This week, the European Central Bank said it will keep rates low until it sees inflation near its 2% target. As they said, this ‘may also imply a transitory period in which inflation is moderately…
Brexit, the US-China trade war and conflict in the Middle East.
It seems we are quickly moving into an era where markets are dominated by politics.
What is the real impact of politics on the economy and global markets?
On any given day you may see the ASX up or down on a variety of politically-driven events.
At The Rum Rebellion we take a long-term view. Ultimately, markets are driven by earnings and interest rates. At a fundamental level, this is all that matters.
Brexit and the US-China trade war can impact earnings and interest rates, so to a degree, these are relevant to market moves.
The real impact of politics on the economy and global markets though, is that it creates a smokescreen for investors.
The back and forth detracts from a clear-eyed view of what’s really wrong with a country — especially here in Australia.
What’s wrong with Australian politics?
Of course, Australian politics has recently impacted markets. The ASX got a short-term boost from the Liberal victory in the federal election.
However, successive governments (on both sides of the aisle) have created a system that results in an excessive amount of capital flowing into the property sector.
Investors have been rewarded by speculating on land, rather than investing in longer-term productive enterprises. Commodity-based income underwrites this national pastime, which is why the commodity/housing nexus is so important to ongoing growth.
It has left us with a foreign debt of $1 trillion, and the continued selling off of assets to fund our property obsession. As a result, we have a chronic current account deficit. In the year to 30 June 2018, the deficit was around $50 billion.
The trend reversed recently on the back of a commodities boom, in particular iron ore.
Hooked on houses and mining again…
What’s Australia’s political relationship with China?
Everyone knows we have a close economic relationship with China. They now own some of our ports, gas pipelines and electrical grids.
They pour money into real estate and mining as well.
But our over reliance on this investment comes at a price — we don’t have anywhere to go if the relationship breaks down.
As a result, we are sceptical of China as a force for good in Australian politics and our commentary reflects that.
Climate change policy and what The Rum Rebellion stands for…
Instead of facing these issues, Australian politics is tearing the country apart. One of the chief culprits is climate change. Climate change and what to do about it has been a key destabiliser of national politics since it increasingly became a political issue from around 2007.
The Rum Rebellion is a libertarian voice. While we think all governments are corrupt and self-serving, out of principle we particularly abhor the ‘government knows best’ views emanating from the left of centre.
We don’t pull punches and we don’t accept money from advertisers, so we can tell it like it is.
On this page you can find all our political analysis. We cover topics in US politics, Australian politics and pretty much any political factor that could move markets.
You may disagree with us, or even be offended. We aren’t fussed though, we take freedom of speech seriously.
Ultimately, inflation is just a very pernicious and corrosive form of taxation. It ruins the economy and corrupts the society; it reduces real economic output and makes people poorer.
Different liberal thinkers had different views on how much the state should intervene to safeguard the vulnerable and ensure a relatively egalitarian society existed.
In today’s economy, the zombies get infusions…households get stimmy cheques…the stock market gets pumped up……real losses are papered over with fake money…
All indications point to a crash of biblical proportions in our future. Only foolish people and those without understanding of how markets function would close their eyes and ears to the messages being sent.
US inflation surprised to the upside. June’s Consumer Price Index came in well above expectations at 0.9%, increasing 5.4% from a year ago. This is the largest increase in 13 years.
That the majority of Australians believe they have a 38% chance of dying if they catch COVID is all the proof you need. It shows the government and media’s fear campaign has worked.
We don’t know, but prices are on the rise almost everywhere. In England, inflation is running at about 2.5% annually — the highest level in three years…
There IS an underlying law of economic gravity at play here. Companies can’t infinitely grow earnings faster than GDP growth. You can cut costs (lower wages through automation)…