Monthly archives: May, 2019

Now that Trump is US president, world braces for Trumpnomics

Rex Tillerson, former chief executive officer of Exxon Mobil Corp and now US secretary of state nominee, for president-elect Donald Trump. Photo: Kevin DietschIf Australia does indeed catch a cold when the US sneezes, should we be preparing for a crippling dose of influenza when Trumpnomics takes hold?

In the months following the end of the US presidential campaign, the rhetoric of Donald Trump moved from boisterous statements on (mostly undoable) plans to build walls and ban Muslims to more practical announcements about economic policy.

This rhetoric reflects Trump’s understanding that the way to make America great again is through economic prosperity. Hence the need to articulate an economic plan, which, with this weekend’s inauguration, will soon become reality.

So what does this plan look like and what effects will it produce?  How are we in Australia going to be affected by the new course of US economic policy?

Mission impossible: saving manufacturing

On the basis of what we know, the centrepiece of Trumpnomics is a restriction of international trade to protect domestic manufacturing (and possibly some other declining industries and sectors).

President Trump is threatening to implement a policy of import substitution, whereby tariffs and/or quotas will be imposed on imports of manufacturing goods produced abroad, even if by US corporates.

Import substitution is not a new idea. In the past, it has been used in many countries to drive industrialisation. While the circumstances and practical implementation of this policy significantly differed across countries, one thing was common: import substitution did not work.

In the countries that tried it, domestic industries failed to develop and the government (read: taxpayers) had to pick up the tab of what turned out to be a very costly experiment.

In principle, import substitution could work if manufacturing was suffering from a temporary loss of competitiveness. In this case, targeted protection would provide the sector with the necessary time to adjust to the new environment (or to respond to whichever shock caused the initial loss of competitiveness) and regain competitiveness.

But in the US (and in most other advanced economies), manufacturing is now structurally uncompetitive; it is a declining sector that tariffs and quotas would keep artificially alive for some time, but at the cost of higher domestic prices on manufactured goods.

Furthermore, if tariffs and quotas were accompanied by some sort of subsidisation of the manufacturing sector (eg tax discounts, direct payment of subsidies and transfers), the import substitution policy would also place a heavy toll on the federal budget.

Actions and reactions

Another undesirable effect of Trump’s import substitution plan is that it will trigger responses from other countries.

Here of course the mind immediately turns to China and the rest of east Asia. One option for China and other US creditors (possibly including Japan) would be to stop financing the US debt.

This could potentially lead to a financial crisis that would significantly reduce the long-term growth potential of the US economy.

However, this is not likely to happen because China and other countries hold large volumes of US debt. There is no rational reason why creditors would want to dump a good investment.

A more likely option would be for China to return to a policy of systematic devaluation of the renminbi.

This would make Chinese goods cheaper and offset to some extent the effect of the tariffs imposed by the US. If China devalued its currency, one would expect other emerging countries to do the same, with the risk that the global economy might be shaken by a domino of competitive devaluations.

The devaluation of the renminbi in response to Trump’s actions would be good news for Australian consumers but bad news for Australian exports. Consumers would enjoy cheaper goods from China and other countries whose currency loses value relative to the Australian dollar. Exports would become less competitive on international markets.

Service (including education) and tourism would suffer the most. To prevent that, Australia could also engage in some form of exchange rate management to devalue the Australian dollar. But this could lead to inflationary pressures at home.

Neglecting fundamental issues

Certainly, the jobs that are being lost in US manufacturing and other declining sectors are a matter of concern. However, rather than trying to save these jobs through a costly import substitution policy destined to fail, President Trump should think of more structural and dynamically efficient interventions.

As an entrepreneur, he should know that while some sectors and activities decline, others emerge. Workers who lose their jobs should be helped to move to the new, emerging sectors of the economy.

To this end, active labour market policies that support the requalification and upgrade of workers’ skills ought to be implemented via the federal budget. Unfortunately, there has been no mention of such policies in President Trump’s rhetoric.

The other big item in Trumpnomics is a combination of corporate tax cuts and investment in infrastructure. This package is becoming more and more popular across many governments.

Yet President Trump’s belief that more infrastructure and lower corporate taxes will stimulate private sector activity and economic growth is questionable.

Economic growth is essentially a process of innovation that leads to productivity gains and to the emergence of new sectors and industries. Infrastructure and tax cuts across the board do not automatically facilitate innovation and hence do not guarantee growth.

However, they do require to be financed. The most likely candidates for a cut in the federal budget are social welfare and public health and/or education. This in turn will increase disparities and inequality in income distribution.

As inequality increases, innovation becomes less likely because its main source (the “middle class”) progressively disappears. At that point, Trumpnomics will have achieved the opposite of what it was meant to achieve: less innovation and slower long-term growth.

In conclusion, Trumpnomics is more than likely to damage the US economy; and if the US economy is hurting the rest of the world is destined to feel the pain.

Professor Fabrizio Carmignani is Head of Department of Accounting, Finance and Economics at Griffith Business School.

This story Administrator ready to work first appeared on Nanjing Night Net….

Sydney lights up with Lunar New Year festivities

Sydney prepares to welcome the Year of the Rooster with lion dancers. Photo: Edwina Pickles Lord mayor Clover Moore beats the drum for Sydney’s Chinese New Year festivities. Photo: Edwina Pickles

Sydney will celebrate a multicultural Australia over 17 days as the Lunar New Year makes way for the Year of the Rooster.

The city’s Lunar New Year festival will celebrate its 21st anniversary as the biggest outside of Asia.

“The Chinese New Year will be colourful, it will be noisy, it will be a lively celebration, and I hope Sydney will join us in this wonderful celebration,” Sydney lord mayor Clover Moore said.

The annual celebration will bring together residents and visitors to the “sights, sounds and tastes of Asia”. The festivities will begin on January 23 and conclude February 12.

“It celebrates not only our citizens of Chinese heritage but also Vietnamese, Thai and Korean,” Councillor Moore said. “So many Sydneysiders have that Asian heritage.”

The famed lanterns, representing the 12 Chinese zodiac signs and the rooster, will line the foreshore from the Sydney Opera House to Dawes Point during the festival.

“This year there will be an illuminated park,” the lord mayor said. “Tall, larger-than-life lunar lanterns around our harbour in celebration.”

The program of events will include dragon boat races, community performances, workshops, and red lights on the Opera House, the Sydney Harbour Bridge and the Town Hall.

Chinese New Year festival curator Claudia Chan Shaw said the event would be a “spectacular display of shimmering lanterns”, with a focus on the Rooster across the foreshore.

“You can not miss them. They are absolutely huge,” Ms Chan Shaw said. “Displaying true Rooster traits of power and love of the limelight, the rooster lantern will be displayed here at the Opera house.”

In addition to the lights, the festival program offers 80 events across the city with a focus on Dixon Street and Chinatown, as well as Pitt Street Mall and Martin Place.

Chinese New Year festival advisory group chair Robert Kok said the upcoming festival and performances will showcase how “Sydney embraces Chinese New Year”.

“These community celebrations are always at the heart and soul of our Chinese New Year festival,” Mr Kok said. “It brings the community together to celebrate our multicultural society.”

This story Administrator ready to work first appeared on Nanjing Night Net….

Canberra man dies after being swept off rocks at Tathra – as locals aid in rescue of four others

Emergency crews were called to Tathra after a group of Canberra fishermen were swept off the rocks. Photo: Jacob McMasterA fishing trip ended in tragedy when a Canberra man died after being swept off rocks at Tathra.

The incident occurred around 1.10pm on Saturday, when the 54-year-old and four other men were dragged into the water by dangerous seas while rock fishing near Kianinny Bay

Chief Inspector Tony Moodie of Bega Police said the men came from the ACT as a group.

Two of the town’s locals, Shane Babington and Bill Aliendi, were instrumental in the ocean rescue.

Commercial fisherman Mr Babington heard cries for help from his house and ran down to the rocks to get a look.

He saw four people in the water and while one made it back up the rocks on his own, there were still three left in the water with one life jacket between them.

He then dashed up back up to the house to ring 000 before calling out to his neighbour Mr Aliendi.

The pair hitched up the boat and made a dash to the Kianinny boat ramp, where they were able to pick up two of the men from the water.

“It took us only a couple of minutes to get in the water and by the time we got there we could see two people in the water so we picked them up,” he said.

“They told me there was another person in the water.”

The Far South Coast Local Area Command, Marine Area Command, Tathra Surf Life Saving Club and the Westpac Rescue Helicopter all searched for the remaining man, but later found the 54-year-old unconscious.

The lifesavers and paramedics provided CPR to the man, but he could not be revived.

CPR was also performed on a second man.

A dangerous surf warning for deceptively powerful surf was in place for Saturday.

Neither the deceased man nor the other man requiring CPR were wearing a lifejacket at the time they were washed into the water, but one man pulled from the water uninjured did have one on.

Three of the men were taken to the South East Regional Hospital, but all were discharged on the day with minor injuries. One man required stitches.

Mr Babington said he could not have made the rescue without his neighbour’s help.

“I wouldn’t have been able to do what I did without Bill,” he said.

Bega District News

This story Administrator ready to work first appeared on Nanjing Night Net….

James Cameron returning to Terminator franchise in ‘godfather’ role

Director James Cameron is reportedly returning to The Terminator franchise. Photo: Paul Archuleta Arnold Schwarzenegger as The Terminator in Terminator 3: Rise Of The Machines

The Terminator franchise has spawned five films and even a TV series.

He’s back. Well, sort of.

James Cameron is reportedly returning to the Terminator franchise after stepping back from the Hollywood blockbuster that catapulted both himself and Arnold Schwarzenegger into the spotlight.

Cameron hasn’t been directly involved in the time-travelling, post-apocalyptic universe he brought to life since directing Terminator 2 in the early ’90s.

Since then, there’s been another three Terminator films and even a TV spin-off. None of these have been considered a massive success, though.

But the franchise’s fortunes could be about to change, with Deadlinereporting that Cameron is in early talks with Deadpool director Tim Miller to direct a possible sixth film.

If it goes ahead, this means Cameron will be “godfathering” the project instead of sitting in the director’s chair.

It’s unclear at this stage whether the talks relate to just a sixth film to conclude the franchise, an entire reboot, or both.

Whatever happens, there’s no denying the curious timing. After all, Cameron regains certain rights to The Terminator in 2019.

Usually, rights-holders simply have to ensure their claim to a film remains ‘alive’ in order to ensure the rights don’t return to the original owners (hence why there are so many Spider Man films).

But it appears Cameron managed to strike a specific deal when he stepped away from the Terminator franchise that saw the rights revert to him after a set period of time.

If this new project goes ahead and is a commercial success – think of Titanic or Avatar – then Cameron is about to get a whole lot richer. And that’s not even considering potential game spin-offs and other merchandise.

But devoting time and energy to a new sci-fi project would be a momentous task, given Cameron is currently working on shooting not one but four Avatar sequels, tentatively scheduled for release through till 2023.

One only needs to look at George Lucas’s Star Wars prequels to see how revisiting an old favourite could all go wrong. Surely this time the new terminator movie will be good right? pic.twitter南京夜网/xvy9VX6qXo— Callys Caves 3 (@CallysCaves) January 22, 2017if there is going to be a new #Terminator film it should better be @Terminator Genisys sequel and please dont reboot pls pls— Kiran (@imKiranDuvvuri) January 22, 2017James Cameron and Tim Miller working on a new Terminator film seems like something from a weird drug induced dream— Leigh A. Jones (@whee_leigh) January 21, 2017

This story Administrator ready to work first appeared on Nanjing Night Net….

Solar, battery demand set to surge as energy prices soar, survey finds

The times increasingly favour solar panels – and soon batteries, a survey finds. Photo: Mark MetcalfeSoaring prices of electricity and gas are prompting many more people to consider adding solar panels and batteries to give them greater control over costs, a consumer survey has found.

The study, involving almost 2500 households conducted by UMR Research for Energy Consumers Australia and KPMG, found about 34 per cent were considering adopting solar panels within the next five year compared with the 15 per cent now owing photovoltaics.

The interest jump for batteries was even greater, with 27 per cent examining adding batteries compared with just five per cent owning storage.

“Their overall assessment is that they are not happy with the value they are getting from energy prices and the energy sector,” Rosemary Sinclair, chief executive of ECA, said. “Consumers now have an option which is to take matters into their own hands, and invest in assets that give them independence.”

The survey should serve as a warning shot for energy companies that consumers aren’t willing to cop increasing fuel bill when tumbling prices for solar panels and now batteries offer them alternatives.

“Even Joe Blogs out there looking at ever-increasing energy bills is becoming less and less convinced by the conservative [argument] that we’ll get your energy prices down,” said Ben Larsson, a project manager who installed a 2-kilowatt solar PV unit in 2010 and added another 2.5 KW last year.

“People are getting the sense of ‘Right, I want to an option to have get some control over my energy consumption, and I’m starting to need to because it’s becoming that expensive,'” he said. Hip-pocket pressure

The ECA was set up two years ago by states and the federal government to give consumers a greater voice in an industry increasingly dominated by just three big generator-retailers: AGL, EnergyAustralia and Origin Energy.

The survey found financial rather than environmental interests were the foremost drivers in consumers seeking solar PV. (See table below.)

The research was conducted last May before a series of grid issues, including the super storms that took out a major South Australian transmission line and triggered a state-wide blackout.

How those outages might contribute to greater consumer demand for solar and storage was “a very interesting question”, Ms Sinclair said.

While not among the top motivations for shifting to solar, consumers were aware of the environmental aspect of the change including the need to decarbonise the economy, she said.

“People understand that there is a transition underway and their concern is that the transition costs as little as necessary,” she said.  Just add batteries

Mr Larsson said his first panels, aided by a generous NSW feed-in tariff at 60 cents per kilowatt hour exported to the grid, paid themselves off in just “four and a bit years”.

Even with the voluntary feed-in tariffs now offered by retailers slashed to just 6-8.4 cents in NSW, the pay-off period for solar remains about five years. That’s because PV prices have dropped as much as 70 per cent since he bought his first panels, Mr Larsson said.

While batteries are not yet justified by financial criteria alone, even that mark could be crossed over the next 12-15 months as global competition in storage intensifies, the Randwick resident said.

(See survey responses for storage below.)

“People are starting to come to the conclusion we’re no longer helpless and at the whim of the three big retailers, and whatever they throw at [us] in terms of an energy rate,” he said.

Bruce Mountain, an energy economist with CME Australia, predicts consumers will switch to solar PV and batteries much faster than regulators predict.

He said Tesla’s new 13.5-kilowatt-hour Powerwall 2, costing about $8800 before installation, offered a lower battery price per capacity than the Australian Energy Market Operator had predicted for 2040.

That meant residents in cities such as Adelaide – where power prices have doubled in the past eight years – were now be better off with panels and storage. A similar result was likely for Sydney and Melbourne, he said.

The impact on demand for electricity from utilities could be significant since a household with solar PV typically cut power usage from the grid by about a third. Adding a battery, however, slashed grid purchases by about 95 per cent, he said.

Follow Peter Hannam on Twitter and Facebook.

This story Administrator ready to work first appeared on Nanjing Night Net….