January 19, 2023 Edition
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In the US there is a lot of nonsense going on about a few stray pages from Biden’s past. Otherwise all seems reasonably calm.
In the UK / Europe there has been little change but Iran seems to be a collection of murderous thugs that is out of control killing political enemies.
In OZ there has been an obsession about Nazi dress-ups from 20 years ago while the Federal ALP Government sails on unperturbed!
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Major Issues.
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9.20AM 08-01-2023
Dutton says PM is ‘condemning Voice to failure’
Andrew Hobbs
Peter Dutton has accused Prime Minister Anthony Albanese of “condemning” to failure the proposed Indigenous Voice to parliament by refusing “complete information regarding your government’s version of the Voice”.
In an open letter published in The Sunday Telegraph, Dutton accused Albanese of treating voters like mugs on the Voice.
“I believe you are making a catastrophic mistake in not providing accessible, clear and complete information regarding your government’s version of the Voice, condemning it to failure, and, in turn, damaging reconciliation efforts in our country,” Dutton says in the letter.
“Your approach will ensure a dangerous and divisive debate grounded in hearsay and misinformation.”
Dutton goes on to say he is “committed to being constructive on the issue of reconciliation” and would “support any sensible and practical measures to improve the lives of Indigenous Australians”.
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7 super opportunities you’d be mad to miss
Whether you’re still building up your retirement savings or already living on them, these strategies can help your nest egg last longer.
Colin Lewis Contributor
Jan 4, 2023 – 5.00am
The holiday season can be expensive so if you have time during this period, it’s worthwhile taking stock of where you’re at financially and to make sure you’re on track for 2023.
When it comes to the constantly changing superannuation environment, the last thing you want is to be unaware of a change and miss out on an opportunity you didn’t know existed.
If you are under 75, consider topping up your super as it’s the most tax-effective structure to hold your money in – technically, you have up until 28 days after the end of the month in which you turn 75 to contribute.
Unlike previous tax years, the work test no longer applies to people aged 67-74 who wish to make non-concessional (after-tax) contributions – great for those who are fully retired or work only one day a week or volunteer.
However, you cannot contribute if your total superannuation balance (TSB, or the total amount you have in the super system) was $1.7 million or more on June 30, 2022.
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Money mistakes: Five big ones to avoid this year
7:43AM January 9, 2023
Anyone who tells you they have never made a financial mistake is lying.
Some people lose mountains of money through poor investment or debt decisions, fraud or gaps in financial knowledge, while others dent their wealth by paying too much for items or missing out on the best deal on their bills or other expenses.
Every lost dollar adds up, and every money mistake is a learning tool to help stop it from happening again.
As household budgets buckle under the weight of higher living costs in 2023, it pays to understand these common money mistakes and how to avoid them.
1 CARELESS WITH CREDIT
Debt can destroy household wealth, especially after 2022’s surge in interest rates, and people are being urged to understand everything they owe, the costs being charged, and have a strategy to handle future interest rate rises.
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Record downturn sends house prices plunging 8.4pc from their peak
Nila Sweeney Reporter
Jan 9, 2023 – 1.37pm
Australian house prices have posted their largest fall on record, plummeting 8.4 per cent, less than nine months after peaking last May and eclipsing the previous 2017-2019 correction, CoreLogic said on Monday.
Rapid rises in interest rates and higher costs of living have crippled buyers’ ability to secure a mortgage. The massive downturn, recorded on Saturday in the CoreLogic Daily Home Value Index, is likely to be shattered again in the coming months with prices set to fall further.
“This was driven foremost, by the most rapid increase in interest rates that we’ve seen in over 30 years,” said Eliza Owen, CoreLogic head of research.
“The last time we saw a 300 basis point increase in the cash rate, it took six years, not eight months. This has triggered a strong market reaction, which contributed to this record-breaking downturn.”
The size and pace of the decline in national house prices has overtaken the record set during the downturn in 2017-2019, when home values dropped 8.38 per cent peak-to-trough, which played out over 20 months.
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Consumers start 2023 upbeat, but Chalmers warns of a tough year
Ronald Mizen Economics correspondent
Jan 10, 2023 – 12.55pm
A bout of warmer weather and talk of the Reserve Bank being close to done on interest rate rises coincided with a jump in consumer confidence to start 2023, the first new year rise in five years.
But while a hint of optimism is emerging, overall sentiment remains firmly in pessimistic territory.
Treasurer Jim Chalmers on Tuesday spoke about the difficult economic outlook with his counterparts in the US, UK, Canada and New Zealand as part of the five finance ministers’ group.
“This was a really valuable opportunity to discuss the current state of the international economy and look to how we can work together to respond to challenges,” Dr Chalmers said.
“While each of our nations enters 2023 from our own unique position, we all realise this year is going to be a very tough one for our economies and the global economy more broadly.”
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https://www.afr.com/world/asia/why-australia-needs-to-deal-with-indonesia-as-it-is-20230105-p5cagn
Why Australia needs to deal with Indonesia as it is
With Indonesia drifting in the global tide of illiberal politics and the Australian media drawn to the bad-news stories stemming from this, the rhetorical scaffolding of the bilateral relationship needs refreshing.
Liam Gammon Contributor
Jan 9, 2023 – 1.55pm
The calendar will tell you that Indonesia’s presidential election is due in February 2024 – but South-East Asia’s biggest democracy is firmly in election season already.
Party coalitions are manoeuvring to form presidential tickets by a November deadline and, buoyed by resilient approval ratings, President Joko “Jokowi” Widodo is keen for his legacy to be carried forward by a friendly successor.
Indonesia had been basking in its successes in 2022, with the economy bouncing back better than expected from the pandemic – the World Bank predicts annual GDP growth of 5.2 per cent – and a diplomatic triumph in its chairmanship of the G20.
The November summit in Bali capped a G20 whose outcomes greatly exceeded expectations in a year in which its membership was divided on big issues, notably over the Russian invasion of Ukraine.
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Treasurer asks ACCC to investigate banks’ deposit rates
Ayesha de Kretser Senior reporter
Jan 10, 2023 – 5.59pm
The Federal Treasurer Jim Chalmers has asked the competition watchdog to investigate the interest rates that banks are offering to savers, putting even more pressure on the big four as tougher funding markets bite.
Dr Chalmers said the Australian Competition and Consumer Commission would explore whether the banks were behaving fairly when it came to passing on interest rate increases.
“This is an issue I’ve asked the ACCC to take a closer look at this year,” Dr Chalmers told The Australian Financial Review.
“Banks should treat their customers fairly when it comes to savings accounts.”
Throughout last year, Dr Chalmers publicly urged bank bosses to reward savers for their patience during the period of ultra-low rates.
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ATO throws troubled wealth sector a tax lifeline
Aleks Vickovich Wealth editor
Updated Jan 10, 2023 – 5.48pm, first published at 5.31pm
Wealth management firms are hopeful that a new Australian Taxation Office review could expand the financial advice services eligible for tax deductibility and make them more affordable, amid a 40 per cent blowout in median fees in three years.
Under rules first written in 1995, a taxpayer cannot deduct fees for ongoing strategic financial advice or the establishment of an investment portfolio because they are not deemed as being directly related to income.
But the Tax Office last month announced it would update the guidance on income tax deductions for financial advice fees, with a new edict expected to be handed down by the middle of the year.
Sector leaders and lobbyists, which have for years called for all advice fees to be eligible for deductions, say updated guidance could help revert the upward trajectory in fees, which has resulted in at least 100,000 Australians quitting or becoming priced out of advice.
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https://www.afr.com/world/asia/the-revealing-moment-in-top-chinese-diplomat-s-speech-20230110-p5cbim
The revealing moment in top Chinese diplomat’s speech
China says it wants to reset economic ties with Australia but is worried about Canberra’s deepening security ties with Japan and the United States.
Michael Smith North Asia correspondent
Updated Jan 10, 2023 – 7.37pm, first published at 5.41pm
Tokyo | It is telling that the most extraordinary comments coming out of Xiao Qian’s first public appearance of the year did not refer to either China or Australia.
Instead, China’s ambassador to Australia launched a brutal attack on Japan.
“During the Second World War, Japan invaded Australia, bombed Darwin, killed Australians and treated Australian POWs in a way that is humanly unacceptable,” Xiao told reporters in Canberra on Tuesday.
“And the Japanese government has not apologised for that up to today. If they don’t apologise, it means they don’t accept it’s wrong, and they might repeat the history.”
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Sydney rental prices sit above national average, bucking national trend
By Eli Green
NCA NewsWire
12:00AM January 11, 2023
Sydneysiders have seen their weekly rental cost climb yet again, despite new figures revealing prices have stalled in most other cities across the country.
The average cost of renting a dwelling in Sydney has risen by 1.8 per cent in the December quarter, the second highest lift in prices across the country after Melbourne, where rent rose 2.3 per cent according to the latest PropTrack report.
Nationally, prices have remained the same at an average of $480 per week, while the cost of a dwelling in Sydney has reached $560 per week – a 7.7 per cent increase from the end of 2021.
Rental costs will be “something to watch” in 2023 according to report author Cameron Kusher, who says the ongoing lack of supply is likely to continue pushing up prices throughout the year.
“Vacancy rates in Sydney are still very low,” he said.
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Don’t ditch the tank if you want real firepower
Don’t be fooled by Russia’s losses in Ukraine. Here are four reasons why the ADF still needs these so-called dinosaurs on the battlefield.
By Alan Dupont
From Commentary
January 13, 2023
War concentrates the mind like few other activities, so it’s not surprising that the Ukraine-Russia conflict is generating widespread media coverage of the combat power of the two protagonists.
Far from being a morbid fascination with the weapons of war, the debates they stimulate are critical to the functioning of a healthy democracy. Democracies that fail to gain public support for essential defence projects and policies are unlikely to be victorious on the battlefield.
The Albanese government’s search for a more lethal and impactful Australian Defence Force is clearly being shaped by the Ukraine conflict. There are many worthwhile lessons to be learned about battlefield tactics and the use of advanced and improvised weaponry. But one false lesson that should be rejected is that tanks are now obsolete.
Critics have labelled tanks as behemoths, dinosaurs and of “no strategic value”. Their conclusion? Money set aside for the upgrade of our vestigial tank force, infantry fighting vehicles and Vietnam-era armoured personnel carriers should be reallocated to more useful capabilities.
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The 60/40 portfolio is back as investors eye stocks, bonds
Jan 13, 2023 – 4.42pm
Investors are preparing to plough money into shares and bonds this year even though market experts say the global economy is headed for recession and the so-called 60/40 portfolio – mixing growth and defensive assets – is dead.
A survey of 2000 Australian investors by fund manager VanEck in November and December last year found the vast majority of respondents (87 per cent) intended to kick-start or increase their investment in range of asset classes, especially shares/equities and bonds/fixed income.
The finding suggests the 60/40 strategy, which has historically underpinned the approach of many self-managed superannuation funds, may be experiencing a resurgence.
It was variously described by commentators as “dead”, “broken” and “endangered” over the past year, as rising inflation hit the value of both shares and bonds at the same time, in a rare occurrence.
The VanEck study found investors were most enthusiastic about Australian shares, with 69.8 per cent of respondents planning to deploy capital to the local market, followed by international shares (46.7 per cent). Fixed income was selected by 13.4 per cent of respondents, receiving a warmer response than listed infrastructure and property (12.9 per cent), resources/commodities (12 per cent), gold (11.25 per cent) or crypto assets (7.8 per cent).
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Pell’s wooden casket lies in state as his posthumous attack on Pope overshadows funeral
By Rob Harris
January 14, 2023 — 10.16am
Vatican City: A dark brown wooden coffin containing George Pell, the most polarising Australian Christian leader of his generation, was lying-in-state on Friday and even in death, the cardinal was fighting for the traditionalist cause.
His closed casket was placed on the floor of the small church of St Stephen of the Abyssinians, inside the Vatican walls. The oldest surviving church in the city, having survived the destruction of old St Peter’s basilica, is normally used for baptisms and weddings. Parts of it date back to the fifth century.
Closed to the public, only church officials filed through slowly over 10 hours, kneeling in prayer.
Having rarely taken a backward step over his lifetime, the cardinal’s funeral preparations were overshadowed by revelations that he was the likely author of an anonymous memo last year that branded Pope Francis’ pontificate a “catastrophe”. Francis will join the service late to give a final blessing and commendation on Saturday evening Australian time.
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How fundies plan their turnaround of fortunes
8:32PM January 13, 2023
After years of outflows, Platinum Asset Management’s Andrew Clifford hopes 2023 will mark the start of a much-needed turnaround. His approach is to keep doing more of the same.
At Magellan Financial, chief executive David George has big ambitions to get the under-pressure fund back to its glory days. He’s looking for bolt-ons and eyeing new products in a bid to double funds to $100bn.
While pursuing different strategies to reignite investor confidence, both are acutely aware that flows won’t improve until performance does.
On this front, Platinum is ahead of its rival, thanks to the market turn against growth stocks. The globally focused value manager’s international fund beat its benchmark by 16 per cent over the year to December 31, returning 3.1 per cent as the index limped in with a negative 12.5 per cent. Magellan’s flagship global fund, meanwhile, returned negative 15 per cent.
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How stock selection can help recession proof investment decisions
Owning stocks with pricing power is like winning the lottery because it allows a company to protect its profit margins.
Jun Bei Liu Contributor
Jan 15, 2023 – 5.00am
Every recession is different in terms of the drivers, the length, the depth and of course, the speed at which the economy can recover.
As we move into the new year, the consensus is for recession in the US, Europe, and UK, but that Australia will avoid this outcome. This is encouraging news for domestic investors but recession or not, Australia’s economic outlook will deteriorate meaningfully.
This means there is likely to be further downside for equity markets and a continuation of the stomach-churning volatility that has accompanied the period during which the Reserve Bank of Australia has been raising interest rates.
Even for an optimist, it’s probably too early to look through the economic downturn that is on the cusp of unfolding. This is because the economy and corporate earnings are closely linked, meaning as economic growth weakens, unless there are positive margin offsets, so too will earnings.
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COVID-19 Information.
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The great retirement: has COVID-19 fast forwarded demographics?
The speed with which Baby Boomers retired accelerated during the pandemic. This seems not just a cyclical issue but a structural surge; the future has arrived early.
Tim Hext
Jan 8, 2023 – 5.00am
Congratulations to Baby Boomer readers born in 1956.
You have just turned (or are about to turn) 66 years and six months, and finally qualify (by age, at least) for the age pension.
We have long known the demographic challenges Australia faces as the Baby Boomers retire. Fortunately for Australia, Baby Boomers have largely replaced themselves with fertility rates close to two babies per woman in the 1980s and early 1990s.
Together with large-scale immigration, this means our biggest decade age-groups remain in the 20-29 and 30-39 ranges.
We will therefore avoid for a long time the potentially catastrophic demographic squeeze now hitting Japan, Germany, Italy and soon China. However, with fertility rates now closer to 1.6 babies per woman, immigration will need to continue to drive the future workforce.
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China reports 60,000 deaths with COVID-19 since December
AP 15 Jan, 2023
China reported nearly 60,000 deaths in people who had COVID-19 since early December following complaints it was failing to release data, and said the “emergency peak” of its latest surge appears to have passed.
The toll included 5503 deaths due to respiratory failure caused by COVID-19 and 54,435 fatalities from other ailments combined with COVID-19 since December 8, the National Health Commission announced. It said those “deaths related to COVID” occurred in hospitals, which left open the possibility more people also might have died at home.
The report would more than double China’s official COVID-19 death toll to 10,775 since the disease was first detected in the central city of Wuhan in late 2019. China has counted only deaths from pneumonia or respiratory failure in its official COVID-19 death toll, a narrow definition that excludes many deaths that would be attributed to COVID-19 in other places.
China stopped reporting data on COVID-19 deaths and infections after abruptly lifting anti-virus controls in early December despite a surge in infections that began in October and has filled hospitals with feverish, wheezing patients.
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Climate Change.
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Controversial carbon credits supply to be limited
Colin Packham Energy and resources reporter
Jan 9, 2023 – 6.18pm
The supply of controversial carbon credits earned by landowners for protecting forest that could otherwise be cleared will be curtailed, under changes to the carbon emission market.
Former chief scientist Ian Chubb recommended a spate of measures to improve public confidence that included a change to the method of how these “avoided deforestation” credits are earned.
“There will be a lower number of credits from the avoided deforestation, though I would expect more credits to offset this from other areas,” said AiGroup adviser Tennant Reed.
Professor Chubb also recommended changes to how biomethane companies earn credits. Currently, credits are allocated according to how much methane they take out of the atmosphere above their “baseline”, which is usually 30 per cent. Professor Chubb said this target should be slowly increased.
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‘Felt like a gotcha moment’: Critic alleges carbon credit ‘interrogation’
Aaron Patrick Senior correspondent
Jan 9, 2023 – 4.18pm
An academic critical of the integrity of Australian carbon credits said she was subjected to unpleasant questioning that constituted an “interrogation” by a panel investigating the scheme.
Dr Megan Evans, an environmental policy expert at the University of NSW, said the review headed by former chief scientist Ian Chubb asked her to attend a meeting with the inquiry members on November 2.
Instead of focusing on a submission she co-wrote to the review, Dr Evans said she was questioned about an academic report she had published that discussed part of the effect of “human-induced regeneration” projects, including tree planting, on climate change policy.
“It wasn’t a particularly pleasant meeting,” she said. “It wasn’t hostile but I certainly felt like I was being interrogated. It was strange.”
Dr Evans’ description of the meeting provides an insight into the personal dynamics operating between staunch critics, like her, of carbon credits, and the review panel, which largely vindicated the scheme in a 56-page report published on Monday.
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Australia urgently needs a trusted carbon market
Greater transparency and more robust assessments means scaling up the carbon market should start without delay.
John Connor
Jan 9, 2023 – 5.24pm
As we digest the conclusions of the independent review of Australian Carbon Credit Units (ACCUs) led by Professor Ian Chubb, there are two key goals we must aim to achieve through the impending market reset.
Both are important. And all of us – those investing in carbon markets, those scrutinising them, and those regulating them – have a responsibility to keep both in mind.
The first, crucial goal is to implement the recommendations to bolster integrity in a timely and appropriately resourced manner.
These recommendations include an enhanced and more independent carbon abatement integrity committee, with a full-time chair, replacing the Emissions Reduction Assurance Committee as guardian of the scheme’s integrity.
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Australia’s safeguard mechanism remains in danger from flawed credits
The Chubb inquiry into the integrity of the carbon credit system fails to mention the adverse scientific evidence that it commissioned and which was put in front of it.
Andrew Macintosh Climate risk expert
Jan 10, 2023 – 2.19pm
The Australian carbon credit unit (ACCU) system is essentially sound in design even if it needed more transparency, an independent review led by former chief scientist Professor Ian Chubb has concluded.
Yet, the scientific evidence commissioned and received by the review suggests Australia’s carbon offset scheme really is flawed and remains so. A substantial proportion of the credits issued are of low integrity, and do not represent genuine abatement.
The evidence confirms a series of papers that my research team and I published a year ago that suggests over 70 per cent of the credits issued to the main types of projects – human-induced regeneration, landfill gas, and avoided deforestation that are responsible for 75 per cent of credits – had low integrity.
These findings have been confirmed, with the Academy of Science, CSIRO, Wentworth Group of Concerned Scientists and other experts concluding there are problems with the rules governing the issuance of the credits.
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Emission targets for big polluters released
John Kehoe Economics editor
Jan 10, 2023 – 2.07pm
More than 200 of the country’s biggest industrial emitters will need to cut emissions by almost 5 per cent each year to 2030, to help the Albanese government meet its 43 per cent reduction target.
The reformed carbon plan for industrial emitters proposed by Energy and Climate Minister Chris Bowen on Tuesday would deliver 205 million tonnes of abatement between 2023 and 2030, about half the total target by the end of this decade.
To support trade exposed businesses and regions with the transition, they will be eligible for $600 million in funding from the $1.9 billion Powering the Regions Fund.
The so-called “safeguard mechanism” is the centrepiece of Labor’s plan to cut national emissions by 43 per cent by 2030, and to reach net-zero by 2050.
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Liberal Party PTSD has changed the climate debate
A climate-wary Coalition is betting on an economic downturn to turn Australians against a policy seen as the return of an economy-wide carbon price.
Aaron Patrick Senior correspondent
Jan 11, 2023 – 1.58pm
The Coalition does not plan, at this stage, to launch a substantive campaign against the Labor government’s safeguard mechanism.
Liberals’ wariness about attacking the policy, which some experts believe is a step towards an economy-wide carbon price, is a sign of how much climate politics has changed.
On Wednesday, the Coalition’s energy spokesman, Ted O’Brien, called the policy a “carbon tax” and “three times as big” as the financial costs imposed by the original Labor version.
O’Brien isn’t well known at the national level, which meant his comments aren’t likely to get much attention.
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Carbon credits for big emitters could be blocked by Greens
John Kehoe Economics editor
Jan 11, 2023 – 4.30pm
The use of billions of dollars worth of carbon credits by big emitters could be blocked by the Greens, who want stricter climate rules for coal and gas companies.
Energy and Climate Minister Chris Bowen on Wednesday said Labor would pass the bulk of its carbon reduction safeguard package via government regulation, rather than legislation through both houses of Parliament.
But Mr Bowen said legislation will be required for the safeguard's "below the baseline credit”, which 215 high-emitting facilities will be eligible for if they undershoot their government-prescribed emission caps.
The credits could be stockpiled by a business for future years to meet emission reductions or sold on the market to other high-emitting companies to meet their carbon targets.
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Chris Bowen vows real emissions cuts, no exceptions
Jan 12, 2023 – 9.19am
-Labor’s new carbon trading scheme – a beefed-up version of the former government’s safeguard mechanism, with teeth – will create pressure for real emissions cuts, and concessions for “trade exposed” industries will be issued sparingly and according to strict criteria.
Energy and Climate Change Minister Chris Bowen, in this week’s Carbon Challenge Newsmaker interview, says a tough approach is necessary because concessions for some industries mean others have to do more of the heavy lifting. However, the system will be flexible enough to allow the use of carbon offsets for hard-to-abate industries.
But Mr Bowen says offsets should not be the default means of abatement because many industries will be able to find real cuts to their emissions that cost less than the price of Australian carbon credit units (ACCUs), which is capped at $75, increasing at CPI plus 2 per cent.
Labor has this week unveiled its signature emissions policy – a strengthened safeguard mechanism that will force the country’s 215 biggest emitters to reduce their carbon footprint by nearly 5 per cent each year.
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Did 2022 prove that ESG investing is a fad?
By Erica Hall
January 15, 2023 — 5.05am
Up until the Russian invasion of Ukraine, environmental, social, and governance (ESG) investing had a dream run.
The majority of ESG equity fund portfolios had delivered outsized returns for investors. During those halcyon days, ESG investors were able to invest aligned to their values and generate decent returns, the epitome of having their cake and eating it too.
Unfortunately, macroeconomic shocks of inflation, rising interest rates and the global energy supply crisis saw this euphoria unwind, as the market swung back and began to focus more on fundamentals; stocks with more subdued valuations became more attractive.
This all has implications for ESG portfolios. Whilst ESG is an umbrella term that covers many investment approaches, ESG funds have generally emphasised technology while avoiding energy/fossil fuel exposure. Further, Australian ESG strategies tend not to hold or have minimal exposure to tobacco, alcohol, gambling, weapons, and adult entertainment.
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Royal Commissions And The Like.
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Ageing at home? New caps mean more to spend on you
With provider admin fees creeping to as much as 60 per cent of a full-service package, rules from January 1 should lead to more funds for cleaning, meals or other services.
Bina Brown Contributor
Jan 11, 2023 – 5.00am
Home care providers charging excessive fees to manage the funding meant to pay for goods and services to keep an ageing person at home have been pulled into line.
From January 1, providers of home care packages can no longer charge more than 20 per cent of the package level for care management and no more than 15 per cent of the package level for package management.
To make it easier for recipients to shop around, the government has also announced the removal of any exit fees associated with someone leaving a provider to go elsewhere.
There are four levels of home care packages – government funding for older Australians to access support services they need to remain living independently at home.
Current funding for packages comprises: $9179 for level one or someone with basic care needs; $16,147 for level two or low care needs; $35,138 for level three or intermediate care needs; and $53,268 for level four or high care needs.
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Regional aged care headed for crisis
By Paul Garvey
12:23PM January 14, 2023
Regional aged-care operators say they are facing the toughest conditions in memory amid growing expectations that some centres in small communities could be forced to close.
The situation is particularly acute in Western Australia, with one expert warning that as many as nine out of 10 centres across the regions are under financial stress.
WA has the tightest labour market in the country, and its metropolitan hospitals are desperately trying to recruit staff. The state’s vast distances and low population density have always put extra pressure on regional aged-care centres, while rising cost pressures are adding to the pain.
Regional aged-care consultant Julie Christensen said the regional homes were facing a “tsunami of challenges” and some centres would close over the next two years. “The writing has been on the wall for some time about finding the right model for the bush,” she said. “And although everybody has tried so hard to find that model, and I’ve been in the industry for 20 years, we could never ever pin it down.”
Losing aged-care centres would be a major blow to the many towns that have already had to cope with the loss of doctors and schools. Many smaller homes are the only such facility within a much larger radius, raising the chances of older Australians having to move to cities far from their families.
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National Budget Issues.
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Treasurer Jim Chalmers pledges to tackle budget repair
By JOE KELLY
11:00PM January 8, 2023
Jim Chalmers says fiscal repair will be an ongoing challenge and a key focus of his second budget in May as he responds to the ballooning costs of the NDIS, health, aged care, natural disasters and the impact of higher borrowing costs.
With Labor facing growing calls to restore the path back to surplus as a key policy objective, the Treasurer said he would aim to “put the budget on a more sustainable footing” and help insulate the economy from future shocks at a time of growing international uncertainty.
The focus on budget repair comes amid fresh spending demands being made on the commonwealth, with the leaders of Victoria and NSW – Daniel Andrews and Dominic Perrottet – beginning the new year by calling for an overhaul of Medicare and the primary healthcare system.
In March, Labor will also receive a report setting out the full scale of the task in acquiring a new fleet of nuclear-powered submarines under the AUKUS framework, representing a massive expense on the budget.
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Our policy platform for challenging future
12:00AM January 9, 2023
As we head into 2023, we should be optimistic about the future of our economy and our country but realistic about the prospect of another global downturn and what that means for us in Australia. We begin this year with a lot going for us: historically low unemployment, the beginnings of wages growth, and with the world paying us good prices for our exports. This is a handy starting point.
At the same time, we are buffeted by five forces that will shape our economic fate: the war in Ukraine pushing up energy prices; China’s transition from Covid zero and how it manages the current wave of cases; turbulence in the big advanced economies of the northern hemisphere; the timing and severity of the impact of higher interest rates here and around the world, and; the ongoing uncertainty and consequences from more frequent natural disasters.
Underlining the magnitude of the global slowdown, the International Monetary Fund warned a third of the world’s economy will likely slip into recession this year. “Even countries that are not in recession, it would feel like recession for hundreds of millions of people,” IMF managing director Kristalina Georgieva said.
The combination of a slowing global economy and higher interest rates explains Treasury’s forecasts for weaker consumption, weaker economic growth and slightly higher unemployment in 2023. Inflation remains our dominant concern even on the other side of its peak, as global price pressures coming at us from around the world continue to be felt around the kitchen table.
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https://www.afr.com/policy/economy/this-is-hawke-and-keating-for-the-2020s-20230108-p5cb21
This is Hawke and Keating for the 2020s
The growth breakthroughs for this decade lie in critical minerals and the care economy. They are the new tariff reform and financial deregulation.
Jim Chalmers Federal treasurer
Jan 8, 2023 – 2.27pm
For Australia to prosper and grow through the 2020s and beyond we need to learn the right lessons and draw the right conclusions from the 40th anniversary this year of the election of the Hawke-Keating government.
It’s not to turn back and retrace the steps of our predecessors, even our heroes, even as we admire their ambition and achievements. It’s to look forwards, upwards and outwards – to the future, to economic mobility, and to the world, like they did.
It’s to understand that the best Labor governments, the best Australian governments, pursue growth and distribution – not growth or distribution.
It’s not to try to retrofit old agendas and policies on to the complex combination of today’s uncertainties, global and domestic.
Times have changed and we need to evolve and change too.
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Risk of even more rate rises as bank funding costs bite
Ayesha de Kretser and John Kehoe
Jan 9, 2023 – 8.30pm
Home loan borrowers face the threat mortgage rates will rise by even more than official increases this year, as funding costs soar and banks repay $188 billion of emergency money borrowed from the Reserve Bank of Australia during the pandemic.
Smaller non-bank lenders have already increased variable mortgage rates more than the central bank’s 3 percentage points of rate rises since last May – passing on up to 20 per cent more each month – while some, including Nano Home Loans and Volt Bank, have been forced to stop writing new loans or close altogether.
Judo Bank boss and former National Australia Bank executive Joseph Healy said the big banks could be forced to follow suit this year.
“The major banks will have to protect the margins because otherwise the investor community gets very upset,” Mr Healy said.
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https://www.afr.com/wealth/personal-finance/apra-cracks-down-on-property-funds-20230105-p5camm
APRA cracks down on property funds
The “massive” performance gap caused by static valuations between listed and unlisted funds is alarming investors and regulators.
Duncan Hughes Reporter
Jan 11, 2023 – 5.00am
Popular property funds are under increased scrutiny from the prudential regulator about how they value their assets as the performance gap between funds listed on the ASX and their unlisted rivals blows out to nearly 40 percentage points.
Latest performance figures from the Property Council of Australia show that unlisted property funds posted gains of nearly 19 per cent in the nine months to the end of September as listed funds slipped by nearly 20 per cent, or nearly three times ASX declines for the same period.
Chris Brycki, chief executive of online investment adviser Stockspot, says: “Don’t be tricked into thinking unlisted assets are less volatile than equivalent listed assets.
“Be very wary when investing in unlisted assets where valuations are subjective, not transparent and may vary from market prices. Just like you wouldn’t pay $50,000 for a car from one dealership if that same car was available at another dealership at $40,000.”
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https://www.afr.com/policy/economy/inflation-jumps-back-to-32-year-high-7-3pc-20230111-p5cbqp
Inflation jumps back to 32-year high 7.3pc
Ronald Mizen Economics correspondent
Jan 11, 2023 – 11.55am
Annual headline inflation jumped to 7.3 per cent and Black Friday pushed retail sales to an 11th consecutive record month in November, lowering the likelihood the Reserve Bank of Australia will pause interest rate rises.
CPI inflation is back to an equal 32-year high after it dipped to 6.9 per cent in October, according to the Australian Bureau of Statistics. The RBA is forecasting inflation to have peaked at 8 per cent in December.
Retail sales surged 1.4 per cent, the strongest result since January 2022, while a surprise revision to the October result from a 0.2 per cent fall to 0.4 per cent growth means sales grew every month in 2022 to November.
Marcel Thieliant, senior economist at Capital Economics said the strong inflation and retail trade results would prompt the RBA to press ahead with interest rate rises at its February meeting.
“The continued strength in inflation coupled with the resilience in consumption will prompt the RBA to keep hiking rates for a while yet,” Mr Thieliant said.
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Chalmers warns of budget hit from natural disasters
Ronald Mizen Economics correspondent
Jan 12, 2023 – 10.30pm
Treasurer Jim Chalmers has warned natural disasters and extreme weather will hit the federal budget in May, with recovery funding adding billions of dollars in costs to the bottom line.
Natural disasters and extreme weather events wiped $5 billion from the Australian economy in 2022, largely because of widespread disruption to the mining, agriculture, tourism and construction sectors.
The disruption was equivalent to about 0.25 per cent of gross domestic product, new Treasury analysis shows, and that comes on top of more direct costs such as damage to property and infrastructure.
Dr Chalmers said disasters stoked inflation, slowed growth and were costing the federal budget billions in unavoidable spending.
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Health Issues.
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Old cure revived to help fight against antibiotic-resistant superbugs
January 9, 2023 — 6.00am
A treatment first used more than a century ago, that uses bacteria-killing viruses, is making a comeback in Australia and doctors hope it will help counter a growing crisis of antibiotic-resistant superbugs.
The Alfred hospital in Melbourne has become the first health service in Victoria to begin using the pioneering phage therapy, which involves utilising harmless viruses – known as bacteriophages – to kill germs in cases where traditional antibiotics have failed.
Professor Anton Peleg, head of infectious diseases at The Alfred, said phage therapy was being used for an increasing number of patients battling potentially deadly superbugs, on compassionate grounds.
“They are patients with severe bacterial infections that are either life-threatening, or limb threatening, or function threatening, where they don’t have any other options left,” Peleg said. “It is a salvage treatment pathway.”
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Doctors’ pay not the priority for Medicare reform, say health experts
January 8, 2023 — 7.30pm
Health experts have warned that boosting doctors’ pay should not be the priority for Medicare reforms, saying the focus of the additional funding should be on a broader system overhaul, new funding models and investment in multidisciplinary care.
Victorian Premier Daniel Andrews and NSW Premier Dominic Perrottet want Medicare reform to be the focus of the national cabinet’s agenda when it meets on February 1 and will lobby the Albanese government to pay doctors more in a bid to boost the rate of bulk billing.
The NSW and Victoria premiers are calling on the federal government to fix Medicare.
Health Minister Mark Butler has declared fixing the country’s primary health network is his top priority and is awaiting a finalised report from a federal government task force about how best to use the $750 million Strengthening Medicare Fund announced in the October budget.
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The Andrews-Perrottet alliance handballs health problems to others
Anthony Albanese should hear out calls by state premiers for more federal GP funding. Then make it clear why he is not going to comply.
Terry Barnes Contributor
Jan 9, 2023 – 2.54pm
What do NSW Premier Dominic Perrottet, and Victoria’s Premier Daniel Andrews, have in common with Prince Harry?
The wayward royal blames everyone for his woes but himself. Similarly, when it comes to their hospital systems’ underwhelming performance, it’s all someone else’s fault for Perrottet and Andrews.
For them, someone else is the federal government. As far as Perrottet and Andrews are concerned, the buck now stops with incumbent Prime Minister Anthony Albanese, whose health policy poison chalice was inherited from his Labor as well as Coalition predecessors. Pressure on public hospital emergency departments from non-urgent patients? Albanese’s fault, as Medicare is “broken”. Public hospitals supposedly underfunded by the feds? Albanese’s fault too. Elderly people in public hospital beds? Albanese’s fault, as the aged care system is a wreck. People access free public hospital services. Albanese’s fault, as Medicare doesn’t pay GPs enough – even as the GP bulk-billing rate is well over 80 per cent.
When health minister, Tony Abbott’s mantra was “don’t bring me a problem, bring a solution”. Like the rogue royal, however, Perrottet and Andrews simply finger-point presuming their muscle, as leaders of the two largest states and nearly three-fifths of the Australian population, will give them the political battering ram to knock down the Commonwealth’s health funding wall.
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$750m Medicare reform ‘not enough’
9:30PM January 11, 2023
The $750m the federal government has allocated to fixing Medicare fails to address the crisis facing patients and practices of declining bulk billing, escalating gap fees and difficulty accessing a GP.
That’s the warning from members of the Strengthening Medicare taskforce awaiting the final version of a report that lays out how to reform general practice with the expansion of multidisciplinary, team-based care.
With the latest Medicare figures revealing a steep drop in bulk-billing rates and more patients unable to afford gap fees, there are warnings that a new payroll tax ruling could see gap fees rise a further $5 for a standard consultation.
The Queensland Revenue Office released a ruling on Monday that means GP practices will be slugged with payroll tax if two or more full-time-equivalent GPs work under their umbrella. It follows a NSW tribunal ruling that the remuneration of GPs working in practices amounts to wages even though they work as contractors. The position is likely to be adopted nationwide. Medical groups are now fiercely lobbying for a payroll tax exemption.
Royal Australian College of GPs president Nicole Higgins described the development as “another nail in the coffin of general practice” at a time when Medicare was on its knees.
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A new weight-loss drug is having remarkable results. Could it also change the way we talk about obesity?
By Liam Mannix
January 15, 2023 — 5.00am
Scientists and advocates say new anti-obesity drugs generating remarkable levels of weight loss in clinical trials will once and for all dispel the myth that obesity is simply the result of making unhealthy choices, rather than a genuine disease.
The emergence of the new drug, marketed locally as Wegovy, promises to revolutionise weight-loss treatments. In one major clinical trial patients using the drug lost 11 per cent more body weight than those undergoing an intensive diet and exercise program.
Scientists and campaigners have long rejected the popular narrative that obesity is solely the result of unhealthy choices. Wegovy’s dramatic results might provide the sort of black-and-white proof that convinces society at large, they hope, that it is a disease and needs to be treated as such.
“I think it will reframe the argument. As these drugs become more effective and available, it will be harder for people to ignore them,” said Professor Brian Oldfield, a leading obesity researcher at Monash University and editor of the field’s top academic journal.
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International Issues.
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Why the great stagflationary debt crisis is upon us
Governments fighting wars against revisionist states, climate change, pandemics, tech disruption, and inequality will be sorely tempted to inflate their way out of debt.
Nouriel Roubini Global commentator
Jan 8, 2023 – 12.46pm
Inflation rose sharply throughout 2022 across both advanced economies and emerging markets. Structural trends suggest that the problem will be secular, rather than transitory. Specifically, many countries are now engaged in various “wars” – some real, some metaphorical – that will lead to even larger fiscal deficits, more debt monetisation, and higher inflation in the future.
The world is going through a form of “geopolitical depression” topped by the escalating rivalry between the West and aligned (if not allied) revisionist powers such as China, Russia, Iran, North Korea, and Pakistan.
Cold and hot wars are on the rise. Russia’s brutal invasion of Ukraine could still expand and involve NATO. Israel – and thus the United States – is on a collision course with Iran, which is on the threshold of becoming a nuclear-armed state. The broader Middle East is a powder keg. And the US and China are facing off over the questions of who will dominate Asia and whether Taiwan will be forcibly reunited with the mainland.
Accordingly, the US, Europe, and NATO are re-arming, as is pretty much everyone in the Middle East and Asia, including Japan, which has embarked on its biggest military build-up in many decades. Higher levels of spending on conventional and unconventional weapons (including nuclear, cyber, bio, and chemical) are all but assured, and these expenditures will weigh on the public purse.
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https://www.afr.com/technology/five-reasons-for-optimism-in-2023-20221230-p5c9fg
Five reasons for optimism in 2023
Even as the world faces many challenges, there are reasons to be hopeful about 2023 and beyond.
Andrew Ross Sorkin, Ravi Mattu, Bernhard Warner, Sarah Kessler, Stephen Gandel, Michael J. de la Merced, Lauren Hirsch and Ephrat Livni
Dec 30, 2022 – 2.29pm
As 2022 comes to an end amid stubborn inflation, a “tripledemic,” a climate crisis and a brutal war with no end in sight, it can be difficult to remember that good things happened this year, too.
Coronavirus vaccines became available for children as young as six months old, a relief to parents as much of the world returned to a new normal. Rich countries agreed to do more to help poor nations cope with climate disasters. And major scientific breakthroughs brought us a tad closer to long-held ambitions such as nuclear fusion power and curing cancer.
Even as the world faces many challenges, there are reasons to be hopeful about 2023 and beyond. We’ve decided to continue the tradition of highlighting the most promising developments of the year.
We’re a little closer to a new source of clean energy. After a major breakthrough in nuclear fusion this month, investors are pouring money into companies that want to harness the type of energy that powers the sun and stars.
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Opinion
Time is not on Ukraine’s side
By Condoleezza Rice and Robert M. Gates
January 7, 2023 at 7:00 a.m. EST
Condoleezza Rice was secretary of state from 2005 to 2009. Robert M. Gates was secretary of defense from 2006 to 2011.
When it comes to the war in Ukraine, about the only thing that’s certain right now is that the fighting and destruction will continue.
Vladimir Putin remains fully committed to bringing all of Ukraine back under Russian control or — failing that — destroying it as a viable country. He believes it is his historical destiny — his messianic mission — to reestablish the Russian Empire and, as Zbigniew Brzezinski observed years ago, there can be no Russian Empire without Ukraine.
Both of us have dealt with Putin on a number of occasions, and we are convinced he believes time is on his side: that he can wear down the Ukrainians and that U.S. and European unity and support for Ukraine will eventually erode and fracture. To be sure, the Russian economy and people will suffer as the war continues, but Russians have endured far worse.
For Putin, defeat is not an option. He cannot cede to Ukraine the four eastern provinces he has declared part of Russia. If he cannot be militarily successful this year, he must retain control of positions in eastern and southern Ukraine that provide future jumping-off points for renewed offensives to take the rest of Ukraine’s Black Sea coast, control the entire Donbas region and then move west. Eight years separated Russia’s seizure of Crimea and its invasion nearly a year ago. Count on Putin to be patient to achieve his destiny.
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‘Worst may not be over’: Central banks a big risk, say super funds
Emma Rapaport Markets reporter
Jan 9, 2023 – 5.00am
The gatekeepers of Australia’s $3.3 trillion retirement savings pot are reducing their bets on risky growth assets, investing more in bonds and commodities, and boosting their cash buffers as they warn the worst may not be over for sharemarkets.
The warning comes amid fears central banks may overshoot in their bid to curb inflation and tip the economy into a “a deep recession” and as Australia’s largest super fund, AustralianSuper plans to hire its first chief liquidity officer this year as super funds prepare for future bouts of market chaos.
“We’ve already seen a slowing in growth, and expect more slowing coming into 2022,” the $273 billion super fund’s chief investment officer Mark Delaney told The Australian Financial Review in a poll of the nation’s top chief investment officers.
The super sector, which is loaded with so-called alternative exposures, is heeding the lessons of last year’s UK pension shock in an emerging era of rising liquidity risk as it tackles the challenge of a surge in retirees needing income.
Mr Delaney said the fund was taking a more defensive stance shifting from stocks and high-yield credit to fixed income while Rest’s Andrew Lill said the fund was considering gold and commodities to protect the portfolio,
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Bolsonaro supporters storm Brazil Congress in act Lula calls ‘barbarism’
By Lia Timson
Updated January 9, 2023 — 10.18amfirst published at 6.17am
Rio de Janeiro: Supporters of former Brazilian president Jair Bolsonaro have stormed the Brazilian Congress, climbing on the roof, breaking windows and vandalising offices, in a riot new President Luis Inacio Lula da Silva decried as “barbarism” by “fascists”.
Demonstrators also moved on the Presidential Palace and Supreme Court – completing the assault on all three branches of government – while a group of police officers took videos on their phones. Local media estimated that about 3000 rioters were involved.
Police earlier tried to stop the crowd, who are being referred by Brazilian media as “terrorists”, at some police barricades around the complex with capsicum spray but appeared to be outnumbered.
The office of the minister in charge of the Supreme Court, Alexandre de Moraes, and the offices of others were vandalised.
The extraordinary scenes, reminiscent of the invasion of the US Capitol by supporters of Donald Trump on January 6, 2021, come just a week after leftist Lula was sworn in on January 1.
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https://www.afr.com/world/europe/why-modern-power-is-about-more-than-military-might-20230109-p5cb8x
Why modern power is about more than military might
As Russia has found to its cost, wars today are about economics and technology as well as the number of bodies in uniform.
Paul Krugman
Jan 9, 2023 – 12.46pm
Credit where credit is due: Make America Great Again was a brilliant slogan, precisely because nobody knew what it meant. Was it about bringing back jobs in manufacturing? Was it about restoring straight, white, Christian men to what some of them thought was their natural position of social dominance? MAGA became all-purpose code for reversing whatever was bugging you about 21st-century America.
And one important strain of MAGAism was and is the belief that wokeness is making America militarily weak. Back in 2021, Senator Ted Cruz famously shared a video comparing Russian military ads, which feature manly men doing manly things, with a US ad telling the story of a female recruit raised by two mothers. “Perhaps a weak, emasculated military is not the best idea,” Cruz declared.
Remarkably, the idea that wokeness makes us weak has persisted despite the failures of the decidedly un-woke Russian military in Ukraine. Senator Tom Cotton, who has published a book titled Only the Strong: Reversing the Left’s Plot to Sabotage American Power, recently declared that “soldiers join the army to kill the bad guys – not to learn to speak like they’re in a faculty lounge.”
OK, there are so many things wrong with this worldview that it’s hard to know where to begin. National power in the modern world has far more to do with economic strength than it does with military might and also reflects “soft power” – the influence of a country’s values and culture.
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The US may now be closer than ever to defaulting on its debts
Senior business columnist
January 9, 2023 — 11.42am
The farcical 15 rounds of voting to elect the new Speaker for the US House of Representatives has set up a collision between Republicans and the White House that could roil global financial markets and even precipitate another global financial crisis.
Among the myriad of concessions Kevin McCarthy agreed to in order to secure the position was a promise not to raise the US debt ceiling without major cuts to spending.
The debt ceiling is unique to the US among the major economies. Increasing it doesn’t authorise or enable new spending but simply allows the government to finance existing, Congress-approved, measures.
With current federal government debt of just over $US30 trillion and a current ceiling of $US31.4 trillion the Biden administration will hit the ceiling by mid-year, if not before.
Rising interest rates, the forgiving of student loans, the cost of military assistance to Ukraine and the potential for higher social welfare spending if the economy shifts towards recession could bring that moment forward.
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Inflation risk was taken lightly. Don’t treat recession the same way
Recession has joined inflation in the driver seat of the global economy and is likely to displace it. It’s an evolution that makes the global economy and investment portfolios subject to a wider range of potential outcomes.
Mohamed El-Erian Global financial commentator
Jan 10, 2023 – 11.53am
Inflation was the dominant economic and financial issue last year for most countries around the world, particularly for those advanced economies that have a consequential impact on the global economy and markets.
The effects were felt in worsening living standards, higher inequality, increased borrowing costs, stock and bond market losses and the occasional financial accident (fortunately small and contained until now).
In this new year, recession, actual and feared, has joined inflation in the driver’s seat of the global economy and is likely to displace it. It’s an evolution that makes the global economy and investment portfolios subject to a wider range of potential outcomes – something that a growing number of bond investors seem to realise more than many equity counterparts.
The IMF is likely to soon revise down its economic growth projections again, on expectations that a “recession will hit a third of the world this year”. What is particularly notable in this deteriorating global outlook is not just that the world’s three main economic areas – China, the EU, and the US – are slowing down together, but also that this is happening for different reasons.
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China’s mixed economic blessing for the rest of the world
Senior business columnist
January 10, 2023 — 11.57am
China is nearing a critical point in the re-opening of its economy and society after the abrupt U-turn in Xi Jinping’s response to the pandemic last month, when three years of draconian measures were shelved without notice or, it appears, much preparation.
In less than a fortnight, starting on January 21, China will enter the lunar new year, which traditionally has meant 15 days of celebrations and what was, pre-pandemic, one of the world’s biggest movements of people as workers travelled across the country to spend the holiday period with their families.
After three years of Xi’s harsh “zero COVID” approach to the pandemic, with its lockdowns and restrictions on travel, China expects the number of trips this year to be at least double that of last year, or more than 2 billion trips.
That would still be well down on pre-pandemic levels, but it still carries with it obvious risks. It will be occurring even as China has been hit by waves of Omicron infections, with tens of millions of infections daily and estimates that more than a quarter of a billion Chinese were infected last month alone.
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https://www.afr.com/technology/why-the-future-of-technology-is-so-hard-to-predict-20221229-p5c98d
Why the future of technology is so hard to predict
On recent predictions, the future seems extremely late and not exactly what we ordered.
Faye Flam
Jan 10, 2023 – 12.19pm
They don’t make technology predictions like they used to. Just look at the amazingly prescient technological wish list famed chemist Robert Boyle jotted down in a note found after his death in 1691:
“The recovery of Youth, or at least some of the Marks of it, as new Teeth, new Hair, new hair color’d as in youth.” Check.
“The art of flying.” Check.
“The art of continuing long under water and exercising functions there.” Check.
“The Practical and Certain way of finding Longitudes.” Check.
And finally: “Potent Druggs to alter or Exalt Imagination, Waking, Memory and other functions, and appease pain, procure innocent sleep, harmless dreams, etc.” Check … with caveats.
I think Boyle would be pleased with the 21st century’s dentistry, rainbow of hair dyes, scuba gear, submarines, routine flight and GPS. He would surely want to try our psychedelic drugs.
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Macron risks upheaval with plan to make French retire later
William Horobin and Ania Nussbaum
Jan 10, 2023 – 5.35pm
Paris | President Emmanuel Macron’s government was on Tuesday set to present his plan to overhaul France’s pension system, likely triggering mass strikes and protests that could undermine an economy at risk of falling into recession.
Even moderate labour unions vowed to down tools and take to the streets if Mr Macron proceeds with his election pledge of raising the minimum retirement age from 62 to 64 or 65.
Yet, the government insists such change is essential to boost relatively low employment rates among seniors and avoid persistent deficits in a system funded by worker contributions.
Prime Minister Elisabeth Borne was scheduled to give an overview of the plan, including the government’s target retirement age and possible changes to the minimum period of contributions to qualify for a full pension. Unions planned to meet later to decide how to respond.
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Fight shows drama of seeking power without purpose
12:00AM January 11, 2023
Michael Ritchie’s 1972 film The Candidate is among the best movies ever made on political campaigning. Robert Redford plays the neophyte Democratic candidate, Bill McKay, who runs in an apparently hopeless race for the US Senate against the Nixonian incumbent, Crocker Jarmon (Don Porter).
Along the way, McKay is guided by a hard-headed campaign manager, Marvin Lucas (Peter Boyle), who causes McKay to shed all his idealism and embrace compromises that will get him across the line with the voters. In one memorable scene, McKay even wins the support of the notorious Teamsters Union.
Against the odds, McKay wins. He becomes a US senator-elect for California, but at the end of the film he turns to his campaign manager and asks plaintively: “What do we do now?”
He has won office but he doesn’t know what to do with the power it conveys.
If this is sounding a tad familiar, then we are looking at the recent 15-ballot battle for the speakership of the US House of Representatives. Eventually Kevin McCarthy of California was endorsed, after many and varied concessions were made to the fevered-right of his own Republican Party, grouped mainly in the Freedom Caucus.
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China’s electronic money revolution could shake the almighty $US
America has ‘exorbitant privilege’ from the currency that the world uses. But will it fall behind as China leads the charge to digital money?
Richard Holden Economics professor
Jan 11, 2023 – 12.41pm
As Xi Jinping settles into his 11th year as secretary general of the Chinese Communist Party – his first as lifetime president of China – there is an understandable focus on the power of China’s military and the size of its economy.
It seems that the days of hoping that trade and economic integration would cause China to accept the rules-based international order are over.
But what is often overlooked is a systematic move by China since 2014 to create a “central bank digital currency” (CBDC) called the “e-CNY” that could not only have big domestic consequences, but challenge the US dollar’s status as the global reserve currency. As economic and diplomatic events go this would be a 9.5 on the Richter scale.
CBDCs can deliver more efficient payments, dramatically faster international currency transfers, and the ability to curtail illicit activities such as drug-dealing, money-laundering and human-trafficking. And they hold out the promise of facilitating financial innovation, through widespread use of smart contracts and what is known as Web3.
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https://www.afr.com/policy/economy/emerging-economies-lost-years-will-affect-us-all-20230111-p5cbqi
Emerging economies’ lost years will affect us all
The problems of fragile and impoverished countries will become the problems of rich countries, too. It is time to do things differently.
Martin Wolf Columnist
Jan 11, 2023 – 9.56am
The shocks of the past three years have hit all countries, but they have hit emerging and developing countries particularly hard. As a result, according to Global Economic Prospects 2023, just out from the World Bank, the convergence of average incomes between poor and rich countries has stalled.
Worse, it might not soon return, given the damage already done and likely to persist in the years ahead.
By the end of 2024, gross domestic product levels in emerging and developing economies are forecast to be 6 per cent below those expected before the pandemic. The cumulative loss in GDP of these countries between 2020 and 2024 is forecast at 30 per cent of 2019 GDP.
In fragile and conflict-affected areas, real incomes per head are expected to have fallen outright by 2024. If the global economy slows more than is now forecast, as a result of tight monetary policy and perhaps other shocks, these outcomes could easily be worse.
These losses, with all they mean for the plight of the world’s most vulnerable people, show the impact of the pandemic, the war in Ukraine, the rise in energy and food prices, the surge in inflation and the sharp tightening of monetary policy in high-income countries, especially the US, and consequent rise in the value of the dollar. An obvious danger now is that of waves of defaults in over-indebted developing countries. Taken together, these shocks will cause long-lasting effects, perhaps lost decades, in many vulnerable places.
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British politics is still suffering from ‘long populism’
Both Rishi Sunak and Keir Starmer see the perils of avoiding hard choices. But they also know the allure of populism and will not feel safe being too open with voters until they are sure the UK is truly over the virus.
Robert Shrimsley British political commentator
Updated Jan 12, 2023 – 11.04am, first published at 9.22am
For those who prefer their political leaders to be serious and managerial, 2023 started well. The next election is likely to be contested between two figures neither of whom will disgrace the office of prime minister. Yet encouraging as this is after the populist interlude, other advances will take longer to work their way out the system.
There are two core traits in populist politics. The first involves using the language of elites to set the public against institutions that might curb a government’s power. The second is the “cakeist” refusal to admit that complex problems nearly always involve uncomfortable trade-offs.
The first strain is easing under Rishi Sunak. On the second, however, the UK still suffers from what might be called “long populism”.
Symptoms of this can be seen in Brexit where both Labour and the Conservatives have a vested interest in denying or understating its adverse economic effects. For Tories, because it is their flagship policy and for Labour because highlighting problems draws attention to its limited solutions.
Long populism is more acute when it comes to fiscal policy, for British politics has lost the ability to cope with a lack of money. Superficially both Sunak and Keir Starmer speak of hard choices, but the reality is more nuanced.
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UK government warned to be ‘wary of over-committing’ in the Indo-Pacific
January 12, 2023 — 11.03am
London: The British government has been warned against over-committing its military resources to the Indo-Pacific given the war in Ukraine.
The clarion call came as Prime Minister Rishi Sunak signed a bilateral defence and security pact with his Japanese counterpart Fumio Kishida at the Tower of London which Britain said would “cement the UK’s commitment to Indo-Pacific security” by allowing both forces to devise larger military exercises and deployments.
The alarm over the UK over-extending itself to the Indo-Pacific was sounded by the House of Lords International Relations and Defence Committee ahead of a major review of the country’s strategic defence and foreign policies.
“The government must guard against ... and remain wary of ... the risk of over-committing defence resources to the Indo-Pacific at a time when the European security environment is deteriorating,” Lords warned in a report released on Thursday.
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Russia’s struggling invasion of Ukraine spurs reshuffle of top generals
By Olena Harmash and Clodagh Kilcoyne
January 12, 2023 — 8.17am
Key points
· Russia’s military chief of staff has been sent to rescue the stuttering Ukraine campaign.
· The Wagner contract militia claims control of Soledar.
· Ukraine says its forces are holding onto the eastern mining town.
· Russia acknowledges heavy losses in the battle for Soledar.
Kyiv/Near Bakhmut: Russia ordered its top general to take charge of its faltering invasion of Ukraine in the biggest shake-up yet of its malfunctioning military command structure after months of battlefield setbacks.
It did so as Russian forces struggled to cement their control of the small east Ukrainian salt-mining town of Soledar after taking heavy casualties, a day after the leader of the Wagner contract militia said the town was under Russian control.
Soledar would be Russia’s most substantial gain since August after a series of retreats before Ukrainian counter-offensives.
Wagner is among a number of semi-autonomous Russian forces whose high battlefield profile after more than 10 months of war has underlined the ineffectiveness of Russia’s core military in a campaign the Kremlin had expected to finish in days.
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A Republican lesson in the glorious mess that is democracy
12:00AM January 12, 2023
Far from being an embarrassment, the four days it took Republicans to work out who would be the next Speaker of the US House of Representatives provided a glimpse into how parliaments should function.
For a brief few days, congress became a debating chamber rather than the preening chamber Americans are used to, where speeches are crafted for the nightly news and social media rather than in any genuine attempt to convince the other side. The congress no longer was a costly rubber stamp for the secret deliberations of political parties after 20 renegade Republicans demanded substantive changes to congressional rules before they would vote for Kevin McCarthy – and succeeded.
But the mainstream media was incandescent with condemnation, slamming the “chaos”, the “humiliation”, the “extremism”, where in fact there was none. Perhaps many prefer the governance model of the Chinese Communist Party or the old ruling Soviet party where there was no public infighting – and if there was, protagonists soon would be in prison.
The American people, who even might have learned a little about how their congress worked on the way, were the winners.
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Stuck in a deadly rut: is Putin’s Russia headed for collapse?
Despite the fog of propaganda on both sides, it’s hard not to hear an increasing drumbeat of doubt that Russian President Vladimir Putin is going to survive his profound strategic miscalculation.
Hans van Leeuwen Europe correspondent
Jan 13, 2023 – 9.40am
Every so often, the Ukraine war throws up another previously anonymous village, city or town, somewhere on the front line, that becomes part of our collective mental geography and vocabulary for this conflict. This week, that town was Soledar.
For most of us, living comfortably distant from the Donbas region of eastern Ukraine, it is just another place where, in maps of the war, the areas of Russian red and Ukrainian yellow meet, and shade into each other.
But for many months, Soledar has been hell on earth for the 10,000 people that live in what’s left of it, and for the Ukrainian troops, Russian conscripts and Wagner Group mercenaries who are fighting to control it.
Satellite images show snow-covered fields pockmarked with artillery craters – there is no avoiding the cliche, it is a “moonscape” – while entire streets of apartment buildings have been reduced to charred or battered husks.
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Fight against inflation is now all about the Fed’s 2pc target
While it’s hard to predict how fast the US inflation will return to the Fed’s 2 per cent target, it’s probably a safe bet to expect it will get there faster than in Australia.
Matthew Cranston United States correspondent
Updated Jan 13, 2023 – 9.50am, first published at 9.45am
Washington | Forget about the trend of falling inflation in the US – the main game is all about whether the Federal Reserve will see consumer price growth drop to its golden target rate of 2 per cent before a recession kicks in.
Inflation has more than turned a corner in the US, falling for six months straight to 6.5 per cent in December from 9.1 per cent in June.
Getting that down to 2 per cent could happen faster than both the market and the Fed think. Why? Because not only have some improvements in supply chains reduced cost pressures, but there has been an historical pullback in the supply of money.
The speed of the Federal Reserve’s monetary policy tightening is like nothing we have seen in the past 70 years, which means demand-induced inflation is going to keep shrinking just as the supply side constraints relieve cost pressures too.
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The three big themes (and risks) of China’s reopening
10:14AM January 13, 2023
The fate of the global economy this year could be in the hands of China’s consumers.
There is still a stream of bad news coming out of China right now with infections spreading and reported deaths fast-rising following the move away from last year’s tough zero Covid policy. But like other countries in the west that have come out of long lockdowns – an economic boom is on the horizon.
For the world’s second biggest economy and Australia’s largest trading partner a rebound in China is significant as it provides crucial support for commodities prices. It might just be the thing that stops the global economy from tipping into a recession this year with the US and Europe both facing a sharp slowdown.
On markets at least, the China reopening trade is already well underway, propelling mining giants from BHP to Rio Tinto higher on expectation the rebound will fuel demand for steelmaking. BHP shares on Thursday hit a record high, after stripping out the impact of the demerger of its energy arm last year.
UBS’s Hong Kong-based China economist Ning Zhang has sketched out the three big themes of the reopening: Covid transmission rates; pent-up demand from locked up consumers and finally the property rebound.
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S&P 500 earnings revisions point to a hard landing: Goldman
Timothy Moore Before the Bell editor
Jan 14, 2023 – 7.55am
Goldman Sachs expects the US will narrowly avoid a recession this year, and that slower growth will cool both wage and price inflation. That said it expects the S&P 500 to end the year at 4000, little changed from now.
The “soft landing” economic scenario has led Goldman’s top US equity strategist David Kostin and his team to identify 46 stocks that investors should consider for their portfolios including Tesla, Garmin, Carlyle Group, 3M, Qualcomm and AMD.
In a note, Kostin said the 46 stocks share some basic characteristics: they are profitable Russell 3000 companies in a cyclical industry group with a market cap greater than $US5 billion ($7.2 billion).
In addition, these stocks trade at a forward price to earnings multiple below their historical 10-year median and have an Altman z-score—a measure of a company’s likelihood of bankruptcy—greater than the Russell 3000 median.
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Two missile waves strike Ukraine's cities
STAFF WRITERS 15-Jan-2023
Russia launched two waves of missile attacks on Saturday against critical infrastructure in Ukraine’s capital and other cities across the country, seeking to deprive residents of power as it steps up its military campaign in the east.
Kyiv and other cities were struck in an early-morning barrage that officials said included ballistic missiles, and a second volley in the afternoon targeted the western part of the country, The Wall Street Journal reported. Across Ukraine, air-defence units scrambled to try to intercept the projectiles.
A strike on a residential building in the eastern Ukrainian city of Dnipro Saturday left at least five dead and 27 injured, officials said, while the President blasted Russian “terror”.
“Eternal memory to all whose lives were taken by Russian terror! The world must stop this evil,” Ukrainian President Volodymyr Zelensky reacted on social media.
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David.
