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Welcome to QETA Newsletter 3 2016.
At the simplest level, economics can better show us the consequences of our actions. Less simple are cases in
which we don't have the knowledge to predict the full consequences. Global warming and climate change are
examples. Edmund Phelps
During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists,
it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his
analysis vastly more exact. - Ronald Coase
Economics is mostly how humans rationalize who gets what and why. It's how we instantiate our preferences about
status, privileges, and power. - Nick Hanauer
We assume that everything's becoming more efficient, and in an immediate sense that's true; our lives are better in
many ways. But that improvement has been gained through a massively inefficient use of natural resources. - Paul
Hawken
QETA 2016 CALENDAR OF EVENTS
28 February
7 March
7 March
8 March
9 March
10 March
10 March
31 March
11 April
21 May
11 July
14 July
22 July
25-29 July
25-29 July
12 September
3 October
12 October
2016 Subscription Due
RBA Seminar 1 Cannon Hill Anglican College 11am
RBA Seminar 2 Brisbane Girls Grammar School 4pm
RBA Seminar 3 Toowoomba Grammar School 9am
RBA Seminar 4 Gold Coast 9.30am - venue to be advised
RBA Seminar 5 Cavendish Road State High School 7am
RBA Seminar 6 Marist College Ashgrove 9.30am
Final date for discounted memberships
Econopak 1 Published
QETA Conference – Brisbane Girls Grammar School
Econopak 2 Published
UQ Student Day
QUT Student Day
UQ Student Economics Competition
Economics Week
UQ Student Economics Competition Presentation of Prizes
Econopak 3 Published
AGM
QETA NEWS
1. BEA CONFERENCE
Thinking, Teaching, Doing Business – Call for papers now open!
The BEA Biennial Conference will be held at Wrest Point Convention Centre, Hobart, Tasmania on
Thursday 29 and Friday 30 September 2016.
The 2016 Conference Planning Committee is calling for expressions of interest for papers and workshops
at the Biennial Conference. The conference provides a forum for the teaching and learning of economics
and business education and associated studies for colleagues across Australia and New Zealand. The
Conference will also provide the opportunity for participants to be updated on the Australian Curriculum.
>> Click here to submit a paper or workshop.
>> For more information on the conference please visit our website.
2. 2016 MEMBERSHIP
Don’t forget that membership fees are due to be renewed by the end of February. On 29 th February, only
those who have renewed their memberships for 2016 will receive the Newsletter and other
communications from QETA. Please try to have your school renew as soon as possible.
3. QETA CONFERENCE 2016
We are able to confirm that the QETA Conference will be held on Saturday 21st May 2016 at Brisbane Girls
Grammar School and that the focus of the Conference will be on the new Economics syllabus which is to
be developed by the QCAA.
4. RBA SEMINARS 2016
Don’t forget to register for one of the QETA RBA Seminars to be held as follows:
7 March
RBA Seminar 1 Cannon Hill Anglican College 11am
7 March
RBA Seminar 2 Brisbane Girls Grammar School 4pm
8 March
RBA Seminar 3 Toowoomba Grammar School 9am
9 March
RBA Seminar 4 Gold Coast 9.30am - venue to be advised
10 March
RBA Seminar 5 Cavendish Road State High School 7am
10 March
RBA Seminar 6 Marist College Ashgrove 9.30am – Booked out!
The Seminar at Marist College Ashgrove is now booked out essentially. There are a couple of
spaces left only! However, there are spaces available at the other three venues in Brisbane!
The Seminars are for registered teachers of Economics and their students only. No external attendees are
permitted. It is also the RBA policy that the presentation cannot be recorded in any way via video etc..
TEACHING RESOURCE
How to jazz up your PowerPoints with an embedded video
It can be really awkward trying to open and close windows on a computer screen in front of a restless
class - try embedding your YouTube videos into your PowerPoints...
http://tutor2u.cmail20.com/t/ViewEmail/j/5AFE2E930480BC54/7402E01707305E9F20B193FBA00ED1DB
Better Classroom Questioning - Socratic Questioning
Socratic questioning is an extremely powerful questioning technique that teachers can use to explore
complex issues and ideas with students, open up common misconceptions and analyse and evaluate topics
at...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
Cut and Paste Powerpoint Timer
Have you ever wanted to include a simple timer into a Powerpoint slideshow? Now you can - this simple
Powerpoint-timer file gives you some "cut-and-paste" timers to put...
http://tutor2u.cmail20.com/t/ViewEmail/j/EE61AF3E87E0D60F/7402E01707305E9F20B193FBA00ED1DB
PROFESSIONAL LEARNING
Preparing for new senior assessment and tertiary entrance systems
A new section on the QCAA website helps schools stay up-to-date with the various trials and initiatives
being conducted this year to inform the design of revitalised senior assessment and tertiary entrance
systems.
Australian Higher Education Summit
Melbourne on 14th/15th of July
The conference aims to provide attendees with an unparalleled opportunity to examine the management
structures, partnerships and value chains within the tertiary sector that are paramount for personal,
commercial and operational success.
We are able to offer your members a special Higher Education Association Members Rate of $450 to
attend the conference (a saving of 80% off the standard rate) by booking online and entering the
following code: 16HESASC
Is EdTech transforming education?
Here is a thoughtful podcast analysis from The Economist on the role of ed-tech in education, and whether
it is actually helping learning.
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
RESOURCES
1. FROM THE FEDERAL TREASURY
2. FROM THE ABS
8501.0 Retail Trade Australia (Media Release), Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/MediaRealesesByCatalogue/676AC4CC578D6559CA257734002
04519?OpenDocument
8501.0 Retail Trade, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/8501.0?OpenDocument
8731.0 Dwellings approvals continue to decline in December (Media Release), Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/MediaRealesesByCatalogue/B4669E44CACBB1D5CA257E38001
BDFC5?OpenDocument
5368.0 International Trade in Goods and Services, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/5368.0?OpenDocument
6467.0 Selected Living Cost Indexes, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/6467.0?OpenDocument
8731.0 Building Approvals, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/8731.0?OpenDocument
5372.0.55.001 International Merchandise Trade: Confidential Commodities List, Jan 2016
http://www.abs.gov.au/ausstats/[email protected]/mf/5372.0.55.001?OpenDocument
8731.0 Building Approvals, Australia, Dec 2015 (Additional Information)
http://www.abs.gov.au/ausstats/[email protected]/mf/8731.0?OpenDocument
5671.0 Lending Finance, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/5671.0?OpenDocument
3101.0 Australia to reach 24 million (Media Release), Jun 2015
http://www.abs.gov.au/ausstats/[email protected]/MediaRealesesByCatalogue/BA93C4A707F25020CA257F57002
287FC?OpenDocument
3101.0 Australian Demographic Statistics, Jun 2015 (Additional Information)
http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0?OpenDocument
9314.0 Sales of New Motor Vehicles, Australia, January 2016
http://www.abs.gov.au/ausstats/[email protected]/mf/9314.0?OpenDocument
3401.0 Overseas Arrivals and Departures, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/3401.0?OpenDocument
5609.0 Housing Finance, Australia, Dec 2015
http://www.abs.gov.au/ausstats/[email protected]/mf/5609.0?OpenDocument
Australia's population soon to reach 24 million,
http://www.abs.gov.au/ausstats/[email protected]/MediaRealesesByCatalogue/EC168D1FB33F5985CA257F56001
B440B?OpenDocument
3. FROM THE IMF
Speech: The Role of Emerging Markets in a New Global Partnership for Growth by IMF Managing
Director Christine Lagarde
http://www.imf.org/external/np/speeches/2016/020416.htm
IMF Survey : When National Cycles Coincide: Tracking Global Recessions and Recoveries The
world has experienced four global recessions since 1960. In a new multimedia book, two economists track
what drives the global economy into and out of a recession.
http://www.imf.org/external/pubs/ft/survey/so/2016/int020916a.htm
4. FROM WORLD BANK
A New View of the Middle East and North Africa
A new interactive data visualization shows the economics of the Middle East and North Africa, and explains
why countries in the region need a new social contract. The data is easy to download and share. Read
More »
5. FROM THE RBA
The Reserve Bank of Australia issued the Index of Commodity Prices for January 2016. You can view
this statistical release at:
http://www.rba.gov.au/statistics/frequency/commodity-prices/2016/icp-0116.html
The latest quarterly Statement on Monetary Policy has been released by the Reserve Bank of Australia.
http://www.rba.gov.au/publications/smp/2016/feb/
The Reserve Bank of Australia has released the February 2016 issue of the Chart Pack.
You can view the Chart Pack at:
http://www.rba.gov.au/chart-pack/index.html
The Reserve Bank of Australia has released the Minutes of the February 2016 Monetary Policy
Meeting of the Reserve Bank Board.
http://www.rba.gov.au/monetary-policy/rba-board-minutes/2016/2016-02-02.html
The statement delivered by the Governor, Glenn Stevens, to the House of Representatives Standing
Committee on Economics in Sydney is available on the RBA website.
http://www.rba.gov.au/speeches/2016/sp-gov-2016-02-12.html
6. FROM THE BUSINESS SPECTATOR
The RBA’s jobs outlook brightens
5 Feb 2016 | 5:17 PM | Bill Evans
The RBA’s statement contained a few surprise traces of optimism, including an upbeat view of labour
market trends.
What kind of power will China become?
5 Feb 2016 | 5:00 PM | Stratfor
Challenging economic and market conditions could put a halt to China’s political, military and economic
rise.
Why the RBA will keep holding steady
2 Feb 2016 | 4:02 PM | Bill Evans
Two key factors are likely to ensure the RBA keeps rates unchanged for some time.
A rocky road awaits the yuan
9 Feb 2016 | 2:06 PM | Mike Callaghan
Growing unease over China’s growth fundamentals, coupled with global currency tensions, will intensify
the pressure on its currency.
The devil in the demographics
29 Jan | 5:00 PM | William H Gross
The implications of an ageing global population will dominate investment markets and returns for the next
few decades.
The challenge of building Australia’s gateway to the Indo-Pacific
29 Jan | 5:00 PM | Robertson & Aidan Lavin
While its significant potential has long been recognised, the vision of Northern Australia as an economic
hub has never been fully realised.
A happy medium will drive economic growth
29 Jan 2016 | 5:00 PM | Jana Matthews
Growing our ‘upper small’ and medium-size businesses will unlock the greatest returns for the Australian
economy.
Australia is not Greece, but its economy is obese and unfit
16 Feb 2016 | 8:57 AM | John Daley
Comparisons with Greece may be a little premature, but there is certainly hard work ahead for Australia’s
economic policymakers.
The RBA plays the waiting game
16 Feb 2016 | 4:21 PM | Bill Evans
Although we must be mindful of the risks global financial turbulence poses to the domestic economy, rates
look set to remain on hold this year.
ACOSS sets out $12bn budget savings proposal
16 Feb 2016 | 12:33 AM | AAP
Peak social welfare body says insurance rebate should be scrapped, negative gearing incentives reined in.
The global savings glut is here to stay
12 Feb | 5:00 PM | Tracey & Joachim Fels
Rates are set to stay lower for longer, as the so-called demographic cliff remains at least a decade away.
7. FROM ECONOMY WATCH
OECD Economist: Central Banks Jeopardizing World Economy
William White is a senior adviser to the Organization for Economic Cooperation and Development (OECD),
and heads the OECD's Economic and Development Review Committee. He is making waves with a recent,
fairly scathing, critique of various nations' central banks. According to White, Central banks’ excessively
liberal monetary policies are putting the global economy at risk, and he wants things to change.
Read More
Supplementing GDP with Wealth Statistics
By: East Asia Forum | Date: 02/16/2016
Suppose you are an investor evaluating a company, but you only have its income statement. There you
have revenue, expenses, profit and profit growth. If the company has experienced high profit growth then
this may indicate future growth, and imply a sound investment. However, if you can’t tell whether the
company is simply selling off its assets, as shown on the balance sheet, then you will not have a good idea
of the company’s potential for future growth. This same logic applies for measuring the well-being and
development of nations and communities.
Read More
8. FROM THE ECONOMIST
Negative interest rates
Now that Japan has joined the club, a quarter of world GDP comes from countries with negative interest
rates. Welcome to a topsy-turvy world
READ MORE >
9. FROM MONEYSMART
Do you understand investment risk?
Test your knowledge of investment risk with our new investing challenge
Investing outside Oz
Gaining exposure to overseas assets or markets can diversify your investment portfolio but there are
some common pitfalls.
Going for broke
What really happens when you go bankrupt or sign a debt agreement.
10. FROM TED TALKS
Plastic bags are essentially indestructible, yet they're used and thrown away with reckless abandon. Most
end up in the ocean, where they pollute the water and harm marine life; the rest are burned in garbage
piles, where they release harmful dioxins into the atmosphere. Melati and Isabel Wijsen are on a mission
to stop plastic bags from suffocating their beautiful island home of Bali. "Don't ever let anyone tell you
that you're too young or you won't understand," Isabel says to other aspiring activists. "We're not telling
you it's going to be easy. We're telling you it's going to be worth it." Watch »
Economic growth is the defining challenge of our time; without it, political and social instability rises,
human progress stagnates and societies grow dimmer. But, says economist Dambisa Moyo, dogmatic
capitalism isn't creating the growth we need. She surveys the current economic landscape and suggests
that we have to start thinking about capitalism as a spectrum -- so we can blend the best of different
models together. Watch »
11. FROM THE DAILY RECKONING
Bank of Japan Gives Australia More Rope
 Japan’s deflationary vortex, driven by horrible demographics
By Greg Canavan in Albert Park
--Remember in Friday’s Daily Reckoning I said to keep an eye on the closing price of the ASX 200? Here’s
what I wrote:
‘Being the last trading day for the month, it will be interesting to see whether the ASX 200 will close back
above the 5,000 level. If it can’t (future prices indicate it will struggle) it will represent the lowest monthly
close since June 2013.’
--Well, late in the day the index was lacklustre. But then came the Bank of Japan with its negative interest
rate announcement. The Aussie index responded immediately. Stocks closed up on the day and the ASX
200 closed just above 5,000.
--But was it enough?
--Not quite. Friday’s close was slightly lower than the August monthly low. That means the Aussie market
made a new monthly low in January, the lowest monthly close in three and a half years.
--That’s bearish. It tells you that the odds suggest this market will go lower as 2016 unfolds.
--But in the short term, the bounce that got underway last week should continue for a while yet.
--Thanks to the Bank of Japan’s actions on Friday, Aussie stocks should continue to rally.
--So what did the BOJ do? Bloomberg explains:
‘The Bank of Japan pushed interest rates below zero Friday, after years of keeping them at the lower end
of the positive range.
‘The negative rates will be imposed on reserves worth about 10 trillion to 30 trillion yen initially and will
apply only to new reserves that financial institutions deposit at the central bank, according to people
familiar with knowledge of the matter. The change will take effect on Feb. 16.’
--Let’s ignore the fact that this will do absolutely nothing to help Japan out of its economic quagmire. The
country is stuck in some sort of deflationary vortex, driven by horrible demographics.
--With Japan’s population constantly shrinking (meaning constantly lower demand) no amount of
monetary or fiscal stimulus will fix things.
--This policy decision is all about trying to weaken the currency. I wonder what China will think of it?
--But in the short term, such a move is bullish for markets. To understand why, let’s have a look at the
role that Japan plays in global asset markets.
--As you probably know, Japan has been a basket case for many, many years. Thanks to a massive asset
market bubble at the end of the 1980s (which the authorities never dealt with properly) and terrible
demographics, Japan has endured years of very low interest rates.
--As a result, one of the primary big picture trades has been the selling of Japanese yen and the buying of
higher yielding currencies and assets. Australia is one of the favoured destinations of Japanese capital.
--In fact, there is a pretty strong correlation between the Aussie stock market and the Aussie dollar/yen
exchange rate. The chart below shows you this relationship over the past five years.
--The All Ordinaries index is the black line, while the Aussie/yen exchange rate is the red line. When the
yen weakens, it’s bullish for Aussie stocks because investors and traders sell it to buy higher yielding
Aussie assets.
Source: StockCharts
Click to enlarge
--So this announcement by the BOJ should provide a short term boost for Aussie stocks. But it will only be
short term.
--After all, what have negative rates achieved for the Swiss or Europeans?
--These are policy settings designed to discourage capital flows and weaken currencies. Nothing good
comes out of deliberate attempts to devalue currencies. Such policies are an admission that there are no
other options to increase demand…the only option is to steal existing demand from other nations.
--It also raises the question of when the Fed will respond. The interest rate settings of Japan and Europe
funnel capital into the US dollar where there is at least the whiff of a yield. The strength of the dollar will
eventually hurt US multinationals. In fact, it’s already hurting them. Falling earnings estimates for US
stocks reflect this.
--Now, this is good and bad news for Australia. It’s bad in that a stronger US dollar usually reflects weaker
commodity prices. That should keep a lid on any recovery in the resource sector (notwithstanding the rally
in oil).
--But negative rates in Japan should see some short term support for the banks, as capital searches for a
return in this higher yielding sector.
--As I mentioned though, this will only be a short term reaction. There are some bearish big picture
developments unfolding in the global economy. This announcement by the BOJ will not change that.
--The other thing to consider is that it is really only ‘saving nations’ that can set interest rates below zero.
Both Japan and Europe have huge levels of excess savings (a result of running current account surpluses
for years) and this puts constant upward pressure on a currency.
--Setting negative rates is one way of removing some of this upward pressure.
--But if Australia tried to do something similar, it would risk a currency collapse. We are a debtor, not a
creditor. Who would want to invest in Australia for near zero return?
--No one. After hedging for currency risk, it wouldn’t make sense.
--So the best we can hope for is to take advantage of the desperation of the world’s savers to weaken
their currencies. But will only buy us a little more time.
--Or, depending on your viewpoint, provide us with a little more rope to hang ourselves with.
Greg Canavan,
For The Daily Reckoning
12. FROM NCEE
Better Money Habits Module
Better Money Habits is a module of 18 personal finance lessons (gr. 6-12) that introduces new resources
and strategies for teaching students how to navigate important life events such as renting an apartment,
saving, college, buying a car and more. Visit the Website and Get Started >>>
13. FROM TUTOR2U
Updated country profile sheets used by students as preparation for their macro exams. The resource is
available as a free download.
Building Contextual Awareness - Country Profile Sheets
Behavioural economics: making poor financial decisions
Behavioural economics tries to offer realistic insights into decision making. Traditional economics
assumes people make rational decisions and consistent choices based on effective computation.
http://tutor2u.cmail20.com/t/ViewEmail/j/00FC374AD53537CC/7402E01707305E9F20B193FBA00ED1DB
Youtube and Contestability - The Fine Brothers nearly changed the game
Here's a story that got me thinking about Youtube and concepts of Perfect Competition
and contestability. Examples of perfect competition are thin on the ground and we talk...
http://tutor2u.cmail20.com/t/ViewEmail/j/00FC374AD53537CC/7402E01707305E9F20B193FBA00ED1DB
Should we make mosquitoes extinct? An application of Cost-Benefit Analysis.
As the WHO declares mosquito borne Zika fever a major health emergency, scientists claim that we now
have the knowledge to make extinct the...
http://tutor2u.cmail20.com/t/ViewEmail/j/00FC374AD53537CC/7402E01707305E9F20B193FBA00ED1DB
The impact of trade and globalisation
There is a great analytical piece on the impact of trade on the Economist website from the weekend. In
particular, it examines the impact of imports into...
http://tutor2u.cmail20.com/t/ViewEmail/j/5AFE2E930480BC54/7402E01707305E9F20B193FBA00ED1DB
Market Failure and Behavioural Policies - Research Assignment
A seasonal hat tip to my colleagues in the economics department at school for this tremendous idea for a
slightly different research project to promote independent learning and stronger evaluation...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
Chinese slowdown - the human cost for migrant workers
This video from Reuters highlights the precarious existence of migrant workers as the Chinese economy
slows down: as the piece highlights, workers are increasingly seen as criminals rather...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
Economists must never ignore the human factor
Several members of the Tutor2u teacher community have alerted me to this excellent, thought-provoking
article from Tim Garton-Ash on the challenges to Economics as an academic discipline nearly ten...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
Chinese Economic Reform - An Overview
These are pivotal times for the Chinese economy. Structural reforms of their institutions, labour and
financial markets are high on the agenda of the Chinese government and many of them...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
Cartels: The Quebec Maple Syrup Cartel
Quebec has 7,500 mostly family-run farms – who produce 70% of world supply of maple syrup. Since
1990 producers have been required to hand over the bulk of what they produce to the...
http://tutor2u.cmail20.com/t/ViewEmail/j/42BA50F3AD038951/7402E01707305E9F20B193FBA00ED1DB
TPP is signed! What do trade agreements do?
The signing of the Trans Pacific Partnership trade agreement in Auckland, New Zealand in February 2016
raises once again the topical issue of trade agreements and their economic and social benefits...
http://tutor2u.cmail20.com/t/ViewEmail/j/486CE3F10919BC70/7402E01707305E9F20B193FBA00ED1DB
Topic of the Day: Barriers to Entry
Our economics topic of the day is “Barriers to Entry”. Revise this key concept using our study notes,
presentations, and more!
http://tutor2u.cmail20.com/t/ViewEmail/j/035022FCB2A0873E/7402E01707305E9F20B193FBA00ED1DB
Thirst for Coffee Brews Chronic Supply Shortage
Elementary demand and supply factors at play here: there's the prospect of higher coffee prices. Changing
consumer tastes, as artisan coffee houses become the norm in cities such as...
http://tutor2u.cmail20.com/t/ViewEmail/j/035022FCB2A0873E/7402E01707305E9F20B193FBA00ED1DB
Can a new currency help Somalia
In a country where no new bank notes have been printed for over 39 years, can a new currency help
Somalia to re-establish a financial system to support growth and help...
http://tutor2u.cmail20.com/t/ViewEmail/j/035022FCB2A0873E/7402E01707305E9F20B193FBA00ED1DB
World Bank Video on the Internet Economy
The 2016 World Development Report focuses on the digital dividends from the rapid expansion of the web
and associated technologies. This 3 minute video outlines some of the benefits of the internet...
http://tutor2u.cmail20.com/t/ViewEmail/j/349492B656CB876A/7402E01707305E9F20B193FBA00ED1DB
Selected Sources of Reading on China
Study notes
This study note provides a selection of links to archived analysis and evaluation of developments in the
Chinese economy
http://tutor2u.cmail20.com/t/ViewEmail/j/349492B656CB876A/7402E01707305E9F20B193FBA00ED1DB
Digitisation and the Future of Work
In this video clip, economists from the OECD look at the Fourth Industrial Revolution and how the
digitisation of work will affect labour markets. It is a fantastic clip...
http://tutor2u.cmail20.com/t/ViewEmail/j/349492B656CB876A/7402E01707305E9F20B193FBA00ED1DB
Engaging Lesson Starter - Conveyor Belt Memory Game
Here's a fun and engaging lesson starter for your next Economics lesson called 'Conveyor Belt Memory
Game' (hat tip to Paul Hoang from Sha Tin College in Hong Kong for...
http://tutor2u.cmail20.com/t/ViewEmail/j/349492B656CB876A/7402E01707305E9F20B193FBA00ED1DB
Bank of Japan moves to set Negative Interest Rates
The Bank of Japan has made an unexpected move to cut their main interest rate into negative territory in
a bid to bring the exchange rate down and help avoid...
http://tutor2u.cmail20.com/t/ViewEmail/j/349492B656CB876A/7402E01707305E9F20B193FBA00ED1DB
Oligopoly and Game Theory
Study presentations
A revision presentation on aspects of game theory applied to an oligopoly
http://tutor2u.cmail20.com/t/ViewEmail/j/49FD784721B7C5E6/7402E01707305E9F20B193FBA00ED1DB
Development Economics: Mexico in Focus
Study notes
This is a curation of articles and analysis on the economic performance of Mexico, a member of the OECD,
TPP and NAFTA and one of the most interesting countries to...
http://tutor2u.cmail20.com/t/ViewEmail/j/49FD784721B7C5E6/7402E01707305E9F20B193FBA00ED1DB
Development Economics: Ethiopia In Focus
Study notes
This is a curation of news articles and analysis on the economic performance of Ethiopia, one of the
world's fastest-growing countries and a nation at a critical stage of their...
http://tutor2u.cmail20.com/t/ViewEmail/j/49FD784721B7C5E6/7402E01707305E9F20B193FBA00ED1DB
Transition Economies
Study presentations
Transition economies are involved in a process of moving from a centrally planned economy to a mixed or
free market economy.
http://tutor2u.cmail20.com/t/ViewEmail/j/49FD784721B7C5E6/7402E01707305E9F20B193FBA00ED1DB
Storify on Abenomics and the Japanese Economy
Abenomics refers to economic reforms introduced by Japanese prime minister Shinzō Abe and central
bank governor Haruhiko Kuroda. Abenomics seeks to expand the money supply, boosting government
spending and supply-side...
http://tutor2u.cmail20.com/t/ViewEmail/j/49FD784721B7C5E6/7402E01707305E9F20B193FBA00ED1DB
Oligopoly and Collusion
Study presentations
A revision presentation of business collusion in an oligopoly
http://tutor2u.cmail20.com/t/ViewEmail/j/7F03C82088170C31/7402E01707305E9F20B193FBA00ED1DB
Oligopoly - The Kinked Demand Curve
Study presentations
A revision presentation on the kinked demand curve theory of oligopoly plus revision notes on the basics
of an oligopoly
http://tutor2u.cmail20.com/t/ViewEmail/j/7F03C82088170C31/7402E01707305E9F20B193FBA00ED1DB
Oligopoly and Examples of Price Fixing
Study notes
Recent examples of price fixing cases in oligopolistic markets
http://tutor2u.cmail20.com/t/ViewEmail/j/7F03C82088170C31/7402E01707305E9F20B193FBA00ED1DB
Growth Miracles and Growth Disasters
Some might take issue with continuing to award Japan thew accolade of a growth miracle economy,
nonetheless this entertaining short video from Marginal Revolution is a a tidy bridging resource...
http://tutor2u.cmail20.com/t/ViewEmail/j/7F03C82088170C31/7402E01707305E9F20B193FBA00ED1DB
Economic Growth - The Importance of Institutions
Study notes
Institutions matter for economic growth and development. This is widely recognised in the economics
literature; consider for example the damage to economic prosperity and the risks to human development
and...
http://tutor2u.cmail20.com/t/ViewEmail/j/7F03C82088170C31/7402E01707305E9F20B193FBA00ED1DB
Topic of the Day: Contestable Markets
Our economics topic of the day is “Contestable Markets”. Get to grips with this this key concept using our
study notes, presentations, videos and more
http://tutor2u.cmail20.com/t/ViewEmail/j/292359273C2BC114/7402E01707305E9F20B193FBA00ED1DB
The England football team suit and globalisation
The story of the creation of the England football team's suit for Euro 2016 is a great example to use in
analysing globalistion, with elements created all over the world -...
http://tutor2u.cmail20.com/t/ViewEmail/j/292359273C2BC114/7402E01707305E9F20B193FBA00ED1DB
Information failure, consumer behaviour and prices
Here's a good spot from regular t2u contributor Penny Brooks, who is highlighting to her students this
week an article from the BBC on how businesses can confuse consumers...
http://tutor2u.cmail20.com/t/ViewEmail/j/292359273C2BC114/7402E01707305E9F20B193FBA00ED1DB
14. LET THE CENTRAL BANKING GAMES BEGIN – From the Daily Reckoning
Shae Russell, Editor, Strategic Intelligence
It was the first Tuesday of the month yesterday. Perhaps more importantly, it was the first Tuesday of the
year that the Aussie central bankers got together to make an interest rate decision.
Ah, let the central banking games for 2016 begin!
I’m a bit late though. They started last Friday.
That’s when the Japanese central bank met. And they were the first to blink this year.
The Bank of Japan (BoJ) decided that an economy inflicted with low inflation and almost zero gross
domestic product (GDP) growth could do with negative interest rates. They lowered the cash rate from 0%
to -0.1%.
Investors clearly didn’t know what to make of the move. The Nikkei rose on the news to begin with, then
dropped, then closed up 2.3% higher the following day.
Have a look at the chart below to see what I mean.
Source: Google Finance
[click to open in new window]
Overall, the index is up 5% since the announcement. But how long for? The euphoria of central bank
intervention doesn’t seem to last very long these days.
In addition, the BoJ will continue with the quantitative easing program it started in 2014. Buying up to 80
trillion yen (AU$930 billion) per year worth of government bonds and real estate trusts.
Basically, this move by the BoJ is the desperate attempt to get Japanese economy growing again.
You could say the central bank is penalising banks and other lenders for holding too much cash on
deposit. And that it’s a desperate attempt to get consumers and business to borrow more and save less.
In fact, this move could be one giant gamble on the sentiment of the people. Negative interest rates could
see people withdraw their cash from the banking system over time. Even if the cash rate is a negligible 0.1% and it doesn’t directly affect people. This move could signal a loss of faith in the banking system.
Aussie dollar rallies
Just as Japanese investors were wondering floorboards or mattress, the Aussie dollar decided to rally on
the back of the central bank's move.
Source: xe.com
[click to open in new window]
The unconventional policy decision pushed the Aussie dollar to a three week high.
Which, for the Reserve Bank of Australia, isn’t the news they’re after. Although the RBA didn’t cut rates
yesterday afternoon.
The word on the street — for those that like eavesdropping on central bankers — is that the RBA is going
for a more ‘dovish’ sort of policy.
If that’s the case, we pretty much know the direction of the RBA’s decisions for the year. When you hear
the term from ‘dovish’ from central bankers, it tells you they are leaning towards cutting rates. Without
actually cutting them.
The RBA are going to spend the next few months highlighting the economic weakness and making it clear
that ‘accommodative policy’ will come at some point.
Basically, this sort of change in central banking language is part of a strategy called ‘forward guidance’.
Forward guidance is pretty much a central bank talking to, and about, the market. In other words, it’s the
RBA telling investors and businesses that there will be changes, but don’t worry, we’ll give you plenty of
warning before they come. It’s the ‘no surprises’ sort of central banking policy.
When central banks move to this, it tells you just how fragile the market really is.
Japan cuts rates and the US raises them
For the perfect example of what forward guidance looks like, look to none other than the Federal Reserve
Bank.
The Fed spent all of 2015 warning, warning again and insisting that a rate rise was coming.
They had to. The American economy was so delicate, so fragile, that investors couldn’t handle the ‘shock’
of a rate movement without warning.
After 12 long months of talking and reassurance, the Fed finally cranked up rates from 0.25% to 0.5% in
December last year.
The problem is, the US economy isn’t healthy.
Bloomberg wrote over the weekend that fourth quarter GDP data says the US economy can’t handle a rate
rise, saying:
‘Gross domestic product rose at a 0.7 per cent annualised rate in the three months ended in December
after a 2 per cent gain in the third quarter, Commerce Department figures showed on Friday. The advance
was in line with the Bloomberg survey median forecast of 0.8 per cent.
‘“The economy perhaps isn't quite as strong as we thought it was - there's clearly some very weak spots,
but there's a solid foundation to growth,” said Nariman Behravesh, chief economist at IHS in Lexington,
Massachusetts , who is the best forecaster of GDP over the past two years according to data compiled by
Bloomberg. Even after the fourth-quarter slowdown, “the stars are aligned for consumer spending to
return.”’
Bloomberg then points out that consumer confidence is stable, and resurrecting the economy relies on
consumption. Business aren’t borrowing, with the data showing the first drop since 2012. On top of that,
there was a 38.7% drop in spending on mining, oil and gas well drilling rigs.
The rate hike came four years too late. That’s according to Jim Rickards, the strategist of Strategic
Intelligence. Jim says, if the Fed increased rates back in 2011/2012, they’d have the room now to cut
rates as the economic data gets worse.
Instead, the Fed are hiking rates as the US sleepwalks into a recession.
He argues that the US economy is too weak to support a rate increase, saying:
‘The US is heading into a recession and the Fed’s rate hikes will accelerate that eventuality. Slower growth
and deflation will dominate the Fed’s preference for rate hikes.
‘Enjoy your rate hike on 16 Dec. But don’t breathe a sigh of relief. The guessing game will restart
immediately. When is the next hike coming? How frequent will they be? In the absence of message
discipline — there is none at the Fed — speculation will be more rampant than ever.
‘It will be interesting to see if the Fed hikes once, twice or three times before reality sinks in. The rate
hikes will be over soon enough. Expect a new round of Fed easing to ‘stimulate’ a flagging economy by
mid-to-late 2016. No amount of forward guidance will change the hard reality of recession.’
The US is raising rates into a recession. Japan has negative rates to increase inflation. And Australia is
simply talking at the market with a ‘she’ll be right’ sort of attitude.
Cutting or raising rates, it doesn’t matter. Either way, 2016 will be filled with more central bank
intervention than ever before.
15. FROM POPULATION MATTERS
13 February will mark the 250th anniversary of the birth of Thomas Malthus. We shall be using the
anniversary to raise the issue of population and sustainability, and we invite members to contact their
local media about the occasion, using our pre-prepared media pack. Further resources are on our website.
Population Matters patron Sir David Attenborough raised the problem of population growth in a recent
interview by the Sunday Times Magazine to mark his 90th birthday. “It seems to me that every one of the
ills of the past 200 years — hunger, famine, loss of identity, forests disappearing, loss of dignity,
overcrowding, loss of countryside — it’s all to do with increased population,” Sir David said. “The only way
you can deal with this situation — well, I can’t see myself getting on a soapbox and saying, ‘Stop having
children’ — is when people are better off without so many children. Anywhere that women have control of
their bodies and education and are literate and politically independent, the birth rate falls. Kerala in India
is an example of that.”
The World Health Organization has stated that pollution in many cities is now a global “public health
emergency”. According to the UN, there are now 3.3 million premature deaths every year from air
pollution, with 1.4 million occurring in China.
Research from the UN Food and Agriculture Organization shows that global fishing catches are declining
rapidly because of overfishing in previous years. However, the report fails to account for illegal fishing,
which could mean the quantity of fish caught is much higher than estimated.
Analysts at investment banking firm Goldman Sachs have found that having children is more
expensive than ever. According to their research, having more than two children can mean that
household expenditure is up to one and a half times more than that of childless couples.
16. FROM THE ECONOMIST
The music industry
The album is not dead—yet
Musicians like to make them, and fans like to buy them—yet the future of albums remains uncertain.
Read more
WEBSITES
Doug Cave
QETA Secretary/Treasurer
[email protected]
http://www.qeta.com.au
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