President Trump seems to be making progress with his threatened 'Trade War', with China responding by offering concessions, as one might have expected from a 4,000 year civilisation. The President's clinical response to evidence of Syrian government's use of awful chemicals on their own people seems also to have gone off without creating World War III, thank goodness. Giving ground to the students opposing the easy gun ownership seems like a path too hard, but reminds Henry of the beginning of the real freedom for men and women of colour in the USA.
In our local political puddle, nothing seems to have changed. The 30th awful Newspoll for the Turnbull government has come and gone with no explicit challenge for the leadership. Messrs Dutton, Frydenberg and Morrison have each said they'd like to be Prime minister one day, if the job were available. Ms Bishop looks cheery enough that perhaps she knows things the rest of us do not. Mr Abbott was off on his PolyPedal enterprise and is (in Henry's view) planning to return as leader of the opposition after the next election assuming, as we must, that the current government is a dead duck, or at least a crippled chook.
We await the budget, but must remind Scomo that producing a small surplus is the beginning of the Treasurer's task, not success. A substantial surplus is needed. So too are higher rates of interest as when the next global crisis erupts we shall need room to ease macroeconomic policy. Recall the 'Banana Republic' episode. Even though Treasurer Keating followed instructions and turned a budget deficit into a respectable surplus in 1987, three years later a modest US recession triggered a major Australian recession.
Clearly simply fixing the budget is only part of a sound macro policy. In the late 1980s interest rates were not raised sufficiently to head off a damaging boom, and when a new inexperienced team at the RBA finally lifted rates they overdid it, with cash rates at what seems an unthinkable level of 19 %.
The next similar episode is underway now. A US recession is likely within the next two years, and if we are not prepared our recession could be worse than that in 1990-91. Will we call it 'the recession we had to have', gentle readers? Or will it be 'Banana Republic #2'?
Big excitement last week as editor's EconArt showing occurred at the Royal Melbourne Yacht Squadron. Good food, good wine and fun speeches, including Pete's explanation of the meaning of the latest painting, called 'Parable for Floating the Aussie Dollar'. This sold within moments of show opening, and later 'Four Famous Economists' and 'Banana Republic'. all three were among the artist's favourites, so financial effects were modified by grief at losing them. An experienced artist present said not to grieve. 'It always feels like losing a close relative', he said. 'But you will get over it.'
Here is a link.
Page down to see Banana Republic image. A glimpse of what may be our lot in the next recession.
Fiona Prior is quite besotted by some of the pooches of Wes Anderson’ Ilse of Dogs. More here
The Commonwealth Games are about to come to a triumphant end. There are many medals for the home team, acts of great sportmanship and record ticket sales. This just about wipes out the recent memory of our incompetent cricketball tamperers.
The AFL season is underway, and Henry's Caaarlton! have played increasingly badly after the first 15 minutes of their first game. Yesterday night's total flogging by North Melbourne (North Melbourne!) was, Henry hopes, a low point from which the trend will be up. Smaller floggings and perhaps a win or two will do for season 2018, but here is a hint for the recruiting team. You now have a competent mosquito fleet, but lack some scary big men. At an absolute minimum we need another serious ruckman, or Kruezer will be burnt out, a serious centre half forward and a really scary centre half back.
Rest of the AFLM are sorting themselves out with Richmond, West Coast, Port Adelaide, Sydney Swans and GWS all with bigger, stronger and more skillful players than the very nice lads at Caaarlton!
Image of the week - 'Parable of Floating the Aussie Dollar'.