April 07 2022 Edition
-----
This week it is really all about the Russian War in Ukraine and the implications for the global economy, global food, global supply chains and so it goes.
My view is that the future for the world has been altered for the worse permanently. Comments welcome!
In Australia we had our Budget which was a desperate attempt to buy votes and win an election which did nothing I could see for the future beyond. ScoMo looks to be terminal as members of his own party turn on him,
-----
Major Issues.
-----
Carnage in bond markets as investors prepare for new world order
Investors fear higher inflation – and interest rates – as BlackRock’s Larry Fink warns Russia’s invasion of Ukraine ‘has put an end to the globalisation we have experienced over the last three decades’.
Karen Maley Columnist
Mar 27, 2022 – 9.00pm
The sell-off in global bond markets is gathering pace, leaving investors nursing losses on a scale last seen in the 1980s and prompting analysts to declare that we’ve now entered the third great bond bear market.
This year’s horrific sell-off has sent bond prices tumbling, while yields have pushed higher. (Bond yields rise as prices fall.)
The yield on benchmark US 10-year bonds – which influences borrowing costs for consumers and businesses around the world – has jumped from 1.51 per cent at the beginning of the year to 2.48 per cent at the end of last week.
Meanwhile, the yield on 10-year German bunds – the benchmark for borrowing costs across the eurozone – which started the year at minus 0.12 per cent, has vaulted to a positive 0.59 per cent.
-----
Why it’s not always worth trying to hedge against geopolitical risk
Financial markets have a history of taking geopolitical events in their stride and a portfolio diversified across different asset classes is a strong alternative.
James Weir Contributor
Mar 28, 2022 – 5.00am
In times of geopolitical risk, it’s understandable that investors’ thoughts turn to what effects it will have on a carefully nurtured portfolio and whether there are ways to protect it.
That kind of protection is referred to as a “hedge” – ideally it will increase in value at times when markets are vulnerable to a fall in risk assets, such as equities.
There are many assets that can act as a hedge – for example, investing in real assets like property or art can provide a return that has no correlation to shares. However, not all portfolios are large enough to be able to diversify into expensive assets like these.
For more average-sized portfolios, the most commonly used hedges are those that trade on financial markets, such as gold, government bonds or the US dollar. All three can be accessed through ETFs that trade on the ASX.
However, there is no guarantee that what looks and sounds like a sensible hedging strategy will work. It can end up costing money.
-----
https://www.afr.com/world/asia/return-to-oz-an-eye-opening-reality-check-20220324-p5a7in
Return to Oz an eye-opening reality check
An extended visit to her birthplace gave Tokyo-based Melanie Brock much to ponder on the pandemic’s lingering impact on the Australian psyche.
Melanie Brock Contributor
Mar 29, 2022 – 10.49am
Konnichiwa from Tokyo. Am just back from a trip to Australia, where I enjoyed everything I love about our terrific country: family, friends, coffee, the wattle, amazing stars at night and, oh!, fabulous fish and chips.
Mostly I was grateful to get into Western Australia for a reunion with my Fremantle-based son and for Mum and Dad’s 60th wedding anniversary. Am home now in Tokyo enjoying the cherry blossom, not in quarantine thankfully and reflecting on my six weeks on the road.
My extended stay allowed me longer than usual to check out the current state of play in Australia. A visit to several states gave me the chance to compare and contrast.
This evaluation has also allowed me to consider what it is about Australia I would take back to Japan and what I leave where it is. And when I say what I would take back, I am not talking about Tim Tams.
-----
Another attack on PM’s character by one of his own, at the worst time
The PM dismisses criticism from his colleagues, saying leaders can’t be thin-skinned. He and Josh Frydenberg want voters to focus on their criticisms of Labor’s record while they sell the budget.
Jennifer Hewett Columnist
Mar 30, 2022 – 5.49pm
As he started the big budget sell, Josh Frydenberg had to compete for public attention with Wednesday night’s memorial for the late Shane Warne.
Anthony Albanese’s budget reply speech on Thursday night will now have to compete with Volodymyr Zelensky’s impassioned address to the national Parliament. Then there is the return of more devastating flash flooding in areas of northern NSW, galvanising community concerns about the level of government help.
After losing preselection for her Senate spot, Liberal senator Concetta Fierravanti-Wells has called Scott Morrison a bully, who is unfit to be PM.
But it’s Scott Morrison who has to repeatedly compete with blue-on blue political attacks from his side about his character failings. The latest onslaught from NSW Liberal Senator Concetta Fierravanti-Wells was particularly vicious, vocal and badly timed for the government.
-----
The story of 2022 is being written now.
Voters may shun brazen budget, but Albanese is not over the line
Award-winning political commentator and author
March 31, 2022 — 12.00am
The problem with Josh Frydenberg’s fourth and possibly last budget, win or lose the election, was not whether it was good or bad, or right or wrong.
The problem always was that more was expected of it than it could ever possibly deliver.
Frydenberg’s task was to produce a budget that would lift the Coalition from its present unwinnable position in the polls, to bring it within striking distance at the start of the official campaign (expected in days), to instil confidence, to maintain credibility, to restore trust in a government in desperate need of it, all while wedging or squeezing Labor.
It shaped as a crushing burden, a phenomenal weight resting on a single event and mainly on the shoulders of one person who happens to be the most popular in the government. It is hard enough, even in the best of times, to reconcile the competing tensions of economics and politics and to meet such soaring expectations. Yet these are pretty close to the worst of times for the Morrison government.
In a better world, Frydenberg’s budget would have been both fiscally responsible and electorally appealing. At any other time a bribe, a fistful of dollars neatly tied with a bright red bow, delivered in a brown paper bag on election eve, would have been tarted up as a stimulus package driven by economic imperatives.
-----
Savage assessment of Morrison a bolt of lightning for election campaign
By David Crowe
March 30, 2022 — 8.00pm
The savage assessment of Scott Morrison by one of his nominal allies is like a bolt of lightning into the debate about whether the Prime Minister deserves another term in power.
It electrifies the election campaign when Morrison is trying to make the contest about his leadership and the personality of his opponent, Anthony Albanese.
After losing preselection for her Senate spot, Liberal senator Concetta Fierravanti-Wells has called Scott Morrison a bully, who is unfit to be PM.
But it burns Morrison badly, and might even fry his campaign, when voters are told that some of the Prime Minister’s own party do not think he is fit for the job.
There is no budget night in living memory when a government senator has denounced the Prime Minister in the way Concetta Fierravanti-Wells did in the Senate on Tuesday.
-----
We must protect Australian way of life
The damage done to the American psyche through unrelenting attacks on its core values. For Australia, it is a cautionary tale.
March 30, 2022
Our way of life has faced some serious challenges over the past year. For a long time, for many of us, it changed. And so this discussion is as pertinent as it is important.
I suppose you must start with some basic questions. Is there a unique Australian way of life? If so, what is it? And ultimately, why is it essential? Is it worth investing in?
Well, the first question is easy. Yes. Anyone of us; all of us lucky to have spent time living or travelling overseas know that Australia does have its own identity, its own unique culture and a specific way of life.
Let me start with identity, which is a bit easier, and move on to way of life later on.
Australia must ramp up air defence, particularly as China’s ‘Mighty Dragon’ is far superior
8:14AM March 31, 2022
When Peter Dutton became defence minister almost exactly a year ago our defence equipment standing in the region was complete joke. The termination of the French submarine disaster and its replacement with access to US nuclear technology started our nation on the long road to gain defence respect.
But we will never gain full respect in the region while we have no worthwhile air defence particularly as the Chinese “Mighty Dragon” – the Chengdu J-20 – is far superior to any other aircraft regularly operating in our region.
Until now being competitive in regional skies seemed an unattainable goal because the only aircraft that rivals the J-20 is the American F-22 and the US ceased production of the F-22 believing the Joint Strike Fighter- F-35 would fill the gap. We agreed to buy the JSF-F35 and it was a disastrous mistake by both the US and Australia.
Suddenly an amazing never to be repeated opportunity has arisen. I plead with Peter Dutton and his assistant minister Andrew Hastie plus shadow defence minister Richard Marles (whom the opinion polls say will be defence minister in a few weeks) to make investigating this opportunity the highest national defence priority.
-----
Torpedoed from within: why this character assassination of Morrison is so powerful
Chief political correspondent
March 31, 2022 — 6.26pm
It is hard to find a conservative warrior as committed as Concetta Fierravanti-Wells to the causes that have motivated members of the Liberal Party in more than seven decades of argument with Labor over social values, economics and foreign policy.
Fierravanti-Wells has been a policy hawk on China, an advocate for a hard line on budget repair and a ferocious opponent of marriage equality out of her long concern about matters of personal faith and traditional values.
When the Parliament legislated same-sex marriage five years ago, she and others launched a campaign for religious discrimination laws to defend what they saw as the right to speak up for personal beliefs even when it offended others.
All this has made the Liberal senator from NSW a lifelong enemy of the Australian Labor Party and the last person voters might expect to turn on a Liberal prime minister with a wallop that could take him down at the coming election.
-----
Under the radar: Australia to cash in as a forgotten commodity booms
Senior business columnist
March 31, 2022 — 12.00pm
Russia’s invasion of Ukraine and the sanctions imposed by the West in response are driving up the prices of most key commodities. Nowhere is that more evident than in the price of arguably the most overlooked of strategic commodities, alumina.
The alumina price has shot up to around $US500 a tonne, with some analysts forecasting prices of $US600 a tonne, after averaging only $US329 a tonne last year. It has averaged about $US420 a tonne through the first three months of this year.
Alumina tends to be the least visible and analysed of the major commodities, perhaps because, historically, it was subsumed and barely visible as a discrete commodity within an aluminium industry supply chain that was dominated by integrated aluminium metal producers.
It was the emergence of China as a major aluminium producer and consumer, long on aluminium production but short on alumina, that saw the delinking of aluminium and alumina prices and the establishment of trading in alumina at prices set by reference to indices rather than the aluminum price.
Alumina prices have shown themselves to be very sensitive to events – the prices are volatile and respond quickly to any disruption to supply or change in demand because alumina can’t be stored for any length of time without deteriorating and aluminium smelters have to keep operating – so it isn’t surprising that the outbreak of the war in Ukraine has had an impact on a market where the supply and demand equation was reasonably tight anyway.
-----
New India free-trade deal to ease industries’ China pain
9:30PM April 1, 2022
Australia and India will sign a landmark free-trade deal on Saturday, removing or slashing tariffs on a range of Australian exports to the world’s fastest-growing major economy.
The breakthrough, which is expected to boost exports to India to at least $45bn by 2035, has been hailed as a sign of a closer relationship between New Delhi and Canberra.
Under the Australia-India Economic Cooperation and Trade Agreement, industries hit by China’s trade sanctions over the past two years, including wine and coal, benefit from the easing of tariffs as both countries aim to reduce dependence on Beijing.
Trade Minister Dan Tehan, writing for The Australian, said the pact signified greater unity between Australia and India from a grassroots community level to the stronger personal connections at the highest levels of government.
“It was the joint encouragement from Prime Ministers (Scott) Morrison and (Narendra) Modi that gave the process the impetus to reach today’s historic milestone,” he said.
-----
Charles will be King ... and no Australians can apply’: Republicans launch presidential plans
April 3, 2022 — 5.00am
Australians would be able to choose from up to 11 presidential candidates and the directly-elected winner would serve a five-year term, under proposed changes finalised by the Australian Republican Movement.
The ARM, which released some of the details of its proposed model in January, has now finalised its proposed constitutional changes for an Australian republic.
The proposed model and constitutional changes have been designed after extensive consultations with legal experts and are similar to the Irish Republic, which vests limited powers in a future President, who would replace the Governor-General - the Queen’s representative in Australia.
Each state and territory would be able to propose one candidate for president, with how that person was chosen up to the jurisdiction, while the federal government would propose up to three candidates - with a popular vote to follow.
A future president would appoint a prime minister who had a majority in the House of Representatives, as the Governor-General currently does, but could not terminate a prime minister who had a majority in the House, as Sir John Kerr did to Gough Whitlam in 1975.
-----
COVID 19 Information
-----
‘Only had it seven weeks ago’: More people report COVID-19 reinfection
By Mary Ward
March 29, 2022 — 5.00am
With her daughter wearing a jumper in bed under two blankets, complaining of flu symptoms, Kara Lee knew all the signs were there.
“But she’d only had it seven weeks ago and had been testing negative,” the Port Macquarie mother said. “I told her, ‘look, I’ll do the test, but I doubt it’s COVID’.”
As high case numbers of coronavirus infections continue to be recorded in NSW, more people are reporting their second infection with the disease.
Ms Lee’s family has spent 35 days in isolation since her son tested positive to the Delta variant in November. They have recorded seven infections among the six of them, including reinfections for two of her daughters this month who previously had it in January.
‘I’ve given up’: Experts call for long COVID data as patients despair
By Chloe Booker and Melissa Cunningham
April 3, 2022 — 9.00am
One morning in December, Julia Costello looked down at the coffee she was gulping and saw lumps of curdled milk floating in it.
The emergency nurse had already drunk half of it but due to the loss of both her sense of smell and taste after a bad case of COVID-19 four months earlier, she didn’t realise she was drinking tainted soy milk.
Another time, she drank the whole cup.
“I just started vomiting, and then I realised that I’d drunk the box that was sitting on the bench, instead of the one in the fridge, that had probably been sitting on the bench for like a week,” she said.
Eight months after contracting the virus, Ms Costello still has anosmia and hypogeusia, the total loss of smell and the partial loss of taste respectively. She can taste bitter and salty, but no other flavour.
------
Climate Change.
-----
https://thenewdaily.com.au/finance/finance-news/2022/03/28/carbon-offsets-climate-alan-kohler/
6:00am, Mar 28, 2022 Updated: 10:58pm, Mar 27
Alan Kohler: The ‘dodgy schemes’ hiding the real cost of climate action
The Morrison government tolerates obviously dodgy carbon offsets because they keep the price of credits down.
And after all, global warming is a political problem rather than a real one, so the aim is not actually to reduce emissions but to appear to.
If the offset schemes were all genuine, with credits only issued to things that genuinely reduce emissions, the supply of them would shrink dramatically and the price of offsetting emissions would be a multiple of what it is now.
Despite the scams, the price of Australian carbon credit units was rising steeply this year because of demand from companies trying to do the right thing, so the Emissions Reduction Minister Angus Taylor did a complicated restructuring of the Emissions Reduction Fund that temporarily halved their price and ploughed billions of dollars into the bank accounts of the carbon financiers.
-----
Carbon fraud claims rejected by industry players
8:18PM March 27, 2022
A set of whistleblower allegations slamming the integrity of Australia’s carbon offset program has been rejected by the industry body, which says the “sensational accusations” threaten projects aimed at cutting emissions.
A new bout of volatility has hit the sector just weeks from a federal poll after the former chair of an audit committee alleged a majority of carbon credits issued by the Regulator were flawed.
Andrew Macintosh – an ANU professor and former chair of the Emissions Reduction Assurance Committee – last week unveiled a series of problems with the government’s Emissions Reduction Fund, which is run by the Clean Energy Regulator.
The Carbon Market Institute – whose 130 members include ANZ, BHP, Coles and Woodside Petroleum – has denied the charges.
-----
Royal Commissions And The Like.
-----
From hard hat to care home, two very different visions
Labor has hewed close to the Coalition’s positions on national security and petrol excise. But on aged care, Anthony Albanese was keen to show the policy difference.
Laura Tingle Columnist
Apr 1, 2022 – 5.11pm
There used to be a rather grim joke in the campaign media pack about what (used to be) inevitable visits to aged care homes, which went to the theme of the things a political leader has to do to get a captive audience.
All those old people, minding their own business, not able to move very fast, suddenly finding themselves engulfed in a media scrum for a photo opportunity.
Childcare centres have also been a regular target.
If COVID-19 changes anything about the 2022 campaign, it will be the options for daily photo opportunities in places where no politician would want to introduce infection.
Not that these constraints will necessarily affect Prime Minister Scott Morrison. The images he chooses to convey are from a completely different world.
-----
National Budget Issues.
-----
Budget must check Australia out of never-ending debt and deficit
Josh Frydenberg must take maximum advantage of the strong recovery to signal productivity-enhancing transmission, tax and superannuation structural reforms that can accelerate fiscal repair.
Stephen Anthony Contributor
Mar 27, 2022 – 12.51pm
Federal budget night on Tuesday will be another doleful reminder of just how far Australia’s fiscal stocks have fallen since the halcyon days of John Howard and Peter Costello.
Do you remember the time back in the mid-2000s when the federal government had negative net debt? It was back then that we used to talk about the possibility of structural reforms. Could it be the two issues are linked?
Not any more. Not even close.
Following on from the global financial crisis and now the pandemic indiscriminate stimulus – timely, temporary and terrible – we expect the budget to contain deficits in excess of $60 billion in every year of the forwards and beyond. This implies a large underlying structural deficit and now a rising debt stock subject to an escalating average cost of borrowing.
-----
Australian Defence boost amid costs blowouts
8:56PM March 27, 2022
A flagged budget boost for Defence this week comes amid ongoing blowouts in sustainment costs and shortfalls in the planned availability of key military capabilities.
Updated budget numbers published in February reveal the cost of running and maintaining Defence capabilities this financial year has been revised up by $703m since the last budget, while the sustainment bill for 2020-21 came in more than $1bn higher than originally forecast.
The $1.7bn blowout over two years, revealed in the department’s Portfolio Additional Estimates Statements, comes despite continued underperformance of Australian Defence Force ships and aircraft.
The February budget update reveals the navy’s “major combatants” – a category that includes the Collins-class submarines, Hobart-class air warfare destroyers, and Anzac-class frigates – were on track to be at sea for 243 fewer days this financial year than forecast in the 2021-22 budget.
The navy’s “minor combatants”, including Armidale and Cape-class patrol boats and Huon-class minehunters, were facing a 709-day shortfall in their availability this financial year, against budget estimates.
-----
https://www.afr.com/politics/federal/women-are-left-holding-the-policy-baby-20220327-p5a8dx
Women are left holding the policy baby
Reform of the Child Care Subsidy would ease cost-of-living pressures for working families
Craig Emerson Columnist
Mar 28, 2022 – 12.40pm
It’s not the size of the spend that counts, it’s the quality. Yet federal budgets over the last few years have been dominated by expensive, low-quality spending that ministers and their staff assess as offering large political dividends with little or no regard for economic benefits.
Car parks at railway stations had undergone no economic cost-benefit analysis but were colour-coded in ministerial offices for location in Liberal electorates. North Sydney Pool received a $10 million refurbishment from a regional development program.
Despite scandal upon scandal, the Morrison government in its December mid-year fiscal update squirrelled away an election war chest of up to $8 billion in decisions taken but not yet announced – in case it called an election before the budget.
Will these projects be disclosed in this week’s budget, or will they remain hidden for unveiling during the election campaign, which could start at week’s end?
-----
The most dangerous aspect of Frydenberg’s formula
Apart from adopting a strategy similar to those favoured by zombie companies, the Treasurer could end up leaving the country much more exposed to other negative shocks.
Karen Maley Columnist
Mar 28, 2022 – 8.11pm
Treasurer Josh Frydenberg’s plan for the Australian economy has worrying similarities to the strategy favoured by zombie companies – those feeble businesses that manage to survive only because of ultra-low borrowing costs.
When Frydenberg announces his people-pleaser federal budget on Tuesday, he’ll undoubtedly be grilled on his failure to take any tough decisions that might shrink the country’s yawning budget deficit, which is expected to run at about $60 billion a year in the coming years. (Like zombie businesses, we’ll have to rely on borrowing to cover this shortfall.)
And Frydenberg will, as in the past, trot out his favourite formula, which purports to prove there’s absolutely no problem with Australia
“As I have said before, provided nominal economic growth exceeds the nominal interest rate, economic growth will more than cover the cost of servicing our debt interest payments”, he told an audience in Canberra this month.
-----
Frydenberg’s budget offerings are a sign of weakness, not strength
An improvement in the budget deficit will form a psychological fulcrum for Liberal Party MPs offering voters cash paid for with debt.
Aaron Patrick Senior correspondent
Mar 29, 2022 – 12.05pm
At 7.30 tonight, Treasurer Josh Frydenberg will stand at the dispatch box in the House of Representatives and, to the sound of “here, heres” from the government benches, boast of financial adroitness amid sickness and war.
This financial year’s budget deficit will be smaller than forecast last year – possibly by $30 billion – Frydenberg will declare.
The ostensible improvement will form a psychological fulcrum for Liberal Party MPs when they look voters in the eyes and ask for their votes in return for budget bribes paid for with borrowed money.
A petrol excise cut isn’t a tax cut, in a time of deficit, unless it is matched by a spending reduction. It is an interest-generating tax deferral. A $250 payment for the poor and pensioners will be a debt imposed on future taxpayers.
This year’s budget deficit, which Deloitte Access Economics tips will be around $70 billion, isn’t less worse because of Frydenberg’s custodianship of the public finances.
-----
6:00am, Mar 30, 2022 Updated: 43m ago
Alan Kohler: The real story of the budget is that Treasury got the pandemic wrong
The overriding fact of federal government finances in 2022, and everything about Tuesday night’s budget, is that Treasury got the pandemic entirely wrong.
It’s perhaps hard to blame the spreadsheet jockeys too much – no one was alive during the previous pandemic and in the depths of the 2020 panic, forecasts about what this one might do to the economy and government income and expenses were a complete guess.
But let it be recorded, and not forgotten, that Treasury, and therefore the Treasurer, guessed wrong, with the result that they over-compensated and under-forecast – by a lot.
Specifically, the $350 billion in government spending, and $350 billion in entirely coincidental Reserve Bank buying of government debt, was more than double what was required, so $250 billion of it was saved by grateful, bemused households.
As a result, Treasury’s economic forecasts were out by miles.
-----
Health budget 2022 spends a little on favoured interest groups but misses a chance for real reform
Published: March 30, 2022 6.24am AEDT
Author Stephen Duckett
Honorary Enterprise Professor, School of Population and Global Health, University of Melbourne, The University of Melbourne
The 2022 budget is an election-year budget. So stakeholders have been pushing their wheelbarrows up the hill to Parliament House to lobby for extra largesse to flow their way.
But while plenty of taxpayers’ money was allocated this year to give an ailing government the greatest possible advantage in the upcoming election, health fared poorly.
Although health stakeholders should expect a lean year every now and again, the reform agenda in health is large, and each budget where no progress is made is an opportunity lost.
Small sums for favoured interest groups
A characteristic of all health budgets – and this one is no exception – is there are lots of little throwaways for favoured interest groups.
Commonwealth health spending is big: about A$100 billion a year, with aged care spending an additional A$25 billion.
-----
https://www.afr.com/politics/federal/pm-s-audacious-8-6b-election-bid-20220329-p5a8zz
PM splashes cash in dash to the polls
Phillip Coorey Political editor
Updated Mar 29, 2022 – 8.42pm, first published at 7.31pm
The Morrison government has made an audacious bid for re-election with an $8.6 billion cost-of-living package that slashes petrol tax by 22 cents per litre for six months, gives 10 million low and middle-income earners a one-off, bonus tax rebate of $420, and hands $250 cheques to six million pensioners and welfare recipients.
The budget, the springboard for an election to be called within days, forecast a modest recovery in real wages from next financial year onwards, and also sent a message of post-election, post-pandemic restraint by using the majority of dividends from a rapidly rebounding economy to start corralling debt and deficit.
Despite the improvements in the budget bottom line, the budget will stay in deficit for at least the next decade.
Of the $114.6 billion in extra revenue and savings over four years that have appeared since the last budget update in December, this budget spends $30.4 billion, or 27 per cent of it.
The deficit for this financial year has been revised down from $99.2 billion to $79.8 billion and the cumulative deficit over four years is $103 billion lower than forecast in December.
-----
PM’s budget sell derailed by fresh bullying claims
Georgie Moore
Mar 30, 2022 – 9.08am
Scott Morrison’s post-budget sell has been derailed by a vicious personal attack from Liberal senator Concetta Fierravanti-Wells, who labelled the Prime Minister an autocrat who lacks a moral compass and is unfit to govern.
Senator Fierravanti-Wells, a right factional warrior who lost her preselection at the weekend, accused Mr Morrison and Immigration Minister Alex Hawke of ruining the NSW Liberal Party with a federal executive intervention over unresolved lower house pre-selections.
“In my public life, I have met ruthless people. Morrison tops the list. Followed closely by (Immigration Minister Alex) Hawke,” she told the Senate after the Coalition handed down its budget on Tuesday night.
“Morrison is not fit to be Prime Minister. And Hawke certainly is not fit to be a minister.”
-----
The Tinker Bell budget: Clap if you believe it makes sense
March 29, 2022 — 7.31pm
This is the Tinker Bell budget. Clap if you believe.
Clap if you believe that the sudden outpouring of $8.6 billion in one-off handouts has absolutely nothing to do with the imminent federal election, due by May 21.
And clap if you believe that this is a “responsible” government delivering good budget management, as it tells us repeatedly. This government has, so far, delivered by far the biggest load of debt – in dollar terms but also as a proportion of the economy – in modern history.
Josh Frydenberg told Parliament that he was “ending economy wide emergency support” as the COVID crisis fades.
But now there is a new crisis. Not the political crisis of an unpopular government desperately searching for votes, but a “cost of living” emergency.
-----
Coalition splashes $8.6 billion on election pitch to voters
By David Crowe
Updated March 29, 2022 — 8.00pmfirst published at 7.31pm
Talking points
· Voters offered $8.6 billion in cash payments, tax rebates and cuts to fuel excise.
· Budget invests in cost of living relief, while pushing budget repair into the future.
· Cash payments of $250 will flow over the next four weeks to 6 million people.
· A tax cut worth $420 will go to 10 million low and middle-income earners.
Voters will be offered $8.6 billion in payments, tax rebates and cuts to fuel excise in a wave of budget outlays timed to start during the federal election campaign, delaying budget repair in the hope of shoring up support for the Coalition.
An immediate cut to fuel excise will halve the rate from 44.2¢ to 22.1¢ a litre for petrol and diesel from midnight on Tuesday and will last for six months. The government claims it could save $300 for an average household with one car.
Cash payments of $250 will also flow over the next four weeks to 6 million people including those on the full age pension and pensioner concession cardholders as well as those on the carer allowance, disability support pension, JobSeeker, youth allowance and other income support.
A tax cut worth $420 will go to 10 million workers later in the year in one of the biggest surprises of the federal budget, by inflating the existing low and middle tax offset from its old rate of $1080 to a maximum of $1500 to be delivered as a tax refund after June 30.
-----
A lamington on the lips will go straight to the interest rate hips
By Shane Wright
March 30, 2022 — 11.25am
In his 2019 federal budget, Josh Frydenberg enthusiastically labelled his promised extension of the low and middle income tax offset as a stimulus measure that would “support the recovery”.
“More of their money in their pockets to spend across the economy, creating jobs,” he said of the $1080 refund aimed squarely at more than 10 million people who earn less than $126,000 a year.
An extra creamy lamington - the low and middle income tax offset - will be dropped into an economy with high inflation and strong employment growth.
No ifs or buts. The LMITO, or lamington, as it is called, was a stimulatory measure to help drag the Australian economy out of the COVID-recession.
Less than 12 months on, the lamington has been swelled by $420 worth of extra coconut, cream and jam. At a cost to the budget of $4.1 billion.
------
Why Frydenberg’s budget is such an economic failure
A bigger cash splash than Kevin Rudd’s first stimulus and a bloated project pipeline just rankle when the medium-term challenges are so real.
Danielle Wood Economist
Mar 31, 2022 – 2.15pm
The commentary on Tuesday night’s budget has landed on a tone of cynical resignation.
Yes, the government is pumping billions of dollars of stimulus into a strong economy. Yes, it’s committing tens of billions of dollars in new infrastructure spending with not so much as a business case. But what can you expect in an election year? Given Labor will simply rubber stamp it, shouldn’t we be grateful that the budget wasn’t more reckless?
The “could have been worse” consensus is rooted in the extraordinary budget numbers.
Government tax receipts this year are 4.5 per cent higher than anticipated just four months ago. This is part dividend from the strong labour market recovery, rightly trumpeted by the government, and part awkward benefit from the invasion-fuelled commodities price boom.
The government is spending “only” $17 billion of the extra $38 billion windfall next financial year, and about one quarter of the $143 billion windfall over five years. Hence, the “relatively restrained” refrain.
-----
Wealthy retirees the big winners from super drawdown change
Michael Read Reporter
Mar 31, 2022 – 5.00pm
The government has labelled it a win for older Australians, but experts say the Coalition’s decision to extend a reduction in the amount of money retirees must withdraw from their super goes against its retirement income policy and mainly benefits the well-off.
The government put $52.8 million aside in Tuesday’s budget to extend a temporary 50 per cent reduction in the minimum amount that superannuants need to withdraw from their account-based pensions.
Drawdown rates range from 4 per cent to 14 per cent depending on age. The extension of the halved rate would drop the rate to 3.5 per cent from 7 per cent for someone aged between 80 and 84.
It is the second extension of the temporary measure, implemented at the start of the pandemic in March 2020 to give retirees the option to curb their spending, instead of selling assets into depressed markets.
-----
Labor pledges $2.5 billion for aged care, and cheaper childcare in budget reply
By David Crowe
Updated March 31, 2022 — 8.10pmfirst published at 7.30pm
Labor leader Anthony Albanese has made a $2.5 billion pledge to improve the treatment of older Australians with an aged care package that opens a wider election fight on “fairness and decency” by holding out the promise of higher wages for millions of workers.
The Labor plan would force every aged care facility to have a registered nurse on site at all hours, hire more carers, set higher standards for meals and fully fund a boost for workers through an appeal to the Fair Work Commission to set higher wages.
Labor pledges $2.5 billion for aged care, and cheaper childcare in budget reply
But the wage pledge does not come with a specific funding commitment, given Labor cannot know what the commission will recommend, while Uniting Care estimates the cost at $4 billion each year if unions gain all that they seek in their wage case.
Mr Albanese also promised cheaper child care for “almost every family” by setting out a more generous subsidy rate for families with more than one child under six years of age.
-----
https://www.afr.com/wealth/personal-finance/what-the-budget-means-for-your-money-20220331-p5a9pp
What the budget means for your money
Politics aside, short- and long-term measures contain a range of opportunities that astute investors and consumers may seek to take advantage of. Here’s what you need to know.
Aleks Vickovich, Lucy Dean, Duncan Hughes and Bina Brown
Apr 1, 2022 – 12.07pm
As expected, the Morrison government’s pre-election budget had plenty of sweeteners.
The 2022-23 budget documents revealed total expenditure of $628.5 billion, of which social security and welfare ($221.7 billion) made up the lion’s share, alongside funding for health ($105.8 billion), education ($44.8 billion), defence ($38.3 billion) and transport and communications ($18.9 billion).
Grattan modelling finds the average mother will earn $2 million less over her lifetime compared to the average father.
Included was a one-off, $8.6 billion package of short-term handouts described by The Australian Financial Review as a “shameless voter bribe”.
Whether the cash splash is effective remains to be seen, with voters set to go to the polls in May. But politics aside, the budget’s short- and long-term measures contain a range of opportunities that astute investors and consumers may seek to take advantage of.
-----
Much more defence spending required to properly protect Australia
Unable to subjugate Australia via economic coercion, China is hoping to militarily encircle us by establishing bases, ports and runways across our near neighbours, writes Christopher Joye.
Christopher Joye Columnist
Apr 1, 2022 – 12.43pm
Unable to control Australia after decades of unprecedented espionage and propaganda, and having had scant success forcing us to bend the knee following an equally unparalleled, economic, coercion campaign, China is trying to militarily encircle us.
The Chinese Communist Party has sought to lay the groundwork to establish bases, runways, naval ports and close military ties with most countries situated to our north and north-east, including Fiji, Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga, Vanuatu and, farther afield, the tiny nation of Kiribati.
The dark, non-democratic shadow being cast over Australia by a one-party communist dictatorship desperate to cauterise all perceived threats to its existence calls into question the relatively modest “official” defence spending plans in this week’s federal budget.
While defence’s 2.1 per cent share of GDP is an improvement over the tiny 1.6 per cent Australia spent in 2012 – the lowest level since the 1930s – the truth is we need to radically increase our military investments if we are serious about protecting ourselves in the event of major power conflicts. The most pressing, near-term, existential risk is, of course, war over Taiwan.
-----
Millions of Australians face $1500 tax hike as ‘lamington’ crumbles
By Shane Wright
April 2, 2022 — 5.00am
The Coalition’s cost-of-living budget will create a tax “cliff” in the second half of next year that will leave 3.5 million Australians worse off and hit dual-income families particularly hard.
Exclusive modelling compiled for The Age and The Sydney Morning Herald reveals net taxes paid by people earning less than $90,000 a year will go up by $1500 when the federal government ends the low and middle-income tax offset (LMITO) in 2022-23.
In his pre-election budget, Treasurer Josh Frydenberg increased the LMITO, which was worth up to $1080, by a one-off $420, describing it as cost-of-living relief for more than 10 million Australians. The bonus and the offset will cost the budget more than $12 billion.
But he did not extend the offset, which was introduced in 2018 and is paid as a refund on a person’s annual tax return, beyond this financial year.
-----
It’s a leap of faith, Australia: Albanese pledges are light on detail
Political and international editor
April 2, 2022 — 5.00am
This week confirms some serious failings of the Morrison government. On the current trajectory, the people will reward it by sending it into oblivion at next month’s election. But what makes anyone think Labor would be any better?
First of three vital areas of failure, the budget. The budget published this week is festooned with the junkiest of political trinkets, attempts at political bribery so blatant that they represent an insult to the intelligence of the Australian voter.
We sneer at elections in Indonesian villages where campaigners slip a few bank notes into the hands of people to buy their votes as they approach the ballot box. How is it any different for an Australian prime minister to make a one-off cash payment into people’s bank accounts in the approach to his re-election bid? Or, as Labor’s leader, Anthony Albanese, put it, the government “might as well have stapled cash to your ballot paper”.
Albanese called the payments “just one-off handouts to get through an election, with all the sincerity of a fake tan”.
-----
Despite all the hoopla, budget’s extra economic stimulus isn’t huge
Economics Editor
April 1, 2022 — 2.00pm
Sensible economists accept that, because they’re determined by politicians, budgets are more about politics than economics. Pre-election budgets are more political than other budgets. And budgets coming before an election a government fears it may lose are wholly politically driven.
Welcome to this week’s budget. But here’s the point: whatever the motivation driving the decisions announced in the budget to increase this or reduce that, all the decisions have an effect on the economy nonetheless.
It’s a budget’s overall effect on the economy that macro-economists care about, not so much the politicians’ motives. So good economic analysis involves leaving the politics to one side while you focus on determining the economic consequences.
A glance at this week’s budget says that, with all its vote-buying giveaways, the budget will impart a huge further stimulus to an economy that was already growing strongly, with unusually low unemployment, but rising inflation.
-----
Nation’s debt addiction not unnoticed by rating agencies
8:42PM April 1, 2022
If we’re all Keynesians now, as Richard Nixon once said, then Josh Frydenberg’s budget on Tuesday is a snug fit with the economic orthodoxy.
The Coalition’s doctrinaire approach to fiscal restraint, which culminated in the Treasurer’s embarrassing “back in black” boast in 2019, has now been replaced by deficits as far as the eye can see, with gross debt ballooning to more than $1 trillion.
But we’re now told that our debt addiction is OK, even without any pathway to surplus, provided the deficit as a percentage of GDP is falling and we somehow avoid a blowout in interest rates or some other external shock.
The contrast with a decade or so ago is profound.
After a burst of spending by the Labor government to minimise economic scarring from the Global Financial Crisis, a young Liberal Party MP slammed the government in 2011 for squandering the strong budget position it had inherited in 2007. His name was Josh Frydenberg. “Tragically, the Rudd-Gillard government has become addicted to spending,” the then-backbencher said.
-----
Health Issues.
-----
Hormone imbalance may explain your high blood pressure: study
Jill Margo Health editor
Mar 28, 2022 – 5.00am
More than half a million Australians are living with high blood pressure caused by a largely undiagnosed condition that is easily detected and treated, according to a study in the Medical Journal of Australia.
Many take prescription medicine with little to no effect and have been told the root cause of their hypertension (high blood pressure) is unknown.
Dr Jun Yang and her father, Lisheng Yang, who got rid of his four daily drugs and now takes a quarter of a tablet that controls his blood pressure “perfectly”.
But they have an endocrine condition in which they over-produce a hormone called aldosterone, which is responsible for controlling sodium and potassium levels in the blood.
Left untreated for decades, this condition increases the risk of heart arrhythmia, heart attack and stroke. It also causes hypertension, which, in turn, can affect the heart and increase the risk of peripheral arterial disease, aortic aneurysms, kidney disease and vascular dementia.
This important study, from Melbourne’s Hudson Institute of Medical Research and Monash University, is calling for screening for this condition, known as primary aldosteronism, PA, or Conn’s Syndrome.
-----
How obesity affects the chances of complications during pregnancy
By Mary Ward
March 27, 2022 — 7.49pm
Women who are significantly obese can reduce their risk of pregnancy complications, including gestational diabetes and pre-eclampsia, by losing just a small amount of weight, a new study from Sydney researchers suggests.
The report comes amid concerns that not enough is being done to address obesity during the pandemic.
Researchers from Northern Sydney Local Health District compared patient records from more than 2500 obese mothers who gave birth over a five-year period, adjusting for demographic factors such as age.
While previous studies have shown how women with obesity have a higher risk of complications than those within a healthy weight range, the new research, published in Frontiers in Endocrinology this week, showed an increased risk for women with class III obesity (formerly known as morbid obesity and defined as a BMI of 40 or higher) compared to those with class I (a BMI of 30 to 34.9).
-----
Drug trials a ‘ticking time bomb’: ex-TGA agent
Former TGA official Peter Keller says regulatory pitfalls in the conduct of clinical trials ‘place unnecessary risks on study participants’. Picture: Tara Croser
7:59PM March 28, 2022
A former TGA official who led the regulator’s inspections program has warned that a lack of independence and oversight in the conduct of clinical trials is a “ticking time bomb” that risks the safety of people participating in drug studies.
Clinical researcher Peter Keller, who oversaw the Therapeutic Goods Administration’s inspections program from 2017 to 2022, has spoken out about concerning “regulatory gaps” that stand to undermine the credibility and safety of clinical trials across the country.
Dr Keller, who was engaged by the TGA to develop an inspections program to audit the safety of clinical trials, said the regulatory pitfalls “place unnecessary risks on study participants” and he was aware of a current trial in which a commercial sponsor failed to take responsibility for manufacturing standards that compromised people’s safety.
He said a “poor understanding” of responsibilities by both the sponsor and Human Research Ethics Committees were only compounding the risks.
-----
Final piece of DNA puzzle could explain human traits, disease
Sarah Knapton
Apr 1, 2022 – 12.09pm
The entire human genome has finally been sequenced – nearly 20 years after scientists first claimed to have made the breakthrough.
In 2003, researchers from the Human Genome Project announced that the blueprint of life had been decoded. But they missed out around 8 per cent of DNA, believing it unimportant.
The final 8 per cent of human DNA to be unlocked could help explain some characteristics.
Since then, experts have realised that this “junk DNA” plays a crucial role in human biology, and have finally sequenced the missing pieces. The development may explain why some people develop certain traits and are at greater risk of disease.
The missing chunk is so large that scientists say it is equal to decoding a whole new chromosome.
-----
International Issues.
-----
Could Putin be trying to build his own off-ramp in Ukraine?
A Kremlin statement at the weekend indicates a way for Russia to scale down its war aims and declare victory. But it’s still fraught with uncertainty.
Hans van Leeuwen Europe correspondent
Mar 27, 2022 – 9.02am
London | At the end of last week, amid a stalemate on the Ukrainian battlefield and a flurry of Western summitry in Brussels, all the talk was of red lines and escalation threats.
The anxious questions were twofold: Could Russian President Vladimir Putin find a way out of his floundering invasion without doubling down? And could the West do more to help Ukraine beat Russia back further, without provoking Putin into drastic escalation?
But reports from Russian news agencies on Friday (Saturday AEDT) have suddenly opened up a new possibility: that Putin may already be setting up a potential way to end the war.
Various Kremlin-supporting news sites reported the Russian Defence Ministry as saying that its military focus would now be tightened onto the “liberation” of Donetsk and Luhansk.
-----
The Ukraine war has put Silicon Valley in its place
The tech bros are giving history a nudge here and there, but not setting its essential course. That is still the role of people who dig stuff out of the ground for fuel.
Janan Ganesh Contributor
Mar 27, 2022 – 11.24am
You can dine and shop well enough in the La Brea district of Los Angeles to forget that its name translates as “tar”. You can savour the treasures of the LA County Museum of Art and ignore the lake of gurgling black goo in the park outside.
You can decide against the La Cienega route to LAX and avoid the sight of oil derricks, bobbing up and down like perpetual-motion executive desk toys.
In the end, though, even in California, home to the disembodied economy of tech, the coarse physicality of the energy sector is inescapable. And so, ever more, in all our minds, is its importance.
The war in Ukraine has put paid to a series of fantasies. No, Germany cannot opt out of History. No, it is not butch to tweet adoringly about a strongman you don’t have to live under or near. Yes, the EU is a dream, not an ogre, for tens of millions of people in its near abroad. Of all the illusions, though, the most quietly punctured is the idea that tech is the industry at the centre of the world: the one that makes it go round. Energy, it turns out, is still a worthier bearer of that mantle. This is an education for anyone born in the half-century since the OPEC oil crisis.
-----
Russian generals are getting killed at an extraordinary rate
By William Booth, Robyn Dixon and David L. Stern
March 27, 2022 — 1.27pm
London/Mukachevo, Ukraine: The war in Ukraine is proving extraordinarily lethal for Russian generals, the grey men bedecked in service medals, who are being aggressively targeted by Ukrainian forces and killed at a rate not seen since World War II.
Ukrainian officials say their forces have killed seven generals on the battlefield, felled by snipers, close combat and bombings.
If true, the deaths of so many generals, alongside more senior Russian army and naval commanders – in just four weeks of combat – exceeds the attrition rate seen in the worst months of fighting in the bloody nine-year war fought by Russia in Chechnya, as well as Russian and Soviet-era campaigns in Afghanistan, Georgia and Syria.
The latest, Lt Gen Yakov Rezanstev, was killed on Friday (Ukraine time) in a strike near the southern city Kherson, according to Ukraine’s defence ministry.
-----
The West is dumping Chinese government bonds
The abrupt reversal of foreign inflows to China’s bond market is a deeply concerning development, and warrants the closest of scrutiny.
Grant Wilson Contributor
Mar 27, 2022 – 3.43pm
It has been a torrid month for global bond markets, with the repricing of yields taking on historic dimensions. Yet the most significant development from a cross-border perspective has received scant attention.
In February, foreign inflows to Chinese government bonds, as captured by the two main clearing houses, the China Central Depository and Clearing Co and the Shanghai Clearing House, abruptly reversed.
Net sales of $US12.8 billion ($17 billion) were recorded, easily the largest outflow on record, and the first significant monthly outflow in three years.
For context, the average monthly inflow over the past couple of years has been $US12.5 billion. This has been driven largely by passive rebalancing, reflecting the inclusion of China by the main global index providers, JPMorgan, Bloomberg Barclays and FTSE Russell.
This is an ongoing process, with FTSE Russell, for example, commencing a three-year ramp in October last year.
-----
Biden denounces Putin, says he ‘cannot remain in power’
Matthew Cranston United States correspondent
Mar 27, 2022 – 6.08pm
Washington | US President Joe Biden evoked the courage of the late-John Paul II, the Polish pope, against communist Russia in a speech in Warsaw during which he went off-script and seemed to suggest Vladimir Putin be removed from power.
Coming at the end of a powerful address on Saturday night (Sunday AEDT) calling for NATO unity in the face of Mr Putin’s aggression in Ukraine, Mr Biden said: “For God’s sake, this man cannot remain in power.”
The seemingly off-the-cuff comment, which sent aides scrambling to clarify, went against stated US policy. It directly countered claims from senior administration officials, including Secretary of State Antony Blinken, that regime change in Russia was not on the table.
Shortly after, a White House official sought to qualify the comments.
“The President’s point was that Putin cannot be allowed to exercise power over his neighbours or the region. He was not discussing Putin’s power in Russia or regime change,” the official said.
-----
Zelensky: Russia sowing a deep hatred among Ukrainians
Yuras Karmanau
Mar 27, 2022 – 6.31pm
Lviv | Ukrainian President Volodymyr Zelensky angrily warned Moscow that it was sowing a deep hatred for Russia among his people, as constant artillery barrages and aerial bombings are reducing cities to rubble, killing civilians and driving others into shelters, leaving them to scrounge for food and water to survive.
“You are doing everything so that our people themselves leave the Russian language because the Russian language will now be associated only with you, with your explosions and murders, your crimes,” Mr Zelensky said in an impassioned video address late on Saturday (Sunday AEDT).
Russia’s invasion of Ukraine has ground into a war of attrition in many places, with the toll on civilians rising as Moscow seeks to pound cities into submission from entrenched positions.
A nuclear research facility in the besieged city of Kharkiv, near the Russian border, again came under fire on Saturday, and Ukraine’s nuclear watchdog said that because of ongoing hostilities it was impossible to assess the extent of the damage.
-----
AP
https://www.afr.com/world/north-america/backlash-at-biden-for-putin-must-go-comment-20220328-p5a8gi
Backlash at Biden for ‘Putin must go’ comment
Robert Mendick and David Millward
Mar 28, 2022 – 7.59am
London/Washington | US President Joe Biden is facing an international backlash from his own allies after calling for regime change in Russia.
French President Emmanuel Macron led a chorus of disapproval following his US counterpart’s comments, in which he called Vladimir Putin a “butcher” and insisted the Russian leader “cannot remain in power”.
Downing Street said it was for the Russian people to choose their leader, while Mr Biden’s own Secretary of State contradicted him in an attempt to limit the diplomatic fall-out.
Mr Biden’s emotional speech in Poland on Saturday night (Sunday AEDT) puts his relations with Western allies under strain while fuelling the Kremlin’s claim that Russia is faced with an “existential” threat.
-----
https://www.afr.com/world/north-america/biden-s-inconvenient-truth-on-putin-20220328-p5a8ih
Biden’s inconvenient truth on Putin
Washington’s uncompromising tone risks exposing western divisions over how to end the war in Ukraine.
Edward Luce Columnist
Mar 28, 2022 – 10.47am
Washington’s definition of a gaffe is blurting out the truth at an awkward moment. On Saturday (Sunday AEDT) Joe Biden said out loud what every Western leader is surely wishing in private – the end of Vladimir Putin’s rule.
The awkward bit is that Russian regime change could now be mistaken as NATO’s explicit goal. That, of course, could make Putin even less likely to settle terms that could bring Russia’s invasion of Ukraine to an end.
Biden’s statement cannot be deleted, though White House officials did their best to give it a different gloss. They insisted that when Biden said Putin “cannot remain in power” what he meant was that he should not exercise power over other countries. Moreover, Biden’s words were not in the text of the speech he gave at Warsaw’s Royal Castle on Saturday.
That is all very well. But the effect of Biden’s aside could make it harder to sustain the democratic unity that was the chief message of his Warsaw speech.
-----
Spectre of ‘Indo-Pacific NATO’ accelerates China’s decoupling
Edward White and Tom Mitchell
Mar 28, 2022 – 11.30am
Seoul/Singapore | For weeks Chinese officials and analysts have endorsed Russia’s claims that NATO’s expansion in Europe triggered its invasion of Ukraine.
Now they are pointing to a new spectre to justify their support of Russia’s war: an “Indo-Pacific NATO” that could ultimately force China to decouple from the West and achieve self-sufficiency in everything from food to semiconductors.
Ever since Xi Jinping and US President Joe Biden refused to budge from their opposing assessments of the conflict during a two-hour phone call on March 18, Chinese diplomats have gone on a rhetorical offensive, arguing that US-led alliances are as much a threat to Beijing as they are to Moscow.
Most of their ire is directed at the “free and open Indo-Pacific” strategy Biden inherited from Donald Trump, which seeks to bind the US, Japan, Australia and India in a united front against China.
-----
Putin’s war is proving a grave misjudgment: four metrics tell the story
Political and international editor
March 29, 2022 — 5.00am
The great powers behind each side of the war in Ukraine announced new strategies over the weekend. Both the Russian and US pronouncements contain strong elements of fantasy.
Russia’s invasion of Ukraine “is being conducted by the General Staff in strict accordance with the approved plan,” according to head of the Russian general staff’s main operational department, Sergei Rudskoy.
Yes, it’s all going so well.
Russia’s forces were nearing the end of the first phase of their “special military operation”. Remember, don’t call it a war. You can go to jail for saying so in Russia under its new laws against “fake news” as defined by Vladimir Putin.
“The main objectives of the first stage of the operation have generally been accomplished. The combat potential of the Armed Forces of Ukraine has been considerably reduced,” said Rudskoy.
-----
The woman who built ‘Fortress Russia’ can deal Putin a huge blow
By Ben Marlow
March 29, 2022 — 10.35am
Vladimir Putin’s grip on power is weakening. Professor Mark Galeotti compares the Russian regime to “a circular firing squad”. High-profile figures are being quietly unseated, others will follow as the invasion stalls altogether.
Colonel-General Sergey Beseda, head of the foreign intelligence branch of the FSB, was arrested two weeks ago on suspicion of embezzling money. Roman Gavrilov, the deputy head of the National Guard, has been accused of leaking classified information and “squandering fuel”. His boss Viktor Zolotov hasn’t been seen for weeks, nor has defence minister Sergei Shoigu.
As the atmosphere of paranoia ratchets up, defections have begun, with Anatoly Chubais the first to flee in protest at the war. As climate envoy, Chubais is a mid-ranking official but as the man credited with launching the political career of Putin in the 1990s his departure is a big blow and a huge opportunity for the West.
With cracks emerging in the Russian president’s inner circle, the intelligence services must now target other top figures that they think can be persuaded to follow Chubais’s brave example, starting with central bank governor Elvira Nabiullina.
-----
Unprecedented’ flow of money from China as Covid-19 outbreak hits
China is in the grip of the worst coronavirus outbreak in years – and it is causing an economic bloodbath as millions are locked down.
March 29, 2022 - 10:16AM
There has been an “unprecedented” flow of money out of China as global volatility hits the world’s second largest economy.
China is facing the most serious Covid outbreak in almost two years, with Shanghai’s 26 million residents bracing for a brutal new lockdown.
The city – one of the most economically important for the nation – has emerged as ground zero of the latest outbreak, with authorities locking down citizens in two, four-day stages in a frantic attempt to carry out mass testing and slow the spread of the virus.
During the lockdown, citizens will be prevented from leaving their homes, with both public and private transport all but prohibited and workplaces shut down.
-----
https://www.afr.com/policy/economy/how-high-inflation-will-come-down-20220329-p5a8wz
How high inflation will come down
Paul Krugman
Mar 29, 2022 – 1.51pm
Rising prices will get worse before they get better. Russia’s invasion of Ukraine has caused the prices of oil, wheat and other commodities to soar.
Official measures of the cost of shelter don’t yet fully reflect last year’s surge in the cost of newly rented apartments. So there’s still a lot of inflation in the pipeline.
The Federal Reserve, however, believes high inflation will be a temporary phenomenon. Furthermore, the Fed believes it can bring inflation down relatively painlessly – that it can achieve a so-called soft landing.
But doesn’t this fly in the face of history? After all, the last time America had to bring high inflation under control, during the 1980s, the cost was immense. The unemployment rate soared to 10.8 per cent and didn’t get back to 1979 levels until 1987. Are there good reasons to believe this time is different?
-----
https://www.afr.com/world/europe/xi-putin-and-trump-the-strongmen-follies-20220329-p5a8wt
Xi, Putin and Trump: The strongmen follies
Putin’s performance in Ukraine is a walking, talking, barking advertisement for the perils of having a president for life.
Thomas Friedman Contributor
Mar 29, 2022 – 1.35pm
The past five years have been a masterclass in comparative politics because something happened that we had never seen before at the same time. The world’s three most powerful leaders – Vladimir Putin, Xi Jinping and Donald Trump – each took drastic steps to hold on to power beyond their designated terms of office. One failed. Two succeeded. And therein lies a tale that says so much about our world today.
Trump failed for one simple reason: American institutions, laws and norms forced him to cede power at the end of his four years – barely – despite his efforts to discredit the electoral results and his unleashing of supporters to intimidate lawmakers into overturning his loss at the polls.
Putin and Xi have fared better – so far. Unencumbered by institutions and democratic norms, they installed new laws to make themselves, effectively, presidents for life. Pity their nations. Lord knows democracies have their problems today, but they still have some things autocracies lack – the ability to change course, often by changing leaders, and the ability to publicly examine and debate alternative ideas before embarking on a course of action.
Those attributes are particularly valuable in an age of accelerating technological and climate change, when the odds are low that one person in his late 60s – as both Putin and Xi are – will make better and better decisions, more and more alone, as he gets older and older.
-----
Sanctions are economic WMDs and need a lever for control
Advanced economies will be understandably reluctant to place constraints on their own newly discovered powers. But they should recognise that a balkanised global economy would hurt everyone.
Raghuram Rajan Economics professor
Mar 29, 2022 – 1.47pm
War is horrific, no matter how it is waged. Nevertheless, Russia’s unprovoked attack on Ukraine, with its scenes of Ukrainian civilians being murdered or driven from their homes, undoubtedly had to be opposed.
In addition to supplying Ukraine with military weapons, governments around the world have deployed economic weapons against Moscow. Although Russia – an economic midget relative to its military power – may still lash out by expanding the range of weapons it uses and the territories it targets, it is a risk the world had to take.
Compared to Russia’s indiscriminate bombing, economic weapons will not kill people as quickly, create as much visible destruction, or inspire as much fear. Nonetheless, the unprecedented economic weapons that have been deployed against Russia will be unquestionably painful.
The strictures on Russia’s central bank have already contributed to the rouble’s collapse and only partial recovery. New limitations on cross-border payments and financing have had an immediate impact, weakening confidence in Russian banks.
-----
https://www.afr.com/politics/federal/the-staggering-cost-of-putin-s-war-in-ukraine-20220329-p5a91f
The staggering cost of Putin’s war in Ukraine
Jacob Greber Senior correspondent
Mar 29, 2022 – 7.31pm
Vladimir Putin’s invasion of Ukraine is just over a month old and the costs are already huge and mounting fast – both in human life and the economic impact.
Even though the Russian and Ukrainian economies together account for less than 3 per cent of global gross domestic product and less than 2.5 per cent of global trade, the war is a shocker.
It has caused a severe supply shock across the globe, driving up prices for energy, agriculture and metals across economies still recovering from the pandemic. Russia’s growing isolation from world markets, and the loss of Ukrainian output, will affect “all economies”, according to Treasury.
The numbers are staggering.
Treasury’s initial calculation is that it will wipe 0.75 of a percentage point off global growth, reducing expected growth this calendar year to 3.75 per cent from 4.5 per cent.
-----
Nothing is quite as it seems: The illusion of Russia’s Potemkin markets
Senior business columnist
March 29, 2022 — 12.00pm
The Russian stockmarket has reopened for equities trading but it’s not trading that resembles anything an investor in London, New York, Sydney or Melbourne would recognise.
The market, closed since the start of the invasion of Ukraine, actually re-started trading last week but the trading sessions on Thursday and Friday were limited to a few hours and only 33 stocks. On Monday trading in all the companies listed on the Moscow Stock Exchange was allowed.
At face value the market, which was shut down more than a month ago after losing about a third of its value when Russia launched the invasion, has been relatively calm and the trading quite orderly.
The exchange’s benchmark MOEX index was up 4.4 per cent on Thursday, down 3.7 per cent on Friday and then slipped another 2.15 per cent on Monday in thin trading. The volumes of shares traded since the exchange’s reopening have been a fraction of those before the invasion.
In Russia at present, of course, nothing is quite as it seems. With the foreign investors who hold about 80 per cent of the free float in the market not allowed to sell and Russia’s National Wellbeing Fund (its sovereign wealth fund) having pledged $US10 billion ($13.4 billion) to support the market, the trading was meaningless.
-----
China-Solomons pact is a disaster for Australian security in the South Pacific
5:57PM March 29, 2022
The security agreement between Solomon Islands and China, so savagely defended by Prime Minister Manasseh Sogavare in parliament this week, represents unequivocal failure for Australian policy.
It is a bad, perhaps disastrous, development for our security. New Zealand Prime Minister Jacinda Ardern has for once got a strategic assessment right when she described the agreement as “gravely concerning”.
Australia’s intelligence agencies have known for years that Beijing has a serious ambition to establish a full military base in the South Pacific. There have been previous efforts with Vanuatu.
The Chinese are all over the South Pacific. Beijing’s embassy in Fiji is one of the most imposing buildings in Suva.
-----
US agrees to fund Australian critical minerals projects
Matthew Cranston United States correspondent
Mar 31, 2022 – 10.02am
Washington | US Commerce Secretary Gina Raimondo has committed to help finance Australian critical minerals projects through its export financing arms, as President Joe Biden invokes Cold War powers to boost domestic supply of minerals crucial for defence equipment and electric vehicles.
Ms Raimondo and Australian Trade Minister Dan Tehan met for an hour on Wednesday (Thursday AEDT) in Washington with chief executives from critical minerals producers to iron out regulatory hurdles that prevent US financing agencies from investing in such projects.
“We’ve just got a long to-do list from the companies in there about the help they need with financing, the help they need with regulation, the help they need with permitting.”
Ms Raimondo, the former governor of Rhode Island and current chair of the US Development Finance Corporation, said she would be “going one by one breaking down barriers” to facilitate investment in such projects.
-----
Five ways Russia’s bloody invasion of Ukraine could end
As Putin’s war marches on into its second month, military officials and security analysts debate whether it will end in a bloody stalemate, peace or decisive victory.
Amy Mackinnon, Jack Detsch and Robbie Gramer
Mar 31, 2022 – 8.00am
Shortly before dawn on February 24, in an address to the nation peppered with falsehoods and grievances, Russian President Vladimir Putin announced plans to invade neighbouring Ukraine for the second time. Moments later, Russian missiles began raining down on Ukrainian cities, marking the opening to the largest land war in Europe since World War II.
Four weeks later, 10 million Ukrainians have been forced to flee their homes – including half of the country’s children – and Europe has been forever changed.
Already the war has taken several unexpected turns. Having banked on a lightning assault to seize the Ukrainian capital, Kyiv, Russian forces have been bogged down by a lack of basic supplies and poor morale, with NATO officials estimating that as many as 40,000 Russian soldiers have been killed, wounded, or captured in a month of fighting. Seven Russian generals have been killed on the battlefield, Ukrainian officials say.
-----
Russia redeploys troops from Georgia to Ukraine
Timothy Moore and Natasha Rudra
Updated Apr 1, 2022 – 9.43am, first published at 12.23am
Pinned post – 9.22AM
In its latest intelligence assessment, the UK Ministry of Defence said Russia is redeploying troops from Georgia to Ukraine.
Between 1200 and 1600 of these troops are being reorganised into three battalion tactical groups, the ministry said.
“It is highly unlikely Russia planned to generate reinforcements in this manner and it’s indicative of the unexpected losses it has sustained during the invasion.”
-----
Solomon Islands in danger of becoming a puppet state of China
Contributor
March 30, 2022 — 3.30pm
The Sogavare government’s proposed security agreement with China – which will see military and intelligence personnel stationed on our islands – is bad news for both the Solomon Islands and the South Pacific region.
China has been bad news for the Solomon Islands in the past, and will be so again for the whole South Pacific region.
China is intentionally dragging the Solomon Islands into their geopolitical battle with the United States. The people of the Solomons will suffer the fallout from this contest, just as they did when Japan invaded during World War II. But unlike 1942, China is using our own so-called leaders to accomplish their goals.
Let us be clear. The Malaita government – which represents the most populous of the Solomons nine provinces –never agreed with the 2019 switch in diplomatic recognition to the People’s Republic of China. Our forests and people have been raped and pillaged by a logging monster that lives in China. While the legs and wings of the dragon are in Malaysia and the Philippines we know where its home cave is. We’ve watched it bribe and corrupt countless leaders, and we know it will never stop.
-----
The ‘China model’ is being put to the test
By Li Yuan
April 1, 2022 — 11.05am
A year ago, while many countries were still reeling from COVID-19, China seemed to be one of few places prospering through the pandemic. It was also the only major economy that reported growth in 2020. Global investors were bullish on Chinese stocks even as Beijing’s regulatory crackdown on its private sector became more like a political campaign.
That led some people in China to argue that its one-party authoritarian rule offered a compelling alternative to traditional liberal democracy. The United States was declining politically and economically, they said, and the world was “gravitating toward China.” Many Chinese cheered the narrative online.
A year later, the tone within China is more one of anxiety, anger and despair. In the past month, hundreds of millions of people there have struggled under lockdowns as coronavirus outbreaks spread across the country. Foreign investors are dumping Chinese stocks over geopolitical, regulatory and pandemic uncertainties. And the government’s support of President Vladimir Putin of Russia as he wages war in Ukraine has risked the world’s criticism, and potentially sanctions.
It’s all leading to increasingly anxious questions about the country’s path — and even about whether too much power has been concentrated in the hands of the country’s leader, Xi Jinping, who is seeking a third five-year term at the Communist Party congress late in the year.
-----
Burned and wary: China’s Xi battles to win back trust of global investors
By Sofia Horta e Costa
April 1, 2022 — 7.44am
President Xi Jinping’s efforts to regain the trust of international investors face serious hurdles.
Xi’s government showed little regard for the same investors last year when it unleashed a series of crackdowns on the country’s most profitable companies, in a bid to curb “disorderly capital” and ensure the firms didn’t become more powerful than the Communist Party. The result was confusion and punishing losses for shareholders. Regulators have yet to follow through on promises made this month to ensure policies are more transparent and predictable.
Wariness toward Chinese assets has only increased since Russia attacked Ukraine just weeks after a Beijing summit reinforced the close ties between Xi and Vladimir Putin. Global investors feared the Biden administration would hit China with similar penalties, even though American officials say China has complied with US sanctions and there’s no evidence to suggest otherwise.
While there’s little doubt Chinese assets are cheap -- the MSCI China Index of stocks trades near the biggest discount to global peers in more than two decades -- for many investors, the downsides of China exposure outweigh the potential upside. The trauma of investing in Russia, where sanctions and capital controls made internationally-held assets effectively worthless, has prompted investors to look at China in a different light.
“There’s a very thick layer of political risk over Chinese assets right now,” said Daniel Murray, Zurich-based chief executive officer of EFG Asset Management in Switzerland. His firm manages and advises on about $US50 billion ($66.6 billion). “You could wake up and see China has done something to really complicate things, like providing military equipment to Russia or something. President Xi falls into the strong-man camp of global leaders which is not a popular club at the moment.”
-----
https://www.afr.com/world/europe/the-long-hard-road-to-a-ukraine-peace-deal-20220401-p5a9x5
Why Putin’s war is far from over
With a quick win now beyond Russia and Ukraine equally hamstrung, something has to give. The question is what, and where.
Hans van Leeuwen Europe correspondent
Apr 1, 2022 – 10.33am
“Approx. To be confirmed.” This is the fine print of Ukraine’s official daily tally of the damage it has inflicted on Russia’s invasion force. But if it is even remotely accurate, it would make for grim reading in the Kremlin war room.
Ukraine claims Russia has lost 17,500 troops. Over the five weeks of the invasion, that’s about one every three minutes – and perhaps one in 10 of the men that Russian President Vladimir Putin sent over the border.
Alongside that, Ukraine’s underdog army says it has knocked out more than 130 Russian planes, 130 helicopters, 600 tanks, and several thousand military vehicles. Aside from aircraft, photographic verification has numbers only slightly more modest than these.
On the military map of Ukraine, the relentless seep of Russian red ink bleeding into the country’s edges has stopped. In a few places, it has even been pushed slightly back. The consensus among Western military strategists is that an overwhelming force has met an immoveable object. Now, something has to give. The question is what, and where.
-----
US adds 431,000 jobs in March, bolsters case for higher rates
Olivia Rockeman
Apr 2, 2022 – 5.43am
Washington | The US added close to half a million jobs in March and the unemployment rate fell by more than expected, highlighting a robust labour market that’s likely to support aggressive Federal Reserve tightening in the coming months.
Nonfarm payrolls increased 431,000 last month after an upwardly revised 750,000 gain in February, a Labor Department report showed. The unemployment rate fell to 3.6 per cent, near its pre-pandemic low, and the labour force participation rate ticked up. Wage gains accelerated.
The median estimate in a Bloomberg survey of economists called for a 490,000 advance in payrolls and for the unemployment rate to fall to 3.7 per cent.
“This is an economy and labour markets overheating, the Fed has to accelerate” its tightening, Jeffrey Rosenberg, senior portfolio manager for systematic multi-strategy at BlackRock, said on Bloomberg Television.
-----
Solomon Islands: China deal won’t include military base
Nick Perry and Andrew Tillett
Apr 1, 2022 – 2.25pm
Wellington | Seeking to counter international fears over its new security alliance with China, the Solomon Islands said on Friday it will not allow China to build a military base there.
But that insistence will do little to ease concerns about the pact from the nation’s traditional partners that include New Zealand, Australia and the United States.
The leader of neighbouring Micronesia added his voice to those expressing trepidation by invoking the bloody battles of World War II and warning that the pact could again see the South Pacific region become a battleground for much larger powers.
The Solomon Islands government said on Thursday a draft agreement of the new security pact had been initialled by representatives from the Solomons and China and would be “cleaned up” and signed.
-----
https://www.afr.com/world/asia/india-russia-and-the-battle-for-the-quad-20220331-p5a9sp
Walking the tightrope: India’s strategic dilemma shakes the Quad
India’s links with Russia might not derail the Quad in its mission to constrain China – but they will slow it down.
Emma Connors South-east Asia correspondent
Apr 1, 2022 – 11.25am
Singapore | On Thursday, Russia’s Foreign Minister, Sergey Lavrov, began a two-day visit to New Delhi. British Foreign Secretary Liz Truss arrived on the same day, and Wednesday brought the United States deputy National Security Adviser Daleep Singh.
Last week, there was a virtual summit between Scott Morrison and Indian Prime Minister Narendra Modi and a brief, hastily organised stopover by China’s Foreign Minister, Wang Yi. Japan’s Prime Minister, Fumio Kishida, has also met with Modi in the past couple of weeks.
A month after Russia’s invasion of Ukraine, a storm of diplomatic firepower is being deployed as a new order emerges, pitting the world’s largest autocracies, Russia and China, against democracies led by the US and its allies. In this corner is the Quad, or the Quadrilateral Security Dialogue, which brings together the US, Australia, Japan and India.
As the steady stream of dignitaries to New Delhi shows, India is being courted by both sides. But while the West is focused on Europe, New Delhi’s foreign policy priority is China. It relies heavily on arms from Russia for its defence and was hoping the Quad could help guard against a revisionist Beijing in the future.
-----
Russia’s use of mercenaries in Ukraine is a sign of desperation
Military leader and strategist
April 1, 2022 — 1.45pm
In mid-March, it became clear that Russia was failing to achieve its objectives in Ukraine and that it needed a new theory of victory. Since then, it has shifted to a strategy which might be described as “seize the east and terrorise the Ukrainians into submission”. While it is debatable whether this is working, part of this new approach from Russia is the use of mercenaries.
The New York Times and British Intelligence have described how 1000 members of the Wagner Group, a private company based in Russia, were expected to deploy and conduct combat operations in Ukraine. There are several things that might be read into this deployment, but first some background on the use of mercenaries in warfare.
Importantly, this is a reasonably common occurrence. From wars in antiquity, through to the conflicts of the 21st century, nations have employed private citizens from other nations to fight on their behalf. Both sides in the American War of Independence did it, just as many sides in the recent operations in Iraq did so. Even Ukraine now employs foreign soldiers on short-term contracts.
Mercenaries are used for many reasons – nations can use them to launch attacks where they can deny involvement in doing so or to supplement the size of one’s military forces. Ideological struggles, such as in Afghanistan, Iraq and beyond, draw in mercenaries. Even Australia used mercenaries (or “private military forces” as they are more often called) to protect its embassy in Baghdad.
-----
The German economic miracle no longer exists
By Ambrose Evans-Pritchard
April 1, 2022 — 1.05pm
Germany is facing a poisonous combination of rising recession risk and the highest inflation for half a century, even if it can avoid the full macroeconomic shock of a Russian energy blockade.
The headline HICP inflation rate spiked to 7.6 per cent in March, well above expectations and a figure unseen since the “stagflation” crisis of the early 1970s.
It follows the steepest one-month fall recorded in the expectations component of the Ifo confidence index.
The manufacturing and broader sentiment indicators are now weaker than they were during the eurozone debt crisis, and not far short of the extreme capitulation levels of the global financial crisis in 2008.
-----
Zelensky says Ukraine ‘will not accept any outcome’ besides ‘victory’
Ukrainian President Volodymyr Zelensky has declared that he will only accept “victory” against Russia.
Andrew Mark Miller and Fox News
April 3, 2022 - 1:05AM
Ukrainian President Volodymyr Zelensky has declared that he will only accept “victory” against Russia.
Mr Zelensky was interviewed by Fox News host Bret Baier on Friday night, touching on a wide variety of topics, including what a victory looks like for Ukraine and what Putin is hoping to achieve.
Baier asked the Ukrainian leader at the start of the interview how he believes the “war will end” prompting an explanation from Zelenskyy that only “victory” will be acceptable to his country.
“A victory of truth means a victory for Ukraine and Ukrainians,” Mr Zelensky said through an interpreter. “The question is when it will end. That is a deep question. It’s a painful question. Besides victory, the Ukrainian people will not accept any outcome.”
-----
Zelensky: 'They left in their wake a complete disaster'
Ukraine has regained control of “the whole Kyiv region” after invading Russian forces retreated from some key towns near the Ukrainian capital, deputy defence minister Ganna Maliar said.
“Irpin,
Bucha, Gostomel and the whole Kyiv region were liberated from the invader,”
Maliar said on Facebook, referring to towns that have been heavily destroyed by
fighting.
All three towns lie northwest of Kyiv and have suffered heavy destruction since
Russia invaded Ukraine on February 24.
Irpin and Bucha, commuter towns outside Kyiv, were retaken by the Ukrainian army this week. Both have seen large civilian death tolls.
"They left in their wake a complete disaster and many dangers,” Ukrainian President Volodymyr Zelensky said in an overnight address, referring to the Russians.
-----
https://www.afr.com/world/europe/ukraine-to-get-first-injection-of-tanks-20220403-p5aadq
Ukraine to get first injection of tanks
Jamie Johnson
Apr 3, 2022 – 10.00am
Ukraine is set to get its first wartime delivery of tanks to help bolster its defences in the east, amid warnings that the region will soon see “heavy battles” as Russia refocuses its efforts there.
In a significant strategy shift, US defence sources said Washington would work with allies to facilitate the transfer of Soviet-made tanks, which Ukrainians already know how to use, to enable Ukraine to conduct long-range artillery strikes on Russian targets.
The US official did not disclose how many tanks will be sent, nor which countries they will come from.
However, Poland, one of the most hawkish NATO member countries when it comes to Russia, is believed to be one possible candidate. Warsaw recently ordered US M1A2 Abrams tanks to replace its Soviet T-72 battle tanks, which will be phased out of service.
The decision is in response to a direct request from President Volodymyr Zelensky late last month to NATO leaders, including US President Joe Biden, for more military assistance at an emergency summit in Brussels. He said the tanks were needed to lift the sieges on “our cities that are now dying: Mariupol, Berdyansk, Melitopol, others”.
-----
I look forward to comments on all this!
-----
David.
