February 10 2022 Edition
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In the US we see another ISIS leader meeting a sticky end at the hands of US special forces while much of the North East has had dreadful freezing weather! There have been wild moves in the US technology sector which are genuinely unprecedented!
I have no idea how BoJo is still PM but he continues to be hanging on. I think he is a dead man walking if truth be told.
In Australia ScoMO has had a dreadful time with unwanted texts as the Aged Care sector is in crisis – on his on admission. An election looms so who knows what will happen.
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Major Issues.
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https://thenewdaily.com.au/finance/work/2022/01/31/working-from-home-alan-kohler/
6:00am, Jan 31, 2022 Updated: 7:19pm, Jan 30
Alan Kohler: The pleasure and pain of working from home
A young couple I know have to buy a three-bedroom house instead of the two-bedroom place they would be looking for because they’re both forced to work from home, him full-time, her part-time.
With a small baby, there’s no choice – they can’t both work at the kitchen table – so they have to move further away from their parents to afford the extra bedroom, away from family support.
Even though they’re required to work from home, there’s no suggestion that either of their employers will help with the cost of the extra bedroom or, for that matter, the lighting, heating and cooling, or the child care to replace grandparents.
Data given to me by Purpose Bureau shows that 55 per cent of jobs advertised on Seek now offer the option of working from home, but 27 per cent of them are permanent, and not optional.
The Australia Institute’s Centre for Future Work estimates that 30 per cent of the Australian workforce could feasibly work from home, or about 4 million people.
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Crony capitalists’ narcissistic rage prompts proxy advice ambush
The Treasurer’s shameless repurposing of financial services laws to protect the hurt feelings of the directors’ club puts all market participants on notice.
Dean Paatsch Contributor
Jan 31, 2022 – 5.00am
Treasurer Josh Frydenberg’s pre-Christmas regulatory ambush on proxy advisers has repurposed Australia’s financial services laws to protect company directors’ hurt feelings and punish the government’s perceived enemies with extraordinary fines and red tape.
It’s a low point in performative policymaking and a dangerous precedent for those in capital markets who dare criticise incumbent management.
Ownership Matters is one of four proxy advisers in Australia employed by institutional investors to advise on resolutions at the annual general meetings of listed companies.
Importantly, our advice is just an input. No client is obliged to contract with us, or is a slave to our view.
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Savings war chest grows to $424b: Frydenberg
Ronald Mizen Economics correspondent
Jan 31, 2022 – 4.00am
Federal Treasurer Josh Frydenberg said a $424 billion war chest of private savings was available to prop up the economic recovery as his NSW Liberal counterpart chided Canberra for not providing more handouts.
NSW Treasurer Matt Kean said he was “very disappointed” the federal government had refused to help fund a $1 billion support package to get small and medium businesses through the omicron wave.
But Mr Frydenberg said as the nation entered a new phase of the pandemic, the economy needed to move to a more normalised setting, bringing an end to the emergency support.
Citing data from the prudential regulator to be released later this week, Mr Frydenberg said the pile of cash stashed away by households during the pandemic had grown to $245 billion, and for businesses to $179 billion.
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$45bn Hunter-class frigates slow, unsafe: Defence
February 1, 2022
Australia’s new $45bn Hunter-class frigates will be “substantially” slower, have a shorter range than originally intended, and could be vulnerable to detection by enemy vessels, a classified Defence Department report reveals.
The Defence “Engineering Team Assessment” of the frigates program, undertaken last November, warns the ships could also be less safe for crews, with the potential for sailors to become trapped below deck by floodwaters in “credible damage conditions”.
The 36-page report sets out an array of serious problems with the “immature” British design, which is being substantially modified to meet Australian requirements, and warns that the government’s contract with shipbuilder BAE Systems provides “very limited means … to influence contractor performance”.
BAE won the contract in 2018 to build nine anti-submarine frigates in Adelaide to replace the Anzac-class fleet, with the first ship due to enter service in 2033.
The company claimed its design was the most advanced and stealthy on offer. But unlike its competitors, Spain’s Navantia and Italy’s Fincantieri, BAE’s design was an unproven one.
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Frigates sink us further into risk of expensive duds
7:00PM January 31, 2022
Australia has done it again, buying an unproven defence design and creating innumerable further problems by modifying it to meet our own requirements.
The classified “Engineering Team Assessment” of the $45bn Hunter-class frigate program, revealed by The Australian, should be a wake-up call to the government – without urgent political intervention, the frigates risk becoming expensive duds.
The report should also be a warning of the high risks of selecting a British-designed nuclear submarine.
The British government and its privatised defence giant, BAE Systems, claimed its Type-26 frigate was the most advanced submarine-hunting ship on the market.
But unlike its Italian and Spanish competitors, the British option existed only as an immature design, not a completed ship.
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Dean Paatsch and Rex Patrick nail Josh Frydenberg’s failure
12:27PM January 31, 2022
The last two years have given politicians right across the political spectrum a taste for the ‘advantages’ of fascism.
It can be summed up as: shut up and put on a mask or place your hands behind your back for the handcuffs – literally demonstrated with that video of the pregnant woman in Chairman Dan’s Victoria.
That’s been the wall-to-wall story in the Covid space – not excluding Gladys Berejiklian and Dominic Perrottet’s NSW, although they and it haven’t been anywhere near as bad as the rest. Now we see it in the corporate space with Treasurer Josh Frydenberg’s proposed $11m fines for so-called ‘proxy advisors’ if they step out of line, as mandated by Big Government.
That sort of crushing penalty can be imposed on such trivial actions as a proxy adviser failing to email a copy of its report to a listed company on the same day it is delivered to its – fee-paying – clients.
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New omicron sub-variant threatens to prolong case wave
Tom Burton Government editor
Feb 1, 2022 – 6.21pm
Experts have warned that a new rapidly spreading omicron sub-variant is 13 per cent more infectious, threatening to prolong the current wave well into autumn, stymying business and government hopes for an early end to the shadow lockdown and an outbreak-free election period.
The prospect of a long and bumpy tail of cases and sickness in the run-up to winter comes as cases and hospitalisations across the east coast and South Australia had begun to rapidly fall after peaking in mid to late January.
The emergence of the new more contagious BA.2 sub-variant also comes as health authorities predicted a rise in cases from schools reopening.
Analysis from routine contact tracing data by the respected UK Health Security Agency (UKHSA) released over the weekend indicates that transmission is likely to be 13.4 per cent higher among contacts of the new sub-variant in households than those for contacts of original omicron cases.
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Election not over yet, but Morrison may need another miracle
Nine News Political Editor
February 2, 2022 — 5.30am
In the lead-up to the 2010 and 2013 elections, one belief sustained the hopes of Labor MPs: Australians would never make Tony Abbott prime minister.
He all but won in 2010 and won convincingly in 2013 because Labor tore itself apart. The lesson, re-learnt, was that governments usually lose elections, oppositions don’t win them.
Four months out from the next poll, what confidence there is in Coalition ranks rests on a shared conviction: Australians won’t make Anthony Albanese prime minister.
That underestimates Albanese and misses the point. If Labor can make this election a referendum on the pandemic and pin the federal government as the sole source of all misery, then all Albanese needs to be is benign. And, given the Coalition’s entire 2019 campaign was built on Scott Morrison, the loss of trust in him is a body blow.
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Investors in a quandary as volatile markets send out confusing signals
Senior business columnist
February 1, 2022 — 12.13pm
As the US Federal Reserve Board leads the big shifts in monetary policies starting to occur around the developed world it is generating confusing and conflicting signals in financial markets.
The Fed triggered a nasty sell-off in the US and other sharemarkets when it made it clear after last month’s Open Market Committee meeting that the first rate rise of this cycle would come next month.
It will also halt its quantitative easing program (its buying of bonds and mortgages) and will start shrinking its balance sheet and withdrawing liquidity from the US and global financial system later this year.
The US sharemarket fell almost 10 per cent after the Fed meeting, with tech stocks taking a hammering, before it staged something of a recovery late last week.
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Peter Dutton sticks to his guns on frigates
6:30PM February 1, 2022
Defence Minister Peter Dutton says the federal government will stick with the British-designed Hunter-class frigate, despite an array of problems revealed in an internal Defence Department report revealed by The Australian.
Mr Dutton told Sky News the government had considered a “Plan B” option for the $45bn frigates, but decided to stick with British contractor BAE Systems.
The Australian revealed on Monday that the frigates would be “substantially” slower and have a shorter range than originally intended, and could be vulnerable to detection by enemy vessels, according to a classified Defence Department report.
Mr Dutton acknowledged there had been problems with the British frigate, but said they were “being addressed”.
He said the government was not planning to dump BAE Systems as it had with France’s Naval Group – the former head contractor for the now-cancelled Attack-class submarines – or multi-role helicopter supplier Airbus.
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Living with COVID-19 means businesses must sink or swim
The low jobless rate makes it the right time to wind back government handouts. Companies that can’t survive in the pandemic economy will need to make way for those with viable futures.
John Kehoe Economics editor
Feb 2, 2022 – 12.23pm
The economy is rebounding from the temporary omicron disruption and the unemployment rate is on track to fall below 4 per cent for the first time since the 1970s.
After two years of pandemic turbulence, this is excellent news for most businesses and households.
Now is a suitable time for the federal government to resist giving more debt-funded taxpayer handouts to struggling businesses and to allow the economy to adjust to the new COVID-normal.
Federal Treasurer Josh Frydenberg is right to resist pressure for more financial business assistance from NSW Treasurer Matt Kean, who is trying to shore up four state seats in byelections scheduled for February 12.
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Morrison has one last chance as he slides into dangerous territory
Award-winning political commentator and author
February 3, 2022 — 5.00am
Scott Morrison’s prime ministership has slid into its most dangerous phase. A few more weeks like the past few, and he can kiss it goodbye.
The pandemic which resurrected his leadership, combined with a few other summer squalls, could easily destroy it. Time is running out.
Morrison’s first chance to lay the groundwork for recovery came and went at the National Press Club. It was the political equivalent of the Hindenburg exploding and crashing onto a train. His last chance will be the budget on March 29. Days after that he has to call the election.
If he doesn’t improve, the most likely outcome will be that the voters take care of him at the ballot box. Another outcome, not very likely, is that colleagues will implore him to step aside before that.
On Tuesday Morrison failed to successfully recast his narrative, admit his mistakes without qualification, apologise for them also without qualification, show he is both in control and in touch, or outline an agenda for another term more arresting than “the other bloke will be worse than me”.
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SMS turns Scott Morrison’s reset into painful rewind
6:19AM February 3, 2022
Scott Morrison’s National Press Club address was supposed to be his reset moment ahead of the election.
Instead, the Prime Minister is being forced to answer questions about which current senior minister texted disparaging comments about him with Gladys Berejiklian.
The former NSW premier was a willing participant in the whinge-fest about Morrison but because the minister hasn’t been named, attention has turned to who the other party in the conversation was.
While it’s understandable that journalists will ask questions about it, politicians will of course line up to deny it was them, and others will demand the responsible minister out themselves; that’s never going to happen.
Why? Because the minister is the source, which is also why the veracity of the text exchange isn’t in question. It wasn’t passed on by a third party, for example.
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Shipwreck confirmed as Captain’s Cook Endeavour, after 22-year search
Reporter
February 3, 2022
A team of marine archaeologists believe they have identified the remains of James Cook’s ship HMS Endeavour off Rhode Island in the US, marking one of the biggest discoveries in Australia’s maritime history.
Australian National Maritime Museum director Kevin Sumption announced on Thursday that the shipwreck of James Cook’s famous vessel, HMS Endeavour, has been positively identified.
Following a two-decade program of fieldwork and research, Mr Sumption said the remains of the Endeavour had been discovered in Newport Harbor off Rhode Island at a site known as RI 2394.
“I am satisfied that this is the final resting place of one of the most important and contentious vessels in Australia’s maritime history,” Mr Sumption said in statement.
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https://www.afr.com/chanticleer/magellan-and-platinum-both-can-t-be-right-20220203-p59tmo
Magellan and Platinum both can’t be right
Magellan and Platinum have very different responses to the current market volatility, with one avoiding the stocks that the other loves.
Feb 3, 2022 – 5.25pm
The 63 per cent fall in Magellan Financial Group shares in the last six months has drawn inevitable comparisons to fellow ASX-listed, global fund manager Platinum Asset Management.
Platinum’s share price has also been hammered in the last six months, falling almost 40 per cent. But it’s the stock’s longer-term trajectory that raised concerns among Magellan investors.
Since its shares peaked at $8.72, Platinum has faced a lengthy period of underperformance – its flagship international share fund trails its benchmarks over one, three, five and 10 years – that has seen it face four years of share price declines. It was trading at $2.54 on Thursday.
Magellan’s underperformance in more recent times has taken on a very similar look to that of Platinum, with Magellan’s flagship global share fund trailing its benchmark over the same period.
It raises an obvious question: will Magellan struggle to turn around its share price slump in the same way that Platinum has?
The appearance at Morningstar’s conference on Thursday of Magellan’s co-founder and chief investment officer Hamish Douglass and Platinum investment specialist Julian McCormack – on separate panels, it should be noted – showed both similarities and sharp differences in the ways the two firms are approaching this crisis.
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Data shows crash in export income from overseas students
Julie Hare Education editor
Feb 3, 2022 – 4.33pm
Export income from overseas students almost halved in two years to just $22 billion, new data reveals, with experts predicting that 2022 will see a continuation of the slump.
New Australian Bureau of Statistics data shows that Australia’s largest services export sector and once third-largest export sector attracted $22.5 billion in 2021, down from $31.7 billion in 2020 and $40.3 billion in 2019.
“It is important that the wider community now understands the dire straits this once-vibrant sector is currently in,” said Phil Honeywood, chief executive of the International Education Association of Australia.
“Unfortunately, it’s likely to get worse before it gets better.”
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PM may survive the leaked texts, but will he survive the open warfare?
Chief political correspondent
February 4, 2022 — 5.00am
Scott Morrison could not resist scolding some of his Liberal colleagues in an interview this week when he aired his frustration with “factional rubbish” that was hurting his government, one day after he was called a psycho live on air on national television.
“It is very frustrating,” the Prime Minister told Ray Hadley on 2GB on Wednesday. “There’s some childish games going on there.”
But that remark only made things worse for Liberals who are fed up with the way Morrison runs their party.
“Was he looking in a mirror when he said that?” asked one of them. Some are in despair at the state of the Liberals in the Prime Minister’s home state of NSW. Some are in outright fury. And many of them, from the right and the left, think Morrison only has himself to blame.
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The political press is starting to believe Morrison won’t win
The hostility towards the Prime Minister from journalists is a powerful sign that he is losing the undeclared campaign.
Aaron Patrick Senior correspondent
Feb 4, 2022 – 12.13pm
In the investment markets, when insiders start selling, the professionals will tell you it is time to get out.
In Australia, when News Corp starts sliding away from a Coalition government, is that a political sell signal?
One month into the election year and a fascinating shift is taking place: the institutional political media – a diminished but potent force – suspects Scott Morrison may be a liability to his party.
The new perception was demonstrated at the National Press Club in Canberra on Tuesday in the questions put to the Prime Minister.
From the Nine Network’s Chris Uhlmann – a man undaunted by social media trolls – to cocky ABC correspondent Andrew Probyn, the tone was almost universally hostile.
One of those present described the mood as: “Let’s get him. It had that feel about it.”
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The government falls back onto its thin khaki line
After decimating the institutions of care, government calls upon the ADF have morphed from helping in emergencies to providing logistics and daily care services.
Laura Tingle Columnist
Feb 4, 2022 – 4.27pm
We are living in grim times. Governments – along with the rest of us – have had to contemplate even grimmer scenarios.
The national security committee of cabinet, Defence Minister Peter Dutton told ABC’s 7.30 on Thursday night, had been contemplating some particularly grim prospects.
“When we were first briefed as a national security committee on COVID, we were preparing for morgues at public hospitals, for Defence personnel to be deployed to turn people away from hospitals.”
The rather apocalyptic picture Dutton painted of desperate people being turned away from hospitals by gun-toting military personnel came during a spirited defence of his Prime Minister – a PM on the political ropes this week, confronted by a disastrous polling slump and a train wreck of an appearance at the National Press Club, topped by text message revelations that former NSW premier Gladys Berejiklian had described him as a “horrible, horrible person”, while an unknown cabinet minister had called him a “complete psycho” and a “fraud”.
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Underdog’s new tricks falling flat, but it’s not over yet for Morrison
Political and international editor
February 5, 2022 — 5.30am
You’ve heard the saying “kick a dog when it’s down”, but the version I heard in Japan is a touch more specific: “Kick the dog when it’s in the ditch”. Just now, the Morrison government is the dog in the ditch.
It’s in a losing position. It’s making every effort to struggle out. But nothing works. And just about everyone is kicking it, including many of its own. Of course, this only weakens it. With only three months to election day, this is not the position Scott Morrison planned for his government.
Look at this week. It was going to be the moment when the government leapt out of the ditch and bared its fangs. It was to be the big political reset.
The Prime Minister sought to do three things. First, he was going to look piteously into the eyes of the people by offering a mea culpa for his failures, hoping to assuage some anger. Surely they’d stop kicking him long enough to listen to what he had to say.
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Barnaby Joyce offered his resignation after texts calling PM ‘a hypocrite and a liar’ were leaked
By James Massola and Ashleigh McMillan
Updated February 5, 2022 — 9.58amfirst published at 9.20am
Deputy Prime Minister Barnaby Joyce offered to resign from his leadership position following a texting scandal where he called Prime Minister Scott Morrison a “hypocrite and a liar”.
And following a brief press conference on Saturday morning, in which Mr Joyce said Mr Morrison had declined his offer to resign, the Deputy Prime Minister pulled out of a scheduled appearance on the ABC’s Sunday morning Insiders program.
Deputy Prime Minister Barnaby Joyce had offered Scott Morrison his resignation amid his text message leak, which the Prime Minister did not accept.
The Deputy Prime Minister said his views in the text leaked to The Sydney Morning Herald and The Age were based on “assumptions and commentary” while on the backbench.
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The future of house prices is in the RBA’s hands
Home values will likely climb a little further before falling 15-25 per cent after rate hikes.
Christopher Joye Columnist
Feb 4, 2022 – 11.50am
What the Reserve Bank of Australia says these days is more or less meaningless – with the advent of brisk core inflation, its actions will be eventually dictated by the data.
The enormous uncertainty, and profound disruptions to activity, wrought by the pandemic required the RBA to provide both extreme policy stimulus and a convincing narrative that demonstrated there was a light at the end of the tunnel.
That narrative was built on the foundation of the RBA’s “forward guidance” and yield curve target, which clearly signalled that rates would remain low until 2024. As much as the RBA is being pilloried for getting this wrong, it is precisely this confidence and certainty that has helped power the recovery. Put differently, Martin Place is partly a victim of its own success.
It’s important to point out that while the RBA’s forward guidance was delivered with conviction, which gave consumers and business the confidence to go out and spend and invest, these statements were always bound by state-dependence. That is to say, the data was always going to determine the course of interest rates, irrespective of the narratives spun by Martin Place.
Given its power over the media, the RBA has been fond of telling stories to rationalise its outlook. The challenge with this is that its outlook at any juncture is based on a set of judgmental forecasts. And the RBA is the first to admit that its predictions are not normally worth the paper they are written on beyond 12 months or so. Even within that time horizon, the RBA can find it hard to divine our destiny.
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It’s the economy, stupid. An election in a time of economic turmoil
The first post-recession election in almost 30 years will ensure economic issues are front of mind for Scott Morrison and Anthony Albanese.
By Shane Wright
February 5, 2022
The 2019 federal election delivered the most substantial shock to political pundits in almost three decades.
Polls and betting markets were sure Bill Shorten would be standing up in Melbourne on that May 18 evening, promising a new era of Labor government.
Instead, Scott Morrison was in Sydney telling a raucous crowd how he believed in miracles and the result that evening was another one.
While pollsters and punters wondered if there had been some divine intervention in the result, those who study economic models had a much more humanistic take.
In a paper due to be published in the Australian Economic Review, Queensland University economist Hamish Greenop‐Roberts looks at the performance of polls, betting markets and economic models in predicting election results in Australia between 2010 and 2019.
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The news on the economy is better than we’re being told
Economics Editor
February 4, 2022 — 11.30am
From the way the financial markets – and an easily-led media – are telling the story, our troubles have multiplied. Along with all our other worries, Australia now has a big new problem: inflation is back with a bang. But that’s not the way Reserve Bank governor Dr Philip Lowe told the story this week. He thinks we’re going great guns.
According to the markets, recent figures show we’ve caught America’s disease and inflation has taken off. Something must be done urgently to stop the rot and, just as US Federal Reserve is about to start raising interest rates to get prices back under control, we’ll have no choice but to follow within a month or two.
The bets the financial markets are making about imminent rate rises imply that most of us will be getting big pay rises this year – which I’ll believe when I see it. But if that did happen it would be the first decent pay rise most workers had received in almost a decade. This, apparently, would be very bad news. Really?
In marked contrast, Lowe thinks everything in the economy’s got better, not worse. Right now, he said in a speech this week, “we are closer to full employment and achieving the inflation target than we had anticipated”. Gosh. That bad, eh?
This time last year, the Reserve was expecting the economy - real gross domestic product - to grow by 3.5 per cent last year. Now it’s expected to have grown by 5 per cent. The rate of unemployment was expected to be 6 per cent. Turned out to be 4.2 per cent. Wages were expected to grow by only 1.5 per cent. Now it’s likely to have been 2.25 per cent.
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COVID 19 Information
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https://www.afr.com/politics/federal/the-untold-story-of-the-covid-19-commission-20220130-p59saj
The untold story of the COVID-19 commission
A hard look at the NCCC shows how the Morrison government gained, and subsequently lost, a vital line to industry that helped keep the economy running when strains on supply chains were most severe.
Michael Roddan National Correspondent
Jan 31, 2022 – 5.00am
Earlier this month, confronted with the latest pandemic-induced strain on Australia’s supply chains, Scott Morrison floated a proposal to allow young adults aged 16 and over to operate forklifts.
Aimed at easing the staffing crisis that had crippled the nation’s distribution centres with the arrival of the highly infectious omicron variant, the Prime Minister’s plan to open forklift licences to under-18s lasted mere hours.
Although some countries such as Germany offer tractor and forklift licences for 16-year-olds, a unanimous rebuke from the states and condemnation from unions rendered the morning’s plan dead by the end of the national cabinet meeting on January 19.
The proposal caused a stir on social media and sparked renewed criticism of the government’s ill-preparedness for the latest supply chain calamity.
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NSW alarmed by aged care deaths as states stare down new omicron
Finbar O'Mallon Reporter
Updated Jan 30, 2022 – 6.08pm, first published at 4.51pm
NSW’s top doctor has confirmed the arrival of the new, more transmissible version of the omicron strain of COVID-19 as the state reported its deadliest day with 52 deaths.
The confirmation of four cases of the BA2 variant of omicron follows confirmation over the weekend that it has been detected in Victoria and Queensland.
Sunday, January 30: NSW Premier Dominic Perrottet has announced grants for small businesses earning less than $50 million a year of up to $5000 per week for wages, alongside payments for businesses to buy RATs.
NSW Chief Health Officer Kerry Chant said the variant had some “growth advantage” but it was not “presenting anything different clinically in terms of the severity”.
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Doubts on molnupiravir drug but 300,000 ordered
5:50PM February 1, 2022
Australia’s foremost authority on the use of medicines to treat Covid-19 has recommended that an antiviral drug produced by Merck be prescribed only as a last resort despite the government buying 300,000 doses.
The Covid-19 Clinical Evidence Taskforce says the evidence on the efficacy of molnupiravir is too limited, and Pfizer’s drug nirmatrelvir-ritonavir, known as Paxlovid, should be given in preference. Both drugs are in short supply in Australia due to global shortages.
Both drugs must be taken within five days of the onset of symptoms. They are most effective in cases of severe disease.
The taskforce recommends that doctors consider prescribing Paxlovid to patients who have only received two vaccinations and have risk factors for severe disease. The drug should also be considered for immunocompromised patients who are double or triple vaccinated.
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https://thenewdaily.com.au/finance/finance-news/2022/02/03/lockdowns-no-alternative-covid-kohler/
6:00am, Feb 3, 2022 Updated: 5:26pm, Feb 2
Alan Kohler: ‘No lockdowns’ doesn’t have to mean death stalks the land
opinion
Australian governments are behaving as if the only alternative to allowing 80 people a day to die from COVID-19 is another bout of hard lockdowns.
And since lockdowns have been abolished, that means it’s tough luck for the dying.
There can be no more lockdowns because the Morrison government decided to leave lockdown losers to their fate: The hardship of the few to protect the health of the many is too great.
But lockdowns are not the only alternative to letting the virus rip and having a health system in crisis.
The other three ways of preventing the spread of a virus are good masks, good ventilation and plenty of testing.
They’re less effective than hard lockdowns, it’s true, but better than giving up.
Last week the Biden administration began distributing 400 million free N95 masks – the most effective ones – around the United States.
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The pandemic is draining the power of incumbency
Once upon a time, solidarity in facing COVID-19 got governments re-elected. That’s now turned into voter irritation that might toss them out.
Phillip Coorey Political editor
Feb 3, 2022 – 8.00pm
As policy backflips go, Labor’s pledge this week to build a taxpayer-funded, gas-fired power station in NSW’s Hunter Valley was a ripper.
For the best part of a year, Labor vehemently opposed the plant, not because it would burn gas and eventually hydrogen to help firm up renewable energy when the Liddell coal-fired plant closed, but because it was bad economics.
Labor argued, as did many in the industry, that if the project stacked up, the private sector would build it, not taxpayers via the government-owned Snowy Hydro Limited.
“What’s important here is what the science tells us and what the economists tell us. And they tell us that this doesn’t stack up. Otherwise, the market would have put this mechanism in place,” Anthony Albanese said in May last year.
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The world is likely sicker than it has been in 100 years
By David Luhnow and Joanna Sugden And Rajesh Roy
The Wall Street Journal
12:53AM February 6, 2022
The world is living through a unique moment: In the past five or six weeks, the Omicron coronavirus variant has likely gotten more people sick than any similar period since the 1917-18 flu pandemic, according to global health experts.
While Omicron infections have peaked in many places, February is likely to see similar case loads as the variant continues to spread before it flames out, causing worker shortages from hospitals to factories and spurring debate about Covid-19 restrictions, particularly since Omicron appears to be causing less serious illness.
In England, more than one in six residents are estimated to have caught the coronavirus since Omicron emerged in late November, surveys and modelling by the Office for National Statistics indicate. In Denmark, about one in five have caught the virus, and in Israel one in nine, authorities estimate.
“This is an unbelievably unique moment when so many people get infected by a pathogen at the same time,” said Christopher Murray, the director of the University of Washington’s Institute for Health Metrics and Evaluation, which tracks global health.
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Climate Change.
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No entries in this category.
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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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Why Lowe will steer clear of Powell’s ‘nimble’ promise
Global equity markets dropped sharply after Fed boss Jerome Powell came out swinging against inflation. But despite the aggressive rhetoric, the Fed is likely to remain cautious.
Karen Maley Columnist
Jan 31, 2022 – 5.00am
It’s a fair bet that when he writes the statement that will be released following the central bank’s board meeting tomorrow, Reserve Bank boss Phil Lowe will scrupulously avoid any use of the adjective “nimble”.
The word acquired a certain notoriety after Jerome Powell, the head of the powerful US Federal Reserve, set global share markets reeling when he insisted that the US central bank would be “nimble” in responding to inflationary pressures, while strongly hinting at a rapid-fire series of rate hikes.
Even without the market meltdown, however, Lowe would have felt little temptation to follow Powell’s lead.
That’s because he’s consistently emphasised Reserve Bank determination to be patient and to hold off raising rates until actual inflation is sustainably back within a 2 to 3 per cent range.
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Josh Frydenberg draws a $65 billion line in the fiscal sand
By Shane Wright
January 31, 2022 — 2.50pm
Josh Frydenberg and Scott Morrison have drawn a line in the fiscal sand.
The move to tell the NSW government that federal coffers are closed to more state handouts to deal with COVID-related economic problems is recognition of two key federal government attitudes towards Omicron and its ilk.
The first is that while lives are not back to normal for many Australians, the federal government wants us all to feel that normal is within our grasp.
As Frydenberg noted on Monday, while the past month has been anything but normal for most, it is nothing like the April 2020 lockdown or the disaster that Delta delivered the country between June and October last year.
“We’re moving
to more normalised settings. Omicron is less severe. We don’t have 13 million
Australians in lockdown today like we did with Delta,” he told ABC television.
“And people are continuing to spend. Yes, some spending came off in the January period, yes, there’s pressures on our health system, yes, there’s pressures on supply chains and, yes, there’s pressures on cost of living.”
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https://www.rba.gov.au/media-releases/2022/mr-22-02.html
Statement by Philip Lowe, Governor: Monetary Policy Decision
Number 2022-02
Date 1 February 2022
At its meeting today, the Board decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent. It also decided to cease further purchases under the bond purchase program, with the final purchases to take place on 10 February.
The Omicron outbreak has affected the economy, but it has not derailed the economic recovery. The Australian economy remains resilient and spending is expected to pick up as case numbers trend lower. The RBA's central forecast is for GDP growth of around 4¼ per cent over 2022 and 2 per cent over 2023. This outlook is supported by household and business balance sheets that are in generally good shape, an upswing in business investment, a large pipeline of construction work and supportive macroeconomic policy settings. The main source of uncertainty continues to be the pandemic.
The labour market has recovered strongly, with the unemployment rate declining to 4.2 per cent in December. Hours worked are estimated to have declined significantly in January due to the Omicron outbreak, but high numbers of job vacancies suggest further gains in employment over the months ahead. The RBA's central forecast is for the unemployment rate to fall to below 4 per cent later in the year and to be around 3¾ per cent at the end of 2023.
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https://www.afr.com/policy/economy/rba-ends-bond-buying-upgrades-forecasts-20220201-p59stp
RBA ends bond buying, upgrades forecasts
Ronald Mizen Economics correspondent
Updated Feb 1, 2022 – 3.01pm, first published at 2.51pm
The Reserve Bank of Australia terminated its $350 billion pandemic bond buying program on Tuesday, citing significant improvements in the jobless rate and inflation running years ahead of expectations.
The RBA board kept the official cash rate at a record low 0.1 per cent at its first meeting of the year and indicated rates would remain on hold until wages growth was consistent with the bank’s inflation objectives.
As expected, the RBA tipped unemployment to fall below 4 per cent later this year before stabilising at around 3.75 per cent by the end of 2023 – the lowest level since the early 1970s.
RBA governor Philip Lowe said while the omicron outbreak had affected the economy, it had not derailed the recovery, and high job vacancies suggested unemployment would continue to fall.
The bank upgraded its inflation forecasts following a surprisingly strong result in the December quarter. It now expects underlying inflation to peak at 3.25 per cent later this year before falling to about 2.75 per cent over 2023.
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Record home loans drive the fastest price gains in three decades
Michael Bleby Senior reporter
Feb 1, 2022 – 3.45pm
Australians chalked up a record near-$370 billion in new home loans last year as they took advantage of record-low borrowing costs to push up prices at their fastest rate in more than three decades.
Total new mortgage commitments over the 12 months to December jumped 51 per cent from the 2020 calendar year, gaining 4.4 per cent in December alone – for a monthly record of $32.8 billion – official figures on Tuesday showed.
The soaring total, driven by a 5.3 per cent month-on-month rise in owner-occupier and first home buyer loans, and a 2.4 per cent gain in investor mortgage borrowing, underpinned the capital city average growth over the year of 21 per cent, which was the biggest annual gain since 1998.
The huge demand for home loans makes it likely regulators will act again to curb credit availability even as separate figures on Tuesday showed housing price growth slowed in January, in addition to slowing caused by increasingly higher fixed- and variable-rate loans.
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Quantitative easing is dead, long live quantitative tightening
By Shane Wright
February 1, 2022 — 6.30pm
It’s easy to spend money – especially when you control the nation’s currency printing presses.
But the Reserve Bank is now fast approaching the point where it has to decide how to deal with the end of the money creation spree that has kept afloat the economy since the advent of COVID-19.
Most Australians focus on the RBA’s movement of the cash rate and what that means for their mortgages and business operations.
But the COVID-19 recession not only delivered us the lowest interest rates on record, just 0.1 per cent, but also the RBA’s first foray into quantitative easing. That’s the process under which the bank created and then pumped hundreds of billions of dollars into the economy.
Forget about Treasurer Josh Frydenberg and his budget deficit, which this year is forecast to be $99 billion. Over the past 2½ months alone, the bank has been creating $4 billion a month with which to purchase federal and state government bonds. That is money sloshing around the economy.
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Future Fund chair Peter Costello says RBA ‘credibility’ damaged
February 1, 2022 — 11.56am
Future Fund chair and former treasurer Peter Costello has thrown his support behind an inquiry into the Reserve Bank of Australia, claiming recent efforts to keep interest rates at historic lows had cast doubt over the credibility of its policies.
Speaking during a portfolio update for the Future Fund on Tuesday morning, Mr Costello called on the RBA to end quantitative easing and release a plan for increasing the cash rate, which he said was “inevitable” as inflationary pressures grow.
The RBA met on Tuesday to discuss current monetary policy settings, which include buying $4 billion of government bonds each week and maintaining the cash rate at a historic low of 0.1 per cent until 2024.
The expansionary policies have helped reduce unemployment and maintain economic stability during COVID-19 but have also sent house prices and sharemarkets skyrocketing, causing regulators to intervene. Mr Costello said the current settings around interest rates were “plainly not tenable”.
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Rate hawks circle as Lowe concedes 2022 in play
Cecile Lefort Markets reporter
Feb 2, 2022 – 4.43pm
Shares extended their rally and bond yields eased a touch after Reserve Bank governor Philip Lowe admitted interest rates could rise in 2022, in-line with the market's thinking, although 2023 remained his apparent central scenario based on the projected path of wage growth.
A day after upgrading its forecasts for inflation and employment, Dr Lowe framed an optimistic picture for the Australian economy.
The RBA last year held the view that an increase to its record low 0.1 per cent cash rate was unlikely until late 2023 or 2024. But with stronger than expected employment and inflation data, the central bank believes its monetary goals are in sight, paving the way for tightening policy.
“This is good news,” Dr Lowe said during a Q&A after a speech at the National Press Club in Sydney. “I’m hoping that as we make further progress towards full employment, and we can sustain inflation, roughly 2.5 per cent, we’ll be able to normalise monetary policy.”
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https://www.afr.com/policy/economy/the-rba-is-flying-blind-in-the-pandemic-20220202-p59t2j
The RBA is flying blind in the pandemic
RBA governor Philip Lowe said an interest rate rise later in 2022 was now “plausible”, after only three months ago dismissing it as “extremely unlikely”.
John Kehoe Economics editor
Feb 2, 2022 – 3.21pm
Twelve months ago, at the National Press Club when I asked Philip Lowe how credible his guidance was that interest rates would remain near zero until at least 2024, the Reserve Bank governor admitted it was a “best guess” and not a “pledge”.
Nevertheless, many borrowers assumed it was an ironclad guarantee and took on large debts.
Now, with inflation rising and the unemployment rate on track to fall below 4 per cent, Lowe at the same forum on Wednesday candidly conceded the fallibility of the RBA’s crystal ball.
Lowe, in essence, admitted the central bank is flying blind through the pandemic, with the official interest rate anchored at 0.1 per cent until clarity emerges.
He was forced to admit an interest rate rise later in 2022 was now “plausible”, after three months ago dismissing it as “extremely unlikely”.
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The RBA’s grand and risky experiment on inflation and jobs
Achieving the lowest jobless rate in 50 years without rampant inflation would burnish the legacy of Scott Morrison and Philip Lowe, both under pressure to deliver for the nation.
John Kehoe Economics editor
Feb 4, 2022 – 11.45am
Scott Morrison calls it a “once-in-a-lifetime opportunity” and Philip Lowe says it would be a “historic milestone”.
Remarkably, the Prime Minister and Reserve Bank of Australia governor are on the cusp of realising an unemployment rate with a 3 in front of it – the lowest in half a century.
Such a feat would have been dismissed as fantasy when the COVID-19 pandemic hit and the national economy shut down two years ago.
The goal of the lowest jobless rate since the ’70s will help determine the professional success and legacy of Morrison and Lowe, both of whom have faced criticism in recent months.
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Health Issues.
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Australians paying $41 to see a GP as emergency rooms bear brunt of healthcare pressure
By Dana Daniel
February 1, 2022 — 12.01am
More than a third of all emergency department patients last year could have been treated outside a hospital, but Australians face delays seeing a general practitioner and fork out an average $41 each time despite telehealth measures driving up bulk-billing.
Almost a third of GP patients pay gap fees, and a third in need of an urgent appointment had to wait 24 hours or more in 2020-21, a Productivity Commission report on government-funded health services shows. Only 56 per cent were seen within four hours.
Emergency departments (ED) received an influx of patients with conditions that could have been treated outside the hospital. Out of 8.8 million emergency department visits nationally, “GP-like presentations” to hospitals hit 3.2 million in 2020-21, up 14 per cent from 2.8 million the previous year.
Australian College of Emergency Medicine past president Simon Judkins said many patients had no option but to present at their local emergency department because “their GPs are fully booked”, and some patients told the next available appointment was weeks away.
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https://www.ausdoc.com.au/news/doctors-call-rethink-over-medicalisation-death
Doctors call for rethink on 'over medicalisation' of death
An international panel has called for changes to how death is viewed especially in light of the extremes of dying seen in the pandemic
2nd February 2022
Death has been "overmedicalised" and needs a different approach, according to a group of international experts, who say COVID-19 has shed a harsh spotlight on care for the dying.
Millions around the globe are suffering unnecessarily at the end of their lives due to the culture in wealthy nations of healthcare workers seeking to prolong life, rather than support death, the panel says.
At the same time, around half of people globally die without any palliative care or pain relief, particularly in lower-income countries, points out The Lancet-convened panel.
The Commission on the Value of Death — that involves patients, community experts, philosophers and theologians, as well as medical and social care experts — is calling for change.
It made five recommendations for what they called a "new vision of death" in its report published on Monday.
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Why IVF is more equal than other healthcare in the pandemic
When the virus has so heavily disrupted birth and death rituals, the special treatment of infertility services reflects a particular kind of feminism.
Tanveer Ahmed Contributor
Feb 2, 2022 – 12.06pm
There are few types of suffering that have been deemed worthy of special treatment in comparison to the priorities of containing the pandemic. Even the most fundamental rituals around birth and death have been heavily disrupted.
Yet last month the Victorian government categorised middle-class infertility as a special kind of emotional pain by overturning a pause on in vitro fertilisation, or IVF. They did so in the wake of public pressure, sparked by a Facebook post from 45-year-old woman Melanie Swieconek.
The suffering of infertility, while terrible, is not special compared to severe pain, impaired vision or immobility. Along with cancer and cardiac treatments, these are some of the typical problems that require the elective surgery banned in spurts throughout the pandemic.
In Victoria there are 67000 such procedures on waiting lists. It is highly unlikely that the pain of testicular or prostatic cancer would attract special attention.
The desire of women unable to conceive naturally to have children is both natural and understandable.
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Pioneering treatment ‘cured’ patients of leukaemia
By Laura Ungar
February 3, 2022 — 3.28pm
St Louis: In 2010, doctors treated Doug Olson’s leukaemia with an experimental gene therapy that transformed some of his blood cells into cancer killers. More than a decade later, there’s no sign of cancer in his body.
The treatment cured Olson and a second patient, according to the University of Pennsylvania doctors, who said it was the first time the therapy had been studied for so long.
“I’m doing great right now. I’m still very active. I was running half marathons until 2018,” said Olson, 75, who lives in Pleasanton, California. “This is a cure. And they don’t use the word lightly.”
His doctors describe the two cases in a study published on Wednesday in the journal Nature. They say the two examples show the treatment, called CAR-T cell therapy, can attack cancer immediately, then stay inside the body for years and evolve there to keep the disease at bay. Such so-called “living drugs” are now used by thousands around the world to treat certain blood cancers.
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Listening to patients key to doctors avoiding misdiagnosis, study finds
11:01PM February 3, 2022
Doctors who spend less time learning about their patients’ medical histories and put greater emphasis on physical symptoms misdiagnose patients at higher rates, a world-first study into what causes clinicians to arrive at a false diagnosis has found.
The study, led by researchers at the Australian National University and the University of Melbourne, found physicians who listed more evidence or over-explained reasons for diagnoses were also more likely to be wrong.
It is estimated 140,000 people have medical issues misdiagnosed in Australia every year, resulting in 4000 deaths - three times the number killed in road accidents.
The researchers analysed video of 16 medical examinations, where overseas doctors were asked to diagnose a patient’s symptoms in a controlled setting, to uncover the hallmarks of a wrong diagnosis.
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International Issues.
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Putin is many things, but he is not irrational
Vladimir Putin is ruthless, a nationalist, and an autocrat. But he is also a master tactician and strategist.
Grant Wilson Contributor
Jan 31, 2022 – 9.11am
If the Minister for Defence, Peter Dutton, has nothing intelligent to say on the Ukrainian-Russian conflict, he really should say nothing at all.
Dissing the President of Russia, Vladimir Putin, on talk-back radio as an ageing dictator who is “more and more irrational” was needlessly provocative, irresponsible and inaccurate.
The caustic rebuke he received from the Russian Ambassador to Australia, Dr Alexey Palovsky, was well within diplomatic boundaries, even if highly unusual. There was an ample serving of Russian propaganda delivered on the side, but the thrust of his comments resonated.
Specifically, Dr Pavlosky was correct in stating that “if such is the level of analysis informing Australian policy then it is definitely a worrying sign”.
Dutton’s comments are beneath what Australians should expect of their senior elected representatives, especially in such a febrile diplomatic environment.
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Sweden shores up defences of island pivotal for control of Baltic Sea
By Richard Orange
January 31, 2022 — 8.55am
Gotland: Two Gripen fighter jets swoop in, unleashing a clatter of cannon fire at an imagined enemy battling its way inland from the beach.
As they pull away, armoured combat vehicles and battle tanks roar up to a ridge, and begin firing off shell after shell, before racing in for closer-range combat, backed by an infantry platoon armed with anti-tank mortar weapons.
Until Sweden’s armed forces sent reinforcements to the strategic island of Gotland two weeks ago, this show of strength would have been impossible.
But with Russian troops massed on the border of Ukraine, the security situation in the Baltic Sea is now more tense than at any time since 1981, when Russian warships came close to entering Swedish territorial waters to rescue a stranded submarine.
At the same time, Russia’s demand that the US block Sweden and Finland from membership of NATO, has reawakened debate in Sweden over joining the Western alliance.
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Pay and volunteers: How Vladimir Putin revitalised the army
By Michael Evans
The Times
4:28PM January 30, 2022
Tank for tank, missile for missile, Russia is so far ahead of Ukraine that on paper an invasion might end up being a mad dash to Kiev similar to the lightning advance by US forces across Iraq in 2003.
The Russian army today is better organised and equipped than it has been for decades, with a motivated and disciplined officer class.
Despite recent improvements in Ukraine’s forces – including NATO training and combat experience from the eight-year separatist war in the Donbas region – its army is still no match in the field.
However, just as the US was unable to defeat the insurgency in Iraq, Russia’s ability to quell a broad, post-invasion resistance in Ukraine is an altogether different proposition.
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George Soros says Xi could be toppled
Matthew Cranston United States correspondent
Updated Feb 1, 2022 – 7.54am, first published at 5.15am
Washington | Chinese President Xi Jinping could be replaced once his economic and COVID-19 control policies prove to be a failure following the Winter Olympics, billionaire George Soros says.
Mr Soros, the retired hedge fund manager who has long warned groups such as BlackRock against investing in China because of its authoritarian regime, likened the upcoming Winter Olympic Games to a Nazi Germany propaganda stunt.
“Like Germany in 1936, [China] will attempt to use the spectacle to score a propaganda victory for its system of strict controls,” Mr Soros told think tank Hoover Institution’s forum on China on Monday (Tuesday AEDT).
But the striking prediction from the 91-year-old, who maintains China is the greatest threat to open societies in the world, is that the Xi regime could be replaced this year as his economy and pandemic responses fail.
“Xi Jinping has many enemies. Although nobody can oppose him publicly because he controls all the levers of power, there is a fight brewing within the CCP that is so sharp that it has found expression in various party publications,” Mr Soros said.
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https://www.afr.com/world/europe/why-putin-s-gamble-on-ukraine-borders-on-the-insane-20220131-p59sn4
Why Putin’s gamble on Ukraine borders on the insane
Moscow cannot achieve its aims in Ukraine without a historic capitulation by the US. And the Russian president has made it difficult for himself to retreat.
Carl Bildt
Jan 31, 2022 – 4.35pm
Russian President Vladimir Putin has thrown down the gauntlet against the West in a way no Kremlin leader has done since Nikita Khrushchev brought the world to the brink of nuclear catastrophe six decades ago.
It’s a huge strategic gamble by the Kremlin – one that has led to a situation in which Putin must either climb down from his extensive demands or launch a military operation likely to lead to large-scale war in Europe.
None of the fears the Kremlin’s propaganda play on have any foundation in reality. The last consequential NATO expansion was decades ago. No one was seriously contemplating NATO membership for Ukraine or Georgia. Plans for US missiles in eastern Ukraine targeting Russia are pure fantasy. No sane person sees the risk of Norway, Estonia, Ukraine or any other border state planning to invade Russia.
In fact, NATO policy has been rather careful. Before Putin’s invasion of Ukraine in 2014, US forces in Europe had been continuously reduced. The year before, the last US tank in Germany had been shipped back across the Atlantic.
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North Korea launches biggest missile in four years
By Timothy W. Martin
Dow Jones
4:15PM January 30, 2022
North Korea, for the first time in years, launched what appeared to be an intermediate-range ballistic missile on Sunday, Seoul and Tokyo officials said, raising the magnitude of its weapons tests to a level the Kim Jong-un regime had not approached in years.
The suspected ballistic missile took an unusually lofty trajectory of more than 1900km, according to Japanese and South Korean officials. That would be more than twice the altitude of what Pyongyang has launched in more than four years.
Seoul labelled it an intermediate-range ballistic missile, while Tokyo called it longer than a mid-range weapon.
The Sunday test is the biggest step back towards major provocations – even though it appears, based on initial assessments, to have fallen short of being classified as an intercontinental-ballistic missile, according to weapons experts.
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https://www.afr.com/policy/economy/the-era-of-free-lunch-economics-is-ending-20220131-p59sol
The era of free-lunch economics is ending
Markets and voters have come to expect all gain and no pain economic policy. That’s making it harder to remove the fiscal and monetary punch bowls.
Raghuram Rajan Contributor
Feb 1, 2022 – 12.31pm
Smart economic policymaking invariably requires trading off some pain today for greater future gains. But this is a difficult proposition politically, especially in democracies. It is always easier for elected leaders to indulge their constituents immediately in the hope that the bill will not arrive while they are still in office. Moreover, those who bear the pain caused by a policy are not necessarily those who will gain from it.
That is why today’s more advanced economies created mechanisms that allow them to make hard choices when necessary. Chief among these are independent central banks and mandated limits on budget deficits. Importantly, political parties reached a consensus to establish and back these mechanisms irrespective of their own immediate political priorities. One reason why many emerging markets have swung from crisis to crisis is that they failed to achieve such consensus. But recent history shows that developed economies, too, are becoming less tolerant of pain, perhaps because their own political consensus has eroded.
Financial markets have become volatile once again, owing to fears that the US Federal Reserve will have to tighten its monetary policy significantly to control inflation. But many investors still hope that the Fed will go easy if asset prices start to fall substantially. If the Fed proves them right, it will become that much harder to normalise financial conditions in the future.
Investors’ hope that the Fed will prolong the party is not baseless. In late 1996, Fed chairman Alan Greenspan warned of financial markets’ “irrational exuberance”. But the markets shrugged off the warning and were proved correct. Perhaps chastened by the harsh political reaction to Greenspan’s speech, the Fed did nothing. And when the sharemarket eventually crashed in 2000, the Fed cut rates, ensuring that the recession was mild.
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https://www.afr.com/policy/economy/the-fed-is-too-late-to-remove-the-punchbowl-20220202-p59t43
The Fed is too late to remove the punchbowl
Despite all the noise, monetary policy is still aggressively loose, even though the US economic recovery and surge in inflation have long been clear.
Martin Wolf
Feb 2, 2022 – 9.26am
On November 22, US president Joe Biden renominated Jay Powell as chairman of the Federal Reserve. Eight days later, Powell told Congress that it was “probably a good time to retire that word and try to explain more clearly what we mean”.
The magic word he was about to retire was “transitory”. That incantation had permitted the Fed to persist with an extremely expansionary monetary policy during a strong recovery accompanied by soaring inflation.
A cynic might think there was something more than accidental about the timing of the word’s retirement. I could not possibly comment. Let us hope instead that the shift is not too late.
In 1955, chairman William McChesney Martin remarked that the Fed “is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up”. It was sound advice, as the monetary turmoil of some two decades later demonstrated. Losing control over inflation is politically and economically damaging: restoring control usually requires a deep recession.
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https://www.afr.com/policy/economy/can-the-fed-let-us-down-easy-20220202-p59t4m
Can the Fed let us down easy?
While Americans have sharply increased their expectations for inflation over the near future, they don’t expect that inflation to persist.
Paul Krugman
Feb 2, 2022 – 9.29am
American workers are quitting at record rates, suggesting that they are confident they can easily find new jobs. Wages are rising rapidly, suggesting that labour currently has a lot of bargaining power. These are the hallmarks of an economy at or near full employment. At the same time, inflation is running uncomfortably high.
All of this says that it is time for the Federal Reserve to cool things down, which it has indeed said it will do. It is planning a series of interest rate hikes over the year ahead, with the pace of those hikes dependent on the data.
But can the Fed pull this off without sending us into a recession? It will be tricky, for reasons I’ll get to. But I keep seeing people drawing parallels between recent inflation and the inflation of the 1970s, with the implication that disinflation will be as ugly as it was last time. So it is important to understand why that comparison is misleading.
The end of the ’70s inflation was indeed extremely ugly. Paul Volcker’s tight-money policies eventually brought inflation down to tolerable levels but only at the cost of a huge surge in unemployment.
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https://www.afr.com/policy/economy/slow-fed-right-to-be-wary-digital-dollars-20220201-p59t06
Slow Fed right to be wary digital dollars
In a democracy, the US central bank will get one shot at an official cryptocurrency. It needs to be sure the gains outweigh the risks.
Kenneth Rogoff Columnist
Feb 2, 2022 – 12.36pm
Many countries’ governments, most notably China’s, are continuing to experiment with central bank digital currencies (CBDCs). Money 3.0 is moving full speed ahead, and with its recent white paper, entitled The US Dollar in the Age of Digital Transformation, the US Federal Reserve, a conspicuous laggard, has finally started to weigh in, if only tepidly. The Fed’s caution is understandable, but is it excessive?
The Fed sets an extremely high bar for introducing a retail digital dollar. For starters, we are told that the new form of money must provide benefits more effectively than other methods, presumably meaning dollar-linked digital stablecoins and existing bank accounts.
For example, one purported benefit of a digital dollar is to provide “real-time clearing” for small payments, which of course paper currency already achieves, and the Fed plans to introduce 24-hour electronic payments through banks soon.
The digital currency also must protect privacy (then again, the Chinese authorities say that, too) and must not facilitate criminal activity, which is ironic given the popularity of the $100 bill in the global underground economy.
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Biden deploys troops to Europe as talk of US-Russia deal emerges
Updated February 3, 2022 — 2.54amfirst published at 12.56am
Washington: The US has approved the deployment of 3000 additional troops across eastern Europe to shore up its NATO allies amid the threat of Russian aggression.
The Pentagon announced on Wednesday (local time) that President Joe Biden had approved the deployment of the troops, which would be sent to Romania, Poland and Germany.
“These are not permanent moves – they designed to respond to the current security environment. Moreover, these forces are not going to fight in Ukraine. They are there to provide a robust defence to our NATO allies,” said Pentagon spokesman John Kirby.
“These movements are unmistakable signals to the world that we stand ready to reassure our NATO allies and deter and defend against any aggression.”
Russia immediately criticised the US deployments.
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Putin and Xi form alliance to defeat sanctions over Ukraine
By Marc Bennetts
The Times
February 3, 2022
President Putin and President Xi will sign a series of deals in Beijing on Friday as well as discuss a new gas pipeline to China that could provide Russia with an economic lifeline in the event of western sanctions.
China will formally pledge its support for Russia in its dispute with the West over NATO expansion, the Kremlin announced.
Moscow also said that it was looking to move ahead with the construction of a Power of Siberia 2 pipeline that would run to China through Mongolia.
Gazprom, the state-backed energy company, said the pipeline would deliver 50 billion cubic metres of gas a year, doubling Russia’s annual exports to China.
If it goes ahead, the pipeline could provide Russia with an alternative to its contentious Nord Stream 2 gas pipe to Germany, which could be under threat if Russia invades Ukraine. However, the new project has been under discussion for a long time and would take years to complete.
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Facebook suffers biggest wipeout in market history
Matthew Cranston United States correspondent
Updated Feb 4, 2022 – 10.03am, first published at 5.43am
Washington | A 27 per cent drop in Meta’s stock price – equivalent to more than $US230 billion ($322 billion) in lost value – has sent analysts scrambling to re-rate the tech giant with greater consideration for competitive threats such as Tik Tok as well as Apple’s privacy policies that have hit advertising.
The collapse in Meta, the parent company of Facebook, is the worst-ever sharemarket hit by value and points to further pain in the sector as the US earnings season plays out.
More than 50 analysts had buys or neutral recommendations on the stock before its price crashed after Meta tipped first quarter revenue guidance of $US27 billion to $US29 billion, far lower than consensus. Only two analysts – Société Générale’s Simon Baker and Independent Research’s Markus Jost – had sell recommendations before the collapse.
Meta’s hit one day hit alone was worth more than the market value of over 460 of the S&P 500’s members
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https://www.afr.com/policy/foreign-affairs/bring-back-the-free-world-20220203-p59th8
Bring back the free world
Fascism and the Cold War brought about a group of democracies that cared about each other’s freedom. Vladimir Putin is reminding us how important that is.
Bret Stephens Contributor
Feb 4, 2022 – 11.27am
At some point in the past 30 years, the concept of the “free world” fell out of favour.
Maybe it seemed dated once the Cold War ended. Or an afterthought in an era in which economic development, not political freedom, became the primary measure of human progress.
Or too smug in an American culture increasingly obsessed with its own sins, current and original. Or no longer befitting countries where democratic norms and liberal principles were being eroded from within – from Hungary to India to the US.
But we urgently need to restore the concept to its former place, both for its clarifying power and its moral force.
The prospect of a Russian invasion of Ukraine is being treated by Vladimir Putin’s many apologists as a case of reasserting Russia’s historic sphere of influence, or as predictable pushback against NATO’s eastwards expansion – that is, as another episode in the game of great power politics.
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Amazon surge paces Nasdaq, US 10-year yield tops 1.9pc
Timothy Moore Online editor
Feb 5, 2022 – 5.45am
Shares in Amazon, which posted strong quarterly results after Thursday’s market close, steadied the tech sector which had been hammered by Meta’s plunge.
In New York, Amazon was up 13.5 per cent, reviving the NYSE Fang + Index, which was 2.2 per cent higher. Microsoft, Netflix and Alphabet each were higher. Apple and Meta saw modest gains fade into the close.
Buying momentum eased late and the Dow ended the session down 0.1 per cent, reversing an afternoon advance. The S&P 500 was 0.5 per cent higher with the Nasdaq powering up 1.6 per cent.
Wall St: Dow -0.1% S&P 500 +0.5% Nasdaq +1.6%
In New York: BHP +0.6% Rio +0.6% Atlassian +5.4%
Tesla +3.6% Apple -0.2% Amazon +13.5% Meta -0.3%
Five of the S&P 500’s industry sectors rose, paced by a 3.7 per cent rise in consumer discretionary. Materials, real estate and consumer staples led the laggards.
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Fed could hike at all seven remaining meetings this year: Summers
Simon Kennedy
Feb 5, 2022 – 6.08am
Former US Treasury Secretary Lawrence Summers said investors need to brace for the Federal Reserve to potentially raise interest rates at all seven remaining policy meetings this year and even for it to hike by more than a quarter point in one go.
“Markets have to be prepared for a rate hike in every meeting and they have to be prepared for the possibility that, as the inflation process continues, we might need to have meetings with more than a single 25 basis point rate hike,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin on Friday (Saturday AEDT).
The Fed is “behind the curve” and anyone not open to considering that policymakers will boost rates at consecutive meetings through year-end is “underestimating the range of possibilities”, said Summers, a Harvard University professor and paid contributor to Bloomberg.
Summers in December had suggested that signalling four hikes in 2022 was what would be “required to restore credibility” to the Fed with regard to quelling inflation. But since then, price and wage gains have accelerated further.
https://www.afr.com/policy/economy/us-economy-adds-467-000-jobs-in-january-20220205-p59u0h
US economy adds 467,000 jobs in January
Reade Pickert
Feb 5, 2022 – 4.55am
Washington | The US labour market showed unexpected strength last month despite record COVID-19 infections, extending momentum into the new year as surging wages added more pressure on the Federal Reserve to raise interest rates.
A broad-based 467,000 gain in nonfarm payrolls, which exceeded all economists’ projections, followed a 709,000 total upward revision to the prior two months, Labour Department figures showed on Friday (Saturday AEDT).
The unemployment rate ticked up to 4 per cent, and average hourly earnings jumped.
A variety of factors including omicron, seasonal adjustment and the way workers who are home sick are factored in make interpreting the January data challenging. But the increase in employment, along with substantial upward revisions to prior months, illustrate newfound momentum in the labour market. All the while, businesses are trying to retain as many workers as they can, including those hired for the holiday season.
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Bank of England raises interest rates as inflation, energy prices surge
By Danica Kirka
February 4, 2022 — 2.57am
The Bank of England raised interest rates for the second time in three months on Thursday, putting the United Kingdom far ahead of the rest of Europe, the US and Australia in moving to tame inflation.
The bank’s monetary policy committee voted 5-4 to boost its key rate to 0.5 per cent from 0.25 per cent, with the dissenting members arguing for a bigger increase. It also voted unanimously to begin reducing the bank’s holdings of UK government debt and corporate bonds, which it had built up to bolster the economy since the global financial crisis more than a decade ago.
UK consumer prices rose 5.4 per cent in the year through December, the highest inflation rate in almost 30 years. And the squeeze is only going to get worse: Britain’s energy regulator on Thursday announced a 54 per cent increase in household gas and electricity prices in April, the same month income taxes are set to rise by 1.5 per cent.
“Amid the global monetary policy regime shift from easing to tightening, the Bank of England is storming ahead, pressing forward with decisive action as a time when other central banks are falling behind the curve on inflation,” said Victoria Scholar, head of investment at Interactive Investor.
Russia, China condemn AUKUS, affirm ‘no limits’ to their partnership
By Andrew Osborn and Mark Trevelyan
February 5, 2022 — 9.09am
Moscow: China and Russia have condemned the AUKUS alliance between Australia, Britain and the United States, saying it increased the danger of an arms race in the region, in a combative joint statement released as China’s President Xi Jinping hosted Russia’s Vladimir Putin on the opening day of the Beijing Winter Olympics.
Putin and Xi proclaimed a deep strategic partnership on Friday to balance what they portrayed as the malign global influence of the United States. China affirmed support for Russia’s position in the Ukraine Crisis and Russia rejected any notion of Taiwanese independence from the mainland.
The two countries affirmed that their new relationship was superior to any political or military alliance of the Cold War era.
“Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation,” they declared, announcing plans to collaborate in a host of areas including space, climate change, artificial intelligence and control of the internet.
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Orban freezes prices to beat inflation and election rivals
By Oliver Moody
The Times
3:01PM February 4, 2022
Hungary has frozen the prices of essential products such as milk, flour and sunflower oil as the cost of living climbs and a finely balanced election looms in two months’ time.
The prices of seven items, including sugar, chicken breasts and pork legs, are now capped for three months at the level they reached in mid-October.
Shops are also obliged to display signs crediting the government with holding down the cost of basic foodstuffs, in what opposition parties have cast as a nakedly political measure and an admission of the “total failure of economic policy”.
In response, Lidl, the budget supermarket chain, has said it will restrict the quantity of these products that each shopper is allowed to buy in one go.
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Summit fuels West’s fears of a new axis of autocrats
The Times
5:01PM February 3, 2022
For decades China and Russia were at loggerheads over how to implement a communist revolution. Now, as this week’s Winter Olympics summit between Xi Jinping and Vladimir Putin is likely to show, they are cementing an alliance to make the world safe for autocrats.
The Chinese President is backing his Russian counterpart in resisting what they both declare to be Western interference in Ukraine; no doubt when the time comes, Putin will declare that a Xi invasion of Taiwan was actually a Western “provocation”.
The wisdom of the Nixon-Kissinger era was that Moscow and Beijing could be played off against each other to America’s benefit, but the Russian troop build-up around Ukraine has forced Russia and China into a sticky embrace.
Relations between the two have rarely been so intimate. China has been buying significant quantities of pipelined natural gas from Russia. The price is lower than what could be expected from the Nord Stream 2 pipeline into Europe but it gives the Kremlin a safety cushion should the West decide to punish Russia if it invades Ukraine.
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Republicans declare the Capitol attack ‘legitimate political discourse’
By Jonathan Weisman and Reid J. Epstein
February 5, 2022 — 11.05am
Washington: The Republican Party has officially declared the January 6, 2021 attack on the Capitol and events that led to it “legitimate political discourse,” formally rebuking two politicians in the party who have been most outspoken in condemning the deadly riot and the role of former president Donald Trump in spreading the election lies that fuelled it.
The Republican National Committee’s overwhelming voice vote to censure Representatives Liz Cheney of Wyoming and Adam Kinzinger of Illinois at its winter meeting in Salt Lake City culminated more than a year of vacillation, which started with party leaders condemning the Capitol attack and Trump’s conduct, then shifted to downplaying and denying it.
On Friday (Saturday AEDT), the party went further in a resolution slamming Cheney and Kinzinger for taking part in the House investigation of the assault, saying they were participating in “persecution of ordinary citizens engaged in legitimate political discourse”.
It was an extraordinary statement about the deadliest attack on the Capitol in 200 years, in which a mob of Trump’s supporters stormed the complex, brutalising police officers and sending politicians into hiding. Nine people died in connection with the attack, and more than 150 officers were injured. The party passed the resolution without discussion and almost without dissent.
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I look forward to comments on all this!
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David.
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