November 18 2021 Edition
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This big news this week has been the end of COP26 with some positive movement – but not enough for many. Australia will now be under pressure to do more in a number of areas,
In the US this week will be one remembered for clarifying how the US and China can live in the same world and not blow ourselves up - was so good the meeting of Biden / Xi was calm and polite!
In the UK and Europe and some of Asia we seem to be having COVID get worse again with more vaccine breakthrough etc.
In Australia
the election campaign for next year seems to have sadly kicked off. A six month
campaign may kill us all! ScoMo seems to be testing out lines for the coming campaign!
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Major Issues.
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https://www.afr.com/politics/federal/election-in-may-on-economic-rebound-looms-20211107-p596q3
Election in May on economic rebound looms
John Kehoe Economics editor
Nov 8, 2021 – 5.00am
The federal election is most likely to be held in May next year, with the Morrison government preparing to fight the poll on an expected economic bounce-back from COVID-19.
The public service in Canberra is undertaking preparatory work for an April budget, with bureaucrats being told to be prepared to cut short their summer holiday plans in January.
Government sources said no final decision had been made on an election date, but the odds were firming for an April budget, followed by a May election.
With the Coalition trailing Labor in opinion polls, Prime Minister Scott Morrison wants to make the election a referendum on which side of politics can be trusted to manage the economic recovery from COVID-19.
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Inflation gives investors the chance to profit from shares
James Weir Contributor
Nov 8, 2021 – 5.01am
Inflation is once again in the headlines, after Australia’s September quarter CPI data showed prices increased by more than 3 per cent over the year.
The Reserve Bank looks through the more volatile prices, such as food and energy, but even its preferred “core measure” came within its 2-3 per cent target range for inflation for the first time in six years.
Underlying the spike in inflation are higher energy prices, especially across the Northern Hemisphere, colliding with ongoing supply chain pressures, which were frequently referred to in recent results by both US and Australian companies.
The supply chain pressure is due largely to a global spike in demand for goods underwritten by the enormous levels of government stimulus pumped into the economy to offset COVID-19 pressures.
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Interest rates definitely to rise - sometime, maybe
Economics Editor
November 7, 2021 — 1.12pm
The geniuses in the financial markets – and they must be geniuses because they’re paid far more than we are – think next year will be an absolute ripper. Workers will be getting their first decent pay rise in six years or more. Say, 3 to 4 per cent. Whoopee. Gee, thanks guys.
Find that hard to believe? So do I. It’s the logical implication of the bets they’re making that the Reserve Bank will begin lifting its official interest rate – which has been at almost zero for a year – by the middle of next year and be up to 1 or 1.25 per cent by the end of next year.
For that to happen, the underlying or core rate of inflation, which has been below the bottom of the Reserve’s 2 to 3 per cent target for years and only just a few weeks ago lifted its head to 2.1 per cent, would need to have shot up close to 3 per cent.
And, because the inflation rate doesn’t rise sustainably unless it’s being driven up by rising wages, an inflation rate approaching 3 per cent couldn’t happen without annual pay rises averaging 3 to 4 per cent.
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Goodbye coal and hello nuclear power
2:48PM November 7, 2021
Behind the pledges and platitudes at the Glasgow climate conference there are key signals for the active investor: The standout is the potential of nuclear power to replace coal, and that’s just one of many changes coming down the line.
Anyone who recalls the Climate Conference in Copenhagen in 2009 will know these meetings – even when they disappoint at the time – trigger structural changes where investors can win or lose big-time. Look at it this way: Who knew in the miserable aftermath of Copenhagen that 12 years later electric car maker Tesla – barely on the radar back then – would now be most powerful car manufacturer in the world.
For investors, perhaps the biggest surprise so far at Glasgow is a shift back towards nuclear power. This is a vexed energy source; it is carbon-free, it can provide baseload power but it has, of course, been shunned as too dangerous or expensive in many quarters.
Nonetheless, it is emerging as the “least worst” alternative energy if there is to be a transition to “net zero” that does not bring energy market failures and rising prices. What’s more, the world will need uranium to fuel new reactors around the world, especially in China. Last week it was reported that Beijing is working on a plan to build 150 new nuclear stations; this is more than the rest of the world has built over the past three decades.
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Why you should hold your weighting to property and equities
Maintain a focus on quality, review your positions and tilt towards sectors that benefit from higher negative real rates.
John Abernethy Contributor
Nov 9, 2021 – 5.00am
With elevated inflation, it is clear interest rates have bottomed and will rise from their historic lows. But this tightening cycle, particularly at its onset, will be unlike those of the past. It will be laboriously slow.
This means the outlook for growth asset such as equities and property may not be as challenged as many suggest.
In previous rate rise cycles, central banks (including the Reserve Bank of Australia) lifted rates from levels that were already set above the level of inflation. In other words, rate rises started from a position where “real rates” were positive and their impact on activity was potent. So positive real rate rises dampened inflation expectations when the economy approached a level of overheating.
Real rates of interest are calculated by comparing market interest rates to inflation. Normally, market interest rates exceed actual and foreseeable inflation as savers and lenders naturally seek compensation for inflation.
However, that clearly is not the case today, and it really hasn’t been the case since the GFC.
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There is systemic risk mounting up in unlisted super assets
Assets which are harder to price pose intergenerational issues, and compromise the principles of our personal account based super system.
Richard Holden Contributor
Nov 9, 2021 – 12.06pm
Recent government reforms to make the valuation of assets in superannuation funds more transparent are a good move. Economists have understood for the last half century that one of the chief obstacles to efficient and well-functioning markets is lack of transparency.
Mandatory disclosures ensure that there is less private information that can cause markets to break down. Better-functioning asset markets in this country help all Australians – especially and including superannuation fund members.
Although you wouldn’t get that impression from recent commentary by Greg Combet. He claims that disclosure requirements are “patently not in the best financial interest of super fund members”. This is statement that is both remarkable and worrisome.
American jurist Louis Brandeis famously, and rightly rebuked opacity in financial matters more than a century ago, observing “sunshine is the best of disinfectants; electric light the most effective policeman”. Since then, economists have shown that, without a doubt, more transparency equals better markets. That means more liquidity, better price discovery, and less risk.
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Inflationary pressures bite as input, labour costs climb
Alex Gluyas Markets reporter
Updated Nov 9, 2021 – 1.05pm, first published at 12.48pm
The soaring demand for goods, which producers have been struggling to meet because of supply chain disruptions and border closures, has pushed input costs to the highest level in a decade, adding thrust to the inflationary pressures in the Australian economy.
There was no respite for businesses grappling with high shipping costs, supply bottlenecks and labour shortages in October, according to National Australia Bank’s monthly business survey.
“Most of us initially thought that the pandemic would bring a demand shock and create a deflationary environment, but supply factors are now outweighing that,” said NAB’s senior economist, Gareth Spence.
“This is creating margin pressures for businesses and constraints on accessing inputs, and the key questions now are, how effectively can businesses pass those costs on to consumers, and how can they meet demand?”
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https://www.afr.com/politics/federal/the-afr-gets-it-grotesquely-wrong-on-icac-20211109-p59760
The AFR gets it grotesquely wrong on ICAC
It is laughable to suggest that voters, in the absence of independent scrutiny, are in any position to judge the lawfulness, probity and rectitude of government decisions.
Anthony Whealy and Stephen Charles
Nov 10, 2021 – 12.00am
It is regrettable that The Australian Financial Review’s editorial - Voters, not ICAC, should judge the business of politics - of November 3 should have taken a narrow view of the need for proper integrity oversight of the political process in NSW.
This is a grotesque view. Voters are in no position to investigate at close quarters the minutiae of events surrounding any particular grant decision.
Consider the detail of the Auditor-General’s report into the Sport Rorts scandal. Consider also the months of inquiry, the call for and collection of documents, the interviewing of witnesses, the compulsory examinations in connection with the Maguire/Berejiklian investigation.
The material uncovered in both these matters, one federal and one state, emphasises how voters, left solely to their own prejudices, know little of the detailed circumstances involving “the business of politics”.
It is laughable to suggest that voters, in the absence of independent scrutiny, are in any position to judge the lawfulness, probity and rectitude of government decisions.
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As rates rise, these are the sectors you should be wary of
William McInnes Reporter
Nov 10, 2021 – 5.00am
A significant increase in interest rates over the next few years could begin to chip away at some of the more extreme valuations in the market and hurt stocks with high levels of debt, according to some of Australia’s leading fund managers.
For years, Australian investors have reaped the benefits of low and declining rates, supporting lofty valuations and allowing companies to cheaply fund debt.
But now investors are faced with the prospect that interest rates in Australia could begin to rise for the first time in a decade, with global rates also set to tick higher.
“We’ve always had a view rates would be moving higher over time, it was just a matter of how quickly and what the trajectory was,” says Brad Potter, head of Australian equities at Tyndall Asset Management.
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Checking out: Is the Great Resignation a Great Rethink?
By Paul Krugman
November 9, 2021 — 11.32am
Life is full of surprises. But there are surprises, and then there are surprises.
What I mean is that most of the time, when something you weren’t anticipating happens, you quickly realise that it’s something you could and maybe even should have seen coming, at least as a possibility. Of course air traffic control delays caused me to miss my connection. Or, to take an economistic example, few anticipated the 2008 financial crisis, but once it happened economists realised that it fit right into both their theoretical frameworks and historical patterns.
Sometimes, however, events take a turn that leaves you wondering what’s going on even after the big reveal.
Right now the US economy is experiencing a very old-fashioned bout of inflation, with too much money chasing too few goods. That is, booming demand has collided with constrained supply, so prices are rising.
But there are really two kinds of supply constraint out there, and some are more comprehensible than others.
Not many people anticipated the now famous supply chain issues — the ships steaming back and forth waiting to be unloaded, the parking lots stacked high with containers and the warehouses that have run out of room. But once they began happening, those issues made perfect sense. Consumers who were afraid to buy services — to eat out, to go to the gym — compensated by buying lots of stuff, and the logistical system couldn’t handle the demand.
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Retirement costs are rising at fastest rate since 2010
8:46AM November 10, 2021
Retirement costs are climbing at their fastest rate in more than a decade, driven higher by surging fuel prices and a sharp jump in council rates and other fees.
A comfortable retirement now costs a couple $63,799 a year and a single senior $45,239, a jump of almost 3 per cent since 2020, according to a new report from superannuation industry group.
Rising global oil prices lifted fuel costs 7.1 per cent in the September quarter and 24.6 per cent annually, it found, while council rates rose an average 3.3 per cent after last year’s Covid-related rate freezes.
ASFA deputy CEO Glen McCrea said it was the biggest annual jump in retiree budgets since 2010, and many now faced “significant pressure” as it was difficult to dodge price rises in essential costs.
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Australia’s reputation ‘at rock bottom’ among education agents
Julie Hare Education editor
Nov 10, 2021 – 5.56pm
The forced termination of the Port of Darwin lease, held by the Chinese company Landbridge, could trigger another round of economic retributions from China, including halting the flow of international students.
Experts say a complex confluence of factors is affecting the flows of international students into Australia. Of gravest concern is the lack of a clear plan.
James Laurenceson, director of the Australia-China Relations Institute at the University of Technology Sydney, said the possible termination of the 99-year lease for Port of Darwin to the Chinese government-owned company, Landbridge, would almost certainly trigger another round of economic reprisals from Beijing. This would likely include stopping or limiting the flow of international students to Australia, valued at $10 billion in 2019.
“If the Australian government takes that extreme step of tearing up the [Port of Darwin] deal, that sends one heck of a signal to China about where Canberra sees the future of the bilateral relationship into the long term,” Professor Laurenceson said.
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Our walking, talking, weaving, wedging Prime Minister
Award-winning political commentator and author
November 11, 2021 — 5.00am
Unlike his backbenchers and frontbenchers, journalists are not obliged to dive into the swamp to try to rescue the Prime Minister when they know his own words and deeds have plunged them all into a foul mess.
A few in the media choose to do it willingly, eagerly, either in hope of reward, out of fear of punishment or because it’s all part of the bribery and blackmail transactional play that occurs between reporters and their subjects which often ends in tears for one or the other or both. Or they do it because they lean more to one side than the other. That leads into a swamp too.
Most journos simply do their jobs, asking difficult questions of powerful people then reporting what they say regardless of whether it is helpful or not. That is what happened last week in Rome when the ABC’s Andrew Probyn, assisted by Pablo Vinales from SBS, intercepted then steered Emmanuel Macron to an impromptu doorstop with Australian media. They asked Macron a number of pertinent questions, then Bevan Shields from this masthead got the killer line, “I don’t think, I know” when he asked the French President if he thought Scott Morrison had lied to him.
Those words will forever brand the Prime Minister, but then in a judgment clouded by anger and arrogance, Morrison and his staff struck on a brilliant idea to retaliate by leaking a private text message from the President, spinning it to say it was Macron who was lying, not him. Morrison broke accepted protocols to prove nothing except that if an opponent goes low and wounds him, he will go lower, guaranteeing the leak and the leaker became the story.
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Paul Keating dead wrong on China and Japan, but half right on subs
11:00PM November 10, 2021
Paul Keating’s remarks at the National Press Club were his now usual combination of gibberish, strategic madness, misrepresentation, prejudice, genuine shafts of insight, and linguistic inventiveness.
He has a bad habit these days of saying things that just aren’t so. He claims China’s economy is bigger than that of the US. Wrong. You only get to that outlandish conclusion if you use the notional purchasing power parity formulation. Using market exchange rate dollars (ie real dollars, you can’t buy a submarine with PPP dollars), the US economy is 40 per cent bigger than China’s.
Keating repeated one of his weirdest, most egocentric claims, that he produced the APEC leaders’ summit. APEC was founded by Bob Hawke in 1989. It was convened at leaders’ level by Bill Clinton in 1993. Keating’s role in this was so central that Clinton doesn’t mention Keating in his memoirs at all (though he has warm words for John Howard).
Keating’s dogmatic assertion that Virginia-class submarines will be obsolete if we get them in the 2040s or 50s is true only if nuclear submarines are obsolete altogether by then. The US will continuously upgrade its submarines. As a close ally, we’d get the upgrades too.
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https://www.afr.com/politics/federal/desperate-pm-driven-to-can-do-capitalism-scare-20211111-p597xy
Desperate PM driven to can-do capitalism scare
Embarrassed by reversing direction on electric cars, Scott Morrison is trying to conflate federal Labor with the power-addicted, micro-managing premiers.
Phillip Coorey Political editor
Nov 11, 2021 – 8.00pm
During the last election campaign, Scott Morrison saved the weekend. Now he’s saving the planet.
Trouble is, he’s had to undergo a somewhat difficult contortion to move from one position to the other. And it’s catching up with him.
Let’s call it the price of desperation.
The Coalition was not supposed to win the last election. By the time Morrison seized the top job in August 2018, the party had burned through two prime ministers in five years and, in the words of the third, resembled The Muppet Show.
Labor was united, it had dictated the policy agenda for the entirety of the term, and it had commanded a strong lead in all the published polls for as long as anyone cared to remember.
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Keating’s troubling take on Taiwan deserves attention
The former prime minister advocates abandoning a democracy of 24 million people. But his critics have to answer some very awkward questions.
Laura Tingle Columnist
Nov 12, 2021 – 4.42pm
Ed Husic, like Paul Keating, grew up in Sydney’s west, though in the decades that separate the two Labor politicians’ time in Parliament, just what is “the west” has been radically transformed.
Bankstown was the west in Keating’s day. Now it is somewhere closer to Penrith. Husic’s electorate is about 40 kilometres west of Keating’s old stomping ground.
Like Keating, and in this week when many have observed the Prime Minister engaging in a faux election campaign, there is nothing faux about Husic. He is angry about what has happened to his community this year during the height of the COVID-19 pandemic. It is in the part of Sydney that found itself locked down harder than the rest of the city, experiencing more cases, more deaths.
In a speech last weekend, he charged the federal and state governments with engaging in class – and implicitly partisan – warfare over pandemic management: warfare that started with the different treatment of the affluent eastern suburbs where the delta variant first surfaced, and the less affluent western suburbs where workers had to get tested to leave their local area.
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https://www.afr.com/wealth/personal-finance/crypto-and-thematic-etfs-come-with-risks-20211111-p59809
Crypto and thematic ETFs come with risks
Tony Featherstone Contributor
Nov 12, 2021 – 6.23am
Will thematic exchange traded funds transform retail investing as more people bet on global trends rather than stocks? Or are these ETFs yet another bull-market fad as issuers cash in on megatrend hype to lure investors?
These questions are urgent as money pours into ASX-quoted thematic ETFs, and a rush of new funds arrive. BetaShares this month made front-page news with its new Crypto Innovators ETF that provides exposure to global companies in the crypto economy.
That followed ETF Securities’ launch last month of the ETFS Hydrogen ETF, which provides exposure to global hydrogen companies. Although it could be years or decades before hydrogen is commercialised, more than $60 million poured into the ETF in its first month.
ETF Securities also recently launched the ETFS Fintech & Blockchain ETF to provide exposure to leading global fintech and blockchain companies, and the ETFS Semiconductor ETF.
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Democracy in crisis as woke concerns trump real-world problems
11:00PM November 12, 2021
The US, Britain, Australia – the three amigos of AUKUS – are led respectively by a centrist Democrat long at the heart of his nation’s political life, a Conservative maverick who led Britain out of the EU, and a Liberal Prime Minister heading a government in office for eight years.
They should be the pinnacle of Western resolve, the sharp end of allied purpose. In truth, each nation is moving to the left culturally, and therefore over the long term they are moving left politically as well, notwithstanding short-term electoral wins for conservatives. Each also is displaying spasmodic but disturbing signs of a lack of seriousness in national security.
And each society, but especially the US, is internally polarised.
This is not a counsel of despair. Things can change. But a key attribute of military success is situational awareness, confronting the circumstances you’re actually facing. And the circumstances are not good.
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‘Inconceivable’ Australia would not join US to defend Taiwan
Reuters
Nov 13, 2021 – 11.06am
It would be “inconceivable” for Australia not to join the United States should Washington take action to defend Taiwan, Australian Defence Minister Peter Dutton said on Saturday.
On Wednesday, US Secretary of State Anthony Blinken said the United States and its allies would take unspecified “action” if China were to use force to alter the status quo over Taiwan.
“It would be inconceivable that we wouldn’t support the US in an action if the US chose to take that action,” Dutton told The Australian newspaper in an interview.
“And, again, I think we should be very frank and honest about that, look at all of the facts and circumstances without pre-committing, and maybe there are circumstances where we wouldn’t take up that option, (but) I can’t conceive of those circumstances.”
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Coronavirus And Impacts.
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China’s zero-COVID strategy ‘risks global economy’: Carney
Russell Lynch
Nov 12, 2021 – 9.00pm
London | China’s zero-COVID-19 strategy is at risk of derailing the global economy and driving up inflation, the former Bank of England governor Mark Carney has warned amid fears of mass factory closures in the run-up to Christmas.
Mr Carney urged China to reconsider its approach to COVID-19 after a handful of cases triggered the shutdown of entire cities and pushed the world’s second-biggest economy towards recession.
He told an LBC podcast that China will have to “evolve or pivot” towards managing the disease through vaccinations and added: “There are real economic consequences of a hard, zero-COVID policy that is maintained.”
Mark Williams, head of Asia at Capital Economics, said China was at risk of a technical recession after the northern summer shutdowns wiped an estimated 5 per cent off its economy from July to September.
Mr Carney, who is now the United Nations climate change envoy, said a failure to change course would have serious global consequences given China’s role as the world’s workshop and biggest exporter of goods.
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Climate Change.
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Morrison’s big plan for net zero has a black hole at its centre
Even free riding on the technology of others is not going to let Australia break the laws of economics and free itself of carbon at no cost.
Steven Hamilton Contributor
Nov 8, 2021 – 12.25pm
Ever since the government made its long-awaited net-zero commitment, I’ve been a bit perplexed. On one hand, they say we can achieve net zero by 2050, pointing to unreleased McKinsey modelling to back it up. On the other hand, they haven’t announced a single new policy, nor committed a single new dollar. All while promising no additional constraints or taxes.
The reason the climate wars have been so fiercely fought is that climate action involves bearing costs today in exchange for benefits in future, and those up-front costs will be borne unequally.
The breakthrough, which got the Nats over the line, is that apparently we can now achieve net zero without any of those nasty costs. All those arguments over all those years, all that fearmongering, was completely unnecessary.
The trouble is this is a bit like defying the laws of physics. Indeed, to take that analogy further, when we look out at the cosmos, there are phenomena we observe that simply don’t make sense with just the four fundamental forces of physics we know of.
To resolve these contradictions, physicists say there must exist an unknown fifth force. Some have posited it might be related to the dark matter that constitutes much of the universe.
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Morrison’s electric car plan is unlikely to force real change
Forget where you sit on green issues, the electric cars of the late 2020s will be simply superior.
Tony Davis Motoring Writer
Nov 9, 2021 – 3.12pm
So, what are we scared of? Why don’t we want electric cars in this country?
Or more specifically, why does the federal government’s electric car strategy appear less like a genuine change of heart than a case of “what’s the very least we can do while still looking like we are doing something?”
Increasing the charging infrastructure is commendable, so is encouraging energy price reductions, and some other parts of the strategy. But overall, it’s not likely, or likely intended, to force real change.
The major problem is that it addresses only one side of the equation. It will be hard to convince Australians to buy high-tech electric cars when the internal combustion engine competition is unregulated.
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https://www.afr.com/politics/the-absurdity-in-morrison-s-electric-car-plan-20211109-p597ar
The absurdity in Morrison’s electric car plan
Jacob Greber Senior correspondent
Nov 9, 2021 – 12.52pm
Scott Morrison is rightly drawing ire for his spectacular about-turn on those “weekend-destroying” electric vehicles.
Images flooded TV screens on Tuesday of a grinning Prime Minister plugging in a vehicle at Toyota’s Altona plant in Melbourne. Charges of hypocrisy are well aimed given his 2019 attacks on such technology.
But that’s not the real problem with the government’s apparent Damascene conversion to the EV cause. Seeing the same light that the rest of the world has long-ago responded to should be welcomed, however belated.
The announcement of a modest sum of public money to roll out more vehicle-charging infrastructure is a step in the right direction.
It will help address range anxiety – when drivers worry about a car’s battery running out of power before reaching their destination – and should spur consumer demand for EVs.
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How to drive a real transition to electric cars
That road user charges for electric cars are vehemently opposed by the EV lobby shows that it’s not just the Prime Minister who doesn’t get how market mechanisms can be best for the climate.
Nov 9, 2021 – 7.25pm
Scott Morrison’s conversion to boosting the uptake of electric vehicles has exposed the low-grade culture war rhetoric of the last election.
According to the Prime Minister, Bill Shorten’s plan to mandate tough carbon emissions standards for petrol and diesel cars, and have electric cars account for 50 per cent of all new cars sold by 2030, would “end the weekend” as quiet Australians knew it.
The populist claim that only petrol or diesel-guzzling utes could tow a boat or haul caravan has been disproved as advances in battery technology have given electric vehicles enough grunt to do the job. Mr Morrison now wants 30 per cent of new car purchases to be electric or low-emissions hybrids by 2030.
To encourage the shift away from petrol and diesel vehicles, the government says it will spend the modest sum of $250 million on a “future fuel strategy”, which includes expanding the number of public, business and household charging stations and helping the electricity grid manage network congestion at peak charging times.
As with the government’s wider net zero “plan”, there is no policy or market mechanism to drive the transition, with the Prime Minister ruling out “bans and taxes” that would force people to buy cars they don’t want or can least afford.
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‘Highly insufficient’: Australia’s climate goals slammed at COP26
4:52AM November 10, 2021
Respected scientific research group Climate Action Tracker has given a withering assessment of Australia’s climate policies in a shock report that warned of global temperature rises of 2.4 degrees by the end of this century.
Despite a rush of fresh targets to reduce carbon emissions this decade at COP26 in Glasgow – but not from Australia – the CAT said policy implementation on the ground was advancing at a snail’s pace.
The CAT report criticised Australia on a number of fronts, including that it refused to cut out coal-fired power by 2030 and that it subsidised gas production.
The report was compiled ahead of the Australian government’s pre-COP26 pledge for net zero by 2050. But Canberra was chastised for ramping up a “gas-fired recovery” over a green economic recovery and its refusal to increase a 2030 domestic emissions target. The CAT’s new overall rating for Australia is “highly insufficient”.
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‘Existential crisis’: United States and China stun COP26 with joint climate change pact
By Nick O'Malley and Bevan Shields
Updated November 11, 2021 — 7.35amfirst published at 5.56am
Talking points
· The US and China will work together on emissions reductions and an accelerated phase-out of unabated coal, however timelines were not listed.
· China and the US have also reached consensus over 2030 emissions targets.
· The surprise announcement is a dramatic boost to the ongoing negotiations between nations at COP26.
Glasgow: China and the United States have unveiled a shock new pact at the Glasgow climate talks, declaring global warming an existential crisis which demands co-operation between the superpowers.
In a boost to the flagging COP26 talks and sign of a possible thawing in the fractured relationship between both countries, Chinese climate envoy Xie Zhenhua and his US counterpart John Kerry stunned observers by unveiling the joint declaration pledging tougher action this decade.
The agreement between the world’s two largest emitters was negotiated in secret for months during about 30 virtual meetings and negotiation sessions in Shanghai, London and Washington before final terms were settled in Glasgow on Wednesday night local-time.
“Co-operation is the only choice for both China and the United States,” Xie told reporters via a translator.
“By working together, our two countries can achieve many important things that are beneficial not only to our two countries, but to the world as a whole. As two major powers in the world, China and the US shoulder special international responsibilities and obligations.
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US, China spring surprise with wide-ranging climate tie-up
Hans van Leeuwen Europe correspondent
Nov 11, 2021 – 5.38am
Glasgow | China and the United States have sprung a shock at the COP26 summit, unveiling a sweeping joint declaration that heralds “concrete and more pragmatic” co-operation across the waterfront of climate change issues.
The surprise agreement could signal an important rapprochement in US-China tensions, or at least insulate climate change from the broader friction. And it may help unlock a deal at the bogged-down COP26 summit in Glasgow, where the announcement was made.
“In the area of climate change, there is more agreement between China and the US than divergence, making it an area with huge potential for our co-operation,” Chinese climate negotiator Xie Zhenhua told reporters in Glasgow late on Wednesday (Thursday AEDT).
The deal, which the two sides said had been nutted out over the course of more than 30 meetings since the start of the year, commits both countries to step up action “in the 2020s”.
“The two largest economies in the world have agreed to work together to raise climate ambition in this decisive decade,” US climate envoy John Kerry told a separate press conference in Glasgow.
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Go mini-nuclear with AUKUS, Rolls-Royce urges Australia
November 12, 2021 — 5.00am
London: Rolls-Royce says the AUKUS security agreement between Australia, the United Kingdom and the US paves the way for Australia to embrace small modular nuclear reactors.
This week Rolls-Royce announced it had raised nearly £500 million ($915 million) in government and private equity funding to build its small modular reactor design.
Currently, no such reactors exist anywhere in the world, although China began construction of its first plant in July.
Rolls-Royce believes it could begin building its first reactor in 2030 if it is given regulatory approval. It submitted the paperwork to regulators on Wednesday.
A small modular reactor is roughly the size of two soccer pitches and about one-tenth the size of Britain’s existing nuclear plants. Rolls-Royce claims it would produce the same amount of power generated by 150 onshore wind turbines, enough to supply 1 million homes.
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Australia will have a coal and gas economy beyond 2050
Jacob Greber Senior correspondent
Nov 12, 2021 – 7.29pm
Australia will remain one of the world’s biggest fossil fuel exporters in 2050, shipping almost $100 billion a year in coal and gas, according to modelling done for the Morrison government’s net zero plan.
The estimate, which is in 2020 dollars, underscores the long-tail challenge of Australia’s transition out of high-emitting industries and exports, even as the government predicts it can deliver on most of its target by relying on technology and a “shadow” carbon price of $24 a tonne.
The ongoing strength of coal and gas will come despite the value of Australia’s coal shipments falling 51 per cent between now and 2050, leaving just under half of the industry alive, while gas will have grown 13 per cent. That implies coal will still be earning Australia about $35 billion a year and gas more than $60 billion.
The modelling comes as fossil fuel emissions come under increasing attack from activists and heavy investor scrutiny, which Treasury calculated could drive up the cost of capital for Australia by as much as 3 percentage points early next decade – slashing investment by 17 per cent a few years later.
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Modelling shows real cost of no net-zero carbon emissions
9:00PM November 12, 2021
Businesses and households would have faced interest rate hikes of up to 1.5 per cent under expected penalties imposed by global financiers if the government had failed to adopt net zero emissions by 2050, modelling for the Glasgow climate package shows.
The penalty regime would have sparked a 17 per cent investment collapse by the middle of the next decade, cutting 0.9 per cent from gross domestic product and making each Australian more than $650 poorer.
Households would have paid an extra $25bn a year to service home loans, and business and credit card debts.
The modelling, released on Friday by Scott Morrison, predicts the government’s net zero by 2050 plan can lift national income by 1.6 per cent by 2050, or $2000 per person, by developing new technologies to lower emissions.
It assumes 85 per cent of the net-zero target can be achieved by improvements in existing technologies at a voluntary price of about $25 for each tonne of carbon abated. But if there is no new technological innovation the price would rise to about $80 a tonne.
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https://www.innovationaus.com/doesnt-make-sense-csiro-staff-slam-outsourced-net-zero-modelling/
‘Doesn’t make sense’: CSIRO staff slam outsourced net-zero modelling
Denham Sadler
National Affairs Editor
8 November 2021
The federal government’s decision to bypass its own science agency and pay $6 million to a multinational consulting firm for key modelling work on its net-zero plan “doesn’t make much sense” and will be more costly and less effective, according to the CSIRO Staff Association.
It was revealed last week that CSIRO had applied to conduct key net-zero modelling for the government, but was rejected in favour of US consulting firm McKinsey.
McKinsey was eventually paid more than $6 million over two contracts by the Industry department for this modelling work, which featured heavily in the federal government’s net-zero emissions by 2050 plan.
According to CSIRO Staff Association acting secretary Susan Tonks, the national science organisation had the ability and expertise to conduct this modelling in-house, and would have delivered a better result for the public.
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A glass half-full is still a glass half-empty
Some fights were wrestled to a compromise, some were put off until next year. COP26 didn’t call time on global warming, but it wasn’t quite a damp squib either.
Hans van Leeuwen Europe correspondent
Nov 14, 2021 – 8.12am
London | The agreement struck by 197 countries at COP26 has planted a climate-friendly flag over some fresh terrain, but also left plenty of battleground to be fought over in a year’s time when the talks reconvene in Egypt.
The deal does not offer any prospect of containing global warming to within the 1.5 degrees Celsius, the level now seen as a potential threshold between a liveable world and climate disaster.
It has also particularly disappointed the developing world: many poorer countries feel they are being asked to flatten the curve of their economic development without getting adequate compensation from the countries that grew rich on cheap fossil fuels.
But the developing world appears to have accepted that the West is genuinely willing to pursue deeper “climate justice”, on several fronts.
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The Glasgow summit’s final agreement: what you need to know
By Nick O'Malley and Bevan Shields
November 14, 2021 — 7.49am
What actually happened?
The Glasgow summit concluded almost a day late with a set of final decisions that have been cautiously welcomed by many observers. The agreement is not yet enough to put the world on a path to holding warming to 1.5 degrees, but commitments made should both reduce emissions this decade and accelerate momentum.
It calls on countries like Australia that did not improve their 2030 targets before Glasgow to do so as soon as possible before the next round of talks in Egypt next November. It recognises that to keep 1.5 degrees in reach, urgent action must be taken this decade; and to encourage that, it calls for an annual stocktake on how countries are tracking, along with annual ministerial meetings on accelerating action. The decision’s language also shifts the political focus onto the 1.5 degree warming target mentioned in the Paris Agreement, from the less ambitious “well below 2 degrees” also referred to in that accord.
Will it have any impact on global warming?
In the words of UN Secretary General Antonio Guterres, 1.5 is alive, but on life support. According to the research group Climate Action Tracker, if all the pledges and commitments made in the leadup to the COP, at the summit and on its sidelines were to be achieved, the world could be on a pathway to 1.8 degrees warming.
This is not necessarily the good news it appears to be, warns Bill Hare, chief executive of Climate Analytics. This is because many of the commitments are so far not supported with formal government policy.
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Nearly 200 world delegates agree on major climate action pact at Cop26 Glasgow summit
NCA NewsWire
November 14, 2021
A new deal on climate action has been reached after two weeks of negotiations between governments from almost 200 countries.
The Glasgow Climate Pact, which came more than 24 hours after Friday afternoon’s deadline, was sealed by Cop26 president Alok Sharma in Glasgow.
It will agree to reduce coal, the worst fossil fuel for greenhouse gases.
The deal also presses for more urgent emission cuts and promises more money for developing countries – to help them adapt to climate impacts as warming-driven disasters increase around the world.
But the deal has raised questions about whether it will be enough to keep alive the target of the 2015 Paris goal, limiting temperature rises to 1.5C.
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Royal Commissions And The Like.
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No entries in this category
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National Budget Issues.
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https://www.afr.com/policy/economy/jobless-rate-surged-to-5-2pc-in-lockdown-october-20211111-p597z5
Jobless rate surged to 5.2pc in October
Ronald Mizen Economics correspondent
Nov 11, 2021 – 11.57am
Employment dropped by 46,000 in October, bringing to more than 326,000 the number of jobs lost during lockdowns in NSW, Victoria and Canberra, while the unemployment rate edged higher to 5.2 per cent.
The number of people out of work was the opposite of market expectations of employment growth of 50,000, while the growth in unemployment from 4.6 per cent to 5.2 per cent was well above consensus.
“As we’ve seen throughout the pandemic, the changes in the labour markets with lockdowns continued to have a large influence on the national figures,” said Bureau of Statistics head of labour data Bjorn Jarvis.
But in early signs the labour market was beginning to recover ahead of lockdowns lifting, the participation rate in NSW increase by 0.8 percentage points as lockdown-affected employees re-entered the workforce.
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Health Issues.
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Nurses’ union says Aishwarya report a bleak warning as WA hospitals prepare for COVID
By Hamish Hastie and Peter de Kruijff
November 10, 2021 — 8.59am
The head of Western Australia’s nurses’ union warns the damning report into Aishwarya’s Aswath’s death is just a taste of what the state can expect in its hospitals when COVID begins to spread – unless the government gets its nursing recruitment right.
Australian Nursing Federation WA state secretary Mark Olson said while conditions had improved at Perth Children’s Hospital since Aishwarya’s death, the same situations identified in the report could be seen across the health system.
The independent inquiry into the seven-year-old girl’s death in April found PCH staff were “exhausted, demoralised and isolated” and the emergency department had “suboptimal” contingencies in place to deal with higher workloads.
“I can’t think of a single public hospital that doesn’t have the same problems that are identified in this report,” Mr Olson said.
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Hopes AI program can treat Indigenous hearing loss in remote areas
November 14, 2021 — 5.00am
Indigenous children suffer some of the highest rates of ear disease and hearing loss in the world but doctors hope a new Australian-made artificial intelligence program will help identify and treat problems earlier than previously possible.
Dr Al-Rahim Habib, the principal health officer at Greenslopes Hospital in Queensland, has led the Drumbeat.ai project, which uses an AI algorithm to analyse a database of ear photos and clinical advice from the Northern Territory.
He hopes to use the program to develop an application or device to allow healthcare workers, such as nurses, to more easily identify ear problems, especially given how hard it is for people in remote communities to access specialist surgeons treatment.
“We’ve spent the last two years getting access to a 10-year database from the Northern Territory … this is comprised of over 10,000 ear drum photos with corresponding clinical data, so really a very unique world’s first database,” Dr Habib said.
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International Issues.
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Central bank induced bond tumult stings big name hedge funds
Laurence Fletcher, Tommy Stubbington and Kate Duguid
Nov 7, 2021 – 11.13am
London/New York | The era of unlimited central bank largesse is drawing to a close, injecting intense volatility into government bonds and inflicting heavy damage on a clutch of high-profile hedge funds.
Superstars of the industry have been left nursing billions of dollars in losses after an abrupt rethink on how and when central banks will reverse the huge wave of support they provided to markets when the pandemic hit last year.
Initially, central banks said that process would be very slow, despite soaring inflation, and hedge funds believed them. But markets began to fret last month that the US Federal Reserve and other central banks would have to raise interest rates more quickly, wrong-footing high-profile traders including Chris Rokos and Crispin Odey.
An intense sell-off in short-term government debt upended some of these funds’ biggest bets, causing them to exacerbate the market ructions by rapidly exiting their positions. Rubbing salt in the wounds, some of those bets later proved to have been right all along.
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Obama’s pivot to Asia reminded Australia where its loyalties lay
A decade on from the most consequential visit by an American president to these shores, the US-Australia alliance has only intensified. Yet change came in a crab-like way.
James Curran
Nov 7, 2021 – 12.32pm
Ten years ago, Australia hosted the most consequential visit by a US president in its history.
When Barack Obama arrived in Canberra in November 2011, he brought not only a new language on the US alliance, but something that governments here had been wanting since the end of the Second World War: a permanent, even if rotating, US military presence on Australian soil.
Obama also came to lock Australia into America’s so-called “rebalance” or “pivot” to Asia and therefore into Washington’s evolving strategic competition with China.
Curiously, some Americans then were nervous about where Australia stood. A week before the visit, a US congressman had privately remarked that the US did not want “another Germany in Australia”, namely a “country that’s a defence ally of ours but has become dependent on China for its trade”.
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12,000-word Xi homage cements personality cult at top in Beijing
By Didi Tang
The Times
November 8, 2021
It runs to 12,000 words, extols President Xi as China’s “man of action” who loves his people as much as his own mother and has been published days before his third term in power is expected to be rubber-stamped.
As if preparing the ground for what is to come, the six-chapter official tribute to Xi, released by the state news agency Xinhau, lauds his record as the leader of a great power who has defeated a pandemic, bested foreign rivals and dragged China into the 21st century, just as the 200-member inner circle of the Communist Party meets to discuss the president’s record and recommend that he remains for another five years.
Critics have said that the work cements a personality cult at the top of Chinese politics and paves the way for Xi, who took power in 2012, to become a “forever president” and dictator for life. China’s leaders traditionally served two five-year terms. Xi altered the constitution in 2018 to remove the limit.
The tribute says that the president, 68, is “a man of determination and action, a man of profound thoughts and feelings, a man who inherited a legacy but dares to innovate and a man who has forward-looking vision and is committed to working tirelessly”, adding that having realised his first goal of building a “prosperous society” he will now focus on his second: that of “national revival”.
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Xi Jinping’s Nixonian paranoia can only end in one way
Richard Nixon opened the West’s door to the People’s Republic. Half a century on, it’s China’s current leader who is showing the worst traits of the former US president.
Misha Zelinsky
Nov 8, 2021 – 2.06pm
Xi Jinping’s purge of Fu Zhenghua – the party boss in charge of China’s vast security and legal apparatus – reveals a paranoia worthy of his idols Mao Zedong and Joseph Stalin. But to avoid disaster, Xi should remember the cautionary tale of another politician central to China’s story: Richard Nixon.
Nixon’s 1972 “go to China” moment should have defined his presidency. But even the Oval Office provided no security from enemies he saw conspiring everywhere. Only months after visiting Beijing, his obsession to “use any means” necessary against his political opponents would destroy his entire legacy via Watergate.
The trap should seem familiar. Though he successfully removed term limits in 2018, Xi still needs next year’s Communist Party congress to approve his third presidential term. Keeping close watch on domestic politics, Xi hasn’t left China for nearly two years. His latest crackdown this year has punished 180,000 party members and 1250 bureaucrats.
By arresting Fu – an ally who ruthlessly did away with his leader’s enemies – Xi is sending a message that nobody is safe. But paranoia will always consume its host.
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https://www.afr.com/world/asia/meeting-this-week-will-set-up-third-term-for-xi-20211108-p596yd
Party prepares Xi for historic third term
Michael Smith North Asia correspondent
Nov 8, 2021 – 3.54pm
Tokyo | A historic meeting of China’s top Communist Party officials will this week reinforce Xi Jinping’s position as the country’s most powerful leader since Mao Zedong with the release of a new doctrine setting him up for a third five-year term.
The party’s Central Committee, comprising 300 top officials, is meeting behind closed doors in Beijing from Monday to Thursday, when it is expected to produce a “historical resolution” praising Mr Xi’s achievements and examining the ruling body’s history.
The document, only the third of its type produced by a Chinese leader since the party was founded 100 years ago, would also set out an ideological road map for the next phase of China’s development. Mao and former leader Deng Xiaoping both released similar documents at pivotal moments in the country’s history.
China’s state media trumpeted praise for Mr Xi in the lead-up to Monday’s meeting, but critics said the primary purpose of the resolution was to pave the way for his third term as leader, expected to be ratified at the next party congress in November next year.
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https://www.afr.com/world/asia/china-s-self-isolation-is-a-global-concern-20211109-p5976m
China’s self-isolation is a global concern
As most of the world returns to something close to normality, China’s self-isolation is increasingly anomalous. Its zero-COVID policy is damaging international business and global governance.
Gideon Rachman Columnist
Nov 9, 2021 – 9.41am
The most important invited guest at COP26 did not show up. As president of China, Xi Jinping leads a country that emits more carbon dioxide than the US and the EU combined. But, unlike other world leaders, Xi did not give a speech to the climate summit.
Instead he submitted a written statement of less than 500 words for the conference website.
Xi’s dismissive attitude to the climate talks was not so much Middle Kingdom as middle finger. But the Chinese leader’s refusal to travel to Glasgow for COP26 — or to the G20 summit in Rome, before it — is part of a broader pattern of national self-isolation.
In response to the COVID-19 pandemic, China has installed one of the world’s strictest systems of border controls and quarantines. Foreigners or Chinese citizens entering the country must go into strict quarantine for a minimum of two weeks. Extra controls apply if they enter Beijing, where the leadership resides.
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A close shave for teetering US democracy
Political and international editor
November 9, 2021 — 5.00am
American democracy teeters on the brink of collapse. The removal of Donald Trump didn’t fix the problem. But it did give Joe Biden and the Democratic Party a chance to begin repair work.
After a frustrating year and three days since being elected, Biden got hold of his first big repair kit on Saturday (Australian time). It’s a $US1.2 trillion brace of money for America’s second-rate infrastructure.
“This is a once-in-a-generation investment that will create millions of jobs and puts us on a path to win the 21st century,” said Biden. “This is a blue-collar blueprint to rebuild America.”
Political hyperbole to one side, it is, at least, a federal infrastructure bill, and America hasn’t had one in a decade. Trump talked a good game but delivered nothing more than an unfinished wall.
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Warren Buffett’s cash pile a sign of how worried he is about markets
By Katherine Chiglinsky
November 9, 2021 — 10.00am
Warren Buffett is signalling wariness with the soaring stock market as the billionaire investor extends a selling streak.
Buffett’s Berkshire Hathaway was a net seller of equities for the fourth straight quarter, a trend not seen in data going back to 2008. The company ended up selling almost $US2 billion ($2.7 billion) more in stocks than it purchased during the period, adding to a cash pile that climbed to a record $US149.2 billion.
The selling streak indicates Buffett has struggled to find bargains with the stock market hitting all-time highs. A big, splashy acquisition also eluded the conglomerate, as the 91-year old and his investing deputies confronted a combination of sky-high price tags and fierce competition from the wave of special purpose acquisition companies.
“The big issue here is that Berkshire was a net seller of stocks again this quarter,” Jim Shanahan, an analyst with Edward Jones, said in a telephone interview. “That’s the primary culprit” of the cash pile continuing to rise.
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Voters Decide to Make America Sane Again
November 9, 2021
To the many people around the world who admire America and want her to succeed, watching events in this country over the past few years has been a little like observing a dear friend going through a mental-health crisis.
Many of the symptoms of a full psychiatric breakdown have been on display — denial of objective reality, wild mood swings, episodes of paranoia, delusional thinking and grandiose ideation, a tendency toward lacerating self-harm.
But last week, voters in a handful of states and cities donned the white coats and began wrestling the patient back to reality. There’s a way to go yet, but for the first time in a while there are encouraging signs that sanity is reasserting itself.
The lunacy had been developing for some time, but it was the election of Donald Trump, himself surely a source of enough material to keep an entire psychology faculty employed for life, that seemed to send the country over the edge.
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Austere Xi Jinping has no time for games
November 9, 2021
There was pandemonium in university dorms, bars and cinemas across China in the early hours of Sunday.
It was bigger than the Melbourne Cup. It was sweeter than an Ashes victory.
A Chinese team had just beaten the favourites from South Korea in the final of the League of Legends World Championship, the biggest computer game tournament in the world.
Euphoric scenes – including a man dressed only in his underwear, running down a street carrying the flag of the winning team, Shanghai’s Edward Gaming – soon flooded the Chinese internet.
“I’m in a very magical state,” a fan in Shandong province told The Australian after a raucous night of celebrations with friends over Chinese BBQ and beers.
“My voice is very sore.”
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US big tech not dramatically overvalued: DataTrek
Timothy Moore Online editor
Nov 10, 2021 – 8.03am
While Tesla is poised to have shed more than 16 per cent of its value to start the week, the sell-off should not be interpreted as a sign the stock is overvalued, according to DataTrek.
In a blog post, the firm said there are two “distinct” approaches to valuing the tech sector: sustainable earnings growth; and, then there’s Amazon and Tesla - “these are not stocks so much as they are long-dated call options on tech-based disruptive innovation”.
DataTrek said Amazon and Tesla ”have theoretically huge addressable markets and strong competitive advantages. Their price-earnings valuations may look ridiculous, but they don’t trade on investor confidence in 2022 earnings.
“Rather, their valuations rise and fall with incremental success or failure in disrupting the global auto industry or ecommerce and cloud computing.”
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Biden dithers as the world waits for the most powerful central bank to be remade
Senior business columnist
November 9, 2021 — 11.54am
Joe Biden has an extraordinary opportunity to remake the leadership of one of the world’s most powerful institutions. He’s taken an inordinate amount of time deciding how to do it but now appears on the verge of acting.
The fate of at least three and potentially four of the seven seats on the US Federal Reserve’s board of governors, including its chair, are hanging on Biden’s decisions.
How they are filled is of acute interests to other central banks, financial market participants and economists because they will occur at an exceptionally sensitive moment for the markets and the economy.
The key decision ought to be the easiest. Chairman Jerome Powell’s term expires in February and, given that he’s the incumbent, enjoys broad bipartisan support, would provide continuity and wouldn’t unsettle the markets, his reappointment ought to be automatic.
Except that it isn’t. While he is overwhelmingly favoured to get a second term, he has drawn criticism from the Democrat progressives – including a scathing critique from Senate banking sub-committee chair, Elizabeth Warren – and has also taken some hits from the recent resignations of two regional bank presidents over securities trading scandals.
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Runaway Chinese producer prices raise the stakes for inflation
Cecile Lefort Markets reporter
Nov 10, 2021 – 3.39pm
A surge in Chinese producer prices in October to a 26-year high has invited nerves around US data that will decide the course of interest rate rises in the world's biggest economy.
Chinese producer prices advanced 2.5 per cent in October for an annual growth rate of 13.5 per cent, data released on Wednesday showed. It was the largest increase since 1995, according to Commonwealth Bank, and mainly attributed to higher commodity costs. Chinese consumer prices rose 0.7 per cent, making it a 1.5 per cent increase over 12 months.
Central banks in the US, the UK and Australia have called for patience before raising interest rates from ultra-low levels, as they evaluate whether rising inflation is only transitory or sustained.
Speculation that a more dovish Federal Reserve chairman could be appointed is not helping risk sentiment.
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China’s Xi warns against return to Cold War tensions at APEC meeting
Praveen Menon and Shashwat Awasthi
Updated Nov 11, 2021 – 10.26am, first published at 9.54am
Wellington | The Asia-Pacific region must not return to the tensions of the Cold War era, Chinese President Xi Jinping said on Thursday, ahead of a virtual meeting with US President Joe Biden expected as soon as next week.
Mr Xi, in a recorded video message to a CEO forum on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit hosted by New Zealand, said attempts to draw ideological lines or form small circles on geopolitical grounds were bound to fail.
“The Asia-Pacific region cannot and should not relapse into the confrontation and division of the Cold War era,” Mr Xi said.
Mr Xi’s remarks were an apparent reference to US efforts with allies and partners in the region, including the Quad grouping with India, Japan and Australia, to blunt what Washington sees as China’s growing coercive economic and military influence.
China’s military said on Tuesday it conducted a combat readiness patrol in the direction of the Taiwan Strait, after its Defence Ministry condemned a visit by a US congressional delegation to Taiwan, the democratically governed island claimed by Beijing.
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Containing inflation will be ‘difficult’: Larry Summers
James Eyers Senior Reporter
Nov 11, 2021 – 10.13am
Former US treasury secretary Larry Summers says the Reserve Bank may be forced to follow central banks in the United Kingdom and United States, which will likely have to act to contain significant inflation.
The Harvard University professor was responding to the sharp rise in US consumer prices, after figures on Wednesday showed inflation in the US had hit a three-decade high, jumping 6.2 per cent in October.
This added to investors’ concerns about price pressures in the global economy and hit US stocks.
Mr Summers said the consumer price index in the United States pointed to an 11 per cent annual inflation rate and he suggested central banks will have a tough time curtailing it without forcing the economy into a slump.
Mr Summers has been warning about a dangerous breakout in inflation for the past year.
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US consumer prices rise at fastest pace in more than three decades
Olivia Rockeman
Nov 11, 2021 – 2.40am
Washington | US consumer prices rose last month at the fastest annual pace since 1990, cementing high inflation as a hallmark of the pandemic recovery and eroding spending power even as wages surge.
The consumer price index increased 6.2 per cent from October 2020, according to Labor Department data. The CPI rose 0.9 per cent from September, the largest gain in four months. Both advances exceeded all estimates in a Bloomberg survey of economists.
Higher prices for energy, shelter, food and vehicles fuelled the supercharged reading and indicated inflation is broadening out beyond categories associated with reopening.
Against a backdrop of solid demand, businesses have been steadily raising prices for consumer goods and services at the same time supply chain bottlenecks and a shortage of qualified workers drive up costs.
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Belarus weaponises migrants on Polish border in dispute with EU
At least 2000 people are believed to be stuck at the Belarusian/Polish border, as Minsk seeks to create a migration crisis to undermine its neighbours.
Amy Mackinnon and Robbie Gramer
Nov 11, 2021 – 10.00am
Belarusian President Aleksandr Lukashenko has weaponised migration, with thousands of asylum-seekers and migrants from the Middle East caught up in a multilayered geopolitical standoff with neighbours such as Poland, Lithuania and Latvia.
As tensions escalate between Belarus and the West in the wake of fraudulent presidential elections last year and a violent crackdown on protests, Lukashenko has sought to exploit the European Union’s weak seams of unresolved internal tensions over migration and Poland’s increasing defiance of Brussels by shipping in would-be migrants and then flooding them toward his European neighbours’ borders.
At least 2000 people are believed to be stuck at the border, with Belarusian guards pushing them into the EU while their Polish counterparts shove them back. Polish border guards estimate that 30,000 people have tried to cross the border since August, and the crisis is only likely to worsen as winter sets in, according to multiple Eastern European officials.
One official said the Polish and Baltic state governments expect Belarus to begin operating anywhere between 40 and 55 direct flights per week from the Middle East to Minsk, Belarus, bringing potentially thousands of new migrants with false promises of an easy passage into the European Union.
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Mystery of China’s huge US dollar pile baffles world markets
By Enda Curran
November 11, 2021 — 5.08am
Unprecedented trade surpluses and record inflows into its bond market are giving China a stockpile of dollars unseen since the days when the “Asian savings glut” was blamed for keeping US interest rates excessively low and fuelling the sub-prime mortgage crisis.
But unlike then, when China aggressively recycled its dollar holdings into US Treasuries, China’s giant pile of foreign exchange reserves are holding broadly stable. That means the dollars are being funnelled somewhere else, but exactly where is proving to be a bit of a mystery.
While some of that flood of greenbacks is ending up as deposits at Chinese banks, the large “errors and omissions” in the nation’s balance of payments is muddying the picture. What is clear is that the dollars offer China an important cushion against any future shocks in the world economy, even as individual companies like China Evergrande struggle to repay their debts.
“It is exceedingly difficult to get a clear view of how China’s current account surplus is recycled,” said Alvin Tan, head of Asia foreign exchange strategy at RBC Capital Markets in Hong Kong. Nonetheless, the dollars mean that “whatever China’s economic challenges ahead, there is little danger of either a balance-of-payments or a foreign-debt problem.”
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US inflation not looking quite so transitory now
Economists and officials have been playing down post-lockdown inflationary pressure as “transitory” for some time now. The latest US data has them rethinking everything.
Matthew Cranston United States correspondent
Updated Nov 11, 2021 – 1.27pm, first published at 12.50pm
Washington | The most unsettling thing about the latest US consumer price print, which shows a 31-year high in core inflation, is that so many respected economists, including those at the Federal Reserve, have this year been dismissing the possibility that it would come to this.
The addiction of financial markets and drunken fiscal sailors to free money had blinded a lot of them to the sort of warnings from the likes of former US Treasury Secretary Larry Summers, someone who understands inflation dynamics well.
The Federal Reserve, always seeking to sooth the markets, has been dithering on its decision to begin reining in its $US120 billion ($164 billion)-a-month emergency bond-buying, let alone signalling an earlier lift-off in interest rates.
Even economists at Pimco, one of the world’s largest bond fund managers, said in June that “we also project inflation to peak in the coming months”. It was betting on a quicker resolution of the post-lockdown supply-demand imbalances that are pushing up the price of disparate goods and services around the world.
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The US is getting Taiwan ready to fight on the beaches
Joe Biden is continuing Donald Trump’s “porcupine strategy” to harden the island’s defences, but some policymakers worry it will only provoke China.
Jack Detsch and Zinya Salfiti
Nov 11, 2021 – 8.00am
US military forces have been present in Taiwan for more than a decade, according to multiple people familiar with the deployments and a review of Defence Department data by Foreign Policy.
According to a Foreign Policy review of Pentagon data produced by the Defence Manpower Data Centre, an in-house Pentagon organisation, the United States has kept small contingents of troops on the island dating back to at least September 2008 – the last year of the George W. Bush administration. The numbers also show a small surge of US marines to Taiwan earlier this year, consistent with the Wall Street Journal’s earlier reporting about American training of Taiwanese boat patrols.
The US military presence on the island is part of an effort stretching over several administrations to bolster Taiwan’s ability to fight off any potential Chinese invasion, but it also risks further inflaming tensions between Washington and Beijing. US and Taiwanese policymakers are already wary of a Chinese lunge across the Taiwan Strait sometime this decade.
The program to train Taiwanese troops is part of low-level exchanges that allow units to come from the island to train under the watch of soldiers, airmen, sailors, and marines – including a rotation of pilots who train on F-16s at Luke Air Force Base in Arizona, one of the Air Force’s major training bases.
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What Xi’s big power grab really means
Xi Jinping has been formally enshrined in Party history as one of China’s three great leaders. But his future security will depend on the economy.
Michael Smith North Asia correspondent
Nov 12, 2021 – 5.00am
″This is a man of determination and action, a man of profound thoughts and feelings,” China’s state news agency Xinhua effused in a 12,000-word homage to Xi Jinping this week.
Even by the standards of China’s propaganda apparatus which created a cult of personality around China’s leader years ago, the latest tribute has taken adoration for Xi to a new level. It praised his efforts defeating the pandemic, taking on foreign forces and steering an economically powerful China into the 21st century.
Clearly building up Xi for a third term as president, the essay also depicts the 68-year-old as a robust individual who is capable of leading the country for the foreseeable future.
“Although Xi Jinping has little time for himself, he manages to find time for swimming. This and physical labour during his youth ensure that he has enough stamina to deal with affairs of the Party, government and the military,” Xinhua said. Images of a healthy-looking Xi waving at adoring onlookers on an airport runway in Tibet have flooded state media this week.
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Why I am helping to start a new university
Institutions dedicated to the search for truth have ossified into havens for liberal intolerance and administrative overreach.
Niall Ferguson
Nov 11, 2021 – 8.00am
If you enjoyed Netflix’s The Chair – a lighthearted depiction of a crisis-prone English department at an imaginary Ivy League college – you are clearly not in higher education. Something is rotten in the state of academia and it’s no laughing matter.
Grade inflation. Spiralling costs. Corruption and racial discrimination in admissions. Junk content (“Grievance Studies”) published in risible journals. Above all, the erosion of academic freedom and the ascendancy of an illiberal “successor ideology” known to its critics as wokeism, which manifests itself as career-ending “cancellations” and speaker disinvitations, but less visibly generates a pervasive climate of anxiety and self-censorship.
Some say that universities are so rotten that the institution itself should simply be abandoned and replaced with an online alternative – a metaversity perhaps, to go with the metaverse.
I disagree. I have long been skeptical that online courses and content can be anything other than supplementary to the traditional real-time, real-space college experience.
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US doesn’t want a new cold war with China: top security adviser
President Joe Biden’s National Security Adviser says Washington wants effective competition with guardrails to prevent conflict and the capacity to work with Beijing when it can.
Jake Sullivan
Nov 11, 2021 – 6.01pm
There’s been a debate in strategic circles about the balance of effort the United States should apply against geopolitical challenges and geopolitical competition on the one hand, and transnational challenges and threats ranging from COVID-19 to climate and cyber, on the other hand.
President Joe Biden came to office with a very simple proposition. The US has entered a phase in foreign policy where it must effectively apply itself against both sets of challenges with force and vigour.
The fundamental recipe for dealing with both geopolitical competition and the major transnational challenges of our time is fundamentally common.
It basically boils down to something Dean Acheson said in the aftermath of World War II. The basic purpose and project of American foreign policy was building what he called “situations of strength”.
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China’s party elite cement Xi Jinping’s place in history
Michael Smith North Asia correspondent
Nov 12, 2021 – 1.04am
Xi Jinping is set to rule China for at least another five years after a meeting of top Communist Party officials backed an official re-examination of the country’s modern history which elevates his achievements to the same status as Mao Zedong.
China’s Party elite on Thursday adopted what state media called a “landmark resolution”, the first of its kind in 40 years, which analysts said would all but guarantee Mr Xi a third five-year term as president starting next year and pave the way for him to remain in power for a decade or more.
The historical resolution had been well flagged by state media and followed a three-day meeting of the Party’s Central Committee, which includes the 300 most powerful men in the country.
The document praised the achievements of previous leaders, including Mao and Deng Xiaoping. It said Mr Xi had “demonstrated great historical initiative, tremendous political courage, and a powerful sense of mission”.
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https://www.smh.com.au/business/companies/amazon-on-the-high-seas-20211111-p5981j.html
Amazon on the High Seas
By Shira Ovide
November 12, 2021 — 6.48am
Mammoth shipping containers packed with dehumidifiers in the Pacific Ocean provide a glimpse at how the pandemic and Amazon might be shifting shopping as we know it.
Earlier this year, a company called Aterian was in a jam with the dehumidifiers it sells. You may have read about how difficult and expensive it has become to move goods around the world, and Aterian was feeling the pain.
The company was being quoted prices of $US25,000 ($34,088) or more to haul a shipping container of products from factories in China to its shoppers in the United States. The same shipment typically costs about $US3000, said Aterian’s chief product officer, Michal Chaouat-Fix.
Then Amazon got in touch and offered to put the dehumidifiers on cargo ships that it chartered across the Pacific for a significantly lower fee.
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https://www.afr.com/policy/economy/us-inflation-is-higher-than-europe-paul-krugman-20211113-p598le
US inflation is higher than Europe: Paul Krugman
The important point is that there have been broadly similar inflation surges in many countries, so what’s happening in the US isn’t mainly about policy.
Paul Krugman
Nov 13, 2021 – 7.27am
This past week, the Bureau of Labor Statistics announced that consumer prices in the United States rose 6.2 per cent over the past year. Critics of the Biden administration jumped on the report like football players piling onto a fumbled ball.
But does high inflation by recent standards (what we’re seeing now is nothing compared to the 1970s — or the 1940s) reflect a failure of US policy? Is it even a uniquely US phenomenon?
As it happens, Eurostat, the statistical agency of the European Union, has released a flash estimate — that is, a preliminary estimate based on incomplete data — for annual inflation in the euro area. Like the US report, this estimate showed inflation hitting a much higher level than we’ve become accustomed to. But the European inflation rate, at 4.1 per cent, was considerably lower than the US rate.
There are two ways to look at the Europe-US comparison. Should we focus on the similarities or the differences?
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https://www.smh.com.au/world/asia/all-xi-jinping-needs-now-is-to-be-chairman-20211108-p59714.html
All Xi Jinping needs now is to be Chairman
By Eryk Bagshaw
Updated November 12, 2021 — 3.43pmfirst published at 3.30pm
Singapore: The party started with typical Chinese fanfare. Steelworkers stacked six high and 20 deep lifting the Chinese flag to the podium, farmworkers breaking out into song and a dance from each ethnic minority.
It was the middle of winter in 2018, but Xi Jinping wanted to celebrate. Only eight months earlier he had removed presidential term limits. Now on the 40th anniversary of China’s era of reform and opening up, he would start to lock in his own vision for its future.
Xi quoted Mao Zedong as he addressed the Great Hall of the People in Beijing. “After several decades, the victory of the Chinese people’s democratic revolution, viewed in retrospect, will seem like only a brief prologue to a long drama,” he said.
The Mao quote from the end of the country’s civil war in 1949 is one of Xi’s favourites. When he repeated it last year he added for emphasis: “What’s past is prologue”.
Now, Xi, aged 68, emboldened by his unrivalled power, economic success and nationalism, is writing the main act in his own image.
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Only in a posthumous video did de Klerk apologise unreservedly for apartheid. If only he could have done it alive
By Sharon Davis
November 12, 2021 — 4.00pm
When President F.W. de Klerk rose in the South African Parliament on February 2, 1990, most expected he would announce some mild reforms. His party had presided over the racist apartheid system for five decades. Could a leopard really change its spots?
By the time he sat down 35 minutes later, he had announced a series of seismic changes. South Africa would never be the same again. The African National Congress was unbanned and nine days later, Nelson Mandela walked free after 27 years in prison. Within four years, he would become the nation’s first democratically elected leader.
De Klerk is often touted as a great reformer. However, following his death, at 85, on Thursday, there is evidence aplenty for a more nuanced view of his achievements. The short, dour, uncharismatic leader had set in train a series of events that he could not control.
As he gave his history-making speech, his nation was in turmoil. South Africa had become an international pariah, and economic sanctions, in which Australia played a big role, were biting deep. Domestically, the black townships were in revolt. Millions of people had taken to the streets and could not be subdued despite a draconian state of emergency. Internationally, the Berlin Wall had been torn down and the Cold War was over. To his credit, the deeply conservative but pragmatic de Klerk realised that apartheid could not be enforced for much longer and to do so would lead his nation into further conflict and economic despair.
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Americans think the economy is bad because it actually is
While economists see rising wages and rising prices as “two sides of the same coin”, most people think the coins they are getting don’t go as far.
Ramesh Ponnuru
Nov 13, 2021 – 7.42am
Commentators friendly to the president couldn’t understand it. The economy was expanding. Unemployment was falling. But the public was unhappy about the economy and the president’s popularity kept slipping.
That’s the way things looked in 2006 to a lot of Republicans, and they concluded that the problem was that the “Bush boom” was “the greatest story never told”
Now the bafflement has switched parties. Paul Krugman wrote in the New York Times that “the economy has been booming this year” but that gloomy news coverage has affected people’s mood about it.
Neil Irwin, in the same newspaper, called it a “great contradiction” of today’s economy: “Americans are, by many measures, in a better financial position than they have been in many years. They also believe the economy is in terrible shape.” Economists may think inflation produces both winners and losers, he continued, but most people aren’t seeing it that way.
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Democrats’ spending bill is costly but not passing it is far more so
The Democrats’ budget reconciliation bill isn’t perfect, however it’s the last, best hope to fight climate change.
Michael R. Bloomberg
Nov 13, 2021 – 10.47am
The Democrats’ budget reconciliation bill isn’t perfect. It’s too much of a grab bag of social spending programs, not all of which I support, and not all of which we can afford. But legislating — and governing — requires compromise. The question is not: “Is the bill what I want it to be?” The question is: “Is it, on balance, good for the country?”
To me, the answer is clearly: yes. And the main reason is simple: A large part of it is a historic investment in cleaner air and a stronger, more sustainable economy.
To Speaker Nancy Pelosi’s credit, she has substantially reduced the scope and cost of the bill, while still maintaining climate change as its centrepiece and largest part.
As it now stands, about one-third of the bill’s price tag is devoted to increasing the supply of clean energy, improving the energy efficiency of our buildings, reducing air pollution, and boosting climate resilience. These investments will make us healthier by reducing disease, save us money by reducing our utility costs, and put us on course to cutting our nation’s greenhouse-gas emissions in half by 2030, compared with 2005 levels — as we have committed to do.
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I look forward to comments on all this!
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David.
