August 15, 2019 Edition.
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The trade war slipped out of control this week and the risk of a global recession is rising quickly. Trump has a few points of concern but he needs to work out another way to get his way and having both the US and China prosper with better global rules. With the recent drop in markets globally it might me Trump stops a lot of his silliness.
Who know where Boris is up to – but it is not seemingly going well.
In Australia we have noticed the truth that we have a real problem balancing the US and Chinese relationships – this may be a severe ongoing problem that takes decades or more to resolve. The poor old Pacific Islands are also a bit worried regarding ScoMo and their risk from Climate Change!
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Major Issues.
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The global economy at midyear: How our views have changed
30 July 2019 | Markets and economy
A lot has happened since Vanguard published its global economic and market outlook for 2019 at the end of last year. Decelerating global growth, increasing U.S.-China trade tensions, and disagreement in the United Kingdom on how best to exit the European Union frame an environment in which major central banks have signaled a readiness to loosen monetary policy to support growth.
"Despite these events, our forecasts have not meaningfully changed," said Jonathan Lemco, Ph.D., principal and senior investment strategist in Vanguard Investment Strategy Group. "We expected a global deceleration to take place, and we expect economic growth to continue to slow for the rest of 2019."
Even in this uncertain environment, fixed income markets have remained strong and equity markets have approached record highs, factors Mr. Lemco attributed to a shift toward accommodative policy stances by major central banks. For the first half of 2019, the FTSE All-World Index returned 16.25% in U.S. dollars, and the Bloomberg Barclays Global Aggregate Float-Adjusted Composite Index returned 6.22%.
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'Unbreakable': US wants missiles in Darwin
Aug 4, 2019 — 7.14pm
American officials have raised the prospect of missiles being deployed to northern Australia to deter China, after US Secretary of State Mike Pompeo declared the bond between Australia and the US "unbreakable".
Mr Pompeo and Foreign Minister Marise Payne both dramatically ramped-up rhetoric against Beijing's attempts to coerce smaller nations, intervene in democracies, militarise the South China Sea and engage in unfair trade practices.
While insisting Australia and other allies did not have to choose between China and the US, Mr Pompeo hit back at advocates who want Canberra to prioritise economic ties with China over defending national security and the rule of law.
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The end of diplomacy as Trump's America comes to Sydney
Gone are the days of measured language and careful diplomacy. Mike Pompeo floated the idea of US missiles being stationed in northern Australia, rubbished China at every chance and put the weights on Canberra to help out again in the Middle East.
Aug 4, 2019 — 7.33pm
Trump's America came to Sydney on Sunday with all its loose talk and cheap flattery.
It arrived in the form of US Secretary of State Mike Pompeo, who flew in from Bangkok with the clear mission of reassuring a worried ally, only to have the opposite effect.
Gone are the days of measured language and careful diplomacy. In his two public outings Pompeo floated the idea of US missiles being stationed in northern Australia, rubbished China at every chance and put the weights on Canberra to help out again in the Middle East.
All three areas are difficult for Australia and won't be overcome by Pompeo's talk of an "unbreakable alliance" or "long friendship".
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Van Eck sees a 'global bull market in gold'
Peter Ker Resources reporter
Aug 5, 2019 — 12.00am
One of the world's biggest gold investors has urged Australian miners to resist the temptation to lock in record prices, saying the rally in the precious metal was just getting started.
New York-based VanEck's call to resist price hedging has been met with feisty resistance from local risk advisers and gold company executives, who defend Australian miners missing up to $600 per ounce of profit margin because of price hedges locked in years ago.
The debate comes as Australian-denominated gold prices reached record highs on Friday of $2132 per ounce, and as the gold industry descends on Kalgoorlie on Monday for the annual Diggers n' Dealers conference.
Joe Foster, who picks gold stocks for VanEck's 63-year old International Investors Gold Fund, said Australian gold miners are generally well managed but are unusually prone to locking gold prices into multi-year hedge arrangements.
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Access to US oil linked to warship request
Aug 5, 2019 — 9.06am
Australia could send a warship to help protect oil tankers in the Straits of Hormuz as part of an arrangement to secure extra fuel reserves from the United States, Defence Minster, Linda Reynolds has suggested.
Senator Reynolds was speaking after Energy Minister Angus Taylor announced the government was in talks with the Trump administration about accessing the US's strategic reserve to bolster Australia's inadequate stockpiles.
Australia has enough petrol and crude oil for just 28 days, which is below the 90 days mandated by an International Energy Agency treaty, to which Australia is a signatory.
Following a meeting in Sydney on Sunday between US and Australian Defence and Foreign Ministers, Senator Reynolds linked the fuel proposal to a request from the US for Australia to send a ship to the gulf to protect tankers amid rising tensions with Iran.
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'No request has been made': Linda Reynolds rules out US missile base in Australia
By Stephanie Peatling
August 5, 2019 — 8.57am
Defence Minister Linda Reynolds says the United States made no requests and "is not anticipating making any requests" to base American missiles on Australian soil.
Tensions with China dominated the annual AUSMIN talks at the weekend with both Australia and the United States taking a tough line on Beijing.
Senator Reynolds said there were "compelling reasons to strengthen [the relationship between Australia and the United States] it further" but US Defencs Secretary Mark Esper had made no request to base missiles in northern Australia.
"You would expect the US Secretary of Defence to canvass all those issues [but] I can confirm that he made no request and he wasn't anticipating any request," Senator Reynolds told ABC Radio National on Monday morning.
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The age of wealth accumulation is over
Aug 5, 2019 — 10.09am
Roughly four decades ago, America kicked off the developed world’s last major economic paradigm shift — the supply side revolution.
Capital gains taxes were slashed. President Ronald Reagan and UK prime minister Margaret Thatcher took on air traffic controllers and coal miners. The power of unions faded and that of corporations grew. Some people got very rich. But inequality rose, and eventually, overall trend growth slowed.
Watching the Democratic presidential primary debates last week, I couldn’t help but think that we may be witnessing the next great shift, from an era of wealth accumulation to one of wealth distribution. Moderates like Joe Biden and John Delaney tried to argue for middle of the road answers on issues like healthcare and trade.
But the pole positions were set by Bernie Sanders and Elizabeth Warren, who hold similar views on everything from shifting Americans on to a national healthcare system and relief for indebted students. Both also seek higher taxes for the wealthy and tougher rules for corporations.
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Unbreakable Pacific alliance now ‘more vital than ever’
- 12:00AM August 5, 2019
The symbol of an “unbreakable alliance” with the US pledging it is “here to stay” in the Pacific are the iconic messages coming from a rapidly deepening Australia-US security partnership openly geared to challenging China’s unceasing strategic push.
On display at the 29th AUSMIN meeting in Sydney yesterday was the reality of the working alliance — as distinct from President Donald Trump’s tweets — with a proactive ministerial and security apparatus from both nations jointly declaring the alliance is “more vital than ever”.
What emerged from AUSMIN was a deeper and more coherent US strategic response to combat China with Australia as a strong participant. The driving force was US Secretary of State Mike Pompeo, who branded the alliance “unbreakable” and bonded with Australia in calling for “an increasingly networked structure of alliances and partnership” in the Indo-Pacific, the aim being to combat China’s assertiveness.
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Vanguard plans active fund assault
Aug 5, 2019 — 3.31pm
Vanguard, the $7.9 trillion investment giant is best known for its pioneering index tracking funds that have forced down fees and sparked upheaval in the asset management sector.
But its Australian unit is preparing to offer a suite of actively managed funds in an expansionary move to win a greater share of what remains a largely active investment market.
And one of the key architects of the firm's initially successful foray into financial planning says there are "parallels" in Australia that could pave the way for more technological disruption in the advice sector.
"There is momentum around passive investing in Australia but it is interesting in market that there is still a significant portion of assets that continue to be actively managed - at around 80 per cent," Vanguards Australia's managing director Frank Kolimago told The Australian Financial Review.
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$A dollar slumps as yuan falls through critical level
Aug 5, 2019 — 1.30pm
The Australian dollar has slumped through US68¢ to its lowest point since the depth of the global financial crisis, excluding January's flash crash, tracking the tumble in the Chinese yuan to its lowest level since 2008 as trade tensions between the world's two largest economies escalate.
The People's Bank of China allowed the yuan to breach 7 against the US dollar, saying the move through the closely-watched level was due to pressures from "trade protectionism". The PBoC said it was able to keep the yuan "at a reasonable level".
The weakness in the yuan underscores the headwinds buffeting the economy of China, which is Australia's largest trading partner and source of demand for large miners like BHP, Rio Tinto, and Fortescue.
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Glynn’s Take: RBA Could Cut Interest Rate Four Times by Year-End
The RBA is facing up to the reality that a review of its economic forecasts on May 10 will include cuts to both its GDP growth and inflation forecasts
By James Glynn
April 24, 2019 2:06 am ET
Don’t expect the RBA to stay timid about cutting interest rates any longer.
The Reserve Bank of Australia could roll out as many as four interest rate cuts by the year-end, with the first coming ahead of the May 18 election, after data Wednesday showed inflation flat lining in the first three months of the year.
Consumer prices were unchanged in the first quarter, while core inflation slowed, moving away from the desired target of 2-3% on-year, something that will deeply frustrate the RBA which has been waiting patiently for a rise.
Core inflation rose by just 1.4% in the last year, and by 0.2% on quarter, equal to its lowest levels on record.
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Go-go gold, or a no go zone?
Tim Treadgold contrasts skyrocketing gold stocks against the gold price, in Australian dollars and US dollars, and considers what might happen next.
6 August, 2019
Donald Trump’s 2016 election slogan, Make America Great Again may (or may not) work.
However, a big beneficiary is emerging and it’s one I’ve been banging on about for some time – gold.
With apologies to readers who are tired of reading about gold, or believe they don’t understand it, gold really is shaping as the commodity/currency outperforming most other asset classes in a risk-heavy investment climate, and it could be on top for some time.
What’s driving gold is a well-founded fear that Trump is ‘weaponising’ the US dollar by using it as a tool in his trade war with China, with his demand for lower interest rates part of the process. Falling rates make gold more attractive.
Many of the world’s central banks can see the dollar game being played by Trump. Over the past six months, central banks have acquired a record 374 tonnes of the metal, valued at $US15.7 billion at the time of the purchases – and almost certainly more today.
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Aussie 10-year bond yield drops below 1pc
Aug 6, 2019 — 9.42am
Australian 10-year government bond rates have plunged below 1 per cent for the first time as the intensification of the US-China trade wars continues to ripple through global markets.
On Tuesday morning the 10-year rate fell to 0.993 per cent from 1.085 per cent as traders rushed to snap up safer assets amid a global race to safety.
"It’s a momentous day, we’ve got Aussie yields below 1 per cent for the first time ever," QIC director of rates and inflation Beverley Morris said. "These moves are not being driven by Australian fundamentals at all."
News yesterday that the Chinese yuan had weakened beyond the 7 yuan per US dollar triggered a frantic night of trading on Monday night, with Wall Street suffering its worst day of trade for the year. The S&P 500 index slumped nearly 3 per cent, and is now down 6 per cent from its recent peak.
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Australia’s petroleum crisis
- 12:00AM August 6, 2019
The Iran-inspired oil crisis is arguably the biggest test for Australia’s petroleum security since a trio of the country’s oil refineries closed earlier this decade.
Australia is heavily dependent on imported crude oil and refined petroleum to meet its needs.
The country also has some of the most meagre fuel stockpiles among similarly import-reliant developed nations.
There are about 50 days’ worth of fuel and oil stored around the country, well short of the 90-day stockpile Australia had agreed to hold as a member of the International Energy Agency.
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Government opens the door to cogent energy policy
It might feel like Groundhog Day in the energy wars but the government's proposed gas market reforms might just work.
Aug 7, 2019 — 12.00am
The package of possibilities the Morrison government has flagged to the gas industry is potentially the most positive step towards a cogent energy policy that has been presented to the nation in a decade.
Even the most retrograde, complex and systemically risky of the options offered – the creation of a national gas reservation scheme – lands with boundaries that are appropriately protective and reflect, to some degree, the underlying risk-return prerequisites of an industry that invests on multi-decade return horizons.
Mind you, it might also be just political boondoggling that delivers the government with the appearance of activity in the face of problems that successive predecessors have failed to grapple with, but whose solution is already being fabricated by the very same industries and governments that caused it.
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One day the world's population will start falling
Ross Gittins
Economics Editor
August 7, 2019 — 12.00am
For those who worry about global warming and all the other damage humans are doing to our planet, the latest news on world population growth doesn’t seem good. Fortunately, however, the relationship between population and the environment is paradoxical.
The United Nations Population Division updated its projections in June. From its present 7.7 billion, the world’s population is projected to have grown by 2 billion in 2050. It should reach a peak of nearly 11 billion at about the end of this century, before it starts to fall.
Fortunately, projections are just projections, based on a lot of assumptions that may or may not prove to have been accurate. Some prominent demographers believe the UN’s assumptions are too pessimistic.
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ScoMo should listen to Paul Keating's advice
When central banks are struggling to create growth in a turbulent world. But a former PM had same sage ideas about getting basics right.
Aug 8, 2019 — 12.00am
The Commonwealth Bank of Australia’s downbeat full-year profit result underscores how ultra-loose monetary policy has been stretched beyond the limit of its usefulness. Lower mortgage interest rates may allow housing borrowers to pay down their debt burden a bit quicker. But lower interest rates also hit savers, including retirees living off fixed income, pushing them to take more risk with their money. And because interest rates for bank deposits can’t fall below zero – good luck to the bank that tries it – bank lending margins are becoming increasingly squeezed as the Reserve Bank of Australia reduces its benchmark cash rate, now at a record low 1 per cent. The economy does not exist to serve the banks, but squeezing bank profits (and dividends) is unlikely to help boost lending, particularly amid the technology disruption that forced Suncorp’s retreat on its digital strategy yesterday.
Yet the past week’s escalation of the global trade and currency war will likely push the Reserve Bank to cut its cash rate even further. In chicken-and-egg fashion, yields on Australian government 10-year bonds this week fell below 1 per cent for the first time, paving the way for the central bank to follow with a validating cut at the short end. The pavement turned into a freeway after the Reserve Bank of New Zealand’s out-there governor Adrian Orr yesterday surprised the market with a supersized 50 basis point cut in the kiwi cash rate to 1 per cent. Echoing former European Central Bank chief Mario Draghi, Mr Orr suggested the NZ central bank would do “whatever it takes” and even speculated about cutting the NZ cash rate below zero. Yet, only the day before, the NZ jobless rate fell to an 11-year low of 3.9 per cent!
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Hastie's China comments 'overblown, unwelcome'
Aug 8, 2019 — 9.43am
The head of Parliament's powerful intelligence committee has launched an extraordinary broadside on China's behaviour while also warning Australia has been left "institutional weak" by failing to properly comprehend Xi Jinping's ambitions.
Liberal MP Andrew Hastie has likened the West's failure to get to grips with China's rise to France's flawed confidence in its defences to protect itself from Nazi Germany's invasion in 1940.
Mr Hastie's comments comes just days after US Secretary of State Mike Pompeo urged Australia to do more to push back against Chinese coercion in the Indo-Pacific.
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We must see China - the opportunities and the threats - with clear eyes
By Andrew Hastie
August 8, 2019 — 12.00am
Like many people across the world, I saw 9/11 as the geopolitical moment that would shape the 21st century. It shaped the next decade of my own life. But I was wrong.
The most significant geopolitical moment of the 21st century had already happened, five months earlier. And most of us, distracted by more dramatic events, failed to see it. It came on April Fool’s Day, 2001.
A J-8 fighter jet from the People’s Liberation Army Navy collided with a US Navy EP-3 signals intelligence aircraft, 70 kilometres off the coast of Hainan Island. Both planes began plummeting toward the South China Sea. The PLAN fighter pilot did not survive. The 24 crew of the badly damaged US EP-3 managed a hard landing on the island, and, after being offered water and cigarettes, were held for 11 days by the Chinese government.
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Kenneth Hayne: Trust in politics has 'been destroyed'
By Eryk Bagshaw
August 7, 2019 — 6.25pm
Banking royal commissioner Kenneth Hayne has launched a rare attack on the political establishment, accusing it of being captured by vested interests, destroying public faith in institutions and reducing policy to three word slogans.
In his first public statement since handing down the findings of the financial services probe in February, Justice Hayne contrasted the independent and transparent nature of royal commissions against the "opaque" and "skewed" decisions of politicians influenced by those "powerful enough to lobby governments behind closed doors".
Commissioner Kenneth Hayne and treasurer Josh Frydenberg were asked by a photographer to shake hands, Hayne says a clear 'no' while Frydenberg smiles awkwardly.
Justice Hayne said the need for royal commissions into the finance sector, aged care and disability services showed Australia's legislative, executive and judicial branches were not working as they should.
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Australia's diplomatic tightrope gets thinner
The Sino-optimism of John Howard is giving way to an era of dour pragmatism under Scott Morrison.
Aug 8, 2019 — 7.00pm
For so long, John Howard has been the great optimist on China.
So the pessimistic tone he sounded on Monday underscored how difficult it has become to juggle relations with the nation's largest trading partner and its closest strategic ally.
In 2007, after more than 11 years in office, Howard departed politics listing as one of his three greatest achievements the simultaneous elevation of relations with China and the United States. (The other two were gun control and the liberation of East Timor).
Howard was always wary of Chinese authoritarianism, just as he was always mindful Australia's allegiances lay first and foremost with the US. But he was a great exemplar of the ability to benefit from relations with both, and the need to not have to choose.
He maintained this view post-politics, most notably in October 2012 when delivering the inaugural Sir John Downer Oration in Adelaide.
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Australia at 'real risk' of recession, and a hot war with Iran, warns Kevin Rudd
By Matthew Knott
August 8, 2019 — 3.15pm
New York: US President Donald Trump's latest tariff hikes and his "dumb" decision to brand China a currency manipulator could plunge Australia into recession for the first time in three decades, former prime minister Kevin Rudd has warned.
Mr Rudd, now the president of the Asia Society Policy Institute in New York, said Prime Minister Scott Morrison should forcefully urge Mr Trump to strike a trade deal with China when he visits the US next month.
He also warned that Australia risks stumbling into a war with Iran if the Morrison government, as is expected, joins a US-led maritime coalition in the Persian Gulf.
"The rubber is about to hit the road when it comes to the US-China trade war and its direct impact on the sluggish Australian economy," Mr Rudd said in an interview in New York with The Age and The Sydney Morning Herald.
"A recession is a real risk.
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RBA has 'got it wrong', says key Labor MP ahead of bank grilling
By Shane Wright and Eryk Bagshaw
August 9, 2019 — 12.00am
The Reserve Bank of Australia faces its toughest parliamentary interrogation yet as both Labor and the Coalition prepare to attack its handling of the economy amid accusations it has failed hundreds of thousands of job seekers.
Dr Andrew Leigh, deputy chairman of the House of Representatives' economics committee that will grill RBA governor Philip Lowe on Friday, said the bank had "got it wrong" and failed its own key criteria on unemployment and inflation.
His comments follow those of committee chairman and Liberal MP Tim Wilson, who said Dr Lowe had "thrown up his hands" and given up on stimulating the economy by calling on the government to do more in response to weakening economic conditions.
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Australian government unconvinced by Cambodia's denials over Chinese military base
By Bevan Shields
August 8, 2019 — 11.45pm
An intense diplomatic effort is under way to overturn "seriously disturbing" plans for a new Chinese military base after repeated public denials of the deal by Beijing and Cambodia failed to convince the Australian government.
The secret agreement to station Chinese troops and weapons in the region is a new test for the relationship between Australia and China, after Liberal MP Andrew Hastie stoked fury by likening an inability to contain the emerging superpower to the "catastrophic failure" to stop the rise of Nazi Germany.
The move could see the rising superpower sail warships on Australia’s doorstep.
The Chinese embassy in Canberra accused the chair of Parliament's powerful intelligence and security committee of a "Cold War mentality" but Mr Hastie was praised by many Coalition and Labor MPs who believe Australia should take a more aggressive approach to its largest trading partner.
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Australian economy has reached a 'gentle turning point': Reserve Bank governor
By Shane Wright
August 9, 2019 — 10.00am
Reserve Bank governor Philip Lowe has declared the Australian economy may have reached a "gentle turning point", saying tax cuts, a drop in the currency and lower interest rates are now helping protect the nation.
But in his first appearance before the House of Representatives economics committee since the RBA sliced interest rates in June and July, Dr Lowe said workers hoping for a substantial pay rise any time soon are likely to be disappointed.
The RBA has cut interest rates to a historic low of one per cent.
And he has signalled the RBA may cut interest rates even further to lift the economy.
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World economy faces a risk that's far bigger than Trump's trade war
By Tim Wallace
August 9, 2019 — 10.00am
The world economy is vulnerable to a major housing crash that could lead to a credit crunch, analysts have warned, potentially hitting global growth far harder than the trade war or a no-deal Brexit.
Even though the property market has softened locally, house prices in China, Canada, Australia, the UK and large swathes of Europe and Asia are far higher than before the financial crisis, building up serious risks, according to economists at IHS Markit.
Their analysis raises the spectre of a repeat of the financial crisis a decade on, with debts building in the very same sector of the economy - albeit outside the US, rather than in the same location.
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Hastie's motivation was not just about China
Aug 9, 2019 — 11.55am
When Andrew Hastie tipped a bucket on China in the opinion pages of The Sydney Morning Herald and The Age this week, a conspiracy theory quickly arose that Scott Morrison’s office had put him up to it.
Propagated by the usual suspects, the theory was that the government wanted these criticisms said publicly but not by a minister or the Prime Minister so as to provide diplomatic cover.
Nothing could be further from the truth.
Hastie’s twin motives
Hastie’s motivation was twofold. First, he is a longstanding critic of China’s behaviour, his concern is growing and his views are genuinely held. The former SAS warrior is somewhat of a modern-day crusader on the topic.
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Tweeting the world into a slump
Wars waged through trade, Twitter and currencies are shredding the nerves of markets and governments. The outcome could be very serious
Warwick McKibbin
Aug 9, 2019 — 11.03am
The causes of continued turbulence in global financial markets, declines in global economic growth and a sharp slowing of global trade are complex. Both trend and cyclical factors are at play.
There are persistent declines in the drivers of economic growth such as a global demographic slowdown, low productivity growth and weak investment.
Also, disruption from new technologies and the effects of emerging economies catching up to the economic frontier and reducing costs through increased competition are generating enormous wealth but disrupting existing capital (human, physical and natural).
This disruption is causing falling costs of doing business, which is driving down inflation rates during the transition. On top of this, and because of these factors, there has been an increase in income inequality in many countries that is driving politically disruption.
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Trump's 'easy' war has struck fear into the global economy
By Shane Wright and Eryk Bagshaw
August 9, 2019 — 11.43am
In his first speech to the American people as their President, Donald Trump made clear his intentions.
"We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs," he said on January 20, 2017. "Protection will lead to great prosperity and strength. I will fight for you with every breath in my body and I will never, ever let you down.
"America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams."
The dream had started to take form during the presidential election. In May the previous year he had declared, "we can't continue to allow China to rape our country and that's what they're doing".
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The top 10 risks to the global economy, according to the Economist Intelligence Unit
From trade wars to cyber attacks.
05 Mar 2019
The Economist Intelligence Unit (EIU) has compiled a list of what it regards as the top 10 global risks of 2019. It makes for sobering reading, with a number of active threats to stability and security only likely to get worse before they get any better.“Geopolitical uncertainty is on the rise and will remain a source of significant risk,” the EIU says in its 2019 global risks report. It cautions that the rise of so-called populist leaders is far from over. This rise includes figures such as US President Trump, Brazil’s President Bolsonaro, along with India’s Prime Minister Narendra Modi and the Indonesian President Joko Widodo, who between them hold power in the four most populous democracies in the world today. There are many more who could be added to the roll call: Turkey's Recep Tayyip Erdoğan, Russia's Vladimir Putin and Hungary's Viktor Orbán to name but three.
With nationalist policies and protectionist outlooks, populist leaders excel at the kind of rhetoric that plays well to supporters on their home turf while ratcheting up international tensions. But it can have a substantial impact on trade, destabilize financial markets and the oil sector, and provoke trade wars of the kind witnessed between China and the US.
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Lost in translation: Morrison's high-stakes China play
Updated Aug 9, 2019 — 7.57pm, first published at 2.42pm
In a speech written to emphasise the parallels between the US and Australia, Secretary of State Mike Pompeo made one telling aside.
Speaking at the Mitchell Library in Sydney last Sunday, America’s top diplomat joked that the two nations were “not exactly the same”.
“I had an earpiece today in case I needed translation,” he said on Sunday after an annual round of ministerial meetings.
It was intended as a gentle dig at flattened vowels and the local vernacular, but has come to be seen as an awkward showcase of Washington and Canberra not speaking the same language on the big foreign policy challenge of our time - China.
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RBA’s plea to avoid zero interest rates
Aug 9, 2019 — 10.49pm
Reserve Bank of Australia governor Philip Lowe has implored the "political class" to pursue wide-ranging productivity reforms, such as increasing the 10 per cent goods and services tax (GST), or face the prospect that an escalating US-China trade war could force interest rates to be cut to zero.
Dr Lowe ramped up pressure on governments to invest more in quality infrastructure and undertake reforms to "support firms expanding, investing, innovating and employing people" in order to protect Australia from "political shocks" abroad such as the trade war and "Brexit".
Two tax reforms he suggested to boost flatlining productivity were a greater use of state government land taxes – potentially instead of stamp duties – and lifting the rate or broadening the base of the GST in return for personal income tax cuts.
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https://www.afr.com/wealth/personal-finance/get-ready-for-another-markets-correction-20190808-p52f58
Get ready for another markets correction
We may not be close to recession, but investors should prepare for a bumpy ride ahead in the coming weeks and months.
Aug 9, 2019 — 3.45pm
Markets have regained their poise after a tumultuous six or seven days, but don't be fooled: this is only the first shudder in what is likely to be a rough second half of the year for investors.
The 20 per cent gains enjoyed by sharemarkets since the start of 2019 always looked like misplaced optimism in the face of a plethora of risks stalking the global economy.
Investors should brace for a trade and industrial production double dip in coming months.
— Ric Deverell, Macquarie chief economist
Those gains were underwritten by the US Federal Reserve sparking a new global monetary easing cycle – one that delivered the first US rate cut in over a decade on August 1. That was preceded by two consecutive cuts by the Reserve Bank of Australia, amid a myriad other policy moves across the region, including a surprise double cut from New Zealand's central bank this week.
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Australia out of sync on all fronts
Australia’s foreign policy is struggling to keep up with rapidly changing geopolitical events.
Aug 9, 2019 — 4.45pm
Australia’s foreign policy discussion – such as it is – often seems to roll along in a torpor that is out of sync with what is actually happening in the world.
Only the more extreme rhetoric, or biggest threat, or, dare one say, sharpest three or four word slogan seems to penetrate through the fog, while the bigger picture of what is at stake either gets lost, or quickly forgotten once the headline issue has been dealt with.
There has been plenty of this abroad this week when the one big story that looms up wherever you look is China.
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Dutton orders AFP to lift the bar for investigating journalists
By Bevan Shields
August 9, 2019 — 4.57pm
Home Affairs Minister Peter Dutton has effectively told the Australian Federal Police to avoid raiding or investigating journalists who have been leaked confidential information, in a rare intervention ahead of a major public inquiry into press freedom.
In a ministerial direction two months after high-profile raids on media outlets in Sydney and Canberra, Mr Dutton said he wanted the AFP to change its procedures to "take into account the importance of a free and open press in Australia's democratic society" before executing search warrants.
Former NT Police chief Reece Kershaw has weighed in on press freedom and the raids on a journalist's home and the ABC Sydney offices.
The direction applies to investigations where police may be trying to prosecute government staffers who have leaked secret information. Distributing classified information can be a crime, as can receiving and publishing it.
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'Insane levels': Can a world where profitless companies are flying last?
By Colin Kruger
August 10, 2019 — 12.00am
Stock market experts have been warning of a tech bubble for years now, but this week's ructions have given fresh impetus to the doomsayers.
Tech investors are still licking their wounds after a Yuan-induced rout that dragged their financial universe from record highs (for both the Nasdaq and Australia’s tech darlings) just last week.
More than $82 billion has been wiped from the Australian Stock Exchange over two days
Is it time to heed warnings of a tech bubble?
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How politics has come to trump economics in Canberra
Ross Gittins
Economics Editor
August 10, 2019 — 12.15am
How does the federal government really work? Is it as we were told in Yes, Minister, with the bureaucrats actually in charge, quietly manipulating the politicians? Or are public servants actually the servants of their political masters, as the pollies focus more on getting re-elected than running the country well?
Does Treasury dominate the other departments and the economic advice going to government? Do bureaucrats still give ministers "frank and fearless" advice, or has their role been usurped by the ever-growing army of ministerial staffers, politically aligned think tanks and lobby groups?
In truth, it’s hard for outsiders to be sure. But a new book by a former 30-year senior Treasury officer, Paul Tilley, Changing Fortunes, is surprisingly frank and fearless in spelling out how things work, and how Treasury’s relationship with the elected government has "changed dramatically in recent times".
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Panic buying? Begging Trump for oil? No worries. She'll be right
Tony Wright
Associate editor and special writer
August 9, 2019 — 11.22am
The Cadillacs, big Chevvies, Fords and Chryslers were circling the block, sluggish as junkies nosing around for a fix.
Magically, kids on roller skates appeared.
They cruised alongside the idling cars, offering everything from candy bars to fruit pies and soft drinks, all at inflated prices.
And then came the college kids, sidling up to frustrated drivers. Why don’t you take a break, go shopping, do a little paperwork or whatever, the college kids inquired. We’ll nurse your car through the line for you. For a buck or two.
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Time is right to shield investments from risk
The recent sharemarket sell-off is a reminder of the risks of investing in shares. And if a truce in the trade and technology wars is not called soon, there’s likely to be further gloom and anxiety in sharemarkets. Investors could have a window of opportunity to protect themselves against a very different type of investment risk — that of being under-weighted in shares over the medium-term and longer.
Many investors take a broad view of investment risk; they see it as the prospect of having to face uncomfortably large losses in the value of, or in the income flows from, their investments.
Unfortunately, many textbooks on finance and a lot of investor briefings by advisers and fund managers take a much narrower view of investment risk — treating “risk” as the past “volatility” of the returns on the particular investment or asset class.
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One American import we could do without: hard-right religious conservatism
Jacqueline Maley
Columnist and senior journalist
August 11, 2019 — 12.00am
Here’s the good news: it was surprisingly civil. In NSW we’ve just had three days of debate over whether or not abortion should remain in the criminal code, where it has been since 1900 – a simpler, gentler time when women were barred from standing for Parliament in the state, or from practising law.
On Thursday night members of the lower house voted two-to-one to pass a private members’ bill that takes abortion out of the criminal code and regulates it as a medical procedure, with extra regulation for abortions after 22 weeks' gestation.
Various amendments were bowled up, mostly aimed at increasing hurdles to late-term abortions, which account for just 2 to 3 per cent of terminations in NSW, and which occur in heart-breaking circumstances made worse by the difficulty of access and stigma the old law has created.
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Royal Commissions And The Like.
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Auditors must avoid conflicts of interest
August 4, 2019 — 6.06pm
Of the many damning observations NAB’s contracted consultants at EY (formally Ernst & Young) made about its banking client in draft documents a year ago, one is especially alarming: “The bank focuses only on addressing the issues through Band-Aid fixes rather than investing in long-term solutions.”
That summation by external consultants, commissioned by NAB to examine its risk management and compliance, is remarkable. Put aside for now the apparent conflict in EY, the bank’s long-time auditors, being commissioned to assess NAB’s risk management. Focus instead of what is being conveyed.
Here we have EY staff expressing bewilderment and frustration, as though the consultants cannot believe how blasé, lax, inattentive or, perhaps, incompetent the NAB executives and directors seem to be on matters of fundamental importance.
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That summation by external consultants, commissioned by NAB to examine its risk management and compliance, is remarkable. Put aside for now the apparent conflict in EY, the bank’s long-time auditors, being commissioned to assess NAB’s risk management. Focus instead of what is being conveyed.
Here we have EY staff expressing bewilderment and frustration, as though the consultants cannot believe how blasé, lax, inattentive or, perhaps, incompetent the NAB executives and directors seem to be on matters of fundamental importance.
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Crying, threats as aged care home closed
- By Megan Neil
- Australian Associated Press
- August 5, 2019
A 92-year-old woman with dementia was crying and screaming, asking her "mother" to stop the chaos as distressed aged care residents were evacuated from their Queensland home.
One staff member had to be surrounded by police officers after other staff threatened to "punch her head in" if she did not give them patient care folders.
The chaotic scenes after the abrupt shutdown of the Earle Haven Retirement Village have been played out at the aged care royal commission in Brisbane.
The royal commission was played the recording of a triple-zero call from the facility's clinical manager, asking help to get 69 residents out of the facility.
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ANZ dumps bonuses for performance dividend
Aug 6, 2019 — 12.00am
ANZ Bank CEO Shayne Elliott will dump bonuses for all employees except its top executives on Tuesday in an acknowledgement of the damage that can be done when staff put profits before people.
Under the new regime, individual bonuses will be scrapped and replaced with group performance dividends from October 1. Total compensation will not change because fixed pay will rise while performance-based pay will fall.
Mr Elliott will inform staff on Tuesday morning that replacing bonuses with the new structure was part of recognising that focusing on sales metrics alone had led to poor outcomes for vulnerable consumers.
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Catastrophe warning: Aged care assessors in the dark, inquiry told
By Julie Power
August 6, 2019 — 6.02pm
A warning that residents in a nursing home faced a "possible catastrophic clinical event" was not provided to government assessors who renewed the facility's accreditation, the Royal Commission into Aged Care Quality and Safety heard.
Avondrust was sanctioned in August 2018 for "systemic and pervasive failures" following complaints about the treatment of 87-year-old Bertha Aalberts who died a painful death in August 2018.
A cognisant and continent Mrs Aalberts entered the Dutch-style nursing home in Melbourne in May last year, a week before Avondrust's accreditation was extended for three years.
Three months later, Mrs Aalberts died.
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AMP shows future of advice
AMP's new chief executive Francesco De Ferrari has come up with a model for financial advice that is likely to become the industry standard.
Aug 10, 2019 — 12.00am
The timing was perfect. In the same week investigative journalist Adele Ferguson released her damming book about rip-offs in financial services, AMP revealed the future of financial advice.
AMP’s new chief executive, Francesco De Ferrari, took all of the lessons learned from the Hayne royal commission and designed a three-tiered approach to providing financial advice. The initial reaction from the sharemarket was positive, with AMP shares rising 11.5 per cent.
Chanticleer believes AMP’s new advice model will become the default setting for the industry. In essence, it will mean fewer people having face-to-face contact with financial advisers.
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Deadly aged-care practices ignored, royal commission told
Degrading and potentially deadly aged-care practices have gone unaddressed because regulators failed to be proactive, affected clients and concerned carers were not supported, and the government dithered on reform.
The counsel assisting the Royal Commission into Aged Care Quality and Safety, Peter Gray QC, made the comments yesterday as he summed up evidence demonstrating “serious defects” in regulation.
“Equally concerning, these defects are old news: government has been tardy in implementing previously recommended reforms,” Mr Gray told the commission in Brisbane.
“There’s been no sense of urgency; government is yet even to reach a decision on aspects of the action that have previously been recommended by Carnell Paterson (the 2017 review by former ACT chief minister Kate Carnell and Ron Paterson).
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Fear and loathing: our elders deserve so much better than this
In my favourite photograph I have of my father and me, we’re on a family holiday in England. I’m nine years old and I’m standing in the middle of a fishing village in Cornwall perched on one leg, like a flamingo.
I had resolved that year to stand on one leg in photos because I thought it was a good look. It was not. But Dad is holding my hand and smiling.
He was bemused by my flamingo phase but he always stood beside me, even through my more ridiculous whims.
My father was also incredibly brilliant. His PhD theorised the movement of particles in fluid. When I open up my faded copy of his thesis, I am astonished by page after breathtaking page of complex equations and intricate, beautiful diagrams of genius I will never fully comprehend.
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National Budget Issues.
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Top economists lay out reforms needed to get the economy out of a rut
By Shane Wright and Eryk Bagshaw
August 4, 2019 — 6.00pm
The Morrison government must work with the states to overhaul health, education and tax policies to revive the economy, with the nation's pre-eminent economists warning major reform is needed to boost wages and productivity.
Economists participating in the Scope survey for the Sydney Morning Herald and The Age backed a handful of politically-dangerous changes they believe could offer substantial economic payoffs for the nation, now and well into the future.
Reserve Bank governor Philip Lowe, among other leading policy advocates, has urged all governments to re-engage on necessary economic reform, arguing changes will deliver long term benefits.
A string of proposals delivered by the Productivity Commission to the government two years ago, which advocated reforms such as efforts to slash waiting times in doctor surgeries to road-user charges, have effectively been shelved.
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Are low interest rates actually bad? It depends on your perspective
Ross Gittins
Economics Editor
August 5, 2019 — 5.30am
Although media coverage invariably assumes that low interest rates are good news, they’re now so low there’s a backlash, with people pointing to the disadvantages of low rates and getting quite worried.
The fightback is coming at the usual level of complaints from the retired, but also from more sophisticated observers, such as Andrew Ticehurst, of the Nomura banking group, and Dr Stephen Grenville, a former deputy governor of the Reserve Bank.
It’s understandable that the retired and other savers object to the Reserve Bank’s decisions to cut interest rates and are particularly exercised now rates are so close to zero. Doesn’t the Reserve understand we live on our interest income? Of course it does. So why does it persist?
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Trade war, RBA send yields to record low
Aug 5, 2019 — 11.31am
Slowing economic growth, trade war concerns and a global central bank rate cut cycle have pushed Australian bond yields to record lows with no sign of easing in sight.
On Monday, the Australian 10-year bond yield was sitting at 1.085 although it is likely to fall further after the Chinese yuan fell below the critical 7-per-US dollar level, causing a widespread panic across markets.
While Australian bonds did not trade on Monday due to a NSW bank holiday, futures suggest a sharp reaction on Tuesday.
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Construction fall sharpest in 6 years: PCI
- Australian Associated Press
- 2 hours ago August 7, 2019
A slump in demand for new houses and apartments in July caused the sharpest contraction in home building in six years, a survey of businesses in the construction industry suggests.
The Australian Industry Group/Housing Industry Association Performance of Construction Index (PCI) report released on Wednesday said activity fell 3.9 points on the previous month to 39.1 - a slide that leaves the measure well below the 50-point mark separating expansion and contraction.
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Tim Wilson accuses RBA of giving up on stimulating the economy
By Eryk Bagshaw
August 7, 2019 — 11.45pm
The chair of the Morrison government's economics committee, Tim Wilson, has accused the Reserve Bank of giving up on stimulating the economy, as the China-US trade war rattles markets and sends business confidence to its lowest level in five years.
Global ratings agency S&P warned on Wednesday "the fragile truce between the US and China is now tumbling" as local policymakers grapple with how to respond to the threat posed by growing tensions between two of Australia's largest trading partners.
The Dow plunged 767 points and Wall Street tumbled 3 per cent as part of a global sell-off after the slide in China's currency fueled fears Beijing's move would further aggravate the trade war with Washington.
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Zero rates, QE possible: RBA's Lowe
Aug 9, 2019 — 1.16pm
Reserve Bank of Australia governor Philip Lowe says it is "possible" interest rates in Australia fall to zero, so as a contingency plan the bank has been studying a range of other unconventional monetary stimulus measures used overseas.
Dr Lowe hopes the economy is at a positive "turning point" as recent interest rate cuts, income tax cuts, a weaker currency and infrastructure spending boost demand.
But the governor admitted the RBA was hostage to other central banks lowering interest rates due to an excess of savings and lack of investment in the world economy, so the RBA could not avoid the global rate-cutting trend.
"Globally, if all central banks go to zero, then we'd have to consider that as well," Dr Lowe said.
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Billions in iron ore boost saving Morrison as economic winds worsen
By Shane Wright
August 10, 2019 — 11.59pm
There are growing doubts over the state of Josh Frydenberg's budget and the domestic economy, with only the soaring price of one key commodity protecting the budget bottom line from the impact of rising unemployment and stagnant wages.
Fresh forecasts from the Reserve Bank and emerging troubles from overseas have highlighted the potential troubles facing the Morrison government, which is promising to deliver the first Commonwealth surplus in a decade with its 2019-20 budget.
The budget was brought forward more than a month to April 2 because of the election, with all of its forecasts calculated in late March. Usually these are calculated just ahead of the budget delivered in May.
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Health Issues.
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Medibank and NIB: all good things must end
James Fernyhough Reporter
Aug 5, 2019 — 12.00am
The private health insurance industry was one sector that breathed a sigh of relief when the Coalition won the May federal election.
Labor had gone to the supposedly unloseable election proposing a 2 per cent cap on health insurance premium increases for two years, in an effort to answer growing community concerns about affordability. This would have been a major restriction on private health insurers, given premiums this year have increased on average 3.25 per cent, itself the lowest increase in 18 years.
So when the Morrison-led Coalition pulled off its surprise win, the share prices of Australia's two major ASX-listed health insurers Medibank and NIB shot into the stratosphere.
On election day eve, Medibank's share price was $2.88. The following Monday it had shot up to $3.21, and at close on Friday it was $3.56. NIB's followed much the same trajectory. Election day eve it was $5.89, the following Monday it was $6.82, and at close on Friday it was $7.97.
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Sepsis: time for doctors to “get their house in order”
Authored by Nicole MacKee
DOCTORS must get their “house in order” when talking about sepsis, says a leading infectious diseases physician who is supporting calls for a national plan to reduce preventable deaths and disability from the condition.
Professor David Paterson, consultant infectious diseases physician and Director of the University of Queensland Centre for Clinical Research, said the term “sepsis” was often incorrectly used in many medical specialties.
“When I talk to an orthopaedic surgeon, for example, they may talk about a patient having sepsis, and what they are referring to is a person having an infection in their joint or in their wound, which is a very different thing from what an intensive care unit (ICU) or emergency doctor would talk about with sepsis,” said Professor Paterson.
“There are some situations where people equate an infection in your blood with sepsis, and again, that’s not correct.”
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Australia needs a national plan to reduce sepsis deaths: researchers
By Craig Butt
August 5, 2019 — 12.01am
It kills an estimated 5000 Australians each year, but only one in seven people can identify the symptoms.
A team of experts has called for a nationwide campaign to raise public awareness of the "time-critical medical emergency" of sepsis.
In an article published in the Medical Journal of Australia on Monday, the team from the George Institute for Global Health at the University of NSW called for better monitoring of sepsis cases and improved support services for survivors of the condition.
“Lack of awareness results in delayed presentation to healthcare providers,” Professor Simon Finfer of the George Institute said.
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What medical tests should healthy adults have?
At different times of life, there are some tests we're all advised to take – some better known than others. Here are some to pencil into your diary.
By Rachel Clun
August 5, 2019
Most of us probably visit the doctor when we’re sick, but the occasional check-up to help prevent future illness can also be important.
In general, your doctor will try to make sure you are in good health by talking to you about your diet, exercise, smoking and alcohol intake, but they will also recommend regular tests at certain points in your life.
"Whilst it’s a bit icky to talk about testing your poo or having a cervical screen, I think that the ramifications of not doing that are far worse," says Dr Paula Conroy, deputy chair of the Royal Australian College of General Practitioners, Queensland.
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'Highly protected species': Calls for government to stop 'propping up' pharmacies
By Dana McCauley and Michael Fowler
August 8, 2019 — 11.42am
Australia's largest pharmacy retailer is calling on the federal government to stop "propping up" small local chemists and allow competition to bring down medicine costs, including through free scripts for pensioners.
Chemist Warehouse chief operating officer Mario Tascone said the rules governing pharmacies - which prevent heavy discounting of Pharmaceutical Benefits Scheme (PBS) medicines for pensioners and stop new chemists opening near existing ones - were "outdated" and should be radically overhauled.
"It's the only protected industry in Australia and in the year 2019, these rules make no sense. We're the only country in the world that does it," Mr Tascone told The Sydney Morning Herald and The Age.
Health Minister Greg Hunt is negotiating a new five-year agreement with the powerful Pharmacy Guild, which represents 5700 local pharmacies across Australia. The deal, expected to be finalised by December, will take effect in mid-2020.
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New charter of healthcare rights aims to empower patients
By Stuart Layt
August 8, 2019 — 12.01am
Healthcare advocates will launch a revised Australian Charter of Healthcare Rights on Thursday, aimed at empowering patients to take an active role in their own medical care.
The charter, developed by the Australian Commission on Safety and Quality in Healthcare, outlines what rights people have when going through the healthcare system and what they should expect when receiving treatment.
Revised charter aims to empower patients to take a role in the own healthcare.
This is the second version of the charter, and the commission’s clinical director, Associate Professor Amanda Walker, said they had introduced a number of updates to reflect the change in the healthcare space since the initial charter was released in 2008.
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If we get rid of private health insurance, what happens next?
By Angela Jackson
August 7, 2019 — 11.26pm
“Hey, hey, ho, ho, private health insurance has to go!” This is the relentless chant being sung in opinion pages and on talkback radio across the country. But what comes next if we dispose of this much-loathed part of our health system? Because, as many a revolution has shown, what comes next can be a lot worse than the most maligned status quo.
Those calling for the demise of private health insurance often claim we could redirect the $9 billion spent each year on the private health insurance rebate and Medicare rebates for private hospital care to the public system. While appealing from an economic and ideological perspective, even with additional funding our public system could not handle the additional demand. There are not enough beds or operating theatres, and the cost of acquiring or building new ones would be prohibitive.
Four in 10 visits to a hospital in Australia are to a private hospital. Public hospitals are already being put under pressure as people drop their level of health insurance, opting to be treated in our world-class public system rather than paying extra to go private. The number of mothers choosing to have their babies in private hospitals has fallen more than 10 per cent in five years. At the same time, the numbers going public have increased.
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Call for tenders in health overhaul
Public health services would be put out to tender, insurance and government funds pooled to encourage better ways of delivering care, and consumers given greater control under a reform blueprint released today.
The Global Access Partners blueprint was developed by a 39-member taskforce headed by long-time bureaucrat and now Calvary Health national chief executive Martin Bowles, who previously headed the federal Health Department under Coalition ministers Greg Hunt, Sussan Ley and Peter Dutton.
Among its 19 recommendations is the need for a new approach to prevention and chronic disease management. The taskforce also called for technology, such as telehealth and self-help resources, to be used more in primary care, and for improved access to dental services.
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I doubted health insurance until my son's sudden illness
By Jennie Hill
August 8, 2019 — 1.40pm
With private health insurance premiums sky-rocketing, a popular Australian pastime is to have endless discussions with family, friends and others about the benefits and costs.
I used to participate in these debates, too, and several times nearly dropped our insurance after hearing others say how unnecessary it is. Until, that is, I had a son who needed treatment for a serious mental illness which developed out of the blue and was life-threatening within a few months of first noticing it.
Where would we have been without private health insurance covering huge mental health care costs for our son? I honestly don't know.
When that happened, I unwillingly discovered the yawning gap between what’s on offer in Australia to those with physical illnesses, and those with psychiatric ones. This chasm is enormous, dark and almost impossible to describe. But I’ll try.
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What to do about women's belly fat?
Jill Margo Health Editor
Aug 10, 2019 — 12.00am
Women’s belly fat is a curious thing. In some cultures, it is desirable because it means there is more to love. In our culture it is not because, unromantically, it means the woman has more health risks. For Western society, an accumulation of abdominal fat is seen as a clear danger sign and we encourage women to lose weight.
But one group of women has largely been overlooked. They are normal-weight women with a belly. Sometimes they are referred to as the “skinny fat” or as having "normal weight obesity".
Now, a new study has shown these older women are more likely to die from all causes, including cardiovascular disease and cancer, than normal weight women whose fat is distributed evenly and don’t have central obesity.
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Push for 24-hour convenience stores to sell prescription medicines
By Dana McCauley
August 10, 2019 — 12.00am
The peak body for convenience stores has backed calls to relax the strict rules governing pharmacies to enable Australians to buy medicines at its 6500 stores, including 7-Eleven and Caltex.
Jeff Rogut, chief executive of the Australasian Association of Convenience Stores, said prescription medications were high on the list of additional goods and services customers wanted to see in their outlets.
"When we do surveys of our customers, pharmacy ranks up there with things like postal services as one of the top items they would like to see in a convenience store," Mr Rogut told The Sydney Morning Herald and The Age.
"The reason why is because of the extended hours, the ability to park easily, get in and out quickly and do all the things they want to do ... it would save them time and be more convenient."
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International Issues.
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Europe needs to get the digital ball rolling, or be run over by it
- By Joschka Fischer
- 12:00AM August 5, 2019
The first two decades of the 21st century are beginning to cast a long shadow over the Western world. We have come a long way since the turn of the century, when people everywhere, but particularly in Europe, indulgently embraced the “end of history”.
According to that illusory notion, the West’s victory in the Cold War, the last of the three great wars of the 20th century, had given rise to a global order for which there could be no alternatives. Thenceforth, it was thought, world history would march steadily toward the universalisation of Western-style democracy and the market economy. The new century would merely be a continuation of the previous one, with a triumphant West extending its dominion.
The world is wiser now. The web of alliances and institutions that sustained the West’s dominance is proving to be a product of the 20th century, its future now in doubt. The global order is undergoing a fundamental change as its centre of gravity shifts from the North Atlantic to the Pacific and East Asia. China is on the threshold — economically, technologically, and politically — of becoming a world power and the sole challenger of the incumbent hegemon, the US.
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Australia loses as US sharpens China rhetoric
The sharp tone of the joint press conference in Sydney is just one of many irritants for Beijing authorities, ensuring there will be little improvement in Australia-China ties.
Aug 4, 2019 — 5.55pm
US Secretary of State Mike Pompeo brought Washington words of reassurance to Australia but close co-operation on security issues won’t obscure the growing economic risks of Donald Trump’s view of the US national interest.
The president has again shaken global investor nerves with his latest salvo against China via the imposition of 10 per cent tariffs on the $US300 billion of Chinese imports that had escaped earlier measures.
Markets had repeatedly shrugged off the dangers of a full-scale trade war between the two countries in the belief an eventual trade deal was still possible.
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The Asian strategic order is dying
Updated Aug 6, 2019 — 10.22am, first published at 10.16am
When somebody is reaching the end of their life, they often suffer from lots of apparently unrelated ailments — fevers, aches-and-pains, unlucky falls. Something similar may happen when a strategic order is dying. Across east Asia, the past month has seen a rash of diplomatic and security incidents that are symptoms of a wider sickness.
In late July, the Chinese and Russian air forces staged their first ever joint aerial patrol in the region, causing South Korean warplanes to fire hundreds of warning shots at Russian intruders. The South Koreans are also facing the most serious deterioration in their relations with Japan in decades — with the Japanese imposing trade restrictions last week in a dispute that has its origins in the second world war. North Korea has also just restarted missile tests, endangering US-led peace efforts.
All of the other east Asian flashpoints — Taiwan, the South China Sea, Hong Kong and the US-China trade war — are also looking more combustible. Protests and strikes in Hong Kong are still gathering momentum.
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US labels China currency manipulator for first time in 25 years
Saleha Mohsin
Updated Aug 6, 2019 — 9.25am, first published at 8.23am
Washington | The Trump administration formally labelled China a currency manipulator, further escalating its trade war with Beijing after the country's central bank allowed the yuan to fall in retaliation for new US tariffs.
While the US Treasury Department's determination is largely symbolic, as the potential punishments are a shadow of the steps Trump has already taken against China, it underscores the rapidly deteriorating relationship between the world's two largest economies. The move immediately roiled markets, with S&P 500 Index futures sliding more than 1 per cent in early Asian trading.
Under the designation, Treasury Secretary Steven Mnuchin "will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions", the department said in a statement Monday.
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China stops buying US crops, inflaming trade war
Hallie Gu and Tom Daly
Aug 6, 2019 — 4.42am
Beijing | Chinese companies have stopped buying US agricultural products, China's Commerce Ministry said on Tuesday, a blow to US farmers who have already seen their exports slashed by the more than year-old trade war.
China may impose additional tariffs on US farm products bought shortly before the purchase ban took effect, China's Commerce Ministry said. China also let the yuan weaken past the key 7-per-dollar level on Monday for the first time in more than a decade.
Before the trade war started, China bought $US19.5 billion ($29 billion) worth of farm goods in 2017, mainly soybeans, dairy, sorghum and pork. The trade war reduced those sales to $US9.1 billion in 2018, according to the American Farm Bureau.
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'Like a tsunami is coming': China's move a slap in the face for Trump
By Ambrose Evans-Pritchard
August 6, 2019 — 6.55am
China has hit back at the Trump administration with a drastic exchange rate devaluation, almost guaranteeing a superpower showdown and a lurch towards full trade war.
The yuan blew through the symbolic line of seven to the US dollar for the first time since the global financial crisis, with the offshore rate in Hong Kong spiking to 7.07 in moves that stunned seasoned traders.
The Dow plunged 767 points and Wall Street tumbled 3 per cent as part of a global sell-off after the slide in China's currency fueled fears Beijing's move would further aggravate the trade war with Washington.
The calculated action by the People's Bank (PBOC) threatens to unleash a wave of deflation across the world and risks pushing East Asia and much of Europe into recession. It is certain to provoke a ferocious response from the White House.
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Tensions rise as Indian government revokes Kashmir's special status
August 5, 2019 — 6.15pm
New Delhi: India's government used a presidential order on Monday to revoke disputed Kashmir's special status as thousands of newly deployed troops descended and some internet and phone services were suspended in the restive Himalayan region where most people oppose Indian rule.
Home Minister Amit Shah announced the revocation amid an uproar in India's two houses of parliament.
Shah's statement came while Kashmir was under a security lockdown, keeping thousands of people inside their homes and unable to communicate with the outside world.
The move is expected to spark unrest in the world's most heavily militarised area, and between two nuclear armed states, India and Pakistan.
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Violence erupts in Hong Kong as protesters mount fiercest challenge yet
By Kirsty Needham
Updated August 6, 2019 — 1.43amfirst published August 5, 2019 — 5.00pm
Hong Kong: Hong Kong saw the most widespread eruption of street violence yet in the wake of chief executive Carrie Lam saying she would not resign and needed to lead her team to restore order because agitators were calling for "revolution".
On Tuesday in Beijing, the Chinese government is scheduled to make a new statement on Hong Kong.
In chaotic scenes on Monday evening, riot police fired tear gas across Hong Kong island and the New Territories as rallies in seven locations against the government's extradition bill saw roads occupied, fires lit outside police stations, rocks thrown at police compounds and the Chinese national flag dumped for a second time into the harbour at Tsim Sha Tsui.
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UK joins US Strait of Hormuz mission; Iran slams sanctions
By Jill Lawless
August 6, 2019 — 5.48am
Tehran, Iran: Britain said on Monday that it would join a US-led naval security mission in the Strait of Hormuz, where Iran's seizure of merchant vessels has raised tensions with the West. Earlier, Iran's foreign minister lambasted recent US financial sanctions against him, calling the move a "failure" for diplomacy.
Mohammad Javad Zarif told reporters in Tehran that "imposing sanctions against a foreign minister means failure" for any efforts at negotiations, and means the side imposing the measures is "opposing talks."
The US administration last week announced sanctions on Zarif, a month after President Donald Trump had imposed similar sanctions on Iran's supreme leader, Ayatollah Ali Khamenei.
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China suspends US farm imports, mulls sanctions
- By Chao Deng
- August 6, 2019
China has suspended purchases of US agricultural products in response to US threats to impose tariffs worth billions on more in Chinese goods.
The Chinese Commerce Ministry said early on Tuesday that China “will not rule out” putting tariffs on US agriculture imports purchased after 3 August, two days after US President Donald Trump declared he would impose 10 per cent tariffs on $US300 billion in Chinese imports.
China said the threat of new tariffs “severely violates” the agreement the two countries struck in late June at the G20 meeting in Japan. Back then, President Trump agreed to allow US companies to resume selling products to Chinese telecommunications company Huawei Technologies and said that China would soon purchase large quantities of U.S. agriculture products.
US officials had said they would grant a handful of temporary exceptions to an export blacklist against Huawei, giving the firm some reprieve from tough trade penalties.
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China takes gloves off in trade battle with Trump
- 12:00AM August 6, 2019
China’s move yesterday to let its currency fall below the seven yuan to the US dollar level is the first of many weapons Beijing can use as the bitter trade war of the past year escalates to a more serious clash.
Furious at Donald Trump’s threat last week to impose 10 per cent tariffs on the remaining $US300 billion ($440bn) worth of Chinese exports to the US, starting on September 1, China’s Ministry of Commerce announced last Friday that it was prepared to launch retaliatory action.
“The Chinese side will not give in to any extreme pressure, intimidation or blackmail and we will never concede an inch on major issues of principle,” said Chinese Foreign Ministry spokeswoman Hua Chunying on Friday after Trump’s tweet.
Yesterday saw the beginning of a new attitude in Beijing, where its central bank was no longer prepared to defend the critical seven yuan/$US level, allowing its currency to fall, which will help offset the cost of the higher tariffs.
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This is what America first looks like up close
The idea Australia would need a hedge against a reckless US administration wreaking havoc in the region was never considered even five years ago, but is now firmly government policy.
Aug 5, 2019 — 8.00pm
Amid the constant white noise of Trump's America it was largely missed that China and Russia conducted their first-ever joint patrol of nuclear capable bombers off the Korean Peninsula late last month.
As milestones go this was a big one, showcasing the new era of strategic competition in which Australia finds itself.
To put it mildly, the stakes are getting higher, which makes the China-baiting of the current White House, seen in Sydney on Sunday, all the more problematic for Australia.
The comments by Secretary of State Mike Pompeo that you can either "sell your soul for a pile of soya beans or you can protect your people," have been widely rejected by more sober US voices, indicating bipartisanship on foreign policy has all but evaporated.
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Nomura warns market sell-off could be 'Lehman-like'
Aug 7, 2019 — 7.59am
A second market sell-off following the rout in global equities this week could be "Lehman-like" Nomura says, referring to the September 2008 collapse of the Wall Street broker that helped trigger the financial crisis.
"Investors shouldn’t take much solace from Tuesday morning’s rebound, says Nomura. The firm is warning the next sell-off could resemble a crisis-level plunge like the one that followed Lehman Brothers’ collapse," CNBC reported on its web site.
"At this point, we think it would be a mistake to dismiss the possibility of a Lehman-like shock as a mere tail risk," Nomura strategist Masanari Takada was quoted as saying on CNBC.
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Trump sinks the markets - and maybe his re-election chances
Ironically, the man who promised to make America great again could well be fully responsible for a completely unnecessary economic contraction.
Jennifer Rubin
Aug 7, 2019 — 2.28am
Washington DC | As a result of President Donald Trump's deepening trade war with China and decision to label China a currency manipulator, financial markets on Monday took a beating, with the Dow down in the worst trading day of 2019.
As the Post has reported, "The US last named China a currency manipulator in the early 1990s, and has not applied that designation since. . . . Under the designation, America could impose much more significant tariffs on China than it has so far - which could trigger further retaliation from China."
Even worse, economists fear that "the most dangerous potential consequence of a currency battle would be a slowing of overall economic growth in the US and China, at a time when analysts already fear a global slowdown could push the US into a recession."
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https://www.afr.com/policy/economy/australia-to-pay-the-price-for-us-china-trade-war-20190806-p52ea5
Australia to 'pay the price' for US-China trade war
Aug 7, 2019 — 12.00am
Australia will “pay the price” for US President Donald Trump’s escalating trade war against China, warns former US Treasury emissary to China David Dollar.
The trade and technology fight between the world’s two largest economies intensified on Tuesday when the Trump administration officially designated China a “currency manipulator” after Beijing let the yuan devalue beyond 7 against the US dollar for the first time since the 2008 global financial crisis.
The local sharemarket followed Wall Street’s plunge by sinking for a second consecutive day, with the S&P/ASX 200 Index falling 2.4 per cent to 6478.1 on Tuesday.
Dr Dollar, a former senior US Treasury and World Bank official in China, said China’s currency depreciation was a warning to President Trump that Beijing would retaliate against his latest planned tariffs.
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US in the midst of a white nationalist terrorism crisis
By CJ Werleman
August 4, 2019 — 2.48pm
At a few minutes before 11 am on Saturday in El Paso, Texas, a gunman in his early 20s opened fire on a crowd of shoppers in a mall killing at least 20 and wounding dozens of others, placing the suspect’s rampage among the top ten deadliest mass shootings in US history.
“I saw people crying: children, old people, all in shock,” one eyewitness told The New York Times. “I saw a baby, maybe six to eight months old, with blood all over the belly.”
One suspect in custody, police starting to secure scene.
As hospitals in the local area deal with what can only be described as the bloody battlefield carnage, federal and state authorities are moving closer towards establishing the suspect’s motive for carrying out the mass casualty attack.
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HK faces ‘plunge into the abyss’
- 12:00AM August 7, 2019
China has warned protesters that it will not allow “troublemakers” to “plunge Hong Kong into the abyss”, and threaten China’s national security.
In a briefing in Beijing yesterday, Chinese officials warned the protesters they should not underestimate “the immense strength of the central government”.
“We need to send a stern warning to the reckless, violent groups and black hands behind them — you will pay the price if you play with fire,” said Yang Guang, spokesman for the cabinet-level Hong Kong and Macao Affairs Office.
The second briefing in a week from the office — which gave its first since the 1997 handover from Britain last Tuesday — followed the arrest of 148 people after protesters fought running battles with police on Monday, the largest daily toll since the huge pro-democracy protests began two months ago.
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British Labour vows to get Queen on board to block Boris Brexit
Harry Yorke and Simon Johnson
Aug 8, 2019 — 9.37am
London | Labour's shadow finance minister, John McDonnell, has threatened to drag the Queen into a constitutional crisis by saying Labour would "take over" if Boris Johnson refused to quit in the wake of a confidence vote.
McDonnell said he was ready to send Labour leader Jeremy Corbyn to Buckingham Palace "in a cab" to tell the 93-year-old monarch the party was ready to assume power, in the latest sign MPs seeking to stop a no-deal Brexit are planning to embroil Her Majesty in politics as they run out of parliamentary options.
Mr McDonnell was also accused of forming an "unholy alliance" with nationalists in Scotland and Northern Ireland after he claimed that he would not stand in the way of a referendum in either country to split up the UK.
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The global economy could already be in recession
By John Kemp
August 8, 2019 — 8.43am
The global economy is probably in recession, with most cyclical indicators showing business activity is flat or falling.
Recessions become obvious only once they are well established given the lagging nature of most economic data.
And end-of-cycle recessions are usually impossible to distinguish from mid-cycle slowdowns until well after the slowdown has started.
The arrival of a recession is always controversial at the time and usually missed by most forecasters, as the leading business-cycle economist Victor Zarnowitz noted.
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Currency slide suggests Beijing has reached the end of the line
By Hui Feng
August 7, 2019 — 2.45pm
When US President Donald Trump announced via Twitter on Friday that he was slapping tariffs on an extra US$300 billion of China’s exports, it was widely expected that China’s currency would slide against the US dollar.
What wasn’t expected was that on Monday it would break the seven Chinese renminbi (RMB) to the dollar barrier, a line held by China since 2008.
The RMB/USD exchange rate is tightly managed by the People’s Bank of China. The rate is permitted to move only 2 per cent away from a midpoint fixed by the bank each day.
Although in its official statement the bank attributed the slide mainly to changes in demand and supply, the slide would not have happened had the bank not allowed it. In the past it spent as much as US$107 billion in a single month defending the renminbi.
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US recession odds rise as economists pare growth estimates
Catarina Saraiva
Aug 9, 2019 — 5.34am
Houston | The likelihood of a US recession in the next 12 months rose to 35 per cent in an August survey of economists, from 31 per cent forecast previously, as global trade tensions fuel economic uncertainty.
Growth in the world's biggest economy will average 2.3 per cent this year, down from 2.5 per cent seen in a July survey. Gross domestic product expansion is forecast to slow to a 1.8 per cent annualised pace in the third quarter, from 3.1 per cent in the first three months of the year and 2.1 per cent in the second quarter. Economists see the US entering its next recession in 2021.
Despite the tick up in recession odds, economists still see fairly healthy growth as the US is buoyed by a strong labour market and robust consumer.
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Pakistan slashes ties with India
India’s shock move to strip disputed Kashmir of its statehood and special autonomy has plunged the subcontinent into a fresh crisis, with India bracing for terror attacks and Pakistan suspending trade, recalling its ambassador and closing airspace to Indian traffic.
New Delhi’s ambassador to Islamabad is to be expelled after Prime Minister Imran Khan convened an emergency meeting late on Wednesday of the national security committee and ordered his top officials to use all diplomatic avenues to “expose (the) brutal Indian racist regime”.
“We will call back our ambassador from Delhi and send back their envoy,” Foreign Minister Shah Mehmood Qureshi said.
India’s External Affairs Ministry hit back yesterday, accusing Islamabad of “invoking an alarmist vision of the region” and warning the decision to strip the region of its autonomy was an “internal affair”.
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From party town to battlezone: Why Hong Kong will never be the same
Aug 9, 2019 — 7.09pm
Hong Kong | On the night of June 30, 1997, Hong Kong’s streets were packed as the city’s population made their way home after watching a massive fireworks display, just one element of the elaborate ceremony that marked the handover of the city by the British to China.
Governor Chris Patten publicly shed a tear before sailing out of Victoria Harbour, China’s then leader Jiang Zemin presided over a lavish banquet at a huge convention centre, and thousands of young Hong Kongers danced at a 12-hour rave party where Grace Jones and Boy George performed.
I was on a tram trundling down Hennessy Road with a group of journalists after a long night reporting on the Chinese handover ceremony. As we discussed whether it was a dark day for Hong Kong’s future or not, a Chinese man sitting across from us suddenly chimed in.
“You don’t understand,” said the man, aged in his early 20s. “We are Chinese. We are proud to be Chinese. We’re happy the British are leaving.”
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Hastie's awakening to Xi's bid for total control of China - and beyond
Peter Hartcher
Political and international editor for The Sydney Morning Herald
August 10, 2019 — 12.00am
Like most people in Australia, Andrew Hastie wasn't worried too much about China. When he was first elected to federal Parliament in 2015 at a relatively young age of 32, he'd already fought the Taliban on three deployments. So the new Liberal MP for the West Australian seat of Canning was preoccupied, naturally enough, with the urgent terrorist threat of Daesh, or Islamic State.
Then, in 2017, the government was convulsed with internal arguments over same-sex marriage. "It was our own little Brexit because we didn't have energy to talk about anything else," Hastie has since remarked to his colleagues.
So how did he get to the point this week of writing a threshold critique of China's President Xi Jinping as a modern-day Stalin? And warning that Australia today was like a complacent France even as German tanks rolled towards its borders in 1940?
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North Korea fires two projectiles into sea
August 10, 2019 — 9.39am
Seoul: North Korea has fired two unidentified projectiles into the sea off its eastern coast, South Korea's military says.
The latest launch on Saturday comes after US President Donald Trump said he received a "very beautiful letter" from North Korean leader Kim Jong-un.
North Korea has fired a series of missiles and rockets since Kim and Trump agreed at a June 30 meeting to revive stalled denuclearisation talks.
A US official said that at least one projectile was launched and that it appeared to be similar to previous short-range missiles fired by Pyongyang.
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Sihanoukville, a pothole in the Banana Pancake trail
By James Massola
August 11, 2019 — 12.00am
Sihanoukville: It's Friday morning in Sihanoukville, one of Cambodia's largest cities, and the rain is bucketing down.
We're stuck on the main road from Otres beach, home to the hotels and wooden bungalows once popular with western tourists - which one by one are being sold, torn down, and replaced by towering, Chinese-built high-rise resorts - and I'm anxiously checking my watch every few minutes.
Billions of dollars of Chinese investment have transformed the town of Sihanoukville in Cambodia
First, because we haven't moved for 40 minutes as one side of the road has been so damaged by heavy traffic and flooding rains that it is now impassible. My flight isn't until 1.30pm but, knowing the condition of the roads, I'd set out at 9am, allowing myself four and a half hours to drive the 20 kilometres to the airport.
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Pope Francis says recent political speeches sound like 'Hitler in 1934'
By Siobhán O'Grady
August 10, 2019 — 11.01am
Rome: Pope Francis called for a united Europe in an interview published by Italian daily La Stampa, saying recent political rhetoric has echoed that of Nazi Germany.
"I am concerned because we hear speeches that resemble those of Hitler in 1934," he said. " 'Us first. We . . . We. . . . ' These are frightening thoughts."
It is not the first time the pontiff has made such remarks, but his comments published on Friday came as Italy's populist government appeared to be on the verge of collapse.
On Thursday, Deputy Prime Minister Matteo Salvini, the most powerful politician in Italy, called for parliament to be dissolved and asked President Sergio Mattarella to order snap elections that could make Italy's government lean even further right.
Mattarella has not yet signalled whether he will follow through on the call, which came after 14 months of disputes within Italy's coalition government. Tensions escalated this week after disagreement over plans for a high-speed rail.
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I look forward to comments on all this!
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David.
