The measure accuses Trump of obstruction of justice and seeking to "use his authority to hinder and cause the termination" of an investigation into former national security adviser Michael Flynn, including "through threatening, and then terminating, James Comey".
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Islamic State is now just another terrorist group competing for recruits
Leonid Bershidsky
Published: July 12 2017 - 1:35PM
With Mosul recaptured from Islamic State and Raqqa, part of its old town already in the hands of US-backed groups, probably weeks from being taken, the Islamic State is likely soon to be wiped off war zone maps. Like Lord Voldemort in the early Harry Potter books, it won't have a physical presence - but it will live on in other forms: The minds of the foreign fighters returning to their homelands, the online presence it has built and the souls of the disaffected Sunni populations in the areas that the terrorist group has held for years.
It's important to assess all three dangers and start dealing with them even before the looming military defeat of IS.
The foreign fighters, reportedly, have been abandoning the failed caliphate in droves - the ones, that is, who haven't been killed, a number that's hard to estimate. But thousands of them are still in Syria and Iraq, and many will try to go home.
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- Jul 13 2017 at 10:09 AM
There is something rotten inside Washington's first family
by Edward Luce
Last year the American people rejected political dynasty. Farewell Clintons. Goodbye Bushes.
In their stead, we have the most dynastic first family in American history. Donald Trump's administration is little more than the Trump family plus some disposable retainers.
It is unclear where the White House ends and the Trump business empire begins.
One reason Mr Trump took against Qatar may have been that an influential Qatari denied Jared Kushner, his son-in-law, a $US500 million loan.
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No matter how bad it gets, here's why Donald Trump isn't getting impeached this year
Philip Bump
Published: July 15 2017 - 6:47AM
We quickly lose sight of how exceptional the bizarre moments of the past six months have been. It would have seemed ludicrous one week ago that we'd be sitting here today holding an email in which Donald Trump junior seeks out negative information about Hillary Clinton from someone he believed was a Russian government official. Yet here we are.
Trump's base of support has already appeared to brush aside the obvious demonstration of a willingness to collude in the transfer of information that was "part of Russia and its government's support for Mr Trump," as the first email to Trump Jr. read. President Donald Trump once said that he could shoot someone dead in the middle of Fifth Avenue and not lose any support. That no longer seems much like hyperbole.
Still, others will note, it's not as if Trump is popular. His approval rating remains mired in the low 40s, with most Americans viewing his job performance negatively. Doesn't that alone mean that, if some other significant revelation occurs over the next seven days, Trump's position must surely grow wobblier?
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JPMorgan's Jamie Dimon: 'It's almost embarrassing being an American citizen'
Renae Merle
Published: July 15 2017 - 9:21AM
Since US President Donald Trump's election, Jamie Dimon has emerged as one of Wall Street's most prominent voices in Washington. The chief executive of JPMorgan Chase serves on the White House business advisory council and is chairman of the powerful Business Roundtable.
But in a series of calls on Friday to discuss the big bank's quarterly profits, Mr Dimon vented his frustration with gridlock in Washington.
"It's almost embarrassing being an American citizen ... and listening to the stupid s--t we have to deal with in this country," Mr Dimon said in one conference call.
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Learning to resist Trump’s America First
- The Australian
- 12:00AM July 15, 2017
Paul Kelly
As Donald Trump lives out his “America first” mantra riddled with a presidential character of unreliability and unpredictability, the existential question for other nations looms large: is Trump an aberration or harbinger of a permanently changed America?
For Australia, there is no more important foreign policy issue. The test is whether our task is merely to survive the traumas Trump poses for the world and his alliance partners or whether the forces that created Trump are permanent and reflect the most decisive shift in US society, culture and outlook since World War II.
The notion that after four years of a Trump presidency the US will revert to the pre-2016 status quo is surely fanciful. Neither life nor politics works like that. Trump has come to shake up America. He has come to convince the world it must deal with a different America no longer pledged to the global order and leadership of the past seven decades.
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Senate GOP Rolls Out BCRA Revision
John Commins, July 13, 2017
The bill is scheduled for a floor vote next week, but it’s not clear if this latest version of the Better Care Reconciliation Act of 2017 has enough support to pass the Senate. It will require near-unanimous support from Republicans because no Democrats support it.
Senate Republicans on Thursday unveiled their revised plan to repeal and replace the Affordable Care Act that now scraps a tax cut for the wealthy, increases subsidies for individual coverage, drops the individual mandate and allows insurers to offer no-frills plans.
The revised bill retains a contentious provision for a per capita cap on Medicaid spending and a decade-long phase out of the ACA’s Medicaid expansion that could mean a loss of coverage for millions of people.
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I look forward to comments on all this!
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David.
