Confidence about a rate cut fading a little. The market is less confident today than it was a week ago that the Reserve Bank Board will cut the official interest rate when it meets tomorrow.

The Crikey Interest Rate Indicator shows the changes:

  • A reduction of 0.5 points — 2.8% chance — was 6.1%
  • A reduction of 0.25 points — 65.7% chance — was 71.0%
  • No change in the rate — 31.2% chance — was 22.6%
  • An increase of 0.25 points — 0.1% chance — unchanged
  • An increase of 0.5 points — 0.1% chance — unchanged
  • Any other change — 0.1% chance — unchanged

But retail sales figures point towards one. This morning’s retail sales figures from the Australian Bureau of Statistics suggest consumers are still being cautious in their spending habits and there is certainly no evidence of inflationary pressures from that direction.

In current prices, the trend estimate for Australian turnover rose 0.2% in December 2011 following a rise of 0.2% in November 2011 and a rise of 0.2% in October 2011.

The seasonally adjusted estimate for Australian turnover fell 0.1% in December 2011 following a rise of 0.1% in November 2011 and a relatively unchanged October 2011 (0.0%).

The chances of bombing Iran. In an interview on NBC television at the weekend, President Barack Obama when asked whether Israel was set to attack Iran, said: “I don’t think that Israel has made a decision on what they need to do. I think they, like us, believe that Iran has to stand down on its nuclear weapons program,” adding Israel and the United States would work “in lockstep” on Iran.

The Jerusalem Post reporting this morning on the appointment of a new chief of the Israeli air force said that what was particularly intriguing was the possibility that the government will order the next commander to oversee a strike on Iran’s well protected and distant nuclear infrastructure.

The chances of the USA and/or Israel to execute an overt Air Strike against Iran before midnight 31 Dec 2012 are assessed on Intrade as one in three.

Calling on the old fellow. Somewhat strange, I would have thought, for Julia Gillard to choose Bob Hawke to address her caucus troops yesterday. The former PM didn’t prove much good in staving off leadership attacks when he was head of the government although I guess Bill Hayden would say he knew something about using the NSW right to grab a party leadership. I fear that Ms Gillard will regret not going for the pre-emptive strike and getting her position ratified by her colleagues before the Rudd team are ready to strike.

The next step in this sorry saga of a destabilised government will be speculation about who will emerge as the anybody but Rudd candidate when the challenge finally comes.

Leadership speculation gives back benchers a taste of importance. The devil finds mischief for idle hands and for most of their parliamentary life backbench politicians are essentially idle. Their only real role of importance comes when they are called on in the party room to vote on a new leader.

The rest of the time they are treated with disdain by other participants in the political system. They are but little children given their lines to recite when allowed to enter Parliament House through the door where journalists congregate. Juvenile staffers fresh from university debating societies masquerading as political tacticians write out the questions for them to humiliate themselves by asking.in the chamber.

And then comes the great day when a journalist treats them as important and asks them for a view on the party leadership. Flatteringly they are even promised that these views will be “in confidence” with their name not published if that’s how they want it.

Eureka! I am relevant after-all!

Once they start this process it quickly becomes like a drug. The more interesting the tit-bit of “information”, the more constant the phone-calls, the greater the sense of self-importance, the more interesting …

And so the news cycle feeds on itself.

Until one day, perhaps, we end up with a self fulfilling prophesy that was all built on virtually nothing.

An embarrassing Australian security failure. There should be red faces aplenty among Australia’s security services today following the weekend trashing of the Syrian Embassy in Canberra. Surely they don’t need even more hundreds of millions in government financing to realise there was a risk of just such an event.

I know the current Syrian administration is not the flavour of the month with our, and most other, governments but that does not absolve us from an obligation to ensure the safety and welfare of their diplomatic representation.

See the ABC news report on the sacking of the embassy here.

Peter Fray

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