August 25, 2022 Edition
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The big story this week has been the multiple PM story in Australia with ScoMo. What an amazing saga!
In the UK there seems to be an impending collapse of the economy coming unless some-one takes some really smart steps real soon now.
Relatively the US has seemed pretty calm this week – just waiting for an impending recession – along with China and Europe.
Fair to say things globally are pretty messy!
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Major Issues.
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Every investing trend misfires as stock bears are crushed
Denitsa Tsekova
Aug 14, 2022 – 9.07am
Stock bears are suddenly getting crushed. Once-dependable momentum trades are misfiring. Inflation-lashed bonds are bouncing back.
After another expectations-busting week on Wall Street, sharp market reversals are baffling real-money veterans, retail speculators and quants alike.
Big data surprises, including a blockbuster jobs report and a softer-than-expected July consumer price reading, have caught a heavily hedged investor base off guard, as the S&P 500 Index enjoys a nearly 17 per cent rally from the June bear-market low.
Economic angst and speculation that price pressures are peaking have helped global bonds climb almost 4 per cent from their mid-June nadir, while once-hot stock shorts are backfiring.
Put another way, every investing trend that defined the wild first half is staging a messy reversal in the latest twist of this exhausting year.
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The Reserve Bank’s growing China anxiety
Karen Maley Columnist
Aug 15, 2022 – 5.00am
As the Reserve Bank hikes interest rates to slow economic activity and take some heat out of inflationary pressures, it’s acutely aware that the worsening slump in the Chinese property market could upend its plans by delivering a severe growth shock.
The Reserve Bank is expecting Australia’s economic growth will drop from 3.25 per cent this year, to 1.75 per cent in both 2023 and 2024, as rising interest rates and higher consumer prices, and falling house prices weigh on consumer spending.
But, it expects the Australian economy will be partly cushioned because “the elevated terms of trade [the ratio between export prices and import prices] will boost national income substantially”.
The problem is that the Reserve Bank’s assumptions on export prices – particularly for iron ore – could prove overly optimistic if China’s rapidly deflating property bubble further darkens the outlook for growth in the world’s second-largest economy.
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Is it time to increase your allocation to bonds?
While they haven’t been a buffer in the first half of 2022, the returns enjoyed by bondholders in July have been significant.
Ben Smythe Contributor
Aug 15, 2022 – 5.00am
Self-managed superannuation fund members have had to deal with periods of extreme volatility since January and, with June 30 top-up contributions and dividends in the bank account, are deciding what to do next with their excess cash.
They might be considering topping up either their “growth” or “defensive” asset classes based on investment time horizons. Alternatively, this classic equities versus bonds decision might be driven by which asset class they believe will perform better over the next 12 months.
So, what should be considered when trying to forecast what will happen next?
Looking at the defensive option, and bonds in particular, there have been sizeable negative returns – of a magnitude last seen in 1994.
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Beware these pitfalls in review of defence
12:00AM August 15, 2022
When announcing his Defence Strategic Review on August 3, Richard Marles stressed that the strategic changes we are facing are accelerating at a rate faster than anticipated in the 2016 defence white paper. This implies we need to anticipate further and accelerated strategic change.
The Defence Minister says he wants the review to be as signific`ant as the report I wrote in 1986, which he said “established the framework for every defence white paper from then until the most recent in 2016”. But the 1986 review faced some serious obstacles that must be avoided at all costs by the current review.
The most important hurdle I had to confront was that, despite a clear directive from the minister for defence to the secretary of Defence and the chief of the Defence Force to advise on military capabilities for the defence of Australia, they had been unable over the preceding 12 months to arrive at any agreement.
This should not be a problem this time because the current secretary and CDF seem to get along just fine. In 1986, the opposite was the case because they both got bogged down with what I can only describe as competing theological interpretations of defence concepts such as warning time, low-level conflict and high-intensity conflict. These led to very differing implications for the sort of force structure Australia should develop.
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Scott Morrison appointed by GG to take control of Department of Industry, Science, Energy and Resources 11-months before he scuttled offshore gas project
August 15, 2022
Scott Morrison was appointed by Governor-General David Hurley to take control of the entire Department of Industry, Science, Energy and Resources 11-months before he scuttled an offshore gas project weeks out from the federal election.
Federal Court documents obtained by The Australian reveals that the former prime minister was appointed to administer the super department on April 15, handing him powers over the Commonwealth-NSW Offshore Petroleum Joint Authority.
Prime Minister Anthony Albanese is considering whether to probe the legality of former prime minister Scott…
In the court documents dated May 31, the Australian Government Solicitor said “on 15 April 2021, the then prime minister, the Hon. Scott Morrison MP, was directed and appointed by the Governor-General pursuant to sections 64 and 65 of the Constitution to administer the Department of Industry, Science Energy and Resources”.
“(He) was therefore, for the purposes of the Joint Authority’s decision of 26 March 2022, the ‘responsible Commonwealth Minister’ for the Joint Authority,” the document said.
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PM considering probe over Morrison's Covid move
The Albanese government is considering whether to probe the legality of Scott Morrison’s moves to secretly swear himself as health and finance minister during the Covid-19 pandemic.
Government sources have confirmed it is investigating its options over the swearing-ins – first revealed in The Weekend Australian – as Labor ministers said they were “deeply concerned” by Mr Morrison’s multiple portfolios.
The Weekend Australian report claimed that Mr Morrison made the unprecedented move in March 2020 amid concerns that by invoking emergency measures under biosecurity laws, he was effectively handing control of the country to Greg Hunt.
The then prime minister wanted to ensure that if his health minister was incapacitated by the virus, he could still administer the never-before-used emergency health powers, which could not be delegated, even to cabinet.
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Albanese seeks advice on Morrison’s ‘secret government’
Georgie Moore 15/08/2002
The Department of Prime Minister and Cabinet will examine former prime minister Scott Morrison’s “extraordinary and unprecedented” move to secretly swear himself into three portfolios.
Anthony Albanese says the former PM was running a “shadow government” that it “is the sort of tin-pot activity that we would ridicule if it was in a non-democratic country”.
“Australians knew during the election campaign that I was running a shadow ministry. What they didn’t know was that Scott Morrison was running a shadow government, a shadow government that was operating in the shadows,” the PM told reporters.
“A whole lot of questions arise from this. What did Peter Dutton and other continuing members of the now shadow ministry know about these circumstances?
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Morrison is the gift that keeps on giving ... to Labor
Scott Morrison’s self-confidence meant he didn’t even tell most of his own cabinet colleagues of his intention to share the responsibilities of other ministers by being appointed to their portfolios. It’s another example of unnecessary political self-harm.
Jennifer Hewett Columnist
Aug 15, 2022 – 3.35pm
COVID-19 emboldened federal and state governments to impose extraordinary restrictions on Australians’ rights as citizens. At least some of those decisions, particularly in hindsight, were overreactions that were driven more by political panic and fear of the unknown than by policy logic or evidence.
But they were still shared with the public, even when announced by diktat. A largely compliant nation mostly obeyed the rules despite rising complaints about unfair or excessive application and increasing evidence that many restrictions were counter-productive or ineffective.
Which makes revelations about Scott Morrison’s willingness to bend, if not break the rules to secretly give himself additional ministerial roles seem even more extraordinary. Little wonder Anthony Albanese couldn’t use the term often enough – along with plenty of other scathing descriptions – about the revelations in a new book, Plagued, released this week.
“This isn’t some local footy club,” the prime minister declared.
“This is the government of Australia where the people of Australia were kept in the dark as to what the ministerial arrangements were. It’s completely unacceptable. There’s an absolute need for clear transparency to come through.
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It’s the secrecy that makes Morrison look dodgy
Anthony Albanese could use Scott Morrison’s ghost portfolios to kick-start his long-promised royal commission into the handling of the pandemic.
Phillip Coorey Political editor
Aug 15, 2022 – 3.46pm
When COVID-19 first ravaged Australia, we gave our governments, state and federal, enormous licence as they moved simultaneously to shut down society while “keeping us safe”.
In the context of the economic and social decisions made every day, it would have been of little consequence had Scott Morrison divulged he used an administrative instrument, on the attorney-general’s advice, to effectively appoint himself as back-up health and finance minister.
After all, Mathias Cormann was shelling out billions of dollars a day on a discretionary basis to combat the crisis, while Greg Hunt, to his own alarm, inherited powers that all but would have allowed him to introduce martial law, and which could not be overridden by any parliament.
Given Morrison had his head across every detail, and given there was no vaccine, and that any minister, at any time could have fallen ill or worse, it would have been viewed as yet another unprecedented, but prudent move, in extraordinary times.
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9.14AM 16/08/2022
Morrison defends secret power moves
Georgie Moore
Former prime minister Scott Morrison has sought to defend his secret move to assume an unknown number of ministerial portfolios.
Pressed on reports that he assumed a fourth portfolio, of secret services, last year, Morrison told 2GB he didn’t recall it but also said he didn’t dispute it.
Morrison said his moves to assume various portfolios from the start of the COVID-19 pandemic were based on appropriate advice.
“Throughout the process, we took advice on all of these things. And the governor general set that out very clearly yesterday as well,” he said.
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9.40AM 16 Aug 2022
‘Extraordinary measures’ were needed during pandemic: Morrison
Georgie Moore
Scott Morrison says he assumed the health and finance portfolios at the start of the COVID-19 as a contingency plan and concedes he didn’t inform then-finance minister Mathias Cormann at the time.
He compared it to being on a nuclear submarine, where two people need keys to deploy a weapon.
“We were dealing with quite extraordinary circumstances ... We had to take some extraordinary measures to put safeguards in place,” Morrison told 2GB.
“None of these in the case of the finance and the health portfolio ... were required to be used, and they were there as a safeguard. They were there was redundancy because both of the power the powers in those portfolios, they weren’t overseen by cabinet.”
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https://www.afr.com/wealth/personal-finance/how-to-get-your-head-around-fixed-income-20220812-p5b9ie
How to get your head around fixed income
Just as with equities, the uncertain outlook for inflation is a game changer.
James Weir Contributor
Aug 16, 2022 – 5.00am
Fixed income returns over the fiscal 2022 year were the worst on record. When sharemarkets experience returns like that, investors are conditioned to look for bargains, but bond markets don’t necessarily work the same way.
Any well-diversified portfolio will include defensive holdings designed to reduce volatility and cushion the effects of falling sharemarkets. Fixed income investments normally play that role which typically means allocating to government or corporate bonds, which are two very distinct markets that are driven by different factors.
Because bonds issued by governments of developed nations are almost certain to be repaid, the price they trade at is not normally influenced so much by their credit rating as the outlook for inflation in their home country. If the market expects inflation to rise, investors will demand a higher yield to compensate, which requires a lower price and vice versa.
By contrast, while inflation also plays a role in the pricing of corporate bonds, credit risk is the biggest issue – that is, the risk of the company defaulting, and you don’t get your money back. Consequently, corporate bond prices are more sensitive to the outlook for recession, when company earnings come under increased pressure. The more investors are worried about an economic slowdown, the higher the premium, or credit spread, to investing in risk-free government bonds they will demand.
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Scott Morrison, a well-primed minister for everything
Columnist and senior journalist
August 16, 2022 — 5.00am
All prime ministers have their idiosyncrasies. Tony Abbott ate the onion and Kevin Rudd wrote a children’s book about his cat. Former British PM Gordon Brown reportedly consumed nine bananas a day during his time in office.
But none have had quite the constitutional implications of what has been revealed as Scott Morrison’s peccadillo – secretly appointing himself to ministerial portfolios with an alacrity that would make a dictator blush.
The first ministerial portfolio Morrison took over was health. This was presented as a patriotic act, part of the superlative pandemic management for which Morrison has never received due credit.
“I trust you mate,” the former PM reportedly told his health minister in early 2020 as the pandemic started to get really real. “But I’m swearing myself in as health minister, too.”
It seems never to have occurred to Morrison that the trust needed to flow back in the other direction. To be fair, he was busy.
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Morrison’s mystery ministries reduced the Westminster system to a sitcom
Chief political correspondent
August 15, 2022 — 4.41pm
The mystery of the Morrison ministries is the story of a federal cabinet that lost sight of good government after its leader triumphed against the odds.
Scott Morrison was always inclined toward the presidential style, as many leaders are, but this became a defining feature of his government after he won the 2019 election by hiding his ministers.
Now we know how far Morrison went to centralise power. Thinking he did not really need his ministers, he had himself sworn into their jobs.
This looks like a bedroom farce, with doors slamming and characters striding on stage in confusion, but it should ring alarm bells in Australian politics because the itch to centralise control is part of every government. Morrison simply took it to an absurd conclusion.
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‘Had we known, we would have rolled him’: Liberal colleagues’ disbelief over Scott Morrison’s multiple ministries
6:08AM August 16, 2022
Scott Morrison’s brazen decision to secretly appoint himself to multiple ministries with the help of an acquiescent Governor-General is, as new PM Anthony Albanese said yesterday, the stuff of tin pot dictatorships.
Especially given that is started during a pandemic when the former PM was casually cancelling parliament at the same time. Junking our representative system of government with all its institutional checks and balances. That his self-appointment process continued well beyond 2020, across multiple portfolios with more such secret co-ministerial take-ups soon to be revealed (yes, that’s right – there are more), speaks to Morrison’s utter contempt for our political institutions and political culture.
Transparency and openness are words he apparently never learnt the meaning of.
I can tell you my phone has been running hot with former and current front and backbench colleagues of Morrison expressing everything from disgust to disbelief in his actions.
Had they known before the election what they know now, “we would have rolled him”, is how one Liberal bluntly put it.
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Why 47pc of DIY super funds are having a great day
Lucy Dean Wealth reporter
Aug 16, 2022 – 2.58pm
Nearly half of self-managed super funds have exposure to mining giant BHP, analysis of the $892 billion sector has revealed, as the resources giant marks its second-biggest profit ever and a bumper dividend.
BHP is held by 46.8 per cent of SMSFs, according to software provider Class’ Annual Benchmark Report, which analysed 183,000 funds, or around a third of the total market.
The report found that BHP, which on Tuesday announced a record $US16.3 billion dividend, also makes up 4.8 per cent of total SMSF domestic share investments.
Shareholders will receive a final dividend of $US1.75 a share, as the company also reported an underlying profit of $US21.3 billion.
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Morrison’s ministerial mess needed cleaning up not covering up
Making appointments public is not a legal requirement. But it seems timely to revisit this and to formalise the requirement for transparency.
Anne Twomey Law professor
Aug 16, 2022 – 4.47pm
It is a cliche that it is not the actions of the government, but the cover-up, that gets it into trouble. Scott Morrison has provided a novel variation on the theme by applying the cover-up before even exercising the particular power.
It is not unusual to have more than one minister sharing responsibility for a portfolio. For example, in the current Home Affairs portfolio, under the Albanese government, Clare O’Neil is the Minister for Home Affairs and the Minister for Cyber Security, Senator Murray Watt is the Minister for Emergency Management and Andrew Giles is the Minister for Immigration, Citizenship and Multicultural Affairs.
The problem with Scott Morrison’s appointment to administer Home Affairs in May last year was that the ministers within the portfolio did not know, no arrangements had been made about how power would be distributed within the portfolio, and the public could not know who was responsible for exercising important powers conferred by legislation.
Currently, there is a convention that ministerial appointments are recorded and made public in a number of ways – by press releases, on departmental websites and in a formal record on the Federal Register of Legislation.
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Colleagues call for Morrison to go as more secret ministries revealed
Phillip Coorey Political editor
Updated Aug 16, 2022 – 6.17pm, first published at 6.13pm
An apologetic Scott Morrison has conceded his secret acquisition of five ministerial portfolios was “unnecessary”, as he faced calls from colleagues for his resignation, and the Albanese government threatened an inquiry to hold to account all who knew of the scandal.
Former treasurer Josh Frydenberg was understood to be livid after only learning on Tuesday that his portfolio was one of the five that Mr Morrison secretly assumed.
Mr Frydenberg, now in the private sector, told former colleagues he had been unwaveringly loyal to Mr Morrison as the former government began to unravel in the polls, even rejecting approaches by some to mount a leadership challenge in the final months before the May 21 election.
Senior Coalition frontbencher Karen Andrews demanded publicly that Morrison quit politics after learning he took on her home affairs ministry as well.
Ms Andrews made the call after Anthony Albanese accused his predecessor of undermining Australia’s democracy by secretly giving himself a total of five portfolios.
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Scott Morrison’s secrecy the curse in this fiasco
12:00AM August 17, 2022
It is the secrecy, deception and absence of visibility around prime ministerial power that has brought Scott Morrison undone.
Secrecy is the curse in this fiasco. Morrison’s swearing himself in to five separate portfolios in addition to being prime minister meant a deception of the public, the parliament and most of the ministers involved.
Anthony Albanese is engulfed in a synthesis of genuine outrage and unique political opportunity. He accuses Morrison of “an extraordinary and unprecedented trashing of our democracy” – and Morrison is wedged, under fierce assault by the Labor government while facing a reaction of dismay, anger and bewilderment from his own side.
The fortunes of the Liberal Party and the Coalition have sunk even further. Albanese is rolling out evidence to show unconventional and untrustworthy behaviour orchestrated by the former prime minister in response to the pandemic. He wants to damage the Liberals for years. The core problem is Morrison’s conception and concentration of power during the pandemic.
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https://www.afr.com/politics/federal/what-morrison-did-wrong-and-why-it-matters-20220816-p5baay
What Morrison did wrong and why it matters
Scott Morrison says he needed to assume the powers of other ministers in case of an emergency but others say he overstepped. So what exactly happened?
Aaron Patrick Senior correspondent
Aug 17, 2022 – 9.59am
When Scott Morrison was prime minister in 2020 and 2021, he secretly appointed himself co-treasurer, co-finance minister, co-health minister, co-resources minister and co-home affairs minister. In some cases, the ministers didn’t know, including Treasurer Josh Frydenberg.
There are three reasons these self-appointments are a big deal: other prime ministers don’t seem to have done this; they suggest Morrison didn’t trust his ministers, or feel the need to consult them; it gives the Labor Party material to challenge the claim that Morrison led a well-run government.
What did Morrison do?
The prime minister got Governor-General David Hurley to swear him in as the minister in each case. Normally, swearing-ins are ceremonial events filmed for TV. In these cases, Hurley just completed the paperwork.
It may seem counterintuitive, but ministers have legal powers the prime minister doesn’t. The home affairs minister can deport foreigners. The health minister can declare biosecurity emergencies, which gives him or her the power to impose lockdowns. The treasurer can veto foreign investment.
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What the governor-general should have asked the minister for everything
Professor of law
August 17, 2022 — 5.00am
Scott Morrison has managed to create yet another political storm for himself and the Liberal Party – and in the process drag the governor-general and his office into it.
Many voters already knew they could not trust Morrison to do the job right and fired him at the last election. But could they now be blamed for asking themselves whether the governor-general has also failed to discharge his constitutional obligations?
In the past 48 hours, we have learnt that in 2020 and 2021 Morrison appointed himself to five ministries, in addition to the office of prime minister, and did so with almost no pushback from the governor-general, David Hurley.
The governor-general is required to act on advice of the government in making ministerial appointments. But that does not mean that he has to do so immediately – without first asking a few hard questions.
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The serious implications of Morrison’s shadow grab for power
By David Crowe
Updated August 16, 2022 — 7.45pmfirst published at 7.42pm
The most telling verdict on Scott Morrison’s deception within his own government is the outrage from colleagues who want him gone.
The former prime minister trashed the conventions of good government by naming himself to powerful ministries without telling the parliament or the people, so voters are right to feel aggrieved and deceived.
But the anger from the Liberals and Nationals is something else. It has reached a point where former home affairs minister Karen Andrews wants Morrison out of parliament because of what he did. Others are shocked but are biding their time before they go public. Some will back him. Nobody is shrugging this off as a minor affair.
The defence from Morrison and his supporters is that he had to move quickly during the pandemic and took unconventional steps under extreme pressure. This is true. The powers vested in the health minister, Greg Hunt, were staggering: he could shut down cities or close borders by a simple order without judicial review or a vote in parliament. Checks and balances were needed.
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‘I acted in good faith’, says Scott Morrison
12:52AM August 17, 2022
The devastating impacts of the Covid-19 pandemic and associated recession required an unprecedented policy response from our government.
These were extraordinary times and they required extraordinary measures to respond. Our government’s overriding objective was to save lives and livelihoods, which we achieved. To achieve this, we needed to ensure continuity of government and robust administrative arrangements to deal with the unexpected in what was a period of constant uncertainty during the nation’s biggest crisis outside of wartime.
The prospect of civil disruption, extensive fatalities and economic collapse was real, especially in the early stages, which was occurring in other parts of the world.
The risk of ministers becoming incapacitated, sick, hospitalised, incapable of doing their work at a critical hour or even fatality was very real. The home affairs minister was struck down with Covid early in the pandemic and the UK prime minister was on a ventilator and facing the very real prospect of dying of Covid.
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https://www.afr.com/wealth/personal-finance/what-happens-to-my-super-when-i-die-20220803-p5b701
What happens to my super when I die?
Single with no dependants and cited nieces or nephews as beneficiaries if you die? You’ll need to take more action to make sure they’re the ones who get it.
Lucy Dean Wealth reporter
Aug 12, 2022 – 5.00am
Only 16 per cent of Australians aged 18 to 34 have carried out some form of end-of-life planning, and it can cause painful and expensive problems for families, an estate planner has warned.
Among those with end-of-life planning, 37 per cent had completed their death benefit nomination form for their superannuation, according to YouGov research commissioned by end-of-life planning advocacy group Groundswell.
Anna Hacker, Australian Unity Trustees Legal Services general manager of estate planning, says she’s seen dozens of familial fall-outs due to poor awareness and a lack of planning around what happens to superannuation after death.
The question of “where does my super go when I die?” is one that most people without a partner or dependants will almost always get wrong, says Hacker.
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https://thenewdaily.com.au/finance/2022/08/18/welfare-state-mulino-kohler/
6:00am, Aug 18, 2022 Updated: 5:33pm, Aug 17
Alan Kohler: A plan for the new welfare state
On Tuesday night this week, in the Readings bookstore in St Kilda, Bill Kelty launched a new book about welfare, called Safety Net: The Future of Welfare in Australia.
It was written by Daniel Mulino, the Labor member for Fraser, a federal electorate in Melbourne’s western suburbs, and now chair of the House of Representatives economics committee.
Kelty said it may be one of the most interesting things to come out of COVID-19 lockdown, and will prove to be a source book for social democrats around the world.
And there is no doubt this is an important book, written by one of the more interesting politicians in Parliament: The 52-year-old Mulino was born in Italy and has served at all three levels of government – as councillor and deputy mayor of the City of Casey, an MP in the Victorian upper house and now the House of Representatives in Canberra.
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Morrison stands defiant in the face of overwhelming political logic
The former prime minister says the strident criticism of his behaviour ignores the context for his decisions.
Jennifer Hewett Columnist
Updated Aug 17, 2022 – 6.40pm, first published at 5.50pm
Scott Morrison has never been a politician prone to conceding error. Even so, the combative press conference to justify his actions in secretly extending his prime ministerial reach into his own colleagues’ portfolios was a standout example of defiance in the face of overwhelming odds – and political logic.
According to the former prime minister, the strident criticism of his behaviour ignores the context for his decisions. He biblically describes this as the need to “steer the ship in the raging tempest” of COVID rather than today’s “relative calm seas or safety of the shore”.
“There was a clear expectation in the public’s mind, certainly in the media’s mind, and absolutely certainly in the mind of the opposition … that I was pretty much responsible for every single thing that was going on.”
This one-man band mindset apparently made it seem rational to take on ministerial responsibility for several additional portfolios in case he needed to exercise that power. Yet it apparently never seemed rational to him to explain this to his ministerial colleagues – let alone ask for their advice or share his thinking with the Australian public.
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We need a royal commission to shed light on ‘shadow government’
Political historian
August 17, 2022 — 7.15pm
Liberal backbencher Scott Morrison was true to type this week when the revelation of his secret multi-ministerial existence while prime minister convulsed Canberra.
On social media, radio and television there was wordy self-justification.
Morrison failed to “recall” additional ministries he might have secretly appropriated. Within hours, further revelations emerged of him being secretly sworn in as treasurer and minister for home affairs too – hardly something you would forget.
The exculpatory wall of words and prevarication made Emmanuel Macrons of us all, including Morrison’s former cabinet colleagues: “We don’t think, we know” that Australia’s 30th prime minister hasn’t told the full story.
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Morrison’s actions now appear even harder to understand
While the former prime minister did the right thing in addressing the public, his explanation was confused and contradictory.
By JOE KELLY
From Politics
18 August, 2022
Scott Morrison has failed to provide a convincing explanation for secretly appointing himself to several other ministries during the global pandemic.
In an hour long press conference on Wednesday, the former prime minister was unpersuasive about why he gave himself the ability to take over the finance, treasury, resources and home affairs portfolios between March 2020 and May 2021.
There was only one portfolio for which there was a convincing reason for Morrison to share responsibility: health.
To justify the expansion of his authority into the remaining four portfolios, Morrison made two central claims. And both appear disingenuous.
First, Morrison said he was responding to public pressure and needed to do what was “necessary”. Second, Morrison said he was ensuring there was effective management of the pandemic.
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The god complex: When Scott Morrison ended cabinet government
The revelations this week that the former prime minister secretly assumed responsibility for the health, home affairs, resources, finance and treasury portfolios are only part of the story.
Aaron Patrick Senior correspondent
Aug 19, 2022 – 9.15am
This is a story about power. Power won, used and lost. How power blinded men, silenced sensible voices, and consumed itself. It is the untold story of Scott John Morrison. Told he had been sent by God to save Australians from a great sickness, Morrison turned himself into a kind of one-man government. He wasn’t quite a president, but he wasn’t bound by the conventional institutional constraints on a prime minister either.
The revelations this week that Morrison secretly assumed responsibility for the health, home affairs, resources, finance and treasury portfolios are part of a bigger story. Morrison’s colleagues watched him concentrate power, perhaps more so than any other prime minister in the post-war period. Many were uneasy. With few exceptions, though, they acquiesced to the Morrison show.
Morrison was elected Liberal Party leader in 2018 to “save the furniture” and wasn’t expected to win the election, one of his cabinet ministers said. Twenty-two of Morrison’s ministers, advisers, backbenchers and party workers described, for this article, the evolution of Morrison from surprise Liberal leader to unexpected election winner to national saviour.
The first day of February 2020, a Saturday, was when it began. Health minister Greg Hunt and his departmental secretary, Brendan Murphy, called Morrison and told him a novel coronavirus – so new it didn’t have a name – had spread from China’s Wuhan province to Beijing. They advised him to shut down the border with China.
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Secret ministerial deeds tarnish Scott Morrison’s legacy
The former prime minister’s defence of backing up the health and finance ministers doesn’t pass muster. And ghosting Treasury, Home Affairs and Resources was just plain abuse.
Phillip Coorey Political editor
Aug 18, 2022 – 8.00pm
On March 18, 2020, as the nation was spiralling downwards thanks to the COVID-19 outbreak, Scott Morrison used his daily press conference to provide an update on the latest restrictions, as well as appeal for calm.
The mob, alarmed at events unfolding abroad and determined to control what they could control, was stripping supermarket shelves of toilet paper and other essentials faster than they could be restocked.
“Stop hoarding. I can’t be more blunt about it. Stop it. It’s not sensible, it’s not helpful, and I’ve got to say it’s been one of the most disappointing things I’ve seen in Australian behaviour in response to this crisis,” Morrison urged.
“That is not who we are as a people. It is not necessary.”
Understandably, the press conference was remembered for that forthright (but largely ignored) advice, as well as the latest social distancing restrictions that were foreshadowed.
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Hordes of zombie companies are about to die
Prepare for the first interest rate-led business default cycle since the 1991 recession.
Christopher Joye Columnist
Aug 19, 2022 – 10.15am
This column has been much more constructive on risk since late May when we determined that interest rate markets were finally pricing in the monetary policy tightening required to deal with the near-term inflation threat coupled with our central case that consumer price pressures would start dissipating as supply chains normalised.
I want to make clear that we are not, as a consequence, bullish on the macro outlook. Our core view remains that the US economy tumbles into some sort of recession and that global activity data continues to sour.
It would appear that while equities have appropriately responded to the regime change in long-term interest rates (or discount rates), there are continuing vulnerabilities regarding earnings expectations.
The long and variable lags inherent in monetary policy tightening cycles mean that it is inevitable that in the first phase of that process we see large cross-currents in data releases that have something for everyone.
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Morrison friendless as Howard and Dutton condemn his actions
Phillip Coorey Political editor
Aug 18, 2022 – 5.45pm
Former prime minister John Howard says there was no justification for Scott Morrison giving himself five secret ministries between 2020 and 2021, and has backed the Governor-General’s criticism over the appointments not being made public.
On the same day that Opposition leader Peter Dutton distanced himself from Mr Morrison’s actions, and said he would have tried to stop him had he known, Mr Howard suggested not even the coronavirus pandemic warranted what the former prime minister did.
“I don’t think he should have done that, I don’t think there was any need to do it, and I wouldn’t have,” he told the National Press Club.
“I can’t really have imagined the circumstances when I was prime minister that there was any need to swear myself in as a duplicate minister.″
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The secret ministries and Scott Morrison’s God connection
Only the former PM knows what motivated him to ghost so many of his colleagues’ roles. But it is hard to ignore the place of religion in his character.
Andrew Clark Senior writer
Aug 19, 2022 – 12.48pm
In the cowboy comedy movie Cat Ballou, hard-drinking hired gun Kid Shelleen, played by Lee Marvin, presents for shooting practice, but his shaky hands can’t hold a gun. He has a few swigs of whisky, expertly picks off some targets, and descends into an alcoholic haze.
“I never saw a man go through a day so fast,” observes one onlooker. Change a few details, and you have the week’s narrative for Scott Morrison.
From a former prime minister under fire after revelations of his secret self-appointment to five portfolios, including home affairs, Morrison tried to stem the blood-letting during a combative mid-week news conference. But by the next day, he was under siege.
Opposition Leader Peter Dutton publicly humiliated him by demanding he apologise to former home affairs minister Karen Andrews, who had earlier called on her former party leader to leave Parliament.
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Bewilderment, betrayal, anger: the week Morrison’s legacy was trashed
Former prime minister Scott Morrison went behind the backs of his ministers and the public, and appointed himself to five ministries. This week, his colleagues and opponents found out.
Phillip Coorey Political editor
Aug 19, 2022 – 4.28pm
There are at least three reasons why Scott Morrison will not accept the free advice currently on offer and quit politics.
First, the Liberal Party can ill afford a byelection right now. Morrison’s NSW division is gearing up for a state election in March, the coffers are bare after the federal election, and there is a risk, albeit slight, the party could lose Morrison’s Sutherland Shire seat of Cook if there were a byelection any time soon.
Second, Morrison, along with Malcolm Turnbull, is unique among former prime ministers in that he is not entitled to a parliamentary pension once retired. Under the changes forced in by John Howard and Mark Latham, anyone elected from 2004 onwards does not qualify for the old, generous pension.
While Turnbull is independently wealthy, Morrison, elected in 2007 and aged in his mid-50s, still has a mortgage, and kids at school. If he retires from politics, he receives an office, car and phone like all former PMs, but no salary. Until he can establish a post-political career, he won’t be leaving.
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The secrets that made Morrison a pariah in parts of his own party
Scott Morrison may be the loneliest politician in Australia as this week ends.
By Tony Wright
August 20, 2022
Scott Morrison made his name in Australian politics by invoking the right to secrecy over public policy.
As immigration minister in 2013, overseeing Australia’s system of turning back asylum seeker boats at sea, he made sure it operated under a cloak of stealth by the simple process of refusing to reveal “on-water” or “operational” matters.
Now, his long dedication to secrecy has reduced Morrison – prime minister only three months ago – to a pariah within sections of his own party.
Revelations that as prime minister he covertly had himself granted full authority over five other ministerial portfolios by persuading Governor-General David Hurley to sign legal papers conferring those powers – some of which he claimed on Tuesday he didn’t recall, before regaining clarity on Wednesday to mount a stout defence of his actions – have all but dismantled his political legacy.
He may be the loneliest politician in Australia as this week ends.
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Excuses, arrogance and deception: Morrison was always the problem
12:00AM August 20, 2022
If news of Scott Morrison’s collector tendencies had been ventilated prior to the last election his colleagues may have removed him as prime minister. That is how angry many are now when you talk to them.
A small band of Morrison defenders – led by the member for Cook – has sought to downplay the significance of what happened when the former PM began accumulating ministerial portfolios without the knowledge or consent of his colleagues. But for most conservatives, what he did was an abject violation of the founding principles of their ideology.
Conservatives are supposed to protect institutions, party systems; indeed, the due process that provides transparency. Morrison’s actions would have been concerning enough if we knew about them. If the public or his colleagues did know, they would have stopped his actions, which is the whole point. The fact that he went about collecting portfolios in secret has shredded what reputation he had left after the damage done presiding over the May 21 electoral catastrophe.
The inquiries will happen, the rules will be changed. The biggest legacy of the Morrison administration might now be the consequence of his maladministration. A change, hopefully, in the culture of secrecy he encouraged.
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Scott Morrison’s secret ego trip has damaged the Liberal brand
12:00AM August 20, 2022
Scott Morrison’s mistake as prime minister was his failure to recognise that means can be more important than ends – Morrison had stellar results protecting Australia’s health and economy from the pandemic but his actions undermined democratic principle, public trust and cabinet government.
The ironic aspect of Morrison’s secret accumulation of portfolios is that had this week’s revelations come late last year it is difficult to see how he could have survived as prime minister given the anger of his colleagues and greater stakes for a Coalition that would still have been in government.
The damage to the Liberal Party is palpable.
The Liberals are supposed to be the party of principled government and respect for institutions. But Morrison embarked on an untenable and deceptive accumulation of power. Can you imagine Robert Menzies secretly commissioning himself into five extra portfolios without telling most of the ministers?
The real damage to Morrison comes from his own side – his current and former colleagues who are dismayed, angry and bewildered. The three previous Liberal prime ministers – John Howard, Tony Abbott and Malcolm Turnbull – have criticised Morrison in different ways along with current Liberal leader Peter Dutton, who has had no option but to brand Morrison’s actions as the “wrong call”.
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https://www.afr.com/policy/economy/lowe-and-behold-the-path-to-a-soft-landing-20220817-p5balp
Can the RBA kill inflation without killing the economy?
Central bankers everywhere are playing catch-up to tighten ultra-loose pandemic monetary policy after being caught off guard by a stimulus-fuelled inflationary pulse.
Ronald Mizen Economics correspondent
Aug 19, 2022 – 2.01pm
Like passengers aboard a long-haul flight skirting a hurricane, everyone strapped into the Australian economy is feeling tense and hoping for a soft landing amid a global inflationary storm.
Whether that’s likely depends on which direction you look. Key Australian economic releases this week signal two very different outlooks depending on who you ask and how they choose to interpret the data.
Around the world, central bankers are playing catch-up to tighten ultra-loose pandemic monetary policy after being caught off guard by a stimulus-fuelled inflationary pulse that in many places has hit multi-decade highs.
That has households sweating over how high their mortgage repayments will go and businesses wondering how that will influence consumer confidence and household spending on goods and services.
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We’re tired, as a country, of being morally affronted
The Weekend Australian Magazine
12:00AM August 20, 2022
Most humans have an impulse to be good, to do good, and when there’s a tear in the moral fabric of our existence it’s keenly felt. We heard recently of the castration of a Ukrainian soldier by Russian invaders, in the wider picture of a war of extreme barbarity; an invasion of a sovereign nation that demonstrates a shocking impoverishment of the human spirit. The childlike equation – I want, therefore I shall have – without any respect for the laws of ownership, of dignity or civility, is an affront to humankind; to all of us, as a collective. The thrust of the demand – Putin wants, therefore he shall have – has left the world reeling from a sense of moral injury that’s been inflicted upon us all.
That term “moral injury” was coined by US psychiatrist Jonathan Shay, who spent years examining traumatic wartime experiences of Vietnam veterans through the prism of Homer’s epic narratives the Iliad and the Odyssey. Shay wrote that a sense of moral injury could be triggered when there had been “a betrayal of what is morally correct by someone who holds legitimate authority in a high-stakes situation”. A perception of state-sanctioned injustice goes against the moral order of society, what we perceive of as “right” and can result in feelings of bewilderment, anxiety, vulnerability and rage.
Outside the realm of war, a sense of moral outrage over the actions of those in authority has fuelled anger, again and again, in the recent past. We have seen repeated examples of moral injustice inflicted by those in power upon the powerless, and the result of this slippage has been frustration and fury from a flinching populace. The moral indignity of Donald Trump doing nothing while his supporters trashed the Capitol. The moral outrage of Boris Johnson blithely partying with colleagues while his country was placed under strict Covid lockdowns. Of Pauline Hanson’s performative stunt where she played up to her base by storming out of parliament during an Acknowledgement of Country; words that are a small gesture of politeness and balm to a nation’s conflicted soul. The moral outrage induced by oppositional forces wilfully obstructing or muddying the waters over an Indigenous Voice to Parliament, which, as our Prime Minister recently declared, is “a hand outstretched, a moving show of faith in Australian decency and Australian fairness”.
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Albanese flags Morrison inquiry
Campbell Kwan 21-8.2022
Prime Minister Anthony Albanese also says an inquiry may be held to investigate whether former prime minister Scott Morrison’s decision to secretly appoint himself into five ministry portfolios overturned any constitutional conventions.
The PM told Sky News that while there are currently no suggestions that Morrison’s actions were illegal, he blasted his predecessor for his “trashing the Westminster system”.
He also signalled reforms may be in the works to prevent a prime minister from creating a ghost ministry again.
“There are separate questions about the functioning about democracy about conventions and whether any conventions have been overturned and whether there’s a need for any reforms required to ensure that something like this can never happen again. So there could be a further inquiry or further reforms out of this to ensure it does not happen again.”
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COVID-19 Information.
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No entries in this category.
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Climate Change.
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How much will it cost me to ditch gas entirely?
By Joel Gibson
August 16, 2022 — 2.00pm
Last week a team of workers dug up the street outside my home for a day to connect a house across the road to mains gas. It was an expensive exercise to install an energy source that’s becoming very costly indeed.
Wholesale gas prices have tripled in the past year. So far, households have only seen increases of about 10 per cent in their retail rates, but worse is yet to come as the soaring prices flow through to homes.
Gas used to be the cheaper alternative to electricity for heating, cooking and hot water. But those days may be behind us. With gas prices through the roof and fossil fuels on the nose, some of us have started ripping out gas appliances for a mixture of money saving and planet-saving reasons.
So, what does it cost to ditch gas, and how much money could save?
The transition cost is a major hurdle. If you replaced three gas appliances – heating, hot water and cooking – all at once, it adds up to about $4000-$5000 for average-priced appliances and at least a few thousand dollars for installation.
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Royal Commissions And The Like.
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Greensill’s ghost will haunt the finance world
By Lionel Laurent
August 17, 2022 — 5.42am
SoftBank chief Masayoshi Son and Credit Suisse chairman Axel Lehmann doubtless wish their respective firms had never met disgraced Australian financier Lex Greensill.
But hopefully they — and the finance industry at large — can learn lessons from the scandal that ensued.
Greensill’s charm, self-belief and supposed skill at turning the staid business of supply-chain finance into a booming source of cash had Softbank and Credit Suisse seeing dollar signs, as Duncan Mavin’s new book about the saga — The Pyramid of Lies — reveals.
For Son, whose Vision Fund dragged SoftBank to a recent record loss, taking an ownership stake in Greensill was meant to be a fintech home run. Here was a firm claiming to mix old finance with new data tricks, growing at breakneck speed and with apparently enough cash to prop up dreams such as investing in a new $US34 billion ($48.5 billion) city in Borneo.
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National Budget Issues.
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https://thenewdaily.com.au/finance/2022/08/15/alan-kohler-hubris-money/
6:00am, Aug 15, 2022 Updated: 6:45pm, Aug 14
Alan Kohler: The hubris of central bankers and the limits of money
In 2002, at the end of a two-year stint at the Bank for International Settlements (BIS) in Switzerland, Reserve Bank of Australia Governor Philip Lowe made a point for which he is still remembered in the economic salons of the world, and which he is now trying to put into practice.
He and a BIS colleague Claudio Borio wrote in a prescient paper: “…lowering rates or providing ample liquidity when problems materialise but not raising rates as imbalances build up, can be rather insidious in the longer run. They promote a form of moral hazard that can sow the seeds of instability and of costly fluctuations in the real economy.”
It’s an obvious point, made when the US Federal Reserve was slashing interest rates in the wake of the dot-com bust, but since forgotten by most central bankers, including Dr Lowe, after they were mugged by events.
BIS might be described as the central bankers’ gamekeeper. Borio stayed on there and now heads the BIS’s monetary and economic department. Philip Lowe on the other hand, having briefly served as gamekeeper, returned to being a poacher.
In fact Borio has remained a critic of central banking practices since the GFC, while his partner in scepticism back in 2002 went on to practise what he and Borio back then preached against.
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https://www.afr.com/policy/economy/the-case-for-the-rba-to-slow-down-rate-hikes-20220815-p5b9wb
The case for the RBA to ‘slow down’ rate hikes
John Kehoe Economics editor
Aug 16, 2022 – 2.33pm
Many home borrowers have only felt the impact of one or two of the Reserve Bank of Australia’s four interest rate rises this year, due to lags of up to more than two months for rate hikes to be fully passed through by some of the nation’s largest lenders.
Commonwealth Bank of Australia economist Gareth Aird said the delay in official interest rate rises flowing through to monthly repayments may explain the dichotomy of consumer sentiment being weak but spending remaining robust.
“There’s quite a lag of when the RBA moves and when your repayment resets,” Mr Aird said.
“The full impact of the four rate hikes that have been delivered to people on the minimum repayments doesn’t really fully wash through to around December.”
“So there is three 50s [basis points] in the pipeline still to hit even if the RBA was to do nothing from here.”
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Health Issues.
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Medical MDMA focus for Forrest’s new $250m health tech fund
Brad Thompson Reporter
Aug 15, 2022 – 8.51am
Andrew Forrest will use a new $250 million venture capital business to continue backing the work of a Perth-based company looking at using variations of MDMA - known on the street as Molly or ecstasy - to treat psychological disorders.
ASX-listed Emyria is one of three health and biotech companies to have received millions of dollars from the Forrest family’s private investment arm Tattarang, with other investments in the pipeline through the new vehicle known as Tenmile.
The Forrests invested $5 million in medicinal cannabis and psychedelic drug developer Emyria in November, and through Tenmile executive Chairman Steve Burnell have given the strongest indication they intend to back any future capital raisings.
Emyria is advancing several MDMA-based programs, including an MDMA-assisted therapy trial for post-traumatic stress disorder (PTSD) as well as evaluating a library of novel MDMA analogues in partnership with the University of Western Australia.
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https://www.miragenews.com/racgp-medical-group-data-reveals-true-state-of-836569/
RACGP: Medical group data reveals true state of general practice care
Royal Australian College of GPs
The Royal Australian College of General Practitioners (RACGP) has warned that general practice care urgently requires greater investment so that no patients are left behind.
It comes following reports of new data from hundreds of Australia’s largest medical centres, casting further doubt on the optimistic bulk-billing figures frequently trumpeted by the previous federal Government. When the Primary Care Business Council, a group representing the seven biggest operators of 500 GP clinics, compiled statistics analysing all cases of a GP consult lasting 20 minutes or less (the most common type of GP visit) and calculated the percentage of those consults that were bulk-billed they found the rate has fallen to an average of 61% across the 12 clinics. This is a 12% decline from just two years ago and one of the operators has a rate of just 36%.
RACGP President Adj. Professor Karen Price said this was further evidence that general practice care needed greater support.
“Unless greater investment is made in general practice care, more and more practices will have little choice but to pass the cost on to patients,” she said.
“This can result in patients delaying or avoiding consultations with their GP and having a health condition worsen to the extent that they end up in a hospital bed. When this is replicated in communities across Australia, particularly in rural and remote areas, the health of the nation suffers.”
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https://www.fnarena.com/index.php/2022/08/15/market-share-gains-key-to-resmeds-outlook/
Market Share Gains Key to ResMed’s Outlook
Australia | 1:10 PM
Following FY22 results, brokers set higher price targets for ResMed on average and expect market share gains.
-Strong
demand and competitor woes assist ResMed’s FY22 result
-Fourth quarter device revenue rises by 14% relative to the third quarter
-Brokers set higher 12-month price targets on average
-Ord Minnett downgrades on valuation and a delayed buyback
By Mark Woodruff
ResMed ((RMD)) can secure a ‘Cochlear-esque’ ((COH)) 70% market share of the global sleep market, given more strength in the US market, says Wilsons.
As a result of this view, following fourth quarter/FY22 results, Wilsons upgrades its rating for ResMed to Overweight from Market Weight and increases its target price to $38.75 from $30.71.
The fourth quarter was ahead of expectations, according to Morgans, with strong demand, competitor Philips’ device recall gains and price rises helping expand gross margins, though operating margins were flat on higher operating expenses.
Excluding covid-related ventilator sales in the previous corresponding period, fourth quarter device revenue rose by 6% year-on-year and increased by 14% relative to the third quarter.
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Kidney transplant hopes rise in blood-type breakthrough
By Rhys Blakely
The Times
8:50PM August 15, 2022
Researchers have modified the blood type of three donor kidneys in a breakthrough that could have a large impact on patients waiting for transplants.
The technique could be especially useful for altering organs to make them suitable for black and ethnic minority patients, who are less likely to find a match. A kidney or other organ from someone with blood group A cannot be given to someone with blood group B, or the other way around.
The new process allowed the blood group of three kidneys to be changed to the universal “O”. This means that they could, in theory, be given to people with any blood type. If further testing is successful, this should allow more transplants to be carried out.
Serena MacMillan, a PhD student at Britain’s University of Cambridge, said: “It’s very exciting to think about how this could potentially impact so many lives.”
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GPs demand action to fix ‘disintegrating’ Medicare
4:16AM August 17, 2022
Doctors have issued the federal government with an urgent demand for more Medicare funding, warning general practice clinics are “running for the defibrillator” and need an immediate rescue plan as patients struggle to access bulk billing and more surgeries close their doors.
Health Minister Mark Butler is refusing to commit to raising the diminished Medicare rebate despite patient gap fees being at an all-time record, and doctors’ groups are now saying they cannot wait any longer for action as a federal task force ponders how to spend $750m that Labor has committed to fixing primary care.
Hundreds of doctors’ surgeries every week are writing to their patients to advise they will no longer be able to bulk bill all patients, with some now even charging pensioners a gap fee amid warnings of the collapse of universal bulk billing.
“I think at the end of the day we’ve really hit crunch time,” said Australian Medical Association president Steve Robson. “There’s no Plan B. We need a plan now. The time has come for a proposal, not being commitment phobic.”
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Shocking images a familiar story in a hospital system in crisis
By Aisha Dow
August 18, 2022 — 5.01pm
Many have been shocked by images that have emerged from a major Victorian hospital. Two vulnerable people – a young cancer patient and a nursing home resident – reportedly waited for hours in a corridor and a large tent set up outside the emergency department.
However these stories will come as no surprise to frontline health workers, who have been warning for months that conditions in Victoria’s hospitals, already at crisis point, have been worsening.
They say that things that never happened before or happened quite rarely – such as a patient waiting in an emergency department for more than a day – are becoming almost commonplace. They’ve told us that people who have had strokes or a heart attack, who once would have been seen urgently, are now among those routinely having to wait for care.
On Wednesday, journalist Louise Milligan tweeted an account of a teenager who she said had just finished chemotherapy, who had waited 27 hours in a corridor of the Box Hill Hospital, alongside heartbreaking photos of his makeshift bed.
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International Issues.
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Soft power is next battleground in tussle with China
Australia is trying to counter the lure of China’s cash in the Pacific by diverting its unused IMF drawing rights and tapping private wealth.
Andrew Tillett Political correspondent
Aug 12, 2022 – 3.46pm
China’s war games over Taiwan, including live fire drills, have been dismissed as an overreaction to the visit of a geriatric politician playing for domestic political gain in a last gasp before she loses power.
That would be a mistake.
Just as its island building and militarisation of the South China Sea created new facts on the water, Beijing has pushed the boundaries on what it can get away with.
Since China launched its military exercises on August 5, at least 136 of its aircraft (as of Thursday) had crossed, with impunity, the median line of the 160-kilometre-wide Taiwan Strait – including 49 on the first day alone.
For comparison, just 49 planes crossed the line in the whole of 2020.
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In a takeover fight, both Taiwan and China come out losers
High-income and high-tech Taiwan would gain nothing from being merged into China. And Beijing would not hold on to Taiwan’s dynamism if it did seize the island.
Adrian Blundell-Wignall Economist
Aug 15, 2022 – 2.00pm
The legitimacy of a government requires the consent of a country’s citizens and beneficial consequences for them, as judged by reasonable persons, and tested within a democratic framework.
Chairman Mao Zedong’s dictum that “political power comes from the barrel of a gun” fails all of that. Most recently, we have seen that gun-barrel power in Hong Kong, where even the promise of a 50-year continuation of its freedoms, could not be tolerated.
After that move went out the door, so too did the credibility of a two-systems model for a peaceful reunification of China and Taiwan.
Beijing’s more urgent claims to Taiwan have some puzzling aspects. North and South Korea merit being thought of as a single country. But here, China supports separation. China has a long history with under-developed Mongolia, once ruled by the Ming, but they don’t threaten to take it by force today. Mongolia is neutral regarding China and Russia. It is landlocked, dependent on Chinese ports and is vertically integrated in trade (copper and coal exports to China). China has power without the need of a gun.
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Why the Fed might be at ‘neutral’ already on monetary policy
The peak in the federal funds rate during the current cycle will be lower than otherwise because the combination of quantitative easing and the strong dollar are equivalent to at least a 1 percentage point increase.
Edward Yardeni
Aug 16, 2022 – 8.13am
Most Fed watchers seem to spend more time criticising the US Federal Reserve than watching it. It’s easy to do. Anyone can play the game and attacking the Fed is like shooting at sitting ducks: officials at the central bank can’t respond directly given their public role.
Recently, Fed chair Jay Powell has been skewered by his critics for claiming that the federal funds rate was now at “neutral” at his July 27 press conference just after the policy-setting Federal Open Market Committee had voted unanimously to raise its benchmark federal funds rate range by 0.75 percentage points to 2.25 to 2.50 per cent.
His suggestion that the Fed is on the borderline of restrictive territory and therefore closer to being done tightening was well received by both bond and stock investors, but not by the Fed’s critics.
Former Federal Reserve Bank of New York president William Dudley said last Wednesday that, given the level of uncertainty, “I’d be a bit more sceptical” in saying policymakers had reached neutral.
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China’s Orwellian plans for Taiwan are plain to see
12:00AM August 16, 2022
Beijing’s huge naval, air and live-firepower exercises around Taiwan offer insights into how the People’s Republic of China plans to take over the island, but the aim is more to intimidate than reveal a military blueprint for an invasion.
Late last week, at the height of the military exercise, the Chinese Communist Party’s Taiwan Affairs Office released a new white paper, titled The Taiwan Question and China’s Reunification in the New Era. The document is Xi Jinping’s velvet glove masking the iron fist of China’s military. It claims: “Never before have we been so close to, confident in, and capable of achieving the goal of national rejuvenation.”
The paper says taking control of Taiwan can be done peacefully: “We maintain that after peaceful reunification, Taiwan may continue its current social system and enjoy a high degree of autonomy in accordance with the law. The two social systems will develop side-by-side for a long time to come.”
This stands in stark contrast to the views China’s ambassador to Australia, Xiao Qian, put to the National Press Club last week. Under intense questioning Xiao acknowledged that the views of 23 million Taiwanese people counted for nothing compared with the CCP’s hyper-nationalist brainwashing of 1.4 billion PRC citizens. After a takeover, he warned, “There might be a process for the people in Taiwan to have a correct understanding of China about the motherland.”
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How to survive nuclear war? Stay in Australia
By Tom Whipple
The Times
August 16, 2022
Who would win in a nuclear war between the US and Russia? Nobody, of course. But according to a new study, the countries with the best hope of at least seeing their civilisation survive the decade afterwards would be Argentina and Australia.
In Britain 90 per cent of people would starve to death, the study suggests.
Scientists have performed one of the most detailed analyses of the effects of a nuclear winter, looking to understand what will happen when the massive firestorms caused by a large-scale nuclear exchange throw up enough soot to block out the sun. Their conclusion is that even if you avoided being among the initial deaths, the indirect effect of the conflict means five billion people could starve to death globally in the years immediately after the attack.
“Everybody understands that the direct effects of nuclear war would be horrific, as we saw in Hiroshima and Nagasaki,” Professor Alan Robock, from Rutgers University in New Jersey, said. “Our work shows that more than ten times as many people could die in the rest of the world because of the impacts on climate and agriculture.”
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Is China finally hitting the economic wall?
Globalisation is heading into a perfect storm – and for China in particular it could not be coming at a worse time.
Arvind Subramanian and Josh Felman Development economist
Aug 16, 2022 – 11.08am
Over the past decade and a half, financial, health, and geopolitical shocks pummelled world trade. The 2008 global financial crisis devastated the banks that financed much of the world’s commerce, and then triggered a secular decline in economic growth.
In 2020, the COVID-19 pandemic closed factories and upended global supply chains. And now Russia’s invasion of Ukraine has disrupted food and energy supplies, threatening to divide the world along geopolitical lines.
Some argue that these three shocks might even lead to the death of globalisation. But the reality is likely to be more complex: The disruptions will probably transform the global trading system rather than shrink it, with the impact varying across countries. Significantly, China will probably lose, while India might even gain.
Starting in the early 1990s, developing countries advanced as a group for almost two decades, rapidly catching up to rich countries’ standards of living. This convergence was facilitated by hyper-globalisation, whereby trade liberalisation and large declines in transport and communication costs swiftly increased opportunities for the developing world. China and India benefited enormously, leading to the largest reductions in poverty the world has ever seen.
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Full-scale nuclear war could kill 5 billion people, study shows
Alex Millson
Aug 17, 2022 – 7.20am
Hong Kong | Five billion people would die in a modern nuclear war as the impact of a global famine – triggered by sunlight-blocking soot in the atmosphere – would probably far exceed the casualties caused by lethal blasts.
Scientists at Rutgers University mapped out the effects of six possible nuclear conflict scenarios. A full-scale war between the US and Russia, the worst possible case, would wipe out more than half of humanity, they said in the study published in the journal Nature Food.
The estimates were based on calculations of how much soot would enter the atmosphere from firestorms ignited by the detonation of nuclear weapons. Researchers used a climate forecasting tool supported by the National Centre for Atmospheric Research, which allowed them to estimate productivity of major crops on a country-by-country basis.
Even a relatively small-scale conflict would have devastating consequences for global food production. A localised battle between India and Pakistan would cause crop yields to decline by an estimated 7 per cent within five years, the study suggested. A US-Russia war would make production fall by 90 per cent within three to four years.
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Biden signs expansive health, climate and tax law
Jim Tankersley
Aug 17, 2022 – 7.22am
Washington | US President Joe Biden on Tuesday (Wednesday AEST) signed a long-awaited bill meant to reduce health costs, reduce greenhouse gas emissions and raise taxes on corporations and wealthy investors, capping more than a year of on-again, off-again negotiations and cementing his early economic legacy.
“This bill is the biggest step forward on climate ever,” Mr Biden said, after drawing a standing ovation from a White House crowd filled largely with aides and allies.
The bill, which Democrats named the Inflation Reduction Act, invests $US370 billion ($527 billion) in spending and tax credits in low-emission forms of energy to fight climate change. It extends federal health insurance subsidies, allows the government to negotiate prescription drug prices for seniors on Medicare, and is expected to reduce the federal budget deficit by about $US300 billion over 10 years.
The legislation would increase taxes by about $US300 billion, largely by imposing new levies on big corporations. The law includes a new tax on certain corporate stock repurchases and a minimum tax on large firms that use deductions and other methods to reduce their tax bills.
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Bizarre behaviour that’s fast becoming the political norm
August 17, 2022
Scott Morrison’s extraordinary decision to be prime minister for so many portfolios indicates unmistakably one of his government’s worst features, which is shared, sadly, by many others in the West.
That is the inclination to centralise all power, decision-making, even daily tactical responses, in the chief executive’s hands.
Morrison’s actions were bizarre. Democratic governments have negotiated world wars without such behaviour. Covid caused very few Western governments to bend their institutional arrangements so peculiarly out of shape. If Morrison was ever worried that ministers were exercising statutory power inappropriately, he could have sacked them. Even more indefensible is not telling anyone about these arrangements.
However, the general trend to over-centralising power is widespread and accelerating in Western politics. Sajid Javid in February 2020 resigned as UK chancellor because Boris Johnson decided to appoint all of Javid’s advisers, a preposterous imposition on a senior minister.
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Disappearing Rhine adds to the drip of problems in Europe
By Oliver Moody and Charlie Devereux
The Times
5:11PM August 16, 2022
Two summers after the end of the Second World War, Germany wilted in a drought so severe that the Rhine could be crossed on foot and leaves withered on the trees in August. One resident of the city of Worms took a chisel and carved the words “Year of Hunger 1947” into a stone exposed by the river’s receding waters. Three quarters of a century later and with the Rhine a brackish shadow of its usual self, the “hunger stone” has resurfaced.
This summer’s drought has rendered the river impassable to heavier cargo ships and economists worry that blocking such an important artery of trade, one that carries cars, chemicals and clothing in one direction and gas and coal in the other, could deal a measurable blow to German GDP at a time when growth is scarce enough to begin with.
The Rhine river in Germany has fallen below a key waterline level used as a reference for judging its accessibility for… shipping. The water dropped below the 40-centimetre (15.7-inch) reference level in Kaub, a noted bottleneck for shipping where the Rhine runs narrow and shallow. That level is More
Nor is the Rhine the only European river to be drying up in what some researchers believe could be Europe’s worst drought in 500 years. According to the European Drought Observa- tory, part of the European Union’s Copernicus Earth monitoring programme, a “staggering” proportion of the Continent, including France, Spain, Croatia, Romania and southern Greece, is going through a “severe precipitation deficit”.
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UK inflation hits double digits for first time in 40 years
Andrew Atkinson and Celia Bergin
Aug 17, 2022 – 4.44pm
London | UK inflation rose more than expected last month to the highest in 40 years, intensifying a squeeze on consumers and adding to pressure for action from the government and Bank of England.
The Consumer Prices Index rose 10.1 per cent in July from a year earlier after a 9.4 per cent gain the month before, the Office for National Statistics said Wednesday. Economists had expected a reading of 9.8 per cent.
Rising food prices made the biggest contribution to this month’s increase, indicating inflationary pressures are spreading beyond energy. Investors moved to price in 2 percentage points of increases in the BOE’s key rate to 3.75 per cent by May next year.
“Food prices rose notably, particularly bakery products, dairy, meat and vegetables, which was also reflected in higher takeaway prices,” said Grant Fitzner, chief economist at the ONS. “Price rises in other staple items, such as pet food, toilet rolls, toothbrushes and deodorants also pushed up inflation in July.”
-https://www.afr.com/policy/economy/herd-gets-recessions-talk-wrong-20220817-p5banv
Herd gets recessions talk wrong
There are four good reasons to question whether the prevailing pessimism about stagnation, inflation, and stagflation is justified.
Jim O'Neill Columnist
Aug 18, 2022 – 12.38pm
With so much talk of stagnation, inflation, and stagflation in recent months, it is worth questioning whether the prevailing pessimism is justified. While I have shared in the gloom, warning early on that it could be a “bad year for markets”, I’m starting to reflect on my previous views, for four reasons.
First, I am struck by just how widespread the recession narrative has become. Almost everyone seems to believe that developed countries are heading into, or are already in, a recession. I have given multiple interviews to business consultants who all want to know “how to prepare for the recession.” As I remarked to one of them, I know of no previous recession that was so confidently anticipated as the one that is supposedly upon us now.
After all, the main reason that “recession” is such a scary word is that it is usually unexpected. Economic forecasters tend not to see them until they have already arrived. That is what happened in 2007-2008, which was admittedly rather unique, and again in 2020, following the arrival of COVID-19. Yet now, even some central banks (namely, the Bank of England) are openly forecasting a recession later this year.
Has economic forecasting suddenly become better, or is something else going on?
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Truss, Sunak shy away from UK’s real life economic woes
With runaway inflation, worker shortages and range of other problems, the UK economy is in trouble. The candidates to take over from Boris Johnson, however, seem oblivious to this.
Mark Landler
Aug 19, 2022 – 10.09am
London | The last time Britain suffered double-digit inflation, in 1982, Margaret Thatcher was prime minister, the nation was about to go to war with Argentina over the Falkland Islands, nurses and miners went on strike, and Prince William was born to Prince Charles and his wife, Princess Diana.
This week, Britain is again in upheaval, with an inflation rate of 10.1 per cent in July, a looming recession and a Conservative Party in the throes of a rancorous campaign to choose a new leader. If, as expected, Liz Truss is elected next month, she would take power during a period of economic stress comparable to what Thatcher confronted.
And yet, the multiple shocks Britain faces — from soaring energy prices because of the war in Ukraine, supply chain disruptions after the coronavirus pandemic, and the hollowing out of the British labor market by Brexit — seem strangely disconnected from the contest to replace Prime Minister Boris Johnson.
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Ukraine can win this war - on these five conditions
Military leader and strategist
August 19, 2022 — 5.00am
The Ukrainian attack on the Russian airbase in Crimea last week has dragged attention back to a war which many in the West, including this country, have largely lost sight of. Rising interest rates, high fuel and energy costs, and election campaigns have reasserted domestic issues as the primary concerns in the minds of most Western citizens.
Despite this collective inattention to the war, it continues, nonetheless. The Russians are pounding away at Ukrainian defensive positions in the Donbas, gaining ground by the metre while losing soldiers in their hundreds. Russian missiles, with variable accuracy, continue to rain down on Ukrainian cities, callously killing children and civilians.
In the early days of the war, the Ukrainians were given little chance of defending their country against the larger, and supposedly more capable, Russian army. Vladimir Putin planned a short, lightning war against his southern neighbour but instead drew Ukraine and the West into a bloody, expensive and prolonged conflict. As months have passed, the initiative has slowly bled away from Russia as Ukraine corrodes its ability to conduct offensive operations.
What are the prospects for a Ukrainian victory? As I wrote in March, Ukraine can win. But such a victory relies on five foundational conditions.
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China to join Russia military exercises as US rivals deepen ties
By James Areddy and Ann M. Simmons
The Wall Street Journal
8:37PM August 18, 2022
China’s People’s Liberation Army said it is set to join military exercises led by Russia, in the latest demonstration of partnership between the two US rivals.
Building on a “no limits” pact their presidents signed this year, the Russian and Chinese militaries are expected to drill side-by-side starting later this month in the Russian Far East, according to China’s Ministry of Defence.
The exercises will mark their second joint show of force in the region this year after bombers from each country in May conducted a 13-hour drill close enough to Japan and South Korea that those nations scrambled jet fighters, at a time when President Joe Biden was visiting Tokyo.
Russia’s Ministry of Defence didn’t immediately respond to a request for confirmation of whether China would participate in the exercises, which are scheduled August 30 to September 5.
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What if China saved the world and nobody noticed?
Environment and Climate Editor
August 20, 2022 — 5.00am
Climate activists and scientists the world over breathed deeply in relief this week when President Joe Biden signed into law the Inflation Reduction Act, as America’s biggest-ever package of climate actions had been rebranded while it was wrestled forcefully through the Senate.
“It’s law,” said Biden at the White House on Tuesday. “This bill is the biggest step forward on climate ever.”
And the scope of the package is extraordinary. Its various measures will channel $US370 billion ($535 billion) into programs that, if successful, will see the creation of 60 gigawatts of new renewable energy capacity a year, doubling the amount deployed last year.
But in focusing on the future plans of America, the world risks missing what is already going on in China, where a green revolution is already sweeping the economy.
In the world’s popular imagination, China is a machine built on coal. At the COP26 climate talks in Glasgow in November last year, China – along with Australia and India – declined to sign a pledge to phase out coal use. In the wake of the pandemic, it stimulated its economy by ramping up coal production so much that climate observation satellites detected new plumes of methane emissions leaking from mines across Inner Mongolia.
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Power off, panic on in British energy crisis
10:00PM August 19, 2022
People in Cornwall have been turning off their freezers, to the alarm of health officials warning of food poisoning. In Newcastle, food charities have been flooded with requests for non-perishable items that don’t require turning on the stove.
And in London at my house, the hot water has been off for the past month with showering scheduled for immediately after a sweat-inducing run in the park.
A neighbour has given up toast and community groups advise people to vacuum the backs of their fridges to ensure they work as efficiently as possible and to shower every second day.
A pre-panic mode has struck households across Britain as a cost-of-living crisis approaches uncharted territory.
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S&P 500 could drop dramatically in months ahead: Guggenheim
Timothy Moore Before the Bell editor
Aug 20, 2022 – 9.58am
US stocks are in trouble if the S&P 500, which has rebounded about 16 per cent from its 2022 low in mid-June, fails to break through its 200-day moving average, according to Guggenheim Partners.
In a note, the firm’s research team argues that investors should brace for potentially deep losses.
“Stocks have seen a strong rally since the Federal Open Market Committee meeting in mid-June, but the S&P 500 has struggled to close above its 200-day moving average in the past week.
“Based on the history of previous bear markets, this level (currently 4320) is an important one to watch. A failure to break the 200-day moving average could portend much deeper losses for equities in the months ahead.
“Additionally, it is noteworthy that the current rally has failed to break the downtrend that has been in place since the beginning of the year.”
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I look forward to comments on all this!
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David.
