August 05, 2021 Edition
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In Australia,
as in the US, we are seeing more and more of the Delta COVID19 variant and
right now we are seeing some havoc both health wise – with infections and death
– and economically. In NSW it just gets worse with 262 new cases and 5 deaths on Thursday.. Problems are also emerging in Qld and Vic.
In the US they are back to 100,000 cases per day with death rates really rising. Right now it is looking rather ominous and we will have to wait a few weeks to see if it can settle.
In the UK right
now “Freedom Day” seems to have worked which is really interesting and frankly
amazing! Both cases and death rates are dropping!
Asia and especially Indonesia and worryingly China seem to be going backwards. So globally we are in a bit of a COVID19 pickle while the share market continues to rise! Go figure!
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Major Issues.
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Revealed: the fringe groups where Sydney’s lockdown protest began
By Fergus Hunter and Laura Chung
July 25, 2021 — 7.34pm
The organisation of an anti-lockdown protest that turned violent in Sydney on Saturday began in fringe online communities teeming with COVID-19 conspiracy theories, anti-Semitism and debunked views on vaccines.
The widely-condemned protest was linked to a “worldwide rally for freedom” and NSW Police said they were not taken by surprise by the event, having monitored plans as they developed in groups on encrypted platform Telegram and spread further on Facebook and Instagram.
Police on Sunday said they had received more than 5500 tip-offs about attendees and identified more than 200 people involved. More than 350 officers policed the event and a dedicated strike force of 22 officers has since been launched to investigate public health order breaches and any other offences.
“What took us by surprise and what disappoints me so greatly is the level of violence that people were prepared to use. That was unprecedented. That’s not Sydney,” NSW Police Deputy Commissioner Mal Lanyon said on Sunday.
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Covid-19 pandemic has underlined the need to keep investing in science
3:37PM July 25, 2021
Australia has succeeded as a progressive nation, building prosperity and opportunity for future generations, with a vision towards the horizon of possibilities. I have long admired Australia’s ability to “punch above its weight” on the global stage, particularly in the life sciences.
An outward-looking and aspirational mindset has been backed by determined resilience in the face of adversity. Now at this pivotal moment in history, leaders in all fields across Australian society can consider what can be – not simply what is.
The history of CSL – formerly Commonwealth Serum Laboratories, established in 1916 – is one of an ambitious vision to protect Australians suffering from serious disease and to improve public health. World-class medical research and ingenuity, coupled with skilled business strategy, have created a truly global success story.
Three key characteristics have emerged globally and locally that can drive an effective recovery from the impacts of the Covid-19 pandemic across policy, politics, regulation, health and commerce. They are agility, resilience and speed – which have been evident in the local response. However, there is much more that can be done to deal with both short-term issues as well as setting the nation up for a brighter long-term future.
At CSL, we believe scientific innovation will lead the world out of the pandemic. Over the past year, we have seen inspirational solutions to treat and prevent Covid-19 – demonstrating that the economic imperative to invest in science cannot be ignored. There is a huge opportunity for highly educated and innovative countries – like Australia – to invest further in world-class medical research and, crucially, the growing ecosystem that turns science and innovation into commercialised products.
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Labor drops negative gearing and tax cut repeal policies
6:55AM July 27, 2021
Anthony Albanese has promised to maintain tax cuts for higher income earners and dump plans to cut negative gearing in a pitch to aspirational voters who deserted Labor at the 2019 federal election.
The federal Opposition Leader promised that if Labor won the next election he would not repeal or modify the third tranche of legislated tax cuts that are due to begin in 2024, benefiting workers earning more than $120,000.
Mr Albanese also dumped a Bill Shorten-era policy to crack down on negative gearing and capital gains tax concessions.
He signalled Labor’s health and education policies would now be paid for by further crackdowns on multinational companies.
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I wouldn’t sign a China trade deal now: Tony Abbott
July 28, 2021 — 5.53am
London: Former Prime Minister Tony Abbott has told a British audience that there is no way he would sign a trade deal with China today.
Speaking alongside his new boss, the UK Secretary for Trade Liz Truss, the former prime minister said Australia had indulged in “wishful thinking” to believe that the Chinese would become “more like us” as a result of more global economic integration.
As prime minister, Abbott struck the China-Australia free trade deal in 2014 and lauded it as one of his government’s biggest achievements in office.
The agreement was announced with much fanfare when Xi Jinping visited Canberra in 2014 to address a joint sitting of Parliament and was hailed as far more ambitious than insiders had expected.
Abbott said Xi’s promise to Parliament of “democracy” in China by mid-century had been proven hollow by the Chinese President’s actions over the last six years.
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Why more of your super savings will end up overseas
Banking reporter
July 27, 2021 — 10.30pm
Australia’s $3.1 trillion superannuation pool is growing so fast it is creating a problem for super fund managers of where to park their ever-growing cash piles to obtain the best returns for their members.
The trend is changing how retirement savings are being invested.
A combination of higher super contributions, compounding returns and a wave of super fund mergers is creating “mega funds” – global-scale behemoths with more than $100 billion in assets.
Over the long term, these dynamics are set to lead to significant changes in the asset allocation of funds that manage the retirement savings of most Australians.
In a nutshell, a growing proportion of super money is more likely to be invested overseas in the likes of Apple, Facebook or foreign infrastructure assets, with relatively less in our market titans, such as BHP Group and the big-four banks.
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Early access to super cost Australians thousands
Michael Read Reporter
Jul 30, 2021 – 9.18am
Hundreds of thousands of Australians were left worse off by the Morrison government’s early access to super scheme, says Hostplus chief executive David Elia, who warned policymakers against reviving the policy during the current lockdown.
Mr Elia said the scheme, which ran from April until December last year, cost the 310,000 Hostplus members who withdrew money thousands of dollars each in foregone returns.
“Unfortunately for many of those members they effectively redeemed those investments at the bottom of the market,” he told The Australian Financial Review.
The scheme let people who had lost their jobs or had hours cut withdraw as much as $20,000 from their super accounts in two $10,000 tranches – the average withdrawal for each tranche was $7645.
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Australia’s biggest political deficit is moral courage
The pandemic has shown up lack of capacity to govern. But the longer-term defect has been fear of being unpopular.
Laura Tingle Columnist
Jul 30, 2021 – 3.59pm
It seems to have been a bit hard for the federal government to find anything useful to say this week as things have gone so pear-shaped in NSW.
Premier Gladys Berejiklian, her Health Minister Brad Hazzard and Treasurer Dominic Perrottet have daily floundered between pleading with people to comply with restrictions, pleading for them to get vaccinated, trying to insist the strategy is working in the face of a relentlessly rising trend line, and pleading with the federal government for more vaccines and economic help.
There was the belated offer of financial assistance from the Morrison government – once they were sure Victoria and South Australia were not also going to succumb to major COVID-19 outbreaks – and the rapid move by federal Treasurer Josh Frydenberg to make sure things had been positioned so that if the national economy does once again slip into recession, everyone will know it is NSW’s fault.
There was some more of the “look into my eyes, not at my hands” announcements from the Prime Minister about extra vaccine doses for NSW from a national stockpile that may or may not exist, depending on the day of the week.
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Frigate hell: this could dwarf our submarine drama
While the focus has been on problems with our $90bn future subs program, a storm is brewing over five new naval frigates.
July 31, 2021
It is the second largest construction project in Australia’s history behind the new submarines, but the $45bn program to build nine naval frigates now is in the spotlight for all the wrong reasons.
While the media focus has been on problems with the $90bn future submarine program, the first of the future frigates has been delayed by up to 18 months while the estimated cost of the whole project has been adjusted up from $35bn to $45bn.
“The submarines have had all the attention but a lot of signs are indicating that the future frigate program may be facing significant problems, if not worse,” says Marcus Hellyer, a senior defence analyst with the Australian Strategic Policy Institute. “We’ve seen some pretty clear signs from Defence, out of the Senate estimates for example, that the schedule is under a lot of pressure.”
So what is going wrong with the project to build the new frigates – the core of the navy’s future fleet – and why do these sorts of problems continue to plague Australia’s naval shipbuilding industry at enormous cost to the taxpayer?
The first problem, according to many defence experts, is that the Turnbull government chose the highest risk option in June 2018 when it selected as Australia’s future frigate the British Type 26 Global Combat Ship with significant Australian modifications.
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Coronavirus And Impacts.
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The politicisation of pandemic punditry
Medical experts are presenting opinions as facts and forming into rival camps.
Aaron Patrick Senior correspondent
Jul 25, 2021 – 3.37pm
Sixteen months ago, before most Australians knew what an epidemiologist was, an obscure but well-credentialled Sydney infectious diseases doctor and scientist was invited onto the ABC’s 7.30 program to discuss the pros and cons of COVID-19 lockdowns.
Answering host Leigh Sales in the flat tones of a television novice, Raina MacIntyre raised a problem that few people had thought a lot about, and is now a fault line dividing almost every pandemic-policy discussion: how to balance public health and economic freedoms.
“The social distancing measures that we need to take for public health for a disease for which we don’t yet have a vaccine do have an economic price,” MacIntyre said in the interview on March 11.
“That includes the travel restrictions, school closures – anything where you are stopping people from doing the normal things in their life. [Stopping] trade and travel and tourism is going to have an economic consequence.”
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No easy way out for unvaxxed Australia
NSW’s deepening lockdown crisis shows there will be no genuine return to normal life for all Australians until the national vaccine rollout is completed.
Jul 25, 2021 – 7.45pm
That NSW faces a tough fight to suppress the delta strain was reinforced over the weekend. A day after its government declared a state of national emergency, new infections surged on Saturday to a delta outbreak high of 163, with 43 people infectious in the community.
That fell only slightly to 141 and 38 respectively on Sunday. Two fatalities pushed the number of deaths during the current outbreak to eight.
There is still no exponential spread, which shows the restrictions are having an effect. But four weeks after the lockdown began, the outbreak is still not being reined in.
Hence Gladys Berejiklian’s call to redirect Pfizer vaccines from the rest of Australia to limit the spread in Sydney’s hotspot suburbs. While rejected by other premiers, consistent with their politically popular states-first approach, and by Scott Morrison, there is support for redirecting supposedly unallocated Pfizer supplies, including from former Labor leader Bill Shorten.
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‘Adriana is not a number’: Sydney accounting student, 38, the latest NSW coronavirus death
July 25, 2021 — 8.55pm
An accounting student in her 30s is being remembered as a valued friend and woman with dreams after her shock death from COVID-19 this weekend.
Adriana Midori Takara, a 38-year-old Brazilian national studying accounting at Sydney’s Kaplan Business School, had no underlying health conditions but deteriorated quickly after contracting the virus.
The case has renewed warnings about the danger posed to people of all ages as the highly contagious Delta variant of the coronavirus continues to spread.
Ms Takara died on Saturday night at Royal Prince Alfred Hospital, one of eight deaths linked to the current outbreak in NSW.
Fernanda Ferreira Batista, identifying herself as a friend of Ms Takara, said the woman was a much-loved daughter, sister, auntie, niece and friend.
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Anti-lockdown protests a sign of chaos growing in NSW
Columnist and former adviser to Labor prime ministers Kevin Rudd and Julia Gillard.
July 26, 2021 — 5.00am
There are days in politics when the weather seems to alter. Perhaps a new piece of knowledge has arrived or a realisation has finally set in. For whatever reason, the mood shifts.
On Saturday, anti-lockdown protests took place in several cities. That night there were scenes of violence on the news: two men were later charged for punching a police horse. Most other people were united in our conclusion that these people – clustering together without masks - were idiots. They did not represent us. But there was something about those images that did reflect the current moment: the burgeoning chaos, the sense of order fraying, the childish focus on self at the expense of others.
Thousands of people gathered in downtown Sydney to protest coronavirus restrictions as New South Wales recorded its biggest daily rise in new COVID-19 cases this year.
The protests were a lagging indicator. It was really Friday that the weather changed. That morning I was in the car, waiting for a COVID test, when the NSW Premier’s daily press conference began. I turned the volume down while my throat and nose were probed. After I drove home I sat in the car for a bit – it was hard to stop listening.
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Divided city reaches boiling point with anti-lockdown protest
By Mark Mordue
July 26, 2021 — 5.00am
Like many people, I wished the very worst upon the anti-lockdown protesters in Sydney. I wished they would catch the disease they seemed to think was little more than an illusion. A mask-less rabble in their thousands, they marched down Broadway: new-age anti-vaxxers, angry gym junkies, Christians fixated on the apocalypse, rednecks waving their flags for liberty, whole swathes of people who have lost all faith in the media and politicians. Placards on display declared the ABC to be controlled by Zionists, while others talked of not wanting to be part of a vaccine Holocaust.
It was hard to know who was freedom-loving or freedom-threatening, who was pagan or religious, lost in conspiracies or enraged by their inability to believe in anything at all. But a mob does not channel thought; only ill will.
The story of a nurse on her way to work being abused by the crowd for wearing a mask and a photo of large, muscular man seeming to strike a police horse summed it up. The man’s singlet said “Free Speech – more important than your feelings”. Later we learnt the horse was OK and that his name, appropriately enough, was Tobruk.
Apart from contradictory appeals for freedom, the only unifying chant the protesters had was “New South Wales”, as if this whole anti-lockdown event was woven from a State of Origin NRL fan-base mired in a reality-TV update on Survivor.
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Coronavirus: Sydneysiders have every right to be frustrated
July 26, 2021
This lockdown I’ve become more alert and alarmed about the Covid-19 spread than I was in 2020. The unknowns were concerning back then, but now the knowns are too.
Based in Sydney and knowing how much more transmissible (and seemingly deadly) the Delta variant is, my caution levels have risen.
It is partly driven by seeing the finish line, at least when it comes (hopefully) to becoming serious ill or dying from Covid-19. I’m due to get my second jab today, knowing that it takes upwards of seven days to start to offer the protections its designed to offer. But once they kick in, the rarity of dying from Covid-19 is comforting.
And I am one of the lucky ones. I can only imagine how Sydneysiders so far unable to access vaccines are feeling. Knowing their age grouping have been both ineligible for vaccinations, yet members of their age cohort are struggling for life in ICU.
Of course the revised advice surrounding AstraZeneca has finally and belatedly opened vaccine access up, but the point still stands.
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COVID authoritarianism sweeps across Europe – but the economy is saved
By Ambrose Evans-Pritchard
July 28, 2021 — 10.48am
Europeans have watched the slapstick spectacle of Britain’s “pingdemic” and drawn their conclusions: they will not let vaccine refuseniks queer the pitch for everybody else, or prevent the full reopening of the economy.
The unvaccinated will be shut out of normal life, progressively demonised, and stripped of civil rights for the greater good of the majority. A new political fault line is emerging in Europe.
“Those who have been vaccinated will definitely have more freedom than those who have not been vaccinated. The state has the duty to protect the health of citizens,” said Helge Braun, Germany’s cabinet minister.
If and when the Delta wave hits Germany in earnest - he fears 100,000 cases a day by September, just in time for the election - the unjabbed will face exclusion from restaurants, cinemas, stadiums and so forth. “The risk for everybody else is too high,” he said.
The lurch towards majoritarianism is taking hold. France’s Emmanuel Macron is ramming through mandatory vaccination for nurses and care home workers, as the first step towards compulsory jabs for broad sections of society. His draconian plan has been somewhat diluted in parliament after dissent from Left and Right.
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There’s nothing over the top about saving 50K lives
A more targeted strategy might have worked. But Australia’s border closures and lockdowns have achieved world-leading health and economic outcomes and produced net benefits overall.
David Bassanese Columnist
Jul 27, 2021 – 12.13pm
To those that continue to argue Australia’s approach to dealing with COVID-19 has been over the top, I have a single searing statistic for you.
By my estimates, we’ve saved up to 50,000 lives so far, and probably at least about 35,000. That’s one-fifth of our annual death toll.
That’s a lot to feel proud of. Let me explain.
Australia has officially recorded about 32,000 cases of COVID-19, which represents 0.12 per cent of the population. We’ve also sadly had just over 900 deaths, or 2.8 per cent of those recorded as having contracted COVID-19.
In the United States and the United Kingdom, about 10 per cent and 8 per cent of their populations respectively are recorded as having caught COVID-19. About 2 per cent of those cases died.
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https://www.afr.com/policy/economy/nsw-faces-months-in-lockdown-not-weeks-20210728-p58dsh
NSW faces months in lockdown, not weeks
The state is going to take a long, long time to recover from its current crisis. It’s just no one wants to concede that publicly yet.
Jennifer Hewett Columnist
Jul 28, 2021 – 5.35pm
NSW has crossed the line from commendable optimism to unjustified delusion. The virus doesn’t follow a political timetable. Gladys Berejiklian’s announcement of a four-week extension of the lockdown is little more than desperate hope.
The more depressing reality is a state probably stuck in lockdown and national isolation for something like four months rather than four weeks. It’s just that no one wants to concede that publicly yet.
New infections are still heading in the wrong direction – 177 were reported on Wednesday. At best, this number might flatline with a modest fall in the number of infected people out in the community in August.
But with the highly transmissible delta variant well established, the latest restrictions will produce changes more at the margin.
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How Contagious Is the Delta Variant?
July 29, 2021
The Delta variant of the virus that causes Covid-19 is often described as highly transmissible. So, what does that actually mean?
Scientists studying Covid-19 say that Delta’s increased contagiousness means we need to update our thinking about exposure risks. Because people infected with Delta carry higher levels of virus than with earlier strains, the old rules of thumb no longer apply, they say — including the conventional wisdom that it takes 15 minutes of close contact with someone to get infected.
Delta has already changed public-health advice about masking. The Centers for Disease Control and Prevention on Tuesday recommended that vaccinated people resume masking indoors in certain parts of the country. And local officials have begun to reinstate mask mandates, including in Los Angeles County and St. Louis County.
CDC Director Rochelle Walensky said the guidelines were revised because new data on the Delta variant show that breakthrough infections for fully vaccinated people, though rare, carry a similar level of viral load as infections among the unvaccinated.
Here’s what scientists say we need to know about how Delta changes our risk calculus.
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Vaccination race reveals two distinct populisms
The global race to vaccinate has a use beyond the narrowly medical: it is also dividing the global populists into authoritarians and feral libertarians.
Janan Ganesh Contributor
Updated Jul 29, 2021 – 11.11am, first published at 11.04am
Last month, Rodrigo Duterte warned Filipino vaccine-dodgers that he would inject it “in your butt”. Neither the risks to efficacy nor the potential tort deterred this most vivid of presidents.
Other members of the strongman club are more demure but not less insistent. Hungary’s Viktor Orban is making a third dose available from next month. Israel’s vaccination rates led the world under a now-deposed populist.
When the Law and Justice party of Poland censured one of its MPs for getting jabbed, it was not capitulation to science that was his crime. It was queue jumping.
The global race to vaccinate is having a use beyond the narrowly medical. It is delineating two populisms that my trade likes to group into a Nationalist International.
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Race complicates Berejiklian’s vaccine mission
Aaron Patrick Senior correspondent
Jul 29, 2021 – 4.16pm
Gladys Berejiklian is holding her home city hostage to vaccination numbers. Unfortunately for her and Greater Sydney, convincing the population at the centre of the outbreak to get inoculated is made more difficult by the delicate challenge of racial biases.
On Thursday, Berejiklian acknowledged the problem, obliquely, of convincing an ethnically diverse and working-class south-western and western Sydney to get jabbed.
“In some communities, having a vaccine doesn’t come naturally,” she said.
Academic research shows some racial groups are more sceptical of vaccines than others.
Ten days ago the Lancet, a British medical journal, published a study of 11,584 British healthcare workers, who included nurses, porters and cleaners.
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Long COVID is on the march: can it be stopped?
As global cases of the coronavirus build towards 200 million, the threat of long-term medical consequences keeps extending.
Jill Margo Health editor
Jul 30, 2021 – 12.26pm
After the world has tamed COVID-19 into an infection it can live with, there will be a long aftermath. Among the loss, the relief and the recriminations, there will be long COVID.
This post-viral syndrome has already begun and is gaining momentum as the number of people infected with COVID-19 builds towards 200 million globally.
While Australia’s politicians haven’t quite woken up to this yet, they will soon and, hopefully, policymakers who are monitoring global research on the health effects of COVID-19 will put long COVID on the agenda.
It would take a prescient politician to realise that when the vaccine war is over, long COVID will be an important issue, perhaps one for an election.
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Delta Variant as contagious as chickenpox: CDC internal report
By Apoorva Mandavilli
July 30, 2021 — 3.10pm
New York: The Delta variant is much more contagious, more likely to break through protections afforded by the vaccines and may cause more severe disease than all other known versions of the virus, according to an internal presentation circulated within the Centres for Disease Control and Prevention.
Dr Rochelle Walensky, the director of the agency, acknowledged Tuesday that vaccinated people with so-called breakthrough infections of the Delta variant carry just as much virus in their nose and throat as unvaccinated people. But the internal document lays out a broader and grimmer view of the variant.
The Delta variant is more transmissible than the viruses that cause MERS, SARS, Ebola, the common cold, the seasonal flu and smallpox, and it is as contagious as chickenpox, according to the document, a copy of which was obtained by The New York Times.
The immediate next step for the agency is to “acknowledge the war has changed,” the document said.
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Coronavirus: Indonesia is being ravaged by Delta; we must step up
Marc Purcell and Brigid O’Farrell
12:00AM July 29, 2021
Delta has shaken us from cosy notions of Australian pandemic exceptionalism. It also should help us recognise the health and humanitarian disaster unfolding on our doorstep. The pathogen does not respect borders. A narrow focus on eliminating the virus within our own nation means we are destined to invite it back in.
So Indonesia deserves our urgent attention. Our northern neighbour is the epicentre for the highly contagious new variant that has swept across India. Delta may have ground Sydney to a halt, but in Indonesia the impact has been more devastating.
Indonesia’s vaccination rate remains at 6 per cent, while deaths average more than 800 a day. The fourth most populous country has been hit with critical shortages of medical supplies and sharply rising risks for marginalised communities such as informal workers, women and children.
Confirmed daily cases are approaching 50,000 and recent data suggests almost half of Jakarta’s population – 4.7 million people – have been exposed to the virus.
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Climate Change.
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Fire and fury: Is climate change entering a more dangerous phase?
A UN report due next week will be closely scrutinised after wildfires destroyed a Canadian village and floods tore through a German town and inundated a Chinese subway station.
Pilita Clark Columnist
Jul 29, 2021 – 12.44pm
In just over a week, if all goes as planned, a colossal report on the state of the global climate will emerge from the UN’s Intergovernmental Panel on Climate Change (IPCC).
This is the sixth analysis of its kind in 31 years and, like the other five, it will be a sweeping scientific assessment of how and why the planet is warming. Yet this report will be different.
It will arrive as the impact of a shifting climate seems brutally apparent, not just on remote Himalayan glaciers or Arctic sea ice, but right in front of frightened human eyes.
In the past four weeks alone, wildfires virtually burnt a Canadian village off the map after it shattered the national heat record with a scorching 49.6 degrees. Floodwaters tore through a Germany town like a tsunami, tossing cars like corks. Terrified Chinese subway passengers stood in chest-high water as nearly a year’s worth of rain fell in three days.
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Royal Commissions And The Like.
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No entries this week.
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National Budget Issues.
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https://www.afr.com/markets/equity-markets/australia-is-heading-back-into-recession-20210725-p58co9
Australia is heading back into recession
Our recession will be painful, protracted and political.
Grant Wilson Contributor
Updated Jul 25, 2021 – 2.01pm, first published at 11.01am
It is more likely than not now that Australia is heading back into recession through the second half of the year.
This will look and feel very different to last year’s downturn. It will be less dramatic, though more protracted. Indeed, the downturn may well extend into next year.
This view is not shared by sell-side economists, who continue to expect a snapback in Q4, thereby averting two consecutive quarters of negative growth.
Underpinning these forecasts is an expectation that South Australia and Victoria emerge from lockdown soon, and that Greater Sydney follows in the next couple of months.
The household savings ratio is also still more than twice pre-pandemic lows (11.6 per cent versus 5.4 per cent), hence there is a lot of dry powder. Moreover, with Q3 GDP now set to be a weak print, it should be arithmetically straight-forward for an improvement in Q4, or so the story goes.
We are more concerned, and think that a sustained downturn is more likely.
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Inflation figures ignore soaring cost of housing
As the property bubble goes global, there’s growing concern official data fails to capture the steep rise in home prices consumers now have to contend with.
Karen Maley Columnist
Jul 27, 2021 – 5.00am
When top officials from the US Federal Reserve meet this week, you can be sure one of the hot topics of conversation will be the extent to which the US central bank’s aggressive monetary stimulus is fuelling the country’s housing bubble.
According to figures released last week, the median sale price of an existing home soared 23.4 per cent in the year to June, to reach a record high of $US363,300 ($495,000).
The surge in house prices largely reflects the aggressive monetary stimulus the Fed adopted to combat the economic devastation of the pandemic, which included slashing short-term interest rates to near zero, and buying $US120 billion of US government bonds and mortgage-backed securities a month.
At its meeting this week, Fed policymakers are set to discuss when they should start to reduce their monthly bond purchases, and how quickly they should taper their purchases.
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https://www.afr.com/policy/economy/inflation-spikes-to-3-8pc-20210728-p58dl7
Inflation spikes to 3.8pc
Ronald Mizen Economics correspondent
Jul 28, 2021 – 11.48am
Petrol prices and the withdrawal of coronavirus supports caused inflation to spike in the June quarter but the lift will be temporary and unlikely to change the Reserve Bank’s dovish outlook for interest rates.
Headline inflation rose 0.8 per cent over the quarter and 3.8 per cent annually, according to the Australian Bureau of Statistics.
The result was broadly on par with market expectations for the consumer price index (CPI) to lift 0.7 per cent quarter-on-quarter and 3.7 per cent year-on-year (up from 1.1 per cent in March).
Trimmed mean inflation or “core inflation” – the RBA’s preferred measure – came in at 0.5 per cent over the quarter and 1.6 per cent annually, slightly ahead of the central bank’s forecast of 1.5 per cent.
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https://www.afr.com/policy/economy/super-and-private-health-ripe-for-more-reform-20210725-p58co0
Super and private health ripe for more reform
Business has more to gain from making government work better than from marginal reforms to tax and labor markets.
Ben Potter Companies editor
Jul 29, 2021 – 2.11pm
Few people have had a better view of what passes for reform at the interface of government, business and individuals in Australia in the last dozen years than John Daley.
Daley has handed the reins of The Grattan Institute – the centrist think tank of which he was the founding chief executive – to Danielle Wood and is returning to consulting next month at the marquee firm of EY Port Jackson Partners.
You can never plan on what consulting is going to throw at you but he expects to find himself looking at similar issues through a different lens – that of corporate clients – so it is timely to ask where the remaining low-hanging fruit is in business.
Readers who’ve followed Grattan’s work on superannuation won’t be surprised to learn that the $3 trillion sector is Daley’s first port of call. Genuine reforms have been passed this year to reduce the unacceptably high number of dormant accounts drawing fees for little or no service, speed up the exit of poorly performing funds and improve reporting to members.
New Statesman
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Treasurer warns Sydney lockdown could lead to second recession
By Shane Wright and Jennifer Duke
July 30, 2021 — 12.01am
Federal Treasurer Josh Frydenberg has warned the nation could fall into a second recession if the Greater Sydney lockdown failed to contain the coronavirus outbreak, as industry groups say home builder grants won’t be as effective to drive another economic recovery.
The economy is expected to shrink over the September quarter due to the extended restrictions in NSW, Mr Frydenberg said. A recession is defined as two consecutive quarters of negative growth, which means the next few months are critical.
“With respect to the December quarter, that does depend to a large extent how successful NSW, our largest state economy, is in getting on top of this virus,” Mr Frydenberg said. “That’s why people need to follow the health advice and that’s why it’s also important for our economy that both South Australia and Victoria have come out of these lockdowns.”
Analysis released on Friday by EY suggests the current lockdown will reduce GDP by 2.5 percentage points in the September quarter, enough to drive it into negative territory, but an economic rebound is expected in the final quarter.
Australia was plunged into its first recession in 30 years last year due to the pandemic, with a sharp 7 per cent contraction in the June quarter, but rebounded quickly on the back of billions of dollars of government spending and support including building grants and a historic wage subsidy program.
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Health Issues.
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Victoria drug deaths: Men twice as likely to overdose than women
July 29, 2021
More than 4500 Victorians died by drug overdose in the past decade with the rise of new psychoactive substances contributing to the tally.
A new report released Thursday by the Coroners Court of Victoria, reveals 4551 Victorians died by overdose between 2011 and 2020 with a steady increase in deaths between 2011 to 2018, then a slight decline from the 2018 peak in 2019 and 2020.
The report, Victorian Overdose Deaths 2011-2020, found males were twice as likely to die of an overdose than females, and people aged between 35 and 54 are most at risk.
While just under three-quarters of the overdose deaths occurred in metropolitan areas, the rate of overdose deaths are consistent across Metropolitan Melbourne and Regional Victoria.
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International Issues.
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Beijing’s surprise plan to lift birth rate sparks massive selloff
By Julie Zhu
July 26, 2021 — 7.21pm
Hong Kong: China’s sweeping new rules in private tutoring have sparked a selloff in Chinese private education companies as Beijing steps up regulatory oversight of a $US120 billion ($163 billion) industry that investors had bet billions of dollars on in recent years.
The new rules released on Friday bars for-profit tutoring in core school subjects in an effort to boost the country’s birth rate by lowering family living costs.
The news sent shockwaves through the sector and parents struggled to understand how exactly the move would impact their children in a highly competitive education system.
Under the new rules, all institutions offering tutoring on the school curriculum will be registered as non-profit organisations, and no new licences will be granted, according to an official document.
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America’s recent military history points to strategic shortcomings
Political and international editor
July 27, 2021 — 5.00am
America’s two “endless wars” are now ending. Joe Biden already has committed to the withdrawal of all US combat forces from Afghanistan. He’s about to announce the withdrawal of all US combat forces from Iraq as well.
Not because the US and its allies won. Both wars have been failures of strategy and failures of policy. They are hard reminders that the US has not won a major war since World War II.
It has mounted successful smaller interventions including the 1991 Iraq War and it didn’t lose the Korean War, although it didn’t win it, either – it was a major conflict which remains stalemated in ceasefire.
But in Afghanistan, Iraq and Vietnam it has demonstrated that there is nothing super about the superpower’s ability to wage war.
This is not to diminish the pluck or patriotism of any of the soldiers from the US or its allies who took the gravest risks and often paid the highest price in service of their countries.
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China wipes out $US100 billion industry as it widens crackdown
Senior business columnist
July 27, 2021 — 11.59am
China just wiped out a $US100 billion ($135 billion) industry. It’s not its first assault on its big private sector businesses, however and probably won’t be its last.
Over the weekend China announced the detail of reforms of its private sector education companies, one of the hottest sectors in its economy and the target of massive amounts of foreign investment.
It banned the companies from making profits, raising capital or going public. It also banned them from teaching foreign curriculums, importing foreign textbooks and employing foreign teachers.
It has effectively destroyed the companies and the wealth of the private sector entrepreneurs who profited from the ambitions of parents trying to maximise the chances of their children gaining entry to the country’s best universities. The founder of one of the biggest of the companies, Gaotu’s Larry Chen, lost $US15 billion of paper wealth as shares in the US-listed company plunged nearly 80 per cent.
There are some industry-specific motivations for the assault on a sector the authorities said had been “hijacked by capital.”
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AFP
5:17PM July 26, 2021
President Vladimir Putin has boasted that Russia’s navy is capable of delivering lethal strikes against underwater and aerial enemy targets during a parade of warships in the port city of Saint Petersburg.
The Russian leader’s comments on Sunday come days after military officials announced tests of advanced new weapons, some of which come from an arsenal Mr Putin has described as “invincible”.
“The Russian navy today has everything it needs to guarantee the protection of our country and our national interests,” he said according to a broadcast on state television. “We can detect underwater, surface or aerial enemies and target them if a lethal strike is necessary.”
The Russian leader was speaking on the sidelines of an annual parade of military vessels, flanked by naval officers in white, and also Defence Minister Sergei Shoigu.
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China’s education sector crackdown hits foreign investors
Ryan McMorrow and Sun Yu in Beijing and Tabby Kinder and Thomas Hale in Hong Kong
Jul 27, 2021 – 2.11pm
China’s sweeping overhaul of its $US100 billion private education industry will eliminate foreign investors from much of the sector and threatens to wipe out billions of dollars of investment from groups such as BlackRock, Baillie Gifford, Tencent, Sequoia and SoftBank’s Vision Fund.
The regulations will ban companies that teach school curriculum subjects from making profits, raising capital or listing on stock exchanges worldwide, and will prevent them from accepting foreign investment.
The move could fundamentally damage a sector that has boomed in recent years, resulting in hefty valuations for the three largest US-listed groups, TAL Education, New Oriental Education and Gaotu Techedu.
The changes are part of the Chinese Communist party’s drive to make raising children and education more affordable and combat a looming population decline that threatens the country’s economic future.
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Blame on all sides, but China’s hard line is not softening
China has made it clear it will not play ball with Biden. Importantly, however, it is willing to keep the lines of communication open with the United States – something it will not do with Australia.
Michael Smith China correspondent
Updated Jul 27, 2021 – 6.39pm, first published at 5.19pm
The mood in Tokyo compared with Tianjin this week could not have been more different.
As Chinese and American Olympic athletes competed in an atmosphere of global goodwill in Japan, a high-level meeting between the two global powers in the northern Chinese city was decidedly frosty.
Rather than rolling out the red carpet as it did for Donald Trump four years ago, the most senior US official under the Biden administration to visit China so far was not even allowed to set foot in the Chinese capital Beijing.
Instead, US Deputy Secretary of State Wendy Sherman travelled to a hotel in the nearby city of Tianjin for a terse meeting with her Chinese counterpart, Xie Feng. She did later land a meeting with his superior, China’s Foreign Minister Wang Yi, but that oddly received a lot less attention.
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Why Xi Jinping is making investors very nervous
Shareholders fear being caught in the crosshairs as Beijing ramps up its regulatory crackdown and analysts warn Chinese companies are ‘simply not investable’.
Karen Maley Columnist
Jul 28, 2021 – 5.00am
How far is Chinese president Xi Jinping prepared to go in tightening Beijing’s grip over the world’s second biggest economy?
Foreign investors have dumped billions of dollars worth of Shanghai and Shenzhen-listed shares so far this week, after state-owned media reported on the weekend that Beijing plans to force after-school tuition groups to run as not-for-profit operations, and to ban them from raising capital.
The share price of US-listed Chinese education companies, including New Oriental Education and Technology Group (EDU) and TAL Education (TAL), were also sold off heavily in US trading at the start of the week, as investors worried that their earnings would be crunched by Beijing’s new policy.
New Oriental has seen is share price plummet close to 86 per cent in the past year, while TAL Education has fallen 94 per cent.
Meanwhile, technology stocks remain under pressure. Chinese internet behemoth Tencent slumped more than 7 per cent in Hong Kong trading on Tuesday after the company’s music arm relinquished some exclusive streaming rights.
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‘We will not flinch’: US defence chief calls out China on first trip to South East Asia
July 27, 2021 — 9.46pm
Singapore: United States Defence Secretary Lloyd Austin has slammed China over its aggression in the South China Sea and towards Taiwan, but says his focus is on enhancing ties in the Indo-Pacific and military capability in a bid to “deter anyone that would make the mistake of taking us on”.
In his first major speech on security in south-east Asia and and the rise of China, the Pentagon chief said the US was committed to ensuring a free, open and rules-based region and took aim at Beijing for conduct that did not adhere to those principles.
“Beijing’s claim to the vast majority of the South China Sea has no basis in international law,” the retired Army general said at Singapore’s Fullerton Hotel on Tuesday night.
“Unfortunately, Beijing’s unwillingness to resolve disputes peacefully, and respect the rule of law, isn’t just occurring on the water. You’ve also seen aggression against India, destabilising military activity and other forms of coercion against the people of Taiwan, and genocide and crimes against humanity against Uighur Muslims in Xinjiang.”
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China threatens its own future by stifling its tech giants
The tension between state control and the animal spirits of China’s private sector raises serious doubts about the economy’s ability to keep growing
Stephen Roach Contributor
Jul 28, 2021 – 12.31pm
When it comes to the Chinese economy, I have been a congenital optimist for more than 25 years. But now I have serious doubts. The Chinese government has taken dead aim at its dynamic technology sector, the engine of China’s new economy.
Its recent actions are symptomatic of a deeper problem: the state’s efforts to control the energy of animal spirits. The China Dream, President Xi Jinping’s aspirational vision of a “great modern socialist country” by 2049, could now be at risk.
At first it seemed as if the authorities were concerned about a one-off personnel problem when they sent a stern message to the irreverent Jack Ma, founder of Alibaba, the world’s largest e-commerce platform. Ma’s ill-timed comments at a Shanghai financial forum in late October 2020 about the “pawnshop” mentality of the bank-centric Chinese financial system crossed the line for China’s leaders.
Early the following month, a record $US34 billion initial public offering for Ant Group, the behemoth fintech spin-off of Alibaba, was cancelled less than 48 hours before the scheduled listing. Five months later, Alibaba itself was fined a record $US2.8 billion ($3.8 billion) for alleged anti-monopoly violations.
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China’s eminently sensible sharemarket assault
Jonathan Shapiro Senior reporter
Jul 29, 2021 – 9.50am
In January 2014, an exclusive group of hedge fund managers gathered in Miami to escape the bitter north-east winter and exchange some of their best ideas. One in particular seemed compelling: go long China e-commerce.
E-commerce was a numbers game and no market had more consumers than China, which had largely leapfrogged bricks and mortar retail. For the most part, that thesis has played out, and over the years, foreign investors have learnt to love Chinese stocks, particularly if they’re listed in the US.
But there’s always been a lingering apprehension about Chinese tech stocks. One issue is the Variable Interest Entity structure, which meant in effect that investors didn’t actually own shares in the company but a derivative tied to the economic outcome. Over time, these concerns were drowned out as China’s tech titans were embraced by global investors.
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The Fed looks as confused as the rest of us about what the future holds
Senior business columnist
July 29, 2021 — 11.46am
As far as the US Federal Reserve is concerned, it appears the more things change the more they stay the same.
Despite an economy roaring along at its fastest pace for decades and inflation rates at their highest levels for 30 years the Fed remains adamant that the surge in growth is a bounceback from pandemic-affected levels and that inflation remains transitory, a function of pandemic-induced bottlenecks in supply chains.
After this week’s meeting of the Fed’s Open Market Committee its chairman, Jerome Powell, did say that, if the Fed saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently above the levels the central bank is targeting, it would be prepared to adjust the stance of policy.
It has become apparent as this year has progressed, however, that despite Powell’s apparent confidence that the Fed has things under control, its members are as uncertain as the rest of us as to whether the big bounceback in the US and other developed economies will continue and whether the huge spike in inflation is indeed transitory.
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How a declining birth rate will reshape the world
Even before the pandemic, population growth across the world was falling. But do you really want people to have more children?
Sophie McBain
Jul 30, 2021 – 9.50am
In the days when we were still disinfecting our groceries and stockpiling toilet rolls, there was speculation that lockdowns might produce a baby boom: couples were stuck at home – what else was there to do? Instead, as the pandemic has worn on, maternity wards have become quieter. Birth rates have plummeted across much of Europe, the US and Asia.
Provisional data for England and Wales suggests the number of births fell by 3.9 per cent last year and the first quarter of this year, which would put the fertility rate at a record low. It turns out – and it seems obvious now – that the horror and uncertainty of a pandemic has a dramatic contraceptive effect: the monthly fertility rate in England and Wales in December last year and January this year, about nine months after Britain shut down, fell by 8.1 per cent and 10.2 per cent year-on-year respectively. A record number of women in England and Wales had abortions last year.
In the US, the fertility rate fell by 4 per cent last year, to the lowest on record. Italy’s birth rate has dropped to its lowest level since unification in 1861; together with a high COVID-19 death toll, this has caused a drop in population equivalent to a city the size of Florence.
In France birth numbers have dropped to their lowest since World War II; in Japan and South Korea there have been record lows. The number of births in China dropped 15 per cent last year; after decades of maintaining a one-child policy, replaced with an allowance for two in 2016, the government announced in May that women could now have three children.
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China’s tech terror means the end of the economic miracle
By Ambrose Evans-Pritchard
July 29, 2021 — 2.01pm
Beijing would like us to believe that the great purge of China’s technology sector is akin to Teddy Roosevelt’s subjugation of the US robber barons a century ago.
Roosevelt’s trust busters confronted the Rockefellers and JP Morgans of the era, breaking up Standard Oil, US Steel and the railway monopolies. His Square Deal is the best known of America’s episodic responses to overweening and abusive corporate power, each aimed at preserving the country’s Jeffersonian spirit and preventing the rise of an entrenched oligarchy.
Xi Jinping is doing the opposite. His purpose is to bring all centres of rival power under tight control and reassert the total political monopoly of the Communist Party. He is striking on multiple fronts at once, and the tally so far is a 43 per cent fall in the Hang Seng Tech index since the peak in February.
It is presented as a form of commercial cleansing, a necessary step to ensure data protection against predatory business elites, as well as a blow for consumer rights and the spirit of equality. “I don’t believe for one moment that these are the true motives,” said Roger Garside, a former British diplomat in Beijing and author of books on Xi and Deng Xiaoping.
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China sends sharp-tongued ‘wolf warrior’ to US as ambassador
July 29, 2021 — 2.59pm
Washington: China dispatched a veteran diplomat known for pushing back against Western criticism to serve as its next ambassador to the US, an appointment that suggests Beijing is bracing for a period of prolonged tension with Washington.
Qin Gang, 55, who most recently served as vice foreign minister, arrived in the US on Wednesday to fill the post vacated last month by long-time ambassador, Cui Tiankai, according to a statement from the Chinese embassy.
He said at a press briefing that he would work “to safeguard the foundation of China-US relations, uphold the shared interests of the two peoples, and endeavour to bring China-US relations back on track.” The ties that have been opened between the countries “cannot be closed,” Qin said.
His arrival was accompanied by a commentary from the official Xinhua news agency warning that it was “unrealistic to solve the fundamental differences between the two countries quickly,” and placing the onus on the US to treat China as an equal.
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Markets are finally taking notice of China’s repression in Hong Kong
By Simon Nixon
The Times
8:13PM July 30, 2021
One of the surprises of the past two years has been the extraordinary indifference of markets towards the fate of Hong Kong.
When Beijing broke a solemn treaty obligation to maintain “one nation, two systems” until 2047, supplanting the territory’s democratic institutions with its own appointees and introducing a national security law that compromised the independence of the judiciary and threatened Hong Kong’s freedoms, most financial institutions remained unfazed.
When pro-democracy campaigners were arrested and jailed, the markets shrugged. Several investment banks have actually increased their staffing in Hong Kong this year.
Indeed, money has continued to pour into Hong Kong, which was viewed by investors as the gateway to China. The new issue market has boomed, with $US88bn of share sales so far this year, second only to New York. Hong Kong even managed to climb up the international league table of financial centres from fifth to fourth. Investors appeared to be betting that while Beijing would seek to impose its own brand of authoritarian control, it would not do anything to undermine the institutions and system of common law that underpinned Hong Kong’s attractiveness as a financial centre. After all, Chinese companies needed access to foreign capital and China’s super-rich wanted to park their cash offshore.
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I look forward to comments on all this!
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David.
