Dissatisfaction At The RBA
You read the news long enough, you do get educated into weird things. One of the things I've been taught over the years is that the RBA is independent of politics - that it operates apart from executive and legislature branches of government in order to be impartial. To that end it has a charter and it works to control inflation and work towards full employment. And now the RBA is getting reviewed because something really wonky has happened to our economy as result of the RBA doing its thing.
The bank’s charter, which includes a commitment to full employment, is unchanged since it was formally established in 1959. Its inflation target of 2-3 per cent, which it failed to meet in the 7 years leading up to the COVID-19 recession, was established in the early 1990s.
Apart from failing to meet its inflation target, the RBA now holds $356 billion in state and federal government debt as part of its quantitative easing program and has official interest rates at 0.1 per cent while households are carrying record levels of property debt.
KPMG senior economist Sarah Hunter said given how many unconventional monetary policy tools were used to deal with the coronavirus recession, the time was right for a review.
One of the things I might offer up is how the RBA uses the Consumer Price Index instead of the Cost of Living index to make its decisions on interest rates. The thing is, it is well known that for 3 decades now CPI has under-reported the inflation figured compared to Cost of Living. This has led to an overall easing bias over the 30 years, and amazingly (or not) this has led to the current state of affairs where interest rates sit at 0.1% and there is record private sector debt locked up in housing. I mean who'd a thunk it, right?
If the RBA had not decided to calculate CPI differently to how it did it back in the early 1990s, maybe CPI would not have under-reported inflation and consequently interest rates would not have been as low as they are today. Are low interest rates a problem on of themselves? No, but the accumulated byproducts of this low inflation regime is startling. There is the record private sector debt in mortgages; there's the housing crisis in general that is so problematic, governments cannot devise policies of sufficient aces to combat them; then there is the general problem of people not being able to save enough for retirement. A whole generation of people's retirements have been compromised by the regime of low interest rates that have followed the Global Financial Crisis, which in turn has forced their money into riskier assets late in life. Equities are at a historic high in spite of negative sentiment in such areas as the pandemic, accelerating Global Warming and associated natural disasters and generally low growth across the developed world that dates back three decades as well.
As well meaning as RBA Governor Philip Lowe is, we've seen a radical accumulation of paper wealth for the rich. Arguably, had the RBA followed the Cost of Living numbers over the CPI for the last 30 years, there might not have been the insane frenzy for real estate that suddenly seems to define the economy. So if nothing else, there's ample evidence the RBA needs to be reviewed. I'm certainly for doing it.
The 4th Dose Is Coming
I got my booster shot back in early January. I actually managed to get my Moderna shot a day before proper eligibility - the chemist wasn't really going to argue the toss at a time when they wanted everybody to be getting the booster anyway. I figured on the law of averages we would likely be doing yet another booster around May to June, given that even when properly motivated my shots seemed to take place 4-5 months apart at a time. During those months the politics would gyrate and new variants would come and go but the net effect was this thing where we needed to get another shot.
Now the chatter is that a fourth dose is inevitable.
“The protection that you are getting from the third, it is good enough – actually quite good for hospitalisations and deaths. It’s not that good against infections, but doesn’t last very long.
“But we are just submitting those data [on fourth doses] to the [Food and Drug Administration] and then we will see what the experts also will say outside Pfizer.”
Dr Bourla said Pfizer needed to be well-coordinated with US regulators the Food and Drug Administration, Centres for Disease Control and Prevention, and the wider industry, so “that we are all providing to the American people and to the world a cohesive picture rather than confusion” on whether four doses were necessary.
I am guessing that the Deltacron hybrid discovered in the UK and France recently is going to pose a problem. Basically, the mRNA vaccine Pfizer and Moderna have been making is based on the spike protein of the original. Omicron spikes are sufficiently different so render the vaccines much less effective. The Deltacron seems to have the spike of the Omicron but the pathogenic capability of Delta which means it's the worst of both worlds. It was bad enough when Moderna's boss said current vaccines would not terribly useful against Omicron back in December. If we don't get vaccine against the Omicron spike, we're kind of sitting ducks all over again. Amazingly, just as when Omicron started to break, the government is carrying on like living with all variants of COVID is like living with the Flu.
I'm also guessing that in roughly 2 months time we will find this current approach of relying mostly on the vaccine was way too loose. So I peg that we'll be doing our 4th boosters around May.
A Weird Take on Putin's Russia
So Big had this link wherein it is argued that Putin has won. It's a take based on the assumption that Putin is a psychopath and is acting accordingly (plausible) and therefore the outcomes he would be aiming for would be psychopathic outcomes. As such he is likely to get whatever it is because in all our sanity, we cannot fathom the depth of Putin's psychopathic goals.
It's an interesting take except a lot of psychopaths that do terrible things in public at least tend to end up imprisoned and incarcerated. Serial killers tend to hide their tracks and do their dirty deeds in secret but the public psychopaths tend to meet the pointy end of law and order. If Hitler's psychopathic outcome of his dreams was the destruction of European Jewry, then he sure did accomplish that outcome but he also ended up in the bunker shooting himself (if officials versions of events are to be believed). The same applies to any number of Nazis, Fascist dictators and unhinged royals of many a family in history.
It is true Putin is sitting on a good supply of wood, oil, grains, fertiliser and aluminium. It is true cutting off those supplies would hurt the world economy. Yet it is also true none of those commodities are exclusive to Russia, so it remains to be seen if these sanctions really will hurt us more than it hurts Putin's Russia. I'm inclined to think that in the 21st century commodities market, it's impossible to corner anything to be able to wrest control of the markets. I still think Putin is holding a bunch of losing cards right now.
PSA - New Album Coming
Just a quick note to let you know my new album 'Cosmic Orphans' is due out through digital only release on 17 March 2022.
Pink Floyd pulled all their tracks from Russia on Spotify because of this Russia Ukraine thing. I thought I might do the same but I realise none of you listeners are from Russia so it would be redundant.
Anyway, this one is my 'pandemic lockdown rock-down'. All of the songs were written and produced during this pandemic. Most of it was in fact recorded and mixed in the second half of 2020 and first half of 2021 - but lining stuff up for a release can be a bitch. I think just about everybody sent home to work from home worked on their album so the logjam must be intense. Some people wanna fill the world with digital audio information. And what's wrong with that?
Anyways, do be good, stay tuned. Go to Spotify and keep an eye out for it this week.