THE DISTILLERY: A broad band of downsides

Perhaps they are saving themselves for the flood of corporate earnings (the CBA, and Telstra's result tomorrow), but the number of good corporate commentaries this morning was on the thin side. Plenty of political stuff, especially on the Opposition's broadband policy, but not much else. The National Australia Bank's July report showed a slide in business conditions, confidence and new orders that worried the bank's economists, so much so that you felt there's a slump coming in the non-mining economy that may need some stimulus, fiscally speaking.

News Ltd tabloidist Terry McCrann was one of the few columnists to pick up on the shift, and other news: "UH-OH. A rolling tide of baddish – not quite outrightly bad – news has been building over recent days, starting with the poor jobs number in America last Friday night... we have a challenging mix of a two-tiered economy; the first tier is of course China and resources; the 'second' tier is everything else, and looking increasingly fragile. This week we've seen a big fall in home lending approvals and yesterday's drop in NAB's business confidence index." The AFR also noticed the NAB's warning of the approaching slowdown.

The Australian's John Durie cautioned readers against taking any notice of bank brass complaining about new global capital rules: "Two Australian bank chiefs have admitted the new global bank regulations won't be as bad as they had feared. At yesterday's quarterly profit update, NAB finance chief Mark Joiner confided that the new rules would require an extra $50 billion in funding between now and 2018, which he said was 'quite doable'. Later, in a lunch speech, ANZ's Mike Smith said the new rules 'were not as bad as many of us in Australia had feared', adding that the rules had removed uncertainty at a 'lower cost than many of us had feared'. The fact the Australian bank oligopoly has cried wolf once again shouldn't come as much as a shock to anyone." Was that a jab at the Commonwealth's Ralph Norris, who has moaned and moaned about the new rules. The CBA reports its 2010 earnings this morning. A profit of just under $6 billion is expected.

And Fairfax's Eric Johnston did not see much upside for the NAB after its third quarter trading update yesterday: "National Australia Bank is still waiting for the rebound in business cycle to drive its growth. Until then falling bad debts will provide any swings for the bank's earnings. The bank this morning reported June quarter cash earnings of $1.1 billion; this is up some 22 per cent from the same time last year, but largely flat on the last two quarters. Much of the boost came from a halving in bad debts during the quarter to $510 million, while some market share gains came about in the business banking market."

But Business Spectator's Stephen Bartholomeusz saw positives from the NAB update: "The bottom line might not be exciting, but it is reassuring in the context of a still-fragile and volatile economy and weak demand from business for credit. NAB says it improved its lending volumes to business and grew above-system despite a 1.1 per cent fall in the system's business loans."

Fairfax's Elizabeth Knight looked at the Opposition's new broadband policy, and found little to like: "However, what Tony Abbott laid out yesterday as an alternative was not a real alternative. It was the equivalent of a jerry-built renovation that will not address Australia's future communications needs. The coalition is proposing to spend $6 billion to patch up what we have today. In his own words this communications policy is about filling in the gaps to give Australians uniform broadband availability at reasonable speeds. The policy sounded all too familiar. Not surprising, really, because it is almost a carbon copy of the policy promoted by his predecessor, John Howard."

Only The Australian's Jennifer Hewitt could see the positives in the Opposition's plan: "It means the Liberals have to make a virtue of backing an inferior patchwork national system, trusting in advances in technology and market competition to do the rest. The government's plan to shake up the whole industry structure by separating Telstra into a wholesale and retail network is also ditched, along with Labor's commitment to provide a fibre connection to 93 per cent of Australian homes."

Unlike Ms Hewitt, Fairfax's Malcolm Maiden spotted the biggest flaw in the Opposition's plan: "The broadband policy that the Coalition launched yesterday could produce telco Groundhog Day: a repeat of the pre-NBN environment, where Telstra is dominant and able to influence both how quickly rather slow broadband is delivered, and its price. The Opposition knows all about this risk, because it has already tried unsuccessfully to head it off. When it was in government, it attempted another variant of a national network that would have seen the private sector roll out broadband to neighbourhood 'nodes' in the cities while taxpayers would fund a wireless roll-out in remote areas.... Telstra will still be the vertically integrated gorilla in the room." And that particular animal reports its 2010 earnings tomorrow.

And the AFR's Chanticleer could also see the downside from the Opposition's broadband change. In a column with a headline on the website of "Back to the bad old days", Chanticleer wrote: "Telstra will be put comfortably back in the driver's seat of the telecommunications market if the Coalition wins on Saturday week." And Tony Abbott was very noticeable by his absence from the broadband policy launch yesterday. He was in Sydney speaking on asylum seekers and then being interviewed by Kerry O'Brien on The 7.30 Report.

And finally, with the US Federal Reserve making a small but symbolic change in policy after its meeting overnight, a look at the reality of life in America from New York Times columnist Paul Krugman: "The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno. Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel. And a nation that once prized education – that was among the first to provide basic schooling to all its children – is now cutting back. Teachers are being laid off; programs are being cancelled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead... So the end result of the long campaign against government is that we've taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere. . ."