Tuesday 20th of August 2019

trading blows...

trade blows

When New Zealand slashed its interest rates by half a percentage point this week, it sucked the Australian dollar into a vortex, dragging it to its lowest point in 10 years.

It was, one economist said, “shock and awe” by the Kiwi central bank, a move taken only three times – after the Christchurch earthquake, the global financial crisis and September 11.

In the background, foreign central banks have been slashing their interest rates, bond rates have been tumbling around the world, and China and the US have been slugging it out in the second round of their trade bout.

Bloomberg declared that the fall in bond rates had sounded the “shrillest alarm yet over the economy”, while other media prophesied the world was teetering on the brink of economic disaster.

º Why the ‘yield curve’ is such a reliable predictor of a recession

Then on Thursday, NZ’s Reserve Bank governor Adrian Orr dropped the knife in the toaster in a “whatever-it-takes moment” by saying the RBNZ may have to resort to negative interest rates if it felt it needed to resuscitate the economy further.

“Easily within the downward errors of our forecasts … if you’re trying to stimulate … that means you have negative interest rates,” Mr Orr said on Thursday, potentially leading to mortgage rates of 2 to 3 per cent.

For many commentators, this was confirmation the sky was about to fall in.

But BetaShares chief executive David Bassanese prescribed a cup of tea, a Bex and a good lie down.

Mr Bassanese said a recession was “a low probability” based on the strength of the US economy, that central banks were cutting rates as a precaution, and that zero interest rates would choke the viability of banks.

“The Reserve Bank will only cut to 0.5 per cent by early next year. I am not changing my view or bringing it forward,” Mr Bassanese said.

“They would be reluctant to go too far too fast and I certainly don’t think they will go to zero [per cent].

“If you’re a glass-half-empty person, you look at the bond market and say it’s pointing to a recession,” Mr Bassanese said.

“If you’re a glass-half-full person, you’d say the bond market is simply saying that central banks will come to the party and do what’s needed and put enough stimulus in the market that’s necessary [to prevent a recession].”

In the US, consumer spending was still strong, the labour market was still firm and the US is also a large enough domestic market to not be too buffeted by the trade war, he said.

“They [central banks] are simply taking out insurance. They’re trying to stave off a recession … they’re firing their bullets now and the bond market is just pricing in those future cuts.

“And the sharemarket is holding up because they believe that central banks will do enough to ward off a global recession.”


“Trump’s re-election is the key motivator for making the economy work, and he’s in a jam where he polls well on fighting China, but fighting China is hurting his base.“It’s volatile. Whatever the state of play is now will not be the state of play next week.”

Read more:https://thenewdaily.com.au/money/finance-news/2019/08/08/global-recession-zero-interest-rates/




caught like the lettuce in the sandwich...

The West Australian Government has been left walking a fine line in navigating the state's economic reliance on China in the midst of a trade war between the superpower and the United States.

Key points:
  • A warning on China from Liberal Andrew Hastie sparked criticism from the Premier
  • China is WA's biggest trading partner by far, taking almost half of its total exports
  • Experts say WA's commercial relationship with China may not be possible in future


China has been WA's largest trading partner for the past 13 years, with half of the state's exports going there. WA exports more goods to China than all the other states and territories combined. 

On the flip side, Chinese visitors were also WA's largest spenders in 2018.

Tensions flared yesterday after the head of Federal Parliament's intelligence committee, WA Liberal MP Andrew Hastie, warned China's ambitions could threaten Australia's freedom.

In the piece, he compared the handling of China's rise to the failure to contain the advance of Nazi Germany and said the nation needed to acknowledge the challenges ahead otherwise "choices will be made for us".

Mr Hastie made the comments, reflecting some of the most serious condemnations of China made by any Morrison Government member, in an opinion piece in The Sydney Morning Herald.

WA Premier Mark McGowan accused Mr Hastie of damaging the state's relationship with China.


Read more:



I believe that Liberal MP Andrew Hastie's comments did not come off the cuff... He would have been briefed by the PM's office to rattle the cage without implicating our PM, Scummo. It's the way it's being done...

elephants in a small china shop...

The Mid-Range Nuclear Forces Treaty, for all time buried by Washington and Moscow, is a new chapter in the history of global security that is beginning. Defense expert Philippe Migault returns to the end of the FNI.

The Treaty on the Intermediate Nuclear Forces (INF), or Washington Treaty, symbolic of the end of the first Cold War, signed on December 8, 1987, between Ronald Reagan and Mikhail Gorbachev, officially becomes obsolete today.

The United States, which withdrew from the treaty on February 1, 2019, arguing that Russia had failed to comply with the treaty, had in fact given the Kremlin until August 2 to give guarantees of compliance with clauses of the text.

Predictably - Russia announced on February 2 that it was suspending its participation in the treaty - Russian authorities refused to comply with US injunctions over their 9M729 missile accused of violating the agreement. If Moscow has not officially withdrawn from the treaty, it does not consider itself less liberated from its obligations, which amounts to the same thing.

Obviously, Washington and its NATO partners will not fail to blame Russia. Georgia 2008, 2012 protests, Ukraine 2014, interference in US presidential elections, Skripal case, "poisoning" of Navalny opponent ...: The pitch is exemplary clarity. The USSR is back. Besides, Hillary Clinton had predicted it. At the heart of the summer, with media in search of sensational and whose few defense experts are on vacation, the Western press will of course relay this storytelling without thinking more.

Yet the end of the FNI treaty has little to do with all of this. It is the culmination of a string of violations of international law by the United States on the one hand, and on the other hand, a process of increasing exasperation of Russia with, as a corollary, to the international agreements assumed, such as the annexation of Crimea, answer of the shepherd to the shepherdess.

Obviously, since we are on RT, the critical reader will not fail to point out that of course, the fault is once again the Americans. But who can reasonably deny that it is the latter who, imagining they can endorse not "the dividends of peace", but those of "the end of history," have behaved for a quarter of a century like elephants in a china shop, sacking the strategic balance they have, the first, ardently defended?


Read more:






MOSCOW, Jan. 23 (Xinhua) -- The Russian 9M729 land-based cruise missile, contrary to the allegations of the United States, does not fall under the Intermediate-Range Nuclear Forces Treaty (INF), senior Russian officials said Wednesday.

"Russia has fulfilled and continues to strictly observe the provisions of the treaty and does not allow any violations," said Lt.-Gen. Mikhail Matveyevsky, Chief of the Missile Troops and Artillery Branch of the Russian Armed Forces.

He spoke at a news briefing on the cruise missile for military attaches and Russian and foreign media, saying that the United States uses the missile to accuse Russia of violating the 1987 treaty and threatens to abandon it.

"The 9M729 missile could not be tested at the prohibited range of 500 to 5,500 km, as it was developed for other purposes," Russian Deputy Foreign Minister Sergei Ryabkov said at the briefing.

According to Matveyevsky, the missile, which was demonstrated at the briefing in the Moscow region, is a modernized version of the 9M728 cruise missile, part of the short-range Iskander-M missile system.

The 9M729 missile is 53 cm longer than its predecessor and its maximum range decreased by 10 km to 480 km, which is below the minimum 500 km range set by the treaty, Matveyevsky said.

Under the INF Treaty signed between the Soviet Union and the United States, the parties committed themselves to liquidating their ground-based medium-range and shorter-range missiles, the launchers of such missiles, as well as the associated auxiliary facilities and equipment.

By June 1991, the Soviet Union destroyed 1846 medium- and shorter-range missiles, as well as 106 launchers and 239 Oka missiles with a range of 400 km as a gesture of goodwill, Matveyevsky said.

Meanwhile, Ryabkov said that the United States is testing drones and other systems banned by the INF treaty.



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torpor in the land of seven sundays a week...

Australia's foreign policy discussion — such as it is — often seems to roll along in a torpor that is out of sync with what is actually happening in the world.

Only the more extreme rhetoric, or biggest threat, or, dare one say, sharpest three- or four-word slogan seems to penetrate through the fog, while the bigger picture of what is at stake either gets lost, or quickly forgotten once the headline issue has been dealt with.

There has been plenty of this abroad in this week when the one big story that looms up wherever you look is China.

A week ago, the story was all about whether the United States wanted us to have missiles in Darwin.

It took a few days of bumbling to knock that on the head, but once it had been ruled out, the broader messages US Secretary of State Mike Pompeo and US Secretary of Defence Mark Esper were delivering seemed to get lost.

These were messages about the preparedness of the US to escalate strategic tensions in the Asia-Pacific by pushing for ground-based missiles, and the United States' willingness to drop Australia right into heightened diplomatic tensions with Beijing by clearly exhorting Australia to back Washington's stance against China.

That these messages seemed to get lost after a couple of days might be explained by the fact there were even more alarming China-related stories erupting: the upgrading of US/China trade tensions into a currency war; and an increasingly ugly situation in Hong Kong.

The decision of the Chinese to devalue their currency on Monday in response to increased US trade sanctions shook financial markets, with ramifications for the value of the Australian dollar and the value of Australian investments.

Equally, what is happening now in Hong Kong — with an escalation of aggressive warnings to protesters this week by Beijing — seems to make the prospect of a significant crackdown there now very likely.

Yet what has captured the debate — or at least the headlines — is the comparison a government backbencher, Andrew Hastie, has made between China and the French failure to recognise the threat from Hitler's Germany in 1940.

'See above' isn't leadership

There was immediately an outcry about any comparisons to the Nazi regime, and very little discussion of the strategic argument Hastie was making.


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see also:

still feeling the howard effects of ming...

beating the democrats to it...

Democrats Vow to Go Tough on Trade. But Trump Beat Them to It.

  • Democrats have long been critical of NAFTA and China, but President Trump has stolen that playbook and gone further.
  • Now they are trying to figure out how to differentiate themselves from Mr. Trump — without ceding their position as the party that will defend workers.


US to drop off the ATO?...

WASHINGTON (Sputnik) - US President Donald Trump said on Tuesday that the United States may pull out of the World Trade Organization (WTO), following what he claims are years of mistreatment at the hands of the organization.

"We will leave if we have to", Trump said during a campaign rally in Pittsburgh. "They have been screwing us for years, and it's not going to happen any longer".

Trump said the United States does not need the WTO if the organization fails to address loopholes that favor certain nations.

"They view certain countries like China, India, many countries - they've viewed them as growing, they are growing nations. [...] Well, they have grown, and they had tremendous advantages. We are not letting that happen anymore", he said.

Trump has repeatedly reiterated his criticism of the WTO, claiming that the US is disadvantaged as a member of the global bloc. The US president has also repeatedly called the WTO a "catastrophe" and a "disaster" for the US.

Trump recently directed US Trade Representative Robert Lighthizer to secure changes in the group that would prevent developing countries from utilizing regulatory loopholes.

The White House pointed out in a memorandum that China and many other countries continue to style themselves as developing countries “allowing them to enjoy the benefits that come with that status and seek weaker commitments than those made by other WTO members”.

Shortly after issuing the memorandum, Trump said in a statement that the WTO is "broken" when the world's richest countries claim to be developing countries and get special treatment to avoid WTO rules.

The memorandum points out that seven of the ten wealthiest economies in the world - as measured by GDP per capita on a purchasing-power-parity basis - currently claim developing-country status: Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore, and the United Arab Emirates.

China, the world's second-largest economy, has been identified by the United States as the most significant abuser of WTO regulations. Since joining the WTO, China has insisted that it is a developing country, according to the memorandum.

Discussions about reforming the WTO have been going on for years and the organization's 164 member states are yet to reach a consensus. They are divided into two camps, with one group of states - including Russia - advocating for the organization's further development, and another calling for developing a new format for the bloc.


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