February 13, 2019 Edition.
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The big news in the next few months will be from OZ as we see a NSW State election followed by a Federal Budget and election. That will keep us all busy for the next little while! Worse politics federally has gone totally feral with Border Security issues at fever pitch. The Government also lost a vote in the House and are mightily annoyed!
Trump is off to Vietnam to meet with Kim again and is seemingly more and more unhinged. Relationships with China are not good and probably getting worse as the world economy slows. A new shutdown and worse tariffs also in the mix.
Brexit is still not fixed but I have no idea where we are now..like most others!
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Major Issues.
Morgan Stanley warns the rate of property price falls may be 'difficult for the economy to absorb'
By Duncan Hughes
Updated 03 Feb 2019 — 12:59 PM, first published at 10:02 AM
Residential property prices are falling too fast for the broader economy to absorb and could force the RBA to cut rates to prevent a consumer slowdown, job losses and weakening dollar, according to global investment bank Morgan Stanley.
The warnings come on the eve of the year's first meeting of the Reserve Bank of Australia and evidence that prices are falling faster than recent downturns, with Sydney already down more than 12 per cent from their peak.
"This rate of decline will be difficult for the economy to absorb," the Morgan Stanley report warns.
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Labor's Michelle Rowland signals modernisation of 'analogue' media regulation
03 Feb 2019 — 11:00 PM
Opposition communications spokeswoman Michelle Rowland has flagged a future Labor government would pursue a major modernisation of the "broken" media frameworks and regulations, including broadcast rules that she said were designed for the previous analogue era.
Ms Rowland, a former commercial lawyer who worked on telecommunications, media and technology (TMT) deals for a decade before entering parliament in 2010, said supporting "public interest journalism" would be a priority for her if Labor wins the federal election due in May.
Allowing media subscriptions to be tax deductible and ensuring public broadcasters such as the ABC were well funded and independent were among the policy options canvassed by a Senate inquiry into the future of public interest journalism that were "worth looking at", she said.
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Investors set to reap dividend bonanza
By Matthew Burgess
4 February 2019 — 10:55am
Investors are set to receive a boost in dividend payouts this month as companies rush to avoid a looming overhaul of tax rules if there's a change of government.
The Labor Party, which is favourite to win elections expected in May, is pledging to tighten so-called franking rules, under which shareholders reduce their overall tax liability.
Facing growing pressure over franking credits, the opposition leader said he will stand by the policy.
Several companies are expected to use up franking credits that would be rendered less valuable to some investors if the rules change, helping swell the total expected payouts this earnings season to about $29 billion.
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Every drop of sweat: Labor says Morrison is hurting ordinary workers
By Shane Wright
4 February 2019 — 12:01am
Shadow treasurer Chris Bowen says Australians have been "chained to a treadmill of low wage jobs" since the Coalition took power in 2013, with Labor signalling it will target Scott Morrision's management of the economy as an election weakness.
As Bill Shorten says Labor is "not for turning" on its franking credits policy, Mr Bowen will use a speech on Monday night to argue the government has weakened the national economy by protecting tax loopholes at the expense of core services and helping working Australians.
The Prime Minister last week used a major economic address to commit to the creation of 1.25 million jobs over the next five years while warning the economy would weaken if Labor won this year's election, expected in May.
But Mr Bowen will use the inaugural Chifley Oration in Melbourne to say the economy is doing much more poorly than headline figures suggest, pointing to issues such as under-employment and middling growth.
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A year on, few predicted house prices would fall this fast
By Eryk Bagshaw
2 February 2019 — 12:01am
It was the year that housing went south. But few of the 26 economists surveyed by The Age and The Sydney Morning Herald in January 2018 predicted just how fast and low it would fall.
Only four got close in Sydney and Melbourne: Stephen Koukoulas, Steve Keen, Shane Oliver and Stephen Anthony.
Between them they predicted falls of between 6 and 8 per cent in Sydney and 6 and 3.5 per cent in Melbourne. The official result would beat them all, with Sydney falling by 8.9 per cent and Melbourne 7 per cent.
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Development pullback: 2018 the weakest for apartment approvals in four years
Updated 04 Feb 2019 — 1:10 PM, first published at 1:09 PM
High-rise apartment approvals hit a four-year low in the year ended December as developers scaled back new plans for large projects and focussed on houses and townhouses in a weaker credit environment.
Approvals of units in a four-storey block or higher fell nearly 12 per cent from calendar 2017 to total 53,590 last year, the lowest since calendar 2014, official figures showed on Monday.
The sharp pullback in new apartment developments, a consequence of the regulator-driven credit curbs on investor borrowing and bank skittishness ahead of the findings of last year's banking royal commission, have triggered a slump in Australia's housing construction that also saw the total housing approvals for the year to December slide to a four-year low of 212,316.
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Online retail sales down 1.4 per cent in December: NAB Online Retail Sales Index
04 Feb 2019 — 1:04 PM
Consumer online retail spending was down markedly in December 2018 from November 2018, new data shows.
The National Australia Bank's Online Retail Sales Index recorded a 1.4 per cent month-on-month contraction in December, down from a 2.9 per cent increase in November.
The only other December contraction in NAB's online series was back in 2016, which recorded a much more marginal 0.1 per cent drop.
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Home approvals crater as credit tightens
By Wayne Cole
4 February 2019 — 1:21pm
Approvals to build new homes in Australia collapsed to five-year lows in December as sliding house prices and a squeeze on credit hammered the apartment market, a blow to what had been one of the economy's stronger sectors.
Monday's grim data knocked the local dollar lower as it intensified pressure for a cut in interest rates from the Reserve Bank of Australia (RBA) a day before it holds the first policy meeting of the year.
It also highlights the stakes at play when the government releases the findings of the royal commission into financial misconduct later on Monday.
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Savers' meagre earnings under threat from cash rate cut
By John Collett
1 February 2019 — 9:47am
Savers face the prospect of their already paltry earnings on term deposits paying even less if, as a growing band of economists believe, the Reserve Bank cuts interest rates this year.
Four years ago, term deposits paid about 4 per cent a year. They now pay an average 2.5 per cent.
BB Parreno is one of those who lives off their savings and is wondering where to put her cash to earn a better return.
The 25-year-old from the Philippines has been living in Sydney for a year while studying leadership and management.
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Veteran bond manager Bill Gross to retire from Janus Henderson
By Trevor Hunnicutt and Jennifer Ablan
Updated Feb 5, 2019 — 6:57 AM, first published at 2:52 AM
New York | Bill Gross, once the bond market's most influential investor, will retire from Janus Henderson Group in coming weeks, ending attempts to reclaim the stature he enjoyed leading the world's largest fixed-income investing firm.
Gross, who turned to investing after serving as US naval officer, co-founded Pacific Investment Management Co in 1971, attaining rock-star status in investing circles as he attracted hundreds of billions of dollars in assets. Under his watch, Pimco blossomed into a $US2 trillion asset-management powerhouse, one so influential that the US Federal Reserve tapped it to help implement its program of emergency bond purchases in the financial crisis in 2008.
At Janus, however, Gross was unable to repeat his earlier success, with the performance of the fund he managed ranking near the bottom. Gross told Reuters on Friday that low rates are distorting returns.
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Bond bears and equity bulls are running in opposite directions
By Stephen Bartholomeusz
5 February 2019 — 12:00am
Financial markets are sending conflicting signals about the outlook for the US and world economy, with equity markets bullish but bond markets decidedly bearish. They can’t both be right.
After a hellish last quarter of 2018, during which the US stockmarket fell almost 20 per cent, equities have mounted a major resurgence. Since December 24 they’ve rebounded 15 per cent.
It isn’t just equities. The US junk bond market, which shut down from the end of November through to early January, with no new issues for the first time since the financial crisis, has seen a flurry of new raisings since the start of the year.
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Bell Potter says high-yield switch will dodge Labor franking hit
Feb 4, 2019 — 11:00 PM
Labor's proposed policy to stop paying cash refunds for surplus franking credits to investors with no income will drive up the cost of capital for banks and force investors into high-yield bonds that could significantly reduce the potential tax saving.
That is the view of research analysts at Bell Potter who have told clients that by switching out of bank hybrid securities to a listed high-yield corporate bond fund that does not benefit from franking, investors who will lose thousands of dollars of refunds under the policy can actually maintain the same income.
Bell Potter's hybrid analyst, Damien Williamson, showed clients an example of how investors could potentially maintain the same cash income after tax by shifting half of a $600,000 investment in Westpac's Capital Notes, which pay a margin of 5.25 per cent, into Neuberger Berman's listed global high-yield bond fund, which also pays a margin of 5.25 per cent.
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RBA rates on hold in first meeting of 2019
By John Kehoe
Updated Feb 5, 2019 — 3.51pm, first published at 2.30pm
The Reserve Bank of Australia has held the official interest rate steady at 1.5 per cent, acknowledging risks have increased and downgrading its outlook for the economy which is softening according to new data published Tuesday.
Following its first monetary policy meeting of 2019, RBA governor Philip Lowe said in a statement the central scenario is for the domestic economy to grow about 3 per cent this year and a little less in 2020, down from the 3.5 per cent it forecast in December.
Adding to its slightly less upbeat tone, the RBA said underlying inflation would take a "little longer than expected" to rise to the its 2-3 per cent target band and updating its underlying inflation forecast to 2 per cent for 2019 and 2.25 per cent in 2020.
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Self-funded retirees 17 per cent 'worse off' under Labor franking credit plan
By Duncan Hughes
Feb 5, 2019 — 11.00pm
Self-funded retirees could be worse off by more than 17 per cent compared with other retirees on the part pension under Labor's proposal to end cash rebates for excess franking credits, according to modelling.
The independent analysis, verified by consultant and financial adviser William Buck, is based on a self-funded retiree couple with assets of $1 million managing a portfolio of Australian shares compared to a couple on the age pension with assets of $840,000 (just below the age pension cut-off of $848,000).
It finds the self-funded couple wholly invested in Australian shares (earning up to 4.5 per cent in dividend income) currently receives $45,000 plus franking credits of $19,285 – total income of $64,285. The high exposure to Australian equities is a common strategy for self-funded retirees who manage their own portfolio.
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Tax the rich, not the helpless
By Nicholas Stuart
6 February 2019 — 12:00am
Labor’s Treasury spokesperson Chris Bowen is a smart man. Perhaps that might explain why sometimes he’s also, unfortunately, ruthlessly blunt.
Last week an ordinary self-funded retiree – not a plutocrat, a person just getting by on less than $50,000 – phoned ABC talk-back and described to Bowen how Labor’s new imputation policy will hit him personally. Judging from the amount he’ll be worse off ($5,000) and his degree of concern (significant), the caller isn’t the sort who breaks out the Bollinger and quaffs caviar on a daily basis. Bowen’s response?
He told listeners to feel “perfectly entitled to vote against us”.
Next question.
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RBA puts rate cut back on table, hails ‘balanced and sensible’ royal commission report
- By James Glynn and Michael Roddan
- February 6, 2019
The Australian dollar had dived after Reserve Bank of Australia governor Philip Lowe said the outlook for interest rates has become “more evenly balanced”, adding there is a risk the economy might be weaker than the central bank thinks.
Dr Lowe also said the housing market was undergoing a “correction” as prices fall across major capital cities, but said the economy was well placed to handle the falls.
“It is not expected to derail economic growth,” Dr Lowe said of the housing price drop.
The comments were made in a wide ranging speech given to the National Press Club in Sydney. The speech marks the first major public comments by the central bank boss this year.
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Apartment construction unwinds as activity drops to lowest level in six years
Updated Feb 7, 2019 — 10.45am, first published at 10.21am
The country's apartment builders are already seeing evidence of the Reserve Bank's expected contraction in housing investment, with a leading index of activity in the sector dropping to the lowest levels in more than six years.
The Performance of Construction Index measure of apartment-building activity fell 1.6 points to 24.9 in January, the lowest reading since July 2012, Ai Group and the Housing Industry Association said on Thursday.
"It's very much a leading indicator," HIA senior economist Geordan Murray said. "It is reflecting what builders were coming on the books right throughout January. It's certainly softer than it has been for quite a few years."
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Lower rates were once a political positive, but a cut will not be on Scott Morrison's wish list
By Shane Wright
February 6, 2019 — 3.54pm
Political rhetoric and economic reality are on a collision course.
Prime Minister Scott Morrison has warned voters of economic headwinds in an effort to worry voters into sticking with his government.
He has been careful not to suggest a material weakening in the economy on his watch. That would be an acknowledgement that his government's policies are failing now, not a solution to some future problem.
In his first speech of the year, Reserve Bank governor Philip Lowe describes a shift in the balance of wage growth and inflation.
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Recession-free era could turn into something quite unpleasant
By Stephen Bartholomeusz
February 6, 2019 — 7.30pm
Philip Lowe’s address to the National Press Club underscores how finely-balanced our current economic circumstances appear to be.
So finely-balanced, in fact, that the Reserve Bank governor assesses the probabilities of either an increase or decrease in the cash rate as evenly balanced. Previously the central bank had considered it more likely the next move would be an increase.
It isn’t surprising that Lowe is cautious about the direction of the economy. While the starting point for his discussion of both the global and domestic economies is that the year just ended provided relatively strong bases, there are increased risks in both.
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Labor is exploiting misunderstandings about franking credits
By Tony Dillon
February 6, 2019 — 11.43pm
It disturbs me that an opposition leader who aspires to be our next Prime Minister seemingly has a lack of understanding of one of his signature policy proposals.
To quote Bill Shorten as reported in The Australian Financial Review on October 12 last year: “On the criteria that you own shares and giving people a refund when you haven’t actually paid income tax for the year that the refund covers, what's the economic theory behind that?” He was of course referring to the ALP’s policy to remove cash refunds in respect of excess franking credits.
That is, for those situations where investors have no other tax liability to which franking credits can be offset. This policy is akin to not refunding PAYG tax withheld from employees by an employer over a financial year, to the extent that the total tax withheld exceeds the final year tax liability, as determined by an individual’s tax return.
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Business outlook more uncertain: NAB survey
- By James Glynn
- Dow Jones
- February 7, 2019
Australian business conditions weakened sharply in the final months of 2018, with plans for new investment slowing amid signs that hiring is also set to cool off as the year progresses.
The National Australia Bank’s business conditions index stood at +8 in the fourth quarter, down from +13 in the third and +16 in the second quarter.
The business confidence index stood at +1 in the fourth quarter, down from +3 in the third quarter and +7 in the second quarter.
Forward looking indicators also point to potential further weakness, said Alan Oster, chief economist at NAB.
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Consumer anxiety rises, discretionary spending falls as households fret about future
By Tim Boyd
Updated Feb 7, 2019 — 4.40pm, first published at 2.29pm
Consumer anxiety has reached its highest level in three years, with households spending less on discretionary items as they worry about their finances and the future.
The National Australia Bank consumer anxiety index rose to 62 points in the December quarter, and close to 40 per cent of those surveyed said they had experienced financial hardship during the quarter – the highest level in two years.
Households said they had pulled back their spending on things like travel, eating out and entertainment due to heightened anxiety about their financial conditions.
The primary causes of anxiety through the December quarter were how to finance one's retirement and how to provide for one's family's future.
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Taxpayer funded inquiry used to raise money for Liberals
By Eryk Bagshaw
February 8, 2019 — 12.00am
The Coalition is using a taxpayer-funded inquiry into Labor’s franking credits policy to raise funds for the Liberal Party, as the committee prepares to meet with dozens of angry retirees for the final time before Parliament returns.
Letters to self-managed super fund trustees from Liberal MP Jason Falinski, seen by the The Sydney Morning Herald and The Age, show the House economics committee member using the inquiry to entice voters to donate to the Liberal Party in exchange for an audience with committee chair Tim Wilson.
Mr Wilson is facing calls to resign after shadow treasurer Chris Bowen accused him of "collusion" with private interests to maximise political pressure on a Labor policy.
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Reserve to slice growth forecasts amid signs of consumer anxiety
By Shane Wright
February 7, 2019 — 7.55pm
The Reserve Bank will slice predictions for the national economy and inflation on Friday as signs grow consumers are increasingly worried about holding down a job and the cost of living.
Amid fresh forecasts of falls for Sydney and Melbourne house prices, the central bank will release its quarterly monetary policy statement that will contain downgrades to economic growth and underlying inflation.
Reserve governor Philip Lowe this week revealed the statement will reduce expected growth for this year and next by a quarter percentage point while the RBA now believes it will take longer for inflation to return to its target band of 2 to 3 per cent.
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Abolish Billionaires. The world would be better off without them
By Farhad Manjoo
February 8, 2019 — 11.03am
Last October, Tom Scocca, editor of the essential blog Hmm Daily, wrote a tiny, searing post that has been rattling around my head ever since.
"Some ideas about how to make the world better require careful, nuanced thinking about how best to balance competing interests," he began.
"Others don't: Billionaires are bad. We should presumptively get rid of billionaires. All of them."
Scocca — a longtime writer at Gawker until that site was muffled by a billionaire — offered a straightforward argument for kneecapping the wealthiest among us.
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Australia catches a glimpse of China’s claws
- 7:48AM February 8, 2019
On the global stage there is now a rush for the “safety” of the US dollar which is forcing American bond yields towards new lows as the world fears we are spiralling towards an escalation of the US-China technology-driven trade war.
But here in Australia, our banking gymnastics obscure our own escalating battle with China which is starting to affect our key exports like education, coal and agricultural products. We depend on China but China is deliberately moving its itself to a position where Australia is dispensable and we do not recognise this incredibly dangerous development. It’s time to part the curtain.
My business friends tell me that when they talk to top government people in China, they are alarmed to discover that China is very unhappy with Australia. China has decided, without fuss, and on a step-by-step basis, to punish us for our bad behaviour. They have chosen to target our soft underbellies like students, coal, apartments and agriculture. The blows are not severe — more like a “rap on the knuckles”.
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Past four years hottest on record, says UN
- AFP
- 12:00AM February 8, 2019
The past four years were the hottest since global temperature records began, the UN reports in an analysis it says is a “clear sign of continuing long-term climate change”.
The UN’s World Meteorological Organisation said in November that 2018 was set to be the fourth warmest year in recorded history, stressing the urgent need for action to rein in runaway planetary warming.
Yesterday, it incorporated the final weeks of last year into its climate models and found that average global surface temperature in 2018 was 1C above pre-industrial baseline levels.
Boosted by a strong El Nino that normally tips the mercury northwards, 2016 remains the hottest year on record.
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Central bankers stymied as their normalisation window closes fast
By Jacob Greber
Updated Feb 8, 2019 — 8.19pm, first published at 6.00pm
Washington | Well, that was useful, while it lasted. The global monetary policy reset looks to have done its dash.
Central bankers around the world appear to be flat out shelving plans for rate hikes or reverse quantitative easing – from the big boys at the US Fed to minnows like Iceland.
It's happened seemingly in the blink of an eye, despite the fact they're nowhere near where they thought they'd like to be at this point in the economic cycle.
The next downturn will be a doozy if you're a central banker; robbed of the traditional "bazookas" of big interest rate cuts that were used after the global financial crisis to reset the global economy.
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The economy isn't in trouble, but let's cut interest rates anyway
By Ross Gittins
February 9, 2019 — 12.00am
Rather than merely acknowledging that the next move in interest rates is as likely to be down as up, I think the Reserve Bank should get on with cutting them. But not for the reason you may imagine.
There are plenty of people – many of them in the media – silly enough to believe a fall in interest rates is always good, and a rise always bad. They have a mortgage-centred view of the universe.
They forget that lower rates are bad news for people living off their savings – or saving for a home deposit.
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Reserve Bank cuts forecasts as fears grow over housing
By Eryk Bagshaw
February 8, 2019 — 3.54pm
The Reserve Bank has cut key economic forecasts as risks to the Australian and global economies increase and the odds of an interest rate cut rise, threatening the outlook of Treasurer Josh Frydenberg's first budget.
In a statement that will increase pressure on both Labor and the Coalition to explain how they will manage a slowing economy, the central bank cut its forecasts for economic growth for the next two years. The economy is now forecast to reach a top of just 2.75 per cent in 2020, down from 3.25 per cent in its last statement released in November.
The sharp deterioration comes on the back of concerns about house price falls in Sydney and Melbourne leading flow on effects in the rest of the economy. The RBA flagged that further drops could lead to limits on how much small businesses can borrow by using their house as collateral.
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The caretaker government where little care is being taken
By Jacqueline Maley
February 10, 2019 — 12.10am
Next week Parliament will resume for two short weeks before it rises, and it likely won’t sit again until the second half of the year, when we will probably have a Labor government.
As one prominent Liberal MP said to me recently: “There is not a single member of the government who thinks we are going to win the election”, and such fatalism can be freeing.
In the face of electoral failure, there is nothing stopping you from pursuing naked tribal and self interest.
If you know you soon have to vacate the joint, you may as well trash it.
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Storm-o-nomics: Why Australia should be more prepared for extreme weather
By Matt Wade
February 9, 2019 — 11.45pm
Another Australian summer has been marked by disasters triggered by extreme weather. Some came out of the blue, like the Townsville floods. Others unfolded gradually, like the drought afflicting much of eastern Australia.
But there’s one characteristic our natural disasters have in common: their high price tag when compared with the rest of the world.
The World Disasters Report 2018, prepared by the Red Cross, found Australia was ranked 10th in the world for the cost of damage caused by disasters between 2008 and 2017. It estimated our disaster damage bill over that decade to be a hefty $US27 billion ($38 billion).
A separate study by London-based charity Christian Aid rated Australia’s lingering drought as the world’s seventh most costly weather-related disaster of 2018 (between US$5.8 and $9 billion).
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Royal Commissions And Similar.
Scott Morrison's massive banking commission gamble
By Sean Kelly
4 February 2019 — 12:00am
The report, due to be released this afternoon, will be explosive. The list of sins – charging dead people fees and other acts of naked greed – will be damning. There is a fair chance it will suggest criminal charges should be laid.
The Banking Royal Commission's final report will be handed to the government today and made public after the close of trade on Monday.
But there was Scott Morrison, at the end of last week, seeming to pave the way for ignoring some recommendations. In principle the government is keen to accept them all, but in practice, the Prime Minister says, it depends on what is recommended. In one sense that’s a statement of the obvious. But it is also a massive gamble. Is he really preparing to defend the banks?
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Hayne's verdict on the banks in his own words
The royal commission into Australia's financial services industry has handed down its final report. Here are some of the key insights delivered by commissioner Kenneth Hayne.
By Kenneth Hayne
4 February 2019 — 5:01pm
"The conduct identified and described in the commission’s interim report and the further conduct identified and described in this report includes conduct by many entities that has taken place over many years causing substantial loss to many customers but yielding substantial profit to the entities concerned.
Commissioner Kenneth Hayne has delivered his verdict on Australia's scandal-ridden financial sector.
"Very often, the conduct has broken the law. And if it has not broken the law, the conduct has fallen short of the kind of behaviour the community not only expects of financial services entities but is also entitled to expect of them.
"In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business. Providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers.
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The banking royal commission final report at a glance
By Shane Wright
4 February 2019 — 4:40pm
High Court justice and royal commissioner Kenneth Hayne has declared the time has come to overhaul the Australian financial services sector.
In his damning final report into the industry that touches almost every Australian, Justice Hayne unveiled 76 recommendations which will challenge key aspects of banking, superannuation, financial advice and the rural lending industries.
Declaring that "choices must now be made", Justice Hayne also referred some of the nation's biggest company names to regulators for possible criminal or civil action for the way they treated their customers.
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Banking royal commission final report: Criminal referrals will shame finance sector
By The AFR View
Updated Feb 4, 2019 — 7:27 PM, first published at Feb 3, 2019 — 11:45 PM
Kenneth Hayne has done a powerful job in sharply clarifying the legal duties that financial service providers owe their customers and that identified breaches of those duties – such as charging people for perhaps a billion dollars or so of services they never received amid their insurance, superannuation or financial advice – should be more vigorously penalised.
"There is no doubt that money was taken from clients," concludes Commissioner Hayne. "Nor is there any basis for doubting that, when taken, the taker did not intend to return it to the client".
There can be no argument with the basic proposition that the professional duty to customers should form the bedrock of the business of providing banking and financial services.
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Banking royal commission final report: big banks emerge bruised but not broken in Hayne report
By James Frost
Updated Feb 4, 2019 — 7:44 PM, first published at 4:34 PM
The four pillars of the banking system will be unshaken by Commissioner Kenneth Hayne's final report, which leaves the core businesses of the big four bruised, but not broken from a humiliating public inquiry.
The report stops well short of fears of forcibly separating banks from financial advice divisions or making narrow recommendations for how bankers are paid.
A key proposal to shake-up mortgage broker pay is even expected to further enshrine the dominance of the big four banks, and was the only one of the 76 changes to split the two major political parties.
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Never fear, Hayne is a new start – and not just for the banks
By Ross Gittins
5 February 2019 — 10:57am
If you think the banking royal commission’s damning report means you’ll never again be overcharged or otherwise mistreated by a bank, you’re being a bit naive. If you’re hoping to witness leading bankers being dragged off to chokey, you’ll be waiting a while.
But if you think that, once the dust has settled, we’ll find little has changed, you haven’t been paying attention.
For those looking for massive structural change in the wake of the Banking Royal Commission, an overhaul of the regulators or a list of heads on sticks, Commissioner Hayne's verdict may have disappointed, says Adele Ferguson.
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Banking royal commission failed on essential financial advice reform
- February 5, 2019
Kenneth Hayne’s final report was a stiff and eloquent ticking off of the financial services industries. But it is also a failure.
Specifically, his decision to not call for the separation of product and advice is both inexplicable and egregious. Another significant failure is that he has nothing to say about percentage fees and the high cost of financial advice. In fact, he seems to applaud it.
Overall, Hayne’s report was well summed up by UBS’s bank analyst Jonathan Mott: it “fell well short of market expectations”. And none of the 76 recommendations “by themselves will have a material financial impact on the banks”.
You might expect an analyst to celebrate that, but far from it: “We are concerned that ensuring lasting cultural change over the years may be difficult, especially as management and Boards rotate,” Mott says.
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Rewards bring out the Dibber dobbers
- 12:00AM February 5, 2019
At primary school I recall children mocking each other with the epithet “dibber dobber”. “Dibber dobbers wear nappies” was occasionally thrown around the playground, less as an analytical or empirical point, more as an expression of disapproval. It turns out dibber dobber is an Australianism according to Green’s Dictionary of Slang, which defines the noun as a telltale or whistleblower.
There aren’t many examples of great Australian whistleblowers. In its 1000-page interim report, the banking royal commission referred to only three: one at Commonwealth Bank in 2010, and two at National Australia Bank in late 2015. For a report that unearthed volumes of cases of egregious behaviour across multiple firms, three isn’t many, given the big four banks plus AMP have a total of almost 160,000 staff.
Surely hundreds, if not thousands, of people knew about breaches, but Australia doesn’t have a culture of dobbing.
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Banking royal commission: Shorten inherits a powerful legacy
- 12:00AM February 5, 2019
The Hayne final report gives the 2019 election a devastating framing — who is responsible for a bank and financial system plagued by systemic misconduct and who is best to fix it?
Josh Frydenberg pledged action on all 76 recommendations, said restoration of trust was the priority and “the banking sector must change and change forever” — essential steps to protect the Coalition from the fatal danger of untenable ethical misbehaviour on its watch.
While the Morrison government and Labor were on the same page in offering broad endorsement of the Hayne recommendations, Bill Shorten inherits a powerful legacy — Labor is vindicated in its call for the royal commission and will deploy its findings as condemnation of the government that resisted this inquiry for so long.
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Banking royal commission: Where NAB went wrong on fee for no service
By James Eyers
Feb 5, 2019 — 11.00pm
It was the moment the penny dropped for the corporate regulator: the fee-for-no-service scandal, which has rocked the banking and wealth sector to its core, could be an issue for the criminal law.
Nicole Smith, the former chairman of National Australia Bank trustee NULIS, was in the witness box last August. The royal commission was in the process of exposing NAB for charging more than 200,000 customers millions of dollars in fees even though it hadn't provided them with any advice.
Commissioner Kenneth Hayne turned to Smith. He asked whether she'd considered that taking money to which there was no entitlement raised a question of the criminal law.
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Banking royal commission: NAB misjudged Kenneth Hayne
Feb 5, 2019 — 7.45pm
National Australia Bank seem to have got it wrong on Commissioner Kenneth Hayne from the very beginning.
Despite initially being at long odds to be the worst bank, there have been a litany of mis-steps – from day one through to CEO Andrew Thorburn's long service leave and caveated apology on Tuesday – all while bank executives remained overconfident they would come through unscathed.
On the first day of hearings in March last year, NAB earned the wrath of Hayne for failing the 50-page homework assignment, telling NAB's counsel Wendy Harris QC and chief legal counsel Sharon Cook they had failed to "grapple with the task set by your commissioner to provide a comprehensive response".
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'Why wait': challenge laid down to the banks and Parliament
By Adele Ferguson
6 February 2019 — 12:00am
Graeme Samuel, who will spearhead a root and branch review of the prudential regulator, has set a challenge for the banks.
He wants them all to sign up to a banking code, enforceable by the corporate cop, where they agree to conduct their business in accordance with the recommendations set out in the final report into the royal commission.
For those looking for massive structural change in the wake of the Banking Royal Commission, an overhaul of the regulators or a list of heads on sticks, Commissioner Hayne's verdict may have disappointed, says Adele Ferguson.
“Why wait up to two years for changes when they can do it today?” he said.
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The banks haven't escaped unscathed, quite the contrary
By Stephen Bartholomeusz
5 February 2019 — 7:45pm
The general reaction to the banking royal commission’s final report seems to be that, with the jarring exception of National Australia Bank’s Ken Henry and Andrew Thorburn, the major banks got off lightly.
That’s a narrow and distorted view of how the majors have been affected by, not just the recommendations in the final report, but the entire commission process and, even more significantly, the lead-up to it as they and the federal government tried to stave off the calls for it to be established.
Both the slap the royal commissioner, Kenneth Hayne, gave Henry and Thorburn and the impact of the commission on the majors have to be seen in context.
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What the royal commission proposals mean for your money
By Stephen Miles
5 February 2019 — 3:37pm
You've heard all the horror stories of major misconduct and possible illegal activity by some of our largest financial services firms in the banking royal commission.
Kenneth Hayne singled them out in his 950-plus-page final report, released on Monday, where he made 76 recommendations for sweeping reforms across the industry.
However, bear in mind they are only recommendations. Any changes still need to be implemented through government legislation. That doesn't mean enacting them exactly as the report suggests.
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It wasn’t broken, so Hayne didn’t have to fix it
- 12:00AM February 6, 2019
Kenneth Hayne was only meant to examine misconduct in the financial services industry, yet the market whipped itself into a frenzy expecting him to fix an industry that actually wasn’t necessarily broken.
An ethical and cultural wasteland, yes, but not a complete train wreck.
Yesterday’s rally in bank stocks was the start of the undoing of about $7 billion in short positions against the industry.
On an individual stock basis the short positions are not huge, with Commonwealth Bank leading at a 2.1 per cent short position at the end of January, and after underperforming the market by some 3.5 per cent over the past six months yesterday’s
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Why you're better off paying a mortgage broker yourself
By Jessica Irvine
February 7, 2019 — 12.00am
The word “adopt” has a fairly clear meaning to most people. When you adopt a child, you take sole custody of caring for and nurturing that child as your own, allowing him or her to flourish to their fullest extent. You don’t adopt a child “in principle”. Nor do you simply agree to “act on” that child.
But these are precisely the sorts of weasel words now emerging from both the Coalition and Labor as they seek to avoid adopting Royal Commissioner Kenneth Hayne’s most controversial recommendation.
Namely: the complete abolition of conflicted commission payments by lenders to mortgage brokers.
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Savings cuts create aged-care ‘losers’
- 12:00AM February 7, 2019
Aged Care Minister Ken Wyatt was handed a departmental briefing report showing the “winners and losers” from the Coalition’s $2 billion savings drive in the aged-care sector shortly after Scott Morrison announced a royal commission and denied funding cuts.
Documents obtained by The Australian under Freedom of Information laws show the proportion of “losers” almost tripled to 53 per cent following the budget savings revealed in late 2015.
In the three-year period to 2018, aged-care services that had been classified as “winners” almost halved to 47 per cent, according to the brief sent to Mr Wyatt.
A series of “hot issue briefs, question time briefs and general briefs” sent to Mr Wyatt last year acknowledged the budget hit to the Aged Care Funding Instrument — which is the basic taxpayer care subsidy paid to all nursing homes — together with “increasing cost pressures will be putting pressure on the sector”.
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NAB's Andrew Thorburn, Ken Henry resign, Phil Chronican named acting CEO
Updated Feb 8, 2019 — 7.55am, first published at Feb 7, 2019 — 3.48pm
NAB's embattled chief executive Andrew Thorburn and chairman Ken Henry have capitulated to growing pressure and announced their resignations as the crisis of confidence swirling around the bank came to a head.
The bank has tapped veteran banker Phil Chronican to replace Mr Thorburn from February 28 as acting chief executive, while Dr Henry will remain in his role until a new leader is found.
The bank will also begin a clean-out of the board in the hope of rebooting the culture after a damaging period that saw the bank lurch from one crisis to the next.
Mr Thorburn said it had been a tough week and over the last 24 hours he had come to a realisation that the time was right to leave.
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Banking royal commission: Professor Ian Harper 'chastened and rebuked' by Hayne
By Patrick Durkin
Feb 7, 2019 — 11.00pm
One of the key architects of Australia's financial system says he feels chastened and rebuked for underestimating bad conduct by the banks, and acknowledges that the regulatory system needs to work more vigorously.
However Professor Ian Harper, a member of the Reserve Bank board who helped to design the financial system as part of the Wallis Inquiry 22 years ago, warned the federal government against adopting two key recommendations of the banking royal commission which he said would undermine the twin peaks model "fire-tested" in the global financial crisis and endorsed by multiple inquiries.
Professor Harper has reservations about Commissioner Kenneth Hayne's recommendation to try to spread oversight of the superannuation system across both the Australian Securities and Investments Commission and Australian Prudential Regulatory Authority, and warned that the creation of an oversight body for the regulators risked blurring the twin peaks into one.
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Banking royal commission: what it means for you
By Nicole Pedersen-McKinnon
Feb 8, 2019 — 11.00pm
One of the few unresolved consumer questions about the royal commission report Kenneth Hayne delivered to the government this week is: "Who pays for the past?"
Although the nearly 1000-page report referred 24 entities and companies for either civil or criminal proceedings, there's still a sense that the big banks, in particular, are getting off scot-free.
There's also a knowing weariness, with an election imminent, about the political argy-bargy over the 76 sweeping recommendations to come. Labor has committed "in principle" to every single one, while the Coalition has vowed to "take action" on the lot.
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The exquisite irony of pollies condemning bankers
By Peter Hartcher
February 9, 2019 — 12.00am
Is it just me, or has anybody else noticed the exquisite irony? The irony that the political parties are in a frenzied bidding war of indignation at the banks for abusing the trust of the people.
The politicians condemning the bankers? Roy Morgan's survey of trust in Australia's professions rates bank managers at 33 per cent. This is pretty poor compared to public trust in nurses, who, at the top of the scale, enjoy a well-deserved 94 per cent. But federal MPs score half that, a mere 16.
The banks abused the people's trust and took Australians' money. The political parties abused the people's trust and took their democracy. Yet the political leaders managed to spend the week damning the banks without any evident self-reflection.
The moment the Hayne royal commission delivered its recommendations, Labor and Liberal entered a fast-paced auction to see which of them could be tougher on the banks. "We've been taking action when it comes to the financial sector now for years," bragged Scott Morrison on Tuesday. "In fact, our actions have already gone beyond what the royal commission has actually recommended, because we've been taking action on this issue for years." Makes you wonder why Ken Hayne wasted his time.
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Decisions for NAB, which failed to heed the lessons of leaders past
- 6:35PM February 8, 2019
That was the second time NAB lost both its chief executive and chairman at once. The other time was in February 2004, when Frank Cicutto and Charles Allen both walked the plank after some foreign exchange traders in the bank lost $360 million and tried to cover it up.
The traders got the sack promptly of course, but why did the CEO and chairman have to go too? Because APRA said that “cultural issues were at the heart of the failings” that had led to the losses, and after inspecting the other banks concluded that NAB was the worst of them.
Director Cathy Walter led a board revolt and Allen and Cicutto were overthrown.
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Federal Government commits to 'significant' $662 million aged care funding boost
By Herlyn Kaur
10 February, 2018
The Federal Government will provide an additional $662 million in funding for aged care and senior Australians in what it is calling a "significant investment".
Key points:
- The funds will be spread over a range of aged care facilities, including care for veterans with mental health conditions
- Aged Care minister Ken Wyatt said this plan is "outside of what will come from the Royal Commission"
- The Government's statement referenced the national aged care quality indicator program, which it says monitors the use of physical restraint
The bulk of the money will go towards two key initiatives, with more than $280 million committed for 10,000 additional home care packages and $320 million allocated for aged care providers to help increase support.
Aged Care Minister Ken Wyatt said the investment aims to speed up access to home care and reduce the number of people on waitlists.
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Elderly get $662m boost for at-home care
- 6:25AM February 10, 2019
The government will unveil a $662 million package to enable the elderly to live in their homes for longer rather than move into aged-care homes. The funding to be unveiled by Aged Care Minister Ken Wyatt will pay for 10,000 home care packages that provide a range of services including nurses and aids, or personal services such as showering, gardening and meals. Sunday’s announcement comes as the first hearings of the Royal Commission Into Aged Care are set to begin on Monday.
Prime Minister Scott Morrison said looking after the elderly was the government’s top priority.
“These places give older Australians the choice about how and where they want to live,” he told News Corp Australia.
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National Budget Issues.
Auction numbers down by 33pc, results 'still weak'
03 Feb 2019 — 11:42 AM
The number of homes taken to auction in the first weekend of the year tumbled by a third as the housing correction gathered pace.
There were just 526 auctions across the country compared with 790 the same weekend last year, according to CoreLogic.
Analysts dismissed the slight tick-up in the national preliminary clearance rate to 47.8 per cent compared with December's low 40 per cent range with just 126 auctions held in Sydney and 156 in Melbourne.
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Hey pollies: weak wage growth won't fix itself
By Ross Gittins
4 February 2019 — 12:01am
The economy’s prospects are threatened by various risks from overseas – about which we can do little – and by continuing weakness in wage growth – about which the two sides contesting the May federal election have little desire to talk.
In his major economic speech last week, Scott Morrison gave wages only a passing mention: “by focusing on delivering a strong economy we create the right environment for wages growth, which we are now beginning to see, and more will follow”.
Actually, you need a microscope to see any improvement. The microscope shows that most of it is explained by the Fair Work Commission’s hefty 3.5 per cent increase in minimum wage rates last June.
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Health Issues.
'Extremely concerning': state urged to ban junk food advertising
By Esther Han
4 February 2019 — 12:05am
Pressure is mounting on the NSW government to ban junk food advertisements on public transport, with new research showing children who catch the bus or train to school are exposed to 4.5 ads spruiking chips, donuts and ice cream per trip.
With 21 per cent, or 247,000 children, in NSW being overweight or obese, Cancer Council NSW is urging the government to remove junk food ads from state-owned property.
In its latest study, researchers mapped out trips taken by foot (average 600m), by bus (2-3km) and by train (one stop) to 21 schools across Sydney, from Fairfield to Freshwater.
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Experts setting drug standards have links to drug companies: report
By Stuart Layt
5 February 2019 — 12:01am
One in five of the Australian medical experts tasked with deciding which drugs are recommended for use by doctors have undisclosed links to drug companies, an investigation has found.
In a paper published in the journal BMJ Open on Tuesday, the report’s authors identified 83 experts with potential conflicts of interest that they had not disclosed, out of a total of 402.
Bond University academic researcher Dr Ray Moynihan, one of the report’s authors, said in many cases there was no actual requirement for the experts in question to disclose their conflicts of interest.
“They didn’t do anything illegal, and in fact were probably doing what they thought was the right thing,” Dr Moynihan said.
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Coalition ups MRI machine pledge by 20
- 12:00AM February 5, 2019
A further 20 Medicare-funded MRI machines have been promised by the Morrison government, bringing the Coalition’s total commitment to 50.
A September announcement of 30 new machines — topping Labor’s promise of 20 — was so well received that Health Minister Greg Hunt yesterday promised 30 more. “In response to overwhelming demand of over 490 applications, I am pleased to announce that our government will invest a further $150 million, bringing the total investment to $375m over the forward estimates,” he said.
The cost to Medicare of a fully licensed MRI machine can vary by about $500,000 a year depending on its location, which means the pre-election promises also come at a significant financial risk to the federal budget.
Mr Hunt said he would shortly announce the successful locations.
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Sydney hospital faces trainee ban over junior doctor scandal
By Kate Aubusson
6 February 2019 — 8:45am
A specialist unit at Bankstown Hospital could lose the privilege of training young surgeons after a junior doctor was hospitalised for exhaustion, despite repeated pleas for help.
Dr Yumiko Kadota has ignited a firestorm of outrage from surgeons and other medicos, describing her dangerous workload in the plastic and reconstructive surgery department at the south-west Sydney hospital that left her physically and mentally "broken".
Her case has exposed the issues affecting unaccredited registrars, who are not afforded the protection of specialist colleges.
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The simple change we can make to reduce the risk of depression
By Sarah Berry
6 February 2019 — 12:01am
There is growing evidence that the way we fuel our bodies affects not just our physical health but our psychological health too.
But, while plenty of diets purport to improve mood, a new Australian study has come back with a simple message: if you want to feel better, eat less junk.
The large study, published in the journal Psychosomatic Medicine on Wednesday, found a healthier diet can significantly improve symptoms of depression.
Researchers at Western Sydney University analysed dietary interventions in nearly 46,000 people participating in 16 different trials across the world. They found no one health diet worked better than another, rather, simply replacing junk food with whole foods alleviated low mood.
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Exhausted surgeon dismissed as an 'emotional female'
By Kate Aubusson
5 February 2019 — 5:53pm
A young surgical trainee dismissed as “an emotional female” was made to work up to 70 hours a week and on-call for seven days straight at a Sydney hospital.
Dr Yumiko Kadota was hospitalised for six weeks for sleep deprivation last year after an extreme case of junior doctor exploitation, with her repeated pleas for help ignored by senior staff at Bankstown-Lidcombe Hospital.
“You are killing yourself for a job that would replace you within a week if you dropped dead,” the registrar warned in a blog post published this week.
Dr Kadota's case has angered Health Minister Brad Hazzard who called in the hospital’s senior management on Tuesday.
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Working 65 hours a week good for young doctors, college says
- 12:00AM February 6, 2019
Young doctors should work up to 65 hours a week for their professional development says the Royal Australasian College of Surgeons, despite evidence they are then most at risk of making mistakes because of fatigue.
Amid an ongoing debate over doctor welfare, the college has told a parliamentary committee inquiry in South Australia that restricting trainees to clinical practice of 38 hours a week would undermine their development.
“RACS believes a 55-65 hour working week, spread across a seven-day period with sufficient uninterrupted breaks during that time, is appropriate for trainees to gain the knowledge and experience required by the training program,” its submission states.
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Medicare’s unwanted $110m rebate ‘windfall’
- 12:00AM February 7, 2019
Medicare has quietly accumulated $110 million in rebates owed to Australians who haven’t managed to make electronic claims since cheques were phased out in 2016.
About 670,000 people have rebates that have gone unclaimed after they personally paid for GP and specialist services upfront and failed to chase up the Medicare contribution.
By not providing Medicare with their bank account details, they have short-changed themselves and inadvertently added to rising out-of-pocket costs in healthcare.
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Plan to expand mental health sessions overlooks most needy, warns psychiatrist
By Dana McCauley
February 7, 2019 — 7.55pm
High-profile psychiatrist Ian Hickie has blasted the Medicare review's mental health reference group, saying a report calling for rebates to be extended to people "at risk" of being mentally ill has got it wrong.
Professor Hickie, from Sydney University's Brain and Mind Centre, said the report's recommendation for a new item number aimed at increasing access to "preventative" psychological therapy sessions, had failed to address the more serious problem of poor outcomes for people with significant mental disorders.
"We have this problem in Australia of thinking if everyone gets a little bit that's better than, actually, people getting better," he said.
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Pharma kickbacks stay under the radar
- 12:00AM February 8, 2019
More than a third of the money spent by pharmaceutical companies promoting drugs to doctors, healthcare providers and consumer groups may have gone unreported after changes to Australia’s system of self-regulation.
An analysis of more than 900 transparency reports found a 34.1 per cent reduction in spending disclosed by companies in industry body Medicines Australia in the year after the changes.
Researchers from the Charles Perkins Centre at the University of Sydney found Australia’s self-regulatory model was not only restricted and difficult for consumers to use, it was falling behind other countries.
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'Kill myself or leave': female surgeons reveal horrifying conditions
By Kate Aubusson
February 8, 2019 — 2.45pm
Sexual harassment, bullying and a contempt for motherhood are driving aspiring female surgeons out of operating theatres.
Women training to become surgeons have seriously contemplated suicide, been invited to fondle the nipples of a male colleague and dismissed as childbearers undeserving of medical training, a series of in-depth interviews reveals.
The shocking case of trainee surgeon Dr Yumiko Kadota is not a one-off, new study shows.
The testimonials confirm the shocking case of surgical trainee Dr Yumiko Kadota is not an isolated one, but an endemic problem in Australian hospitals.
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Latest mental health productivity data reveals scale of reform ahead
By Dr Sebastian Rosenberg
February 9, 2019 — 12.00am
Mental health is surely one of the most investigated areas of government. There were 32 separate statutory inquiries into mental health just between 2006 and 2012. We currently have a royal commission into aged care, including the mental health care of people in nursing homes. We also have a royal commission into mental health in Victoria. This inquiry has already drawn 4500 submissions, and that’s before the terms of reference have been determined!
The other major current inquiry is by the Productivity Commission. When he announced it, Treasurer Josh Frydenberg stated that one key reason for the government’s interest was that mental health services were costing government more than $1 million every hour. There is clearly political and community concern to ensure value for money from this expenditure.
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International Issues.
Federal Reserve at early stages of pivot towards next easing cycle
By Michael Mackenzie
Updated 03 Feb 2019 — 11:03 AM, first published at 10:54 AM
The dollar's status as the world's reserve currency and the vast US government bond market ensures the Federal Reserve's status as the dominant central bank. Its policy decisions and guidance matter immensely, particularly for emerging market economies that have plenty of dollar-denominated debt to service.
A U-turn on monetary policy last week week from the Fed has been billed by some as a twin capitulation to both financial markets and President Donald Trump's incessant demands that it should stop raising interest rates.
Such critiques miss the burning issue: a decade after the financial crisis, the global economy is slowing much faster than expected, and debt levels have ballooned, particularly in EM and in the corporate world. Many investors still pin their hopes on Beijing stimulating economic activity this year, but do so as China is enduring a credit crunch and trying to prevent a trade war with Washington.
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Stockpiles, relocations, regulations: Britain, EU brace for no-deal Brexit
03 Feb 2019 — 2:25 PM
London | The drumbeat of preparations for Britain to crash out of the European Union with no deal on March 29 has intensified on both sides of the Channel, raising the stakes in British Prime Minister's high-risk fortnight of poker with the Continent.
The EU has joined Britain in issuing a blizzard of guidance and policy to cover the basic terrain if the two sides can't strike a deal before the clock runs out – illustrating the sheer scale and scope of potential disruption to current business procedure and practice.
The step-up in preparations comes as British Prime Minister Theresa May readies proposals for Brussels on tweaks to her Brexit deal that she still hopes could get it through her parliament when the next crunch vote takes place on February 14.
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Don't get caught in the middle when great powers collide
By Kirsty Needham
Beijing: It is the hypothetical question that hangs like a cloud over Australians in China in these uncertain times of US-Sino trade wars, as middle powers get caught in the middle.
What if Huawei executive heiress Meng Wanzhou had been transiting through an Australian airport, instead of Canada, when the United States issued her arrest warrant?
Former solicitor-general of Australia, Gavan Griffith, says the Canadian situation could happen in Australia.
Griffith, a Queens Counsel who works from London on international disputes, and was Australia's solicitor-general for 14 years, says if the United States made a proper extradition request, "Australia would be required to detain".
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Merkel offers PM May a crumb of comfort in search for Brexit compromise
Feb 5, 2019 — 3:53 AM
London | German Chancellor Angela Merkel has offered a glimmer of hope to British Prime Minister Theresa May that a cross-Channel compromise might be found on the vexed issue of the Northern Irish border, potentially allowing an 11th-hour Brexit deal to go through before the March 29 deadline.
Dr Merkel's comments on Brexit at a press conference in Tokyo late on Monday (AEDT) might fall short of what Mrs May needs to win over her backbench rebels next week, but sent a signal from Europe's most powerful leader that there's room for dialogue.
"We want to do everything to ensure that a no-deal [Brexit] doesn't happen," Dr Merkel said. She ruled out reopening the withdrawal treaty, governing Britain's exit next month, but said the controversial Northern Ireland 'backstop' could be addressed through changes to the separate framework agreement that sets parameters for the two countries' future relationship.
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Worst crisis since Cold War brewing, but no one's paying attention
By Peter Hartcher
5 February 2019 — 12:00am
A peculiar complacency has settled on the world over America's hardening confrontation with China. The world's two greatest powers are punishing each other with harsh sanctions as they renegotiate their relationship in talks that broke up last week with the barest of a beginning of an agreement.
It is "the most significant current event" in the world, according to the economics editor of London's Financial Times, Martin Wolf. The Brexit saga is trivial by comparison, yet gets far more attention thanks to its political theatrics.
Chinese billionaire tech entrepreneur Jack Ma had promised Donald Trump that his Alibaba group would create a million American jobs, but last year he cancelled: "The promise was made on the premise of friendly US-China partnership and rational trade relations. That premise no longer exists today." The friendly partnership is gone; trade relations are no longer rational.
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Bloodbath averted: The world economy may have been saved in the nick of time
By Ambrose Evans-Pritchard
6 February 2019 — 7:15am
When the US Federal Reserve suddenly abandons monetary tightening so late into the economic cycle, a recession usually follows within three to six months. The damage below the waterline is by then already irreversible.
There are crucial exceptions to this post-war rule of thumb. It did not hold after the Fed retreat during the East Asian crisis of 1998 or the pause after the Chinese currency scare in 2016.
Pre-emptive action came soon enough to keep the cycle alive, and to fuel another blistering rally on global asset markets. In both cases low inflation gave the Fed latitude.
It is a fair bet that last week's double-barrelled capitulation by the Fed on rate rises and quantitative tightening (QT) will again rescue the crumbling world economy. It should avert a bloodbath that was starting to look all too likely late last year.
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Pope says he is committed to ending clergy abuse of nuns
By Philip Pullella
6 February 2019 — 9:50am
Pope Francis has urged predator priests who have sexually abused minors to turn themselves in at his traditional Christmas address to the Vatican.
Abu Dhabi: Pope Francis has said he is committed to stopping the abuse of nuns by priests and bishops, some of whom had used the women as sex slaves.
Francis made his comments on Tuesday on a plane returning from Abu Dhabi in response to a reporter's question about an article last week in a Vatican monthly magazine about the abuse of nuns in the Catholic Church.
Recently more nuns, encouraged by the #MeToo movement, have been coming forward to describe abuse at the hands of priests and bishops. Last year, the International Union of Superiors General, which represents more than 500,000 Catholic nuns, urged their members to report abuse.
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Americans have finally wised up when it comes to Trump
By Jennifer Rubin
5 February 2019 — 3:01pm
Americans have learned through experience to disregard most of what President Donald Trump says. The days of Trump snookering most of the people most of the time are over.
According to the latest CBS News poll, 66 percent of Americans don't think Trump should declare an emergency to build the wall. While 58 percent think the economy is very or somewhat good, when asked "how the country overall is doing compared to a year ago, more say the country is worse off (50 percent) than better (28 percent)." Large majorities believe Trump has not brought manufacturing jobs back to the United States (55 percent), made the US borders more secure (62 percent), reduced the influence of donors and lobbyists (71 percent), been a role model (73 percent) or tried to unify Americans (65 percent).
Majorities have little or no confidence in his ability to apply business-world ideas to government, handle North Korea negotiating or strike deals with Congress (58 percent don't think now is the time for Trump to have another summit with North Korean leader Kim Jong Un, and 82 percent think Pyongyang has expanded or kept its nuclear weapons program).
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India will continue to rise as an economic force, regardless of its politics
By Martin Wolf
Updated Feb 6, 2019 — 11.36am, first published at 11.15am
India is an important country. It will soon be the world's most populous. It has the world's fastest growing large economy. Not least, it remains a vibrant democracy. What happens in India is going to affect everybody on the planet.
What, then, are its economic prospects? Has Narendra Modi, its prime minister, made a big difference? How important are the general elections due in the next few months?
The decisive change in India's economic trajectory came in 1991, when a foreign currency crisis caused a fundamental shift away from the "license Raj" towards a market-led economy, but one with a strong role for public ownership, and constant government interference.
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Banks don't know what to do about Democrat firebrand Alexandria Ocasio-Cortez
By Pete Schroeder and Michelle Price
Updated Feb 7, 2019 — 10.43am, first published at 7.05am
Washington | Court, avoid or sideline?
Barely a month into the new Congress, financial lobbyists in Washington are already strategising how to handle the star power of rookie Democrat lawmaker Alexandria Ocasio-Cortez.
The Democratic Socialist and Wall Street critic joined the 60-member House Financial Services Committee in mid-January and more than a dozen lobbyists interviewed by Reuters say the 29-year-old activist and former bartender is too high-profile to ignore.
Richard Hunt, chief executive of the Consumer Bankers Association, said he had not encountered a lawmaker like Ocasio-Cortez in more than 20 years in Washington. "She has the ability to influence unlike a lot of other freshmen."
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Blood plasma scandal latest stain on China's medical products image
By Kirsty Needham
February 7, 2019 — 4.40pm
Beijing: China’s second biggest medical blood products company has been forced to issue an emergency recall for its blood plasma amid concern up to 12,000 units may be contaminated with HIV.
The latest medical scandal to hit China has seen the Shanghai Xinxing Pharmaceutical Company told to stop production after the discovery of HIV antibodies in its intravenous immunoglobin product.
The pooled blood plasma product is used to treat rabies, leukaemia and hepatitis.
The National Health Commission on Tuesday ordered hospitals to seal any products in the contaminated batch and monitor patients who had used it, as investigators were sent in.
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How did we get here? Venezuela's humanitarian aid standoff explained
February 9, 2019 — 11.37am
Caracas: Opposition lawmaker Juan Guaido declared himself Venezuela's interim president last month, vowing to oust Nicolas Maduro from power and end the once-wealthy nation's deepening political and humanitarian crisis.
Millions of Venezuelans have migrated, and those left behind struggle to afford scarce supplies of food and medicine. Guaido called upon the international community for humanitarian aid. The world watches now whether Maduro's government will let the first shipments from United States cross its borders.
How did we get here?
Despite having the world's largest oil reserves, Venezuela is in a historic crisis after 20 years of socialist rule launched by the late President Hugo Chavez. Dozens of political parties that make up Venezuela's opposition have failed to mount a viable political challenge.
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Venezuela says US is delivering weapons to Maduro enemies
By Tim Johnson
February 8, 2019 — 5.05pm
Washington: Venezuelan authorities say a US-owned air freight company delivered a crate of assault weapons earlier this week to the international airport in Valencia to be used in "terrorist actions" against the embattled government of Nicolas Maduro.
An air freight company, 21 Air, based in Greensboro, North Carolina, operates the Boeing 767 aircraft that the Venezuelans allege was used in the arms transfer. The flight originated in Miami on Sunday.
The Boeing 767 has made dozens of flights between Miami International Airport and destinations in Colombia and Venezuela since January 11, a flight tracking service shows, often returning to Miami for only a few hours before flying again to South America.
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I look forward to comments on all this!
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David.
