As the treasurer lauds supply-side economics, a once-controversial recovery theory is gaining traction.This is the essence of modern monetary theory – that government budgeting is nothing like household or business budgeting, for the simple reason that government can create money.
Trump threatens ‘fire and fury’ against North Korea
Donald Trump may be impotent getting his domestic legislative program through Washington, but there is one realm in which the POTUS is free to roam and roar, the exercise of military power – never mind the constitutional requirement for congressional approval to go to war.
So things got a bit nervous this week, despite Trump getting his way with tighter sanctions on North Korea approved by China, when the rate of rhetorical fire stepped up. The North Koreans said the Americans would pay dearly for the United Nations Security Council move they had initiated and “under no circumstances” would they negotiate giving up their nuclear missiles and missiles. Rubbing it all in, US officials were quoted as saying Pyongyang had worked out how to make nuclear devices small enough to fit on missiles.
“North Korea best not make any more threats to the United States,” Trump responded from the links at the Trump National Golf Club in Bedminster, New Jersey, where he is holidaying from the steamy Washington swamp and spending his money in-house. “They will be met with fire and fury like the world has never seen.”
Echoing Wellington’s remark about his own troops in the Napoleonic wars − “I don’t know what effect these men will have upon the enemy, but, by God, they frighten me” − US sharemarkets plunged. North Korea’s military said it would bracket the US base on Guam with four warning missile shots into nearby waters if Kim Jong-un gives the go-ahead.
Over at the Beidaihe beach resort, facing North Korea across the Yellow Sea, Xi Jinping also must have been wondering how far Trump would go in his crazy man act. The new UN sanctions put an embargo on North Korea’s exports of coal, iron and metallic ores, and seafood. Nearly all of these go to China and would earn Pyongyang about $US1 billion, a third of its export earnings.
Kim Jong-un can probably wriggle his way through, with a bit of covert help from deniable Chinese and Russian traders and by ramping up counterfeit US dollar and amphetamine production. To really put the squeeze on Kim, Trump wants the Chinese to cut off their oil. So along with some displays of military force, Trump’s officials are also discussing “secondary” sanctions against Chinese financial institutions less directly linked to North Korean trade.
Less direct pressure comes from Trump’s hovering threat of punitive tariffs on imports from China, which could quickly spiral into an economic crisis for Xi just before he seeks Communist Party endorsement of another leadership term at its congress in October or November. Real economic reform has been dumped, Premier Li Keqiang and his technocrats pushed aside, and the usual accelerators – exports and infrastructure and construction loans – applied. It could all go badly wrong.
As we noted last week, the siege of the jihadist-held city of Marawi in the southern Philippines goes on and the US marines are itching to go in, but American assistance for Manila’s struggling military is incremental.
Despite President Rodrigo Duterte’s demand last year for their withdrawal, troops from the US military’s Joint Special Operations Command continue the deployment started soon after the 2002 Bali bombing. They are starting to move beyond the official “training and advisory” mission and have a name: Task Force Trident.
In Manila this week for the ASEAN Regional Forum, a security-oriented gathering of Asian and Pacific foreign ministers, US Secretary of State Rex Tillerson said support now included “intelligence capabilities” with “a couple of Cessnas and a couple of UAVs [drones] to allow them to have better information with which to conduct the fight down there”. But US media reports say the Pentagon is discussing US armed drones being sent in for strikes at
Daesh-linked militants if things worsen.
The Marawi situation has taken pressure off Duterte on the human rights front, meanwhile. He said Tillerson and Australian Foreign Minister Julie Bishop only mentioned his estimated 7000 extrajudicial drug-war deaths “in passing” in their meetings at the presidential palace. Tillerson was circumspect in his public references, too. “I see no conflict at all in our helping them with that situation [Marawi] and our views of other human rights concerns we have with respect to how they carry out their counternarcotics activities,” he said.
We hear little news in our mainstream media about Africa bar human miseries from famine, Ebola and Boko Haram. After we won African votes for our UN Security Council seat four years back, the aid tap was largely turned off. But the struggles of democracy in countries such as South Africa, Kenya and Nigeria are crucial to the future of a continent that will supply most of the world’s population growth in the century ahead.
South Africa this week showed some impressive popular resolve in the no-confidence vote by secret ballot against President Jacob Zuma in its parliament. Although Zuma won the vote by 198 votes to 177, there were clearly many defections and abstentions from his ruling African National Congress, which has 249 of the 400 seats.
The skids are clearly under Zuma, who is deeply unpopular for his favouritism to an ethnic Indian business family. He looks unable to pull the trick of several other African counterparts in removing the constitutional limit on presidential terms and must stand down in 2019. Later this year his term as ANC president expires. Zuma is trying to install a former wife, Nkosazana Dlamini-Zuma, as his proxy but ANC deputy president Cyril Ramaphosa is closing in, and his election as party chief would confirm Zuma as a lame duck. Next month, a supreme court of appeal considers whether to reinstate 783 corruption and criminal charges against Zuma.
In Kenya, incumbent president Uhuru Kenyatta stood for a second term on Tuesday. The son of the founding president Jomo Kenyatta, he looked to have a clear majority of about 55 per cent and, if ahead in a majority of counties, would not need to go to a runoff ballot.
In a country that has impressed with its use of IT, such as its M-Pesa mobile banking, Kenya uses thumbprints to identify voters. But opposition candidate Raila Odinga, a hereditary rival of the Kenyattas, said the results had been “hacked” and by Thursday five had died in protests over the count.
Two elections ago, in 2007, about 1100 people died and 600,000 were displaced in post-election violence. Uhuru Kenyatta was indicted by the International Criminal Court for his alleged role in stirring the violence. But the case collapsed due to lack of evidence, partly because witnesses disappeared.
Benjamin Netanyahu, Israel’s prime minister, is looking increasingly embattled and never mind the toxic situation with Israel’s own Arab population and the Palestinians. The police are closing in with charges over the miasma of cronyism and favour-trading surrounding Netanyahu that look, well, almost Australian.
Israeli media reported this week that his wife, Sara Netanyahu, could be indicted by the attorney-general’s office within days over the alleged spending of public funds at the couple’s private home. This follows two years of investigations and a lengthy interrogation a week ago by Israel’s national fraud squad.
Earlier the prime minister’s former chief of staff, Ari Harow, agreed to testify as state’s witness against Benjamin Netanyahu as part of two investigations into allegations of corruption. These centre on lavish and “inappropriate” gifts he and his family allegedly received from wealthy supporters, including Australian gambling tycoon James Packer, who is now living in Tel Aviv. Another was Las Vegas gambling magnate Sheldon Adelson. Israel’s Supreme Court has just ruled Netanyahu must disclose his phone calls with Adelson. Netanyahu allegedly promised favours to Yedioth Ahronoth newspaper owner Arnon Mozes in return for positive coverage. Up until then, Adelson’s free newspaper Israel Hayom was most relied upon by Netanyahu’s Likud party.
Allegations are also flying about alleged kickbacks in a German submarine deal signed under Netanyahu’s government. Netanyahu says all these allegations are “unfounded” and part of a political campaign against the government.
This article was first published in the print edition of The Saturday Paper on Aug 12, 2017 as "Disquiet in wake of ‘fire and fury’ threat".
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