Being asleep at the wheel. Being like a rabbit caught in the car’s headlights and too frightened to move. Struck dumb. Several phrases, none of them polite, but each of them could be applied to the senior executives of Australia’s Reserve Bank, the RBA. No competent person in a position of authority at the RBA would keep in place the current monetary policy settings.Continue reading
Milton Friedman coined the phrase “inflation is always and everywhere a monetary phenomenon”. He would have been aghast, I think, if he were still around to see this chart of the US monetary base:Continue reading
Germany is the largest economy in Europe. Things are not going well there. It is less than four years ago that President Trump spoke at the UN and was openly laughed at by the German delegation. Trump’s laughable comments, as perceived by the Germans, were to warn of impending serious problems since Germany had deliberately wound back its power generation capacity in favour of long term access to Russian gas.
Now look what two stories appear on the same page of the FT:Continue reading
Did anyone see the report the other day that a study by the Centre for Independent Studies found that university places in Australia could be increased by 80,000 at no extra cost? What? How is that possible? It turns out that the cost savings could be made by removing doubling up in taxpayer supported placements. Double degrees etc. Now, ask yourself this: would removing doubling up in taxpayer support to create savings such that 80,000 extra students could enter university be a good thing?Continue reading
It is normal around this time that people consider the upcoming year and even make predictions about what may happen. This year, I’m not going to do that. Instead, I will make predictions about what won’t happen in 2022.Continue reading
The world runs on fossil fuels. So soon after the latest climate gabfest, this time in Glasgow, and the strategic oil reserve is being opened up. Certain foot-stamping teenagers will not be happy.
It seems that suddenly everybody is talking about inflation. Better late than never, I guess. In Australia, the inflation rate for the full year to 30 September 2021 was 3.1%. The September quarter price index rise was said to surprise economists and the bond market traders. Some Chief Executive Officers of large Australian companies have begone warning their consumers that price rises will be on-going. I know that in some industries, suppliers are giving notice of impending price rises closer to 10%. Producer prices are increasing rapidly and that will eventually feed its way into consumer prices. The Consumer Price Index is the favoured inflation measure of many people, but producer prices give a better lead indication. Continue reading
I am unaware of any country other than Sweden that has taken a targeted risk mitigation strategy to deal with SARS-COV-2. It appears to me that the citizens of other countries have been treated as amorphous, to be pummelled towards the impossible goal of virus elimination. “We had to destroy the village in order to save it.” That cliched quotation, supposedly from a US army general in Vietnam, may be a myth, but it does describe the apparent attitude of most governments in response to COVID19.
Risk mitigation has costs. Therefore, mitigation techniques should be applied only where they are needed and only if they can be reasonably expected to work.
Using Europe as an example, here is the median age data by country:
Across the continent, the median age is less than 44. (It has created up to around 46 in some countries.) That means more than half the European population is aged less than 44.
With that in mind, consider the mortality experience of the last 5 years up to the end of 2020, plus year to date 2021. This comes from the European Mortality Monitoring study that collects data from 29 participating countries. The following chart shows excess deaths (ie different from normal, where normal is based on continuous mortality investigations) for ages up to 44. Each line represents a calendar year of data, split by weeks 1 to 52. I have deliberately withheld the legend so that the lines are not identifiable as any particular year. Your challenge is to guess which coloured lines represent 2020 and 2021.
This analysis ought to inform policy response and mitigation targets. More than half the population is being hammered financially, psychologically and socially unnecessarily.
When it comes to global hegemony the main event is the US and China. This will remain the case for the foreseeable future. China has been making its objectives increasingly clear in recent years and I anticipate that pattern will continue and probably accelerate.
Demography is destiny, as the French chap Comte once said. The pattern of demography and wealth follows a well established path: as countries get richer, the fertility rate reduces, which results in an ageing shift in the country’s population structure until a new equilibrium is established. Of course, some countries adopt a high immigration policy to keep up the supply of younger to middle aged people. That works only if the country maintains that rate of immigration indefinitely. Australia and the US are immigrant nations. China, on the other hand is not. There are no queues at the immigration counters in China. Border security officers in China assigned to the immigration desk have one of the world’s most boring jobs.
So China’s population shape depends entirely on the fertility rate. And here lies the tricky issue. Take a look at the following chart of the US population structure, both historical and with UN projections to 2100.
The total population is growing. The workforce age cohort (25-64) is growing. The retiree cohort (age 65+ is growing but does not get too close to the workforce cohort numbers. Having a healthy surplus of workers to retirees, students and children is essential for economic vitality, growth and social cohesion.
Now look at the equivalent chart for China.
The workforce cohort (25-64) has already peaked and is now falling. That’s a big deal. Meanwhile, the retirees are growing in number. There is a rapid squeeze that will take a grip of the Chinese population structure over the next 40 years and generate really difficult economic constraints. A lot of China’s growth in the last 30 years has come from a transition of agricultural labour into industrial labour to support new manufacturing of goods that have been exported all over the world. That transition is largely complete. There is no easy source of new cheap labour still making its way to the industrial cities. Productivity gains and new investment will be the only sources of future growth. But a demographic structure as projected by the UN combined with a Communist state do not give me much hope that the Chinese people will be able to match the productivity gains of a liberal democracy.
China could well be the first country to grow old before it grows wealthy.
Now, I don’t expect the Chinese Communist Party to meekly roll over and say “Oh well, we tried.” Communist regimes fail – that much we know. But they don’t go quietly.
Most of the population of Australia remains in a COVID19-related lockdown that is unjustifiable by any measure. I wonder if any of those people bring facts into their thinking process? To give an update, here are three charts. I have shown data for Australia, UK and US.
First, the number of new cases:
Next, the proportion of those new cases that are of the Delta variant:
Finally, the numbers of deaths:
The increase in new cases in the UK and US winter of 2020/21 also resulted in an increase in deaths. But the increase in the current northern hemisphere summer has resulted in no increase in US deaths and a marginal increase in UK deaths. What changed? Delta. Virtually 100% of the current new cases is Delta. Last northern winter, virtually none of the new cases were Delta. Delta is more transmissible (apparently) but dramatically less deadly.
Meanwhile, Australia locks everyone up.