February 3 2022 Edition
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There are two global worries this week are global inflation and associated market volatility and the prospect of a hot war in the Ukraine.
Both are really unpredictable into the future.
In the UK Boris J. is holding on by his finger nails!
In Australia
we have a new Australian Of The Year (Dylan Alcott) as the old one (Grace Tame)
went out with a bang and ongoing fury against sexual violence, The week has continued to be tough for ScoMO with aged care and RAT shortages playing havoc with the public confidence in the Government. The election looms in a few months.
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Major Issues.
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AUKMIN hype is dreaming a British Australia never ended
The rhetoric of the recent Australia-UK ministerial meeting showed how an assertive China is generating a nostalgic model of Australian foreign policy.
James Curran Columnist
Jan 23, 2022 – 2.32pm
Sometimes Australian and British ministers must think they have woken from a dream – a dream in which the end of British Australia never really happened.
Evidence that the dream survives in Canberra and London was there in the rhetoric of the recent Australia-UK ministerial meeting (AUKMIN) in Sydney. It showed how an assertive China is generating a new/old model of Australian foreign policy.
The announceables were minor – two small Royal Navy vessels will deploy to the region. The last time this happened amid strategic crisis, in 1942, two British warships, the Prince of Wales and the Repulse, ended up in ‘the wide dark bosom of the angry deep’ off the Malayan Coast.
A British liaison officer will be integrated into Australia’s military. Hyped talk about the loan of a British nuclear submarine was just that. Agreements on cybersecurity and infrastructure tick bulleted talking points down the bottom of the AUKUS partnership, well below its signature hope for nuclear-powered submarines.
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It’s the way markets are falling that’s really worrying
Consecutive days of losses, savage selling in the final hour of trade, and the reversal of intraday gains are all worrying signs on global markets.
Jan 24, 2022 – 5.00am
The size of the falls on global sharemarkets are enough to worry any seasoned trader.
But it’s the way markets are falling that has several experts disconcerted ahead of what may be a telling week for global financial markets, with the Federal Reserve’s two-day meeting and a host of big US earnings results likely to weigh on already poor sentiment.
Friday night’s trade on Wall Street saw the continuation of two of the more worrying trends.
The tech-heavy Nasdaq Composite fell 2.7 per cent, taking losses for the week to 7.5 per cent and adding to what is now its worst January since 2008.
The 15.5 per cent fall since its most recent high has the Nasdaq firmly in correction territory.
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Australia Day: A respectful, unified path beyond bitter annual debate
11:00PM January 23, 2022
Every year there is a debate about Australia Day. In a democracy like Australia, this is healthy.
Sadly, Australia Day receives more focus than the Uluru Statement, which contains nation-building reforms that would unite, rather than divide the country. It isn’t new; 1930s Aboriginal activist Jack Patten said on January 26, 1938: “On this day, the white people are rejoicing. But we, as Aboriginals, have no reason to rejoice on Australia’s 150th birthday.”
Australia’s birthday is actually January 1, 1901. But Patten’s point was Australia is home to a civilisation dating back 65,000 years that is ignored and displaced. Throughout my lifetime, the public debate and understanding of why it is a sensitive day has developed and matured. There is now a much better sense in Australia of why January 26 is a difficult date for many Indigenous people.
When I wrote a book on reconciliation and the Uluru Statement last year, I deeply considered my own position on Australia Day. I am a strong proponent of the Uluru Statement and its Indigenous voice because it is a contribution to nation-building. It is about completing our Constitution and giving Indigenous people a say over special laws, impacting only them, which are made by our parliament.
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What has this Coalition achieved to warrant re-election?
11:00PM January 21, 2022
At the forthcoming election the Coalition is seeking a fourth term in office, just shy of nine years in power. Only three previous governments have achieved the feat, most recently John Howard’s Coalition government. The question is, what has this Coalition achieved to warrant re-election? Beyond voter apathy, or fear of what the alternative Labor government might look like?
These are important questions, and they are best addressed comparatively. Howard led the conservatives into a fourth term when he won the 2004 election against then Labor leader Mark Latham. The victory guaranteed Howard would become the second-longest serving PM in Australian history.
The Coalition’s 2004 win was as much a repudiation of Labor as it was an endorsement. Conservatives often draw on fear of the other. That is, presenting themselves as “safe” administrators in comparison with a risky progressive alternative.
The Latham we know today is very different to the Labor leader he presented as in 2004. Back then he was an advocate for gay rights, a protege of Gough Whitlam, and his signature policy at the election was “Medicare Gold”, a plan to ensure free and accessible quality health cover for retirees.
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$20m copyright buyout makes Aboriginal flag free for all
Tom McIlroy Political reporter
Jan 24, 2022 – 10.30pm
Copyright of the Aboriginal flag has been transferred to the Commonwealth in a new $20 million agreement, resolving a long-running dispute about free use of the iconic Indigenous symbol.
Ahead of Australia Day celebrations on Wednesday, Prime Minister Scott Morrison announced an agreement with Luritja artist and activist Harold Thomas, who designed the flag in 1971.
First used at a National Aborigines Day march in Adelaide that year, the flag was later taken to Canberra and flown at the Aboriginal Tent Embassy in 1972. Mr Thomas asserted his rights to be recognised as the flag’s sole creator in the 1980s, a position recognised by the Federal Court in 1997.
It became an official flag of Australia two years earlier.
As part of the $20.05 million agreement completed last week, Mr Thomas and a group of private licence holders will hand over their rights to use of the flag.
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https://www.afr.com/companies/transport/ocean-freight-costs-keep-import-prices-up-20220124-p59qqd
Ocean freight costs keep import prices up
Jenny Wiggins and Ronald Mizen
Jan 25, 2022 – 5.00am
Consumer goods, fashion and electronics retailers are expected to face continuing financial pressure this year as the cost of shipping freight to Australia remains near record highs and inflation starts to bite, with importers paying a premium to get goods into Australia before the Chinese New Year.
While global spot rates for 40-foot containers – the fees charged to move goods on ships – have declined from their peak in September, they are still running at US$9604, more than double the price of a year earlier, according to the Freightos Baltic Index.
In an ominous sign for the coming earnings season, homewares retailer Adairs warned on Monday that its first half gross profit margins were being hurt by “global supply cost increases” and higher costs for delivering goods to online customers. It shares plunged 21.5 per cent on Monday.
The knock-on impact of higher ocean freight and other transport costs, which include rising fuel prices, is expected to spark higher inflation results in Tuesday’s consumer price index.
Headline inflation is expected to rise 0.2 percentage points to 3.2 per cent in the year to December 31, while underlying inflation, the Reserve Bank of Australia’s preferred measure, is tipped to lift to 2.3 per cent, closer to the middle of its 2 per cent to 3 per cent target band.
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How Putin and Xi are putting Western might to the test
Political and international editor
January 25, 2022 — 5.00am
Vladimir Putin told Kevin Rudd that Australia and Russia “have no fundamental contradictions between our countries”. We should deepen our co-operation, the Russian leader proposed in a 2013 phone call.
The Australian Prime Minister replied: “Mr President, the reason Australia and Russia have gotten along so well and have no fundamental contradictions is that we’ve hardly had anything to do with each other for the last 70 years,” according to Rudd.
Putin acknowledged the undeniable truth of this observation with a belly laugh. But, whether we realise it or not, what Russia is doing today has a lot to do with Australia’s national future.
By amassing an estimated 100,000 troops along the borders of Ukraine and simultaneously making demands of the US and NATO, Putin is not only assessing his options for asserting control of Ukraine. He is testing to see whether the West is a spent historical force.
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This country has a habit of forgetting history, let’s keep the date
Contributor
Year after year we ask the same question about Australia Day. How can we celebrate our national day on January 26?
Some say change the date. Some see it as a tradition we should never change. We have been having this same debate since 1988, or at least 1994 when it was first legislated we had to have Australia Day on January 26. Do you remember when this wasn’t the case and Australia Day was just whatever long weekend we could arrange at the end of summer? The last burst of holiday before we went back to school and work.
Well, here’s something provocative – I don’t want to change the date. As a Quandamooka man living on country I think we should be reminded of our colonial history, and the heartbreak that means for our people, every day. I don’t want to brush away the past 234 years and somehow forget what happened. This country has a habit of forgetting its history.
No – I want the date of our National Day to stand as a spur to discuss our history and remember the trials and tribulations of Indigenous Australia. Changing the date is easy, confronting our past is the harder thing to do. How can we commemorate the painful past and still celebrate our hopes for a better future?
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https://www.livewiremarkets.com/wires/share-market-falls-7-things-for-investors-to-keep-in-mind
Share market falls: 7 things for investors to keep in mind
AMP Capital
Most of the time, share markets are relatively calm and don’t make the headlines. But every so often they have a tumble and make the “front page” with headlines (or these days clickbait) like “billions wiped off share market” and “biggest share plunge since…” Each one is met with lots of analysis and prognostication from experts.
Sometimes the plunge ends quickly and the market heads back up again and is forgotten about (like last September when I last wrote a note like this). But once every so often, share markets keep falling for a while. Sometimes the falls are foreseeable, but rarely are they forecastable (which requires a call as to timing and magnitude)…despite many (who got lucky) claiming otherwise. In my career, I have seen many share market falls, and I even saw the market fall 25% one day.
Key points
Share markets have fallen in recent weeks on the back of worries about inflation, monetary tightening, the Omicron disruption and the rising risk of a Russian invasion of Ukraine.
It's too early to say markets have bottomed.
Key things for investors to bear in mind are that: corrections are healthy and normal; in the absence of a renewed recession share market falls may be limited; selling shares after a fall locks in a loss; share pullbacks provide opportunities for investors to buy them more cheaply; shares offer an attractive income flow; and finally, to avoid getting thrown off a long-term investment strategy it’s best to turn down the noise.
And so it is again - with share markets starting the year on a sour note. From their highs, US shares have fallen 8%, with the tech-heavy Nasdaq down 14%, global shares are down 7% and Australian shares are also down 7%. Always the drivers are slightly different. But as Mark Twain is said to have said “history doesn’t repeat but it rhymes”, and so it is with share market falls. This means that from the point of basic investment principles, it’s hard to say anything new. So apologies if you have seen my “seven things for investors to keep in mind” before, but at times like this, they are worth reiterating.
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Australia has a problem: we’re not turning all our wealth into wellbeing
Senior economics writer
January 25, 2022 — 7.30pm
Josh Frydenberg was upbeat when the latest economic growth figures were released a few weeks ago. Despite the lockdowns of 2021, gross domestic product expanded by a healthy 3.9 per cent in the year to September. A “strong economic performance”, said the Treasurer, considering the turmoil of the pandemic.
But if you reckon there’s more to our national welfare than GDP, the news isn’t so good.
The annual edition of the Herald/Age-Lateral Economics Wellbeing Index, released this week, has drawn attention to some enormous costs incurred during the coronavirus crisis largely overlooked by traditional economic indicators.
The index adjusts GDP to create a broader indicator which takes account of changes in education, health, work life, social inequality and environmental degradation. The outcomes are expressed as a dollar figure which allows both economic and non-economic aspects of human wellbeing to be compared in a tangible way. The result is a much fuller gauge of national progress than GDP.
The latest modelling revealed, for instance, the hit to Australia’s collective wellbeing caused by increased mental illness during COVID-19 lockdowns was a hefty $13.3 billion.
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Victorious First Fleet won Australia’s ‘Trafalgar Day’
By Margaret Cameron-Ash
11:00PM January 21, 2022
At daybreak on Saturday January 26, 1788, two French frigates – La Boussole and l’Astrolabe – stood at the entrance of Botany Bay. Their commander, Rear Admiral Laperouse, gave the signal to enter. He was following new instructions that he had received four months earlier in Kamchatka, Russia.
They were written by Louis XVI after learning that Britain was sending an occupation force to New Holland (Australia). The ministers at Versailles hoped to forestall the English and sent a dispatch across Siberia to Kamchatka, ordering their French navigator to sail straight for Botany Bay.
Laperouse arrived on the coast near Broken Bay at dawn on Wednesday January 23. His target, Botany Bay, lay 30 miles to the south and, in between, was Port Jackson. By midday, the French ships were level with Narrabeen Lagoon. By mid-afternoon they were outside Sydney Heads. If Laperouse had seized the opportunity and turned to starboard, he would have discovered “the finest harbour in the world”. But Laperouse stuck to his instructions and continued south to Botany Bay
Laperouse had no idea whether the British fleet had reached Australia. Nor did he know that Botany Bay was not Arthur Phillip’s true destination.
Eighteen years earlier, Captain James Cook had anchored HMB Endeavour in Botany Bay, but he was unimpressed with the shallow inlet. With a couple of trusted men, he followed an ancient track north along the coastal ridge. From its highest point, Cook saw below him Port Jackson (Sydney Harbour). Here was a naval paradise: a natural deepwater harbour and defensible port with ample room to manoeuvre.
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https://thenewdaily.com.au/finance/2022/01/27/gender-pay-gap-kohler/
6:00am, Jan 27, 2022 Updated: 7:54pm, Jan 26
Alan Kohler: Gender pay gap disgrace is about prices, not just wages
Everybody’s worried about inflation at the moment, but actually we need more inflation … for women.
The fear is that interest rates around the world are about to rise, leading to a squeeze on those with too much debt (that is, just about everyone), lower valuations of shares and property and the prospect of an accidental recession like the last few times rates went up to combat inflation.
But weak wage growth has been the most pressing economic problem for years, and arguably the most pressing social problem is the financial disadvantage of women.
Too many jobs are chronically underpaid, and they are mainly the ones done by women: aged care, child care, nursing, waiting, interior design, book editing – in fact virtually any job done mainly by women is both undervalued and underpaid.
And that’s apart from the 12.5 billion hours of totally unpaid work that is estimated that women do worldwide, worth about 12 per cent of the global economy.
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https://www.afr.com/chanticleer/staying-local-may-be-smart-play-for-aussie-investors-20220126-p59rfr
Staying local may be smart play for Aussie investors
As offshore markets gyrate wildly, Australia’s strong economic growth may provide something of a safe haven according to UBS.
Jan 27, 2022 – 5.00am
Australian investors can be forgiven for waking up each morning and dreading the latest numbers from overseas markets.
It’s not just the sharp falls on Wall Street and European markets since the start of the year that are worrying – it’s the wild gyrations in intraday trade, the constant debate over inflation and interest rates, and the collapse in sentiment in asset classes such as crypto.
Could an antidote be close to home for worried locals?
That’s the view of UBS strategist Richard Schellbach, who says that while Australians have long looked overseas for adventure, an investment staycation may now be in order.
“We believe that many of the best avenues for earnings growth through 2022 will be via stocks whose profits are domestically skewed,” he says.
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https://www.afr.com/politics/grace-tame-s-year-as-an-angry-young-woman-20220126-p59ra1
Grace Tame’s year as an angry young woman
The 2021 Australian of the Year represents a generational baton-change for the women’s movement, in which neither generation really gets the other.
Pru Goward Columnist
Jan 26, 2022 – 1.29pm
Among women of a certain generation (i.e. mine), Grace Tame comes up regularly in discussion. In the beginning, it was enthusiastic support for her Australian of the Year speech, and the moving clarity with which she forensically detailed the grooming, which lies at the heart of the power imbalance in sexual abuse.
A very young, beautiful woman speaking with such frankness and boldness – well, it really was something.
As Grace Tame’s year wore on, and her commentary became better known for its personal cracks at the prime minister than for her contribution to the debate about sexual abuse (and nothing the government did or said was ever good enough), the enthusiasm morphed into something more doubtful.
It was not party-political; plenty of women on the Labor side of politics asked me the same question, no doubt envisaging the day when their guy was the prime minister and could expect the same treatment.
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Chinese ambassador Xiao Qian offers olive branch
5:32AM January 27, 2022
China’s new ambassador to Australia, Xiao Qian, has extended an olive branch months out from the federal election and described his ambassadorship as a “noble mission”.
After arriving in Sydney on Australia Day, Mr Xiao said the China-Australia relationship was at a “critical juncture facing many difficulties and challenges as well as enormous opportunities and potentials”.
Mr Xiao, who follows the firebrand Cheng Jingye as China’s 15th ambassador to Australia, said he would work closely with government officials and business leaders to “jointly push the China-Australia relations back to the right track”.
“I see my ambassadorship as a noble mission and, more importantly, a great responsibility,” Mr Xiao said.
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Seven lessons for investors from Dixon’s demise
Nice guys aren’t always good guys and there are a few lessons we can take to avoid being vulnerable to an adviser intent on profiting from, not for, you.
Jonathan Shapiro Senior reporter
Jan 28, 2022 – 5.00am
For decades, the name of Dixon Advisory was trusted and respected when it came to advice about wealth, particularly the complexities of self-managed superannuation.
The insights of Dixon Advisory experts often appeared in articles in The Australian Financial Review and helped to inform readers on how best to deal with a multitude of tax, administration and investment issues. That advice was often informed and considered.
Unfortunately, there was an aspect of Dixon Advisory’s advice that proved very costly to many of its clients. That was the tendency to herd clients into in-house products that were loaded with fees and ultimately collapsed – in part because of actions that, intended or not, maximised Dixon’s fee take.
The large losses from a small handful of investments, to which many Dixon Advisory clients were arguably over-exposed, has set them back materially.
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Value of themed exchange-traded funds tipped to explode
By John Collett
January 25, 2022 — 10.30pm
The value of exchange-traded funds (ETFs) listed on the Australian Securities Exchange could almost quadruple to $500 billion in the next five years, as the appetite for these type of investments continues to accelerate.
BetaShares chief executive Alex Vynokur expects the biggest growth to come from ETFs that invest with a theme, as investors seek to profit from big global trends, including climate change and cybersecurity.
After two successive years of growth of more than 50 per cent in 2019 and 2020, the size of the Australian listed ETF market grew by almost 45 per cent last year to more than $130 billion in assets under management, according to the latest BetaShares/Investment Trends ETF Report.
Vynokur believes thematic ETFs will outpace the growth rate of all other types of ETFs and that they could reach a value of $100 billion by 2026, up from just $4.3 billion now.
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Scott Morrison is a collision between image and reality
The Prime Minister relies on a series of carefully crafted images. But when they get blurred, there is no core message to fall back upon.
Laura Tingle Columnist
Jan 28, 2022 – 3.38pm
It’s not been an easy time to be an opposition leader these past couple of years.
At a time of national, nay global, crisis, it’s hard to criticise yet sound constructive. And in Australia, in our federation, COVID-19 has made the dominant political tension one between the federal leader and state leaders, not one fought across the political divide at the federal level alone.
So, just months from a federal election campaign, Labor leader Anthony Albanese found himself being asked at the National Press Club this week to explain who he was by the ABC’s Andrew Probyn.
That he was still being asked it – by a journalist who pointed out that many voters didn’t know the answer – says a lot about the cut through problems Albanese has confronted since becoming Opposition Leader in 2019.
His answer was not his rote “log cabin” one. And it was passionate, was delivered with some humour and canvassed his political origins, as well as personal ones.
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It might be too late for Morrison to change course
Columnist
January 29, 2022 — 5.30am
It is an election year tradition for prime ministers to return to work in late January with a grand gesture of humility to resolve a big issue that troubled voters over the summer. Scott Morrison has been around long enough to know the difference between a successful policy mea culpa and the political equivalent of panic-buying, when the bribe is offered too late in the cycle to be taken seriously.
Think John Howard’s backflip on petrol prices and the business activity statement in 2001, which put his government back on the path to re-election long before the Tampa incident, and the counter example of the record handouts he offered in 2007 which did not shift the polls back in his favour.
It is a measure of how badly the government is going at the moment that Morrison just chose the environment for his first big re-election handout, a ploy he knows didn’t work for his mentor Howard 15 years earlier, almost to the day.
The repetition of history in the Morrison government’s plan to protect the Great Barrier Reef, announced on Friday, is uncanny. It is this year’s symbol of practical action on climate change, following last year’s belated commitment to net zero emissions by 2050.
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Hey, Lucky Country, it’s time we made our own luck
Political and international editor
January 29, 2022 — 5.30am
By the end of his life, Donald Horne was not as damning of Australia as he’d been in his most celebrated work. His 1964 book, The Lucky Country, was one of the most stinging critiques of Australia ever written. Its most famous line: “Australia is a lucky country run mainly by second-rate people who share its luck.”
In his last year among us, 2005, he concluded that Australia had started to make its own luck. The reforms of the Hawke-Keating and Howard-Costello years had made the country more vibrant, more prosperous. But in his final interview, two things still agitated him enormously.
One was that a gathering mining boom was reviving Australian complacency. “It’s quite appalling to discover people saying today that Australia is still the lucky country because we have all these minerals. There’s still a bloody lucky-country mentality!”
The other was a persistent “derivativeness” in the way Australia conducted itself, too much imitation of other countries and not enough initiative of our own, too much societal plagiarism and not enough bold originality.
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How investors can navigate a world of rising risk
Threats from rising rates inflation, COVID and geopolitics are rocking markets around the world. Investors need to get used to volatility and uncertainty.
James Thomson Columnist
Jan 28, 2022 – 10.08am
The market’s collective memory tends to be very short, especially in the midst of a meltdown. After a week of wild gyrations on Wall Street and the ASX, you can hardly blame investors for focusing on the very short term.
But for those prepared to zoom out, January 29 will mark a fascinating anniversary for global markets: it’s 12 months to the day since shares in a previously unknown US video game retailer called Gamestop peaked after surging a staggering 1740 per cent - or more than 18-fold – in just three weeks.
Wall Street’s benchmark S&P 500 index would rise another 30 per cent from then, setting record high after record high throughout 2021 before finally peaking this year on January 4.
But Gamestop’s incredible surge, and the broader rally in cryptocurrencies, meme-stocks and high-growth companies that was sparked by retail investors flooding into markets, felt like a high watermark of excess, a moment when a big chunk of the market seemed convinced stocks and other assets could only go one way: up.
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Ethical super outperforms mainstream options
By John Collett
January 29, 2022 — 10.30pm
Super funds’ ethical investment options are outperforming their standard “balanced” options, dispelling concerns that investing responsibly means lower investment returns.
The typical “balanced ethical” option produced an average annualised compound return of 11.5 per cent over the three years to the end of 2021, compared to 10.4 per cent for typical regular “balanced” options – where most workers have their super.
SuperRatings’ figures also show “sustainable balanced” super options outperformed balanced options over one and five years.
Kirby Rappell, executive director of SuperRatings, says sustainable options used to often trail the returns of balanced options. “However, in recent years, we have seen a shift, with sustainable balanced options performing competitively relative to standard balanced options,” he says.
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What high-net-worth investors are doing to avoid market carnage
By Gofran Chowdhury
January 29, 2022 — 10.00pm
As we enter a new year, investors seeking higher returns are looking for new ways to continue to add value to their portfolios in a rapidly changing macro environment.
For many, they understand how to make money in the good times, when sharemarkets are continuing to go up.
However, when markets become volatile or sink, they also need a way to minimise losses and continue to earn a positive return. This is where the expertise of a professional money manager is important, to leverage global expertise and build alternative investments for clients.
Alternative investments include private equity or venture capital, hedge funds, property, commodities and tangible assets. This asset class does not align itself with conventional equity, income, or cash categories.
Incorporating alternatives can help boost portfolio performance while protecting it against downside risk. It can reduce overall portfolio volatility, lower the correlation to equity markets, and give some certainty of returns.
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COVID 19 Information
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Living with COVID doesn’t mean living with incompetence
Every country is struggling with omicron, but there’s no excuse for the failure of Australian governments to order enough rapid antigen tests, leading to too many crippled businesses over a hard summer.
Jennifer Hewett Columnist
Updated Jan 23, 2022 – 3.53pm, first published at 3.10pm
The local Singaporean pharmacist clearly hasn’t heard of Scott Morrison’s warning about the global dearth of rapid antigen tests. He looks puzzled as I put down the 15 individual tests I have grabbed from the shelf, each costing just over $5.
“It’s cheaper to buy in packs of 20,” he says. “How many would you like?”
I settle for another two packets of 20 for just under $200. I am delighted to later discover the brand is endorsed by Australia’s super-cautious Therapeutic Goods Administration as “very high sensitivity,” meaning more than 95 per cent accuracy.
As I prepare to head back to Australia this week, I am still deciding whether my grand total of 55 such tests stuffed into a groaning suitcase is sufficient to assist family and friends.
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Government’s virus mistakes cruel the recovery, again
The worst consumer confidence since 1992 and the supply chain crisis amid the shortage of RATs shows that mismanaging the pandemic is mismanaging the economy.
Jim Chalmers Contributor
Jan 23, 2022 – 1.19pm
The worst consumer confidence since 1992 and the supply chain crisis amid the shortage of RATs shows that mismanaging the pandemic is mismanaging the economy.
Australians were led to believe that 2022 would be better than 2021, but last week’s consumer confidence figures told a very different and very concerning story.
The worst January data since 1992 is the most recent and most obvious consequence of a government which took credit for a recovery without taking responsibility to actually secure it.
It’s another reminder that we can’t have a healthy economy, or a healthy recovery, without healthy people to power it – and that mismanaging the pandemic response is mismanaging the economy.
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https://www.afr.com/politics/omicron-has-arrived-in-wa-and-can-t-be-eliminated-20220123-p59qjm
Omicron has arrived in WA and ‘can’t be eliminated’
Tess Bennett and Michael Bennet
Jan 23, 2022 – 6.26pm
Western Australia’s health minister says 24 new infections confirm that the omicron variant of COVID-19 has taken hold in the community, days after Premier Mark McGowan shut the border indefinitely in an attempt to keep it out.
Amber-Jade Sanderson said the figures were a “wake-up call” for the community that the virus had finally arrived in the state and would not be eliminated.
Sunday, January 23: WA Health Minister Amber-Jade Sanderson has announced 24 new local cases of COVID-19 in the state, adding the number is 'higher than what we're used to in WA'.
“It’s certainly the start of omicron,” she said.
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Two years in, the pandemic economy no one predicted
Australia’s economy is in a stronger position than before the pandemic, at least by some key measurements.
John Kehoe Economics editor
Jan 24, 2022 – 5.00am
More jobs, surging house prices, record stock values, rising inflation and a trillion dollar debt bill. Two years since Australia officially recorded its first case of COVID-19 on January 25, the economic report card is not what most experts predicted at the time.
Paradoxically, Australia’s economy is in a stronger position than before the pandemic, at least by some key measurements.
Former Treasury economist Steven Hamilton, a visiting fellow at the Australian National University’s Tax and Transfer Policy Institute, says it’s the “silver lining” of the pandemic.
“It would have been crazy to think this two years ago, but arguably the economy looks better coming out of COVID than it did heading into COVID,” Hamilton says.
Unemployment is 4.2 per cent, versus 5.3 per cent in January 2020 - artificially aided by the international border closure to foreign labour.
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On Omicron’s hospital frontline, goodwill is wearing thin
By Dr Tony Joseph and Dr Ruth Arnold
January 24, 2022 — 5.30am
The NSW government’s management of the Omicron COVID-19 outbreak has led to significant concerns about the sustainability of public hospital services and staffing levels into the future.
The Herald quotes the NSW Premier welcoming “reassuring signs on hospital admissions”, although those with loved ones still battling COVID-19 may not be as reassured by the warning of high coronavirus-related death rates in coming weeks.
While reported cases are dropping, they remain above 20,000 per day. There is limited public access to rapid antigen testing and schools are poised to reopen. Our Premier advises NSW has “the strongest health system in the country” and is prepared, should the return to schools lead to another spike. Healthcare workers in a hospital system buckling under the pandemic strain may not fully share the Premier’s confidence.
Frontline healthcare workers are still caring for thousands of patients despite significant staff shortages. When there were clear predictions of large numbers of patients requiring hospital care by January, it leaves many questions whether public policy and resources could have been better managed to mitigate the impact of the COVID-19 Omicron wave. Why did “freedom day” proceed without amendment, expecting an already exhausted healthcare workforce to rise to further feats of endurance during a holiday season of reduced staff capacity?
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https://www.afr.com/world/europe/stealth-omicron-takes-over-in-denmark-arrives-in-uk-20220125-p59qxo
‘Stealth omicron’ takes over in Denmark, arrives in UK
Hans van Leeuwen Europe correspondent
Jan 25, 2022 – 5.31am
London | A new and potentially more transmissible omicron variant is rapidly gaining ground in Europe, raising fears that the gradually easing pandemic may kick back up again before the northern winter is out.
The omicron sub-variant, known as BA.2, is not expected to be more dangerous than the current omicron strain, but is spreading more rapidly than its forebear and could potentially re-infect people who have had the original strain.
Denmark is posting fresh records for positive cases of COVID-19, notching up almost 40,000 a day in a country of 5.8 million people. More than half its cases are now the BA.2 sub-lineage of omicron, rather than the original BA.1.
Britain has recorded more than 400 cases of BA.2, and some epidemiologists estimate it could be the dominant strain within three weeks. Other countries with significance incidence include France, Sweden, the Philippines, Singapore, South Africa and India.
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Three new variants replacing Omicron
World Health Organisation spokesperson Margaret Harris says that the world was far from a pandemic “endgame” as Omicron continues to rage across the world.
On Sunday, WHO regional director for Europe Hans Kluge said that the milder Omicron strain was bringing the region a step closer to “a kind of pandemic endgame”.
“What Dr Kluger, our regional director for Europe, was talking about, he was talking about what he was seeing in Europe but, no, for the world we can't say end game yet,” she told Channel 9’s Today.
“We are very much in the face of Omicron, and we're tracking right now three different sublineages of Omicron, the one that we know best is being replaced in some countries by Omicron B2, so we are seeing very rapidly emergence of other variants.
“The good thing is that we've got tools that are proving effective like vaccination, so while we have record numbers of cases – I mean we had more than 23 million cases last week alone – we are not seeing the percentage of deaths that we were seeing before because many, many people have been vaccinated.
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It’s now impossible to run Wesfarmers from Perth: Rob Scott
Julie-anne Sprague Rich List editor
Jan 29, 2022 – 12.00am
Wesfarmers chief executive Rob Scott will leave Western Australia within weeks after deciding it is now “virtually impossible” to manage the $60 billion conglomerate while his home state remains cut off from the world.
It means that for the first time in its 108-year history, the conglomerate, which owns Bunnings, Officeworks and Kmart, will be under the stewardship of someone who does not live in WA.
In a stinging rebuke to West Australian premier Mark McGowan’s border backflip, Mr Scott said it was now impossible to attract talent into WA and out-of-step quarantine requirements were making it too difficult to continue running the company from his Perth office.
It is the start of a great exodus of senior talent out of Western Australia. Wesfarmers chief financial officer Anthony Gianotti and a handful of other senior Wesfarmers executives will also leave the state. Mr Scott will be based in Melbourne, where most of the conglomerate’s retail leaders are based. Mr Scott’s family will remain in Perth.
“The uncertainty around when the border might re-open and the continuing inflexibility towards business-critical travel means that it is now virtually impossible to run a national business from Perth,” Mr Scott said.
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https://www.afr.com/life-and-luxury/arts-and-culture/the-rise-and-rise-of-hillsong-20220119-p59pl1
The rise and rise of Hillsong
In this extract from the book, “Beyond Belief”, Elle Hardy describes the growth and global influence of the church, whose faithful in its early days counted Prime Minister Scott Morrison.
Elle Hardy
Jan 28, 2022 – 10.00am
Pentecostal Christianity in its modern form began at the turn of the 20th century in Los Angeles. More than a quarter of the world’s 2 billion Christians are Pentecostalists, up from 6 per cent in 1980. It’s predicted that by 2050, one in 10 people globally will be adherents. In Australia, in the 1980s, Brian Houston and his wife, Bobbie, founded Pentecostal church Hillsong.
By the early 1980s, globalisation as we know it was really beginning to kick off, and the charismatic wave rolled across the Pacific Ocean to a place that looks a lot like California: Sydney, Australia. My hometown was not a place for the born-again when I was growing up. Australia’s Christian lines were fairly evenly divided between a vanilla Church of England, and Catholics from Irish or continental European backgrounds. If anything, Australians were actively hostile to the people we called “happy clappers”. So much so that my parents were deeply uncomfortable with a high school friend’s family asking me to a Christian spectacular with them in 1999 – but there are worse things that teenagers can get up to on a Saturday night. It didn’t carry any weight with me at the time, but I joined tens of thousands of others at a Hillsong event in Sydney’s burgeoning western suburbs.
Hillsong has risen to become one of the most influential churches in the Western world, best known as the church of celebrities like Justin Bieber and various Kardashian-Jenners. It has been called Australia’s most powerful brand, a money machine, and even a cult. Since its humble beginnings of 45 people, gathered at a school hall in Western Sydney, it has expanded to 30 countries on six continents, and now claims 150,000 weekly worshippers.
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Victoria detects ‘handful’ of new Omicron variant cases
Victoria has revealed it has detected multiple cases of a new “stealth” sub-variant of Omicron causing concern around the world.
January 29, 2022 - 1:26PM
NCA NewsWire
The newest Covid Omicron variant has been detected in a “handful” of confirmed cases in Victoria, the state’s Covid commander Jeroen Weimar confirmed on Saturday.
Known as BA. 2, the new variant has been found to be more contagious than the original Omicron variant.
UK health authority data has shown the rate of transmission among household contacts was 13.4 per cent compared with 10.3 per cent for the original Omicron variant.
Mr Weimar said while it was “early days” Victoria was following international developments closely to understand how the new variant could impact the state.
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What we know about the BA.2 Omicron variant
By RenéE Onque and Denise Roland
Dow Jones
10:05AM January 28, 2022
As newly reported cases of Covid-19 decline in parts of the U.S., researchers around the world are monitoring a new variant of the Omicron variant dubbed BA.2. The variant is under observation by countries including Denmark, India and the U.K., though little is still known about its properties and the threat it may pose.
Here’s what scientists and public-health experts know so far about the BA. 2 variant:
What is the BA. 2 variant of Covid-19?
The BA. 2 variant of Covid-19 is a relation of the widely-spreading original Omicron variant known as BA. 1, according to Theodora Hatziioannou, an associate professor of virology at Rockefeller University.
The two variants arose around the same time and come from the same immediate ancestor strain. They have many mutations in common but there are also around 20 mutations that are different between the two variants. The differences between this variant and BA. 1 can be seen in the spike protein of the virus, Dr. Hatziioannou said.
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Climate Change.
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https://thenewdaily.com.au/life/science/environment/2022/01/24/energy-storage-killing-coal/
Alan Kohler: Long-duration energy storage systems are writing coal’s death certificate
Australia is sprinting towards 100 per cent renewable energy, 24/7, 365 days a year, but very few are ready for it, least of all the coal industry and its subsidiary, the Morrison government.
Once the “dispatchable power” work of coal and gas-fired power stations is lost they will all promptly close, since they can’t compete on cost with renewables, even without a price on carbon.
It could happen as early as 2030, but by 2040 at the latest, thanks to the creation of the Long Duration Energy Storage Council at the Glasgow climate change conference, which was the most important – but least known – result of COP26.
The Glasgow headlines were about the failure of 2030 targets, but the formation of the LDES Council and a report it commissioned from McKinsey & Co are accelerating the rush towards building storage that will enable 24-hour dispatchable renewable power.
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Coal, gas power shrinking in Australia as renewable energy shines
By Nick Toscano
January 28, 2022 — 12.00am
Renewable energy is squeezing fossil fuels further out of Australia’s power mix, accounting for a record-high share of average electricity generation in the final three months of 2021 and threatening the viability of coal-fired power plants.
The influx of large-scale wind and solar farms coupled with an ongoing boom in the uptake of rooftop solar panels have been radically reshaping the national electricity market and slashing daytime wholesale prices to levels at which the dominant sources of power – coal and gas – struggle to compete.
In a report to be released on Friday, figures from the Australian Energy Market Operator (AEMO) reveal renewable energy accounted for a record-high average of 34.9 per cent of generation across the three months to December 31, beating the previous record of 31 per cent set in the prior quarter.
While coal still makes up most of the nation’s power, black coal fell to its lowest seasonal average share for the December quarter since the east coast electricity market was created in 1998, while gas recorded its lowest since 2003.
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Royal Commissions And The Like.
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No entries in this category.
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National Budget Issues.
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https://www.afr.com/policy/economy/shock-inflation-spike-hits-3-5-per-cent-20220125-p59qz4
Shock inflation spike hits 3.5 per cent
Ronald Mizen Economics correspondent
Jan 25, 2022 – 11.42am
Headline inflation spiked to 3.5 per cent in the year to December 31, smashing market expectations, while underlying inflation hit 2.6 per cent and is now years ahead of the Reserve Bank of Australia’s official forecasts.
Households felt the greatest pinch from price rises, with non-discretionary inflation, which includes expenses such as food, petrol, housing and health costs, growing a significant 4.5 per cent over 2021.
Investors had tipped 3.2 per cent growth in headline inflation (CPI) and 2.3 per cent for underlying inflation. On a quarterly basis, CPI rose 1.3 per cent compared to expectations of 1 per cent.
The cost of new dwellings as well as petrol prices were the main drivers of the surprise result, with the former up 4.2 per cent and the latter up 6.6 per cent over the three months.
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Why the RBA can still be patient on interest rates
Banking reporter
January 28, 2022 — 11.49am
The week of Australia Day is traditionally when many of us try to gradually ease our way back to “business as usual” after the summer holidays. But there’s been no such slow start to 2022 in the financial markets, thanks to fears that inflation is back with a bang.
For years, one of our key economic challenges has been that consumer prices were rising too slowly for the Reserve Bank’s liking. During almost all of RBA governor Philip Lowe’s time in charge, inflation has lagged the central bank’s 2 to 3 per cent-a-year target, leading to ever lower interest rates.
Suddenly, that picture seems to have dramatically changed. On Tuesday, we learned that headline inflation was running at 3.5 per cent a year, while the RBA’s preferred underlying measure was 2.6 per cent.
The surprisingly high numbers sparked a flurry of market excitement, and traders are now betting Lowe will lift interest rates in May - also the month we’re likely to have an election.
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Health Issues.
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ResMed revenue, profit up more than 13pc on ‘extraordinary demand’
Yolanda Redrup Reporter
Jan 28, 2022 – 8.49am
Sleep disorder and breathing devices company ResMed has overcome challenges posed by a shortage of critical electronic components, recording a 16 per cent jump in revenue for the first half.
The business banked $US1.8 billion ($2.6 billion) in revenue, while its net profit rose 13 per cent to $US405.4 million.
The company narrowly missed analyst consensus estimates, according to Bloomberg, which had predicted the company would generate $US1.83 billion revenue in the first half. It was also tipped to bank $US623.7 million of earnings before interest, tax, depreciation and amortisation and a net profit of $US408.1 million.
The dual-listed medtech business has faced “extraordinary demand” for its products thanks to competitor Philips’ recall of its Continuous Positive Airway Pressure (CPAP), Bi-Level Positive Airway Pressure (Bi-Level PAP) devices and mechanical ventilators, due to risks posed by a foam component in the devices.
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Pregnant women undergoing ‘unnecessary’, invasive testing: study
7:00AM January 29, 2022
Expectant mothers have been undergoing unnecessary genetic screening procedures that increase their risk of pregnancy loss, rather than using less-invasive blood tests to detect prenatal chromosomal abnormalities, prompting calls for the test to be covered by Medicare.
About five per cent of pregnant women have undergone more invasive prenatal screening procedures, including chorionic villus sampling (CVS) and amniocentesis, when a blood test called a GeneSight test is capable of picking up chromosomal abnormalities, a new study of 1000 women found.
Genea IVF scientific director Steven McArthur said the research, conducted in collaboration with Nepean Hospital’s perinatal unit, was the first of its kind and highlighted the importance of using modern screening technology.
“What we wanted to do was use the GeneSight’s test and be able to identify in early pregnancy patients who are high risk and therefore precluded them from going on and have those invasive tests,” he said.
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International Issues.
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Thich Nhat Hanh, who brought mindfulness to the West, approached death in that same spirit
By Brooke Schedneck
January 22, 2022 — 2.29pm
Thich Nhat Hanh, the monk who popularised mindfulness in the West, died in the Tu Hieu Temple in Hue, Vietnam, on Friday. He was 95.
In 2014, Thich Nhat Hanh suffered a stroke. Since then, he was unable to speak or continue his teaching. In October 2018 he expressed his wish, using gestures, to return to the temple in Vietnam where he had been ordained as a young monk. Devotees from many parts of the world had continued to visit him at the temple.
His simple yet profound teachings, which combine mindfulness along with social change, will continue to have an impact around the world.
In the 1960s, Thich Nhat Hanh played an active role promoting peace during the years of war in Vietnam. He was in his mid-20s when he became active in efforts to revitalise Vietnamese Buddhism for peace efforts.
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Europe could be headed for pandemic 'endgame': WHO
AFP
6:38AM January 24, 2022
The Omicron variant has moved the Covid-19 pandemic into a new phase and could bring it to an end in Europe, the WHO Europe director said Sunday.
"It's plausible that the region is moving towards a kind of pandemic endgame," Hans Kluge told AFP in an interview, adding that Omicron could infect 60 percent of Europeans by March.
"We anticipate that there will be a period of quiet before Covid-19 may come back towards the end of the year, but not necessarily the pandemic coming back," Kluge said.
While cautioning against over confidence, he said that if the recent fall in case numbers in areas like the US's northeast continued, "I believe that you will start to see a turnaround throughout the entire country".
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Starmer must be honest about the pain ahead
Clare Fogey
The Times
January 24, 2022
All eyes are on Graham Brady’s postbox as we begin another week of “will they, won’t they”, the game in which we guess whether enough Conservative MPs will try to remove the leader they know isn’t right for the job.
I am increasingly inclined to think they won’t, and that consequently we are facing a cross between a government and a hostage situation: the prime minister gaffer-taped to a green bench and his backbenchers in balaclavas. There will be sops to rebels and sweeteners to red wallers; low-level pork-barrelling of new schools here and regeneration funds there; megajoules of Westminster energy absorbed by machinations and rebellions. Means to an end that few believe in: the continuing premiership of Boris Johnson.
For Her Majesty’s official opposition this is a moment of hazard. The danger is that, buoyed by the continuing travails of the Conservative Party, Labour falls into its comfort zone of berating the “same old Tories” and thinking that they can cruise to office on a wave of loathing for the government. So rich is the offering of Conservative incompetence and sleaze that there is enough to keep Labour’s outrage machines chugging away for quite some time. Just before an election they might whip up a few big spending pledges: 10,000 new teachers, 100,000 new doctors, a million new homes; some large and delightfully round numbers to lure voters over the line.
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https://www.afr.com/world/europe/russia-and-china-s-plans-for-a-new-world-order-20220124-p59qro
New world order: Russia and China’s plans take shape
For Moscow and Beijing, the Ukraine crisis is part of a struggle to reduce American power and make the world safe for autocrats.
Gideon Rachman Columnist
Jan 24, 2022 – 12.55pm
The Western alliance has threatened the Kremlin with “massive” and “unprecedented” sanctions if Russia attacks Ukraine. But as the Ukraine crisis reaches boiling point, Western efforts to isolate and punish Russia are likely to be undermined by the support of China, Russia’s giant neighbour.
When Vladimir Putin travels to Beijing for the beginning of the Winter Olympics on February 4, the Russian President will meet the leader who has become his most important ally – Xi Jinping of China. In a phone call between Putin and Xi in December, the Chinese leader supported Russia’s demand that Ukraine must never join the North Atlantic Treaty Organisation.
A decade ago, such a relationship seemed unlikely: China and Russia were as much rivals as partners. But after a period when both countries have sparred persistently with the US, Xi’s support for Putin reflects a growing identity between the interests and world views of Moscow and Beijing. According to the Chinese media, Xi told Putin that “certain international forces are arbitrarily interfering in the internal affairs of China and Russia, under the guise of democracy and human rights”.
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A divided Europe gazes at its navel while Russia menaces
This is a particularly distracted time in Western Europe, which may make it a good time for President Vladimir Putin to make his move in Eastern Europe.
Gideon Rachman Columnist
Jan 25, 2022 – 9.14am
Over the weekend, I had breakfast with a former Downing Street official, who still lives and breathes UK politics. He asked me if I thought Russia would invade Ukraine in the next couple of weeks. I replied that I thought it distinctly possible.
My friend looked stricken. “Oh, no,” he exclaimed, “a war is about the only thing that could save Boris.”
That reply captured the current mood of deep insularity in Britain. But the UK is not unique. In fact, most of the big countries in Western Europe are currently in the midst of destabilising political transitions – which make them even less prepared than usual for a confrontation with Russia.
In the UK, Prime Minister Boris Johnson’s grip on power is becoming steadily weaker. The main debate in Westminster seems to be whether the Prime Minister’s remaining time in office is better measured in weeks or months.
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https://www.afr.com/world/europe/nato-scrambles-ships-jets-as-ukraine-tensions-build-20220125-p59qxl
NATO scrambles ships, jets as Ukraine tensions build
Hans van Leeuwen Europe correspondent
Jan 25, 2022 – 4.19am
London | NATO will send ships and fighter jets to eastern Europe and put other military forces on standby, as it bolsters the trans-Atlantic alliance’s defences and deterrence against Russia’s troop build-up on Ukraine’s borders.
The move came as Australia joined other Western countries in advising its citizens to leave Ukraine and avoid travelling there, and withdrew the families of its diplomats – a step lamented by Ukraine’s foreign ministry.
“We now advise you do not travel to Ukraine due to the risk of armed conflict. If you’re in Ukraine, you should leave now if it’s safe to do so. Flight availability could change or be suspended at short notice,” the federal government said via its Smart Traveller Twitter account.
Australia’s ambassador to Ukraine, Bruce Edwards, tweeted that the families of his staff would leave the country in coming days, but the small embassy itself would remain “open for normal business at this time”.
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The winding road to global recovery is through a thicket of risks
There are many downside risks to the IMF’s latest global economic outlook. Just as importantly, the ‘normal’ to which we may return is not the old one. The world has changed.
Martin Wolf Columnist
Jan 26, 2022 – 11.03am
While 2021 was a year of strong economic recovery, that recovery was neither universal nor complete.
Unfortunately, prospects for this year now look worse than the IMF forecast last October: the main culprits, it argues, being the omicron variant of COVID-19, supply shortages and unexpectedly high inflation. Downgrades in forecasts are particularly sharp for the US and China.
Uncertainties are large, with risks concentrated on the downside. Above all, it is easier to argue that the fund’s base case is too optimistic, rather than pessimistic.
These are my conclusions from the IMF’s World Economic Outlook Update. A year ago, the fund forecast global economic growth for this year at 5.5 per cent, with growth of high-income countries at 4.3 per cent. It now estimates that global growth last year was 5.9 per cent, with growth in high-income countries at 5 per cent.
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Unlike Trump, Biden won’t measure economy by the sharemarket
Matthew Cranston United States correspondent
Jan 25, 2022 – 1.22pm
Washington| A near-correction in the S&P 500 index should be ignored as an indicator of the economy, the Biden Administration says, but the beleaguered US President may struggle to shrug off any further declines triggered by expectations of hasty Federal Reserve tightening and tensions in Ukraine.
In a session marked by explosive trading volume and wild market swings, the benchmark index rebounded to close up 0.28 per cent on Monday (Tuesday AEDT) after having tumbled by as much as 4 per cent earlier in the day. Retail, energy and industrial companies led gains.
Prime traders said early in the session that hedge funds dumped high-valuation technology stocks, before a rally in the last half hour of trading pushed the index back into the black.
The size of the intraday drop and recovery had only been surpassed by four other days since 1987.
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https://www.afr.com/policy/economy/federal-reserve-signals-rate-increase-soon-20220127-p59rji
Federal Reserve signals March for first rate hike
Matthew Cranston United States correspondent
Updated Jan 27, 2022 – 7.36am, first published at 6.04am
Washington| The US Federal Reserve has signalled it will begin lifting interest rates in March given the remarkable recovery in jobs, which chairman Jerome Powell said would not be held back by tighter monetary policy.
The central bank boss also said the Fed was not making crucial monetary policy decisions based on the recent fluctuations in US sharemarkets, which have recorded corrections in major indices.
Chairman Powell’s comments and the Fed’s statements pushed the yield on the 2-year bond up 10 basis points, while the 10-year bond up 3.5 basis points to 1.83 per cent.
Mr Powell told the post-meeting press conference that the “remarkable” jobs recovery allowed the central bank to lift rates as soon as March with a tightening in its purchase of securities thereafter.
“I would say that the committee is of a mind to raise the Federal Funds rate at the March meeting,” Mr Powell said.
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US inflation shows the power of media narrative
US President Joe Biden’s inflation, rather than his jobs boom, has captured the headlines. How does that happen?
Paul Krugman Contributor
Jan 26, 2022 – 3.55pm
President Joe Biden had what I’d call a human moment on Monday (Tuesday AEDT). After a Fox News correspondent shouted out a question about whether inflation would be a political liability, Biden could be heard muttering: “No, it’s a great asset. More inflation. What a stupid son of a bitch.”
Seriously, can you blame him?
But why is US inflation proving to be so much of a political liability?
The idea that Americans are down on the economy because price increases have outstripped wage growth has hardened into conventional wisdom. And there’s obviously something to that.
But the political reaction is disproportionate to the actual decline in real wages, and I’d argue that journalists are missing a large part of the story if they fail to realise that.
Let’s talk about the long view of wages and prices.
Consider the annual rate of change in real wages – the rate of wage increase minus the rate of inflation – for blue-collar workers since the late 1970s.
There was a huge decline after the 1979 oil shock. Perhaps less familiar is the fact that real wages fell for much of the Reagan era.
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Lockheed’s F-35s get a flawed $20b software upgrade
Tony Capaccio
Jan 27, 2022 – 5.00am
A $US14 billion ($19.5 billion) Pentagon software upgrade for F-35 jets is being installed on planes that are already deployed even though it’s “immature, deficient and insufficiently tested”, according to a new assessment by the military’s testing office.
Aircraft operators “identified deficiencies in weapons, fusion, communications and navigation, cybersecurity and targeting processes that required software modification and additional time and resources, which caused delays”, according to the 13-page assessment in the testing office’s annual report, which will soon be released.
Built by Lockheed Martin, the F-35 is a flying computer, with more than 8 million lines of computer code, and software needed to increase its capabilities has been marred by problems since deliveries of the upgrades began in 2020.
The US Defence Department’s F-35 program office has implemented “process improvements to address software development issues”, according to the assessment.
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Germany’s appeasement of Putin risks disaster in Ukraine
By Ambrose Evans-Pritchard
January 27, 2022 — 5.52am
London: Sometimes you have to be blunt in international affairs. If Vladimir Putin takes Kyiv it will be in large part because the German political and economic establishment is complicit, notwithstanding the efforts of the Green foreign minister to change course at the last moment.
The German elites have signalled by their actions and body language that there will be no serious consequences, whatever Putin does with his Blitzkrieg forces and armoured divisions on Ukraine’s border.
(In a telling example, Germany said on Thursday AEDT it will supply 5000 military helmets to Ukraine to help defend against a possible Russian invasion- an offer Kyiv mayor and former world champion boxer Vitali Klitschko dismissed as “a joke” that left him “speechless”.)
The rest of core Europe is going along with what can only be described as a diplomatic travesty.
Brussels has been briefing journalists that invasion talk is breathless Anglo-Saxon chatter. The European Commission has pointedly taken the decision not to withdraw embassy staff from Kyiv, the tell-tale behaviour of a power that considers itself neutral.
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Australia ready to fill gas gap in Europe if Russia-Ukraine tensions explode
January 27, 2022
Australian LNG exporters are preparing to fill energy shortages across Europe if Russia cuts off gas supplies, with the federal government pledging to support “friends and allies” caught up in the escalating stand-off over Ukraine.
As US officials scrambled to source alternative energy supplies for countries heavily reliant on Russian gas, Trade Minister Dan Tehan and Resources Minister Keith Pitt said Australia was ready to ship LNG exports to Europe.
European nations on average draw more than 40 per cent of their gas imports from Russia – Germany’s reliance is even greater – sparking growing concerns that Moscow could limit supply to the continent in response to the Ukraine tensions.
Amid reports US officials were holding talks with Australian and Qatari gas suppliers, Mr Tehan said the nation stood ready “to support our friends and allies in the current challenging and complex geostrategic environment”.
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The knock-on effect of Russia conflict with Ukraine will be global famine
The Times
5:09PM January 26, 2022
Russia has always held open the option of deploying its natural gas supplies to the West as a weapon, one that could either complement its tank divisions or replace them. States that displeased the Kremlin were sometimes confronted with sudden “technical” pipeline issues in the midst of a cold winter. Gazprom officials visiting central and east European customers were treated like princelings, at least to their faces. Russian gas has become an instrument of punishment and reward.
Now the West is anxious that already high gas prices will add to a looming cost of living crisis at home. As the Russians tighten their stranglehold on Ukraine in an unusually stretched-out and public period of antebellum, so the price of short-term gas has climbed to three times the price in January last year, and six times the typical pre-pandemic level. When Russian gas supplies slumped before Christmas – supposedly because of unusually cold temperatures but probably also as a reminder to a new German government to approve quickly the Nord Stream 2 pipeline – prices soared even higher.
The cost of energy is, of course, politically toxic. Not least in Britain as Ofgem prepares to raise its energy bill cap. Britain is less dependent than many of its European neighbours on Russian gas but it cannot stay immune from galloping global prices. If Russia marches into Ukraine, or even if it just prolongs the current stand-off through the winter, the stress on the gas market will render it more volatile than in a decade. For separate reasons, including an Iranian-backed Houthi rebel drone attack on the United Arab Emirates, oil has already hit a seven-year high this month and Brent crude seems set to reach $100 a barrel by September.
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https://www.afr.com/wealth/investing/grantham-has-another-scarier-warning-20220127-p59rri
Jeremy Grantham has an even scarier warning
Erik Schatzker
Jan 27, 2022 – 3.55pm
Jeremy Grantham grabbed the market’s attention with his “super bubble” call on US stocks. Now he wants to deliver an even more alarming and urgent message, one his critics might find harder to accept.
The “Goldilocks” period of the past 25 years is ending, and the world needs to prepare for a future of inflation, slower growth and labour shortages, the renowned value investor said in a Bloomberg “Front Row” interview.
“There’s only a certain amount of cheap oil, cheap nickel, cheap copper, and we are beginning to hit some of those boundaries,” Grantham, co-founder of Boston asset manager Grantham, Mayo & van Otterloo ((GMO), said.
“Climate change is coming with heavy floods, serious droughts and higher temperatures – none of these make farming easier. So, we’re going to live in a world of bottlenecks and shortages and price spikes everywhere.”
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The US Federal Reserve is still playing with fire on interest rates
A huge stimulus added to the longest period of negative interest rates in modern times could be the riskiest experiment in the Fed’s history. The exit will rock the markets.
Stephen Roach Contributor
Jan 27, 2022 – 11.58am
The US Federal Reserve has turned on a dime, an uncharacteristic about-face for an institution long noted for slow and deliberate shifts in monetary policy.
That problem, of course, is inflation. Like the Fed I worked at in the early 1970s under Arthur Burns, today’s policymakers once again misdiagnosed the initial outbreak.
The current upsurge in inflation is not transitory or to be dismissed as an outgrowth of idiosyncratic COVID-19-related developments. It is widespread, persistent, and reinforced by wage pressures stemming from an unprecedentedly sharp tightening of the US labour market.
For the US Federal Reserve, recognising the inflation problem is only the first step toward solving it. And solving it will not be easy.
The Fed is so far behind that it can’t even see the curve.
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Ukraine war will have global consequences but could be Vladimir Putin’s undoing
By The Economist
8:57AM January 28, 2022
Seldom in the field of human conflict did so much hang on the whims of one man. Is Vladimir Putin about to invade Ukraine, as the massing Russian troops on its borders suggest? Or is he bluffing, to extort concessions from his neighbour and the West? No one can be sure of Mr Putin’s intentions. Even his own foreign minister seems to be kept guessing. But, if fighting is about to break out, the world needs to understand the stakes.
Perhaps Mr Putin is planning a full-scale invasion, with Russian forces thrusting deep into Ukraine to seize the capital, Kiev, and overthrow the government. Or he may seek to annex more territory in eastern Ukraine, carving out a corridor linking Russia with Crimea, the Ukrainian peninsula Mr Putin grabbed in 2014. Then again, he may want a small war, in which Russia “saves” Kremlin-backed separatists in Donbas, an eastern region of Ukraine, from supposed Ukrainian atrocities — and, at the same time, degrades Ukraine’s armed forces.
Because Mr Putin has the initiative, it is easy to conclude he has the advantage. In fact he faces perilous choices. A big war entails extraordinary risks. But a smaller war that limits these risks may fail to halt Ukraine’s Westward drift. And if a small war does not bring the capitulation of the government in Kiev, Mr Putin may ineluctably be drawn into a larger one.
A full Russian invasion would be Europe’s biggest war since the 1940s, and the first toppling since then of a democratically elected European government by a foreign invader. Russians would not only suffer casualties, especially during a long-running insurgency, but also cause the death of untold Ukrainians — fellow Slavs, with whom many have family ties.
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https://www.afr.com/world/europe/why-the-west-cannot-afford-defeat-in-ukraine-20220126-p59rb0
Why the West cannot afford defeat in Ukraine
A Russian victory would mean the United States and the West emerge weaker from the conflict while China would probably emerge stronger.
John McCarthy Contributor
Jan 28, 2022 – 1.34pm
As tensions in Europe increase, we should reflect on where these tensions leave our national interest – especially if their outcome is direct Russian military intervention in Ukraine.
We need to focus on two things: that the United States and the West risk emerging weaker and that China will probably emerge stronger. It will be cold comfort if a third outcome is that Russia is weakened economically because of intensified – and severe – Western sanctions.
The crisis won’t just go away. The loss of the Soviet Empire and the West’s subsequent triumphalism are central to Putin’s world view. This view hardened after Ukraine’s “Orange Revolution” in 2004 – seen in Moscow as stimulated by the West – and when, at Bucharest in 2008, NATO leaders left the door open to Ukrainian accession to NATO.
The events of 2014 that led to the Russian quasi-occupation of the Donbas area in south-eastern Ukraine and the annexation of the Crimea caused a further deepening of the divisions between Russia and the West.
Putin is driven both by the need to make Russia great again and by Russia’s centuries-old strategic requirement that it directly or indirectly control what it terms its “Near Abroad”– effectively the states of the former Soviet Union. Putin also knows that Russian tradition gives short shrift to leaders who are seen to be losers.
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Putin’s game of roulette over Ukraine
11:00PM January 28, 2022
The crisis confronting Europe, over the fate of Ukraine and Vladimir Putin, has deep roots going back centuries. But it also is based on the reactionary nationalist politics and thuggery by which Putin has kept himself master of Russia for the past 22 years. The historical roots need to be understood. They leave open, in principle, constructive solutions to the current tensions. Putin’s thinking and actions are another matter.
In 2005, a year after the 2004 Orange Revolution in Ukraine, Putin made a remarkable statement that takes us to the heart of how he sees Russia and geopolitics. “It should be recognised,” he declared, “that the collapse of the Soviet Union was the greatest geopolitical catastrophe of the (20th) century. For the Russian people, it became a real drama. Tens of millions of our fellow citizens and compatriots found themselves outside Russian territory. The epidemic of disintegration also spread to Russia itself.”
At times it is suggested that Putin, an ex-KGB officer, seeks to rebuild the Soviet Union. But it’s not that simple. In fact, he has declared that anyone who sought to do such a thing would be brainless.
Rather, as Steven Lee Myers pointed out in 2015 in The New Tsar: The Rise and Reign of Vladimir Putin, he seeks to restore “something much older, richer and deeper: the idea of the Russian nation, the imperium of the ‘third Rome’ ”. That’s a notion that took shape in the Russian heartland after the fall of Constantinople and the rise of the Ottoman Empire in the 15th and 16th centuries.
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Putin v the West: with Ukraine on the brink, who will blink?
The Russian leader can’t afford a military incursion except on his own terms. The West can’t afford to give him an excuse. Each needs the other to mis-step first.
Hans van Leeuwen Europe correspondent
Jan 28, 2022 – 1.46pm
London | Matt Simpson is suffering a painful sense of deja vu.
For 12 years, the chief executive of Toronto-listed miner Black Iron has been working to get the company’s iron ore project off the ground in central Ukraine. In 2014, he was within touching distance when Russia launched a war in Donbas and annexed Crimea, sending investors running for cover.
“Had that war not broken out, this would be an operating mine right now,” he says. “We had to put the company on hold for a while and, now that we’re back, we’d managed to get strong interest from a number of investors again.”
Seven years later, same story. Russian President Vladimir Putin has massed more than 100,000 troops on Russia’s border with Ukraine, plunging the country of 44 million people – and Europe as a whole – into uncertainty. Rightly or wrongly, many in the West are expecting war.
The Shymanivske project is near Kryvyi Rih, a city more than 300 kilometres from the contested, war-stricken Donbas region and safely on the western side of the Dnieper River that bisects Ukraine. But the conflict has caught up Black Iron again.
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https://www.afr.com/world/north-america/powell-s-big-inflation-challenge-20220126-p59rak
Jerome Powell’s big inflation challenge
The Federal Reserve chair is facing the equivalent of a baton change in an Olympic relay where an awkward handover will have enormous consequences.
Matthew Cranston United States correspondent
Jan 28, 2022 – 11.41am
Washington | In the summer of 1984, then US Federal Reserve chairman Paul Volcker was called into the White House to speak with president Ronald Reagan and his chief of staff James Baker.
“The president wants to give you an order,” Baker told Volcker, “Don’t raise interest rates before the election.”
The Fed chairman had made his name in the late 1970s and early 1980s by lifting interest rates to control inflation. US interest rates peaked at 20 per cent in 1981 as inflation hit 14 per cent. Three years on, Volker had started lowering rates as inflation receded to a much tamer 4 per cent.
Now, with American inflation at a 40-year high of 7 per cent and rising, it’s Jerome Powell’s turn to try and tackle sharply rising prices and this week the Federal Reserve chairman strongly hinted that is his plan.
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Russian President Vladimir Putin sends medical units to Ukrainian front
By Vivian Salama, Daniel Michaels and Laurence Norman
The Wall Street Journal
4:19PM January 28, 2022
Moscow has put what appear to be final preparations for an invasion of Ukraine by sending medical units to the front, moving to a level of readiness that it hadn’t reached in past build-ups.
While the moves don’t mean an attack is certain, they are prerequisites for battle and have intensified debates among Western allies over Russian President Vladimir Putin’s intentions. The US and European allies, particularly Germany and France, appear to be drawing different conclusions from identical intelligence.
The White House said on Thursday (Friday AEST) that German Chancellor Olaf Scholz would make his first official visit on February 7 and listed the situation around Ukraine as the top agenda item.
The Kremlin’s spokesman said there was little optimism in Moscow that the West would accept its demands over de-escalating the standoff over Ukraine, and said Mr Putin would take his time in considering proposals delivered by the US and NATO a day earlier.
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Syria jail assault shows ISIS still has a pulse
Rodger Shanahan
6:56PM January 27, 2022
The attack on the Syrian Democratic Forces-run prison in northeastern Syria is a reminder that the threat from Islamic State was not eradicated after its defeat at Baghouz in early 2019.
Exploiting weaknesses in Syrian and Iraqi governance, the group has been quietly and slowly rebuilding itself in the deserts of central Syria and Iraq. Small-scale attacks have gone largely unreported in the media. These operations have allowed the group to gain experience, new recruits, resources and to establish a degree of freedom of action.
Sabr, or patience, is lauded by jihadists as a virtue – be that while sitting in prison or in continuing the fight after defeats on the battlefield. That patience though must have a temporal as well as a spiritual purpose. Jihadist groups have sought to facilitate prison escapes as a show of faith to their members and to demonstrate to potential recruits how committed they are to recovering imprisoned members, as well as to bolster their ranks of experienced fighters, planners and logisticians.
Key to the regrowth of al-Qa’ida in Iraq was the year-long Breaking the Walls campaign that culminated in an attack on Abu Ghraib Prison in July 2014 that freed 500 prisoners.
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I look forward to comments on all this!
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David.
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