|IndyWatch Australian Economic News Feed Archiver|
IndyWatch Australian Economic News Feed was generated at Australian News IndyWatch.
JUST as the postal plebiscite has blown up in the faces of the conservatives who promoted it, let us hope that any subsequent rearguard sabotage attempt under the guise of freedom of religion does the same thing.
For more than two decades (since Howard was elected Prime Minister) politicians have been utterly risk averse, fearfully imagining that some silent, conservative, Christian majority lurks out there ready to punish them at the slightest hint of social progress on human rights or fairness to the marginalised LGBTIQ, unemployed, refugees, homeless.
Wednesdays result should put paid to that.
But if we are going to turn over some rocks in a debate on religious freedom we might see a greater need for freedom FROM religion, not freedom OF religion.
For a start, religions get a free kick under the Marriage Act. If you are a minister of religion of a recognised denomination you are automatically entitled to be registered as a marriage celebrant.
Civil celebrants, on the other hand, have to meet other requirements, such as knowledge of marriage law, an ability to advise couples of relationship services, and be of good character and standing.
With respect to marriage, surely, we should have the same rules for everyone. Wasnt that demonstrated on Wednesday?
Perhaps we should start a campaign to take religion out of marriage laws altogether. At law, everyone should marry before a competent civil official. If religious people feel that that would not be a real marriage they can go off afterwards and do a religious ceremony.
Further, why does the parliamentary session at which these questions are debated begin with a Christian prayer? If parliamentarians mirror the community, about a quarter would be atheists and most of the rest would not be observant Christians.
Theres more. Why should religions get tax-free status for money raised and spent for proselytising their religion and for raising money through commercial enterprises even if there are grounds for tax breaks on charitable work?
And on the charitable, medical and educational side, why should religious institutions escape ordinary anti-discrimination employment laws, especially when they get very large amounts of public money for this and are significant employers?
And why have we wasted $300 million over the past half decade on the schools chaplaincy program under which educationally untrained religious operatives spout uneducational, unscientifi...
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The latest labour force data released today by the Australian
Bureau of Statistics
Labour Force data for October 2017 shows that total employment
growth was weak although there was relatively good full-time
employment growth. Unemployment (and the rate) fell, but only
because the participation rate fell. If not, then the unemployment
rate would have risen marginally. So no signs of a sustained growth
path is emerging. Broad labour underutilisation (underemployment
and unemployment) was at 13.3 per cent summing to 1,724 thousand
persons, which tells you that there is still considerable slack in
the labour market. The teenage labour market deteriorated in
October although this cohort shared in the full-time employment
growth, which is a good outcome. Overall, my assessment is that
there is no discernible trend in the Australian labour market. It
shows signs of strength one month, and then backs away from that
the next. We are not in a position to say that there is a sustained
growth path ahead.
The summary ABS Labour Force (seasonally adjusted) estimates for October 2017 are:
Employment increased by a minuscule 3,700 (0.03 per cent) full-time employment increased 24,300 and part-time employment decreased 20,700.
While the growth in full-time employment is a good outcome, the overall employment growth was very weak and follows a fairly weak result the previous month.
A slowdown is looming.
We observed a zig-zag pattern in total employment growth up until the end of 2016. The oscillating pattern has continued into 2017 but the level has risen above the zero line. There is still a switching pattern around the zero line for full-time and part-time that is evident although over the last two mon...
Countries around the world have a wide ranging view of the digital currency bitcoin or a virtual currency. Western superpowers like the United States and United Kingdom have shown a positive attitude towards the new technology. Some countries like Canada and Australia are still deliberating on what to do about Bitcoin, legally. Bitcoin Digits Coming 
President Trump wrapped up his historic visit to Asia this week.
Trumps journey was the longest overseas trip of his presidency and the longest Asian visit of any president in 25 years.
After a stopover in Hawaii, Trump proceeded to Japan, where he met with Japanese Prime Minister Shinz Abe, and then to South Korea where he met with President Moon Jae-in.
The capstone of the trip was Trumps arrival on 8 November in Beijing for meetings with Chinese President Xi Jinping.
Much of the reporting on this trip has involved international trade, but its a mistake to focus on that.
This trip was a pre-war gathering of allies (Japan and South Korea) and potential allies (China) in a last-ditch struggle to head off a hot war with North Korea, led by the reckless Kim Jong Un.
At this point, there are only four possible outcomes of the US-North Korea confrontation over nuclear weapons:
Based on public statements of US officials, my recent meetings in Washington with the director of the CIA and the national security adviser and other sources, I estimate the degree distribution of those possible outcomes as follows:
Trumps visits to Japan and South Korea were about leaving the
door open to negotiations in the hope that Kim would stand down
while also preparing for war.
Trumps visit to China was about asking for assistance in regime change.
Xi is unlikely to agree to help the US in this regard.
This means war.
Instead, Trump and Xi no doubt discussed Chinas red lines in North Korea so that a war between the US and North Korea does not escalate into a war with China.
Almost none of this is fully priced in public markets, although markets seemed to be getting the message last week.
A war between the US and North Korea will cause a global flight to quality assets and currencies at the expen...
Take a bow Josef Joffe.
In 2013 he wrote a book called The Myth of Americas Decline.
He called BS on the view prevalent then and now that the USA was too bloated, indebted and about to be overrun by China.
Joffe pointed out that pundits wrote off the USA every decade since the Second World War.
First there was the Soviet Unionthen Europethen Japanthen China.
None of them ever hit the top, despite the fretting.
Every week since, Joffes call looked smarter as the US economy recovered out of 2008.
This week took it up another notch altogether
USA to become undisputed leader here
The International Energy Agency (IEA) has now come out and said US oil output in the next 10 years will be the strongest ever seen in the history of the energy market.
This is wildly bullish for the USA and will shower the place in money and influence for decades. Its now on track to become the worlds biggest energy exporter
Thats a good place to be when global energy demand is set to expand by 30% in the next 23 years, according to the IEA. Thats the equivalent of throwing another China and India into the current mix.
The goodies dont stop there for the USA. Not only does it get the money, it gets the power as well.
Consider that China is the worlds largest oil importer. Its dependent on foreign supply.
Right now they call Saudi Arabia the oil markets swing producer. That means it can ramp production up and down to try and manipulate the price to its advantage.
This baton is going to get handed to Washington, in time.
So Chinas economy may be dependent on the USA as its major export market, plus its domestic economy might be held hostage by US energy policy too.
They wont like that idea in Beijing.
China is already trying to diversify its energy supply lines by doing deals with Russia. They might go for a few more for extra insurance after reading the IEA report.
But theres more to this story than geopolitics
A billion in sales every hour on 11 November
Theres great potential for a repeat of the China boom we saw last decade thanks to India and other southeast Asian countries growing their middle class populations.
This is good news for Australia. The LNG export market might be soft at the moment, but theres plenty of demand brewing, right on the front doorstep for us.
The energy projections are one aspect of this. But the expanding middle class in China and India a...
Leland Miller, a good friend of mine, is the founder and proprietor of an economic research service called the China Beige Book.
The name beige book was borrowed from the surveys conducted by regional Federal Reserve banks of economic conditions in their regions. (In the days before the internet, the Fed issued hard-copy booklets with different-coloured covers based on subject matter. The economic conditions booklet had a beige-coloured cover. Hence the name.)
Lee does in China what the Fed does in its regions, except he covers the entire country.
He has a diverse network of over 3,000 companies and entrepreneurs in all business sectors. He gets his information straight from the source and bypasses government channels. Its like a private intelligence service.
In fact, Lees network is better than the CIAs when it comes to economic data. The CIA actually turns to Lee for advice.
The detailed research service costs about $100,000 per year for one subscription.
But Lee publishes summaries on a quarterly basis, and they are freely available.
His latest summary doesnt paint a pretty picture
The cracks are starting to appear in Chinas Great Wall of Debt
The China Beige Book (CBB) says that China had been covering up and smoothing over problems related to weak growth and excessive debt.
Why would they do this?
To provide a calm face to the world in advance of the National Congress of the Communist Party of China. This took place last month on Wednesday 18 October. In fact, it was the first key skirmish in a looming global financial war.
CBB also makes it clear that the much-touted rebalancing of the Chinese economy away from investment and manufacturing toward consumption and spending has not occurred.
Instead China has doubled down on excess capacity in coal, steel and manufacturing and has continued its policy of wasteful investment fuelled with unpayable debt.
Its become obvious that the first cracks are starting to appear in Chinas Great Wall of Debt.
The Chinese debt binge of the past 10 years is a well-known story.
Chinese corporations have incurred dollar-denominated debts in the hundreds of billions of dollars, most of which are unpayable without subsidies from Beijing.
Chinas debt-to-equity ratio is over 300%, far worse than Americas (which is also dangerously high) and comparable to that of Japan and other all-star debtors.
Currently, the Agora Financial Australia office is completely empty. The team is bunkering down in Baltimore, US, for an exclusive conference.
Were connecting with colleagues and experts from all over the world to get a closer look at the trends driving the investment markets.
Well share everything of interest that we find out over the coming weeks.
For today, Im going to share with you a major trend I wrote about in a recent issue of Small Cap Alpha.
This one goes way beyond whats happening in your portfolio.
It could be the most important thing I bring to your attention in the entire year.
Read on to find out why
The worldwide rise of the superbug
If you ever decide to visit India, do yourself a favour and dont order the chicken dish. An unwelcome garnish might be a superbug in your system resistant to antibiotics.
Last year, Bloomberg reported that Indian intensive poultry farms were rampantly using medicines that the World Health Organisation classified as critically important.
One consequence is that bacteria with heightened virulence, and the ability to infect humans, are showing up.
Consumption of chicken in India has skyrocketed over the last 20 years, and is on track to keep going. Meat consumption continues to grow in both India and China, as both countries get richer.
Also on the rise are large-scale farms, which are heavy users of antibiotics. In July this year, another study found the same thing. Indian poultry farms are breeding superbugs.
This is the outcome we get when we combine poor animal husbandry, little regulation, and a booming demand for chicken meat.
Its not unique to India
The resistance develops because exposure to antimicrobial drugs wipes out the target organisms except those with the gene mutations that allow them to survive.
These could quite easily get exported around the world. And its not as if this problem is unique to the subcontinent.
Human societies across the globe are overdosing on antibiotics.
First there are doctors who (over)prescribe it for human patients.
Then theres the people unwittingly developing resistance through food
The drug overdose you dont hear about
70% of essential antibiotics in the US are sold to the livestock industry.
PUBLISHERS NOTE: Earlier this week, I caught up with Jim Rickards, live and in person, to discuss the single greatest threat to Australian investors today. It all stems from what Jim calls the great reset. That is, the end of the US dollars reign as the global reserve currency. This has massive implications for Australia. Not least because our biggest trading partner China is Americas greatest foe in this looming financial war. Below, Jim sets the scene for what is a fascinating discussion. Two hundred years ago, Napoleon warned: When China wakes, it will shake the world. Well, China has awakened. And its about to shake the world to its foundations. It starts with the death of the dollarbut it certainly doesnt end there.
My bestselling 2014 book, The Death of Money, is about the demise of the dollar.
By extension, it is also about the potential collapse of the international monetary system because, if confidence in the dollar is lost, no other currency stands ready to take its place as the worlds reserve currency.
The dollar is the linchpin. If it fails, the entire system fails with it, since the dollar and the system are one and the same.
As fearsome a prospect as this dual collapse may be, it looks increasingly inevitable for all the reasons one will find in the pages to come.
A journey to the past is in order first.
Few people in our time recall that the dollar nearly ceased to function as the worlds reserve currency in 1978.
That year, the Federal Reserve dollar index declined to a distressingly low level, and the US Treasury was forced to issue government bonds denominated in Swiss francs.
Foreign creditors no longer trusted the US dollar as a store of value.
The dollar was losing purchasing power, dropping by half from 1977 to 1981; US inflation was over 50% during those five years.
Starting in 1979, the International Monetary Fund (IMF) had little choice but to mobilise its resources to issue world money (special drawing rights, or SDRs).
It flooded the market with 12.1 billion SDRs to provide liquidity as global confidence in the dollar declined.
We would do well to recall those dark days
The darks days are set to return
The price of gold rose 500% from 1977 to 1980.
What began as a managed dollar devaluation in 1971, with President Richard Nixons abandonment of gold convertibility, became a full-scale rout by the decades end.
The dollar debacle even seeped into popular culture.
The 1981 film Rollover, starring Jane Fonda, involv...
John Maynard Keynes once wrote, Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.
Truer words were never spoken, although if you updated Keynes today, the quote would begin with practical women to take account of Fed Chair Janet Yellen.
The defunct economist in question would be William Phillips, inventor of the Phillips curve, who died in 1975.
It was put forward in an academic paper in 1958 and was considered a useful guide to policy in the 1960s and early 1970s.
In its simplest form, the Phillips curve describes an inverse relationship between inflation and unemployment.
As unemployment declines, inflation goes up, and vice versa.
By the mid-1970s the Phillips curve broke down. The U.S. had high unemployment and high inflation at the same time, something called stagflation.
Economists began to tweak the original equation to add factors some of which were not empirical at all but model-based.
It became a mess of models based on models, none of which bore any particular relationship to reality. By the early 1980s, the Phillips curve was no longer taken seriously even by academics and seemed buried once and for all. RIP.
But like a zombie from The Walking Dead, the Phillips curve came baaaack!
Heres why US monetary policy doesnt work
And the person who has done the most to revive it was none other than Janet Yellen.
Janet Yellen is out at the Fed. Her term ends on Feb. 1. Then Trumps appointee, Jerome Powell, takes over. The Senate must confirm this first, but I suspect hell make it through with no problem.
I recently said Powells main qualification seems to be that hes just like Yellen except hes a Republican.
As a Fed governor, Powell has never voted against Janet Yellen on any interest rate policy decision. You shouldnt expect any immediate changes in monetary policy.
The question is this: will Powell eventually abandon the same flawed models like the Phillips curve and embrace more realistic models that mirror the real world?
Fed governors such as Lael Brainard are showing less faith in traditional models.
For example, in September, she delivered one of the most significant Fed speeches ever. She more or less admitted the Fed has no idea how inflation works.
The Feds favourite measure of inflation plunged from 1.9% to 1.3% between January and August 2017 even as job creation continued and the unemployment rate fell. Septembers numbers, which came out last week, came in at 1.6% still below th...
Im writing from Australia. Im meeting with over 30 of the largest institutional investors and hedge funds in the country.
Im giving presentations to these investors about Fed policy and the potential for war in North Korea. I was able to learn quite a bit about their views on both developed and emerging markets.
Some of those view will be discussed in a very special Daily Reckoning Australia interview I recorded this week with my Aussie publisher. It will be released later this week stay tuned.
But traveling to foreign countries and taking the local pulse gives you insights that you cant get from the papers or TV. You can learn so much from private conversations over drinks or dinner. I then pass along these insights to you.
Meanwhile, even when Im over 9,500 miles from Washington, D.C., its hard to escape the news that broke late last week
What to expect from the new Fed Chairman
That news which affects investors even here in Australia is President Trumps appointment of Jerome Jay Powell as new chairman of the Federal Reserve. Powell will replace Janet Yellen, beginning next February.
I worked with Jay Powell when he was at the U.S. Treasury. I was general counsel of a major primary dealer in government securities at the time. In effect, Jay was my firms biggest customer.
My impression was that he was highly professional and always acted in the best interests of the Treasury and the taxpayers.
Hes smart, has integrity and has a distinguished career both in public service and in a private capacity at investment funds and think tanks.
Jay Powell is someone who is well liked and well regarded by Republicans and Democrats equally. Thats a rare attribute in todays deeply partisan political scene.
The most important fact about Jay Powells appointment is that there will be no change in monetary policy. As a Fed governor, Powell has never voted against Janet Yellen on any interest rate policy decision.
His speeches indicate strong support for Yellens approach. In short, Powell will be more Yellen when it comes to Fed interest rate policy. The Fed chair is changing, but interest rate policy is not.
Beginning in December 2015, Janet Yellen put the Fed on a path to raise interest rates 0.25% every March, June, September and December, a tempo of 1% per year through 2019, until the Fed normalizes interest rates around 3%.
The only exception to this 1%-per-year tempo is when the Fed takes a pause in hiking rates because one part of its dual mandate of job creation and price stability is not being met.
Lately job creation has been strong (despite a small hurr...
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