You’ll notice that the transition from Harry Dent Daily to The Rum Rebellion is now complete.
How do you like the new template?
The team has also been working hard to get a new website up and running. If you click on one of the links above, it will take you to the new site. It’s a little sparse right now, but the content will grow in the weeks ahead.
You’ll still hear from Harry Dent when he writes. But the daily commentary from me will be more focused on Aussie issues. And on that note, I’ve got something good for you today.
But first, a brief wrap up of weekend events…it was a busy one…
The G20 meeting in Argentina came and went. The big news is that the US and China agreed to a trade war ceasefire. US tariffs on $200 billion worth of Chinese goods will no longer rise from 10% to 25% in January.
Markets will like this. It will help the ‘hope’ trade unfold in the coming weeks. But it’s not a permanent arrangement. Negotiations between the US and China will continue.
Moreover, there is a good reason for the trade ceasefire. Both nations are concerned about their economies. China in particular, is slowing as The Wall Street Journal reported on Friday…
‘BEIJING—China’s critical manufacturing sector appears to be stalling, with a gauge of activity ticking down in the latest sign of weakness for the economy.
‘The government reported Friday that the official manufacturing purchasing managers index fell to 50.0 in November—the threshold between expansion and contraction. November’s reading is slightly below October’s level and lower than some economists expected.’
This is partly why the Aussie market took a big hit on Friday.
The US economy is slowing too. That’s what the stock market is telling you, anyway. The slowdown is not yet a major concern. As I wrote last week, the major US stock indexes are still trading above crucial support levels. That suggests the economy is doing ok.
But Trump must be a little concerned, hence his G20 concession to China.
The weekend also saw the passing of George Herbert Walker Bush. A state funeral is set for 5 December. Remember last week I told you to watch that date? US attorney John Huber was scheduled to give testimony to Congress about, among other things, potential illegal activity at the Clinton Foundation.
That’s unlikely to go ahead now. President Trump declared Wednesday to be a national day of mourning.
A ‘stay of execution’ for the Clinton’s? We’ll find out soon enough!
Moving back to Australia now, and the big news from last week was protesting school kids. They were marching for climate change action. The Libs, who seem to be getting better at shooting themselves in the foot at every chance these days, condemned the protests. They said the kids should be in school rather than out protesting.
Whatever your view on the matter, in a free society anyone has the right to protest, including school children. Criticising them isn’t going to help your cause.
Addressing the issues raised by the kids is.
Which is advice I should’ve heeded before firing off a hasty tweet on Friday afternoon. I’ve only just joined Twitter (@canavan_greg) and I got into a decent scuffle with a bunch of climate change activists for saying that it doesn’t matter what we do, as long as China continues to belch emissions with no constraints, then our impact on climate change will be zero. And then I finished with ‘WTF are they protesting about?’
If you’re on Twitter, you’ll know you don’t have much room to craft an argument. And as a novice, I made mine poorly. After the onslaught of abuse I copped, I tried to explain but to no avail. Many of these climate ideologues accused me of being related to Resources Minister Matt Canavan (no relation) and working for the coal industry.
It was pretty funny. My facts had no chance against their emotions.
My point though is an important one. The climate change debate has gotten out of hand in this country. If you are critical of it, you’re a climate change denier. It’s black or white with no shades of grey.
For the record, I do believe climate change is real. I just don’t believe that Australia should threaten its economy and the wellbeing of its people by acting too hastily to cut emissions, when those cuts will make no discernable difference on a global scale.
Coal is rightly considered as the main culprit behind carbon emissions. But here’s the thing, Australia hasn’t built a coal plant since 2010 in WA. The last east coast plant was built in QLD in 2007.
We have 24 coal plants in the country, with a generation capacity of 23,000MW.
China, on the other hand, is currently installing 259,000MW of new coal generation capacity. That compares to 266,000GW of total coal generation capacity for the entire US economy.
You can read about it, here.
Much of this new plant building is unnecessary. It’s the result of central planning. China sets economic targets and works back from there. Local politicians hit their economic growth targets in part by building coal fired power plants.
I know China has a massive population and needs generation capacity to provide for them. But my point is that if China is adding 11 times our total installed coal generation capacity in a short space of time, then any efforts by us to reduce coal based emissions from a relatively much smaller base will be useless and detrimental to our economy.
The climate warriors say we should ban coal exports. My response to that? We have $1 trillion of net foreign debt supporting our fragile housing market. If we stop selling our second largest export earner, what do you think our foreign creditors would do?
In short, a ban on coal exports would collapse the economy.
But we have to do something, right?
Well, I would argue we are. It’s just not enough for the climate change warriors.
Despite the Federal Government not having a coherent plan, our energy mix is changing. As I said, we haven’t built a new coal plant for the NEM (national energy market) in 11 years. Within 20 years, nearly all the existing plants will be phased out.
The body responsible for operating the NEM, the Australian Energy Market Operator (AEMO), in its latest ‘Integrated System Plan’, says that:
‘By 2040 under the Neutral scenario, the energy production from retired coal-fired generation is projected to be replaced with about 28 GW of large-scale solar generation and nearly 10.5 GW of wind generation (in addition to the 4.5 GW already installed), complemented by over 17 GW of new and existing storage capacity.’
The challenge over this time will be in making a largely renewable energy source reliable. Renewable energy is intermittent. Some form of baseload power, either coal or gas, is still required to provide reliability and security.
So the transition needs to be managed carefully. The NEM is one of the largest and most complex in the world.
Alternatively, we could dump coal earlier and build zero emissions nuclear plants to provide baseload power.
Why aren’t the climate change warriors demanding this? Is it because it’s not an appropriate ‘virtue signalling’ message?
Editor, The Rum Rebellion