August 04,
2022 Edition
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The war seems
to grind on sadly and Pres. Biden is having a second round with COVID as unprecedented
weather happens all over the US. It all feels rather like ‘the end of days’!
In the UK we
see an increasing chance of a third female PM being elected as the country seems
to be struggling. We do need to remember however the UK remains a significant
power with nuclear weapons and home-grown nuclear submarines!
In OZ we have
had last week working out how to progress the First Nations ‘Voice’ as we wrap
up the 1st session of Parliament for the new Government. Comments
welcome on how you think it is all going!
The world
seems also to be having bad economic news pretty much everywhere!
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Major Issues.
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https://thenewdaily.com.au/finance/2022/07/25/small-government-free-market-kohler/
6:00am, Jul
25, 2022 Updated: 8:59pm, Jul 24
Alan Kohler: Small government and free markets – ideology or greed?
Alan Kohler
At a small
event at the Productivity Commission last week, visiting Nobel Prize-winning
American economist Joseph Stiglitz was talking about revolution.
He said the
free market and small government ideology that has had America and much of the
world in its grip for 40 years is over.
“This is a
revolution. We are at a juncture in history where the tide has turned. Forty
years of ideology of markets and experiments in many countries has failed. The
last straw was COVID-19.”
By which he
meant, among other things, that America’s market-based economy was unable to
supply its citizens with masks and they had to get them from China. And the
mRNA vaccine breakthrough was the result of government money, not private
enterprise.
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https://www.smh.com.au/business/the-economy/curbing-use-of-market-power-can-help-fight-against-inflation-20220724-p5b42l.html
Curbing use of market power can help fight against inflation
By Rod Sims
July 25, 2022
— 5.00am
Increasing
interest rates often seems to be our only weapon against rising inflation. But
understanding the role of market power and curbing its use can also play a
role, as can taking some sector-specific action.
Economists
often assess inflation assuming that markets are competitive and that all
sectors of the economy are behaving in the same way. These assumptions can lead
to damaging policy choices, particularly in relation to interest rate rises in
response to inflation.
Markets in
Australia are generally far from strongly competitive and, instead, are often
characterised by considerable concentration and market power. Also, today’s
inflation owes much to shocks in key sectors, such as gas and electricity. Both
these points raise issues for how we should now best respond to Australia’s
rising inflation.
Many sectors
of our economy are dominated by just a few companies; think beer, groceries,
energy and telecommunications retailing, resources, elements of the digital
economy, banking and many others. This means the dominant firms have some
degree of market power; that is, they can set prices at higher levels knowing
competitors are unlikely to undercut them and take market share from them.
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https://www.smh.com.au/business/the-economy/australia-needs-insurance-against-future-inflation-20220724-p5b414.html
Australia needs insurance against future inflation
Rachel Clun
Reporter
July 24, 2022
— 10.00pm
The humble
iceberg lettuce has had a lot of attention this year. Thanks to soaring prices,
icebergs became the poster child for rising inflation in this country.
But inflation
is more than just pricier salad ingredients. It affects just about everything
we consume, and the causes of inflation are a complicated mix of short and
long-term, local and global factors.
While the
government and the Reserve Bank can do little when it comes to current
inflation caused by Putin’s invasion of Ukraine, or the immediate effect on
fresh vegetable prices from flooding events in northern NSW, there are things
our institutions can do to better protect us from rising inflation in the
future.
So what is
driving inflation, and what can be done about it?
The Russian
war in Ukraine and China’s strict COVID lockdowns have caused havoc for global
supplies of essentials, including computer chips, wheat, oil and gas. We’ve
also had flooding, which has affected the supply and distribution of fresh
food, including that iceberg lettuce.
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https://www.afr.com/politics/federal/in-from-the-wilderness-labor-faces-big-economic-beasts-20220724-p5b41t
In from the wilderness, Labor faces big economic beasts
Anthony
Albanese won’t have the cushion of a benign economic climate, let alone a
budget surplus.
Jennifer Hewett
Columnist
Jul 24, 2022
– 6.33pm
After nine
long years, Labor returns to parliament this week to sit on the right side of
the Speaker and of political power.
But Anthony
Albanese won’t have the cushion of a benign economic climate, let alone a
budget surplus. Spiking
inflation, interest rates and energy prices are already breaking through
the comfort of the leather seating. Despite dreading the dark days of
opposition, some Liberals even try to console themselves this was a good
election to lose.
Pick
your crisis – sorry, “challenge”. These are coming on a much broader range
of fronts than the new government’s “special envoy for disaster recovery” can
tackle.
But it’s the
size and nature of the economic tests that are most constraining Labor’s choices,
as Jim Chalmers keeps emphasising ahead of the October budget. Real
wage increases? Not any time soon, after all.
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https://www.afr.com/policy/economy/gloomy-global-backdrop-for-chalmers-statement-20220725-p5b4fg
Gloomy global backdrop for Chalmers’ statement
The
rapidly changing outlook means the new government must confront the growth
agenda that both sides of politics have sought to ignore.
Jul 27, 2022
– 5.00am
The
International Monetary Fund’s gloomy downgrade of its forecasts for the
global economy rams home how quickly war, pandemic and inflation have
upended things in the four months.
The risks
that are already swirling in Ukraine, in COVID-hit China,
and in the struggles of central banks to master inflation could quite plausibly
mean a US recession by 2023 and among the world’s worst economic growth
performances since 1970, says the IMF.
It means
Treasurer Jim Chalmers will give his first big formal economic statement for
the new government tomorrow, a day after today’s likely confirmation of an
inflation rate headed to 7 per cent or more, amid the most sombre global
backdrop most Australians will be able to remember.
The rapidly
changing outlook means Dr Chalmers cannot dwell on the tough hand he was dealt
at the May federal election. Alongside the deteriorating indicators, the
government also has inherited an unprecedented jobs boom and the lowest
unemployment rate for nearly half a century. It’s a combination like no other
in modern times.
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https://www.afr.com/wealth/personal-finance/why-you-need-to-prepare-for-the-day-nobody-wants-to-talk-about-20220725-p5b4cr
Why you need to prepare for the day nobody wants to talk about
Most
people agree an end-of-life plan would help their families manage financial and
legal affairs if they died unexpectedly. Here’s how to get started.
Bina Brown Contributor
Jul 27, 2022
– 5.00am
Dying without
the support of friends or family shouldn’t happen – unless it’s by choice. But
older Australians are dying in aged care and hospitals under the comfort of
nurses and care workers rather than loved ones because they never got around to
organising their last days or hours differently.
In ward 11B
of a major hospital, a 96-year-old former federal court judge, with no living
family, is spending his final hours alone as the ravages of age, cancer and
more recently COVID-19 determine his fate. Those who know him would have
happily reminisced with him about his illustrious career and earlier life,
perhaps played him some music they knew he liked and generally been a presence
to ensure his comfort. He would have liked to know his biography that he was
rushing to complete would be published.
But hospital
rules won’t allow anyone who is not the enduring power of
attorney, enduring
or other guardian or named on an advanced
care plan to visit at this time, even if to enhance what may well be his
last days. Despite his intention to have at least one valid end-of-life
planning document in place before his health declined further, there wasn’t
one.
Residential
aged care has become far less brutal, possibly because it is generally a
requirement on entry that every resident has end-of-life documents on file.
It’s also a place you expect to die and to die well; facilities should be
well-used to it.
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https://www.smh.com.au/politics/federal/rates-have-to-climb-but-recession-risks-are-growing-imf-20220726-p5b4it.html
Rates have to climb but recession risks are growing: IMF
By Shane Wright
July 26, 2022
— 11.00pm
Key points
·
In its latest outlook, the IMF forecasts global
economic growth to slow sharply.
·
While the global economy is slowing, it believes
inflation is getting worse.
·
IMF economic counsellor Pierre-Olivier
Gourinchas says central banks should make the control of inflation their top
priority.
·
But he also warns there’s a risk central banks
could create a global recession next year.
Central banks
will have to keep lifting interest rates and governments will need to cut
spending if inflation is to be brought to heel, the International Monetary Fund
(IMF) says while conceding the risks of a global recession next year are
growing.
Ahead of
Wednesday’s June-quarter consumer price index release, which is expected to
show inflation in Australia climbing at a 32-year high of 6.2 per cent, the
fund warned the fight against inflation would probably worsen the “hardship”
facing many people.
Inflation
pressures around the globe have increased this year, in part due to the war in
Ukraine, increases in government spending, strong consumer demand and supply
chain issues tied to COVID-related problems in countries such as China.
In its latest
outlook, the fund forecasts global economic growth to slow sharply to 3.2 per
cent in 2022 and 2.9 per cent in 2023, from 6.1 per cent last year. In April,
the IMF was expecting growth of 3.6 per cent this year and next.
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https://www.smh.com.au/business/the-economy/inflation-is-not-a-big-problem-so-don-t-hit-it-with-a-sledgehammer-20220726-p5b4o7.html
Inflation is not a big problem, so don’t hit it with a sledgehammer
Ross Gittins
Economics
Editor
July 27, 2022
— 5.00am
It’s an old
expression, but a good one: out of the frying pan, into the fire. Less than two
years ago we were told that, after having escaped recession for almost 30
years, the pandemic and our efforts to stop the virus spreading had plunged us
into the deepest recession
in almost a century.
Only a few
months later we were told that, thanks to the massive sums that governments had
spent protecting the incomes of workers and businesses during the lockdowns,
the economy had
“bounced back” from the recession and was growing more strongly than it had
been before the pandemic arrived.
No sooner had
the rate of unemployment leapt to 7.5 per cent than
it began falling rapidly and is now, we learnt a fortnight ago, down to 3.5 per cent
– its lowest since 1974.
You little
beauty. At last, the economy’s going fine and we can get on with our lives
without a care.
But, no.
Suddenly, out of nowhere, a new and terrible problem has emerged. The rate of inflation
is soaring. It’s sure to have done more soaring when we see the latest figures
on Wednesday morning.
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https://www.theaustralian.com.au/science/tidal-wave-of-social-disruption-lies-ahead-warns-csiro/news-story/065af0fedaac385acd908ff380fb980b
Tidal wave of social disruption lies ahead, warns CSIRO
Jamie Walker
12:00AM July
27, 2022
Resource
scarcity, drug-resistant superbugs, disrupted international trade, an ageing
population and increasingly unstable climate feature in the “megatrends”
identified by the CSIRO to dictate how Australians will live and work over the
next two, uncertain decades.
In a
10-yearly update released on Wednesday, the research agency runs the ruler over
the sobering threats to the health, security and prosperity of a nation still
in the throes of pandemic – as well as the potential for science and technology
to meet the emerging challenges.
“Australia is
at a pivotal point,” said CSIRO chief executive Larry Marshall. “There is a
tidal wave of disruption on the way and it’s critical we take steps now to get
ahead of it.”
The outlook
to 2042 is deeply mixed. The devastation caused by Covid-19 underlined the
heightened risk of infectious diseases in line with global population growth,
increasing air travel, urbanisation, livestock handling and wildlife
harvesting, the Our Future World report warns.
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https://www.afr.com/markets/equity-markets/asx-to-slide-wall-street-lower-inflation-data-ahead-20220727-p5b4we?post=p53yjy
11.37AM
CPI rises 6.1c in Q2, below forecasts, $A slips
Cecile Lefort
Australia’s
consumer price index has risen 6.1 per cent in the June quarter, compared with
the previous year, below forecasts of 6.2 per cent and following a 5.1 per cent
increase in the first quarter.
Consumer
prices rose by 1.8 per cent on a quarterly basis against forecasts of a rise of
1.9 per cent, following a gain of 2.1 per cent in the March quarter.
Trimmed mean
CPI, the Reserve Bank of Australia’s preferred inflation measure, rose 4.9 per
cent compared with a year prior, again exceeding forecasts of a 4.7 per cent
increase. On a quarterly basis, the trimmed mean accelerated 1.5 per cent
against forecasts of 1.4 per cent.
The
Australian dollar fell to US69.37¢ from US69.52¢ and government bond yields
eased. The three-year yield slipped to 3.07 per cent from 3.13 per cent, and
the 10-year retreated to 3.34 per cent from 3.38 per cent.
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https://thenewdaily.com.au/finance/finance-news/2022/07/28/reserve-bank-review-alan-kohler/
6:00am, Jul
28, 2022 Updated: 8:27pm, Jul 27
Alan Kohler: The Reserve Bank is a renovator’s delight
Alan Kohler
The pointy
end of the work of the panel reviewing the Reserve Bank will be to decide
whether Governor Philip Lowe committed a sackable offence by saying, over and over,
that he expects the cash rate to stay at 0.1 per cent until 2024.
It won’t come
to a pink slip and cardboard box because Dr Lowe won’t seek an extension when
his term expires in September 2023, like his two predecessors did, but there
should be something that feels like a sacking: An external appointment to
replace him, and shake the place up.
The 2024
“promise” is complicated: Forward guidance has become an important monetary
policy tool, and the governor always made it conditional – that the RBA expected
rates wouldn’t change until then – but being so specific about the year was
unnecessary, and beyond the requirement of “forward guidance”.
What’s more,
the panel may come to see that as just one of many mistakes – monetary policy
over the past decade has been a shambles.
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https://www.news.com.au/lifestyle/health/australias-one-major-failure-exposed-in-damning-new-report/news-story/0b4cf3c4688c8d3ff648236f490ea380
Australia’s one major failure exposed in damning new report
Australia’s
one major failure has been revealed in a shocking new report that shines a
disappointing light on the whole country.
Duncan Murray
July 28, 2022
- 2:13AM
NCA NewsWire
Efforts to
improve the lives of Indigenous Australians are falling embarrassingly short, a
shocking new report has revealed.
The Productivity
Commission has released a damning assessment of the national “Closing the Gap”
targets.
Five key
areas are falling woefully short, just two years since revised targets were
set.
The areas
most in need of improvement are childhood development, out-of-home care, adult
imprisonment, deaths by suicide and maritime rights and interests.
“There are
some disappointing results in the latest figures – it’s clear that more work
needs to be done,” Indigenous Australians Minister Linda Burney said.
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https://www.theaustralian.com.au/business/wealth/middle-income-retirees-on-the-ropes-as-inflation-soars/news-story/30417e1cca1917e970ff6d0377df4c87
Middle income retirees on the ropes as inflation soars
James Kirby
July 28, 2022
Middle income
retirees are set to become the meat in the sandwich between the very wealthy
and those on inflation-protected government pensions.
Retirees with
little or no pension entitlements – which would number around 1.5 million
people – must find a way to beat 6 per cent inflation or face an effective
income cut.
Full-time
pensioners will face a struggle with higher prices, but the government pension
is at least adjusted to include inflation increases every six months.
What’s more,
the Labor government is now under pressure to accelerate the indexing
arrangements. National Seniors CEO Ian Henschke called this week for “pension
indexing” to be applied every three months.
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https://www.afr.com/policy/economy/inflation-to-peak-at-7-75pc-jobless-rate-to-edge-higher-20220728-p5b59i
Inflation to peak at 7.75pc, jobless rate to edge higher
Ronald Mizen Economics
correspondent
Updated Jul
28, 2022 – 12.33pm, first published at 12.30pm
Australia’s
48-year low unemployment rate will edge higher to 4 per cent as headline
inflation at close to 8 per cent sparks higher interest rates and slower
economic growth, Treasurer Jim Chalmers revealed on Thursday.
Dr Chalmers
warned of a “confronting” update on the country’s economic and fiscal position,
but his statement to the parliament painted a picture of a nation well-placed
to transform challenges into opportunities.
And despite
previously downplaying the prospect of improvements to the budget because of
record high commodity prices, the Treasurer now expects “a dramatically
better-than-expected outcome” in the 2021-22 books.
But the
optimism came with a warning about structural challenges in the nation’s
finances, which are expected to add $30 billion to payments in the next four
years, and the perils of unchecked inflation.
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https://www.afr.com/politics/apra-delivers-house-price-warning-to-albanese-20220727-p5b54x
APRA delivers house price warning to Albanese
Michael Read Reporter
Jul 27, 2022
– 6.03pm
Looming rate
rises could plunge some over-leveraged households into financial distress and
cause property prices to fall, the banking regulator told the Albanese
government in a frank assessment of the nation’s property market.
In the
Australian Prudential Regulation Authority’s incoming government brief, written
in May and released on Wednesday under freedom of information laws, the agency
responsible for monitoring the health of the banking system warned of a rapid
shift in the economic outlook.
“Inflationary
pressures and increases in interest rates will increase the cost of finance for
business and housing,” the briefing said.
“More
broadly, frequent natural disasters, increasing geopolitical tensions and cyber
threats, and the lingering impact of COVID-19 are creating volatility in
financial markets, increasing cost pressures for all industries and heightening
risks in the financial system.”
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https://www.afr.com/policy/economy/chalmers-sets-out-the-precarious-and-perilous-economic-path-20220728-p5b5ga
Chalmers sets out the ‘precarious and perilous’ economic path
The
treasurer is setting the scene for economic pain to come – blaming the legacy
of the Coalition government and promising that better times are ahead. But not
just yet.
Jennifer Hewett
Columnist
Jul 28, 2022
– 5.15pm
It’s telling
that Jim Chalmers’ Big Day Out as treasurer was not his first budget but a major
economic statement. His constant spruiking of the need to be “upfront with
the Australian people” is political code for trying to ensure their pain is
pinned on the legacy of the former government rather than the actions of the
present one.
“They know
their new government didn’t make this mess, but we take responsibility for
cleaning it up,” he told parliament.
This is a
standard political tactic for any new government, of course. But the economic
stakes get higher given the extraordinary level of debt – for governments and
households – and the huge new risks in a world that has spent the past decade
worrying more about deflation than inflation and must abruptly re-adjust.
According to
a sober but confident sounding Chalmers, this convergence of challenges is of a
kind that comes along once in a generation but also represents a
once-in-a-generation opportunity.
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https://www.afr.com/politics/federal/the-liberals-search-for-a-future-as-a-modern-party-20220727-p5b55e
The Liberals’ search for a future as a modern party
Monday’s
pre-parliamentary powwow laid bare the threats that, while not quite
existential, are arguably as bleak as any that the Liberal Party has grappled
with since its inception.
Phillip Coorey Political
editor
Jul 28, 2022
– 8.00pm
John Howard
knows better than most how difficult the first term of a new government can be.
After his
landslide victory against the Keating Labor government in 1996, Howard’s
Coalition, wracked by ministerial sackings and initial policy drift, came close
to becoming a oncer, but fell over the line in 1998 despite losing the popular
vote. It took another three elections before Labor won back power.
Howard’s
experience was far from unique. Every first term government since that of Gough
Whitlam has gone backwards at the next election.
The
Rudd-Gillard shambles was reduced to a minority government in its second term
while the Abbott-Turnbull circus was left with a threadbare majority after the
2016 election.
When the
remnants of the federal Liberal Party gathered in Parliament House on Monday
for a day-long
session of discussions and pep talks ahead of the start of the new
parliament, Howard pointed out the travails that all new governments face.
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https://www.afr.com/policy/foreign-affairs/why-turning-away-from-china-is-not-a-serious-option-20220721-p5b3l4
Why turning away from China is not a serious option
For many
in the national security community in Canberra, the American alliance has
become a way of life. But this is possibly the country’s greatest strategic
gamble.
James Curran Historian
Jul 29, 2022
– 5.00am
When in early
1976 Australia’s first ambassador to China, Stephen FitzGerald, wrote a series
of dispatches from Peking back to the new Fraser government in Canberra, he
faced up to harsh realities and difficult questions.
FitzGerald
wrote three opinion pieces covering the political, economic and cultural
dimensions of the relationship. He would later write that they reflected his
“distillation of where we’ve got to with China over the three years” since his
arrival, “and what I think we’ve got to do over the next twenty to twenty five″.
In his
analysis of China’s economic trajectory, FitzGerald foresaw that “by the year
2000 China would have a dominant role in the expansion of the Australian
economy”, and he predicted China would maintain an annual growth rate in the
vicinity of 10 per cent over the next quarter-century.
But in both
the title and content of his opening cable, he threw down the gauntlet. Was the
aim of a substantive political relationship with China just too hard?
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https://www.smh.com.au/politics/federal/imf-downgrades-growth-in-australia-and-across-asia-pacific-20220729-p5b5l3.html
IMF downgrades growth in Australia and across Asia-Pacific
By Shane Wright
July 29, 2022
— 9.01am
The
International Monetary Fund has downgraded its forecasts for the Australian
economy for this year and next, warning nations across the Asia-Pacific region
will have to lift interest rates to deal with growing inflation pressures.
In an update
to its world economic outlook, the fund on Friday said it expects the Australian
economy to expand by 3.8 per cent in 2022 before growth slows to 2.2 per cent
next year.
It’s a
substantial step down from its April outlook when the IMF believed Australia’s
economy would grow by 4.2 per cent this year and by another 2.5 per cent in
2023.
Director of
the IMF’s Asia and Pacific department, Krishna Srinivasan, said the events
playing out in Europe and elsewhere would weigh on the region’s economies
including Australia.
“The global
economic outlook has darkened, and growth across Asia and the Pacific is poised
to slow further amid the continuing impact of Russia’s invasion of Ukraine and
other shocks,” he said.
“Several
economies will need to raise rates rapidly as inflation is broadening to core
prices, which exclude the more volatile food and energy categories, to prevent
an upward spiral of inflation expectations and wages that would later require
larger hikes to address if left unchecked.”
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https://www.afr.com/politics/federal/labor-starts-to-cast-off-the-shibboleths-of-the-last-decade-20220728-p5b5dk
Labor starts to cast off the shibboleths of the last decade
The new
government started the week casting off some the shibboleths and modi operandi
that have dominated our politics for at least the past decade relating to
climate change and Indigenous recognition.
Laura Tingle Columnist
Jul 29, 2022
– 3.57pm
There’s
nothing quite like the reality of walking into the House of Representatives –
and heading to the other side of the chamber to the one you are used to – to
bring home that there is a new government, and a whole new agenda at play in
Canberra.
You can
almost see the set of the shoulders of defeated ministers trying to look …
well, casual? … as they head for the opposition benches, and the barely disguised
elation of the victors heading – at last – to the other side of the chamber.
There are the
formalities of being sworn in and the excitement of first
speeches given.
Most
significantly, there is the important task for the government of setting
expectations. Sure, everyone has been through the white heat of an election
campaign and heard ad nauseam what the government is promising to do
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https://www.afr.com/politics/federal/pm-reveals-simple-but-momentous-voice-referendum-20220729-p5b5mz
‘I believe the country is ready for this reform’: Albanese
Tom McIlroy and Samantha Hutchinson
Jul 29, 2022
– 10.30pm
Anthony
Albanese has vowed to finalise a referendum question on
Indigenous recognition in the Constitution as soon as possible, to seize
momentum and reduce the risk of a divisive “no” campaign.
Addressing
the Garma Festival in north-east Arnhem Land on Saturday, the prime minister
will call for broad political support for the Indigenous Voice to parliament,
urging holdout conservatives to drop their opposition to “a simple but
momentous change”.
Proposing a
simple question – “Do you support an alteration to the Constitution that
establishes an Aboriginal and Torres Strait Islander Voice?” – Mr Albanese said
further consultation and dialogue was needed ahead of a vote as soon as next
year.
Rejecting
claims the Uluru Statement from the Heart represents a third chamber of
parliament or a veto over government, he has proposed three sentences be added
to the Constitution.
-----
https://www.afr.com/policy/energy-and-climate/seven-waves-of-disruption-are-bearing-down-on-australia-20220726-p5b4mb
Seven waves of disruption are bearing down on Australia
Each wave
has the potential to smother us, or power us into the future. The question is
whether we are brave enough to catch them.
Larry
Marshall
Jul 27, 2022
– 5.00am
Today CSIRO
launches a once-in-a-decade report from the national science agency about the
seven global megatrends that will change the way we all live over the next two
decades.
The
megatrends are global disruptions driven by powerful geopolitical, economic,
social, technological and environmental forces, and the impact they will have
on Australia’s people, communities and industries will be significant.
Megatrends
give a name to the uncomfortable truths and massive opportunities that will
shape our future, but they also give us the power to invent a version of that
future where we prosper. The key is seeing them clearly enough to inform the
actions we take, and responding together to change our trajectory.
As a nation,
we haven’t always done this well. We’ve spent 50 years understanding climate
change, but we
haven’t invested in the large-scale, transformative change we now so
desperately need to limit its impact. This failure to act is an
uncomfortable and costly truth, but uncomfortable truths also show us where the
most powerful innovation can be found – if we act.
The megatrends
forecast a future world where a changing climate leads to multiple concurrent
climate hazards that overlap and compound. Where the global shift towards net
zero becomes a massive opportunity for Australia to transform our economy.
-----
https://www.smh.com.au/politics/federal/a-broken-voice-is-no-option-australia-s-moment-to-unite-or-fail-20220729-p5b5nz.html
A broken Voice is no option: Australia’s moment to unite or fail
Peter Hartcher
Political and
international editor
July 30, 2022
— 5.00am
It should be
a unifying act of nation-building. It risks being a divisive failure. With
minimal work to prepare public opinion, Anthony Albanese is launching his
campaign on Saturday to install an Indigenous Voice to parliament.
The essential
concept is straightforward. In 2017, the Uluru Statement from the Heart
presented the request from 250 Indigenous leaders: “In 1967 we were counted,”
referring to the referendum that included Aboriginal people in the census for
the first time. “In 2017, we seek to be heard.”
The prime
minister, in his speech on Saturday at the Garma Festival in Arnhem Land,
describes the Uluru Statement as “a hand outstretched, a moving show of faith
in Australian decency and Australian fairness from people who have been given
every reason to forsake their hope in both”.
Who would the
Voice speak to? And about what? In Albanese’s proposal, the Voice “may make
representations to parliament and the executive government on matters relating
to Aboriginal and Torres Strait Islander Peoples”. This is a minimalist
position, ceding no actual power, designed to attract maximum support.
Consulting
Indigenous Australians on the decisions that affect them “is simple courtesy,
it is common decency,” he posits. “I believe the country is ready for this
reform. I believe there is room in Australian hearts, for the Statement from
the Heart.”
-----
https://www.afr.com/politics/federal/parliament-a-house-divided-as-labor-gets-to-work-20220728-p5b58n
Exciting, but there’s a lot to fix’: Labor gets to work
The new
government is taking the reins, placing climate and the economy firmly on the
agenda in the first week of parliament. Meanwhile, the Coalition is adjusting
to life out of power.
Tom McIlroy P olitical
reporter
Jul 29, 2022
– 12.55pm
Aaron Violi
pulls up a chair in his sparsely furnished Parliament House office. The sun is
setting at the end of his first sitting week and the federal politician and
Victorian Liberal is in a reflective mood.
Having withstood
the electoral swing against Scott Morrison’s Coalition to win the seat of Casey
in outer suburban Melbourne, the father of two finds himself in the middle of
Canberra’s post-election flux. Labor has taken hold of
the reins of government and the opposition is quickly adjusting to life out of
power.
“I had a
moment of sitting in the chamber on the first day on Tuesday, and looking up to
see the school kids up above,” Violi tells AFR Weekend.
“I couldn’t
help but reflect on when I was up there in grade six,” he says. “I definitely
never predicted that I’d be on the other side of the glass some day.”
He watched
the pomp and ceremony as the 47th federal parliament was brought into session
this week, delivering his first speech the night before Anthony Albanese and
Peter Dutton faced off in their first question time battle.
-----
COVID-19 Information.
-----
https://www.afr.com/policy/health-and-education/hospitalisations-climb-but-no-more-mask-mandates-premiers-say-20220724-p5b43n
Hospitalisations climb but no more mask mandates, premiers say
Patrick Durkin BOSS
Deputy editor
Jul 24, 2022
– 5.18pm
The premiers
of the country’s two most populous states are holding the line on a “common
sense” response to the current COVID-19
wave that does not involve mask mandates, even though hospital admissions
are due to surge past the January peak of 5390.
Hospitalisations
due to COVID-19 reached 5362 on Sunday, with over 500 deaths
nationally over the past week alone.
Victorian
Premier Daniel Andrews, who previously imposed the world’s longest pandemic
lockdown, again resisted calls for mandatory mask wearing and ordering people
to work and learn from home, saying “common sense” was the most important
defence.
“The most
important thing people can do is use that common sense. I’m not telling people
what to do, I’m just asking,” Mr Andrews said on Sunday.
-----
https://www.smh.com.au/national/as-omicron-strains-spread-is-this-the-forever-plague-20220720-p5b2zy.html
As Omicron strains spread, is this the forever plague?
By Liam Mannix
July 24, 2022
— 8.27am
Almost a year
ago today, in the middle of a freezing Melbourne winter, a young woman fell
sick. The bug soon spread to her housemates. The three, who had already had
COVID-19 a year before, probably thought they were sharing a nasty cold.
The young
woman diligently lined up for a PCR test – this was in July 2021, when we still
did that – and, to her surprise, discovered she had COVID. Again. Some 368 days
after her first diagnosis.
She and her
housemates were Australia’s first documented cases of reinfection. Natural
antibody levels generated in response to their first infections in 2020 had
waned over 12 months to such a point they were vulnerable to the newly emerged
Delta variant. It was such a novel thing at the time that their case
made it into the scientific literature.
A year later,
what was once novel is about to become de rigueur. The arrival of Omicron and
its subvariants has seen vaccine effectiveness wane from the giddy mid-90s
percentages of the first doses to around 40
per cent by some estimates. With that sharp drop will come increasing
numbers of reinfections.
-----
Climate Change.
-----
https://www.theaustralian.com.au/world/california-fire-rages-as-us-bakes-in-recordsetting-heat-wave/news-story/fdb9284cdec39f3c80df51f4c5c8bb39
California fire rages as US bakes in record-setting heat wave
AFP
6:59AM July
25, 2022
A Californian
bushfire ripped through thousands of hectares on Saturday after being sparked a
day earlier, as millions of Americans sweltered through scorching heat with
already record-setting temperatures due to climb.
The heatwave
encompassing multiple regions has increased the risk of blazes, such as the
major Oak Fire, which broke out on Friday in California near Yosemite National
Park, where giant sequoias have been threatened by flames in recent days.
The fire –
described as “explosive” by officials – grew from about 240ha to about 4800ha
within 24 hours. Concentrated in Mariposa County, it has already destroyed 10
properties and damaged five others, with thousands more threatened. More than
6000 people had been evacuated, said Hector Vasquez of the California
Department of Forestry and Fire Protection, as the fire remained uncontained on
Saturday night (Sunday AEST).
The
department said the fire’s activity was “extreme”.
Californian
Governor Gavin Newsom declared a state of emergency in Mariposa County on
Saturday, citing “conditions of extreme peril to the safety of persons and
property”.
-----
https://www.theaustralian.com.au/business/mining-energy/energy-prices-smash-records-as-coal-generation-slumps/news-story/78a1314f42d02974e19c78c8f46b43b2
Energy prices smash records as coal generation slumps
Perry Williams
12:00AM July
29, 2022
The scale of
Australia’s energy crisis has been laid bare with wholesale power and gas
prices surging to new highs after coal generation plummeted to its lowest level
of supply on record.
Wholesale
electricity prices more than tripled in the second quarter of 2022 to average
$264 per megawatt hour compared with $87MWh in the first three months of this
year, the Australian Energy Market Operator said, with Queensland and NSW
posting the highest prices.
Gas prices
across the east coast markets also soared to more than $28 per gigajoule on
average from less than $10/GJ in the first quarter, and peaked at more than
$41/GJ on June 30, exceeding international LNG netback prices in both May and
June as Russia’s restrictions on supply roiled global markets.
The collapse
of black coal-fired generation contributed to the price hit with a string of
plant breakdowns and supply shortages resulting in the fossil fuel recording
its lowest second quarter output since the national electricity market began in
1998. Coal, which normally accounts for 60 per cent of supply, fell to 43 per
cent in the three months to June 30.
-----
Royal Commissions And The Like.
-----
No entries in
this category.
-----
National Budget Issues.
-----
https://www.smh.com.au/politics/federal/consumer-spending-starts-to-dry-up-as-interest-rates-rise-20220722-p5b3v2.html
Consumer spending starts to dry up as interest rates rise
By Rachel Clun
July 25, 2022
— 4.56am
Fewer movie
tickets or nights out are in the budgets of Australian households as higher
interest rates start taking bigger chunks out of their pay cheques and
inflation adds to the cost of essential goods including groceries and petrol.
Data from
some of Australia’s largest financial institutions shows spending on
discretionary items including household products, entertainment and dining out
has begun to fall as both inflation and interest rates continue to rise.
On Wednesday,
Australian Bureau of Statistics data will show just how high inflation has
become, and Treasurer Jim Chalmers will on Thursday address the ongoing cost of
living pressures being faced by households around the country when he delivers
his economic statement to parliament.
Commonwealth
Bank senior economist Belinda Allen said people had spent up big after the
pandemic’s Delta lockdowns of 2021 and through the Omicron outbreak earlier
this year, but that looked to have peaked around mid-May, just after the
Reserve Bank started lifting interest rates for the first time in more than a
decade.
-----
https://www.afr.com/companies/financial-services/wayne-byres-to-step-down-as-apra-chairman-20220726-p5b4ls
Wayne Byres to step down as APRA chairman
Ayesha de Kretser
Senior Reporter
Jul 26, 2022
– 10.04am
Australian
Prudential Regulatory Authority chairman Wayne Byres has advised Treasurer Jim
Chalmers that he will step down, with a search now underway for his
replacement.
Mr Byres will
step down on October 30 after a more than eight-year stint, during which he has
led the banking, insurance and superannuation systems through the global
pandemic, as well as major international changes.
Dr Chalmers
thanked Mr Byres for his “dedicated service” to Australia and “significant
contribution to the Australian financial system and the global framework for
prudential regulation.”
“His
leadership and expertise has positioned the Commonwealth to respond well to
some of the greatest challenges in Australia’s history - most recently in
ensuring the stability of the financial system during the COVID-19 pandemic,”
Dr Chalmers said.
APRA deputy
chairman John Lonsdale, a former Treasury executive is well-known to Dr Chalmers
and is considered the frontrunner to replace Mr Byres.
-----
https://www.afr.com/policy/economy/headline-inflation-jumps-6-1pc-20220727-p5b4xjhttps://www.afr.com/policy/economy/headline-inflation-jumps-6-1pc-20220727-p5b4xj
Headline inflation jumps to 6.1pc
Ronald Mizen Economics
correspondent
Jul 27, 2022
– 11.43am
Australia’s
annual inflation rate jumped to 6.1 per cent, its highest level in more than
two decades, in a surge fuelled by record petrol prices and increased
home-building costs.
Wednesday’s
result came in slightly below the market consensus of 6.3 per cent through the
year. The rise in the consumer price index in the three months ended June 30
was the highest since June 2001 and the introduction of the GST, according to
the Australian Bureau of Statistics.
Underlying
inflation, the Reserve Bank of Australia’s preferred measure, rose 1.5 per cent
in April-June, and gained 4.9 per cent over the year, the highest rate since
June 1991.
Non-discretionary
inflation, which includes expenses such as food, petrol, housing and health
costs, increased a significant 7.8 per cent in the year.
New dwelling
prices rose 20.3 per cent as government support was withdrawn, while petrol
prices soared 32 per cent.
-----
https://www.smh.com.au/politics/federal/economic-bad-cop-time-coming-to-an-end-for-chalmers-20220728-p5b5ez.html
Economic ‘bad cop’ time coming to an end for Chalmers
By Shane Wright
July 28, 2022
— 6.41pm
The
softening-up complete, the onus is now on Treasurer Jim Chalmers to start
delivering.
Chalmers’ economic
update, outlining just how much has changed since his predecessor, Josh
Frydenberg, delivered
a rose-hued budget back in March, contained some harsh truths.
Frydenberg’s
speech could be from another time. The official cash rate was 0.1 per cent,
wages were expected to outpace inflation and a decent-looking iceberg lettuce
didn’t require a small personal loan and a battle in the local Coles shopping
aisles.
Chalmers’
update contained sizeable reductions in expected GDP, a ramp-up in inflation to
a 32-year high and the revelation that wages won’t be doing better than
inflation until at least 2024.
Extrapolating
the wage forecasts, most Australians won’t see their real pay back to its
pre-COVID level until the second half of this decade.
-----
https://www.smh.com.au/business/the-economy/this-could-be-the-global-recession-we-have-to-have-20220728-p5b58d.html
Perfect storm: This could be the recession we have to have
Stephen Bartholomeusz
Senior
business columnist
July 28, 2022
— 11.59am
Are central
banks fighting the last war and could and would they do anything different even
if they are?
The US
Federal Reserve Board raised US interest
rates by 75 basis points on Wednesday, its fourth rate rise this year in
the most aggressive cycle of a tightening of US monetary policy in four
decades.
Next Tuesday
the Reserve Bank is also expected to raise its cash rate by another 50 basis
points, its fourth increase this year.
Other central
banks, from Canada and New Zealand to the European Central Bank, are following
similar paths in the face of the worst outbreaks of inflation since the 1970s.
The US inflation rate is 9.1 per cent, the eurozone’s 8.6 per cent and
Australia’s 6.1 per cent (and on its way towards 7 per cent).
That’s
despite clear slowing of global and domestic economic growth in all the major
economies.
-----
https://www.theaustralian.com.au/business/economics/economic-gloom-makes-good-politics/news-story/58bc170e5731370563359900fd09e730
Message from offshore: an economic storm is coming
Eric Johnston
July 29, 2022
As US growth
slides, Australia’s most internationally focused businesses are more advanced
in preparations for the storm that is coming in a world where interest rates
are still rising and inflation is some way from peaking.
US GDP contracted 0.9 per cent overnight, adding fuel to fears of
a recession that could spread around the world.
And the
outward-looking players from Macquarie Group and Rio Tinto are leading the pack
ahead of more domestic-focused companies in conditioning investors for lower
returns and potentially some modest hits. As Treasurer Jim Chalmers also on
Thursday painted a picture of the world economy treading a “precarious and
perilous” path, these businesses are rethinking their outlook.
Macquarie’s
Shemara Wikramanayake noted the investment bank had a robust June quarter, but
conditions started softening in the final weeks. This slowing momentum has
continued into July and coincided with super-sized central bank rate hikes and
a slowing northern hemisphere.
-----
https://www.afr.com/policy/economy/tax-landowners-to-repay-covid-19-debt-anu-study-says-20220729-p5b5kg
Tax landowners to repay COVID-19 debt, ANU study says
John Kehoe Economics editor
Jul 29, 2022
– 6.00pm
A federal
land tax of 0.1 per cent imposed annually on mainly wealthier and older
property owners would be the best way to repay about $500
billion of government debt accumulated during the COVID-19 pandemic, a new
study says.
Other viable
options are to reduce concessions for capital gains tax (CGT), introduce an
inheritance tax, or a tighter means test for the age pension by assessing the
value of a retiree’s principal place of residence, says an Australian National
University research paper released to The Australian Financial Review.
The ANU paper
sets an objective of over 33 years reducing federal government debt back to
sustainable levels of about 30 per cent of GDP, after it blew out to more than
40 per cent, or $1 trillion, in the pandemic.
The least
economically damaging way to raise more revenue to reduce debt would be via a
flat federal tax on the unimproved value of land, said Robert Breunig, chairman
of tax policy at the ANU’s Tax and Transfer Policy Institute.
-----
Health Issues.
-----
https://www.afr.com/world/asia/in-indonesia-a-foot-and-mouth-battle-of-epic-proportions-20220724-p5b438
In Indonesia, a foot and mouth battle of epic proportions
Emma Connors South-East
Asia correspondent
Jul 24, 2022
– 3.22pm
Singapore/Jakarta
| Inadequate compensation, vaccine hesitancy and the difficulty involved in
reaching millions of farmers are hampering Indonesia’s efforts to stop the spread of foot and
mouth disease (FMD).
Indonesia’s
central government is rushing to slaughter animals that have the disease or have
been in contact with it, and to vaccinate others.
It is
offering up to 10 million Indonesian rupiah ($963) compensation for cows that
have to be killed and 1.5 million for goats, sheep and pigs. But this is less
than half the market value and represents what will be a loss of livelihood and
savings for many farmers.
In Bogor,
West Java, dairy farmer and breeder Ferry Kusmawan is a worried man. Foot and
mouth disease has cut his herd by one third and he is unsure about the value of
vaccination.
-----
https://www.fnarena.com/index.php/2022/07/27/health-is-wealth/
Health Is Wealth
Australia
| 2:13 PM 27 July, 2022
In times of
great uncertainty the Australian healthcare sector can offer investors plenty
of choice, with varying degrees of risk and opportunities.
-Australia’s
healthcare sector has seen record government investment
-Global
pandemic has accelerated changes for healthcare services -ASX-listed healthcare
sector is dominated by international operators.
-Next
generation of success stories are announcing themselves
By Nikhil
Gangaram
With the
nasty words of recession, volatility and inflation dominating global headlines,
it would be all too easy for investors to miss the fact that a healthcare
revolution is bubbling along right beneath our eyes.
In addition
to being the nation’s largest employer, the Australian healthcare sector has
served as a reliable crux for money managers for an extended period of time.
Companies in
the sector benefit from a unique combination of attributes well suited to the
current environment.
Healthcare
companies in general are not overly impacted by slowing economic activity or
higher interest rates.
Additionally,
post the general de-rating of higher-multiple Quality companies since the start
of 2022, healthcare stocks are now trading at lower valuations, while boasting
strong balance sheets accompanied with long-term pipelines of well-funded
research and development.
-----
https://www.theaustralian.com.au/breaking-news/chief-medical-officer-paul-kellys-big-monkeypox-declaration/news-story/6486ba4a31f20f9bd2c60a8b4030484f
Chief medical officer Paul Kelly’s big Monkeypox declaration
Catie McLeod
NCA NewsWire
July 28, 2022
Australia’s
top doctor has declared that Monkeypox is now a communicable disease incident
of national significance.
Chief medical
officer Paul Kelly made the major announcement on Thursday morning.
In Australia,
there have been 44 cases – the majority of which have been within returned
international travellers.
Professor
Kelly’s announcement means the federal government can enact an emergency
response to the outbreak.
-----
https://www.health.gov.au/ministers/the-hon-mark-butler-mp/media/strengthening-medicare-taskforce-appointed-0
Strengthening Medicare Taskforce appointed
The
Australian Government is making it easier for Australians to see a doctor by
strengthening Medicare, the critical foundation of our health system.
Date
published: 28 July 2022
Media
type: Media release
Audience: General
public
The Albanese
Government is making it easier for Australians to see a doctor by strengthening
Medicare, the critical foundation of our health system.
After a
decade of Liberal cuts and attacks on Medicare, primary health care is in crisis
in Australia.
The Albanese
Government is delivering on a key election commitment, the Strengthening
Medicare Taskforce.
The
Strengthening Medicare Taskforce is bringing together Australia’s health policy
leaders. The diverse membership has been drawn from across the health
professions, and includes consumer, rural and regional and Aboriginal and
Torres Strait Islander representatives.
-----
https://www.smh.com.au/national/wither-the-ama-is-the-powerful-doctors-union-losing-its-clout-20220727-p5b51w.html
Wither the AMA: Is the powerful doctors’ union losing its clout?
By Dana Daniel and Michael Koziol
July 29, 2022
— 8.36am
As president
of the Australian Medical Association for much of the pandemic, Dr Omar
Khorshid enjoyed a higher profile than many of his predecessors. A strong
advocate for greater healthcare funding and strict measures to constrain
COVID-19, he was a prominent and arguably powerful voice shaping Australia’s
response to the virus.
As Khorshid
vacates the chair this weekend after two years in the top job, he does so
against a long-term backdrop of declining membership, infighting and
consternation over the AMA’s purpose, policies and relevance after the
pandemic.
28,000,
representing less than 30 per cent of the country’s 104,000 doctors, compared
with 50 per cent in 1987 and 95 per cent in the 1960s.
Meanwhile,
the Royal Australian College of General Practitioners has 45,840 members, the
vast majority of GPs. (A small percentage of rural GPs are members of the Rural
Doctors Association only.)
“Some people
use [those numbers] to attack us and say we don’t represent many doctors,” says
Khorshid. “We don’t accept that at all. We represent all doctors.”
-----
https://www.smh.com.au/healthcare/health-minister-to-focus-on-terrifying-trend-of-gp-shortfall-20220730-p5b5vc.html
Health Minister to focus on ‘terrifying trend’ of GP shortfall
By Caitlin Fitzsimmons
July 30, 2022
— 5.02pm
The new
federal health minister has identified the looming shortage of general
practitioners as the most pressing medium to long-term challenge in the health
system.
Health
Minister Mark Butler, speaking at the Australian Medical Association’s national
conference on Saturday, said the low number of medical graduates applying to
specialise in general practice was “the most terrifying statistic” in health
care.
“It’s hard
enough to get a GP right now and we know that the current generation of older
GPs are pretty exhausted, particularly over the last 2½ years, and we just do
not have the pipeline coming through,” Butler said. “It is probably the most
terrifying trend that I see in primary care.”
Royal
Australian College of General Practitioners president Dr Karen Price told The
Sun-Herald and The Sunday Age that 16 per cent of medical graduates had applied
to specialise in general practice in 2022, up slightly from the 15.2 per cent
reported last year but “not enough”.
The Herald and
The Age have previously reported on the falling enrolments in
general practice training and the looming shortfall of nearly 10,000
doctors by 2030. Doctor shortages are most acute in rural and regional
areas.
-----
International Issues.
-----
https://www.afr.com/companies/media-and-marketing/murdoch-s-us-newspapers-turn-against-trump-20220724-p5b43s
Murdoch’s US newspapers turn against Trump
Mark Mulligan World
editor
Jul 24, 2022
– 2.40pm
Fox, Donald
Trump’s favourite news network, may have dismissed as a partisan witch hunt the
Congressional hearings into the January 6 Capitol riots, but two other outlets
from Rupert Murdoch’s media empire are taking it seriously.
Both the
tabloid New York Post and business masthead the Wall Street Journal at the
weekend condemned the former president’s behaviour on the day in question, with
the former saying Mr Trump was “unworthy to be this country’s chief executive
again”.
According to
CNN, the editorial amounts to “the tabloid’s strongest critique of Mr Trump
yet”.
It was
published online on Friday evening (Saturday AEST), around the same time the
Wall Street Journal also published an editorial harshly criticising the former
president.
The Journal
called him “the president who stood still on January 6” and praised
vice-president Mike Pence, who Mr Trump famously suggested in a tweet deserved
the full wrath of the Capitol rioters.
-----
https://www.afr.com/policy/economy/i-was-wrong-about-inflation-20220724-p5b42z
I was wrong about inflation
I was
relaxed about warnings that Joe Biden’s $US1.9 trillion stimulus package would
be dangerously inflationary. As it turned out, of course, that was a bad call.
Paul
Krugman
Jul 24, 2022
– 11.53am
In early
2021, there was an intense debate among economists about the likely
consequences of the American Rescue Plan, the $US1.9 trillion package enacted
by a new Democratic president and a (barely) Democratic Congress.
Some warned
that the package would be dangerously inflationary; others were fairly relaxed.
I was Team Relaxed. As it turned out, of course, that was a very
bad call.
But what,
exactly, did I get wrong? Both the initial debate and the way things have
played out were more complicated than I suspect most people realise.
You see, this
wasn’t a debate between opposing economic ideologies. Just about all the
prominent players, from Larry Summers to Dean Baker, were Keynesian economists,
with more or less centre-left political leanings. And we all had similar views,
at least in a qualitative sense, about how economic policy works.
-----
https://www.theaustralian.com.au/business/here-comes-the-phony-recession-but-the-real-one-is-close-behind/news-story/169130641c7b8874191245a4e4f136d3
Here comes the phony recession, but the real one is close behind
ADAM CREIGHTON
July 25, 2022
The US
economy will probably be in “recession” by the end of this week, according to
the conventional rule of thumb – two consecutive negative three month periods.
If the
world’s biggest economy, as measured by GDP, shrinks 1.6 per cent over the
three months to the end of June, which is the current best forecast from the
Federal Reserve Bank of Atlanta, that definition will be met, after a 1.6 per
cent fall in the first quarter.
But it would
be a phony recession, another sign that GDP, an arcane statistic designed in
the 1930s, had decoupled from economic reality.
“You don’t
see any of the signs. Now, a recession is a broadbased contraction that affects
many sectors of the economy. We just don’t have that,” said Janet Yellen, US
Treasury secretary, on Monday (Australian time), speaking on US television.
For a start,
the US jobless rate as in Australia remains at half century lows, 3.6 per cent
in June, and retail spending, the engine of modern economies advanced a healthy
1 per cent in June, up 8.4 per cent from a year earlier. Yes, blue chip US
stocks have dropped about 17 per cent this year, but measured against earnings,
share prices are still expensive.
-----
https://www.afr.com/world/europe/the-vibes-theory-of-uk-politics-20220725-p5b4d8
Why the UK conservative leadership race is all about ‘vibes’
Policies
matter, of course. But so do tribal signifiers. That’s why Rishi Sunak has to
try much harder to seem the same level of rightwing as rival Liz Truss.
Janan Ganesh Contributor
Jul 25, 2022
– 2.01pm
Former UK
Treasurer Rishi Sunak, who wanted to leave the European Union before that cause
was popular, is trailing with the Conservative grassroots as the field of
candidates for the Conservative Party leadership narrows
to two. Rival Liz Truss, who campaigned with some vigour to remain in the
EU, polls better among them.
This oddity
takes explaining. One theory cites his not being white. Another is his
reluctance to promise tax cuts. Yet a third is his mutiny at the
outgoing leader. But all three things are true of Kemi Badenoch, a
now-eliminated hopeful in the leadership race, and she is liked on the right.
Allow me some
speculation. Sunak’s views are right-wing but what you might call his effect is
liberal. Truss, an actual Liberal Democrat for a while, is
the opposite. He presents as: know-it-all, at ease abroad, richer than God.
She presents as no-nonsense and what the British call “regional”.
So, on the
basis of accent and a few biographic facts, one Oxonian of public-sector
middle-class stock appeals to the metro-snobs and the other to the
bumpkin-cranks: two tribes into which our unsubtle age triages so many of us.
Policies matter, of course. But so do tribal signifiers. He has to try much
harder to seem the same level of right-wing as Truss.
-----
https://www.afr.com/policy/economy/looks-like-milton-friedman-was-right-about-global-inflation-20220724-p5b459
Looks like Milton Friedman was right about global inflation
We are in
uncharted waters and care needs to be taken to avoid further policy mistakes in
Western central bank policies. Friedman’s main insights with a global tweak
might be helpful in that rethink.
Adrian
Blundell-Wignall Economist
Jul 25, 2022
– 4.48pm
Milton Friedman
always asserted that inflation was everywhere and forever a monetary
phenomenon. Central banks and post-Keynesian economists were very happy to
ditch this thinking at the first sign of instability in the relationship.
Monetarism was “cancelled”. Inflation targeting based on forecasting became the
dominant way of thinking about inflation and the running of policy.
And look where we have ended up.
A shopper in
Berlin as inflation pushed the European Central Bank to its first rate rises in
a decade. AP
For many
years, central banks wrongly took credit for observed low inflation; that their
policy targets gave rise to “credibility” and tamed expectations, so that
ultra-easy policy after the global financial crisis wouldn’t cause inflation.
It was never
thus.
Globalisation
and the China supply shock were ramping up at the same time. Import
competition, the Amazon/Walmart effect and job fears as businesses restructured
to take advantage of structural change resulted in less secure jobs and low
wage outcomes for ordinary workers.
-----
https://www.smh.com.au/world/europe/russia-seeks-regime-change-in-ukraine-says-kremlin-s-top-diplomat-20220726-p5b4i5.html
Russia seeks regime change in Ukraine, says Kremlin’s top diplomat
By Susie
Blann
July 26, 2022
— 6.28am
Kyiv:
Russia’s top diplomat said Moscow’s overarching goal in Ukraine is to free its
people from its “unacceptable
regime,” expressing the Kremlin’s war aims in some of the bluntest terms
yet as its forces pummel the country with artillery barrages and airstrikes.
The remark
from Russian Foreign Minister Sergei Lavrov comes amid Ukraine’s efforts to
resume grain exports from its Black Sea ports —something that would help ease
global food shortages — under a new deal tested by a Russian strike on Odesa
over the weekend.
“We are
determined to help the people of eastern Ukraine to liberate themselves from
the burden of this absolutely unacceptable regime,” Lavrov said at an Arab
League summit in Cairo late Sunday, referring to Ukrainian President Volodymr
Zelensky’s government.
Apparently
suggesting that Moscow’s war aims extend beyond Ukraine’s industrial Donbas
region in the east, Lavrov said: “We will certainly help the Ukrainian people
to get rid of the regime, which is absolutely anti-people and anti-historical.”
-----
https://www.smh.com.au/world/north-america/trump-2-0-poses-a-grave-risk-to-the-us-and-australia-20220725-p5b485.html
Trump 2.0 poses a grave risk to the US, and Australia
Peter Hartcher
Political and
international editor
July 26, 2022
— 5.00am
Absorbing as
they may be, the US
Congressional hearings into the January 6 insurrection have told us a great
deal more about something that we already knew: that Donald Trump tried to
overthrow democracy in the US by fomenting a violent attack on the Congress.
While most of
us have been preoccupied with his past, he’s busy working on his future. And on
coming back with a vengeance.
In spite of
everything, he remains the frontrunner for the Republican nomination to the
presidency; the overwhelming majority of Republicans in Congress either support
him or fear him; and he is the most formidable fundraiser in American politics.
And his
public approval rating of minus 11 per cent is no worse than Joe Biden’s minus
12 per cent, according to the rolling poll average maintained by realclearpolitics.com.
-----
https://www.afr.com/world/north-america/walmart-issues-profit-warning-as-soaring-inflation-hits-customers-20220726-p5b4is
Walmart issues profit warning as soaring inflation hits customers
Andrew
Edgecliffe-Johnson
Jul 26, 2022
– 8.15am
New York |
Walmart has issued its second profit warning in 10 weeks, signalling a further
deterioration in the US retail environment as inflation
bites the price-sensitive consumers on which the world’s largest retailer
depends.
“The
increasing levels of food and fuel inflation are affecting how customers
spend,” said Doug McMillon, Walmart’s chief executive. He said the company had
made “good progress” clearing inventory in “hardline” or consumer durable
categories — such as appliances and furniture — but was having to increase
markdowns on clothing in its US stores.
In a
statement made after the close of New York trading — just three weeks before
the company is due to report earnings for the three months to June — Walmart
warned its operating income would fall by 13-14 per cent in the quarter and by
11-13 per cent over the full year as it discounts merchandise to clear excess
inventory.
In May, at
its
last earnings announcement, it had flagged that operating income would be
“flat to up slightly” in the second quarter and down by only 1 per cent for the
full year. It had given similar guidance for earnings per share, which it now
expects to fall by 8-9 per cent in the second quarter and by 11-13 per cent in
the full year on an adjusted basis.
-----
https://www.smh.com.au/business/banking-and-finance/china-s-property-cancer-is-spreading-20220726-p5b4kw.html
Alarm bells are ringing as China’s property cancer spreads
Stephen Bartholomeusz
Senior
business columnist
July 26, 2022
— 12.00pm
The
mortgagors’ revolt that has swept through China in recent weeks shouldn’t by
itself trigger a banking crisis but it is another symptom of the cancer that is
eroding one of the pillars of China’s economy.
What started
as a boycott of loan repayments by a handful of homeowners frustrated at having
paid for apartments that haven’t been completed has spread rapidly over the
past week to the buyers of more than 300 property developments across China.
China’s
authorities are clearly concerned that the boycott movement will continue to
expand. They’ve censored references to the boycotts online, floated the
possibility of awarding grace periods for borrowers with uncompleted
properties, told banks to provide more funding for developers and are
themselves setting up a ¥300 billion ($64 billion) fund to help the developers
complete unfinished projects.
The reason
for the angst and anger of the homeowners is obvious. The property industry in
China operates on a pre-sales model – the buyers pay for their properties,
putting down a deposit and borrowing the rest, before construction starts.
-----
https://www.afr.com/policy/economy/imf-downgrades-global-growth-outlook-20220726-p5b4sg
IMF downgrades global growth outlook
Ronald Mizen Economics
correspondent
Jul 26, 2022
– 11.00pm
The
International Monetary Fund has significantly downgraded its outlook for the
global economy for the second time in just three months as inflation and
rapidly rising interest rates stymie activity.
The IMF
forecasts growth of just 3.2 per cent this year and 2.9 per cent next year, 0.4
and 0.7 percentage points lower from April. This largely reflected slowdowns in
the United States, China and in the Eurozone.
Rising food
and energy prices also prompted an upward revision to the global inflation
outlook, with price growth expected to reach 6.6 per cent in advanced
economies, up almost a full percentage point.
Treasurer Jim
Chalmers used the IMF World Economic Outlook update to warn that the
international economy was entering a difficult phase.
-----
https://www.smh.com.au/national/russian-officers-30-years-ago-presaged-rise-of-putin-ukraine-conflict-20220725-p5b4hl.html
Russian officers 30 years ago presaged rise of Putin, Ukraine conflict
July 27, 2022 — 12.15am
In
May 1992 I went searching for answers to a question that had been nagging at me
ever since I’d arrived in Moscow as the ABC TV Russia correspondent.
I’d
landed, spellbound, in the wintry Russian capital in early January that year,
just days after the formal dissolution of the Soviet Union in the dying days of
December.
By
May the winds of change I was witnessing had become a hurricane. A re-energised
Russian president, Boris Yeltsin, was forging ahead with a program of economic
shock therapy designed to forcibly break the entrenched habits of a people
heavily conditioned by decades of communism.
Among
those with an entrepreneurial disposition (including elements of the criminal
class) a super-heated form of primitive capitalism was already taking hold.
Many other Russians just felt left behind and overwhelmed; there were the first
signs of an encroaching impoverishment of a sizeable portion of the
professional class.
The
dismemberment of the USSR, once one of the most powerful states in the world,
was proceeding apace.
-----
https://www.theaustralian.com.au/news/latest-news/russia-doing-better-than-expected-despite-sanctions-imf/news-story/6db9de24822b27c7cece3462967e8eca
Russia doing better than expected despite sanctions: IMF
AFP
July 27, 2022
Despite
damaging Western sanctions imposed on Moscow in the wake of the invasion of
Ukraine, Russia's economy appears to be weathering the storm better than
expected as it benefits from high energy prices, the IMF said Tuesday.
The sanctions
were meant to sever Russia from the global financial system and choke off funds
available to Moscow to finance the war.
"That's
still a fairly sizable recession in Russia in 2022," IMF chief economist
Pierre-Olivier Gourinchas told AFP in an interview.
Meanwhile,
rising energy prices are "providing an enormous amount of revenues to the
Russian economy."
While major
economies including the United States and China are slowing, the report said,
"Russia's economy is estimated to have contracted during the second
quarter by less than previously projected, with crude oil and non-energy
exports holding up better than expected."
-----
https://www.afr.com/policy/economy/six-inflation-mistakes-that-central-banks-make-20220726-p5b4tl
Six inflation mistakes that central banks make
The
world’s central bankers have to act tough now because they succumbed to
complacency, over-confidence in models, distraction and even politicisation.
Bryce
Wilkinson
Jul 27, 2022
– 12.19pm
Since 2019,
central banks have presided over perhaps the largest monetary stimulus the
world has ever seen. Despite this, the surge in inflation
surprised them.
They did not
forecast current
inflation. When it started emerging, they said it was temporary.
Now they have
their backs to the wall. To reduce inflation, they must raise interest rates, a
lot. But doing so will increase unemployment, losses on asset prices and bankruptcies.
What will
they do? What should they do?
-----
https://www.afr.com/companies/financial-services/from-a-synchronised-boom-to-a-synchronised-bust-20220727-p5b50m
From a synchronised boom to a synchronised bust?
Central
banks are now moving in lockstep to hike rates to tame inflation, but their
synchronised tightening risks plunging the global economy into a deep recession.
Karen Maley Columnist
Jul 27, 2022
– 4.05pm
Central
bankers face a dilemma.
There’s no
doubt they’re under enormous pressure to lift interest rates aggressively to tackle rampant inflation
and to convince businesses and households that these rapid price rises won’t
continue.
As a result,
we’re witnessing a synchronised rate-raising cycle by central banks in
developed countries, which are pushing official interest rates up aggressively
to clamp down on excessively strong demand, and reduce the upward pressure on
prices.
The US
Federal Reserve, which is wrestling with an inflation rate that soared to 9.1
per cent in the year to June, a clip not seen in more than four decades, is now
poised to announce a further 75 basis point rate rise.
-----
https://www.afr.com/world/north-america/fed-doubles-down-on-inflation-and-raises-rates-by-0-75-per-cent-20220728-p5b56t
Fed raises rates 0.75pc, Powell says US not in recession
Mark Mulligan World
editor
Updated Jul
28, 2022 – 7.09am, first published at 4.11am
A strong
labour market suggests the United States is probably not in recession, says
Federal Reserve chairman Jerome Powell, although weakening activity in some
sectors point to a much-needed cooling of jobs growth.
Speaking
after the Fed lifted interest rates by 0.75 percentage point for the second
month in a row, Mr Powell said he doubted that the world’s biggest economy had
contracted in the three months to the end of June, after shrinking slightly in
the first quarter.
President Joe
Biden and his administration have recently been playing down fears that the
economy had entered technical recession - two negative quarters in a row - and
Mr Powell’s comments on Wednesday (Thursday AEST) chimed with this view. GDP
data is due out late tonight AEST.
Mr Powell
said although sectors such as housing had already cooled in response to higher
interest rates,steady demand for labour suggested strength in other areas.
-----
https://www.afr.com/politics/us-and-china-are-entering-a-trap-of-their-own-making-20220728-p5b581
US and China
are entering a trap of their own making
The costs of
miscalculation by either side would be lethal, and the risks are only growing.
Edward Luce Columnist
Jul 28, 2022
– 8.12am
When two
trains are heading for collision, the switch operator puts them on different
tracks. Alas, in geopolitics it is up to the drivers to take evasive action.
In the case
of the US and China, each questions the other’s ability to drive trains.
History offers us little hope that looming train wrecks will organically
resolve themselves.
When it comes
to Joe Biden and Xi Jinping – the two world leaders who most need to meet face
to face but have not done so since Biden took office – evasive action is
notable by its absence, particularly on Taiwan.
Biden has
suggested the two countries resume some kind of strategic
dialogue. Any routine exchange of views, even shouting matches, would be
better than today’s escalation.
-----
https://www.afr.com/world/north-america/are-interest-rates-at-neutral-markets-certainly-hope-so-20220728-p5b5bm
Are interest rates at neutral? Markets certainly hope so
Count me
among those hoping that Powell is entirely correct that rates are already at
neutral. This would improve the chances of the Fed being able to soft-land the
economy.
Mohamed El-Erian
Contributor
Jul 28, 2022
– 11.20am
One of
Federal Reserve Chair Jerome Powell’s unscripted remarks at his press
conference on Wednesday (Thursday AEST) – that interest rates have reached a “neutral level”
after the just-announced 75-basis-point interest-rate increase – is sure to
prompt much discussion among economists in the weeks and months ahead.
Judging from how
markets reacted the minute he made this remark, it is clear what
conclusions the vast majority of investors want these economists to reach.
Neutral is
shorthand for the crucially important notion that the level of interest rates
is consistent with monetary policy being neither contractionary nor
expansionary. When combined with the Fed’s dual mandate, it signals a monetary
policy that is close to being set to deliver maximum employment and price
stability.
In today’s
world, this is translated by markets into the view that the Fed now believes
that it has already done the bulk of what is needed to tighten monetary policy
to deal with what Powell himself described as inflation that remains “much too
high” and is inflicting “considerable hardship” on Americans.
-----
https://www.afr.com/world/europe/have-putin-s-ukraine-goals-shrunk-or-expanded-20220728-p5b5fr
Have Putin’s Ukraine goals shrunk or expanded?
Russia’s
stated invasion goals and outsiders’ perceptions of them appear to be shifting
shape on a monthly basis.
Leonid
Bershidsky
Jul 29, 2022
– 3.14pm
The war in
Ukraine is, let’s admit it, weird. Russian citizens can, at least
theoretically, travel to Ukraine for business or pleasure, though now – only
since June – they need visas. The belligerents are parties to a recent deal
ensuring safe grain exports.
Russian gas
keeps flowing to Europe through Ukraine’s pipeline system, albeit in reduced
volumes. Countries that supply weapons to Ukraine are also paying Russia for
energy and fertiliser imports, thus also funding its war effort. It’s not easy
to imagine any of this going on during, say, World War II.
If that
tangle of relationships is not confusing enough, both Russia’s stated invasion
goals and outsiders’ perceptions of them appear to be shifting shape on a
monthly basis.
In one sense,
Russia appears to have scaled back its goals. To achieve his stated objectives,
the “demilitarisation” and “denazification” of Ukraine, Vladimir Putin attacked
on a much broader front than Russia maintains today.
-----
https://www.afr.com/world/europe/how-this-rocket-system-could-force-russia-into-embarrassing-collapse-20220730-p5b5vq
Is Russia headed for an embarrassing collapse?
Mike Martin
Jul 30, 2022
– 10.44am
Some weeks
ago the Russians announced an “operational pause” in the Donbas.
Breaks in
fighting like these are pretty normal in this type of high-intensity warfare,
because of the vast supplies required and damages inflicted.
Armies
sometimes just have to take time-outs to regroup and build up their supplies
again, although normally you don’t broadcast to everyone that you’re doing it.
That’s a bit
odd, and makes it seem like there must be another reason that Russian military
activity has decreased.
And decreased
it has.
Russian
artillery fire has significantly dropped, and there are fewer offensives.
-----
https://www.afr.com/world/europe/russia-loses-half-of-its-troops-in-deadly-war-20220729-p5b5pn
Russia loses half of its troops in ‘deadly war’ in Ukraine
Nataliya
Vasilyeva, David Millward and Marcus Parekh
Jul 29, 2022
– 1.48pm
London | More
than 75,000 Russian soldiers have been killed or injured in the war in Ukraine,
according to new classified US intelligence, a loss equivalent to almost the
entire British army.
If accurate,
the figure would equate to half the 150,000 Russian troops reported to have
been committed
to the Ukrainian invasion, a staggering figure that points to an
“exceptionally deadly war”, according to analysts.
“We were
briefed that over 75,000 Russians have either been killed or wounded, which is
huge,” Michigan Democratic congresswoman Elissa Slotkin, who serves on the
House Armed Services Committee and recently visited Ukraine, told CNN.
“You’ve got
incredible amounts of investment in their land forces, over 80 per cent of
their land forces are bogged down, and they’re tired. But they’re still the
Russian military.”
The
classified briefing, first reported by CNN, was given by the State Department,
the Department of Defence, the Joint Chiefs of Staff and the Office of the
Director of National Intelligence to the House of Representatives on Wednesday.
-----
I look
forward to comments on all this!
-----
David.