Extract from ABC News
Analysis
It feels there is some sort of symmetry between markets becoming somewhat unhinged from reality, and the daily bombast of political rhetoric emanating from the White House. (AP: Craig Ruttle)
Michael Burry became famous in international investment markets when he picked the collapse in the US housing market which provoked the global financial crisis in 2008, and later as one of the main characters in the movie The Big Short.
This week it was revealed he was closing the hedge fund he operates because, he said, "my estimation of value in securities is not now, and has not been for some time, in sync with the markets".
The news came amid ongoing market jitters which were crystallised late in the week with US stocks posting their worst day in a month, despite the end of the US federal government's longest ever shutdown.
While the market falls were widespread, it is the growing view that tech stocks are wildly over-valued that has been making people nervous.
This week President Donald Trump signed the funding bill to end the longest US government shutdown in history. (Reuters: Kevin Lamarque)
Markets unhinged from reality
As The Economist wrote this week, "the cyclically adjusted price-earnings ratio of the S&P 500 index of stocks, propelled by the "magnificent seven" tech giants, has reached levels last seen during the dotcom boom".
"Investors are betting that the vast spending on artificial intelligence (AI) will pay off. Yet the numbers are daunting.
"For companies to achieve a 10 per cent return on the AI capex projected by 2030, they will collectively need $650 billion of annual AI revenues — equivalent to over $400 per year from every iPhone user, reckons JPMorgan Chase, a bank.
"History shows such lofty expectations are often disappointed, at first, by new technologies, even if they go on to change the world."
In a world where conflicts that were supposedly ended by US President Trump — in Gaza, on the Thai-Cambodia border — don't seem to have ended at all really, and with the conflict in Ukraine becoming increasingly dark, what happens on the share market seems a much less brutal affair.
But it feels there is some sort of symmetry between markets which have become somewhat unhinged from reality, and the daily bombast of political rhetoric emanating from the White House.
Trump's erratic approach
Amid Trump's erratic foreign policy making, his falling domestic approval ratings and a stuttering US economy, it is unclear how his administration would respond, and what the fallout might be for the rest of the world.
Would we see an even more erratic approach to diplomacy and foreign policy?
That is an approach which already sees Trump easing tariffs on some goods from South American countries because they are hurting US grocery shoppers, even as he bombs boats in the Caribbean, and appears to use US IMF reserves to help bail out Argentina, to the outrage of US soybean farmers who are competitors with the Argentinians.
Instead of any of these events dominating the news this week, the focus has been very much on Trump himself: the ongoing saga of the Epstein files, and his threat to sue the BBC for $US 1 billion for what was a very bad decision in the way it presented an edited version of his remarks on January 6, 2021, the day of the attack on the US Congress.
Revelations on Friday (Australian time) that a different BBC program had run another contentious edit of the same speech two years earlier only further deepens the woes of the British public broadcaster.
But the two stories have dominated coverage over everything else that is happening in Trump's America, and the rest of the world.
And there is a lot going on, mostly involving everyone else around the world, including Australia, refashioning their politics and their relationships in an environment that has never seemed more uncertain.
'But what will Dad say?'
Consider how the nature of questions faced by the prime minister has changed since January.
Sure, in January we were in the longish run up to an election campaign. But Anthony Albanese generally faced very few questions about international relations and foreign policy in the early months of the year.
There were questions about anti-Semitism at home, about AUKUS, and questions about when he would meet the returning Trump.
Notably, a lot of the questions were framed in terms of whether some thing or other that Australia was doing might offend the Americans.
To be fair, the PM has run an utterly consistent line in response.
Look, for example, at his answers to the first significant questions he was asked about the incoming president on January 8 this year, after Trump had suggested he might use military force to seize control of the Panama Canal and Greenland.
"I have no intention of having a running commentary on what incoming President Trump has to say from day to day," Albanese told Sky's Kenny Heatley.
"That's a matter for him. I'll leave the commentating to the commentators. My job is to look after Australia's national interest, to ensure that Australia has a positive relationship on an ongoing basis with our friends in the United States. And that's what I intend to do."
The shifts in Australia's position, as seen through the prism of our changing relationship with Indonesia, highlight this. (AAP: Dan Himbrechts)
Most of the questions back in January were about domestic issues, and when the election would be held.
By this week, the overwhelming questions were global ones, or issues linked to global issues: a new treaty with Indonesia, the unheralded presence of the president of Nauru, international climate talks (and, of course, a few observations about the Coalition's implosions over climate policy).
Through the course of the year, there have been some significant shifts in Australia's international position — including the decision to recognise Palestine, the warming of the relationship with China which has seen trade blockages eased, a defence treaty with Papua New Guinea and now a new agreement with Indonesia.
None of those changes have happened because of Trump. But it would be fair to say that at the least they have been done despite Trump, or with one eye to the environment of uncertainty he has created.
There seem to be fewer questions framed in that "But what will Dad say?" tone about our relationship with the United States.
China wants to see itself as a peer of the United States on the world stage. In 2025, the US president has helped that happen. (Reuters: Evelyn Hockstein)
Rewriting international relations
That's pretty much the case right around the world. People continue to be polite to the United States but are getting on with whatever they feel they need to do.
The shifts in Australia's position, as seen through the prism of our changing relationship with Indonesia, highlight this.
When Paul Keating signed a pact with Indonesia's President Suharto in 1995, it was part of his attempt to have Australia see itself as part of the region in which we live, rather than as an outstation for the Anglosphere in the United States and the UK.
"Deputy Sheriff" John Howard and the War on Terror put us firmly back in that space.
The relationship with Indonesia went backwards as a result of our intervention in Timor Leste, and while it rebuilt on the back of cooperation over Bali bombings and boats, it still had that feeling of a being a pragmatic arrangement rather than built on the fact Indonesia is actually our largest near neighbour — and the world's fourth largest country.
This new deal has been largely described as a defence pact. It might become one. But more realistically it is a deal that recognises both countries have an interest in each other and in having a good relationship. Doesn't sound much.
But it is actually shocking how little attention Australia has paid to Indonesia in its public discussions in the past few decades and vice versa.
Trump's impact on the world highlights how both Indonesia and Australia are being compelled to rewrite their international relations in what is now a multipolar world.
Indonesia was long part of the "non-aligned" group of countries during the Cold War; that is, it wasn't aligned with either the United States or the Soviet Union.
But like Australia — and most other countries — Indonesia has been reinventing its international profile this year from being non-aligned to being friends with everyone.
The alternative question to "What will Dad say?" has always been "Are we doing this because of a threat from China?"
That question rightly doesn't go away either. But the alarmist tone of five or six years ago about China has dissipated somewhat, even as a different sort of alarm about what might Trump do next has risen.
China wants to see itself as a peer of the United States on the world stage.
In 2025, the US president has helped that happen.
Laura Tingle is the ABC's Global Affairs Editor.
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