October 20, 2022 Edition
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In the US we have just had the usual mass-shootings last week! Hard to know why the population put up with it. On a larger scale the war is seemingly just getting worse and more lethal. While there is assassination there must be hope!
In the UK all eyes are on just when the Truss implosion will actually happen.
In OZ the biggest news has been the really Biblical floods in SE Australia, The Budget is also getting close!
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Major Issues.
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Average tax rate to hit record high this decade (with or without stage three cuts)
John Kehoe Economics editor
Oct 9, 2022 – 12.54pm
Average tax rates for wage earners will reach record highs around the end of the decade even if the stage three tax cuts are retained, federal Treasury analysis shows.
The tax impost will be even bigger if Labor decides to pare back stage three, which predominantly favours people earning more than $120,000 a year.
Unless other taxes are increased in areas such as superannuation to fund further relief from bracket creep, the average personal income tax rate paid by workers will rise from about 23 per cent this year to almost 27 per cent over the next decade, under the current schedule for the stage one, two and three income tax cuts.
Treasurer Jim Chalmers on Friday: “When it comes to cost-of-living relief it should be targeted to people on low and middle incomes.” Nine News
The average tax rate would likely jump above 28 per cent by around 2030 if the $18-bilion-a-year tax cuts due in July 2024 are scaled back, and could rise more if the inflationary environment fuels higher nominal wage growth and results in more bracket creep.
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The cash stash that will help retirees weather market volatility
Selling assets that are falling in value to provide income should be avoided at all costs. This is how to manage sequential risk.
Ben Smythe Contributor
Oct 10, 2022 – 5.00am
As market volatility continues and commentators start to talk about bear markets, self-managed superannuation fund members who are a long way off retirement can ignore the noise and focus on the long term. However, for SMSF members closing in on retirement, the reality of sequencing risk is starting to become more of a concern.
In its simplest form, sequencing risk refers to the sequence or order of returns – specifically negative returns – occurring at the same time you start to draw capital from your SMSF to fund your retirement.
A bear market in terms of investment returns at the outset of retirement can cause significant stress on the capital supporting your retirement. The amount of stress will be dictated by your living expense drawings and capital set aside to fund your retirement. If you are forced to sell assets that have deflated in value to fund your living expenses, the ability to recoup that realised capital loss will be incredibly difficult.
Apart from the obvious solutions of reducing your living expense cash flow requirements or delaying retirement, what other solutions are available to mitigate sequencing risk if you are approaching retirement?
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Why investors are now throwing in the towel
Even though strains are appearing in financial markets, the Fed is showing no inclination to relax its efforts to control rampant inflation.
Karen Maley Columnist
Oct 10, 2022 – 5.00am
For a moment last week, investors convinced themselves that – finally – the US Reserve Bank might ease back on its aggressive inflation-busting campaign, which has already seen it make five rate increases so far this year.
Surely, the Fed and other major central banks would realise that forging ahead with the fastest interest rate hikes in 40 years risks triggering an unexpected financial market accident.
Already, abrupt rate rises have unleashed a bout of turbulence in British bond and currency markets, and sparked concerns over the financial health of Credit Suisse.
Meanwhile, a growing number of developing countries are edging closer to defaulting on their US dollar-denominated borrowings, as the surging US dollar pushes up their debt servicing costs.
But investors’ hopes dimmed on Wednesday when the OPEC cartel and allied producers agreed to slash oil production by 2 million barrels a day, or roughly 2 per cent of global consumption.
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Should you hedge your offshore investments?
While our dollar has fallen against the US dollar, it has strengthened against the euro, yen and pound. So check your currency exposure.
James Weir Contributor
Oct 11, 2022 – 5.00am
Amid the turbulence of global financial markets this year, one of the most notable things has been the inexorable strength of the US dollar against every other global currency. The corollary has been a relatively weak Australian dollar.
One of the great lessons of the COVID-19 crash in 2020 for anyone investing overseas was the more than 40 per cent difference that putting money in a hedged asset made to returns over the following year.
Hedging is like a form of insurance where a manager neutralises the so-called currency effect of the Australian dollar rising, or becoming more expensive, relative to other currencies so that the investment’s return only reflects the change in its underlying value.
For example, buying $US20,000 worth of US shares when the Australian dollar is buying US65¢ will cost $30,769 (20,000/0.65).
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Weighed down by folly of $30bn heavy armour
11:00PM October 11, 2022
The sheer Walter Mitty nuttiness of the army’s plan to get taxpayers to spend $30bn of precious Defence money on heavy armour is revealed in Al Palazzo’s new ASPI report, Deciding the future.
He manfully attempts to answer the impossible question: where on earth could the Australian Defence Force ever use its super-heavy tanks, or the Infantry Fighting Vehicles it wants, that will weigh 42 to 45 tonnes each.
Palazzo’s scenarios are so fanciful, so unlikely, they illustrate how low down the list of defence priorities heavy armour should rank.
One scenario is war on the Korean peninsula. Australia sends an armoured brigade.
Palazzo honestly reflects: “Due to the limited availability of sea transport, the Australian movement to theatre will be done in stages and largely by hired contract shipping.”
Our giant LHD ships can carry only 20 of these cumbersome, unwieldy beasts at a time. so there’d lots of ocean voyages getting them to Korea.
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Reserve Bank in no rush to push rates back to ‘neutral’, says assistant governor Luci Ellis
October 12, 2022
The Reserve Bank will tread cautiously as it returns rates back towards more normal levels, with assistant governor Luci Ellis saying there is no rush to reach the central bank’s long-term “neutral” cash rate estimate of 3.5 per cent.
A little over a week ago, the RBA board delivered a smaller-than-anticipated hike of 0.25 percentage points to 2.6 per cent, after having lifted rates by 0.5ppts in each of the preceding four meetings. In doing so, it became the first among the major central banks to slow the pace of tightening amid a generational inflationary surge.
In a speech to the Citi Conference in Sydney this morning, Dr Ellis described at length how the RBA’s economists estimate the neutral level of rates, the inherent uncertainties around the concept, and why the bank would not be “mechanistically” lifting back to that level.
“When the policy interest rate is low enough, it stimulates demand. And when it is high enough, it restrains demand. Somewhere in the middle, there must be a rate that is neither contractionary nor expansionary,” she said.
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ADF plan: hire ferry to deploy infantry
11:01PM October 11, 2022
The Australian Defence Force would need to buy new ships or hire commercial vessels such as the Spirit of Tasmania ferries to deploy the army’s proposed infantry fighting vehicles in significant numbers, a new report warns as the government stalls on the $27bn purchase.
Australia’s three amphibious landing ships, HMAS Canberra, Adelaide and Choules, can carry a maximum of 20 of the vehicles each, and would face the risk of enemy attack in a conflict scenario, an Australian Strategic Policy report says.
Its author, military historian Albert Palazzo, argues that the planned acquisition of up to 450 infantry fighting vehicles would be a “generational leap” forward for the army in troop protection and lethality.
He says both of the vehicles on offer – the German Lynx or South Korean Redback – are highly capable, offering necessary sensors and communications technologies to operate in a “system-dominated” future war.
The report comes at a tense time for the army as the government’s defence strategic review, led by former defence minister Stephen Smith and former Defence chief Sir Angus Houston, evaluates the proposed acquisition - which was due to be decided in September - against competing capability needs.
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How the 47 per cent tax rate drives a tax avoidance industry
Earnest Labor campaigners against the stage 3 tax cuts tend to overlook real-world reactions of the people that they hope to harvest more tax revenue from.
John Kehoe Economics editor
Oct 12, 2022 – 11.49am
Amid the furore over the stage three income tax cuts, a high top personal tax rate of 47 per cent may seem like a fair and progressive way to run a tax system.
But high marginal tax rates are encouraging tax minimisation by people who can structure their financial affairs, and punishing hard-working wage earners.
Labor’s greatest treasurer, Paul Keating, has called the top rate “too punitive”, and said in 2017 the top marginal rate should be 39 per cent “at the most”.
I’m not sure modern Labor, bureaucrats in Canberra and the left-leaning commentariat campaigning to dump the stage three tax cuts understand how they’re helping to make tax almost optional for a class of Australians.
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https://thenewdaily.com.au/finance/2022/10/13/working-from-home-kohler/
6:00am, Oct 13, 2022 Updated: 6:15pm, Oct 12
Alan Kohler: Working from home is a proletariat revolution
Rising to welcome journalists at an in-house media dinner last week, ANZ CEO Shayne Elliott noted that he and the management team were “ecstatic” at the number of staff who had come into the office that day.
It was the highest attendance since the start of the pandemic – 50 per cent.
Yep, ANZ’s executives were ecstatic that half their staff had come into work, instead of working from home.
It seems to me this is striking for a few reasons: First, of course, is that two and a half years after the pandemic began, half of this bank’s staff are still working from home.
Second is the fact that the bosses aren’t happy about it and are pleased (ecstatic) that half of them made the journey into Melbourne’s Docklands.
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Bank bosses say economy is firing but on precipice of fixed rate cliff
Ayesha de Kretser, Liam Walsh and Tess Bennett
Oct 12, 2022 – 5.40pm
Commonwealth Bank of Australia chief executive Matt Comyn says the economy is in rude health with buoyant business activity driving interest rates higher, but the bank is preparing for conditions to start cooling this year.
As Treasurer Jim Chalmers heads to Washington for the G20 Finance Ministers meeting and annual meetings of the International Monetary Fund and World Bank to learn more about the impending recessions facing the US and Europe, local bank bosses remain upbeat about Australia’s comparative prospects.
On the sidelines of CBA’s annual meeting in Melbourne on Wednesday, Mr Comyn welcomed continued government spending on health, aged care and defence, saying it had been “well-flagged” and it was appropriate to review all aspects of the budget given the Treasurer had a “delicate balancing act” to strike.
“They’ve obviously got much better visibility of Australia’s current financial situation, but I think it makes sense that he’s weighing up some important decisions,” Mr Comyn told The Australian Financial Review.
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Hooked on dividends? Time to think again
October 14, 2022
Australian investors love their dividends. But do they love them too much? If we’re talking about payouts from ASX-listed companies then the answer, it seems, could be yes, according to Sydney-based fund manager Russel Pillemer.
The problem, according to Mr Pillemer, the chief executive of Pengana Capital, is that the vast majority of Australian dividends – a whopping 80 per cent – are concentrated into just four sectors.
With rising inflation, higher interest rates and slowing economic growth posing threats to payouts, looking overseas to spread the risk makes sense, he says.
“Such concentration creates several problems for investors. It forces income investors to choose between buying potentially overvalued companies to meet their income requirements, or appropriately diversifying their equity exposure,” Mr Pillemer says.
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The budget conversation has to be bigger than tax cuts
Given the rate at which economic and budget problems are piling up, the big question is how the government steers a much broader debate about taxing and spending.
Laura Tingle Columnist
Oct 14, 2022 – 4.41pm
Major flooding in suburban areas of Melbourne in the past couple of days has only reinforced the sense that we are now in a world of more or less rolling natural disasters.
The times when a massive bushfire or flood were a shock to the system seem to have well and truly passed.
Disaster relief agencies – and even the Australian Defence Force – are dealing instead with persistent crises.
Last month, the Guardian reported that in its brief to the incoming government, the Department of Defence had warned it was under intense pressure because of the need to respond to “near persistent” natural disasters, and noted “the impacts of climate change” when requesting more cost-effective ways to manage the continual callouts.
The federal government is now in the process of helping state governments buy out some homeowners in low-lying, flood-prone areas. Equally, we haven’t even started to really talk about what the cost to damaged infrastructure might be from the widespread flooding, and how those costs will hit different levels of government.
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Why immigrant ‘flood’ could stop RBA increases
Record migration should buy the RBA time to avoid lifting its cash rate to the 4.1 per cent plus level currently priced by markets.
Christopher Joye Columnist
Oct 14, 2022 – 1.05pm
Let’s start with the shocker that was the latest US inflation report for September, which initially triggered a savage 3.5 per cent drop in US equities only to be superseded by one of the most bizarre, five percentage point plus intraday rallies this column has observed.
On average, the 67 analysts surveyed by Bloomberg expected the monthly core CPI report on Thursday to print at 0.4 per cent, with the distribution skewed towards a lower 0.3 per cent outcome. In practice, core CPI rose by a stonking 0.6 per cent, which just one of the 67 economists forecast.
The US Federal Reserve will be greatly concerned by the fact that there is no sign of core inflation decelerating. If you chart the monthly core inflation prints, they have been trending higher since mid-2021.
The year-on-year pace for US core inflation rose from 6.3 per cent in August to 6.6 per cent in September. This is the highest core inflation since 1982.
Fed officials have in the past week publicly worried about inflation spreading from the supply-chain-driven goods sector to the much more wage-intensive services domain, which would signal the advent of a more difficult-to-constrain wage price spiral.
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https://www.theage.com.au/national/why-i-m-an-atheist-but-not-proud-of-it-20221013-p5bpoi.html
Why I’m an atheist, but not proud of it
Columnist and communications adviser
October 15, 2022 — 5.00am
Pride goes before a fall, goes the saying. I was reminded of this proverb-turned-truism as I followed the public discussion around Andrew Thorburn’s ascension to and rapid descension from the CEOship of Essendon Football Club after it was discovered that he chairs a church which has expressed churchy beliefs. Perhaps it was prideful for Thorburn to try to hold both roles at once, but the crowing of the atheists as he gave up the football club was nothing short of vainglorious.
Unlike the late, great Christopher Hitchens, evolutionary biologist Richard Dawkins, or Janen Ganesh, a superb modern-day sophist who writes in the Financial Times, I long ago stopped feeling proud of myself for outsmarting religious doctrine. It has become evident upon deep introspection that I disbelieve consistently, wholly and unquestioningly. If there is a “god gene”, as proposed by geneticist Dean Harmer, I do not possess it. Rationally, I should accept that I cannot know if I’m right and try to be agnostic, but I’m not. Mine is a universe devoid of a deity. I am an atheist against all logic and I am ashamed of it.
I am ashamed of it because the more we understand about how human societies grow, flourish and become altruistic, the clearer it becomes that religion plays a central role.
Joseph Henrich, professor and chair of Human Evolutionary Biology at Harvard University, describes religion as a “social technology” that has helped humans scale up and build large, complex societies. With apologies to religious readers, for whom this way of understanding faith is undoubtedly reductive, it is nonetheless a very useful way to understand the invaluable gifts that faith has bestowed on Western nations.
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Order in the chaos of our shambolic public health miracle
11:00PM October 13, 2022
Jim Chalmers and his team are shaping a budget to deal with the triple challenges we confront: the need for an overhaul of health (including National Disability Insurance Scheme) funding; the need to start remitting the huge debts piled up under Covid-19; and the need to fund serious increases in defence expenditure to address the growing dangers of strategic confrontation and possible military conflict.
Hospitalised last week, I had both the occasion and the leisure to think a little about these priorities. As Samuel Johnson famously remarked, “When a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully.” I found myself crippled by severe gout in both knees (and one foot), unable to walk or even move my legs. It was hospital by ambulance, then four days of treatment in the acute medical unit before I was on my feet again. Not, perhaps, quite a promised hanging, but a shock of the kind that does, indeed, concentrate the mind.
The first thing that struck me forcefully, of course, being in a public hospital, was the strain that the public health system was under because of the enormous workload it carried, redoubled by the recent protracted Covid crisis.
This led to evident crowding, apparent disorder, the bewildering variation in which medical personnel came to see me, delays in getting even promised treatments and difficulties in getting answers to even basic questions.
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COVID-19 Information.
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No entries in this category.
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Climate Change.
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https://www.afr.com/companies/energy/aemo-warns-reliable-power-is-at-risk-20221007-p5bo5l
AEMO warns reliable power is at risk
Angela Macdonald-Smith Senior resources writer
Oct 10, 2022 – 5.00am
The Australian Energy Market Operator chief will call for a “mature conversation” among governments, industry and customers to thrash out a workable version of the controversial “capacity mechanism” to spur investment in firm generation needed to keep the lights on amid an accelerating energy transition.
Industry bosses are worried that the market is running out of time to build the replacement capacity, but AEMO’s Daniel Westerman will tell The Australian Financial Review Energy & Climate Summit in Sydney on Monday that energy ministers and officials are “leaning in to this strongly”.
However, he will warn that the firmed renewable capacity required to replace coal power plants set to shut down at an accelerating rate will not be built under the existing market design.
Mr Westerman says that is why the Energy Security Board recommended a so-called capacity mechanism to drive investment in “firming” capacity such as pumped hydro to back up weather-dependent wind and solar power.
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Retail electricity prices tipped to rise at least 35pc in 2023
Jenny Wiggins and Angela Macdonald-Smith
Updated Oct 10, 2022 – 2.20pm, first published at 2.19pm
Retail electricity prices could soar by at least 35 per cent in 2023 due to the soaring cost of wholesale energy, as the system grapples with the transition to clean energy amid a global supply crisis, power company bosses have told The Australian Financial Review’s Energy & Climate Summit.
“Next year, using the current market prices, tariffs are going up a minimum 35 per cent,” Alinta Energy chief executive Jeff Dimery told the summit in Sydney. He said rising costs have forced the so-called “gentailers” – which generate electricity and also sell it to consumers – to write off $11.7 billion of shareholder funds over the past five years.
Mr Dimery warned Australia was “out of time” and needed to deal with the commercial reality of investing in new wind farms and hydropower.
“What cost $1 billion to acquire is going to cost me $8 billion to replace. So let’s talk about that and still explain to me how energy prices come down, I don’t get it.”
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Royal Commissions And The Like.
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Bupa the worst aged-care failure
9:20PM October 13, 2022
Bupa is the worst-performing aged-care provider in Australia three years after a royal commission exposed its shocking track record of systemic abuse in residential homes, new data reveals.
An investigation into aged-care operators penalised by the watchdog has found the private aged-care provider is underperforming at a rate vastly higher than all others.
Data from the Aged Care Quality and Safety Commission has revealed Bupa, which has 59 active homes, received 28 penalties from January 2020 to September 30 this year for noncompliance notices, sanctions and notices requiring the provider to fix high-risk or severe problems.
The embattled operator faced widespread public scrutiny after the Royal Commission into Aged Care Quality and Safety found a third of Bupa’s facilities were deemed to be a “serious risk” to residents, with public hearings exposing horror stories of sexual abuse, assault, medical mismanagement and maggots growing in wounds.
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National Budget Issues.
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Do voters love or loathe tax cuts? It depends on how the question is framed
By David Crowe
October 10, 2022 — 7.50pm
Advocates for tax reform often assume Australians will accept higher taxes in return for better government services, but politicians are rightly wary of leaping to the same conclusion.
The latest Resolve Political Monitor shows why. The survey asked 1604 eligible voters their views on tax increases and spending cuts and found only modest support for higher taxes – a key finding when Labor has to decide what it will do with the stage three tax cuts.
Federal cabinet is yet to have a discussion on the stage three package after the kite-flying of the past week but the government is keenly concerned about the cost of the policy once it starts in 2024, which means questions about the Labor position could be asked for at least another year or two.
Treasurer Jim Chalmers is right to highlight the sheer cost of the package but Prime Minister Anthony Albanese is right to be wary about breaking the Labor election pledge to deliver them in the form the previous government put into law.
Do voters love or loathe these tax cuts? A lot depends on how the question is framed, so the Resolve survey asked about stage three in different ways.
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I hope budget night will be filled with broken promises
Economist
October 12, 2022 — 5.00am
When Jim Chalmers delivers his first budget in a couple of weeks, he’ll have news that’s remarkably good, and news that’s challengingly bad.
The good news? Debts and deficits look set to be a fraction of what Treasury forecast just six months ago. That’s not because of tough decisions taken by any politician. It’s because three things surged: inflation, jobs and prices for exports such as gas, coal and iron ore.
That trio is a mixed bag for the economy. In particular, a jump in prices has stripped purchasing power from families so fast that their inflation-adjusted wages are dropping to lows last seen a decade ago.
Yet although the economic news is mixed, the budgetary impact is beautiful. Inflation may strip purchasing power from the punters, but it hands it straight to the taxman. And good news on commodity prices and on jobs does the same.
That’s game-changing. When Josh Frydenberg delivered his last budget six months ago, Treasury estimated deficits over the five years to 2025-26 would be more than $300 billion, enough to push federal debt to a third of annual national income.
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Chalmers warns ‘we won’t be immune’ as world teeters on brink of recession
By Shane Wright
October 12, 2022 — 5.00am
Treasurer Jim Chalmers says he is prepared to make last-minute changes to this month’s budget to avoid inflicting financial pain on the country as the International Monetary Fund warns the global economy is on the cusp of a recession.
Before heading to Washington on Tuesday night for the autumn meeting of the IMF, central bankers and finance ministers from around the globe, Chalmers said while he did not expect Australia to go into recession in 2023, a global downturn would probably slice growth and push up unemployment here.
Releasing its latest forecasts overnight, the IMF said it believed four in 10 economies would suffer a recession over the next 12 months.
It downgraded its expectations for Australia’s economy, tipping it to grow by 1.9 per cent through 2023, with inflation to average 4.8 per cent next year. In April, the IMF was forecasting the local economy to grow by 2.5 per cent next year, with inflation around 2.7 per cent.
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Super returns crumble as inflation unleashes wild market ride
Duncan Hughes and Emma Rapaport
Updated Oct 14, 2022 – 5.51pm, first published at 5.27pm
Super fund returns are falling deeper into the red as traditional diversification strategies fail, and a worsening inflation picture keeps the pressure on global central banks to push through aggressive interest rate increases.
Returns for the average balanced super fund slipped to an average loss of nearly 5 per cent, with the worst performer losing 11 per cent during the past 12 months to the end of August, according to analysis by research group Rainmaker. This compares to 2020-2021 record returns of about 15 per cent.
Only one of a total of 102 balanced super funds earned a positive return.
Australian shares surged 1.8 per cent on Friday after an erratic ride on Wall Street, where the US economy is battling hotter-than-expected inflation. The rally served to underscore expectations for further sharemarket volatility.
The combination of high inflation, the energy crisis and climbing interest rates has fuelled predictions of a recession for the US.
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Super shock for investors as returns plummet and inflation soars
Poor returns and high fees are eating away at many retirement nest eggs, with inflation an added worry for retirees.
Duncan Hughes Reporter
Oct 14, 2022 – 5.00am
Super fund performance continues to slide, forcing investors to make tough choices as traditional diversification strategies fail and inflation becomes a serious problem for the first time in 30 years.
Returns for the average balanced super fund (which aims to balance risk and return) have slipped to an average loss of nearly 5 per cent, with the worst performer losing 11 per cent during the past 12 months to end-August, according to analysis by research group Rainmaker. This compares to 2020-2021 record returns of around 15 per cent.
Only one of a total 102 balanced super funds made a positive return as turbulent stock markets hit higher-risk equity strategies while traditional conservative strategies used to protect portfolios were undermined by inflation.
The performance of fixed interest returns such as bonds or fixed income (traditionally less volatile than shares) was even worse, averaging losses of around 9 per cent during the 12 months, according to Rainmaker.
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Health Issues.
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The Moderna bivalent Covid vaccine introduced in Australia
By Hamish Spence
NCA NewsWire
October 10, 2022
A new Covid booster shot which is anticipated to give better and broader protection against the deadly virus has entered Australia’s vaccine rollout.
Moderna’s new Spikevax Bivalent Omicron vaccine is a combination shot comprising equal elements of the original SARS-CoV-2 virus and Omicron BA. 1 variant.
The Department of Health has confirmed it would be integrated into Australia’s existing Covid booster program from Monday.
It is anticipated the shot will provide broad immune protection against Covid and Omicron subvariants.
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Deadly Ebola outbreak spreads to Uganda’s capital
By Nicholas Bariyo
The Wall Street Journal
4:20PM October 13, 2022
A deadly outbreak of the Ebola virus has spread from rural Uganda into the capital, Kampala, the country’s health ministry said Wednesday, raising further fears of a wider spread of the deadly Sudan strain for which there are no proven vaccines or antiviral treatments.
Nineteen people are confirmed dead from the haemorrhagic fever since Ugandan health authorities announced that a 24-year-old man was killed by the relatively rare Sudan strain of Ebola last month. Nineteen others, including six members of the man’s family, are also believed to have died as far back as early August, but were never tested, the health ministry said.
The first Ebola patient in Kampala died at the National Referral Hospital last week, but the death was only confirmed on Tuesday, triggering fears that the disease has been silently circulating in the traffic-choked city of more than three million. Kampala is a major transit point for regional trade routes to the landlocked economies of Rwanda, Burundi and eastern Democratic Republic of Congo.
Neighbouring countries — their healthcare systems battered by the Covid-19 pandemic and economic downturns — have bolstered border controls to stop the virus spreading. Last week, federal officials ordered US-bound passengers who have been in Uganda in the past 21 days to arrive at select airports for enhanced Ebola screening.
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One in 18 babies conceived by IVF but success can depend on choice of clinic
October 16, 2022 — 5.00am
A record one in 18 babies born in Australia are now conceived via IVF, but the chance of success is heavily dependent on a woman’s age and the clinic she chooses.
More than one in seven IVF cycles undertaken in 2020 were single or in a same-sex couple, the analysis of the Australian and New Zealand Assisted Reproductive Database shows.
And as IVF success rates continue to rise, they’re still heavily dependent on a woman’s age and the clinic she chooses.
The report also revealed alarming variations in the success rates of individual clinics, ranging from over 35 per cent for the top-performing clinics to roughly 7 per cent.
And despite the steep drop-off in the chances of having a baby for women in their forties, almost one-quarter of IVF patients were over 40.
There were 16,439 live-born IVF babies in 2020, one in 18 of the 295,976 babies born in Australia that year, and about 1300 more IVF babies than in 2019.
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International Issues.
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India is weaning itself off Russia and countering China
The Indian foreign minister’s second visit this year is a clear signal that New Delhi views the partnership with Australia as central to its national interest.
Oct 9, 2022 – 2.51pm
With the arrival on Sunday of India’s foreign minister, Dr Subrahmanyam Jaishankar, for his second trip to Australia this year, much of the commentary will no doubt focus on India’s supposed weakness towards Russia.
Indeed, the impression is that India is playing spoiler to Western efforts on Russia and was a latecomer to resisting Chinese regional hegemony via the Quad.
But this is a fundamental misunderstanding of India’s history, ambitions and present predicament. What needs to be understood, including in Canberra, is that the real game is India’s monumental shift from non-alignment to the role of strategic balancer and that this realignment is vital for Australia’s long-term security and wider Indo-Pacific stability.
In this context, Jaishankar’s visit – during which he will meet with Foreign Minister Penny Wong and Deputy Prime Minister and Defence Minister Richard Marles – will be the first time an Indian foreign minister has visited Australia twice in a year following a visit in February centred on the Quad foreign ministers’ meeting. This is a clear signal from New Delhi that it views its partnership with Australia as central to its national interests and its Indo-Pacific strategy.
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https://thenewdaily.com.au/finance/2022/10/10/kohler-world-nations-destruction/
6:00am, Oct 10, 2022 Updated: 8:29pm, Oct 9
Alan Kohler: America, Britain, Russia and China are killing themselves, all in their own way
Has there ever been a time when the world’s four leading nations were in a bigger mess than they are now?
Each, in its own way, is destroying itself, although the chosen methods are all a bit different. But it always has to do with leadership.
And while it makes those of us who managed to sack our ratbags look stable by comparison, that won’t help if the US, Britain, China and Russia keep going down the paths they’re on. Their misery will be everyone’s.
Two of them – Russia and China – are being brought undone by autocracy while the two liberal democracies are either undermining the functioning of democracy itself (America) or are floundering in economic fallacy (the UK).
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El-Erian blames Fed for ‘very high’ risk of a damaging recession
Tony Czuczka
Oct 10, 2022 – 8.29am
Mohamed El-Erian says the US economy is on “a bumpy journey to a better destination,” but there is a persistent risk that the Federal Reserve will overshoot and tip the country into a recession.
“Not only does it have to overcome inflation, but it has to restore its credibility,” El-Erian said of the US central bank in a CBS News interview on Sunday. “So yes, I fear we risk a very high probability of a damaging recession that was totally avoidable.”
El-Erian, a frequent Fed critic, blamed the central bank for that risk by “slamming on the brakes this year” after being criticised for being slow off the mark to counter inflation running at four-decade highs.
The Fed has raised its benchmark by three quarters of a percent, or 75 basis points, three times in a row and comments by Fed policymakers suggest they’re on track to deliver a fourth such increase next month.
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Crimea bridge blast leaves Russian supply chains exposed
Michael Schwirtz and Andrew E. Kramer
Oct 9, 2022 – 7.36am
Kyiv | A fireball that damaged the only bridge linking the occupied Crimean Peninsula to Russia disrupted the most important supply line for Russian troops fighting in southern Ukraine and dealt an embarrassing blow to the Kremlin.
The blast and fire sent part of the 19-kilometre Kerch Strait Bridge tumbling into the sea and killed at least three people, according to the Russian authorities, who said a Ukrainian truck bomb had caused the blast.
That claim could not be independently verified, and the Ukrainian government, which lauded the damage, stopped short of taking responsibility for the attack on Saturday. But the attack comes as Russia faces continued losses on the battlefield and mounting criticism at home.
For Russian President Vladimir Putin, who presided over the bridge’s opening in 2018, the explosion was a highly personal affront, underscoring his failure to get a handle on a relentless series of Ukrainian attacks.
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Why US easing on rates could change everything
A lower forecast for US rate increases would support the RBA’s recent decision to slow and be welcome news for our economy, mortgage holders and investors.
John Abernethy Contributor
Oct 10, 2022 – 5.00am
Events will flow quickly through late October and November that may well affect – if not determine – the outlook for world economic growth and the direction of asset markets in 2023.
Consider the following key events that will happen in quick order:
· The 20th Communist Party Congress (October 16).
· The US midterm elections (November 8).
· The G20 leaders meeting (November 16).
These three events occur as the Ukraine war drifts and possibly escalates while the US Federal Reserve pushes interest rates higher, with its declared trajectory towards 4.6 per cent by March 2023.
President Joe Biden will likely pass a message to the Fed that the rest of the world, including most US allies, is deeply unhappy.
This year’s G20 meeting could be as significant as that in March 2009, which forcefully dragged the world economy out of a difficult financial predicament. I suspect that the US will be asked to temper its monetary settings.
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Confidence slumps around the globe as leading economies ‘on brink of recession’
By Rob Harris
October 10, 2022 — 8.47am
London: The post-COVID recovery has rapidly run out of steam with many countries already in or on the brink of outright recession amid heightened uncertainty and rising risks, a new economic analysis has warned.
The latest twice yearly Brookings-Financial Times tracking index found that growth momentum, as well as financial market and confidence indicators, have deteriorated markedly in recent months, as soaring prices and geopolitical uncertainty fuel mounting economic pessimism cross the world’s major economies.
Confidence indicators have fallen sharply and are at all-time lows since the index began over a decade ago in countries including the US, UK and China. In emerging economies, which are more exposed to rising food and energy prices, confidence has fallen even more sharply.
The United Nations last week warned that developing nations, in particular those in Asia, could bear the brunt as monetary and fiscal policies in advanced economies – including continued interest rate hikes – push the world toward a global recession and stagnation.
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Axe falls on Russian military commanders, as Kremlin seeks blame for war failures
By Mary Ilyushina and Natalia Abbakumova
October 10, 2022 — 10.18am
Russian Ground Forces General Alexander Dvornikov, who over a 44-year military career was best-known for scorched-earth tactics in campaigns he led in Syria and Chechnya, was named overall operational commander of the war in Ukraine in April. He lasted about seven weeks before being dismissed as part of a wider shake-up in response to heavy losses and strategic failures.
Around the same time, Colonel General Andrey Serdyukov, another four-decade serviceman, the commander in chief of the elite airborne troops, was stripped of his post after nearly all divisions of the airborne forces suffered major losses.
And just last week Col. Gen. Alexander Zhuravlev, the head of the Western Military District responsible for Kharkiv, where Russian forces lost huge swaths of territory in early September, was removed after four years on the job, according to Russian business daily RBC.
Far from bestowing glory on Russia’s military brass, the war in Ukraine is proving toxic for top commanders, with at least eight generals fired, reassigned or otherwise sidelined since the start of the invasion on February 24. Western governments have said that at least 10 others were killed in battle, a remarkably high number that military analysts say is evidence of grievous strategic errors.
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‘Why the attack on the Crimea bridge strikes a blow to Russia
By Ann M. Simmons
Dow Jones
October 10, 2022
Russia’s Kerch Strait Bridge has been the economic and military lifeblood of its occupying force on the Crimean Peninsula since its opening in 2018, and more recently a vital conduit for its troops in southeast Ukraine.
Before an explosion damaged a section of the 12-mile structure on Saturday, roughly 40,000 cars daily traveled the four lanes, two in each direction, while the two railway tracks allow around 50 trains to travel round-trip between Crimea and mainland Russia daily, according to official information published about the bridge.
Russia’s Defense Ministry said on Saturday that it was confident troops could be fully supplied by existing land and sea routes.
Who detonated the explosion early Saturday remains unclear. Ukrainian President Volodymyr Zelensky has vowed to retake Crimea, which Russia seized from Ukraine in 2014, but Ukrainian officials haven’t taken credit for the attack.
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Mediocre courtiers to crafty thugs: Who could replace Putin?
Speculation about the theoretical downfall of Russia’s leader has grown after multiple battlefield defeats and national fury over a botched military mobilisation.
Robyn Dixon
Updated Oct 10, 2022 – 12.36pm, first published at 12.04pm
When President Vladimir Putin yelled, “We will win!” at a Red Square concert to celebrate his illegal annexation of Ukrainian lands on September 30, he projected the desperate hubris of a man terrified of defeat.
In Putin’s mind, he cannot lose. But multiple battlefield defeats and national fury over a botched military mobilisation have broken a taboo in Moscow on discussions about what would happen if Putin did lose – not just the war, but his seeming bid to be leader-for-life, according to four members of Russia’s business elite.
Kremlin-watchers, inside and outside the capital, are asking: Who might come next?
The possibilities range from the obvious – Prime Minister Mikhail Mishustin is legally first in the line of succession – to the utterly unpredictable. Some Putin supporters fear the country could break apart without his authoritarian hand at the helm.
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Why the UK bond crisis could be just the start
The IMF is warning about potential liquidity risks in the world’s $64 trillion of managed funds. Like James Bond’s vodka martini, we have been shaken, we should be stirred.
Hans van Leeuwen Europe correspondent
Updated Oct 10, 2022 – 9.29am, first published at 8.17am
London | A week after Britain narrowly escaped a meltdown in its gilt market, the question is whether bonds, and global financial markets more generally, were not just shaken but also stirred.
Was this just a weird niche problem in the hedging strategies of defined-benefit pension schemes? Or is there something deeper, something structural, we should be really worried about?
Markets are a cocktail of volatility and potential illiquidity. Jennifer Soo
The answer is very much like James Bond’s vodka martini: we have been shaken, we should be stirred.
If you enjoy a daily tipple of the Financial Times, you’ll have imbibed many column inches this week on where UK pension funds’ liability-driven investment (LDI) strategies went wrong.
Sure, the wanton political approach of Liz Truss’ government, and the crazy moves in the UK gilt market that followed, would have confounded anyone. Almost no strategy could withstand an assault that was so many standard deviations outside the norm.
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‘If Putin is looking for capitulation, then the attacks have failed’
After the all-clear was given following the missile attacks on Kyiv, lines for barber shops, cafés and restaurants quickly formed, proving the Ukrainian spirit is truly unbreakable.
Misha Zelinsky Special correspondent
Updated Oct 11, 2022 – 10.00am, first published at 9.52am
As commuters made their way to work through heavy traffic on Monday morning, the war returned to Kyiv. If you didn’t see the explosions striking in the very heart of the city, you felt them.
One Russian missile hit a busy intersection near Taras Shevchenko University. Another exploded in a children’s park nearby. In total, 83 Russian rockets were launched at about a dozen Ukrainian cities, with more than half of them shot down mid-air.
With Russia
confirming “all designated targets had been hit”,
the remaining 40 missiles delivered their lethal payloads, killing at least 11
civilians and injuring countless more.
The Russian attacked numerous sites of no strategic military value, including the Klitschko Bridge, a pedestrian only footpath that overlooks the Dnipro River, the waterway that divides Kyiv neatly in two. It’s normally teeming with tourists taking selfies, so it’s a miracle mass casualties were avoided.
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https://www.afr.com/politics/lockdowns-pushed-democracy-to-the-edge-sumption-20221009-p5boeh
Lockdowns pushed democracy to the edge, says UK’s ‘cleverest man’
Julie Hare Education editor
Oct 10, 2022 – 6.38pm
Scott Morrison’s self-appointment to five ministries was a galling byproduct of the authoritarianism governments around the world adopted during COVID-19, says a leading UK scholar and commentator
Lord Jonathan Sumption, a historian, author and former senior judge, said the adoption of lockdowns was a “startling change” for democracy.
The former prime minister’s justification that he “needed to pull the strings because otherwise he wouldn’t be able to manage the crisis” was an abandonment of democratic norms, Lord Sumption told the National Press Club on Monday.
“The fact that he wanted to do it tells us a great deal about what happens to societies when they start adopting mass coercion as an instrument of general interest.”
Regularly described as Britain’s “cleverest man”, Lord Sumption’s address attempted to explain the dire state of British politics and whether the Conservative Party could resurrect itself.
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https://www.afr.com/world/europe/boe-steps-up-extraordinary-measures-to-save-markets-20221010-p5boq5
Bank of England bolsters push to prop up UK bond market
Hans van Leeuwen Europe correspondent
Updated Oct 11, 2022 – 4.42am, first published at 12.33am
London | The Bank of England is scrambling to avoid a cliff-edge this Friday in its fortnight-long bid to save the British bond market, boosting the firepower of its intervention and adding new weapons to avoid a meltdown at pension funds.
The BoE’s aim is to ensure that British sovereign bond prices do not again go into freefall when its £65 billion ($114 billion) emergency bond-buying program ends this Friday.
Its move came as Chancellor Kwasi Kwarteng officially brought forward the date of his next major fiscal statement.
That is the moment when he hopes to prove to markets that he has a credible plan to pay down the debts that are funding his £45 billion tax cuts and £60 billion-plus energy subsidies.
It will now take place on October 31, before the Bank of England’s scheduled meeting on monetary policy on November 3.
In another gesture to nervous markets, Dr Kwarteng signalled a seeming end to his mission to break what he and Prime Minister Liz Truss have called “the Treasury orthodoxy” on economic policy.
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‘Grey zone’ warfare exposes Western weaknesses, including in Australia
Political and international editor
October 11, 2022 — 5.00am
When first asked about the possibility that Russia might use nuclear weapons against his country, President Volodymyr Zelensky didn’t talk about bombs. He talked about a more immediate nuclear threat to Ukraine.
For months, Russia has been endangering the huge nuclear power plant at Zaporizhzhia in southeast Ukraine, and on the weekend it took a step closer to turning it into a radioactive bomb. The last remaining external electricity supply was cut by shelling near the plant, the biggest in Europe. The reactors need electric power to run their cooling systems. Without cooling, they will overheat and melt down in a fire that could spread radioactive fallout in whichever direction the wind is blowing.
Europe and Russia – as well as Ukraine – would be at risk of catastrophe for their people as well as their crops, herds and farmlands in one of the world’s crucial food bowls.
For the moment, emergency diesel generators are supplying electricity to keep the reactors cool. But the diesel generators themselves have only 10 days fuel supply.
“The resumption of shelling, hitting the plant’s sole source of external power, is tremendously irresponsible,” said the International Atomic Energy Agency’s Director General, Rafael Grossi.
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‘Completely unacceptable’: Russia launched more than 80 missile strikes, says Ukraine
By Max Hunder and Jonathan Landay
October 11, 2022 — 5.54am
Key points
· Russia launched 81 missile attacks across Ukrainian cities during Monday rush hour, Ukrainians say.
· The missile attacks were revenge for the destruction of the Russia-built bridge connecting Ukraine to Russia.
· Power, water, heat were knocked out in swaths of country.
· The UN General Assembly was due to start debate Monday on whether to demand that Russia reverse course on annexing four regions of Ukraine.
· US Secretary of State Antony Blinken said the attacks were ‘completely unacceptable’.
Kyiv: US Secretary of State Antony Blinken said that Russia’s attacks on Ukraine present a “profound moral issue” and the international community has a responsibility to make clear that Russian President Vladimir Putin’s actions are unacceptable.
“Now is the time to speak out in support for Ukraine,” Blinken said in a statement, hours before the United Nations were to meet on Ukraine. “It is not the time for abstentions, placating words, or equivocations under claims of neutrality. The core principles of the UN Charter are at stake.”
The UN General Assembly was due to start debate Monday on whether to demand that Russia reverse course on annexing four regions of Ukraine.
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‘Swimming naked’: Credit Suisse is not the only financial giant facing trouble
Senior business columnist
October 10, 2022 — 11.58am
The atmosphere of crisis that surrounded Credit Suisse is recent weeks appears to have abated but the strategic challenges that led to the speculation of a near-death experience and a collapse in its share price remain.
While the extent of the venerable Swiss bank’s woes was massively overhyped by the Twitterrati – the bank is a global systemically important institution with the rigorous capital and liquidity requirements and supervision that designation entails – the reasons for its share price only reflecting about a quarter of the book value of its shareholders’ funds lie are depressingly familiar.
They are depressing because we – and Credit Suisse – have seen them before.
Indeed, Credit Suisse saw them close up when its fellow Swiss banking giant, UBS, had to be bailed out by the Swiss National Bank after the 2008 financial crisis. They have also been a significant factor in Deutsche Bank’s decade-long struggle for stability.
At their core has been several decades of ambition and effort by the biggest of the European banks to challenge the Wall Street banks’ dominance of global investment banking. Those efforts have been studded by destabilising losses, massive fines and failure to achieve those ambitions.
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Putin has mastered the art of atrocity, but it won’t win him this war
Military leader and strategist
October 11, 2022 — 11.14am
A little over three weeks ago, I sat in a large conference room in Kyiv and listened to President Zelensky outline how his country, despite the heroic achievements of its armed forces, would need a continuing flow of military assistance from the West. At the very top of his priorities was air and missile defence systems to ‘close the skies’, to use his exact words.
The past 24 hours has again shown why Zelensky was so strident about this particular requirement. After the attack on the Kerch Bridge, Russia unleashed a barrage of 84 missiles and 13 Iranian kamikaze drones on Ukrainian cities. While around half were shot down, Odesa, Zaporizhzhia, Dnipro, Lviv, Mykolaiv, Kyiv and others were attacked. None were Ukrainian military targets, but residential, tourist and business areas as well as several civil infrastructure targets.
This is hardly a new act from the Russians. Since the beginning of this war, they have mastered the art of the atrocity. Shopping malls, train stations, parks, playgrounds, hospitals, theatres, cultural sites and residential areas are all fair game for the brutal yet clueless Russian military commanders. These attacks are given a thin veil of legitimacy by the Russian military by calling their targets ‘military’, but nothing is further from the truth. These are deliberate attacks to terrorise the people of Ukraine.
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Ukraine turning the tide against Russian invaders, says top British spy
October 11, 2022 — 8.00am
London: The head of Britain’s foreign signals intelligence agency says Ukraine’s courageous actions on the battlefield and online are turning the tide against their Russian invaders.
In excerpts of RUSI’s annual security lecture, to be delivered by Sir Jeremy Fleming - the head of GCHQ, on Tuesday, Fleming will say that Russian supplies and munitions are running out.
His comments were released after a furious Vladimir Putin pounded Ukrainian cities, including the capital Kyiv, with missiles, in retaliation for the destruction of the huge bridge he built linking Russia with Crimea, after he illegally annexed the territory in 2014.
The attack constituted the biggest set of air strikes that Russia has unleashed on Ukraine since the start of the war in February.
Fleming said that Putin’s actions were that of a leader losing, not winning, a war because of his own strategic errors.
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Germany finally delivers €140m air defence systems to Kyiv
By Oliver Moody
The Times
October 11, 2022
Germany will deliver the first of four long-awaited advanced air defence systems to Ukraine “in the next few days” after an intense missile bombardment of Kyiv and other cities.
The Iris-T SLMs, which consist of eight truck-mounted surface-to-air missiles and can shoot down enemy aircraft or rockets at a range of up to 40km and an altitude of 19km, were originally promised more than four months ago.
At the time Olaf Scholz, the German Chancellor, said that the radar-guided batteries, supplied at an estimated cost of €140m ($216m) apiece, would “enable Ukraine to protect an entire city against Russian air raids”.
Much to the frustration of the Ukrainians, however, the shipments were delayed and Kyiv’s order for 11 of the systems, lodged directly with the German manufacturer, was allegedly put on hold pending an export licence from Berlin.
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Russian President Vladimir Putin ready to authorise more severe attacks on Ukraine, analysts say
7:31AM October 11, 2022
Russia’s country-wide bombardment of Ukraine on Monday was “the first episode” of a necessary plan to “dismantle” Ukraine, former Russian president Dmitri Medvedev has claimed.
Mr Medvedev, the deputy head of the Russia Security Council, has been particularly hawkish on Russia’s so-called special military operation, insisting that Ukraine posed a lasting, direct and immediate threat to Russia.
“The first episode has been played,’’ he posted on the social media channel Telegram, before adding a dark warning, “there will be others’’.
He said the goal of Russia’s future actions should be the full-fledged dismantling of the Ukraine political regime.
The G7 will hold an urgent teleconference later today (AEDT) with Ukraine president Volodymyr Zelensky, who has already been briefing European heads of state about supplying urgent air defence systems to help protect major Ukrainian cities.
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Bernanke lived the theory that won the Nobel economics prize
The award of 2022 prize for economics to Ben Bernanke, Doug Diamond and Phil Dybvig rightly recognises that when incentives are wrong bad things can happen like financial crises.
Richard Holden Economics professor
Oct 11, 2022 – 9.57am
The heart of this year’s Nobel Prize for Economics was the contribution of Doug Diamond and Phil Dybvig in 1983. Diamond and Dybvig laid out the theory. And Ben Bernanke – their fellow Laureate – lived it during the 2008 global financial crisis.
One of the great lessons of economics is that incentives matter. And, because of that, providing the right incentives can mean that bad things don’t happen. This has been the modern history of bank runs – or the absence of them. This year’s Nobel Prize rightly acknowledged the theory and practice of preventing banks runs.
Banks are somewhat odd institutions. They perform a really important purpose which is about creating money. They take deposits from folks looking to save money and lend it out to people who are willing to invest it. This creates a slightly odd mismatch. It’s a bit like lending people money to grow trees. If all goes well, and the tree will grow tall they will pay off more than the amount invested. But if the trees get cut down before it matures then a lot of social value is lost. And if I have to cut down the tree to pay you back fast, then I will.
Banks are in an uncomfortable position in all of this. They help match savers with the investors that grow the trees, but if people want their money back in a hurry, then there’s a big problem. This can best be called “maturity transformation”. It’s a super important role that they play, but it’s inherently vulnerable.
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Russia’s revenge strikes will force US response
Jordan Fabian
Updated Oct 11, 2022 – 8.24am, first published at 7.52am
Washington | President Joe Biden condemned the “utter brutality” of Russia’s missile barrage at civilian targets in Ukraine – a significant escalation of a conflict now in its eighth month.
Mr Biden in a statement on Monday (Tuesday AEDT) did not specify how the US would respond to the attacks, but signalled he could approve new sanctions on Russia and weapons shipments to Ukraine. He said the US and its allies would “continue to impose costs” on the Kremlin and “provide the support necessary for Ukrainian forces to defend their country and their freedom”.
“These attacks only further reinforce our commitment to stand with the people of Ukraine for as long as it takes,” the president said.
The strikes, which included the first on Kyiv in months, were Russia’s most intense since the early days of the invasion and raised pressure on the US and its allies to supply Ukraine with more advanced military equipment, including air-defence systems and long-range weapons.
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IMF cuts growth forecast as Chalmers issues inflation warning
Ronald Mizen and Matthew Cranston
Oct 12, 2022 – 12.01am
Washington/Canberra | Treasurer Jim Chalmers has warned that a “big and widening” gap between the Reserve Bank of Australia’s cash rate and other global central banks risks driving down the Australian dollar, pushing inflation higher and forcing interest rates to rise more than expected.
Speaking ahead of flying to Washington for the G20 Finance Ministers meeting and annual meetings of the International Monetary Fund and World Bank, Dr Chalmers said “blunt, brutal but in some ways necessary” global rate rises would push many advanced economies into recession.
“We are headed for a substantial global downturn, and we won’t be immune from that,” he said, though it was not his expectation Australia would suffer a similar fate, and a recession would not be forecast in the October budget.
The IMF on Tuesday night (AEST) downgraded its forecasts for economic growth in Australia and the rest of the world to its slowest pace in more than 20 years, outside the global financial and COVID-19 crises, as higher inflation and geopolitical concerns batter investment around the world.
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Russians awakening to cost of Putin’s invasion, says UK spy chief
John Paul Rathbone
Oct 11, 2022 – 5.01pm
London | Ordinary Russians are increasingly counting the cost of the full-scale invasion of Ukraine and can see ever more clearly “how badly Putin has misjudged the situation”, according to a senior British spy chief.
Sir Jeremy Fleming, head of British cyber intelligence unit GCHQ, called Vladimir Putin’s decision to invade Ukraine a “high-stakes strategy” where “the costs to Russia — in people and equipment — are staggering” and the “Russian population has started to understand that”.
“We know — and Russian commanders on the ground know — that their supplies and munitions are running out. Russia’s forces are exhausted. The use of prisoners to reinforce, and now the mobilisation of tens of thousands of inexperienced conscripts, speaks of a desperate situation,” Mr Fleming said.
The Russian population is, meanwhile, “fleeing the draft, realising they can no longer travel. They know their access to modern technologies and external influences will be drastically restricted. And they are feeling the extent of the dreadful human cost of his [Mr Putin’s] war of choice,” he added.
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JPMorgan chief’s nightmare sharemarket prediction is very possible
By Lu Wang and Peyton Forte
October 12, 2022 — 8.24am
Jamie Dimon says don’t be surprised if the S&P 500 loses another one-fifth of its value. While such a plunge would fray trader nerves and stress retirement accounts, history shows it wouldn’t require any major departures from past precedents to occur.
Judged by valuation and its impact on long-term returns, the JPMorgan Chase chief executive officer’s “easy 20 per cent” tumble would result in a bear market that is in many regards normal. A decline roughly to 2,900 on the S&P 500 would leave the gauge 39 per cent below its January high, a notable collapse but one that pales next to both the dot-com crash and global financial crisis.
The price implied in Dimon’s scenario is roughly the index’s peak from 2018, the year when President Donald Trump’s corporate tax cuts took effect and an equity selloff forced the Federal Reserve to end rate hikes. Rolling back the gains since then would leave investors with nothing over four years, a relatively long fallow period. But, given the force of the bull market that raged before then, it would cut annualised gains over the past decade only to about 7 per cent, in line with the long-term average.
Nobody knows where the market is going, Dimon included, and much will depend on the evolution of Federal Reserve policy and whether earnings stand up to its anti-inflationary measures. As an exercise, though, it’s worth noticing that a drawdown of the scope he described isn’t unheard-of, and would strike many Wall Street veterans as a justifiable reckoning in a market that had been carried aloft by the Fed’s generosity.
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Deluded Truss has learnt the wrong lessons from Thatcher
The Iron Lady was bold, wildly unpopular and eventually vindicated. But if Liz Truss thinks low taxes and less regulation were all that mattered in 1983, she needs to brush up on her history.
12 October, 2022
Shortly before four in the morning of Friday June 10, 1983, Margaret Thatcher returned to Conservative Central Office from her count in Finchley. Accompanied by the party chairman, Cecil Parkinson, she appeared at the first-floor window waving to jubilant crowds in Smith Square. She was celebrating one of the great political victories of the post-war era.
The Conservative landslide of 1983, securing an overall majority of 144 seats, has cast a long shadow. For Labour, defeat under Michael Foot, with a manifesto famously described as the longest suicide note in history, has been remembered as a warning of what can happen if you move too far to the left. And those contemplating leaving one of the two main parties find it hard to ignore that in 1983 the SDP won only six seats.
But it may be on the Conservative Party that 1983 made the biggest impression. For every time someone suggests that the party might lose if it is too bold, Thatcher’s election victories, particularly that second, landslide win, are there to contradict the critic. Thatcher was bold and won handsomely. She was dismissed by conventional opinion, became wildly unpopular, but was vindicated.
This has had a profound effect on Conservative politics ever since. You can’t win from the left, but you can from the right. You need to listen to mainstream analysis if you are on the left, you can ignore it on the right.
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Disease, war and climate change are shaping the global economy
The IMF stresses the ‘cost of living crisis’ and the slowdown in China. Yet, the policy response to COVID-19, the unbalanced recovery from that disease and Vladimir Putin’s war caused the former, while Beijing’s response to COVID-19 caused the latter.
Martin Wolf Columnist
Oct 12, 2022 – 10.53am
It was not familiar economic forces that caused the upheavals of recent years, but COVID-19 and the war in Ukraine. This reminds us that the most destructive forces we know are indifferent nature and wicked humanity.
In its latest World Economic Outlook (WEO), the IMF stresses the “cost of living crisis” and the economic slowdown in China. Yet, the policy response to COVID-19, the unbalanced recovery from that disease and Vladimir Putin’s war caused the former, while China’s response to COVID-19 caused the latter.
Disease and war have indeed shaken our world.
These huge surprises have also reminded us that it is impossible to forecast the economy. Often more illuminating is examination of how forecasts evolve. In this case, one can summarise the changes from previous forecasts quite simply: “Just about everything that could go wrong has.” In “fund-speak”, “downside risks” have materialised.
What were those downside risks?
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https://www.afr.com/world/north-america/the-world-is-starting-to-hate-the-fed-20221013-p5bpep
The world is starting to hate the Fed
It is hard enough to achieve full US employment with low inflation. Adding foreigners’ wellbeing to its mandate would make the job paralysingly complex. The Fed is nevertheless the engine of global contraction.
Edward Luce Columnist
Oct 13, 2022 – 8.11am
A French leader once called the dollar America’s “exorbitant privilege”. Today’s world might go for blunter language. Vector of pain, anyone? Green monster?
Whatever we call it, the strong dollar’s victims have one culprit in mind — the Federal Reserve. Even Josep Borrell, the EU’s foreign policy chief, is joining in. This week he warned that the Fed was exporting recession in the same way the euro crisis was imposed by Germany’s post-2008 dictates. Much of the world is now in danger of becoming Greece.
Such finger-pointing is mostly unfair to the Fed. The US central bank clung for too long to its “team transitory” dismissal of inflation and is thus tightening at speed to restore its credibility. But it is only following the rules.
It is hard enough to achieve full US employment with low inflation. Adding foreigners’ wellbeing to its mandate would make the job paralysingly complex. The Fed is nevertheless the engine of global contraction. Monetary pain is America’s fastest growing export.
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Xi’s threats of war over the Taiwan Strait can be defused
China and Taiwan once had an understanding to agree to disagree. It is time for Taiwan to take the first step to reviving it.
Chenlung Kuo Taiwanese political commentator
Oct 12, 2022 – 1.30pm
Time is running out for the Chinese Communist Party to resolve the Taiwan issue. That’s likely to be the blunt conclusion of the 20th Party Congress when it convenes on October 16.
With Taiwanese public support for independence increasing, the opposition Kuomintang (KMT) party is unlikely to win the 2024 presidential election and the ruling Democratic Progressive Party (DPP) is set for another four years in power. The CCP subsequently worries that the current status quo across the Taiwan Strait is just going to perpetuate itself, and that Taiwan will gradually become a de facto sovereign country.
The CCP has never given up the means and ambition to unify Taiwan by force. But the Russian invasion of Ukraine has demonstrated that the economic and diplomatic costs would be huge. Exclusion from the SWIFT banking exchange system and a freezing of China’s assets overseas are just two of the possible international sanctions that China may face.
Furthermore, China cannot take Taiwan without intense fighting. If or when the People’s Liberation Army lands on Taiwan’s beaches, they would be met by well-equipped Taiwanese armed forces and hostile civilians. Washington has said that it will come to Taiwan’s aid in case of an invasion. Other Indo-Pacific countries are also likely to fall into an anti-China alliance, the closest thing to an Asian NATO.
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Putin has shown he is no challenger to the liberal world order
From Moscow to Tehran, the results are in and while the liberal West may be in trouble, its rivals aren’t at all ready to supplant it.
Ross Douthat
Oct 13, 2022 – 8.00am
The worldview behind Russian President Vladimir Putin’s invasion of Ukraine assumed the following premises: The West and America are declining, decaying and internally divided. The globalised world is becoming multipolar, with “civilisation-states” reemerging and competing to claim their spheres of influence. And Russia and China, in particular, represent potent alternatives to Western liberalism that stand ready to contend for global dominance.
As badly as the war has gone for Putin, some of this analysis still holds up. The world has indeed responded to the Ukraine war along multipolar lines. Saudi Arabia’s snub of the Biden administration’s plea to pump more oil is just the latest example of how the anti-Russian coalition is essentially a Western coalition, with India, China and the Arab world playing more cynical and complicated parts.
Meanwhile, the West’s unity, while obviously more impressive than Putin expected, is still a thin netting flung over deeper vulnerabilities. There has been no sustained post-COVID-19 boomtime, no new era of good feelings. The populist wave is not receding; since the war in Ukraine began in late February, the European establishment has suffered political disappointments and defeats in Sweden, Hungary and Italy.
Two of the governments most committed to the defence of Ukraine, US President Joe Biden’s administration and Britain’s Tory government, are well underwater in approval polls. Europe has only just begun to feel the cost of its naive energy policies, and Western economies are caught between measures that feed inflation and solutions that might induce recession.
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Recession looms after surprise shrink in UK economy
Andrew Atkinson and Liza Tetley
Oct 12, 2022 – 6.10pm
London | The UK economy shrank unexpectedly in August for the second time in three months, raising the possibility that the country is now in a recession.
The 0.3 per cent drop in output was driven by a sharp decline in manufacturing and a small contraction in services, the Office for National Statistics said on Wednesday. Economists had expected no growth in the month.
The decline means the economy will be lucky to avoid a downturn in the third quarter, marking the start of a cost-of-living recession that many analysts anticipate will persist into the early months of 2023 at least.
“The UK economy is teetering on the edge of recession” said Yael Selfin, chief economist at KPMG UK. “The prospect of the Bank of England raising base interest rates higher and worries about a shaky housing market could see GDP falling by as much as 1.6 per cent in 2023.”
Chancellor Kwasi Kwarteng pointed to Russian President Vladimir Putin’s attack on Ukraine as the biggest factor dragging down the UK economy.
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‘No such thing as hedging’: how managing risk creates more
The UK pension fund blow up is not the first time an attempt to manage risk has inadvertently created more risk.
Jonathan Shapiro Senior reporter
Oct 13, 2022 – 8.35am
The high-stakes game of financial stability chicken being played by the Bank of England has gripped markets again this week.
This episode will provide another invaluable case study for risk managers for generations. That is because the source of the cash squeeze that forced UK pension funds into a desperate liquidation scramble was not caused by aggressive risk taking.
Rather, it was the result of an ill-fated attempt to hedge risk. The pension funds entered into highly leveraged long bond trades to protect themselves from a blow-out in liabilities if interest rates stayed low.
If rates went up, pension funds could simply buy bonds at higher rates and deliver on their promised payouts.
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China’s ambassador frustrated by slow progress in repairing Australia relationship
By David Crowe and Matthew Knott
October 13, 2022 — 4.10am
Key points
· China’s ambassador to Australia Xiao Qian says repair to relationship “not moving fast enough, not as fast as China would expect”.
· The ambassador named tensions over Taiwan and the treatment of Muslims in Xinjiang as the two major barriers to a reset.
· Australia’s Foreign Minister Penny Wong says the government will always speak out when necessary on the issues that matter to the Australian people.
· Xiao said Australia “cannot find a better partner [than] China” as Australia diversifies trade links.
· The ambassador said he was willing to facilitate contact between jailed Australian Cheng Lei and her family.
The Chinese government has aired its frustration with the slow progress in repairing its troubled relationship with Australia, setting out hopes for high-level talks with no preconditions to narrow differences on regional security, human rights and trade ties worth $245 billion.
China’s ambassador to Australia, Xiao Qian, is seeking a reset in relations ahead of a series of global summits next month that he says offer a chance for both countries to “move towards each other” after a difficult few years.
Xiao said ending the trade dispute would help Australia ride out a global recession and provide the government with enough revenue to fund the contentious stage three tax cuts.
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A Nobel Prize for the economics of panic
By Paul Krugman
October 13, 2022 — 11.04am
Do people still read Rudyard Kipling’s If? Even if you haven’t, you probably know how it begins: “If you can keep your head when all about you are losing theirs …” Refusing to panic, Kipling asserted, was a great virtue.
But during a bank run, refusing to panic can also be a way to lose all your money.
On Monday, the Nobel Prize in Economics was given to a household name, Ben Bernanke, and two economists’ economists, Douglas Diamond and Philip Dybvig, largely for papers they published almost 40 years ago. So let’s talk about their work and why, unfortunately, it remains all too relevant.
An aside: I sometimes encounter people who insist that the economics prize isn’t a “real” Nobel, because it’s just an award handed out by some Swedes, unlike the other prizes, which are … awards handed out by some Swedes. Yes, I may be talking my own book here, since I got one of these things myself in 2008, but it’s hard to deny the importance of the economics work the Swedes just honoured.
Obviously, Bernanke, Diamond and Dybvig weren’t the first economists to notice that bank runs happen. But Diamond and Dybvig provided the first really clear analysis of why they happen — and why, destructive as they are, they can represent rational behaviour on the part of bank depositors.
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‘They can vote with their feet’: As Xi locks in power, many Chinese rush for the exits
By Eryk Bagshaw
October 12, 2022 — 7.53pm
Between the Detian Waterfall and Friendship Pass along China’s southern border with Vietnam, locals used to trade chicken and rice on bamboo rafts along the Red River.
“There were lots of businesses, big and small, near customs,” says Lyu Weijun, who runs a small hotel in Detian Village.
“Since the pandemic, all such flows had been tightly restricted. There were barbed-wire fences installed along the river. The pandemic situation in Vietnam is serious, but they treat it like the flu.”
On this 1200-kilometre border between China and Vietnam, locals are acutely aware of their predicament. China remains stuck in the land of COVID-zero while its neighbour flourishes.
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Threat to go nuclear is Moscow’s best weapon
11:00PM October 12, 2022
Ukraine’s battlefield successes and Russia’s botched mobilisation efforts are turning the war’s direction against Vladimir Putin. Momentum and confidence count for a great deal in war, and right now this is all breaking Kyiv’s way.
Putin must pause to reinforce and reconstitute his forces. Russia desperately needs smarter generals, although the brutal system Putin leads cannot produce them. Ukraine’s President Volodymyr Zelensky understands that now is the time to press home his advantage.
Far from hunkering down for winter, Ukraine will probably push harder in the Donbas and towards Crimea, hoping Russia’s brittle military will break.
As many Russian males have fled overseas to avoid fighting as have been caught by the conscription press gangs. The bulk of the Russian people are not as committed to the war as Putin. That is why prisoners, Chechens and mercenaries, not the children of Putin’s ethnic Russian power base, are sent to the front.
By turning to partial mobilisation, Putin has ensured the war will touch a much larger number of Russians. If his military is incapable of reversing its battlefield losses, Putin faces a double risk of stoking opposition domestically and in the armed forces. The echoes of Russia’s 1918 revolutions resonate.
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How Ukraine’s strategy is running circles around Russia’s lumbering military
By Stephen Fidler and James Marson And Thomas Grove
The Wall Street Journal
October 13, 2022
Eight months into Ukraine’s war with Russia, its emerging strategy is combining classic military operations with opportunism on the battlefield to exploit the incompetence of Russian forces – and is changing the course of the battle.
Ukraine’s command structure encourages junior officers to make in-the-moment battlefield decisions, an authority that they have used to seize opportunities and quickly take advantage of enemy weaknesses.
Russians, by contrast, have been slowed by a Soviet-era decision-making structure, in which orders trickle down the chain of command from Moscow, and troops at the front lines take little initiative.
In weeks, Ukraine has cleared Russian forces from thousands of square kilometres in the Kharkiv region of the country’s northeast. Its forces are now advancing south toward the occupied city of Kherson, a regional capital.
Rather than directly engaging with the grinding artillery exchanges and tank battles that Russia favors, Ukraine has sought instead to surround Russian forces and cut off supply lines. It has effectively integrated Soviet-era equipment with long-range precision Western artillery and rocket systems to starve its enemy of fuel, ammunition and other supplies.
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Xi Jinping is knocking down China’s house of cards
The confirmation of the president’s third term will mark the inevitable collapse of the institutional edifice Deng Xiaoping established to avoid a repeat of Maoism.
Minxin Pei China watcher
Oct 13, 2022 – 1.26pm
At the 20th National Congress of the Communist Party of China this month, Xi Jinping will almost certainly be confirmed for a third term as the party’s general secretary and China’s president. With that, he will become China’s longest-serving paramount leader since Mao Zedong, and the rules and norms that are supposed to govern the CPC regime will be shattered.
Those rules and norms were put in place largely by Mao’s successor, Deng Xiaoping, who took power in 1978. Deng knew firsthand the damage the party’s ideological fanaticism could do. During the Cultural Revolution, one of his sons was paralysed by rampaging Red Guards.
Deng himself was stripped of his official positions and sent to work at a factory in a remote province for four years – one of three times he was purged from government during his long revolutionary career.
To ensure China would never again be gripped by such terror, Deng – with the support of other veteran revolutionaries who had survived the Cultural Revolution – restored collective leadership and imposed age and term limits for most senior CPC positions. In the decades that followed, China’s top leaders served no more than two terms, and Politburo members respected an implicit age limit of 68.
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https://www.afr.com/world/europe/how-the-stakes-just-keep-on-rising-in-ukraine-20221013-p5bphj
How the stakes just keep on rising in Ukraine
Putin’s bombing blitz has backfired. That failure could send him closer to the nuclear brink, but the West is staring him down.
Hans van Leeuwen Europe correspondent
Oct 14, 2022 – 7.42am
″We do not want a World War.” In this uncharacteristically terse tweet, French President Emmanuel Macron spoke volumes.
Rumbling beneath the Russian missile strikes and the advancing Ukrainian tanks, there is a palpable sense that the stakes are rising inexorably higher.
President Vladimir Putin is losing the war, and his propaganda factory can no longer fully conceal it from his people. For Ukraine, and the West, this should be good news. But it comes with a sting.
In annexing four provinces of Ukraine, Putin has boxed himself in. Could he do a peace deal in which he surrenders what he says is now actual Russian territory? Right now, that feels politically impossible.
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British PM prepares to abandon key tax cuts after market turmoil
Hans van Leeuwen Europe correspondent
Updated Oct 14, 2022 – 7.57am, first published at 2.56am
London | British Prime Minister Liz Truss is expected to junk more of her mini-budget’s tax cuts, as she scrambles to save her sinking premiership. Bond and currency markets rebounded on the growing speculation.
Expectations of a mini-budget backdown grew as Chancellor Kwasi Kwarteng, in Washington for IMF and World Bank meetings, refused to say whether he would stick to his plans for holding down the company tax rate.
Back in Downing Street, sources tipped off journalists that more U-turns were likely coming, although decisions were said to be pending rather than already taken.
Mr Kwarteng is expected back in London at the weekend, when he and Ms Truss are reportedly set to bite the bullet on ditching some of the debt-fuelled measures that have sparked weeks of market turmoil.
Asked in an interview with London’s Telegraph newspaper whether a U-turn was imminent on company tax, Mr Kwarteng said only: “Let’s see.”
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US inflation soars to 40-year high, pushes Fed to rate rise
Matthew Cranston United States correspondent
Updated Oct 14, 2022 – 7.43am, first published at 12.00am
Washington| Inflation in the US rose at twice the pace forecast by economists, while one of the key measures watched by the Federal Reserve hit its highest level since 1982, placing further pressure on the central bank to keep aggressively lifting interest rates.
In what is the last inflation reading before the country’s midterm elections, President Joe Biden was quick to douse concerns that inflation, driven by the highest jump in monthly services inflation since 1992, was here to stay.
“Americans are squeezed by the cost of living: that’s been true for years, and they didn’t need today’s report to tell them that,” Mr Biden said.
“Today’s report shows some progress in the fight against higher prices, even as we have more work to do.”
Headline inflation increased 0.4 per cent in September and was up 8.2 per cent over the year. Economists expected a 0.2 per cent gain in the month.
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Hot US inflation has three risks for investors – and one great hope
Worse than expected US inflation data guarantees the Federal Reserve will keep raising interest rates. Former Bank of England boss Mervyn King says investors need to watch three key risks.
Updated Oct 14, 2022 – 10.23am, first published at 10.10am
Forget the bewildering bounce on Wall Street on Thursday night.
The latest US inflation data is unequivocally bad news for the Federal Reserve and for markets, confirming the Fed has no choice but to keep tightening until it breaks something – labour markets, global economic growth, the plumbing of the financial system, or possibly all three.
The consensus of economists was for headline inflation (which includes the most volatile items, such as gasoline and food) to fall from an annual rate of 8.3 per cent in August to 8.1 per cent in September. Instead, it came in at 8.2 per cent, with the monthly rise of 0.4 per cent double what the market expected.
But the really bad news was in core inflation, which excludes those volatile items. It accelerated from 6.3 per cent year-on-year in August to 6.6 per cent in September.
There was plenty of fun poked at divisive Ark Invest founder Cathie Wood this week after she wrote an open letter to the Fed claiming inflation was coming down, and the central bank needs to stop raising rates – high rates are poison for her tech-heavy fun.
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January 6 panel votes to subpoena Donald Trump
Lisa Mascaro
Oct 14, 2022 – 7.20am
Washington | The House January 6 committee has subpoenaed former US president Donald Trump for his testimony about last year’s Capitol attack. The panel voted unanimously to compel the former president to appear.
“We must seek the testimony under oath of January 6th’s central player,” said Republican Liz Cheney, the committee’s vice chairwoman.
Ms Cheney said: “We are obligated to seek answers directly from the man who set this all in motion. And every American is entitled to those answers.”
The committee presented interviews with Mr Trump’s aides and new documents detailing his unflagging efforts to overturn his 2020 election loss.
The vote seeking Mr Trump’s testimony came as the panel produced vivid new details and evidence of Mr Trump’s state of mind as he refused to concede his loss to Joe Biden, resulting in last year’s attack at the Capitol.
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US sees ‘decisive decade’ ahead in competition with China, Russia
By Gordon Lubold and Charles Hutzler
The Wall Street Journal
2:59PM October 13, 2022
The US is entering a “decisive decade” as it faces competition with China and an attempt by Russia to up-end the international order, while dealing with challenges from climate change to energy to food security, international terrorism and disease, the White House said Wednesday.
The Biden administration released its national security strategy, a blueprint that outlines the administration’s approach to problems around the world.
The strategy describes the US’s attempt to compete with its adversaries, such as China and Russia, while cultivating alliances with countries that share American interests and objectives.
“Our strategy proceeds from the premise that two strategic challenges — geopolitical competition and shared transnational threats — are intertwined,” White House National Security Adviser Jake Sullivan said at an event at Georgetown University.
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US core inflation jumps to 6.6pc, headline CPI at 8.2pc
5:30AM October 14, 2022
The Australian dollar, which briefly fell below US62 cents this week, faces further downward pressure after new US inflation figures left the US Federal Reserve little option but to press on with a punishing series of interest rate increases that threaten to cause a global recession.
Core US inflation, which strips out volatile food and energy prices, jumped to 6.6 per cent over the year to September, the highest level since 1982, up from 6.3 per cent in August, defying hopes inflation would begin to show clear signs of declining after months of hovering around 40-year highs.
Headline US inflation, above 8 per cent for seven months in a row, fell slightly to 8.2 per cent in September thanks mainly to a 5 per cent drop in petrol prices, but prices of core goods and services rose 0.6 per cent, ahead of the 0.4 per cent most economists had expected, and up from 0.3 per cent in July.
“The disappointingly broadbased and high inflation readings will keep the Fed in an aggressive tightening mode and on course for at least another 125 bps this year,” said Kathy Bostjancic, an economist at Oxford Economics.
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Kwarteng races back to London as UK budget crisis deepens
Philip Aldrick
Oct 14, 2022 – 12.32pm
Washington | UK Chancellor of the Exchequer Kwasi Kwarteng cut short his trip to the US and was heading back to London late on Thursday (Friday AEDT) to continue work on the government’s long-term fiscal plan, a Treasury spokeswoman said.
Dr Kwarteng departed early from the International Monetary Fund’s meetings in Washington amid reports the UK government was preparing to abandon plans for a massive package of unfunded tax cuts that have roiled UK markets for the past three weeks.
UK Prime Minister Liz Truss’ government is preparing to abandon a central part of its tax-cutting agenda following weeks of chaos in financial markets - a potential shift that sent the pound and gilts surging.
Officials at 10 Downing Street and the Treasury are drafting options for Ms Truss and Dr Kwarteng, but no final decision has been taken, said an insider who requested anonymity.
The PM could scrap her pledge to keep corporation tax unchanged next year, and instead raise it as planned by her predecessor Boris Johnson, the Sun said.
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British PM makes second tax U-turn after abruptly sacking Chancellor
Elizabeth Piper
Updated Oct 15, 2022 – 5.54am, first published at Oct 14, 2022 – 10.50pm
London | British Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng and scrapped parts of their unpopular economic package on Friday in a desperate bid for political survival less than 40 days into her premiership.
With financial markets in turmoil, a chastened Truss said she accepted her government’s plans for unfunded tax cuts had gone “further and faster” than investors were expecting.
“I have acted decisively today because my priority is ensuring our country’s economic stability,” she told a brief news conference in Downing Street. “I want to be honest, this is difficult. But we will get through this storm.”
The pound and British government bond prices tumbled after she spoke, with economists and investors saying her reversal of £20 billion pounds of tax cuts was not yet enough to restore calm.
Britain is engulfed in a political crisis akin to the industrial battles of the 1970s, the sterling crash of the early 1990s and the chaos that followed Brexit. Since it voted to leave the European Union in 2016 it has lost three prime ministers and its reputation as a predictable member of the global economic order.
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‘This is difficult’: British PM Liz Truss fighting for career after sacking her chancellor
By Rob Harris
Updated October 15, 2022 — 6.07am first published October 14, 2022 — 11.43pm
London: British Prime Minister Liz Truss is facing the imminent threat of being thrown out of office by her colleagues less than six weeks becoming Conservative Party leader, despite axing her controversial economic strategy and sacking her chancellor.
Truss dumped Kwasi Kwarteng, her closest political ally, after just 38 days in office on Friday as she attempted to drag her government out of deep political turmoil following the disastrous financial impact of her mini-Budget.
But her efforts to salvage her position failed to win over financial markets and Conservative MPs, and she now faces speculation of a bid to oust her from Downing Street in the coming weeks, as she reversed plans to cut corporation tax, which will now rise from 19 per cent to 25 per cent next April.
In an eight-minute press conference in which she took just four questions on Friday (London time), Truss said she wanted to be “honest” that the country is facing a “difficult” situation.
She had sacked Kwarteng after dramatically summoning him to return from Washington early, where he was attending the annual meeting of the International Monetary Fund with foreign counterparts, including meeting with Australia’s treasurer Jim Chalmers.
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Elon Musk: SpaceX can’t fund Ukraine’s vital Starlink internet indefinitely
By David Shepardson
October 15, 2022 — 10.05am
Washington: Elon Musk said on Friday his rocket company SpaceX cannot indefinitely fund its Starlink internet service in Ukraine, which has helped the country’s civilians and military stay online during the war with Russia.
Musk’s comment on Twitter came after a media report that SpaceX had asked the Pentagon to pay for the donations of Starlink. The billionaire has been in online fights with Ukrainian officials over a peace plan he put forward which Ukraine says is too generous to Russia.
A senior defence official told reporters on Friday that the US Department of Defence would not confirm that ongoing talks with the company were related to payment, but said the Pentagon was “continuing to talk to SpaceX and other companies about SATCOM capabilities”.
The Starlink communications platform has been very “exceptionally effective on the battlefield” allowing Ukrainians to support multiple device connections in the combat environment, a senior US military official said.
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UK's Truss fires finance minister as budget plan in ruins
AFP
4:53AM October 15, 2022
British Prime Minister Liz Truss on Friday fired her finance minister after prolonged market turmoil, but some Conservatives were plotting their new leader's own demise as her right-wing economic agenda imploded.
Kwasi Kwarteng became the second shortest-lived chancellor of the exchequer in UK political history, paying the price after Truss's crash programme of unfunded tax cuts terrified the financial markets.
She insisted she had acted "decisively" to bring about "economic stability" -- but the pound resumed its slide on currency markets, falling under $1.12.
"I want to deliver a low-tax, high-wage, high-growth economy," Truss added. "That mission remains."
Financial upheaval sparked by the new government's September 23 plan to slash taxes -- financed via billions in more borrowing -- had subsided somewhat since the Bank of England (BoE) intervened in bond markets.
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https://www.afr.com/world/asia/gloves-off-why-xi-jinping-is-just-getting-started-20220929-p5bm1n
‘We’re going to get hardcore Xi’: China’s boss just getting started
Xi Jinping’s coronation as China’s longest-serving leader since Mao Zedong marks a new chapter in the country’s rise which will redefine the global order and cement his role as the world’s most powerful man.
Michael Smith North Asia correspondent
Oct 14, 2022 – 11.16am
Some time over the next week Xi Jinping, the world’s most powerful man, will be anointed China’s longest-serving leader since Mao Zedong.
His coronation in Beijing’s Great Hall of the People will not be the result of family lineage, a victory on the battlefield or a public debate about who is best qualified to lead the world’s most populous country.
Instead, the 69-year-old who spent decades quietly rising through the Communist Party ranks, has amassed vast power via a long and sometimes brutal process of eliminating political rivals, elevating his status and tightening control over key institutions that oversee every aspect of Chinese society, including the military.
If, as is likely, he secures a historic, third term, Xi will face three immediate challenges – COVID-19, Taiwan and Russia. How he tackles these issues will give Australia and the world vital clues about the scale of his longer-term ambitions for China, and the lengths he is willing to go to achieve those goals.
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https://www.afr.com/companies/energy/diesel-market-chaos-threatens-global-economy-20221016-p5bq33
Diesel market chaos threatens global economy
Prejula Prem, Jack Wittels and Alex Longley
Oct 16, 2022 – 7.50am
The world’s diesel market is once again flashing signs of chaos, undermining the global economy with a fresh bout of inflationary pressure.
Powering trucks, trains and ships that drive industry, the fuel is commanding huge buy-it-now premiums in Europe. Beset by worker strikes over pay at French oil refineries that lasted over three weeks, the continent is struggling to be ready for a ban on imports from key supplier Russia that’s 3½ months away. The US has the lowest seasonal inventories in data that began in 1982 going into winter.
The chaos is the last thing Europe needs alongside sky-high energy prices, but there could be worse to come. Officials in the Biden administration have pressed fuel producers to curtail overseas exports and chastised them for low diesel stockpiles.
“It’s extremely tight, end user stocks are extraordinarily low,” said Gary Ross, a veteran oil consultant turned hedge fund manager at Black Gold Investors. “I don’t know where resupply comes from. Diesel is the industrial product of the world, so it’s not going to help an already weakened economic environment.”
At one point this week, traders were paying premiums of as much as $US160 a tonne --more than $US20 a barrel -- to obtain a physical barge-load of the road fuel in Europe. That’s a sign of tight inventories. It compares with $US24 a tonne a month earlier.
In New York, the physical market is so tight that premiums surged there too. The market has been in a bullish backwardation trading pattern since last August. The structure means sellers are losing money when they hold on to supplies.
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https://www.afr.com/world/europe/how-long-can-liz-truss-last-20221015-p5bq2t
How long can Liz Truss last?
Britain’s zombie prime minister will be lucky to make it to the year’s end. But she is simply a symptom of the Conservative Party’s wider malaise.
Hans van Leeuwen Europe correspondent
Oct 16, 2022 – 7.54am
London | In 1926, the celebrated whodunnit author Agatha Christie disappeared for 11 days. A new biography suggests that she went into a “fugue state”, where she temporarily forgot who she was and even assumed a new identity.
Something similar seems to have happened to Britain’s Conservative Party since it elected Liz Truss as its leader on September 5, elevating her to the premiership the next day.
The Tories seem largely to have forgotten they are governing the country. Instead, they are engaged in the internecine battles of ideology and personality that usually engulf political parties only when they are cast into opposition after an election defeat.
A pall of disarray, despair and defeat hangs over the Conservative Party, as well it might. The opinion polls are simply off the scale: a prime minister has seldom if ever plumbed depths of unpopularity this profound.
Truss unwisely rushed out a mini-budget that was half-baked, in a bid to look decisive. She tried to make recklessness look like resolve, but then she crumbled as reality turned her crash-through economic strategy into a total crash.
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If Tories are quick, Truss can be a bad dream
11:06PM October 15, 2022
First the good news for Britain’s Tory MPs. It may not feel like this, but now could be the weekend when they decide to turn the corner. Should Tory MPs choose to take it, a path away from electoral extinction exists. By 2024 Liz Truss could be just a half-forgotten bad dream, not today’s nightmare.
She must go, of course. Hardly worth discussing that. Sucking Jeremy Hunt into her orbit of electoral death won’t cut it, won’t save her government from slaughter at the hands of the voters.
Appointing as her Chancellor a decent, moderate man whose whole political instinct runs counter to her own is intended to save her skin for a time, and it may.
But the time bought will be months, weeks, hours, minutes – surely not years – in which a sulphurous parliamentary party under a lame-duck Prime Minister lurches towards a general election, paralysed by the threat of division lobby mutinies.
The Prime Minister is now close to falling. She must be pushed. Her whole aim this weekend has been to create an impression of continuity. An impression of continuity is the gravest threat this Conservative government faces. That — should her party reprieve her just because she sacked the fellow who carried out her orders — would be the bad news.
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I look forward to comments on all this!
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David.
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