Surely the RBA will cut rates today

The RBA will cut rates today.
If they do not then Lowe should resign after he signalled this in a recent speech.

( He is the governor. I do member one time I was asked whether the RBA would cut a long time ago and I said no. The reason being Ian McFarlane had obviously briefed all three economic editors at the time , Alan Wood, Michael Stutchbury and Ross Gittins. They all had articles on why the RBA would not cut. The only problem was they did cut. Almost every market economist was made to look a goose.)

As Ricardian Ambivalence has shown nothing has come up recently that the RBA did nor know in their May meeting.
The only reason they did not cut had to be the election. Showing again Phillip Lowe is no Glenn Stevens.

There are two problems however.

1) it won't make a great deal of difference. Official cash rates are already 1.5%.
2) It means they have very little in the locker if something unexpected occurs like a recession

This is why Lowe has recommended the government adopt a fiscal policy with more stimulus than at present. ( It is stimulatory at present)..

We will get two cuts this year which will leave the official cash rate at 1%.

When Scott Morrison said if you vote Labor you will get a weaker economy he was right. I voted ALP and we have a weaker economy!!

Moar on polling blues

Well the Marvelous Mark the Ballot and the inimitable Kevin Bonham weigh in again on the election polling disaster.

Mark promises more articles.

They are both must read for politics wonks.

Around the Traps 31/5/19

It is time again for Around the Traps

Aussie,Aussie, Aussie, Oy,Oy,Oy

• Emma Rowe and Laura Perry on some-public-schools-get-nearly-6-times-as-much-funding-thanks-to-parents
• David Epstein on bob-hawke-s-asia-legacy
• Croaking Cassandra on canzuk
• Ricardian Ambivaslence on australias-flattening-phillips-curve
• Ross Gittins on without-decent-policies-labor-would-get-fewer-votes-not-more, our-new-economic-worry-reserve-bank-running-out-of-bullets
• Paul Fritjers on australia-should-remain-in-alliance-with-the-bully
• the Tally room on the big vote for One Nation in Hunter
• Greg Jericho on the-government-needs-to-get-into-more-debt-our-grim-economy-depends-on-it
• John Quiggin on australia-isnt-doing-its-part-for-the-global-climate
• Croaking Cassandra on economic-failure-the-reluctance-to-recognise-the-implications-of-extreme-remoteness
• Thomas Mortlock et al on rising-seas-threaten-australias-major-airports-and-it-may-be-happening-faster-than-we-think
• Peter Hurley et al on fewer-australians-will-have-uni-or-tafe-skills-if-governments-dont-reform-tertiary-education
• Euan Graham on scott-morrisons-biggest-foreign-policy-test-keeping-peace-with-both-china-and-the-us
• Kevin Bonham on oh-no-this-wasnt-just-average-polling-error
• Paul Karp on Australia-to-achieve-50-renewables-by-2030-without-government-intervention-analysis-finds
• renew economy on aemo-says-w-a-grid-at-risk-if-regulations-fail-to-keep-up-with-renewable-transition, australia-to-reach-50-renewables-by-2030-despite-coalition-scare-campaign, off-the-grid-aemc-paves-way-for-stand-alone-systems-to-replace-poles-and-wires, energy-transition-has-only-just-begun-but-solar-has-already-changed-the-game
• Petter Nyman et al on freak-mud-flows-threaten-our-water-supplies-and-climate-change-is-raising-the-risk
• Helen Dickinson on heres-what-needs-to-happen-to-get-the-ndis-back-on-track
• Robin Smitt et al on australians-could-have-saved-over-1-billon-in-fuel-if-car-emissions-standards-were-introduced-3-years-ago
• Ralph Christopher Bayer on the-behavioural-economics-of-discounting-and-why-kogan-would-profit-from-discount-deception
• The Piping Shrike on a-landslide-of-the-political-imagination
• Quentin Beresford on if-the-adani-mine-gets-built-it-will-be-thanks-to-politicians-on-two-continents
• Alex Reilly on cruel-and-no-deterrent-why-australias-policy-on-asylum-seekers-must-change
• Stephen Garnett et al on adanis-finch-plan-is-approved-just-weeks-after-being-sent-back-to-the-drawing-board

Northern America

• Menzie Chinn on guest-contribution-the-trade-war-resumes,
• Macro Mania on is-us-budget-deficit-sustainable
• Barkley Rosser on emoluments-as-grounds-for-impeachment
• Calculated Risk on the-war-on-data-continues, real-house-prices-and-price-to-rent-ratio-in-march
• Eric Kleerfeld on donald-trump-japan-abe-shinzo-trade-north-korea
• Tim Duy on fed-sticking-with-patient-policy-stance Thanks Brad
• the conversable economist onwhy-did-us-labor-share-of-income-fall-so-quickly
• Dallas Fed on which core to believe Thanks Mark
• Brad Setser on vietnam-looks-be-winning-trumps-trade-war Thanks Mark 
• Andrew Prokop on robert-mueller-statement-trump-russia-impeachment
• James Hamilton on yield-curve-inversion
• John Cassidy on our-columnists/robert-mueller-says-its-up-to-congress-to-indict-a-president
• Ricardian Ambivalence on clarida-king-of-the-doves

Europe

• Ben Wellings on why-boris-johnson-would-be-a-mistake-to-succeed-theresa-may
• stumbling and mumbling on the-johnson-puzzle

Asia

• Ben Bland on indonesia-don-t-over-react-jakarta-violence
• Teesta Prakash on modi-s-second-term-what-it-means-south-pacific
• Barkley Rosser on khamenei-denounces-rouhani-for-negotiating-nuclear-deal
• Tony Walker on politics-and-religion-collide-in-the-knesset-as-netanyahu-faces-the-fight-of-his-political-life
• Barkley Rosser on will-china-play-rare-earth-card-in-the-trade-war

Wonk

• Holly Cullen on new-indictments-set-up-a-confrontation-between-the-us-and-julian-assange
• Nick Gruen on forecasting-and-competition-policy
• Uneasy Money on michael-oakeshott-exposes-originalisms-puerile-rationalistic-pretension-to-jurisprudential-profundity
• Mainly Macro on on-use-or-not-of-expertise-by-government
• the conversable economist on what-if-argument-was-about-whether-to-remove-congestion, pricing, why-call-it-socialism, now-is-not-time-to-try-to-lessen-anger-of-Farange-and-Trump-devotees, how-economic-statistics-are-being-transformed
• Reda Cherif and Fuad Hasanov on The-Return-of-the-Policy-That-Shall-Not-Be-Named-Principles-of-Industrial-Policy Thanks Brad
• Darren Lim and victor Ferguson on huawei-and-decoupling-dilemma
• Robert Waldman on comment-on-delong-on-buchanan
• Brad De Long on from-total-industrial-to-limited-war-an-outtake-from-slouching-towards-utopia-an-economic-history-of-the-long-twentieth-century
• Stephen Grenville on america-s-fiscal-policy-rethink-reaches-japan
• Lorenzo on whiteness-is-not-property-deconstructing-critical-race-theory
• Michael Spence on unemployment-welfare-inequality-opportunity Thanks Mark 
• Pro Growth Liberal on conservative-economists-discover-baumol-cost-disease
• Bradford De Long on rise-of-robots-social-work
• Joshua Gans on an-old-result-on-automation-and-wages Thanks Brad
• David Appell on climate-deniers-who-usurp-tragedy-of-the-holocaust
• Tim Harford on why-going-on-holiday-gives-us-more-memories
• Roger Farmer on /why-indeterminacy-matters
• Tyler Cowen on the-real-losers-from-the-u-s-china-trade-war
• John Quiggin on economics-in-two-lessons-21st-century-cars
• Douglas Irwin on does-trade-reform-promote-economic-growth-review-recent-evidence Thanks Mark 
• Kenneth Rogoff on how-central-bank-independence-dies Thanks Mark 

General

• Brook Simmons on curious-kids-how-long-has-gravity-existed
• Alison Carroll on a-scope-as-big-as-humanity-can-conjure-the-terracotta-warriors-and-cai-guo-qiang
• Anthony Dossetto and Alex Franke on trees-the-ancient-macedonians-and-the-worlds-first-environmental-disaster

Climate

• and Then Theres Physics on models-are-failed-hypotheses
• Sung-young Kim et al on china-succeeds-in-greening-its-economy-not-because-but-in-spite-of-its-authoritarian-government
• New Deal Democrat on the-western-hemispheres-portion-of-the-arctic-looks-set-for-a-record-low

Andrew Gelman ( mainly stats)

• crystallography-corner-the-result-is-difficult-to-reproduce-but-the-result-is-still-valid
• i-have-zero-problem-with-people-reporting-results-they-found-with-p0-1-or-p0-2-whatever-the-problem-is-with-the-attitude-that-publication-should-imply-some-sort-of-certainty
• attacks-science-seem-come-unreferred-sources-think-social-psych-organizations-need-clamp-n-way
• i-have-zero-problem-with-people-reporting-results-they-found-with-p0-1-or-p0-2-whatever-the-problem-is-with-the-attitude-that-publication-should-imply-some-sort-of-certainty
• attacks-science-seem-come-unreferred-sources-think-social-psych-organizations-need-clamp-n-way
• lets-publish-everything
• why-edit-a-journal
• Kaiser Fung on using-data-to-guess-authorship-of-the-federalist-papers

Genial Dave Giles ( econmetrics)

• nuttin

Dianne Coyle ( quirky + book reviews)

• digital-arrivals-and-deaths-of-despair
• interdisciplinary-reading
• Ruth Gamble on book-review-unruly-waters-shape-south-asia-s-history

Vox Wonk

• cost-complexity-medicare-part-d-market
• advertising-major-source-human-dissatisfaction
• cultural-roots-firm-entry-exit-and-growth
• measuring-welfare-effects-ai-and-automation
• irish-crisis-lessons-small-central-banks
• procyclicality-banking-euro-area
• export-led-growth-central-and-eastern-europe
• 300-million-week-output-cost-brexit-vote
• confiscatory-taxation-jewish-property-and-income-nazi-germany
• costs-and-benefits-performance-fees-mutual-funds
• trade-war-clash-economic-systems-threatening-global-prosperity-new-ebook

Kevin Bonham lets fly at O/S 'experts on our polling failure plus ALP talent pool

The wonderful Kevin Bonham lets fly in an article entitled oh-no-this-wasnt-just-average-polling-error.

As usual it is a must read.
We should remember which a lot of journalists and 'pundits' do not we simply do not know why the Liberals won and the ALP lost.
I shake my head when they quote polling on the result. No-one but no-one got it right. the polling therefore is useless.

Meanwhile Ed Husic and Andrew Leigh will not be on the opposition front bench. given that these tow men are amongst the most talented people in the ALP in parliament this is extraordinary.
Why anyone would have to make way for Kristina Kenneally is a mystery to me. If she had talent then I have not spotted it. I was disappointed when she was the ALP candidate for Bennelong when we had a by-election. I have seen nothing since then to indicate to me she is worthy of a front bench position.

Public Debt and interest rates

An interesting paper on public-debt-and-risk-premium.
Stephen Grenville's america-s-fiscal-policy-rethink-reaches-japan should also be read in tandem.

Two comments.

The first articles misses the elephant in the room concerning public debt namely Japan. what about Ricardian Equivalence, Remember Kuttner and Posen did not find it in Japan and if you were going to find it anywhere than Japan was the [place

Impaired Money Markets

A fantastic paper on the-macroeconomic-consequences-of-impaired-money-markets.

This is very important.
We know all about liquidity traps but little about impaired money markets and they are crucial for banks.  I remember bringing up impaired lending as a reason for fiscal policy as monetary policy was impotent but was ridiculed by some alleged conservative people.

Was I a prophet??

Here in Australia the CBA which has/had the strongest balance sheet and a commonwealth government grantee to boot could find get any financing at all way back in 2009. I was told at the time they had hired a new bloke in Queensland in charge of lending in that state and then suddenly h=w was told NO MORE LENDING.

This is essential reading

Beware of richardsonisms and why ALP supporters should not get depressed

Oh dear we are being blessed with richardsonisms. I blame this disease after Graham Richardson who would big note himself when he had nothing to big note about.
Only Alan Ramsey of the Canberra press Gallery realised how much BS Richardson would exude on any topic and his alleged role in it.

In Saturday's SMU Peter Harcher showed he had swallowed hook line and sinker the Textor Crosby line of greatness.
first some context. Crosby first came to prominence when he helped engineer the win in 1996 which a drovers dog could have won.
In 2015 CT bragged about their superior polling ability. Orly problem was they never told anyone what they id right and what others did was wrong. Also very important is why politicians briefed by CT weren't at least quietly confident instead of simply relying on hope.
Come our election here and hey pronto again CT a polling geniuses.
Problems:
1) No-one I saw from the coalition looked confident at all.
2) No-one with said superior polling stats plunged on the betting markets
3) no-one said at the time the Libs polling was different to the public polling

Now why ALP supporters should not get depressed
There is a lot of 1993 about this election but everyone forgets Keating blew it away on his first budget.
so what issues could be front and centre next election

1) Budget and fiscal policy. The tax cuts coming in after the NEXT election are very expensive. If you believe the government will cut expenditure to finance them then I have shares in the Harbour Bridge to sell you.
Allied to this in the very short term is the economy is slowing. RBA government Lowe has argued for active fiscal policy. The government simply cannot do this politically UNLESS Commodity prices are raring.

2) Climate changing will be much more important next time. for example solar PV costs will be nearer $30/ MWh than $40.
There is likely to be blackouts because  units in coal fired power stations break down as it becomes very hot.
The world demand for Thermal coal will be declining and Adani will be seen as the con trick it always was.  We should also remember that this is a hot button issue for those countries in the South Pacific.

3) Water. The Murray/Darling problem will get worse as most of the scientists predict.

Just as Keating had little talent to play with in organising his cabinet after the election of 1993 Morrison is equally bereft of talent. The promotion of Stuart Robert is evidence of that. The promotion of Melissa Price before the election is also evidence that Morrison makes woeful mistakes of recognising talent.

All enough to win comfortably next time