Henry Thornton News&Views No 24
Henry Thornton, Terrible shooting in Tokyo, July 9.
Yesterday an assassin shot from behind the former and longest serving Japanese Prime Minister, Shinzo Abe. Medical teams fought to save his life but a bullet in the heart prevented this possibility.
We greatly sympathise with the family of this great man and his many admirers, including all the global leaders he has worked with. May he rest in peace.
AFR, 2-3 July, P1, Ronald Mizon, ‘Fixed rate rises adds to housing crisis.’
‘Commonwealth Bank and National Australia Bank significantly raising the cost of fixed rate loans, putting further pressure on a housing market that economists believe will fall 15 to 20 per cent in coming months’.
Mrs Thornton asks: ‘Why not just increase fixed interest rates to Dr Lowe’s best guess. 2. 5. 3.0 or even 5.0 per cent?’ Sorry sweetheart, says Henry, this would scare just about everyone in Australia, and ensure there would be a 50 per cent fall in property values.’
So the theme is ‘slowly, slowly, making sure RBA goes safely, safely to their final position.
‘RateCity Sally Tindall said more than 70 lenders had increased fixed-rates in the past month.
‘ANZ, Macquarie and HSBC have all made sizeable fixed-rate hikes in the past fortnight and we expect others will follow.
‘Finding a competitive fixed rate is not impossible ... There is currently just one fixed rate under 3 per cent and that rate has a target on its back’.
‘We’ll all be ruined, Hanrahan,’ said Henry with unusual scary mis-statement.
On P 38, the AFR View adds further wisdom. ‘Only people and productivity add up to productivity’.
P 39, Andrew Tillett says: ‘Foreign policy team is front and centre in Canberra’.
There is a lovely picture of a smiling Penny Wong and a grinning Albo with both thumbs up.
Rowan Dean makes another wise statement: ‘Round the bend, stuck on the beach in a town like Alice’.
‘On the other hand. It is time to start bringing Australia’s much-loved but dead white male authors into the modern world. Nevile Schute’s 1953 In the Wet is a good place to start.
‘Enough Henry’ requires us to travel on.
The Aussie, also 2-3 July, P1, Stephen Lunn and Sarah Ison, ‘Virus squeeze on Economy’.
Another scary offering, as the journalists promise more nastiness: ’A winter wave of covid-19 and influenza threatens to force hundreds of thousands of workers to stay home over the next month, exacerbating staffing shortages and sparking warnings of disruption to transport, freight services and supermarkets that could act as a handbrake on the economy.
‘Medical experts on Friday sounded the alarm on elevated Covid and flu numbers remaining ‘at least another month’, with a further 200,000 Australians testing for coronavirus in the past week and Health Minister Mark Butler warning of a ‘third wave’ in coming month.’
Mrs Thornton again asks for further information. ‘How is it possible for the Coalition can switch from prosperity to catastrophe? She says with a furrowed brow.
‘I don’t know’ says Henry. ‘All I can say is it is never as good as it seems or as bad as it seems. ‘We seem to have Labor blaming the Coalition for newly bad times but saying good times will soon be there.’
Paul Kelly, leading the Inquirer, writes of ‘Restoring faith in national heritage’.
‘Australia’s success will depend on uniting a diverse, multicultural society.’
‘Australia is being transformed – not by politicians but by cultural, economic and social forces – with the latest census revealing a country that is deeply multicultural, less Christian, more shaped by millennials, more influenced by Asia and more fragmented in outlook and beliefs.
‘These trends will only intensify in the coming decade. The politicians aren’t really in control of the forces that drive Australia’s directions. More often than not, their task is to manage the change and keep the ship afloat.
‘To a large extent Australia's liberal capitalist, culturally diverse, open economy is propelled by these drivers – operating through individual and collective demand, personal preference, financial need, family aspiration and cultural fashion. This is how a liberal democracy functions. There is no centre of power pulling all the strings’.
Greg Sheridan, P 22, ‘Reshaping Global Order’.
‘With the NATO summit in Spain, attended by Anthony Albanese, ideological conflict has gone global. Australia lines up with its old friends, The US, Europe, Japan, South Korea, even astonishing, New Zealand, and against its old enemies, Russia and China.’
And in conclusion: ‘Our paralysed defence establishment has barely moved an inch toward the type of asymmetric we should be acquiring as fast as we can, given the gravity of the strategic situation.
‘Important and genuinely praiseworthy as Albanese’s strategic diplomacy has been, (it will be his ability to supply Australia) with actually undreamed defence capabilities on a scale that gives us genuine deterrent ... (This is how) history will judge the Albanese government’.
The Economist, 25 June, The energy crisis.
‘This years energy shock is the most serious since the Middle Eastern oil crises of 1973 and 1979. Like these calamities, it promises to inflict short-term pain and in the longer term to transform the energy industry. The pain is all but guaranteed: owing to high fuel and power, most countries are facing soggy growth, inflation, and squeezed living standards and a savage political backlash.
‘But the long-run consequences are far from preordained. If governments respond ineptly, they could trigger a relapse towards fossil fuels that makes it even harder to stabilise the climate. Instead, they must follow a perilous path that combines security of energy supply with climate security.’
‘The great energy shock of 2022 is a calamity. But it could also be the moment when better government policy triggers the investment needed to resolve the conflict between having a safer supply of energy and a safer climate.’
Quadrant, July-August, P22 to p26, Aynsley Kellow, ‘The Madness of Net Zero.’
‘In 1841, Charles Mackey published his notable work ‘Extraordinary and the Madness of Crowds,’ which included discussion of three economic bubbles: The South Sea Company bubble of 1711; the South Sea Company bubble of 1719-20; and the Dutch tulip mania in which some tulip bulb varieties become the most expensive objects in the world in 1637.’
‘If temperatures fail to increase, which as Koonin demonstrates is highly likely, how long shall a public that has followed the public alarmist construction of climate science tolerate substantial increases in the cost of their energy and the inflation that is already accompanying it’.
In conclusion: ‘Steven Koonin’s scathing critique of climate science suggests that Net Zero is neither necessary not possible, and certainly not affordable. If he is correct, the false promise by the Albanese government of cheaper renewable electricity might increasingly begin to split individuals off from the herd.’
AFR, Monday 4 July, John Kehoe, ‘The day RBA boss Philip Lowe nearly died’.
‘Less than 12 hours after Philip Lowe received a phone call from the Treasurer Scott Morrison appointing him the next governor of the Reserve Bank of Australia, he was unconscious, fighting for his life in a Canadian hospital.
Dr Lowe luckily survived. One of Henry’s closest friend had two scary examples. Aged 14, he found himself in hospital, and before long he was blind and unable to walk. He was told by one of the doctors he would not die but would remain as he was. To the doctor’s surprise, after a month or so, my friend began to recover, and before long he was going home. The net result was a very angry personality that took decades to wear off, and playing football that was far better than before the illness.
The second major problem was a torn aorta at age 59. The medical men apologised for missing the tiny tear that they said they should have been caught a year ago. By then the tear was half way around the ‘curve’ at the top. It was just fixable, and after 12 hours my friend was in a hospital bed trying to pull out the breathing tube. The nurse told the wife who had arrived: ‘This as a good outcome. People trying to get rid on the tube usually survive. And so it was’.
AFR, P1 and P 21, Alex Gluyas, ‘Rate rise locked in, heading to 2.35pc.’
‘The Reserve Bank will increase rates tomorrow, but the prospect of further aggressive rate rises needed to tame inflation could cause a sharp economic slowdown, warned market economists.’
Karen Maley, P 28, ‘Inflation problem.’
‘Most economists believe a 0.5 pc rate rise would help to emphasise Lowe’s point that inflation is a serious problem, and that rates are invariably heading higher’.
P2, Larry Schlesinger, ‘Auction clearance rates sag’.
‘Auction clearance rates fell to there lowest level in more that two years on the weekend. That pointed to further steep house price falls as economists tipped a half of a percentage point interest rate rise tomorrow, which will pile more pressure on borrowers’.
P3, Edmund Tandros and AAP, ‘Thousands evacuated in NSW as ‘life-threatening’ floods escalate.’
‘A kayaker died in floodwaters an Sydney’s Paramatta River yesterday and thousands of people were told to leave their homes as authorities warned a dangerous weather event would escalate.
The Aussie, P1 & P4, Greg Brown, ‘Quick jobs fix: import more skills’.
‘Skills Minister Brendan O’Connor supports bringing in more overseas workers to help fill immediate job vacancies in key parts of the economy, head of a longer-term fix for training Australians in growth industries, including blue-collar trades, IT and in healthcare.
‘Mr O’Connor said a short-term solutions to worker shortages would need to include full restoration of the temporary and permanent
Peter Jennings, P 11, ‘NATO step-up ends honeymoon for Labor and China’.
‘Last week’s NATO summit in Madrid (achieved) what successive US presidents have called for and failed to deliver, an expanding alliance, spending more on defence, putting more troops on the ground and focussing on more real threats. NATO has even a coherent strategy.
‘In 11 clearly written pages, the NATO 2022 Strategic makes it clear Russia and China present the greatest threat to Europe’s interests. ‘The Euro-Atlantic area is not at peace … we cannot discount the possibility of an attack against allies’ sovereignty and territorial integrity.
‘NATO has responded with a ‘new force model’ increasing deployed high-readiness forces and, by next year, plans to have between 300,000 and half a million military and half a million personal held at short notice. Significant additional forces will be based in the Baltic states ...
In conclusion: ‘With fine words must come action. Albanese needs to pay close attention to NATO’s rapid increase in ready military forces.
‘Australia must quickly lift its own defence game. This requires a shedding of the pretence that the glacial delivery of ships and submarines a decade from now somehow adds to our immediate security. It doesn’t.
AFR, Tuesday 5 July, P1 & P4, Ronald Mizen, ‘Australia hit as Putin coal fuels China.’
‘China’s deepening alliance with Russia has led China to boost purchases of Vladimir Putin’s cut-price coal while continuing to punish Australian exporters.
‘The value of Russian coal imports into China rose sharply following Beijing’s trade sanctions on Australia in late 2020, and more than doubled between February and May this year due to the Ukraine conflict’.
I hate to say this, but with Russia’s ‘cut price of coal’ cannot be complained about as price cutting is an obvious market development for a nation (ie Russia) desperate to obtain cash. China’s behaviour to Australia can be analyzed with a similar logical move, even if motivated with non-global rules of trade.
‘Sport’. Mathew Futterman, ‘Nick Kyrgios is a dream and a nightmare’.
Hear hear! ‘All white is the dress code of Wimbledon, the oldest and most traditional of the four grand slam tennis torments. So when Nick Kyrgios wears a black hat for his on-court interview, he is sending a message.
Then he won against Stefanos Tsitsipas of Greece, the no. 4 seed. After the game, red shoes and a red hat!
‘A Wimbledon starts its second week, the women’s tournament is wide open and there is potential for a men’s final, which looks more inevitable each day.’ Stay tuned, gentle readers.
Editorial&Opinion, P 38, ‘Keep standing with Ukraine and up to Putin’.
‘Anthony Albanese has underlined the symbolism of his trip to Ukraine by announcing an additional $100 million military assistance for the war-torn country. After meeting with President Volodymyr Zelensky in Kyiv Mr Albanese promised to stand with the Ukrainian ‘as long as it takes for Ukrainian to emerge victorious in defence of your national sovereignty and your homeland’.
Conclusion: ‘The bind that the West is in is that it can’t offer Ukrainian whatever weaponry it takes to win, because it would risk a wider conflict. What it can provide is to support, at whatever the cost, for as long as it takes to punish Russia, for the violation of international law.
‘The end game must not be a peace settlement that ultimately settles nothing. Instead, the West must maintain its resolve and make Russia continue to pay the price in global isolation for its authoritarian aggression’.
P 39, Steven Hamilton, ‘A hefty rise in interest rates today would prove the RBA’s mettle’.
We got another 50 basis points. Better than only 25, and likely to settle down with a few more 25’s. Yet the risk is that getting to a sensible point takes too long, if at all, and there will be an unstretched position that once again, as in the 1980s, it will be too little, too late.
The Aussie, P1 and P5, Joe Kelly and Stephen Rice, ‘Floods hit RBA with new inflation shock.’
‘The NSW floods disaster has endangered $1bn in produce, threatening new shock food prices as the RBA weighs 0.5 per cent, ‘
‘As farmers warned that the latest floods in Sydney’s agricultural basin would keep the price of vegetables high for weeks, on top of elevated energy an fuel costs, new economic figures showed the jobs and housing markets remained robust’.
Optimizing keeps most Australians relatively cheery, except of course for those people who have suffered up to four bad floods quite recently with one more underway. Yet this writer feels Australia will follow the USA, Britain and probably the EU and limp into another big setback.
Surely by now we have to improve dams, rebuild on higher ground or (a serious thought) build large water pipes from known flood areas into Central Australia. This area could become a beautiful green area with possibility some commercial use.
P11, Greg Sheridan, ‘Big decisions on defence soon must be made’.
‘We already suffer pervasive capability gaps all over defence. We have neither lethality, survivability nor mates. We have nothing at all of an asymmetric capability that would deter any potential aggressor in our maritime approaches.
‘There is, in fact, a colossal mess in defence to be sorted out and fixed up. There were two plausible approaches Marles might have taken.
‘One was to sack everyone at the top to show that the old culture of endless delays, irrelevant, hopeless mismanaged projects, useless capabilities soaking up billions of dollars was no longer going to be the operating system for defence.
‘The other approach was to keep existing structures in place but bend them to the government’s will. Albabese and other senior Labor ministers know have made it clear they understand the urgency of the situation.’
Albanese and Marles have decided to keep the defence leadership but task it with their urgent requirements. For this risky strategy to work, it is absolutely vital, of the first order of importance, that the government give clear, unambiguous, time-bound instructions to Defence.
‘One key to this will be getting the government’s promised force-feature review up and running, and making it report by next March, simultaneous with the submarine report. …
In conclusion: ‘The government has started off very well in national security. It must soon hit the accelerator on producing defence capability or our poor, benighted nations, will continue to drift into extreme danger.’
AFR, Wednesday, 6 July, P 40, Chanticleer, ‘Rate rise sooths market nerves’.
‘A relief rally in the share market and favourable moves in interest rate futures are strong indicators that the markets view the Reserve Bank of Australia’s moves as dovish.’
‘This should not be interpreted as good news for housing or sectors of the economy exposed to supply chains, higher borrowing costs and rising energy prices’.
‘The collapse or another couple of home builders in the last week because they could not make money on fixed-price contracts is an early warning signs of the credit pressures that will hit the banks over the next year.’
P 39, Richard Holden, ‘Why we won’t get 70s-style stagflation, like our parents’.
‘The main reason is the RBA won’t let it happen. It knows how to avoid it, and it will do whatever it takes to keep inflation expectations under control’.
‘During the ten-year term of Glenn Stevens as RBA governor, inflation averaged 2.5 per cent a year – dead on the midpoint of the target range’
‘This is why the RBA will do what whatever it takes to get inflation back into the target band And that’s why it would rather get economic growth slow now rather now than let inflation expectations get out of control, necessitating a tougher response in the future.
‘The main reason we are unlikely to have a 1970s-style stagflation is because the RBA won’t let it happen.
‘And because it is independent of government, there will be no political meddling to stop it. And there will be no Keating-esque boasts about having ‘The RBA in [his] pocket.’
The Aussie, Wednesday 6 July, P1 & P4, Patrick Commins, ‘RBA lifts rates, pain takes off’.
‘Jim Chalmers has told households the inflation will get worse before it gets better and interest rates will continue to climb after the Reserve Bank announced a 0.5 percentage increase in the cash rate adding $200 a month to a $750,000 mortgage.
‘RBA governor Philip Lowe flagged more pain ahead for mortgage holders, saying the board, ‘Expects to take further steps in the process of normalising monetary conditions in the months ahead.
‘Dr Lowe said a strong demand, a tight labor market and capacity constraints justifies a second consecutive double rate hike – the sharpest monetary policy since 1994’.
Paul Kelly, P11, ‘PM’s task: to claim ownership of strategy’.
‘Anthony Albanese has displayed skill in his diplomacy, yet the pivotal message is manifest – Albanese’s approach to China’s assertion, Russia’s aggression and a tighter US stands in strong strategic continuity with Scott Morrison’.
‘As a new government, Labor confronting escalating geo-strategic dangers will be required to put its ownership on a foreign and security policy without precedent for the centre-left since world War II. Albanese, Richard Marles, and Penny Wong are now engaged in the most radical remaking of foreign policy by a Labor government for half of a century.
‘This is no surprise. Labor is governing a world transformed from 2013 when the Rudd government lost office. Those days belong to a world of dreamy optimism, the final chapter of the fading liberal internationalism.
‘Since then, most aspects of Australia’s security have been rewritten.’
In conclusion: ‘Just following in the Coalition’s footsteps won’t do the trick. This is an agenda filled with risks and unpredictably and Albanese will need to present it in terms of Labor ownership and conviction, aware that critics of his own side wait in the wings’.
Robert Gottliebsen, P 20, ‘China exports deflation’.
‘Its access to cheap fuel spells trouble for the West’.
‘As Australia braces for higher interest rates, in the past three weeks US interest rates have been in free fall as traders prepare for possible curves in the US inflationary spiral’.
‘The conventional explanation is that those inflationary curbs will come with deep recession.’
But this week a scary alternative explanation crossed my table – China is about to restart exporting deflation to the US via its access to cheap Russian oil and gas plus Mongolian coal’
‘And in the process, China will wipe out large segments of the recovering US manufacturing industry. Australia will be a co-target, especially the upward pressure on our wage rates and our high energy costs’.
‘China now takes us seriously in defence, but it regards Australian industrial policy and the antics of states like Victoria as a global joke.’
And in conclusion: ‘Alex Turnbull says Australian metals processing is about to be wiped off the face of the earth as it is supplanted by Chinese output.’
AFR, Thursday 7 July, P1 and P27, Alex Gluyas, ‘Oil, metals rout spread to shares’.
‘A plunge in commodity prices sparked by mounting fears of a global recession sent the Australian dollar to a two-year low and rocked the ASX’s mining and energy giants, tipping Rio Tinto to its worst session in six years.
‘Panic dominated the energy markets, causing oil to post its poorest session in nearly three months as fresh questions were posed about the strength of future demand if a slow down in response to monetary tightening materialises.’
AFR, P 19, Jenny Wiggins, ‘Wages, materials a ‘perfect storm’ for Snowy 2.0’.
‘The pumped hydro project in the Snowy Mountains, which involves building a power station some 800 metres underground and was supposed to be finished by 2026, is among the many big infrastructure projects beset by delays and cost blowouts’.
Editorial&Opinion, P 38, ‘Fiscal repair now must dovetail the RBA rate rises’.
‘The second half a percentage point cash rate rise in a row – with a third likely to follow next month – has underscored the Reserve Bank’s ‘whatever it takes’ messaging about re-anchoring inflation expectations.
‘That adds to the pressure on Treasurer Jim Chalmers to ensure that fiscal policy is working in unison with monetary policy to help bring Australia’s consumer price inflation – which is expected to hit 7 per cent by the end of the year – down into the central bank’s 2 to 3 per cent target band as soon as possible.
‘Hyperbole about ‘skyrocketing’ interest rates is misplaced, with the cash rate at 1.35 per cent. But the longer inflation remains above target, the higher and more prolonged the interest rate pain will be for mortgage borrowers – and the greater the risk that monetary tightening tips over into a recession’.
My own view is that interest rates should never be set at 0.1 per cent and should never be below 3 per cent. Call me a monetary ratbag but getting rates far too far low a massive mistake. Ho, ho, on with the show!
Aussie, P1 and P4, Joe Kelly, ‘Japan fury at tax hike on miners’.
‘Tokyo has sounded the alarm on the Queensland Labor government‘s new tax regime for coal miners, with the Japanese ambassador to Australia warning that a steep royalty hike had triggered a rethink (about whether Queensland) remained a ‘safe and predictable’ investment destination’.
‘Shingo Yamagami used a speech to the University of Queensland on Wednesday to say Japanese mining companies invested in the state’s coal industry – including Idemitsu, Mitsubishi and Mitsu – had already paid billion of dollars in tax and royalty rises unveiled in the June 21 budget, (and the tax hike) risked ‘trust and goodwill’ built up over years’.
Silly bastards for stupid attempts to rip off a great Queensland industry. Idiots, really.
P9, Jaquelin Magnay, ‘Johnson fights for political survival’, confirmed Friday morning that Boris is out of the game. Over 60 conservative members of his troops spat the dummy and he had nowhere to go. Great pity, of course, but his troops just got sick of his games.
P 11, Adam Creighton, ‘For all America’s pain, its inflation that hurts the most’.
‘Americans marked to 246th anniversary of their nation’s independence this week more depressed about the future than any time in a generation.
‘The senseless murder of Americans by yet another armed lunatic on Monday, the country’s most cherished national holiday, can only reinforce the feeling of despair that ‘s spread across the nation.
‘More than 70 per cent of Americans say the US is ’going in the wrong direction’, or is ‘on the wrong track’, the highest share in at least a decade, according to practically every major US poll published over the last month’.
Aussie cartoon, July 8, Mr Spooner, many thanks
Fiona Prior goes in search of a reliable moral compass. More here.