October 24, 2019 Edition.
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Things seem to be going from bad to worse in the war between Turkey and the Kurds that has been unleashed by Trump pulling out the US forces from the area. This will be seen as the most ill-advised decision taken by Trump so far. As of now he is claiming a great win but I believe Syria and Russia are the winners and the Kurds serious losers.
After the parliamentary session on Saturday last week we are no further ahead and this week will be very interesting indeed! We have has more sittings and we now await the EU view on more time!
In Australia we continue to see policy paralysis on most issues that matter, with the Government in denial that the economy needs some help. Policy seems to be taking a back seat to pragmatism and some issues like Health Insurance costs are starting to cause trouble. Government secrecy is also on the agenda big time, and a few serious hypocrites have been revealed!
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Major Issues.
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If we're dumb, how come we're rich?
Despite what Harvard University might say, there is nothing smart about investing in things which don't play to our strengths.
Oct 14, 2019 — 12.00am
Australia’s exports are concentrated in iron ore, liquefied natural gas, coal, beef and wheat along with tourism and higher education. This lack of “complexity” should have spelled trouble, according to the big database from the Harvard Kennedy School’s Centre for International Development. After all, Australia’s Economic Complexity Index has fallen from 57th in the world in 1995 to 93rd (out of 133 countries) in 2017.
Yet, while losing “complexity”, Australia has climbed the global income rankings to boast the eighth highest GDP per capita in the world, according to the very same Atlas of Complexity. While we’ve supposedly been getting “dumber”, we’ve somehow gotten richer. The reason is that the Harvard Kennedy School’s complexity index is pretty dumb itself: on what other score is Australia below Namibia, a country where much of the population relies on subsistence agriculture? Australia has become high income by concentrating on what it naturally can do best, as economist David Ricardo worked out 200 years ago. The Harvard types may have backed those who called on Australia to strategically bet on developing a computer chip industry during the tech boom of the early 2000s. Instead of that dead end, we were adept enough to work out how to dig up and transport a tonne of iron ore from the Pilbara to China for $20. That has made Australians richer than when they rode on the sheep’s back.
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China tensions to dominate parliament
Oct 14, 2019 — 12.00am
Local farmers have emerged unscathed from Donald Trump's trade truce with China, which focuses on increasing sales of soy beans and pork, commodities Australia does not export in significant quantities.
As Trade Minister Simon Birmingham said easing US-China trade tensions would help boost global economic confidence, the strains between Beijing and Canberra will feature heavily as Parliament resumes on Monday.
Opposition foreign affairs spokeswoman Penny Wong will accuse Scott Morrison of politicising foreign affairs for domestic gain, hampering a bipartisan approach to dealing with China's ambitions.
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Radical plan to charge green players to access grid
Oct 14, 2019 — 12.01am
Wind and solar farm developers would have to pay some of the cost of connecting into the transmission grid and would buy rights to get greater control over access to the network under a proposed radical overhaul of the system for adding new generators and batteries.
The blueprint released on Monday by the Australian Energy Market Commission aims to reduce wastage caused by congested networks and cut unnecessary costs for customers, a major theme of the Australian Financial Review National Energy Summit last week.
Investors in renewable projects have become increasingly concerned about bottlenecks in remote and weak parts of the grid that have cut revenues at several wind and solar farms and driven an estimated $1 billion of write-downs across the sector.
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Why viewers will start picking video winners
Oct 14, 2019 — 12.00am
Netflix, Stan, Amazon Prime, Foxtel Now, Disney+, Apple TV+, Kayo Sports and Optus Sports are some of the headline streaming services in an increasingly fragmented Australian content market.
The disaggregation of content in Australia has ramped up in the past year, with more subscription video on-demand (SVOD) services expected either imminently - like Disney+, Apple TV+ and Foxtel's drama and entertainment streaming service - or in the near future, such as NBCUniversal's Peacock.
"Audiences will be more confused, not less confused, as the market continues to add more services," Deloitte national media sector leader Adam Power told The Australian Financial Review.
"I think what we’ll see is that it’s the viewers who are going to determine what premium content is because they’ll be voting with their wallets, or credit cards, each month. I don’t think anyone is going to be paying for seven or eight SVOD subscriptions per month, so people are going to have to make choices, and there will be winners and losers out of that."
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New disciplinary body for financial advisers
Oct 14, 2019 — 12.00am
Six peak groups representing financial advisers have withdrawn plans to create a new entity to monitor adherence to ethical standards after the federal government said it would establish a new financial adviser disciplinary body as recommended by the Hayne royal commission.
After Treasurer Josh Frydenberg and Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hune, said on Friday the new disciplinary body would be set up in early 2021, the six peak groups withdrew their application for ASIC to approve a new entity, Code Monitoring Australia (CMA), to oversee ethics and education standards.
The adviser associations – Financial Planning Association of Australia, Association of Financial Advisers, FINSIA, SMSF Association, Stockbrokers and Financial Advisers, and Boutique Financial Advisers –have previously criticised the creation of a new government disciplinary body as excessive.
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PM's confidential talking points inadvertently sent to journalists
By David Crowe
October 14, 2019 — 8.56am
The Morrison government has fumbled an attempt to prepare its MPs for a volley of attacks over border protection, foreign policy and religious freedom, inadvertently releasing its internal talking points to the media in a Monday morning mistake.
The talking points highlight the government's sensitivity on key issues for the resumption of Parliament this week, including the arrival of 95,000 asylum seekers by air over the past five years.
The messages, meant to be confidential, also include a refusal to intervene in the extradition of WikiLeaks founder Julian Assange and a defence of Liberal MP Gladys Liu over her links to Chinese Communist Party associations.
The Prime Minister's Office issued the talking points early on Monday with a series of assertions about border protection policy after days of Labor attacks over the growth in arrivals by air.
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Australia, we have become a nation of docile submissives
Sean Kelly
Columnist and former adviser to Labor prime ministers Kevin Rudd and Julia Gillard.
October 14, 2019 — 12.00am
This time two years ago, we were in the midst of the marriage plebiscite. Along the way, commentators offered the Yes campaign plenty of free advice. If it lost, it would be because of its aggressive tactics. They were putting off mainstream voters. This was just not the way to persuade people. In the end, of course, the Yes vote won, and it wasn’t even close.
Around this time 14 years ago, The Latham Diaries had just been released. Mark Latham, who had stood down from the Labor leadership earlier that year, had sharp and nasty things to say about his colleagues and his party. Fears were raised: this would distract from attacks on the government. The book would dog the party all the way to the next election. In the end, it did Labor little harm. Two years later, Kevin Rudd – whom Latham had savaged – led the party into government.
Those criticisms of the marriage campaign might sound familiar. That’s because they are being put to work again. This time their target is Extinction Rebellion, the global movement of protesters calling on parliaments to declare a climate emergency. Stop disrupting traffic, their critics say. You’re putting off precisely the people you need to persuade.
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Rate cuts are having a perverse effect on the economy
Oct 14, 2019 — 10.57am
Like most economists, I’d hate to see the unemployment rate head much higher than it is now.
That said, I also agree with a small but growing number of analysts who think the official cash rate has already been cut too far, and even lower rates will probably hurt more than help meet our longer-term economic challenges. The same goes for attempting to further lower already very low longer-term interest rates through RBA purchases of government and corporate bonds.
Every pet shop galah is now talking about infrastructure spending.
— David Bassanese
At 5.3 per cent, the unemployment rate is indeed higher than it need be. And with underlying inflation still sub-2 per cent, inflation concerns are certainly no barrier to further macro-economic policy stimulus.
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The rise and rise of class actions
Oct 14, 2019 — 4.30pm
Australia has another new growth industry. It means big money for relatively low risk. It already employs thousands of people, with job opportunities increasing. Its cost is relatively invisible to most people and usually borne by businesses with deep pockets.
Welcome to the rise and rise of class actions in Australia.
The rationale for class actions seems only fair and reasonable, of course. They provide people with strength in numbers - the chance for justice or compensation they would be unable or unlikely to pursue as individuals. From dangerous airbags to dodgy financial products to unsafe medical treatments, it offers a welcome “win for the little guy” against corporate wrongdoing or negligence.
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IMF slashes growth as PM rejects stimulus call
Oct 16, 2019 — 12.00am
Prime Minister Scott Morrison declared his budget surplus plan will not be "spooked" by international events, as the International Monetary Fund slashed Australia's economic growth forecast to just 1.7 per cent and advised world governments to unleash a spending stimulus.
The IMF's World Economic Outlook warned of a synchronised global slowdown to the weakest pace since the 2008-09 global financial crisis, as the world economy is pummelled by the US-China trade war that is inflicting a "sharp deterioration" in global manufacturing and trade.
The IMF – again – on Wednesday downgraded Australia's forecasts, slicing 0.4 of a percentage point off growth for 2019 and cutting the 2020 expected recovery rate by 0.5 of a percentage point to a below-average 2.3 per cent.
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Genuine climate crisis needs all hands on deck
Oct 16, 2019 — 12.00am
Australia will miss its 2030 Paris targets for reducing greenhouse gas emissions even with a carbon tax exceeding $100 a tonne that would push up electricity prices by another 75 per cent, according to the International Monetary Fund. In itself, this does not damn successive Australian governments for doing hardly anything to cut emissions. In fact, Australia has led the world in installing renewable energy generation, particularly rooftop solar, that now accounts for about one-quarter of energy generated. Instead, the IMF’s assessment of G20 nation climate change policies confirms that Australia faces one of the steepest bills for reducing emissions because of its economy’s traditional reliance on fossil fuels, as highlighted by Santos’s consolidation of northern Australian gas assets such as Darwin’s LNG plant. The most cost-efficient and fair instrument for reducing global emissions - a global carbon price - would likely still leave Australia with fossil fuel industries such as LNG exports demanded by a power hungry world.
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Politicians too poor at their jobs to fix poverty
Ross Gittins
Economics Editor
October 15, 2019 — 11.00pm
You could be forgiven for not knowing this is anti-poverty week. The poor, as we know, are always with us – which is great because it means we can focus on our own problems and worry about the poor’s problems later. We can fight to protect our tax breaks, then get around to wondering about how easy we’d find it to be living on $280 a week from the Pollyanna-named Newstart allowance.
But it’s not just our natural tendency to let our own problems loom larger than other people’s. It’s also that, as property prices make our cities ever more stratified, we so rarely meet people from the poorer parts of town. We find it hard to imagine how hard they find it to make ends meet, and to lift themselves out of the hole they’ve fallen into. Why can’t they work as hard as I do? (Short answer: because they can’t find anyone willing to give them a job.) Why can’t they budget as carefully as I would if I were in their position? (Short answer: you have no idea of how carefully they have to watch their pennies.)
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Peter Costello: Ultra-low interest rates are fuelling political extremism
By Jennifer Duke
October 16, 2019 — 11.53am
Former treasurer Peter Costello has blamed ultra-low interest rates for fuelling global political extremism and accused the Reserve Bank of focusing on global currency movements rather than the Australian economy when setting monetary policy.
The head of the $162 billion Future Fund further warned that Australia’s financial position is less resilient than before the Global Financial Crisis in 2008 leaving the economy more vulnerable to recessions. And he called for politicians to focus on deregulation rather than fiscal policy to revive growth.
Mr Costello is also the chairman of Nine Entertainment Co, which publishes The Sydney Morning Herald and The Age.
Speaking at the Citi Australia and New Zealand Investment Conference 2019 on Wednesday morning, Mr Costello said that lower interest rates across the world had been good for "sophisticated people" who borrow to buy assets but negative impacted "poor people" who do not.
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RBA tips housing supply shortfall
Oct 17, 2019 — 9.21am
Reserve Bank deputy governor Guy Debelle said a shortfall in housing supply was "quite likely" in the foreseeable future and that would trigger a "larger price response" in property values.
Dr Debelle said demand for housing will continue to grow and 2020 could be the year construction bottoms out, although much of the downturn in construction activity is still ahead" and housing investment will still fall another 7 per cent over the next year.
"2020 looks like being the low year for the residential construction sector. We can see through the trough to the other side," Dr Debelle told the told the CFA Societies Australia Investment Conference in Sydney on Thursday.
"While the increase in supply has finally met the earlier increase in demand, demand will continue to grow given population growth but supply is going to decline. So there is quite likely to be a shortfall again in the foreseeable future," Dr Debelle said.
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Why the stock market is up, but everyone is down
Oct 16, 2019 — 4.33pm
The sharemarket may be at or around all-time highs. Yet brokers and fund managers aren't exactly revelling in the excess and enthusiasm one might expect after a decade-long bull market.
Why is that so? Why is the sharemarket no longer an indicator of welfare and sentiment, even for those directly involved in the industry?
A day spent at Citi's annual investment conference in Sydney provided some answers. In fact, the lack of euphoria may actually be an indicator that the market still has room to run.
Citi's global equity strategist, Robert Buckland, says the reason sell-side brokers are miserable is that corporate activity simply has not responded to the rising sharemarket as it has in the past.
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Why we need to lock a proper climate plan into law
The government wants a strong economy. So it should also be interested in future proofing it too.
Zali Steggall
Oct 17, 2019 — 12.00am
My predecessor in Warringah likes to tell the United Kingdom how it should deal with Brexit. I am more interested in learning from the UK on how it reached bipartisan consensus on climate change and set up an effective national framework to reduce greenhouse gas emissions and adapt all sectors of the UK economy to the impacts of climate change.
The starting point for consensus is to accept the science and, as a nation, look to the future and prepare for the risks ahead. In Britain, 412 out of 646 members of Parliament called for a climate change bill in 2005. Australia needs the same momentum in Parliament. And it needs to start now. The Morrison government has accepted the science and the need to decrease emissions. Accordingly, the same science must be respected when it calls for more reduction of emissions than what current policies are delivering to have a hope of keeping global warming below 2 degrees.
We need to set out the roadmap for Australia to become a low carbon economy without all the fear-mongering and misinformation. The big question all sensible Australians are asking is how? I see three key actions that are needed for Australia to finally be on the right course.
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No retreat, no surrender on budget hold-out
Josh Frydenberg and Scott Morrison are trying to polish a political message looking ever more battered by economic reality. But they are determined to hold the line on the surplus.
Oct 16, 2019 — 8.00pm
It’s a question of timing, according to Josh Frydenberg. Despite the clamour for greater fiscal stimulus, the Morrison government is not about to lose its nerve or its determination to deliver a budget surplus this financial year.
The timing is in waiting for the combination of interest rate cuts, tax cuts, infrastructure spending and an upturn in housing prices to stir a flaccid domestic economy. Yet as the year rushes to its end with such limited impact so far from any of those drivers, that sense of timing is looking ever more suspect.
It makes it more likely the government will have to use its December budget update to announce additional limited spending or targeted tax relief like accelerated depreciation allowances to bolster business investment. Yet this too will still be heavily constrained by the government’s focus on the surplus.
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Spare the budget and free growth drivers
Oct 17, 2019 — 12.00am
The International Monetary Fund’s downgraded growth forecasts are no reason for Australia to hit the Keynesian (or its “modern monetary policy” descendant) panic button. The IMF has cut its forecast pickup for the Australian economy - by 0.4 per cent to 1.7 per cent in 2019, and by 0.5 per cent to 2.3 per cent in 2020. The economy is soft, and growth is subpar. But this is no crisis requiring emergency measures. The Prime Minister is right not to be spooked into blowing the budget surplus on reckless stimulus, as Labor demands. But, as The Australian Financial Review has argued, the Morrison government must seize the political opportunity to spark the economy out of the doldrums. Rather than fiddle with the cyclical dials of monetary or fiscal policy, it must start doing the heavy lifting on the structural reforms to spur business investment, consumer spending, jobs and productivity growth. A lower income tax burden, an internationally competitive company tax, and pro-employment and enterprise industrial relations reform should be on the third term agenda the government must finally discover.
The IMF downgrade is no surprise. Substantial parts of the rural economy are in drought. The resource investment and housing construction booms are long gone, and infrastructure spending has maxed out capacity. With wages set to remain subdued, high household debt makes consumers hesitant to spend. As reported in yesterday’s Financial Review, falling retail spending threatens the profits of firms reliant on discretionary income. Even the Reserve Bank now admits that the rush to prime the economy with cheap money could be counterproductive by sapping the “income and confidence of savers”. And Donald Trump’s trade war with China, Brexit, Hong Kong and global tech disruption - combined with energy policy confusion and routine business bashing by populist politicians and regulators seeking ever bigger sticks - is prompting companies to return equity to shareholders rather than plough it into new investment exposed to increased political and regulatory risk.
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'Sizeable downturn': RBA warns housing will weigh on economy for another year
By Shane Wright
October 17, 2019 — 9.15am
The housing construction sector will weigh on the economy through next year, the Reserve Bank has warned, while adding prices in Sydney and Melbourne may then increase even more than expected.
The bank's deputy governor, Guy Debelle, in a speech in Sydney on Thursday morning said there was a "sizeable downturn" underway across the construction sector which was a drag on the overall economy.
Dr Debelle said while the bank was forecasting a further 7 per cent drop in housing investment over the next year there was "some risk" the fall could be larger. This would take at least one percentage point off overall GDP growth.
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Morrison must lead like a Liberal
The Liberal Party's 75th anniversary is no cause for hubris. The Morrison Government must channel the spirit of Menzian liberalism.
Oct 18, 2019 — 12.00am
When this weekend’s 75th anniversary of the founding of the Liberal Party was planned, the Liberal hierarchy probably anticipated more of an autopsy than a celebration. Yet, after Scott Morrison’s miracle May victory, the Liberals are proudly boasting of their status as the natural party of government. Since its formation in 1946 by Robert Menzies, the Liberal Party has been in federal government for almost two-thirds of its existence. This is a political achievement rightly worth celebrating. But the challenge now facing the Liberals is to avoid the hubris and complacency that electoral success can breed. Does the Liberal Party view its hold on the government benches as an end in itself? Or will the privilege of government be seized as a means of giving the nation the economic leadership it urgently needs? That is a critical question now that it has unexpectedly won itself a third term in office. How it answers will define the character and legacy of the Morrison government.
The Liberal Party that Menzies created promised to represent the ‘forgotten people’ - the vast middle classes of the nation whose interests were neglected by the organised political forces of capital and labour. Menzies’ party rejected operating as an instrument of big business; but its major and historic achievement during Menzies’ long residence in the Lodge between 1949 and 1966 was to successfully defend the liberal principles of individualism and free enterprise by resisting global trends towards greater state control and expansion of the role and size of government.
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RBA governor talks down more rate cuts
Oct 18, 2019 — 7.53am
Washington | Reserve Bank of Australia governor Philip Lowe has hosed down prospects of further interest rate cuts, saying the economy is set to return to "trend growth" next year, which will cut unemployment and boost wages.
A noticeably more upbeat Dr Lowe told a high-powered forum at the International Monetary Fund in Washington on Thursday (Friday AEDT) that while it was possible more cuts were needed "I wouldn't assume it".
"I don’t think it’s the right assumption to make that we're going to have a lot more work to do to get inflation back to target and growth back to trend," Dr Lowe said.
"I think it's quite probable that we'll see a return to trend growth over the next year, which will be good.
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Sydney and Melbourne house prices will soon be growing at double-digit rates
By Shane Wright
October 18, 2019 — 3.14pm
Sydney and Melbourne house prices will be growing at more than 12 per cent per annum by the middle of next year, one of the nation's largest banks has forecast as the Reserve Bank talks up the chances of the economy recovering in 2020.
Economists with the ANZ believe a change in sentiment along with cuts in interest rates and the federal government's income tax reductions will super-charge Sydney and Melbourne to a point they will effectively wipe out the price falls recorded between 2017 and early this year.
Sydney dwelling prices rose by 75 per cent between 2012 and 2017 while over the same period they increased by 58 per cent in Melbourne. They then fell 15 per cent and 11 per cent respectively until June.
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Dutton gives GetUp the lowdown in realpolitik
Peter Hartcher
Political and international editor for The Sydney Morning Herald
October 19, 2019 — 12.00am
Politics is like sex. You don't need to be good at it to enjoy it. It's an old adage but GetUp has proved it anew. The community-based, progressive political lobbying outfit says it spent $3.5 million and mobilised 10,000 volunteers to campaign in the May federal election.
To what effect? It set itself six aims. To unseat six MPs. They were all Liberal MPs. GetUp's director, Paul Oosting, said that his organisation was not anti-Liberal but was gunning for "hard right" Liberal members. He said "the hard right faction within the Coalition is out of step with the majority of Australians".
Of those six, five were returned to Parliament. And two of them were returned with bigger margins. Who was out of step, exactly, Paul?
In a national result with an overall 1.2 per cent swing in favour of the government, Home Affairs Minister Peter Dutton enjoyed a 3 per cent swing to him in his Queensland seat of Dickson. And Attorney-General Christian Porter improved his vote by 3.9 per cent in his West Australian seat of Pearce.
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Tracking the new adjusted misery index
This week confirmed a record streak of jobs growth, but structural shifts in the labour market mean this is not the unalloyed good news of times past.
Patrick Commins Columnist
Oct 18, 2019 — 2.59pm
In July, the Reserve Bank of Australia governor began a speech with a reference to a now out-of-fashion economic indicator: the "misery index".
Philip Lowe was harking back 40 years to his final high school year in Wagga Wagga.
"For those of you whose memories don't go back that far, this index is the sum of the unemployment rate and the inflation rate," Lowe told the audience, adding: "Few people talk about this index these days."
The idea behind the simplistic measure was that a high jobless rate or high inflation would tend to be bad news for the average citizen, economically speaking. Both happening at the same time would make the average punter even more miserable.
In raising this ghost of economic analysis past, Lowe made the point that today's world of "low and stable inflation and low unemployment" looked pretty good against the high inflation and high unemployment world of his youth.
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Leadership is not easy in an age of uncertainty
After almost ten years of self-inflicted angst over climate policy, real economic pressures are starting to pile up again.
Andrew Clark Senior Writer
Oct 19, 2019 — 12.00am
The old adage that people rise to a challenge will be sorely tested among Australia’s politicians in coming years.
You can call it the double-up challenge. Politics was messy in what turned out to be a relatively benign past decade for the Australian economy despite the depredations of the GFC, while the portents for the next 10 years are not good and the issues are more difficult.
This does not mean life will be “solitary, poor, nasty, brutish and short”, as 17th-century British philosopher Thomas Hobbes once put it, but a world of low productivity growth, high debt, declining and ageing populations in key regions, plus the urgent need to combat climate change, present tough choices.
Locally, a sort of demarcation line separating the two periods is approaching. It takes the form of the 10th anniversary of the December 1, 2009, toppling of Malcolm Turnbull as Liberal leader by Tony Abbott, and, just a couple of weeks later, the collapse of a UN-sponsored attempt to secure a global deal to combat climate change during a conference in Copenhagen.
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Liberal Party push to force voters to show ID
By Judith Ireland
October 19, 2019 — 5.24pm
The Liberal Party's federal council is calling on the Morrison government to force voters to show identification on election day and to have people's names checked off on electronic lists.
The party will also tighten up its own processes at election time, with federal director Andrew Hirst saying there needs to be more thorough vetting of Liberal candidates in the wake of multiple controversies during the 2019 campaign.
Delegates at the party's annual federal council meeting on Saturday voted in favour of voters showing ID on polling day, amid reports some people are voting on behalf of others or voting more than once.
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Swan urges US Democrats to learn from Labor's mistakes
By Matthew Knott
October 20, 2019 — 12.01am
Washington: The US Democrats risk blowing their chance to beat President Donald Trump next year if they ignore the lessons of Labor's shock election loss, former treasurer Wayne Swan has warned.
The ALP national president said he fears Democrats will lock themselves into an overly-ambitious and crowded left-wing policy agenda - just as Bill Shorten did at the May election.
"You can be progressive but you have to be careful about creating too many big bullseyes for your opponents to shoot at," Mr Swan told The Sydney Morning Herald and The Age during a visit to Washington.
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Rate cuts are losing impact: RBA
The US-China trade war has worsened a slowdown in Australia’s biggest trading partner as Reserve Bank governor Philip Lowe warned that monetary policy risks becoming “overburdened” unless such geopolitical risks are resolved.
China’s economic growth rate skidded to a three-decade low of 6 per cent year-on-year in the September quarter, from 6.2 per cent in the June quarter, undershooting economist’s expectations of 6.1 per cent growth. It was the weakest economic growth in China in records going back to 1992.
With growth for the 2019 year-to-date slowing to 6.2 per cent, economists said the further loss of momentum in the September quarter as the latest US tariff hikes took effect suggested China’s full-year growth will be near the low end of the 6 to 6.5 per cent target band set by Beijing in March.
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Royal Commissions And The Like.
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Big banks face new ACCC pricing probe
Oct 14, 2019 — 12.01am
Treasurer Josh Frydenberg has charged the consumer watchdog with investigating the refusal of the banks to pass on in full the recent spate of interest rate cuts, creating the potential for a further round of government intervention.
After his calls for the banks to pass on rate cuts in full were ignored for a third time this year, Mr Frydenberg tasked the Australian Competition and Consumer Commission with looking into the pricing of residential mortgage products, and to examine obstacles that stop customers switching lenders.
The ACCC will focus on the period since January this year and the response by the banks to the three rate cuts made by the Reserve Bank in June, July and October, which have resulted in the cash rate being reduced by a total of 75 basis points.
At the same time, the big four banks have passed on an average of 57 basis points in owner-occupied home loan rates.
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Why profitable banks are good for us
Banks are neither risk-free utilities nor predators to be broken up. The margins they are able to earn are important.
Andrew Mohl
Oct 14, 2019 — 12.00am
The long expansion of Australia's economy has bred a level of complacency about the role of the banking system.
Some would have you believe that banks virtually run themselves and are little more than utilities. They argue we should regulate them harder and drive returns on equity lower.
Let’s test that hypothesis with some facts.
If banks were simple utilities, they would earn roughly similar returns. Yet over the past decade Commonwealth Bank's share price is up 50 per cent while National Australia Bank’s share price has been broadly flat. ANZ and Westpac are in the middle, up around a quarter.
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Aged care royal commission chairman Richard Tracey dies, aged 71
By Megan Neil
October 14, 2019 — 9.26am
Aged care royal commission chairman Richard Tracey, QC, has died. He was 71.
The former Federal Court judge died on Friday, the royal commission announced on Monday at the beginning of a Melbourne public hearing examining workforce issues.
The royal commission held a minute's silence to honour Mr Tracey.
The inquiry's hearings will go ahead as planned this week. There will be no delays to the release of the inquiry's interim report, which will be made public on October 31.
Commissioner Lynelle Briggs said Mr Tracey died in California, where he was being treated for cancer that was diagnosed seven weeks earlier.
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Expect discomfort, APRA tells super funds
Oct 14, 2019 — 12.20pm
Crummy superannuation funds are right to be uncomfortable about the impending release of performance appraisals that will expose high fees and poor returns, Australian Prudential Regulation Authority deputy chairman Helen Rowell says.
"In rising to the challenges set down for us, APRA will again raise the bar for trustees, and you can expect to feel a degree of discomfort," she said in a speech on Monday.
"For some trustees, the path to self-discovery will be a confronting one, as it becomes clear they are responsible for funds, products and options that are underperforming, and therefore have an obligation to lift their game or exit the playing field."
APRA plans to publish analysis of the performance of MySuper products in the areas of investment, fees and "sustainability". It will use heat maps or traffic lights to signal good and bad results.
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Bank bashing could drive up rates: Westpac
Oct 15, 2019 — 12.00am
Westpac has warned that a political pile-on could result in the loss of its AA credit rating and drive up costs for borrowers, as the federal government plays down expectations of its ACCC inquiry into the residential mortgage market.
Despite accusing the banks of profiteering after they did not pass on the Reserve Bank of Australia's rate cuts in full, Treasurer Josh Frydenberg ruled out legislated interventions or increasing the bank levy and said the best outcome for consumers was to increase competition and enable them to switch between lenders.
He said the inquiry was about "getting under the hood" to examine all the reasons why the banks behaved as they did, and he accepted they must look after depositors as well as borrowers.
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What Sims will find when he delves into bank pricing
ACCC boss Rod Sims will need to become nimble with NIMs as he investigates allegations the banks are shortchanging their loyal customers on interest rates.
Oct 15, 2019 — 12.00am
Australian Competition and Consumer Commission (ACCC) boss Rod Sims can look forward to delving into the darkest mysteries of bank pricing as part of his in-depth probe into the failure of the country's biggest lenders to pass on interest rate cuts to customers in full.
In the process, Sims will quickly become acquainted with one of the most critical gauges in the banking sector – the banks' net interest margin, or NIM. The NIM, which calculates the difference between what banks charge for loans and their funding costs, is often seen as the most reliable indicator of the intensity of competition the banks are facing.
The major banks argue that their NIMs are feeling an unprecedented squeeze. That's because intense competition in the housing market – from the other major banks as well as from the likes of Macquarie, ING and HSBC – is putting pressure on their lending rates.
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Bank show trial just ignores economic truths
The Morrison government's regulatory forum shopping puts a strong and healthy banking system at risk.
Oct 15, 2019 — 12.00am
Australia’s banks are anything but perfect. But they can’t win in an age of populist politics.
In the wake of the Hayne royal commission, the Australian Securities and Investments Commission imposed elevated responsible lending laws to prevent "reckless" loans to home buyers and small business, even amid record low loan defaults. As the economy has inconveniently softened, the Morrison government has urged the banks not to be bound by the same stricter credit standards because they might put a brake on investment, the housing market, and jobs. Now the banks stand accused by the Prime Minister and Treasurer of profiteering by failing to pass on in full the three official interest rate cuts since June to mortgage borrowers, even though mortgage interest rates have fallen to the lowest levels on record.
So now the banks are required to submit to yet another government inquiry, this time by the Australian Competition and Consumer Commission, even though the government is yet to act on all of the 34 recommendations made in last year’s Productivity Commission report on competition in financial services. This regulatory forum shopping itself has only been prompted because, under pressure from the government, the Reserve Bank has cut official interest rates to an absurdly low 0.75 per cent, even at the risk of restoking a big-city housing price bubble and adding to what are already record high levels of household debt. As the Reserve Bank’s Financial Stability Review said earlier this month, asset values pumped up by ultra-cheap money are vulnerable to a sudden correction.
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Commissioner was working on interim aged care report before his death
Oct 14, 2019 — 5.50pm
Aged care royal commission chairman Richard Tracey put the finishing touches on the interim report into a system he called "cruel and unkind" before his sudden death in the United States last week.
The royal commission resumed in Melbourne on Monday with a minute's silence and tributes to the former Federal Court judge, who revealed only seven weeks ago that he had been diagnosed with terminal skin cancer.
Fellow commissioner Lynelle Briggs recalled that "in true Richard style" he chaired a meeting soon after receiving the news.
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Bank inquiry ignores depositors as Westpac warns rates could go higher
By Shane Wright
October 15, 2019 — 12.01am
Banks' reliance on depositors was being ignored in the government's inquiry into mortgage lending rates, respected businessman Don Argus has complained as Westpac warns banks could be forced into lifting interest rates to protect their profits.
Mr Argus, former chief executive at NAB and a former chairman of BHP Billiton, said in the rush to help home buyers the interests of depositors who relied on the interest on their savings were being disregarded.
The latest inquiry into the big four banks will look into why they don't pass on interest rate cuts to customers with Treasurer Josh Frydenberg saying it's a chance for banks to come clean.
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How profitable should the big banks be?
Oct 15, 2019 — 4.15pm
After the battering received during the Hayne royal commission, the banks are on firmer and more familiar ground when making the case for not passing through RBA rate cuts to borrowers. They have well rehearsed and not unreasonable arguments.
Most simply, the case made for lenders is that their cost of funding is not captured solely by movements in the official cash rate target. The big four banks fund around 30 to 40 per cent of their lending via international capital markets, and those costs go up and down according to global conditions.
So far so reasonable.
Another line is that having profitable banks is good for the country. It makes for a robust financial system – a point made by both Westpac boss Brian Hartzer and ex-CBA director Andrew Mohl this week.
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National Budget Issues.
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Australia set to 'muddle through' house price pain, economist warns
By Shane Wright
October 14, 2019 — 12.01am
The Australian economy is gently improving despite domestic problems, but falling interest rates are creating future housing affordability hurdles in Sydney and Melbourne that will hit young people, one of the nation's chief economic forecasters has warned.
Deloitte Access Economics, in its quarterly update on the economy released on Monday, said despite ongoing global uncertainty, Australia would likely "muddle through" in the aftermath of a housing bubble and drought.
CoreLogic's national home value index rises for a third consecutive month in September, led by gains in Sydney and Melbourne.
Deloitte is forecasting the economy to grow by a modest 2.2 per cent this financial year, up on the 1.4 per cent recorded through 2018-19, but this is still well short of the long-term trend and the federal budget's current forecast of 2.75 per cent.
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People assume the Reserve Bank is hot to trot on QE. It ain’t.
Ross Gittins
Economics Editor
October 14, 2019 — 12.00am
It’s amazing so many people are so sure they can see where the Reserve Bank is headed. Once interest rates are down to zero it will be on to QE - “quantitative easing” – and negative interest rates, they assure us. Don’t you believe it.
What’s surprising is how heavily the self-proclaimed experts are relying on their vivid imaginations. Or maybe lack of imagination, falling back on the lazy market dealer’s assumption that we should do – and will do – whatever the Americans have done.
What few in the financial markets and financial media are doing is their due diligence: carefully examining what the Reserve – particularly its governor, Dr Philip Lowe – has actually said about its attitude towards “unconventional monetary policy tools”.
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Reserve Bank minutes show rate cut deeply debated
By Shane Wright and Eryk Bagshaw
October 15, 2019 — 12.31pm
The Reserve Bank of Australia's October interest rate cut was sharply debated among board members with fears it could drive up house prices and fail to deliver a boost to the economy.
Minutes of the meeting at which the official cash rate was cut to a fresh record-low of 0.75 per cent reveal the contentious move was partly driven by concerns the combination of past reductions and the Morrison government's income tax cuts had fallen short of expectations.
The minutes showed the main reasons for the October cut were the bank's concerns unemployment is not low enough to drive up wages and increased economy-wide inflation.
"Members noted that the bank's most recent forecasts suggested that the unemployment and inflation outcomes over the following couple of years were likely to be short of the bank's goals," the minutes showed.
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Tax cuts not flowing through to retail
Consumers are keeping their wallets closed despite income tax cuts, with retail spending intentions dropping as Aussies worry about the economy.
Angus Livingston, AAP National Economics Writer
Australian Associated Press October 15, 201912:40pm
Income tax cuts haven't made enough of a difference to get Aussies spending on retail, with interest rate cuts instead making them cautious with their wallets.
The Commonwealth Bank's Household Spending Intentions recorded another drop in September, after a rise the previous month sparked some hope.
"While there were some positive signs in sectors where the tax refunds now flowing would most likely be spent, the overall picture is one of continued consumer caution," chief economist Michael Blythe said on Tuesday.
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Buyer confidence at new lows as experts query RBA’s strategy
Consumer confidence has crashed to the lowest level in four years after a series of interest rate cuts by the Reserve Bank enacted to boost household spending, leading top economists to question the effectiveness of the policy.
Westpac’s closely watched monthly confidence barometer dropped 6 per cent over the month to October, dragged down by a sharply gloomier outlook among respondents about how the economy will be tracking in five years.
“Consumers are looking behind the reason for the rate cut and arguably the absolute level of rates and getting nervous,” said Westpac chief economist Bill Evans.
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Reserve Bank worried about rising home prices
· Dow Jones
The Reserve Bank of Australia is keeping the door open to cutting interest rates further but signals that is increasingly uneasy about the recent jump in house prices, saying the situation requires close scrutiny.
In the minutes of its October 1 policy meeting, the board of the RBA said it “was prepared to ease monetary policy further if needed” to support growth and job creation.
The RBA cut its official cash rate to a record low 0.75 per cent from 1.0 per cent on October 1 in its third cut so far this year.
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Health Issues.
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Why healthcare is a winner in good times and bad
The appeal to investors is the sector's defensive qualities plus the bonus of strong underlying growth via global reach and innovation.
Elio D'Amato
Oct 15, 2019 — 9.32am
Markets are volatile. Notwithstanding the recent return to favour of shares, it would take a brave investor to suggest that the uncertainty is behind us, and it will be smooth sailing from here.
When asked by investors about the best sector to ride out volatility, it is essential first to understand that volatility is a double-edged sword. Not only does it relate to downside risk, but it also provides the opportunity to outperform in the long run. Cash is the ultimate insurance in volatile times, but it entrenches long-term underperformance, as the best an investor can hope for is to stay marginally behind the rate of inflation.
Sectors such as utilities offer the stability of recurring revenue on essential services. Consumer staples covering the necessities of life and even listed property trusts, where a stable income stream can be achieved on illiquid non-tradeable assets like industrial property, mean these sectors are prized for their earnings certainty during uncertain times.
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'Veiled in secrecy': call for surgeons to disclose complications rates
By Kate Aubusson
October 14, 2019 — 9.00pm
Surgeons are being urged to disclose their rates of surgical complications to prove they're worth the premium fees they charge, and to help patients make informed decisions about the doctors they choose.
Obstetrician and gynaecologist Professor Stephen Robson has broken ranks with the surgical profession by publishing his surgical outcomes data for any potential patient, referring GP or colleague to scrutinise.
His bold move has been commended by Australia’s Chief Medical Officer Professor Brendan Murphy and public health experts who have long called for an end to surgeons guarding data on their outcomes from public view.
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X-rays 'fail to reliably detect' lung disease in stone workers: radiologists
By Lucy Cormack
October 15, 2019 — 12.00am
Chest X-rays on workers exposed to dust from manufactured stone are "failing to reliably detect" serious lung disease, with one study showing X-rays overlooked disease in more than 40 per cent of workers.
The Royal College of Radiologists revealed the position in a statement on Friday and "strongly recommended" CT scanning for the screening of workers at risk of occupational lung disease such as silicosis.
Silicosis is a potentially deadly group of lung diseases highly prevalent among construction and demolition workers exposed to engineered stone products with high silica dust, such as benchtops and tiles.
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PBS drug listings being delayed by bureaucracy, medicines lobby says
By Dana McCauley
October 15, 2019 — 12.05am
The head of the powerful medicines lobby says Australians are being forced to wait longer to access life-saving treatments than they would overseas thanks to the federal government's overly bureaucratic process for approving new drugs to be subsidised through the Pharmaceutical Benefits Scheme.
Medicines Australia chief executive Elizabeth de Somer said Australia lagged behind other OECD countries in the time it took to list new medicines on the PBS, which gives patients access to drugs at a fraction of the retail cost.
The peak body will on Tuesday launch a research paper it commissioned by Columbia University professor Frank Lichtenberg, highlighting the economic benefits of new medicines - including a $3.47 billion saving to the health system from reduced hospitalisations in the 14 years to 2000.
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How to get the right home care package for you
By Rachel Lane
October 16, 2019 — 12.05am
Living independently at home can be great for your wellbeing, your family and for your community.
The government offers financial support to help you make this happen through home care packages. There are four levels of home care package available.
Level 1 provides the lowest amount of funding. From there, funding increases through to Level 4, which might also include more intensive services.
Whatever level of package you receive, the funding is yours to allocate as you see fit. You get to choose the provider to host your package what mix of approved services you need to support independent living.
It was five years after he suffered a stroke that David Warry found out about home care packages.
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'It's not like a motor engine': Surgeons oppose making complication data public
By Kate Aubusson
October 15, 2019 — 6.29pm
The college of surgeons has rejected calls for doctors to publish their complications rates, warning clinicians could cherry-pick the easy cases to keep them off the bottom of surgeon "league tables".
Obstetrician and gynaecologist Professor Stephen Robson has announced he has broken ranks in joining a handful of surgeons publicly airing their performance data. The move has been commended by Australia’s Chief Medical Officer Professor Brendan Murphy and public health experts for dispelling the "mystique" surrounding doctors' healing skills.
But the Royal Australasian College of Surgeons warned that patients would misinterpret the data and that could unfairly tar doctors who take on the most complex cases and arduous surgeries.
"The College is in favour of transparency ... but we are not in favour of league tables that rate doctors at the top and down the bottom," college spokesman Dr John Quinn said.
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Corruption in SA health an issue: watchdog
· Australian Associated Press
Corruption and maladministration exist across South Australia's troubled health department but the state's corruption watchdog says he doesn't have the necessary resources to conduct a thorough investigation.
Independent Commissioner Against Corruption Bruce Lander says record-keeping is so poor within SA Health that's it's been almost impossible for him to determine the true extent of the issues.
But he said it was clear there were problems with arrangements between the department and clinicians and between the department and other suppliers and contractors.
"We know what the problems are we just find it frustrating that in the course of our investigations to find that we cannot identify, with the necessary precision, the arrangements that were entered into between health and its employees," Mr Lander told reporters on Wednesday.
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Health Minister Greg Hunt considering 'supervised prescribing' by pharmacists
By Dana McCauley
October 17, 2019 — 5.19pm
Health Minister Greg Hunt is considering "supervised prescribing" by pharmacists to ease pressure on the health system and free up GP appointments, after receiving the green light from the regulator.
Mr Hunt told The Sydney Morning Herald and The Age he had directed the Chief Medical Officer, Brendan Murphy, to examine the proposal, a move which comes as the powerful Pharmacy Guild continues to push for unsupervised prescribing of common medications like the contraceptive pill and travel vaccinations.
The Pharmacy Board, which regulates the profession to protect public safety, said in a position paper released this week that pharmacists are adequately trained to prescribe under supervision, with "any gaps in competencies" able to be addressed through continuing education.
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ANSTO suffers nuclear medicine meltdown
The marketing material sent out by the Australian Nuclear Science and Technology Organisation was clear: its planned nuclear medicine facility, ANM, costing $169m and due by the end of 2016, was a big deal.
State of the art. World-class. A significant improvement on the existing facilities that already performed a lifesaving service, delivering thousands of doses of nuclear medicines to more than 250 hospitals and medical practices in Australia alone.
“ANM will position Australia as a global leader in the high-end manufacturing of nuclear medicine used in over 45 million medical procedures globally each year to diagnose cancers, heart disease and skeletal conditions,” ANSTO boasted.
But, three years later, Australia’s nuclear medicine industry is in crisis after years of accidents, delays and other setbacks. The saga has left patients exposed to a global shortage of molybdenum-99 (Mo-99) isotopes used to diagnose a wide range of illnesses, including cancer and cardiac, muscular and skeletal conditions
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International Issues.
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For Trump and Xi, trade deal comes amid growing pressures at home
Keith Bradsher and Ana Swanson
Oct 13, 2019 — 10.59am
Beijing | The interim trade pact announced on Friday (Saturday AEDT) between the United States and China came together as both country’s leaders faced mounting political pressures and rising economic worries at home.
For months, President Donald Trump has increased pressure on Beijing with higher tariffs on Chinese goods, insisting on a comprehensive trade deal that addressed a long list of concerns about how China manages its economy. And for months, senior Chinese officials met Trump’s escalating tariffs with their own as they remained equally emphatic that any deal must completely erase Trump’s tariffs.
On Friday, both sides decided that half a deal was better than none, consenting to a preliminary agreement that would involve China buying more US farm products and taking several other limited steps to open its economy in exchange for the United States foregoing its planned tariff increase next week.
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How Boris Johnson moved to break the Brexit deadlock
George Parker and Jim Brunsden
Updated Oct 13, 2019 — 1.17pm, first published at 12.51pm
London/Brussels | Boris Johnson has moved decisively to break the deadlock on Brexit, sparking a rare mood of optimism in Brussels, sending the pound soaring and prompting bookmakers to slash the odds on the UK leaving the EU with a deal.
Details of Mr Johnson’s plan are gradually taking shape, although EU ambassadors in Brussels were at the weekend given only the contours of a possible agreement by Michel Barnier, the EU’s chief Brexit negotiator.
Those close to the Johnson plan say it adopts elements of a “customs partnership” proposed by Theresa May, the former UK prime minister, and derided by Tory Eurosceptics — including Mr Johnson — at the time. A heavy layer of fudge has also been added.
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Brexit bubbles to a head at last
By next Sunday, Britain will either be cruising towards a smooth Brexit; tweaking the details of an agreed Brexit deal; gearing up for a November election; or collapsed into infighting over an imminent referendum.
Oct 13, 2019 — 11.31am
London | There have been so many times this year when Britain has reached a Brexit "crunch point", only to see it fudged, squibbed or ducked. Last week, surely, is different. Whatever happens, things won't be the same in a week's time.
If Boris Johnson has achieved one thing in his 82-day premiership, it is finally to get Brexit bubbling to a head. He's broken free of the straitjacket of Theresa May's deal to find his own "pathway".
The EU summit on Thursday and Friday this week will decide whether there's something to it, and parliament will meet on Saturday to determine what happens next.
That doesn't mean Brexit is about to happen. Johnson has said he'd "rather be dead in a ditch" than delay Brexit past October 31, but he's likely to ditch that promise and hope to die another day.
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Trump's 'love fest' unlikely to last
Global markets are reacting with enthusiasm to Donald Trump claiming vindication and victory as he announces a deal with China. But the relief rally may be temporary.
Oct 13, 2019 — 7.32pm
Donald Trump is typically claiming vindication and victory as he relies on general market euphoria to turbo-charge his announcement of “phase one” of a proposed trade deal with China.
Whether there will ever be a second phase doesn’t matter in terms of his immediate political timetable for the election campaign. That formula requires a strong economy, grateful farmers and a surging stockmarket.
So while his description of “the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country” is another example of Trump’s political hubris, the theme will be constantly repeated.
He is, however, a master of political distraction and this provides him perfect cover.
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Kurds find new allies in fight against Turkey
October 14, 2019 — 6.53am
Beirut: The Syrian army will deploy along the entire length of the border with Turkey in an agreement with the Kurdish-led administration in northern Syria, the Kurdish Syrian Democratic Forces have said.
In a major shift of alliance, the deployment would support the SDF in countering "this aggression and liberating the areas that the Turkish army and mercenaries had entered", it said, in reference to Turkey-backed Syrian rebels.
It would also allow for the liberation of other Syrian cities occupied by the Turkish army such as Afrin, in the country's north-west, the statement said.
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Bashar Assad sends troops to help Kurds confront Turkey
Syrian regime troops are moving to the border to confront Turkish troops after the Kurds agreed to a Russian brokered deal to allow Bashar al-Assad’s soldiers into their territory.
The regime forces are expected to move into the towns of Manbij and Kobani, to prevent a humanitarian catastrophe if Turkey claimed the towns.
The deal. agreed after the US announced the withdrawal of all its troops from north Syria, has sparked fears of a wider confrontation pitting the Syrian regime and its Russian backers directly against Turkey. The UK and other western powers are likely to follow the US withdrawal, the London Times reports.
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Kurds: America’s blood sacrifice
On Tuesday morning in Washington, DC, a Pentagon official grimaced as he handed me a letter that had just been sent to coalition troops in northeast Syria. It was written by the chief of staff to General Mazloum Kobani, head of the Syrian Democratic Forces, the mostly Kurdish militia that has been, since 2015, the coalition’s key ally against Islamic State.
Addressed to “our friends and brothers (who) bled with us and were witness to our 11,000 martyrs”, the letter appealed to Americans not to abandon the Kurds to the coming Turkish offensive, lest “the tragedy of the Kurdish people … be repeated again”.
Turkish troops were already massing on the Syrian border when that letter was circulated.
Earlier, President Donald Trump had directed US troops to stand aside, pulling Americans from their posts at Tal Abyad, Tal Musa, Tal Hinzir and Tal Arqam, four key border outposts that sit inside a zone that US special forces had been jointly securing with Turkish troops.
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Sign this deal or let us go now, Boris tells EU
· The Times
British Prime Minister Boris Johnson is to offer EU leaders a historic grand bargain on Brexit — help deliver his new deal this week or agree a “no-deal” departure by October 31.
Mr Johnson will speak to German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission president Jean-Claude Juncker in the next two days and say: “Let’s finish this off.”
Mr Johnson’s intervention comes on the eve of a crunch week for his premiership ahead of a Brussels summit on Thursday and a Saturday sitting of parliament next weekend, the first since the Falklands War of 1982.
Diplomats say Mr Johnson wants to enlist Mr Juncker and the German and French leaders to press chief EU negotiator Michel Barnier to agree the details of the skeleton deal thrashed out with the Irish Prime Minister Leo Varadkar last week.
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Xi warns attempts to divide China will result in 'shattered bones'
Updated Oct 14, 2019 — 3.26pm, first published at 3.21pm
Shanghai | China's president Xi Jinping has warned any attempts to divide the country will end in "shattered bones" as the leader sent his strongest signal so far that unrest in Hong Kong will not be tolerated by Beijing.
Speaking on a visit to Nepal, Mr Xi thanked the Nepali government for supporting the "One China" policy which supports the ruling Communist Party's claim to the island of Taiwan and its authority over Hong Kong.
"Anyone attempting separatist activities in any part of China will be crushed and any external force backing such attempts will be deemed by the Chinese people as pipe-dreaming," Mr Xi said in comments carried on the front page of the People's Daily on Monday.
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Trump orders Turkey sanctions as US scrambles for Syria exit
Jonathan Lemire
Oct 15, 2019 — 9.38am
Washington | Targeting Turkey's economy, President Donald Trump announced sanctions on Tuesday (AEDT) aimed at restraining the Turks' assault against Kurdish fighters and civilians in Syria - an assault Turkey began after Trump announced he was moving US troops out of the way.
Meanwhile, the Americans were scrambling for Syria's exits, a move criticised at home and abroad as opening the door to a resurgence of the Islamic State group whose violent takeover of Syrian and Iraq lands five years ago was the reason American forces came in the first place.
Trump said the approximately 1000 US troops who had been partnering with local Kurdish fighters to battle IS in northern Syria were leaving the country. They will remain in the Middle East, he said, to "monitor the situation" and to prevent a revival of IS - a goal that even Trump's allies say has become much harder as a result of the US pullout.
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Why strong US consumption won't prevent a recession
The broad economy is not only weak, but weakening - and all the signs are pointing to a recession.
Gary Shilling
Oct 15, 2019 — 2.38am
New York | With the unemployment rate at a 50-year low, the hope is that the US consumer will more than offset an otherwise faltering economy. Don't bet on it.
Clearly, the broad economy is not only weak, but weakening. The yield curve has inverted, with 10-year Treasury note yields falling below two-year yields. Every time that's happened in the post-war era, a recession has followed if it hadn't already commenced. No exceptions.
The Federal Reserve Bank of St. Louis reports that the lower real interest rates are at the time of inversion, the longer the recession and the higher the unemployment rate climbs. The real 10-year yield is minus 0.13 per cent, even lower than the 2.2 per cent that preceded the 2007-2009 Great Recession.
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The photo that reveals who got the better of the US-China trade truce
Stephen Bartholomeusz
Senior business columnist
October 14, 2019 — 11.41am
The US Treasury Department tweeted a revealing picture from a dinner between the US and Chinese trade delegations on Friday. The Chinese are beaming; the Americans look glum.
That picture perhaps conveys a better sense of the outcome of the negotiations than US President Donald Trump’s tweet that "the deal I just made with China is, by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our country."
Secretary Steven Mnuchin and US Trade rep Robert Lighthizer with Chinese Vice Premier Liu He and the Chinese delegation at a working dinner during the 13th round of trade negotiations. Credit:Official White House photo by Keegan Barber
Actually, he’s probably not wrong there. China’s agreement to, over the next two years, scale up to purchases of $US40 billion to $US50 billion ($A60 billion to $A74 billion) a year of agricultural products – about twice their historical level – is a very big deal if it eventuates.
It is however, not the first time similar deals have been announced and proclaimed as "the biggest ever" by Trump.
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China wants more details before signing Trump's 'phase one' deal
By Bloomberg News
October 15, 2019 — 5.58am
Beijing: China wants further talks as soon as the end of October to hammer out the details of the "phase one" trade deal touted by Donald Trump before Xi Jinping agrees to sign it, according to people familiar with the matter.
Beijing may send a delegation led by Vice Premier Liu He, China's top negotiator, to finalise a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile, one of the people said.
Another person said China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn't yet endorsed. The people asked not to be named discussing the private negotiations.
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Australia has a key role to play in contest between US and China
Peter Hartcher
Political and international editor for The Sydney Morning Herald
October 15, 2019 — 12.00am
What message should Australia take from Donald Trump's decision to step aside so that Turkey's dictator could have a clear run at attacking an American ally?
"If you are an American ally anywhere, the message is 'beware'", according to eminent US expert Nicholas Burns, a longtime US diplomat.
US military outpost came under Turkish artillery fire in Syria, but Turkey say it was an accident.
"Is our word meaningful? Is our vow that we will have your back credible? I think this has had a major impact on American credibility," says Burns, now a professor of international relations at Harvard.
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The 2020 presidential race just keeps getting more uncertain
By Jennifer Rubin
October 15, 2019 — 12.29am
We can look at the 2020 US presidential race in one of two ways. In the first, the Democratic race is coming down to a head-to-head battle between former vice president Joe Biden and Senator Elizabeth Warren, over who will face the certain Republican nominee, Donald Trump. From a different vantage point, we cannot be certain Trump will survive until 2020 and capture the Republican nomination; both Biden and Warren have significant flaws; and the early states, which remain highly competitive, will determine the shape of the race. In the chaotic Trump era, the second scenario sure seems more realistic.
Let's start with Trump. In what has been dubbed "Watergate for morons", the President is now barreling towards impeachment, implicated in soliciting foreign countries to influence US elections, obstruction of justice and witness tampering. His lawyer Rudy Giuliani, whose media performance art (i.e., nonstop blabbing) could well do him in, is reportedly under criminal investigation, at the very least, for failure to register as a foreign agent. (Giuliani told The New York Times that prosecutors have no grounds to charge him.) The floodgates have opened since a whistleblower complaint surfaced, and a torrent of witnesses could now flood into the impeachment inquest, which may implicate not only Trump but also his secretary of state and attorney-general. Does Trump sound like a viable candidate to you?
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Donald Trump unleashes the dogs of war … and for what?
It did not take long for the biggest foreign policy mistake of Donald Trump’s presidency to go very wrong.
US forces have now begun a humiliating and dangerous retreat from northeastern Syria after the President ordered the final withdrawal of the 1000 American troops in the area.
Trump was forced to order the mass retreat after the safety of US troops was compromised by an increasingly chaotic battlefield when Turkish-backed forces deliberately launched artillery rounds near US outposts and cut US supply lines.
This came only a day after the Pentagon insisted it would not abandon its Kurdish allies to the invading Turkish forces, who view them as terrorists.
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Chinese censorship is spreading beyond its borders
Updated Oct 15, 2019 — 11.36am, first published at 11.34am
When Xi Jinping greeted African leaders in Beijing last year, his speech contained a very Chinese formula: the “five noes”. In reality, all five negatives could be summed up as a single pledge.
Unlike bossy westerners, China would never tell Africans how to run their own countries. There would be “no interference in African countries’ internal affairs”.
This principle of non-interference has been central to Chinese foreign policy since the 1950s. But as the Beijing government becomes more assertive around the world, it is becoming increasingly clear that what we are seeing is “non-interference” with Chinese characteristics.
An incident last week underlined that, in reality, China feels perfectly entitled to interfere when foreigners express views that displease Beijing. A pro-Hong Kong tweet from the general manager of the Houston Rockets led to a clash between China and America’s National Basketball Association, which resulted in NBA games being pulled from Chinese state television.
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Thorniest issues will decide if US-China trade deal lives or dies
Despite what Donald Trump says, if the US Congress does not like the final deal and ultimately vetoes it, it will be as though nothing was agreed at all, writes Caixin's Lu Zhenhua.
Lu Zhenhua
Oct 15, 2019 — 12.03pm
Beijing | It’s the golden rule of trade talks: Nothing is agreed until everything is agreed.
You may have settled nine points of a 10-point agreement, but until you deliver the most difficult one things can always backtrack — with parties pressing for further concessions on the previous points in order to secure the last.
There have been positive noises from both Beijing and Washington after they agreed a hard-won first phase deal in the US capital last week. The two sides had failed for a year to ink a comprehensive deal and the talks had collapsed in May. The only path through the impasse was to reach a precursor deal, before moving on to the thorniest issues.
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Global economic policymakers are playing with fire
These are fragile times. Some of that reflects the wave of populist nationalism that is now sweeping across high-income countries. But some of it reflects sterile orthodoxy, writes the FT's Martin Wolf.
Updated Oct 16, 2019 — 10.05am, first published at 10.03am
“Don’t do stupid shit.” With the last word turned demurely into “stuff”, this became known as the “Obama doctrine”. It reflected the lessons Barack Obama had learnt from his presidential predecessor’s unnecessary Iraq war.
For many, the doctrine was defeatist. Today, I see its merits. It would be wonderful to see intelligent action in response to our many challenges. Yet, today, application of the Obama doctrine would be a relief.
This is true, not least, for the world economy. As Kristalina Georgieva, the new managing director of the IMF, said in her curtain raiser for this week’s annual meetings in Washington DC: “In 2019, we expect slower growth in nearly 90 per cent of the world. The global economy is now in a synchronised slowdown.” Joint research by the Brookings Institution and Financial Times is bleaker still, describing our situation as “synchronised stagnation”.
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Russia moves to fill void left by US in northern Syria
October 16, 2019 — 3.05am
Russia moved to fill the void left by the United States in northern Syria on Tuesday, deploying troops to keep apart advancing Syrian government and Turkish forces. At the same time, tensions grew within NATO as Turkey defied growing condemnation of its invasion from its Western allies.
Now in its seventh day, Turkey's offensive against the Kurds has upended alliances and is re-drawing the map of northern Syria for yet another time in the eight-year-old war.
Russia moved quickly to further entrench its role as a power broker after President Donald Trump ordered the pullout of American forces in north-eastern Syria. The American move effectively abandoned the Kurdish fighters who were allied with the US and cleared the way for Turkey's invasion aimed at crushing them.
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Germany eyes emergency measures for Brexit market panic
Tom Sims and John O'Donnell
Oct 17, 2019 — 1.25am
Frankfurt | Germany could use emergency measures to counter any market panic from a hard Brexit, an official with direct knowledge of the matter said, such as banning bets on falling share prices, a step last used in the financial crisis.
Germany, whose Frankfurt stock market is one of Europe's largest, is the most significant of a group of countries to consider such a temporary ban on short-selling of shares, including Italy and the Netherlands.
Although no emergency measures have yet been triggered, the preparations underscore the continent's heightened state of alert, with negotiations to secure Britain's orderly departure from the European Union hanging in the balance.
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'Don't be a fool!': Trump urges Turkish President not to slaughter thousands
By Matthew Knott
Updated October 17, 2019 — 10.23amfirst published at 8.35am
Washington: US President Donald Trump sent an extraordinary letter to his Turkish counterpart last week urging him not to be a "tough guy" and a "fool" by allowing thousands of people to be slaughtered in north-eastern Syria.
In the letter, released on Wednesday local time (Thursday AEDT), Trump told Turkish President Recep Erdogan that history would regard him as "a devil" if he oversaw mass bloodshed in the Kurdish-dominated region.
With the Turkish assault in its eighth day, Turkish forces and Kurdish fighters were still battling heavily Wednesday over the border town of Ras al-Ayn.
The release of the letter came during a dramatic day in Washington in which a meeting between Trump and Democratic House leaders descended into a slanging match, with US House Speaker Nancy Pelosi describing Trump going into a "meltdown" over a House of Representatives vote condemning his Syria withdrawal.
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Trump caught between two bears
It’s the nightmare scenario of China and Russia joining forces against the US, united not by ideology but by complementary grievances.
By PAUL DIBB
October 15, 2019
We are in an era when the risks of major power conflict are growing.
The likeliest contenders are commonly seen to be China, the rising power, and the US as the formerly dominant power. The other worrying contingency is conflict between Russia and Europe. But what about the third possibility: the prospect of China and Russia collaborating to challenge American power?
US political strategist and national security adviser Zbigniew Brzezinski warned that the most dangerous scenario for America would be a grand coalition of China and Russia united not by ideology but by complementary grievances.
China and Russia are the two leading revisionist powers leagued together in their disdain for the West. Both these authoritarian states see a West that they believe is preoccupied with debilitating political challenges at home.
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The West is reminded why it liked US leadership
The more the US president unwinds his country’s external commitments, the more other nations see the resultant damage to the global commons.
Oct 17, 2019 — 9.26am
Our favourite memories are actually memories of memories. Each time we recall an event or an era, another coat of varnish goes on until the original is romanticised out of all recognition.
And so a relationship that was fractious at the time slowly turns into the defining love of our life.
Nothing has gained more from this mental alchemy than the world before 2016. The rules-based order, as it was seldom known back then, is now remembered as an airtight fraternity of like-minded nations, tragically gone to seed.
It has become a prelapsarian Eden.
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Turkey agrees with US to pause Syria assault while Kurds withdraw
Humeyra Pamuk and Ece Toksabay and Tuvan Gumrukcu
Oct 18, 2019 — 7.15am
Ankara | Turkey agreed on Thursday local time to pause its offensive in Syria for five days to let Kurdish forces withdraw from a "safe zone" Ankara had sought to capture, in a deal hailed by the Trump administration and cast by Turkey as a complete victory.
The truce was announced by US Vice President Mike Pence after talks in Ankara with Turkey's President Tayyip Erdogan, and was swiftly hailed by President Donald Trump, who said it would save "millions of lives".
But if implemented it would achieve all the main objectives Turkey announced when it launched the assault eight days ago: control of a strip of Syria more than 30km deep, with the Kurdish YPG militia, formerly close US allies, obliged to pull out.
"The safe zone will be primarily enforced by the Turkish Armed Forces," a joint US-Turkish statement released after the talks said.
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Donald Trump cuts a deal with himself, virtually guaranteeing impeachment
By Matthew Knott
October 18, 2019 — 11.34am
New York: Another day in Donald Trump's Washington, another article of impeachment.
The Trump administration's decision to host the next G7 leaders' summit at one of Trump's own golf resorts isn't just another brazen rejection of presidential norms.
It is, on its face, a clear violation of the US constitution. It's even more likely than before that Trump will become just the third US president to be impeached.
The constitution forbids American office holders from accepting "any present, Emolument, Office, or Title, of any kind whatever" from a foreign state without the approval of Congress.
Known as the emoluments clause, it reflects the founding fathers' concern, verging on paranoia, about foreign meddling in US politics.
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'A great day for civilisation': US announces Turkish ceasefire in Syria
By Matthew Knott and Michael Bachelard
October 18, 2019 — 5.31am
New York/Duhok, Iraq: Turkey has agreed to a ceasefire in north-east Syria and will allow Kurdish fighters in the region to withdraw, US Vice-President Mike Pence announced following talks with Turkish President Recep Tayyip Erdogan.
In return the US will withdraw the sanctions on Turkish officials that President Donald Trump announced earlier in the week.
Turkey has agreed to a five-day ceasefire in northeast Syria to allow for withdrawal of Kurdish forces, US Vice President Mike Pence said on Thursday after talks with Turkish President Tayyip Erdogan.
"Today the United States and Turkey have agreed to a ceasefire in Syria,” Pence told reporters after more than four hours of talks at the presidential palace in Ankara on Thursday local time (Friday AEDT).
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China GDP growth slows to 6pc
· Dow Jones
China’s economy expanded 6.0 per cent in the third quarter from a year earlier, a slower growth pace for a second quarter in a row and hitting the bottom end of Beijing’s target range for economic growth this year, official data showed.
It was the slowest pace of growth since the first quarter of 1992 when China began publishing such figures, according to data services Wind.
The gross domestic product figure compared with a 6.2 per cent rise in the second quarter, according to China’s National Bureau of Statistics.
The buearu said the country was “faced with mounting risks and challenges both at home and abroad”.
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Trump hands Syria an easy win
The Kurds will have to make their peace with Bashar al-Assad. Western governments will worry about ISIS fighters becoming bargaining chips.
Oct 18, 2019 — 3.12pm
In an interview in February 2016, Syrian President Bashar al-Assad vowed that his military would retake the whole country. By the end of that year, with the support of Russian airpower, his forces had recaptured the country’s second largest city, Aleppo. And now, more than three and a half years later, as a result of the United States commander-in-chief’s unilateral decision to precipitously withdraw his forces, Assad’s military has begun to re-establish itself in the country’s north-east.
The conflict in Syria still has some way to run, but Damascus has been handed an opportunity to expand its footprint in the country at a price far less than it had expected to pay.
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The most ruthlessly honest president of modern times: a thousand days of Trump
By Bruce Wolpe
October 19, 2019 — 12.00am
This week, Donald Trump, the 45th man to occupy the office, marked his 1000th day as President of the United States. The same milestone was commemorated by Arthur Schlesinger Jr’s elegiac history and memoir of John F. Kennedy, A Thousand Days. (“Who can tell you who will be president a year from now?” Schlesinger quoted JFK saying in October 1963, the month before his assassination during his third year in office.)
For Trump, the milestone passed on Wednesday as just another day in the White House marked by the release of a letter in which he told NATO ally Turkey “Don’t be a fool!”, told the Speaker of the House, who is on the verge of impeaching him, that she was a “third-rate politician”, and told the press about a This Is Your Life television moment when he tried to choreograph a surprise healing session between the British parents of a young man killed in a hit-and-run accident and the wife of an American diplomat whom they suspect was the driver. (The parents, shocked, did not permit the encounter to proceed.)
So at this moment, just shy of a year before the next election, what can we say about Trump and his tenure as Commander-in-Chief and leader of the free world?
His is the most disruptive and divisive presidency in modern history. The country remains more divided today than at any time since the Vietnam War. Partisanship has never been stronger. Ninety per cent of supporters of the two major parties are locked in their view of Trump (Republicans approve; Democrats reject him).
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Fighting continues in Syrian town despite cease-fire
October 19, 2019 — 1.15am
Ceylanpinar, Turkey: Fighting continued on Friday in and around a north-east Syrian border town at the centre of the fight between Turkey and Kurdish forces, despite a US-brokered cease-fire that went into effect overnight.
The town of Ras al-Ayn, scene of some of the fiercest fighting of the Turkish invasion, was emerging as an immediate test for the five-day cease-fire agreed on by Washington and Ankara. Before the deal's announcement, Turkish-backed forces had encircled the town and were battling fierce resistance from Kurdish fighters inside.
A spokesman for the Kurdish-led fighters said on Friday they were not withdrawing from Ras al-Ayn because Turkish forces were still besieging and shelling it. Elsewhere along the border, calm seemed to prevail.
Shelling hit in and around Ras al-Ayn on Friday morning, raising columns of smoke, seen by a journalist in Ceylanpinar on the Turkish side of the border, but none was seen after noon, and only sporadic gunfire was heard from inside the town.
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Erdogan: Turkey plans presence in Syria
· Reuters
Turkey will set up a dozen observation posts across northeast Syria, President Tayyip Erdogan says, insisting that a planned "safe zone" will extend much farther than US officials said was covered under a fragile ceasefire deal.
Less than 24 hours after he agreed the five-day truce to allow Kurdish forces time to pull back from Turkey's cross-border assault, Erdogan underlined Ankara's ambition to establish a presence along 300 miles of territory inside Syria.
On the border itself, shelling could be heard near the Syrian town of Ras al Ain on Friday morning despite Thursday's deal, and a spokesman for the Kurdish-led forces said Turkey was violating the ceasefire, hitting civilian targets in the town.
But Reuters journalists at the border said the bombardment subsided around mid-morning and a US official said most of the fighting had stopped, although it would "take time for things to completely quiet down".
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Tough congressional sanctions rode to rescue of Kurds
Editorial Board of the Wall Street Journal
· The Wall Street Journal
US President Donald Trump has hailed a “ceasefire” deal with Turkey regarding Syria’s Kurds as a win for the diplomatic ages, thanking Turkish President Recep Tayyip Erdogan with his usual restraint as “a hell of a leader. And he’s a tough man. He’s a strong man. And he did the right thing.”
It’s more accurate to say that Erdogan is looking down the barrel of serious bipartisan economic sanctions from the US congress.
The deal is a temporary suspension-of-force promise, not a permanent ceasefire. In talks in Ankara with US Vice-President Mike Pence, Erdogan agreed to suspend his military invasion into Kurdish-held territory in Syria for five days. This will give Kurdish forces time to withdraw from areas being shelled, and meantime the US, the Kurds and Turkey will resume negotiating a longer-term deal.
If there’s a permanent agreement, Trump will cancel the sanctions on Turkey he announced this week. He boasted that his sanctions had turned Erdogan. “I didn’t need congress for sanctions because I can do sanctions that are tougher than congress. And I was prepared to do that,” he said.
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Trump may back-pedal but damage clearly done
Last week I wrote of the violent chaos that has overtaken northeast Syria since Donald Trump’s abandonment of America’s Kurdish partners, which enabled Turkey’s incursion into the area. Two airstrikes this week underline the extent of that chaos.
In the first, American fighter jets and attack helicopters mounted a “show of force” against Turkish-backed militia moving towards a major US headquarters in northern Syria, even as the base’s occupants frantically packed up to pull out. This same militia, part of the Free Syrian Army, was sponsored by the US until 2015, allegedly under a CIA program. When that program ended, FSA came under the patronage of Turkey, which is of course a NATO country — meaning that these American aircraft were targeting troops trained, armed and paid for by the US, who were now working with a US ally.
In the second strike, aircraft bombed the same base once American troops had safely left, trying to destroy it to stop the headquarters, and a nearby ammunition dump and equipment stockpile, falling into the hands of Syrian troops rushing to occupy it.
The strike did not fully succeed: much of the base was left undamaged. One video clip posted by a Russian war correspondent highlighted the unseemly haste of the American withdrawal, showing an interior with a well-stocked kitchen, airconditioned sleeping areas, a game console, Wi-Fi routers, and an array of American snack foods and soft drinks. The US troops had “bugged out” at almost no notice, taking weapons and military equipment but abandoning their personal gear.
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Brexit: How Boris Johnson’s deal differs from Theresa May’s
Much of Theresa May’s maligned and rejected Brexit deal has remained unchanged in Boris Johnson’s shiny new deal. But there are crucial differences.
Customs Union
Importantly the UK will not remain in the EU single market or customs union and is not legally bound by the EU rules.
Crucially the references in Theresa May’s deal to the EU’s level playing field demands for legally binding alignment on state aid, tax, social services and employment and environmental standards were removed from the Johnson deal.
Instead this is now referred to in the political declaration, which is the stated desire of the type of relationship the UK and EU would like to forge. This is not legally binding, but says both sides will work towards a Free Trade Agreement (FTA) and a high-level meeting will be convened in June 2020 to take stock of progress. It says the UK and the EU should “uphold the common high standards […] in the areas of state aid, competition, social and employment standards, environment, climate change, and relevant tax matters”.
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Delay plunges Brexit into fresh uncertainty
Hans van Leeuwen Europe correspondent
Oct 20, 2019 — 7.44am
London | British Prime Minister Boris Johnson's push to get Brexit done by October 31 has been blown off course by a rebel Conservative MP's amendment that torpedoed the parliament's supposedly decisive weekend vote on the deal.
The amendment passed 322 to 306 on Saturday (Sunday AEDT), as the British parliament once again plunged the Brexit process into fresh uncertainty.
Mr Johnson still can't be sure he has the numbers for his deal, in a vote the government now wants to schedule early this coming week. It's also unclear if European Union leaders will allow the Brexit delay that the Prime Minister is now legally obliged to seek from them.
"The fog of confusion still hangs over this place," former Conservative minister Stephen Crabb told the BBC.
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Jokowi 2.0: Playing catch-up in Indonesia
Will President Joko Widodo's next government favour politics over prosperity?
Emma Connors Correspondent
Oct 18, 2019 — 10.30pm
“We have to be super careful,” Indonesia’s Maritime Affairs Minister Luhut Binsar Panjaitan told reporters last week when asked how the country would fare amid deteriorating global forecasts and seismic geopolitical shifts. “We are resilient but we have to be super careful.”
Luhut, who generally goes by just the one name, is an influential figure in the country’s outgoing cabinet and knows better than most what lies ahead. He was among the senior ministers briefed a month ago by the World Bank on the increasing risks to the Indonesian economy, a briefing that also warned much-needed reforms were being sidelined by “shadowy forces” at work in government.
On Sunday regional leaders including the Sultan of Brunei and Australian Prime Minister Scott Morrison will rub shoulders at Jakarta’s Parliament building as President Joko Widodo formally begins his second five-year term. Soon after the inauguration the President, commonly known as Jokowi, is expected to announce his cabinet, speculation about which has been running wild since the April election.
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Republicans struggle to defend Donald Trump
By Rachael Bade, Mike DeBonis and Seung Min Kim
October 19, 2019 — 1.04pm
Washington: A growing number of congressional Republicans expressed exasperation on Friday over what they view as President Donald Trump's indefensible behaviour, a sign that the president's stranglehold on his party is starting to weaken as Congress hurtles toward a historic impeachment vote.
In interviews with more than 20 GOP lawmakers and congressional aides in the past 48 hours, many said they were repulsed by Trump's decision to host an international summit at his own resort and incensed by acting White House chief of staff Mick Mulvaney's admission - later withdrawn - that US aid to Ukraine was withheld for political reasons.
Others expressed anger over the president's abandonment of Kurdish allies in Syria.
One Republican, Representative Francis Rooney of Florida - whose district Trump carried by 22 percentage points - did not rule out voting to impeach the president and compared the situation to the Watergate scandal that ended Richard Nixon's presidency.
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I look forward to comments on all this!
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David.
