Henry Thornton News & Views No 30
AFR Weekend, August 13-14, P 17, Michael Smith in Tokyo, ‘Taiwan’s future looks fragile.’
‘Tsai Ing-wen, a bookish former law professor, is an unlikely political leader who won the hearts of the Taiwanese public by standing up to China. On the night in 2020, she was elected Taiwan’s president for a second four-year term, and the crowd outside DPP headquarters went wild.’
‘I hope that the Beijing authorities understand that democratic Taiwan, and our democratically elected government, will not concede to threats and intimidation’, she said to thunderous applause.’ …
And in conclusion: ‘As China becomes increasingly willing to flex its military muscle, the next crisis in the Taiwan Strait might be far more disastrous.’
AFR Weekend, P 22, James Thompson, ‘Have markets bottomed? Profit season be careful’.
‘Are we there yet? After Wednesday night’s better than expected inflation numbers out of the United States and a pretty solid start to August reporting season at home, it’s natural more investors are starting to ask whether the sharemarket lows seen in June might represent a low point for global equity markets’. …
And in conclusion: ‘Historically, markets have tended to bottom when investors give up, stop caring’ … and I don’t think we’re there yet.’ Rob Almedia, global investment strategist, portfolio at MFS.’
AFR Weekend, P 27, Christopher Joye, ‘Drums of war beating louder, faster for China and Taiwan.’
‘About a month ago, one of our top geopolitical and military advisors – and far and away the most accurate forecaster on all matters China – called to say he had amended his views on the probability of the Middle Kingdom having a crack at that recalcitrant province, aka Taiwan. He was bringing forward his expected time horizon to the next 12 months.’
And: ‘Xi knows the US reaction function will likely be radically varied under a hawkish Republican president.’
AFR, Monday 15 August, P1 and P 38, Andrew Tillett, ‘Innovation hubs, fix IR barriers, says BCA.’
‘The business community is pushing the Albanese government to create a national series of special innovation zones that could attract investment and fast-track skilled migrants in a bid to make Australia globally appealing and underpin thousands of new jobs in future industries.
‘As the government considers boosting the permanent migration cap to 200,000 people a year, the Business Council of Australia wants skilled migrants to be given four-year visas with a pathway to permanent residency to help lure talent’
(What about the Scottish family who have been here for almost 10 years. Father work well, wife a nice person, children doing well in school, great numbers of required workers and a bone-headed Minister recently demanded they leave, home to Scotland. What isthat Minister thinking?)
AFR, Monday, August 15, P 29, Karen Maley, ‘Reserve Bank’s growing Chinese unease’.
‘As the Reserve Bank lifts interest rates to slow economic activity and take some heat out of inflationary pressure, its acutely aware that the worsening slump in the Chinese property market could upend its plans by delivering a severe growth shock.
‘In its latest ‘Statement on Monetary Policy’, the Reserve Bank looked closely at the Chinese real estate which it points out ‘has been a significant drag on the Chinese economy over the past year.’
AFR View, Monday 15 August, P 38, ‘Jobs summit must roll back the IR barriers.’
‘After fending off the ACTU’s whacky backward looking manifesto for re-regulating Australia’s economy as ‘not government policy’ last week, Treasurer Jim Chalmers called on business to put forward its agenda for the coming Jobs and Skills Summit.
‘On the features page (P1) of todays of today’s The Australian Financial Review, Business Council of Australia, chief executive Jennifer Westacott sets out what the business forum representing the biggest companies is looking to get out of next month’s gathering of union, corporate and community leaders in Canberra.
Ms Westacott’s starting points is that Australia’s frontier, whose carbon-intensive extractive industries have been the source of the nation’s modern prosperity must now undergo a costly decarbonizion transformation.
‘It is no coincidence that Australia’s ‘lost decade’ of sluggish productivity and wages growth has coincided with the re-regulation of the workforce.
‘The Albanese government now needs to go back to the future and support rolling back workplace barriers if it is serious about reversing Australia’s productivity and real wages stall’.
AFR, Tuesday, 16 August, P 2, Jennifer Hewitt, ‘Morrison the gift that keeps giving’.
‘COVID-19 emboldened federal and state governments to impose extraordinary restrictions on Australian’s rights as citizens. At least some of those decisions, particularly in hindsight, were overreactions driven more by political panic and fear of the unknown that by logic or evidence.’
And in conclusion: ‘The consequences were less damaging than this suggests, given that Morrison didn’t actually take over running health and finance. But even if legal, its hardly politically smart. It gives Albanese another chance to denounce ‘tinpot activity’. To the public it just looks odd, another unpopular, unnecessary legacy of an overly self-confident PM always convinced he knew best’.
AFR, Tuesday, 16 August, P 11, Kevin Yao and Stella Qiu, ‘Surprise rate cut as China’s growth slows’. (Biejing.)
‘China’s economy unexpectedly slowed in July, data showed yesterday, with factory and retail activity squeezed by Beijing’s zero-COVID-19, and a property crisis, while the central bank surprised markets with key lending rates cuts to revive demand’.
At the end: ‘No matter how loose the credit is, companies and consumers are cautious in taking on more debt, ‘ Mr Wang said.
‘Some of then are now even paying back their debt in advance. This may herald a recession’.
‘ASX gain defies China’s grim outlook’.
‘Fed boosts $A after sealing big rally.
’Earnings robust despite higher costs.’
(Titles from P26 and 27.)
AFR, Tuesday, 16 August, P 39, Adrian Blundell-Wagnall, ‘Taiwan and China would both lose in a take-over fight’.
‘CCP bureaucrats may think taking Taiwan would be a good catch-up strategy by disrupting the US design and manufacturing model. This belief, of course, is misplaced. Were Taiwan to be taken two things would happen.
‘First, the design dynamism from Silicon Valley would cease. … This would leave China with little technological value from Taiwan.
‘Second, US and Korean manufacturing would take up the Taiwan gap in the market.
‘Even if China could take Taiwan using the barrel of a gun, it would not be a smart move economically to do so.’
AFR, Wednesday, 17 August, P1 and P 18, Peter Ker and Ronald Mizen, ‘BHP peaks with profit, dividend, tax tsunami’.
‘The biggest contributor to Australia’s record trade surplus, BHP has vowed to be disciplined as it pursues growth in ‘future facing’ commodities after reporting its biggest profit in Australia’s dollar terms, record dividends worth $23.2 billion and the payment of almost 10 per cent of all federal income tax receipts.
‘Consecutive years of record prices for BHP’s heritage iron ore and coal assets has left the company with almost zero net debt and a huge cash war chest to pursue growth options in so-called ‘green metals’ through deals like last week’s rebuffed $8.3 billion bid for copper producer Oz Minerals.
AFR, Wednesday, 17 August, P2, Ronald Mizen, ‘Consumer confidence up, but the output is glum’.
‘A quiet week in economic news – good or bad – accompanied by the strongest rally in consumer confidence in more than a year, but with further interest rate rises looming, overall sentiment remains remains solidly in the doldrums.’
The Aussie, Thursday, 18, P 13, Tony Abbot, ‘West must muscle up to meet these perilous times.’
‘When the Berlin Wall come down, when the old Soviet Union broke up, and when communist China appeared to have embraced market capitalism, the general expectation was that conflict between major nations was a thing of the past, that nearly everyone just wanted a materially better life, and that all governments would mainly be focussed on helping their citizens.
‘And to a great extent that was true. Yet, despite the obvious benefits of more liberal economies, more accountable governments, and more pluralist societies, history didn’t stop, human nature hadn’t changed and there are still people determined to impose their vision on others, by force if necessary.
‘The war in Ukraine has made us confront this grim reality, in a way Islamism never quite did;
And the ‘no limits’ partnership between the new tsar in Moscow and the new emperor in Beijing indicates its not just in eastern Europe that dictators are on the march.
(I am tempted to continue and copy the entire article, but that would be too hard. Get the Oz and read the entire article , P 13 and two articles on the subject on P2.)
And in the final paragraphs. ‘There are yet grounds for hope. After two dispiriting years of pandemic, when safety came first and freedom came last, comes the most glowing example of heroism since Britain and its empire fought against the Nazis. If Ukraine lasts for a 1000 years, men should still l say ‘this was their finest hour.’
‘If those who had known so little of freedom value so much, perhaps we, who have taken so much of it for granted, might see again how precious it is before it is too late.’
Bravo, Tony Abbot.
AFR, Thursday 18, August, P 4, Ronald Mizen and David Martin-Guzman, ‘Private sector wages rise, but not far enough’.
‘Average private sector pay rises hit a decade high 3.8 per cent in the June quarter, which economists say shows growing momentum that will force the Reserve Bank to push the official interest rates to about 3 per cent.
‘Overall wages growth disappointed with a soft 2.6 through the year growth rate, slightly below consensus which others point to as a sign there is little real wage momentum building in the economy’.
(My thought suggests if average wages are 2.6 per cent for the year and June quarter is 3.8 per cent, there may be a sign of hope. Time will tell.)
AFR, Thursday 18, August , P 27, David Sheppard and Dereck Brower, ‘Recession fear in US, Europe as natural gas price surges.’ (London/New York).
‘The global energy crisis deepened yesterday (AEST) as a further surge in natural gas prices in Europe and the US threatened to push some of the world’s largest economies into recession.’
‘Gas markets in Europe jumped by as much as 10 per cent a megawatt hour, equivalent to more than $400 a barrel of oil, as traders raced to secure supplies ahead of the northern hemisphere winter. Prices have more than doubled from extremely elevated levels in June, though they eased marginally later yesterday.
AFR, Friday 19, P1, Ronald Mizen, ‘More jobs than workers, big rate rise likely.’
For the first time on record in the nation’s history there are now more job vacancies than there are people seeking employment, after the jobless fell to 3.4 per cent in July, as a further 20,000 people left the dole queue’.
‘Paradoxically, the government will hold a Jobs and skills summit next month. Bigger pay rises appears to be just around the corner, or are already happening.
with thanks to Mr Rowe
KULTURE
Fiona Prior celebrates the gifts of Salman Rushdie. More here.