May 19, 2022 Edition
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Surely the biggest news this week is that there seems to be a real chance that Putin may not be around to persecute the Ukrainians with an immoral war for too much longer.
An awful racially motivated shooting in the US. Otherwise the US supporting NATO expansion as a counter to Russia – hope there is not blow-back.
In the UK cost of living is very problematic and getting worse.
We are close to the election now so all bets are now off as the pollies hit fever pitch!
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Major Issues.
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https://www.afr.com/politics/the-teal-zeal-is-real-20220508-p5ajhm
The teal zeal is real
A minority government is more likely than not. The political implications will be more far-reaching than the economic.
Grant Wilson Contributor
May 8, 2022 – 3.27pm
When the federal election campaign kicked off a month ago, there was scant interest from offshore investors. The working assumption was that the ALP would win comfortably and that there was negligible difference between the macro policies of the major parties.
That changed when the Leader of the Opposition, Anthony Albanese, punted on a wildly wrong number for the national unemployment rate. The gaffe raised questions of competence, along with electability.
The ALP has stabilised since, partly aided by Albanese’s timely isolation period with COVID-19.
But the questions have not gone away. And they are much more pointed now, focusing on the prospect of a minority government, where the “teal independents” may control the balance of power in the House of Representatives.
A similar pivot has been seen here at home.
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How to reverse Whitlam-sized growth in government
The inconvenient fact of the election campaign is that the out-of-control NDIS is the place to start paring public spending back to pre-COVID levels to reduce the structural budget deficit.
Robert Carling Contributor
May 8, 2022 – 1.40pm
The day before news broke that inflation had surged to 5 per cent, the Australian Bureau of Statistics reported that federal, state and local governments collectively had spent $876 billion in 2020-21, representing 42.4 per cent of gross domestic product.
Although as significant as the surge in inflation – and not unrelated to it – this alarming figure largely managed to dodge the spotlight.
Before the coronavirus pandemic, Australia’s government sector was around 35 per cent of GDP and levels above 40 per cent were confined to the big welfare states of Europe. Is Australia joining that club?
The rise in government spending in 2019-20 and 2020-21 lifted its share of GDP by seven percentage points. The only other similar episode in Australia’s post-war economic history was the two-year jump in federal government spending by six percentage points of GDP under the Whitlam government in the 1970s. On that occasion, the expansion was never reversed.
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Mass redundancies leave unis short of academics
Julie Hare Education editor
May 8, 2022 – 3.29pm
Universities that used the uncertain environment created by the pandemic to make major structural changes, including thousands of redundancies and course cuts, are likely to have to rehire teaching staff this year after finding themselves left short.
Casual staff took the brunt of redundancies, according to new analysis, accounting for two thirds of 11,143 full-time equivalent job losses. On head count, the figure would be far higher, with some estimates calculating the people losing their jobs at 27,000.
Staff numbers fell from 137,000 in 2019 to 125,900 in 2021, with casuals as a proportion of the full-time workforce dropping from 17.8 per cent to 13.5 per cent.
Frank Larkins, an emeritus professor with the Centre for the Study of Higher Education at the University of Melbourne, said universities leaders were strategic, using the pandemic as an opportunity to rationalise staff numbers and course offerings that had blown out in the previous decade.
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https://thenewdaily.com.au/finance/finance-news/2022/05/09/deficits-democracy-failure-alan-kohler/
6:00am, May 9, 2022 Updated: 9:35pm, May 8
Alan Kohler: Deficits and the failure of representative democracy
This is the first election fought in the context of endless government deficits.
At no previous time in Australian history would long-term forecasts of budget balance have shown deficits all the way, especially at an election. The forecasts of surplus are often proved wrong, but at least they’re there.
Neither major party is acknowledging this of course, and the Coalition is talking breezily about economic growth melting away the deficit and debt eventually, but that’s not a plan.
Neither side has a plan to raise enough taxes to pay for what they want to spend without losing the election; borrowing is the path of least resistance.
They both propose to increase defence spending, fund the NDIS, improve aged care and childcare funding, and invest in infrastructure, including the decarbonisation of the electricity grid, yet the only extra tax proposed is a crackdown on multinationals’ tax by the Labor Party, which would raise $4 billion a year, maybe.
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Sunday night’s debate was unruly but it was honest
The debate might have been unedifying to watch, but it was more honest, and it produced more honest answers than the standard campaign face-offs.
Phillip Coorey Political editor
Updated May 9, 2022 – 8.15am, first published at 7.47am
The best aspect of Sunday night’s debate was that it had passion.
Scott Morrison and Anthony Albanese, one of whose political careers will be toast in less than a fortnight, abandoned the faux civility of their first exchange earlier in the campaign and that of debates more generally.
The panel weigh in as Nine viewers decide whether Anthony Albanese or Scott Morrison won The Great Debate.
It may have been less edifying to watch, but it was more honest, and it produced more honest answers. Albanese finally admitted he could not guarantee wages would rise faster than inflation under his watch. It was only an “objective”.
Morrison conceded for the first time he should not have said the vaccine rollout was not a race.
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$8bn price tag as ADF replaces trouble-prone choppers
10:12PM May 8, 2022
New Apache helicopter gunships and Romeo naval helicopters to replace dumped European models will cost taxpayers $8bn.
Scott Morrison and Defence Minister Peter Dutton will announce the already-budgeted funding on Monday as he presses his “khaki election” campaign.
The 29 Boeing-built Apaches will replace the army’s trouble-prone Airbus ARH Tiger helicopters, while 13 MH-60R Seahawk Romeos will be acquired to replace six Airbus MRH-90 Taipans currently in service with the navy. Both helicopter purchases were revealed months ago, with the aircraft scheduled for delivery by 2025.
The final program costs were included in the March budget but kept secret under the heading “decisions taken but not yet announced”.
The Prime Minister said the investments were key to the government’s plan for a safe and secure Australia in the face of regional and global uncertainty.
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As China encroaches, Australia’s leaders can only fluff their lines
Political and international editor
May 10, 2022 — 5.00am
Australia’s leaders have adopted the famous dictum of China’s great moderniser, Deng Xiaoping: “Hide your brightness, bide your time.”
The evidence was Sunday’s televised debate between Scott Morrison and Anthony Albanese. They successfully hid their brightness. Their exchange on China was puerile.
It started with a sensible question from Nine journalist Deborah Knight: “Prime minister, you have drawn a red line on any Chinese military bases in the Solomon Islands. What does that mean?”
Morrison replied that it “means that was something Australia believes would be completely against our national interest”. Yes, asked Knight, but what would you do to enforce it? Would you blockade an attempt to set up a military base, for example?
It would be “unwise to speculate” replied the PM. Knight: “What is the point of talking about a ‘red line’ if we don’t know what you mean by it, to take action?” Morrison waffled without answering.
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Time to recheck your risk profile fits your tolerance for market drops
Central banks are walking the tightrope hoping to deliver a soft economic landing with a benign inflation outcome.
James Wright Contributor
May 10, 2022 – 5.00am
Developed market equities have had a torrid start to the year and private investors are worried. The metaphor has gone from stock (and cryptocurrency) tips from your taxi drivers to recession predictors from your UBER driver.
Private investors need to remember that there are long-term secular trends that will further influence the flow of capital and investment returns. After being artificially suppressed for many years by policy stimulus, the business cycle of greed and fear that has driven regular periods of boom and bust is returning.
The role of risk profiles has been a cornerstone of the financial advice industry for many years. Risk profiling is a process advisers use to help determine the optimal levels of investment risk for clients.
It aims to identify the risk required to meet a person’s investment objectives, risk capacity and tolerance to risk. Investors should be comfortable with the amount of risk they have in markets and can live with the inevitable pullbacks.
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https://www.afr.com/chanticleer/recession-fears-rage-as-investors-hunt-the-bottom-20220510-p5ajzq
Recession fears rage as investors hunt the bottom
The brutal message investors delivered to Uber shows they are positioning for a global recession as markets tumble. But data suggests the selling isn’t over.
May 10, 2022 – 11.12am
It must be hard being one of the last bulls on Wall Street right now.
The S&P 500 fell another 3.2 per cent on Monday night, taking year-to-date losses to 22 per cent, the second worst start to a trading year in history, behind only 1932.
The Nasdaq’s freefall continues, cryptocurrencies look like they’ve moved into panic mode and even commodities have joined the pity party.
But JP Morgan’s chief strategist, Marko Kolanovic, is holding firm. “The past week’s sell-off appears overdone, and driven to a large extent by technical flows, fear, and poor market liquidity, rather than fundamental developments,” he declared on Monday night.
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Election winner faces stagflation mission impossible
If Labor wins, it will confront the same dilemma as the Whitlam government. A returned Coalition will need to repeat the 2014 austerity budget that ended the careers of Joe Hockey and Tony Abbott.
Percy Allan Public policy economist
May 10, 2022 – 12.43pm
After its short but deep pandemic-led recession in the first half of 2020, the Australian economy boomed in 2020/21 thanks to unsparing government and Reserve Bank stimulus.
Veteran economic modeller Chris Murphy estimates that the private sector received $2 of government compensation for every $1 of income lost to COVID-19. The result is unemployment at a near 50-year low of 4.0 per cent.
This largesse – plus the closure of borders to migrant workers and the pandemic’s disruption to world food, fuel and factory supplies (exacerbated now by the war in Ukraine, Russian sanctions and China’s lockdowns) – boosted price inflation in 2021/22.
Looking forward, the RBA thinks it could top 6 per cent by Christmas.
Macroeconomists now posit three divergent scenarios for Australia in 2022/23 and beyond: prosperity, stagnation or stagflation. Or viewed another way – the good, the bad and the ugly.
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Let’s celebrate 50 years of China-Australia relations
Xiao Qian, China’s ambassador to Australia, acknowledges twists and turns in the 50 years of diplomatic relations between China and Australia, but says a healthy and stable relationship is in the interests of both countries.
Xiao Qian
May 11, 2022 – 5.00am
I took office as the Chinese ambassador to Australia at a difficult time for bilateral relations. This year coincides with the 50th anniversary of the establishment of diplomatic relations between China and Australia. As Confucius said: “At 50, one knows the mandate of heaven.”
Looking back at the China-Australia relationship over the past half-century, despite many twists and turns, we have always managed to follow the general trend of history and seek common ground while resolving differences, which has promoted the bilateral relations to advance in the right direction.
The co-operation achievements made by our countries in wide-ranging areas have brought tremendous benefits to our people. It is fair to say that the main theme throughout the development of China-Australia relations is one of mutual benefit.
Over the past 50 years, our countries have achieved mutual benefit by adopting political mutual respect.
In 1971, Gough Whitlam led a Labor Party delegation to China, and in 1972, diplomatic relations between our countries were established, laying an important political foundation for China and Australia to engage in friendly co-operation as two countries with different political systems and in different development stages.
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Inflation driving up hospital costs and private health premiums
By Dana Daniel
May 11, 2022 — 5.00am
Higher inflation is driving up the cost of delivering hospital care, threatening to blow out the budgets of state-run facilities and pushing up private hospitals’ costs to the point where one major healthcare provider terminated its deal with an insurer due to cost increases.
With annual inflation at 5.1 per cent – its highest in 20 years – the Australian Medical Association (AMA) warned public hospitals would not be able to tackle ambulance ramping and elective surgery waiting lists if the federal government’s 6.5 per cent funding cap remained.
“We desperately need those extra services,” AMA President Dr Omar Khorshid said.
“We have a growing and ageing population with more complex needs, and we have hospitals around the country that are struggling.”
Inflation is also threatening the viability of private health insurance as insurers resist private hospital operators’ pleas to meet their higher expenses.
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Let’s not repeat the perilous mistakes of the 1970s
The similarities with the inflationary 1970s are too close to be ignored. The next government will have to act on spending and reform.
John Kehoe Economics editor
May 11, 2022 – 12.39pm
Let’s hope the economic history of the 1970s perfect storm is not being repeated.
The parallels are becoming eerie.
In both eras, the global economy had been booming, fuelled by governments adding fiscal petrol to the inflation fire.
Fifty years ago, the US was trying to have guns (defence spending) and butter (social spending) through funding the Vietnam war and former president Lyndon Johnson’s social programs on healthcare and education.
Today, it is the massive $US5 trillion ($7.2 trillion) fiscal stimulus under President Joe Biden that is contributing to inflation, as well as deficit spending from governments around the world on the pandemic, social programs and defence.
On both occasions, expansionary fiscal policy clashed with supply shocks.
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https://thenewdaily.com.au/finance/finance-news/2022/05/12/coal-end-alan-kohler/
6:00am, May 12, 2022 Updated: 6:45pm, May 11
Alan Kohler: The end of coal is nigh. The next government must tell the truth
The full tragedy of the Coalition’s climate change campaigns is becoming clear, and it’s the exact opposite of what it predicted.
We don’t have too much renewable generation, but not enough, and still way too much coal.
The recent quarterly report from the Australian Energy Market Operator shows that electricity prices are rising and the grid is becoming unstable because of coal-fired generation.
In fact, Australia’s fleet of coal-fired power stations is failing, and it’s happening too soon, before it can be fully replaced with cheaper, more reliable, solar and wind, and for that we can blame the Liberal and National parties.
This issue is not getting anywhere near the attention it deserves in the election campaign, largely because the Labor Party’s own policy is barely adequate and it’s terrified of being accused of proposing a carbon tax.
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Morrison’s strategy a political masterstroke or moral failure
Award-winning political commentator and author
May 12, 2022 — 5.00am
Any lingering doubts moderate Liberals might have had that Scott Morrison was prepared to sacrifice heartland seats, including Kooyong held by his Treasurer and deputy Josh Frydenberg, to harvest votes in the regions and outer suburbs have been dispelled.
They smelled a rat on Sunday when he pledged to proceed with religious discrimination legislation without simultaneously protecting the rights of LGBTQ students.
Confirmation followed with another, even more robust defence of his chosen candidate for Warringah, Katherine Deves, after her carefully stage-managed retraction of an earlier apology for her transphobic tweets.
Morrison, who had earlier excused Deves’ repugnant assertions on the basis of her apology, now defends her retraction and supports the substance of her claims undeterred by any mangling of medical or legal facts.
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Election 2022: The nation’s 30-year economic party is over
An hour ago May 12, 2022
Many an economic shift has been caused by unexpected events; a black swan such as a war, pandemic or terrorist attack. Other shifts are seen coming a mile away, like a pink flamingo, and are the result of poor choices topped with a layering of denial.
Australia and much of the world are soon to enter a period of sustained inflation and slowing economic growth. It will not have been caused by the Russia-Ukraine war or the pandemic, which have been mere bumps on a long road of irresponsible economic policies by many governments.
In response to the economic drag caused by productivity slowing, mostly the result of anti-productivity government policies, expansionary fiscal and monetary policies were employed to mask the problem. And now it’s time to pay the piper.
In the first quarter of 2022, the US economy recorded an annualised inflation rate of 8.5 per cent and negative growth of 1.4 per cent. One more quarter of negative growth will not only be a technical recession but will be technical stagflation. China is suffering from an ageing population and lockdowns, and its annualised rate of inflation was 8.3 per cent. Europe is feeling the weight of the Ukraine war through increased energy prices, military spending and migration. Its annualised rate of inflation was 7.4 per cent.
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How to rebalance your portfolio to handle turbulent times
Investors who stick to a predetermined ratio of growth assets to defensives have a better chance of taking profits and buying value when the herd is paralysed by indecision.
Jeremy Chunn Contributor
May 13, 2022 – 5.00am
Investors with long-term objectives are told they should be immune to market gyrations, but slow, grinding declines in value have been harsh tests of character – and sharp, vertiginous drops are just terrifying.
The Australian and US share markets have lost 7 per cent and 17 per cent respectively since January 1 – and the spectre of inflation has cast a shadow over the next 12 months at least. It’s almost impossible to know what to do next.
It can be hard to stay the course as markets drift lower, but investors who stick to a predetermined ratio of growth assets to defensives have a better chance of taking profits and buying value when the herd is paralysed by indecision.
Every portfolio will drift from its allocation settings as values of investments rise and fall. This means the risk profile of a portfolio will slowly shift. If the sharemarket dives, a 60:40 growth/defensive split might near 50:50. If the sharemarket zooms upwards, a 60:40 growth/defensive split might turn into 75:25.
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‘Bit of a bulldozer’: Morrison concedes he has to change approach
Updated May 13, 2022 — 10.29amfirst published at 10.27am
Prime Minister Scott Morrison has conceded he will have to change his approach to governing if he wins the election after acknowledging he can be “a bit of a bulldozer”.
At a campaign event in the marginal Victorian seat of Chisholm, Morrison was asked whether part of his problem with voters was that he kept telling people what they should know rather than listening to them.
“It’s very important to be listening to Australians and I have done that all across my political career,” the Prime Minister said on Friday morning.
“Over the last three years, and particularly the last two, what Australians have needed from me going through this pandemic has been strength and resilience. Now, I admit that hasn’t enabled Australians to see a lot of other gears in the way I work.
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The Coalition will be either broken or transformed
Whoever wins, Labor will have adopted most of the Coalition’s economic and security policies and the Coalition will either be broken or transformed into something very different.
Laura Tingle Columnist
May 13, 2022 – 12.55pm
The image of what we are told are paid “promotional models”, working as human billboards, begging voters in the more prosperous parts of Melbourne to vote for the country’s federal treasurer next Saturday should probably go down as the defining symbol of the 2022 election campaign.
After all, the economy is supposed to be the Morrison government’s greatest political weapon. Yet, Treasurer Josh Frydenberg who – according to the way politicians always claim they have magical powers over the economy – should be reaping the rewards of saving a grateful nation from the perils of COVID-led disaster, appears set to lose the Liberal Party’s most iconic seat.
That this image – in Friday’s The Australian – is even a possibility can’t be sheeted home to either Labor or the day-to-day idiocy of federal election campaigns.
Labor has, after all, adopted camouflage on all but one of the big economic policy issues in this campaign, no matter how much its most ardent supporters claim there is a world of policy difference between the parties.
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https://www.afr.com/politics/federal/labor-pledges-960m-to-improve-access-to-doctors-20220513-p5al76
Labor pledges $960m to improve access to doctors
Ronald Mizen Economics correspondent
May 13, 2022 – 10.30pm
A Labor government would commit $750 million to a new healthcare fund designed to improve patient access to doctors, reduce healthcare costs and alleviate pressure on hospitals, and a further $220 million in GP grants.
Heading into the final week of the election campaign on strong ground for Labor, Opposition Leader Anthony Albanese will make the announcement in Darwin in the federal electorate of Solomon on Saturday.
“Every day, everywhere I go, people talk to me about how it’s getting more and more difficult to see a doctor,” Mr Albanese said.
Under Labor’s Strengthening Medicare Fund, $250 million a year will be allocated from 2023-24. How the money will be spent will be decided by a new taskforce led by the health minister and with representatives of leading medical bodies including the Australian Medical Association.
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Labor pledges $1b fund for critical new technologies
Paul Smith Technology editor
Updated May 13, 2022 – 8.07am, first published at 5.00am
Labor will unveil a $1 billion warchest to invest in innovative Australian technologies operating in areas deemed critical for the future of the country and economy, such as artificial intelligence, quantum computing, robotics and software development.
The new source of potential funding will be welcomed by entrepreneurs in the previously booming local tech scene, who have begun casting a nervous eye towards the US, where a sell-off in tech-related stocks has precipitated a tightening of the venture capital funding market.
It will provide a significant point of difference in industry and innovation policy between Labor and the Morrison government, which has been almost silent on innovation during the campaign, and has largely distanced itself from talking up tech-based financial growth since the demise of Malcolm Turnbull’s so-called “ideas boom”.
Labor’s tech investment policy – to be announced in Sydney on Friday morning by leader Anthony Albanese and shadow industry and innovation spokesman Ed Husic – will form part of its previously announced $15 billion National Reconstruction Fund (NRF), a body modelled on the Clean Energy Finance Corporation, which will invest in tech and innovative manufacturing to help drive a post-pandemic economic recovery.
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https://www.afr.com/policy/foreign-affairs/how-do-we-keep-an-eye-on-our-spies-20220512-p5akub
How do we keep an eye on our spies?
Our intelligence services have never been more important to us, and democratic governance is part of their strength. But do we need to look at this again?
Ben Scott Contributor
May 13, 2022 – 12.49pm
The director-general of Australia’s Secret Intelligence Service, Paul Symon, delivered a rare public address at the Lowy Institute this week to mark the service’s 70th birthday. His address was part of a commendable effort by Australia’s intelligence chiefs to build public knowledge of their activities. But it also highlighted the need for more democratic oversight of our increasingly active intelligence community.
Symon’s speech underscored how much is changing in the world of intelligence – but also that much remains the same. He outlined out how the oldest form of spying – human intelligence – is challenged by a “fundamentally digital era where our covert activities are increasingly discoverable. In this technological sandbox, authoritarian regimes are having a heyday … harnessing the booming IT economy to develop myriad forms of surveillance.”
But Symon made headlines for suggesting that, nevertheless, Xi Jinping’s unbounded rule was creating more discontent and, hence, more espionage opportunities because “officials, individuals unhappy with the trajectory of closed societies are … interested in a relationship”.
The reasons people betray their country haven’t changed much over the course of human history. Money, ego, compromise and coercion are recurring factors. But ideology and idealism have always been on the list, too. Counter-intelligence services the world over all look for the same warning signs. So, Symon hasn’t told China’s Ministry of State Security anything it didn’t already know.
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‘Extraordinary’: Albanese unloads on Morrison for not briefing him on AUKUS months before announcement
May 14, 2022 — 12.23pm
Labor leader Anthony Albanese has accused Prime Minister Scott Morrison of breaking trust with the Biden administration by not briefing Labor well before the announcement of the AUKUS defence pact, as the presence of a Chinese spy ship off Australia’s coast re-ignites debates over national security.
The Sydney Morning Herald and The Age revealed on Saturday that four-and-half months before the announcement on September 16, senior members of the Biden administration insisted that it would only consider pursuing the landmark AUKUS project if it had solid support from both major Australian political parties.
Instead, the Morrison government waited until the day before the announcement to brief Albanese and senior members of the opposition about the plan to build nuclear submarines with the help of the US and Britain.
Albanese said it was “extraordinary” that Morrison “breached that faith and trust with our most important ally by not briefing Australian Labor on these issues”.
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The PM’s wages call could cost him dearly
Economics Editor
May 13, 2022 — 11.49am
At last, as the election campaign reaches the final stretch, we’ve found something worth debating. Anthony Albanese has found his spine and supported a big rise in award wages, while Scott Morrison says a decent rise for the masses is a terrible idea that would damage the economy.
First the politics, then the economics. My guess is history will judge this to be the misstep that did most to cost Morrison the election. Successful Liberal leaders – John Howard, for instance – know never to be caught within cooee of a sign saying “wages should be lowered”. It’s not the way to woo outer-suburbs battlers to the Liberal cause.
That Morrison should defy this precedent in a campaign where the cost of living has become by far the biggest issue is all the more surprising.
Between them, the two contenders have revived and highlighted the oldest stereotype in Australia’s two-party politics: the Labor Party is - surprise, surprise – the party of ordinary workers, and will always champion their interests, whereas the Liberals are the party of business, and will always champion the interests of business.
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Eyes wide shut; it’s time to wake up to recession risk
10:03PM May 13, 2022
Australia is sleepwalking towards a recession. A bigger problem is that neither major political party seems awake to the risk, or if it is, it is unwilling to talk openly about it.
In an election campaign, it is unthinkable for a politician to say they might need to cut spending … or for their future government to be austere, because there is a risk of an economic downturn.
Most of our recent federal treasurers are more likely to drop an F-bomb than to ever dare to utter the R-word … recession. It is a treasurer’s truly dirty word.
But the telltales of an economic slowdown are all around us: rising interest rates, rising prices, rising wages, falling house prices.
To get some perspective, we must turn to the vastly more candid chairman of the US Federal Reserve, Jerome Powell, battling an inflation rate of 8.3 per cent compared with our 5.1 per cent. He will not commit to a soft landing for the US economy. “Our goal, of course, is to get inflation back down to 2 per cent without having the economy go into recession, or, to put it this way, with the labour market remaining fairly strong,” he said late this week.
By contrast, according to our politicians on the hustings, it’s “happy days are here again”. The economy will grow stronger … there will be more jobs for all … more wage rises … no need for spending cuts.
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COVID 19 Information
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https://www.ausdoc.com.au/opinion/we-are-dying-covid19-not-living-it
We are dying from COVID-19, not living with it
Dr Newcombe is an infectious diseases physician and clinical microbiologist at Douglass Hanly Moir Pathology, Sydney.
11th May 2022
The silence is deafening. Although 2022 has been by far the worst year for Australia, when it comes to COVID-19 in terms of public discourse, it's as if the virus doesn’t exist.
Australia currently has the highest known COVID-19 case rate in the world, at 1631 cases per million people a day.1
Our mortality rate from the virus also remains stubbornly high, with an average of 38 deaths a day, or 1.5 deaths per million people a day.1
If the current death rate persists, Australia will finish the year with 14,000-15,000 COVID-19 deaths, on track to make it the second leading cause of death in the country behind ischaemic heart disease.2
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https://www.ausdoc.com.au/news/covid19-transmission-australia-highest-world
COVID-19 transmission in Australia 'highest in the world'
Deaths from the pandemic virus are climbing to be second only to cancer, figures show
13th May 2022
COVID-19 is fast becoming one of the “major killers” of Australians, with the country now recording the highest infection rate in the world, experts say.
Prominent epidemiologists and infectious diseases physicians have raised concerns about the surge in cases this year, driven by the Omicron variant and relaxation of pandemic restrictions against a background of apparently growing complacency and ‘pandemic fatigue’ among the general population.
The latest statistics, from the University of Oxford tracker, show Australia is recording 1764 cases per million people a day, making it the highest known COVID-19 case rate globally.
The mortality rate from the virus is also high, with the nation now averaging 38 deaths each day, equating to about 1.5 deaths per million people.
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Climate Change.
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‘Devastating’ Great Barrier Reef ‘mass bleaching’ report released
The iconic Great Barrier Reef endured a mass coral bleaching over summer, and now a survey on the extent of the damage has been released.
May 11, 2022 - 9:36AM
NCA NewsWire
A sixth bleaching event has been confirmed in the Great Barrier Reef after a new aerial survey of 750 reefs. The Great Barrier Reef Marine Park Authority, in conjunction with the Australian Institute of Marine Science, found the bleaching was significantly consistent with heat stress being experiences on the reef, marine experts say is due to climate change. GBRMPA Chief Scientist Dr David Wachenfeld says extreme weather events on the Great Barrier Reef have become 'more severe and more frequent, in line with climate change'. 'Unfortunately this year is another of those years where we see extreme weather,' he told Sky News Australia.
Above average water temperatures led to a mass coral bleaching of the Great Barrier Reef over summer, as the Aussie icon was impacted by “escalating” climate change, a new report has revealed.
The Great Barrier Reef Marine Park Authority (GBRM) in March confirmed a sixth mass bleaching event on the Great Barrier Reef – the fourth such event since 2016.
Unusually, it was the first mass bleaching event to occur under La Nina conditions, which are typically cooler.
Aerial surveys to examine the extent of bleaching found 91 per cent of 719 reefs assessed showed some bleaching, according to the long-awaited Reef snapshot: Summer 2021-22 report released late on Tuesday.
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Royal Commissions And The Like.
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Indigenous health facing $4.4 billion funding gap: report
May 10, 2022 — 5.00am
An extra $4.4 billion a year is needed for Indigenous people to receive the same level of healthcare as the general population, a new report says, including an additional $2.6 billion from the federal government.
The Equity Economics report, commissioned by the National Aboriginal Community Controlled Health Organisation (NACCHO), said the rest of the funding gap largely reflected lower private health expenditure.
"Given the barriers many Aboriginal and Torres Strait Islander people face in accessing private healthcare, it is important to recognise this as part of the overall gap and for Commonwealth, state and territory governments to fill this shortfall and work with the Aboriginal Community Controlled Health Sector and other partners to address it," the report said.
The report estimated total recurrent expenditure on Indigenous health in 2019-20 to be $8.6 billion. This translated to $9925 a year spent on health for each Indigenous person compared to $7365 for non-Indigenous Australians.
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National Budget Issues.
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Why the RBA should have waited and not lifted interest rates
The forward guidance was targeting wages growth. The central bank has burned its reputational capital by abandoning that strategy.
Sam Wylie Contributor
May 8, 2022 – 12.31pm
The Reserve Bank of Australia has been widely criticised for its conduct of monetary policy over the past two years. Some of that criticism is misplaced. Yes, the bank’s inflation forecasts were far too low, but the bond market’s forecasts were not much different.
Nor should the RBA be heavily criticised for being slow to respond to rising inflation. In the face of powerful long-term deflationary forces, such as those now in the global economy, it is a mistake to tighten monetary policy too early when short-term inflationary pressures emerge. The work of Milton Friedman and his acolyte Ben Bernanke explained why.
No, it is other conduct by the leadership and governance of the RBA that is deserving of criticism. It is the inconstancy in the bank’s strategy for maintaining long-term price stability, the dissipation of its credibility and the ill-conceived implementation of monetary policy that warrants the ire of the Australian public.
Let’s start with long-term strategy. The RBA under governor Philip Lowe has a taken a long-term view of price stability. Its multi-decade view has given primacy to the long-term problem of deflationary forces over a short-term inflation problem caused by factors related to the COVID-19 pandemic.
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Inflation: bad for your budget, good for the government’s
Economics Editor
May 8, 2022 — 10.00pm
A big part of the Morrison government’s pitch about being better at economic management than Labor is its claim to have ensured all the massive increase in unfunded government spending during the years of pandemic lockdowns was “targeted and temporary”. Well, not really.
In a paper written by Matt Saunders and Dr Richard Denniss, of the Australia Institute, they study the forecasts and projections out to 2025-26 in the latest budget, which those with long memories will remember was presented at the start of this seemingly endless election campaign.
The authors find that, relative to what was projected in the last budget before the pandemic, annual government spending is now projected to grow at a much higher rate. It’s true annual spending has fallen back from its peak in 2020-21, but not by nearly as much as it should have if all the extra spending had been “targeted and temporary”.
So, what’s happened? I think I know. All the spending programs specifically labelled as part of the effort to hold the economy together during the lockdowns – JobKeeper, the JobSeeker supplement and all the rest – have indeed been wound up as promised.
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The great crypto Ponzi scheme finally crashes
Bitcoin has lost $US800 billion since its peak last year, with the risk that more losses are to come. It is a world that relies on the greater fool theory: that there is always a lesser mortal out there willing to buy some worthless crypto off you at a higher price.
Christopher Joye Columnist
Updated May 13, 2022 – 11.35am, first published at 9.57am
As a result of sharply higher inflation and interest rates, the great unregulated cryptocurrency Ponzi scheme has finally started to unravel, as we warned it might in December 2021 and January 2022.
In concert with its highly correlated listed equities masters – the S&P 500 and Nasdaq Composite indices – bitcoin has plummeted 63 per cent from a peak of $US68,991 in late 2021 to a low of just $US25,424 this week.
At this nadir, bitcoin’s market capitalisation had shrunk by $US800 billion ($1.16 trillion), prompting some investors to start referring to it as simply “bitcon”.
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The debt that dare not speak its name - the budget election blues
By Shane Wright
May 14, 2022 — 9.00am
In his 2019 budget speech, Treasurer Josh Frydenberg famously declared the “budget is back in black” and the economy was back on track.
Despite the “back in black” coffee mugs being sold by the Liberal Party, there was still plenty of debt. In the five weeks between the budget speech and Scott Morrison’s election victory, the government sold $9.2 billion worth of debt.
Of that debt, $300 million will be on the national ledger until 2039.
Fast forward to this year’s election campaign. By the time voters cast their ballots on May 21, the government will have sold more than $30 billion of debt since Frydenberg handed down his March budget.
Whoever wins office this month faces billions more in debt being sold by the end of the financial year and northwards of $100 billion through 2022-23.
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‘Recipe for austerity’: Cost of stage three tax cuts blows out by $22 billion in a year
By Shane Wright
May 14, 2022 — 5.00am
Key points
· Costings by the budget office last year put the cost of the stage three tax cuts at $184.2 billion over their first eight years of operation.
· It now estimates they’ll cost the budget $206.6 billion, a blowout of $22.4 billion in a year.
· The overall strength of the economy and the jobs market has pushed up the number of people benefiting from the planned tax cuts.
· The new figures come as the cost of government debt, now at $886 billion, continues to escalate.
The stage three tax cuts supported by both the Coalition and Labor will cost $22 billion more than forecast, adding to pressure on a federal budget that is expected to remain in deficit for the rest of the decade.
Costings by the independent Parliamentary Budget Office for the Australian Greens show the cuts – which start in mid-2024 and deliver major tax relief to higher-income earners – are on track to cost $37 billion annually by the early 2030s.
The stage three cuts were legislated by then treasurer Scott Morrison in 2018 as part of a long-term overhaul of the tax system.
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Health Issues.
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Eye on the prize: the reason Labor ditched nurse-to-patient ratios
State Political Editor
May 12, 2022 — 5.00am
The message from NSW Labor leader Chris Minns to his troops during the federal election campaign has been clear: they are to keep their heads down, and start preparing for what life could look like if they win in 2023. Aside from giving their federal counterparts clean air to campaign, NSW Labor is starting to smell victory.
To reach majority government when NSW goes to the polls in March next year, Labor needs to win seven seats. Not an impossible task, given the Coalition is asking for 16 years in power, but it’s a task that will take significant discipline, focus and policy differentiation.
Minns laid down the law to his shadow cabinet and caucus this week. The opposition leader, who desperately hopes to drag the party out of the political wilderness next year, warned that the pathway to government is to show that Labor is fiscally responsible, and with that comes the confidence to say no.
He was specifically referring to Labor’s position that it would not cave to union demands for mandated nurse-to-patient ratios in the state’s hospitals, a key sticking point in industrial negotiations with the government. It was a significant policy shift from Labor, and the Greens and the Coalition both seized on it.
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International Issues.
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Globalisation isn’t dead, it’s just not American any more
Our world is becoming more interconnected but driven by new forces.
Wang Huiyao
May 8, 2022 – 4.11pm
First, it was the financial crisis. Then Brexit and the election of former US President Donald Trump. Next came a trade war and a pandemic. The war in Ukraine is only the latest event to trigger a wave of claims that globalisation is dead.
Since the Russian invasion began, everyone from newspaper columnists to Wall Street luminaries such as BlackRock Inc. Chairman Laurence Fink and Oaktree Capital Group co-founder Howard Marks have decided that the era of expanding global trade and financial ties has ended. Yet, such claims don’t match the empirical reality many of us see, especially in Asia.
On the contrary, it seems that our world is only becoming more interconnected. Last year, global trade hit a record $US28.5 trillion ($40.2 trillion), up 25 per cent year-on-year and 13 per cent higher than in 2019, before the pandemic struck. For all the talk of decoupling, US-China trade swelled more than 20 per cent last year, to $US687.2 billion. Even with war in Ukraine, global trade is forecast to grow in 2022, albeit at a slower pace.
Cross-border investment also surpassed pre-pandemic levels last year, swelling to $US1.65 trillion. China, in particular, is more integrated into the global economy than ever. In 2021, its foreign direct investment inflows rose by a third to an all-time high of $US334 billion. In the first quarter of this year, they grew by more than 25 per cent year-on-year.
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Ukraine war: How does Russia lose? Vladimir Putin may tell us on Victory Day
Holman W. Jenkins Jr
8:12AM May 9, 2022
Only one of Vladimir Putin’s bets is paying off: His oil and gas revenues are still intact and even benefiting from higher prices.
His most characteristic miscalculation, after witnessing Ukrainians mobilising by the hundreds of thousands in 2004 and again in 2013-14 to protect their country against political dominance by Russia, was to believe they wouldn’t defend it militarily. He told himself these earlier demonstrations weren’t real, they were foreign-organised and -financed, just as he tells himself the same about protests in Russia.
It’s worth pausing to note how thoroughly nothing is turning out the way he planned. Tens of thousands of dead, whole cities reduced to rubble, horrific war crimes, the Russian economy in tatters, now a burgeoning series of direct attacks by Ukraine air power on Russian soil. Thousands of military-age Russians are reported to be fleeing the country to avoid becoming fodder in his military debacle.
Russia will celebrate 'Victory Day' today, marking the Soviet Union’s defeat of Nazi Germany in 1945. The annual…
Listen to the statements or tweets of his most Western-facing servants, Foreign Minister Sergei Lavrov and all-purpose lapdog Dmitri Medvedev. They don’t bother suggesting the war isn’t a disaster for Russia, only that it can become a disaster for the West too.
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https://www.afr.com/markets/equity-markets/fed-warns-of-worsening-market-liquidity-20220510-p5ajwu
Fed warns of worsening market liquidity
Matthew Boesler
May 10, 2022 – 9.11am
New York | The Federal Reserve warned of deteriorating liquidity conditions across key financial markets amid rising risks from the war in Ukraine, monetary tightening and high inflation, in a semi-annual report published on Monday (Tuesday AEST).
“According to some measures, market liquidity has declined since late 2021 in the markets for recently issued US cash Treasury securities and for equity index futures,” the US central bank said in its Financial Stability Report.
“While the recent deterioration in liquidity has not been as extreme as in some past episodes, the risk of a sudden significant deterioration appears higher than normal,” the report said. “In addition, since the Russian invasion of Ukraine, liquidity has been somewhat strained at times in oil futures markets, while markets for some other affected commodities have been subject to notable dysfunction.”
In a statement accompanying the release of the report, Fed governor Lael Brainard said the war “has sparked large price movements and margin calls in commodities market and highlighted a potential channel through which large financial institutions could be exposed to contagion”.
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Putin evokes World War II victory to urge triumph in Ukraine
Marc Champion
May 9, 2022 – 7.38pm
London | Russian President Vladimir Putin justified his faltering 10-week old invasion of Ukraine as a battle comparable to the fight against Nazi Germany as he presided over his annual display of military might on Moscow’s Red Square.
“Today, you’re defending what our fathers, grandfathers and great grandfathers fought for,” Mr Putin said in a speech before the military parade on Monday, flanked by World War II veterans at the May 9 Victory Day celebration marking the German defeat in 1945.
This year’s display includes 11,000 troops and weaponry including tanks, air-defence systems and nuclear-missile launchers. A planned flyover by military jets and helicopters was cancelled because of cloudy weather conditions, state-run Tass news service reported, citing Kremlin spokesman Dmitry Peskov.
Some Western officials had suggested Mr Putin might use the World War II anniversary to move to formally declare war in the conflict that the Kremlin calls a “special military operation.”
This would allow Russia to order a mass mobilisation, potentially helping to jump-start the stalled campaign. The Kremlin has denied any such plans and Mr Putin made no mention of them in his speech.
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https://www.afr.com/world/europe/the-woman-steering-russia-s-war-economy-20220509-p5ajpu
The woman steering Russia’s war economy
Eshe Nelson
May 9, 2022 – 5.00pm
For the second time in less than a decade, Elvira Nabiullina is steering Russia’s economy through treacherous waters.
In 2014, facing a collapsing rouble and soaring inflation after barely a year as head of the Central Bank of Russia, Nabiullina forced the institution into the modern era of economic policymaking by sharply raising interest rates. The politically risky move slowed the economy, tamed soaring prices and won her an international reputation as a tough decision maker.
In the world of central bankers, among technocrats tasked with keeping prices under control and financial systems stable, Nabiullina became a rising star for using orthodox policies to manage an unruly economy often tethered to the price of oil. In 2015, she was named Central Bank Governor of the Year by Euromoney magazine. Three years later, Christine Lagarde, then the head of the International Monetary Fund, effused that Nabiullina could make “central banking sing”.
Now it falls to Nabiullina to steer Russia’s economy through a deep recession, and to keep its financial system, cut off from much of the rest of the world, intact. The challenge follows years she spent strengthening Russia’s financial defences against the kind of powerful sanctions that have been wielded in response to President Vladimir Putin’s geopolitical aggression.
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Shanghai tightens lockdown in final push to hit zero-COVID
Michael Smith North Asia correspondent
May 9, 2022 – 2.43pm
Tokyo | Shanghai has ordered residents to return to their homes and banned food deliveries for the next week following orders from President Xi Jinping to double down on efforts to eliminate COVID-19 in the community regardless of the economic and social costs.
Residents in some districts, many of whom had been given a brief taste of freedom late last week and allowed outside, were shocked on the weekend when they received government notices ordering them to stay at home this week.
Food deliveries, which had resumed in the past fortnight after logistics networks were shut down early in the six-week lockdown, would also be halted.
Some residents were also told they would be considered close contacts and transferred to government quarantine centres if anyone in their building or residential compound tested positive for COVID-19.
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‘Leaders are getting scared’: Putin’s war and La Niña could set off global food emergency
By Ambrose Evans-Pritchard
May 10, 2022 — 9.12am
The destruction of Ukraine’s black earth farm belt is even worse than feared. Half of this year’s output will be lost to the world. A global shortage of fertilisers largely caused by Putin’s war will depress yields across the globe.
This might be manageable were it not for everything else going wrong for global food supply. Atmospheric scientists fear that La Niña global weather, already in an extended “double dip”, will morph into a rare triple dip event. This would extend the drought in Latin America’s grain regions, as well as wreaking havoc in the Prairies, and as far away as East Africa and central Asia.
“There is a better than 50 per cent chance of a third La Niña, and that has only happened twice in the last 40 years,” said Eric Snodgrass, weather wizard at the agro-industrial giant Nutrien.
La Niña events are caused by unusually cold water in the tropical Pacific, which distorts the Jet Stream at mid-latitudes. “It tends to cause drought in the big global agricultural baskets like the US farm belt. If La Niña maintains its grip, it’ll shave yields by a few bushels per acre and that can have a global impact when markets are tight as they are today,” he said.
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of BRW Magazine. Connect with James on Twitter. Email James at j.thomson@afr.com
Putin’s Nazi speech shows Russia stuck in humiliating war
When both sides accuse their enemies of being the heirs to Hitler, compromise becomes almost unthinkable.
Gideon Rachman Columnist
May 10, 2022 – 10.59am
There was no victory for Vladimir Putin to celebrate on Victory Day. Instead, the Russian president is mired in a grinding, inconclusive and increasingly humiliating war.
Ahead of his big speech at the Red Square commemoration of victory in World War II, Putin had three options – none of them good. He could start winding the war in Ukraine down, which would involve accepting that Russia had failed to achieve most of its objectives. He could try to rally the troops and the nation, but announce no major change of policy. Or he could escalate, in word or deed – perhaps by announcing a military mobilisation or hinting at the use of nuclear weapons.
In the event, Putin chose option two, which illustrates how stuck he is. He has no quick path to victory. But defeat is unacceptable.
By once again labelling the Ukrainian government “neo-Nazis”, Putin backed himself into a rhetorical corner. After all, how can you compromise with fascism? But Putin is not the only leader who insists he is refighting World War II. In his own May 9 speech, Ukrainian President Volodymyr Zelensky accused Russia of repeating “the horrific crimes of Hitler’s regime”.
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America’s bizarre duality: Marilyn Monroe v Justice Samuel Alito
If Roe v Wade is overturned, five unelected, unaccountable and relatively unknown political operatives masquerading as impartial jurists will have profoundly altered our lives.
Maureen Dowd
May 11, 2022 – 8.00am
I was watching Vogue’s live feed as Kim Kardashian tried to walk the red carpet at the Met Gala in her skintight, flesh-tone dress, gallantly helped up the stairs by Pete Davidson. I flashed back to Marilyn Monroe on another May night in Gotham, doing similar mincing steps in a similar shimmering dress she was sewn into, when she suspired “Happy Birthday” to JFK.
Then Variety sent out a news bulletin that Kim was actually wearing Marilyn’s dress. I had last seen the crystal-strewn souffle concoction back in 1999, at a Christie’s exhibit for an auction of Marilyn’s property. It sparkled amid detritus such as sombreros, see-through nighties and lighters from Frank Sinatra’s Cal-Neva lodge. The “nudest dress,” as the designer Jean Louis called it, was reverently displayed in a room by itself, lit from above like the Pieta.
As I was contemplating the comeback of this sartorial symbol of American seduction, I got another news bulletin: the Supreme Court was going to yank away the right of women to control their own bodies, strapping us into a time machine hurtling backward.
The two simultaneous emails were a perfect distillation of America’s bizarre duality – our contradictory strains of sexuality and priggishness.
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‘We are now living in a totally new era’: Kissinger
Henry Kissinger, orchestrator of the Sino-US agreement, tells the FT that the US opened to China 50 years ago because the administration believed it was unwise to treat two enemies in the same way.
Financial Times
May 10, 2022 – 2.56pm
This is an edited transcript of a discussion between former US secretary of state Henry Kissinger and Financial Times US national editor Edward Luce on May 7 in Washington.
Financial Times: Earlier this year, we commemorated the 50th anniversary of the Nixon visit to China, the Shanghai communique. You, of course, were the organiser, the orchestrator of this Sino-US agreement. And it was a major shift in the Cold War: you split China from Russia. It feels like we’ve gone 180 degrees. And now Russia and China are back in a very tight relationship. My opening question to you is: are we in a new cold war with China?
Henry Kissinger: At the time we opened to China, Russia was the principal enemy, but our relations with China were about as bad as they could be. Our view in opening to China was that it was unwise, when you have two enemies, to treat them exactly alike.
What produced the opening were tensions that developed autonomously between Russia and China. [Former Soviet Union head of state Leonid] Brezhnev could not conceive that China and the United States could get together. But Mao, despite all his ideological hostility, was ready to begin conversations.
In principle, the [Sino-Russian] alliance is against vested interests, it’s now established. But it does not look to me as if it is an intrinsically permanent relationship.
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Russia facing 'absolutely unacceptable threat': Putin
President Vladimir Putin defended Russia’s war in Ukraine as necessary to protect the “Motherland” as Moscow flexed its military muscle at a huge parade marking the 1945 victory over Nazi Germany.
Fierce battles raged in eastern Ukraine while Putin made his Victory Day speech against a backdrop of intercontinental ballistic missiles rumbling through Red Square.
The Russian leader made no major announcements on Russia’s next steps but channelled Russian pride in its World War II triumph to mobilise support for the Ukraine invasion, now in its third month.
In a sign of international opposition to the war, protesters splattered Russia’s ambassador to Poland with red liquid when he tried to lay a wreath in Warsaw to mark Victory Day.
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Confected Philippines reality that spells trouble
7:13PM May 10, 2022
The son of a late reviled dictator – a dictator who usurped democracy, imposed harsh martial law, stole billions of dollars of national wealth and had hundreds, perhaps thousands, of people killed – has triumphed in a democratic election with the greatest electoral mandate in his country’s history.
Only in The Philippines …
Ferdinand “Bong Bong” Marcos Jr did not apologise for or distance himself from his father’s legacy. Instead he created a fantasy legacy.
His vice-presidential running mate, Sara Duterte, daughter of hardman President Rodrigo Duterte, won her separate vice-presidential election by an even bigger margin.
Marcos Jr won the presidency by ignoring reality and creating his own reality. He did not participate in any presidential debates, nor did he do serious interviews with any mainstream newspapers, television or radio programs. Instead he campaigned almost exclusively on social media.
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https://www.afr.com/policy/economy/a-soft-landing-in-the-us-is-almost-impossible-20220511-p5aka3
A soft landing in the US is almost impossible
It is optimistic to think that a significant recession will not be needed to curb inflation, as is the belief that one can be avoided.
Martin Wolf Columnist
Updated May 11, 2022 – 12.58pm, first published at 9.40am
“Inflation is much too high and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down. We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses.”
Thus did Jay Powell, chairman of the Federal Reserve, open the press conference that followed the meeting of the Federal Open Market Committee last week. This was a grovelling apology. But it also sounded rather like Mario Draghi’s celebrated “whatever it takes” remark of July 2012.
What does the Fed’s renewed commitment to low inflation signify for the future? Powell argued optimistically that “we have a good chance to have a soft or softish landing”.
By this he meant that demand would be brought closer to supply, which could in turn “get wages down, and get inflation down without having to slow the economy and have a recession and have unemployment rise materially”. He also argued that “the economy is strong, and is well positioned to handle tighter monetary policy … but I’ll say I do expect that this will be very challenging”.
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US inflation may have peaked but 8.3pc rate points to its persistence
Matthew Cranston United States correspondent
May 11, 2022 – 10.50pm
Washington | Inflation in the United States rose at a slower rate in April but was still stronger than forecasts and has forced President Joe Biden to declare it his top domestic priority.
While the annual consumer price reading slowed to 8.3 per cent from 8.5 per cent, both headline and core CPI rose 0.3 per cent and 0.6 per cent respectively in April, higher than consensus expectations of 0.2 per cent and 0.4 per cent.
US stocks were lower, particularly the rate sensitive megatech shares, as investors sensed that the inflation reading – still a 40-year-high – was not enough to change the Fed’s plans for higher rates this year.
However, some economists such as JP Morgan Asset Management’s David Kelly said inflation may have peaked and that the Fed would start to ease its hawkish tone.
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Mikhail Khodorkovsky: ‘Putin has embarked on a war he can’t stop’
Jailed for a decade in Russia, the exiled oligarch explains how Putin consolidated his power and why the West still fails to understand him.
Will Dunn
May 12, 2022 – 8.00am
In January 1995, a 31-year-old Mikhail Khodorkovsky travelled to Switzerland to attend the World Economic Forum. At a café in Davos one morning he saw a fellow Russian businessman, Boris Berezovsky, speaking to the Hungarian financier George Soros. It was a small place, and he sat close enough to know they were speaking about Russia’s first post-Soviet-era election, which would be held the following year. “You’ve had a good life so far,” Soros told Berezovsky, “and now the communists are coming back, and it’s time to flee.”
That evening Khodorkovsky had an opportunity to ask the communists themselves, who were also attending the summit: would a victory for them mean disaster for Russia’s emerging business elite? Gennady Zyuganov, the Communist Party leader and presidential candidate, told him: “Mikhail Borisovich, we’re full of respect for what you do, and so we will keep you. We will keep you as the CEO of one enterprise.”
Khodorkovsky had already built or acquired a number of businesses – starting with a café of his own, then a computer and software business, then a titanium manufacturer, then a banking group. He knew how time, effort, intelligence, and resources were squandered in the command economy. He found Berezovsky and told him that something had to be done.
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https://www.smh.com.au/business/markets/russia-faces-economic-collapse-20220510-p5ajx3.html
Russia faces economic collapse, leaked forecasts show
By Louis Ashworth and James Warrington
May 11, 2022 — 2.56pm
Russia’s economy has plunged into its worst crisis for almost three decades as the country is battered by Western sanctions, a leaked copy of the Kremlin’s own forecasts shows.
The Russian finance ministry is predicting a 12 per cent collapse in GDP this year, the biggest contraction since 1994 when it was shifting towards capitalism under Boris Yeltsin, the first post-Soviet president.
A collapse would wipe out around a decade of economic growth. The leak will pile pressure on Vladimir Putin, who earlier this week presided over a scaled-down version of Russia’s annual Victory Day parade in Moscow marking the end of the Second World War in Europe.
Russia has been hammered by heavy sanctions following the invasion of Ukraine, which are about to be ratcheted up further as Brussels discusses a ban on oil from the country.
It has left the Kremlin teetering on the edge of a default after it last week narrowly avoided a failure to pay foreign debts for the first time since the Bolshevik revolution a century ago.
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Crypto’s $2.2 trillion meltdown rings alarm bells
Senior business columnist
May 11, 2022 — 11.59am
Crypto assets were supposed to behave quite differently to conventional investments. It turns out that they do. In a “risk-off” environment they perform far worse.
The selling points for crypto assets used to be that they weren’t correlated to other assets classes and therefore would provide diversification from conventional holdings of shares and bonds and also provide a hedge against inflation. It turns out none of those previous investor convictions has proven true.
In fact cryptos have demonstrated that, as an asset class, they are highly-correlated with other risk assets but in a grossly exaggerated fashion.
The market capitalisation of all crypto assets has fallen by $US1.5 trillion ($2.2 trillion) since peaking last November at about $US2.9 trillion, a fall of about 52 per cent. The value of the dominant asset, Bitcoin, has fallen from almost $US70,000 to about $US30,000, or a decline of about 57 per cent.
At almost the same time that the crypto market peaked, so did technology stocks. (It took a couple more months – until January this year – for the broader market to crack). The tech-laden Nasdaq index peaked at just over 16,000 points in mid-November before falling to 11,737 this week, a fall of “only” 27 per cent.
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Sharemarkets keep falling as investors grow nervous about what the future holds
Senior business columnist
May 12, 2022 — 11.39am
At face value the US inflation rate, the driving force behind the surge in global interest rates and implosions in financial markets, has peaked. Appearances can, however, be deceptive.
Wednesday’s release of the US CPI data did show the expected fall, albeit not one as big as economists had predicted. After posting an 8.5 per cent rate in March the headline number edged down to 8.3 per cent in April, above the 8.1 per cent consensus expectation.
If the US has passed “peak inflation,” then why did the US sharemarket fall yet again?
The S&P 500 index was down another 1.7 per cent and the Nasdaq index 3.2 per cent. The tech-laden Nasdaq index is now almost 30 per cent of its peak late last year and the broader sharemarket 18 per cent from early this year – closing in on the 20 per cent decline that would characterise it as a fully-fledged bear market.
The markets’ responses were telling. There might have been a modest fall in the headline rate of inflation but investors looked beyond that headline and remain fearful that the US Federal Reserve is going to be forced to adopt monetary policies that are more hostile to share and bond prices than anticipated.
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Finland to join NATO as Ukraine pushes back Russian forces
Anne Kauranen and Essi Lehto
Updated May 12, 2022 – 5.41pm, first published at 4.47pm
Helsinki | Finland must apply to join the NATO military alliance “without delay”, Finnish President Sauli Niinisto and Prime Minister Sanna Marin said on Thursday, a major policy shift triggered by Russia’s invasion of Ukraine.
Finland, which shares a 1300-kilometre border and a difficult past with Russia, has gradually stepped up its co-operation with the North Atlantic Treaty Organisation as a partner since Russia annexed Crimea in 2014.
But until Russia’s invasion of Ukraine, the Nordic country had refrained from joining to maintain friendly relations with its eastern neighbour.
“Finland must apply for NATO membership without delay,” President Niinisto and Ms Marin said in a joint statement.
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Russia threatens to retaliate as Finland seeks NATO membership ‘without delay’
By Anne Kauranen and Jonathan Landay
May 13, 2022 — 4.46am
Helsinki/Kharkhiv: Russia’s foreign ministry said Moscow would be forced to take “retaliatory steps, both of a military-technical and other nature” after Finland announced it would apply to join NATO “without delay”.
Russia’s foreign ministry gave no further details.
Russian officials have spoken in the past about potential measures including stationing nuclear-armed missiles on the Baltic Sea.
Sweden is expected to follow Finland in joining NATO as Russia’s invasion of Ukraine looked set to bring about the very expansion of the Western military alliance that Russian President Vladimir Putin aimed to prevent.
The decision by the two Nordic countries to abandon the neutrality they maintained throughout the Cold War would be one of the biggest shifts in European security in decades.
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Bubble fears: Wall Street’s new age of uncertainty
By Parmy Olson
May 13, 2022 — 10.10am
In the two decades since the dot-com crash, investors have been bracing themselves for another bubble to burst. Yet year after year, tech firms like Facebook and Alphabet continued to enjoy uninterrupted expansion and unwavering faith among their investors that it would continue. Even the financial crisis of 2008 barely registered as a blip. But now there is serious talk among entrepreneurs and investors that the correction everyone feared might finally be happening.
Given how intrinsically technology is woven into our lives - and how it will pioneer new avenues through augmented reality, streaming services, artificial intelligence and more - the broader tech boom of the past two decades seems set to continue in the long run. But investors for now must navigate something novel: uncertainty. Already the Nasdaq 100 has declined about 30 per cent since November 2021. So-called FAANG stocks, including Facebook parent Meta Platforms, Apple, Amazon, Netflix and Google, have lost more than $US2 trillion ($2.9 trillion) in value since the start of the year.
It’s worth noting that the markets have never experienced a transition from a global pandemic that made millions of people housebound. There is no historical reference point. Now companies and investors are trying to process an explosion of pent-up demand, where consumers have rushed out of the confines of their homes to buy things in physical stores and plan “revenge travel.” Disney has had more visitors to its theme park in Florida than it did pre-pandemic.
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Vladimir Putin’s state of health kept under the rug by Kremlin
May 13, 2022
Western experts have analysed every movement of Vladimir Putin – seen in public for the longest time in months at this week’s Victory Day celebrations – in a bid to corroborate intelligence that he is seriously ill.
The health of the 69-year-old Russian President has occupied NATO and allies trying to anticipate his highly unpredictable moves in the war in Ukraine.
Intelligence agencies have also prepared reports about Russia’s leadership options if Mr Putin were to die in the near future.
For months there has been speculation about Mr Putin’s health, fuelled by the extraordinary long table distancing himself from any world leaders who visit him; and hints he is seeking to control involuntary shaking.
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China halts travel as Xi escalates zero COVID
Michael Smith North Asia correspondent
Updated May 13, 2022 – 4.31pm, first published at 3.19pm
Tokyo | China has banned its citizens from leaving the country for non-essential travel as Xi Jinping ramps up efforts to stamp out COVID-19 despite the rising economic costs, which are raising questions about his leadership.
With Shanghai tightening its brutal lockdown this week and Beijing residents told to work from home on Friday before another round of mass testing, there are growing concerns about how Mr Xi can manage the pandemic without sacrificing the economy.
“Officials are struggling to balance a raft of conflicting goals spanning everything from GDP growth, zero-COVID, exchange rate stability, deleveraging and regulation. We don’t expect much compromise on zero-COVID,” Capital Economics senior China economist Julian Evans-Pritchard said.
China’s National Immigration Administration announced on Thursday night (AEST) it would ban all non-essential foreign travel by Chinese citizens. Australia did the same thing in 2020 in an effort to reduce the number of citizens returning from countries where infection rates were higher.
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UN warns ‘millions will die’ if Ukraine’s Black Sea ports remain closed
A top UN official has laid bare an uncomfortable truth hanging over the Russia-Ukraine conflict as forces continue to rip through the region.
May 14, 2022 - 10:24AM
A top UN official has laid bare an uncomfortable truth hanging over the Russia-Ukraine conflict, as Vladimir Putin’s forces continue to rip through the region and disrupt global supply chains.
Together with Ukraine, Russia accounts for roughly 29 per cent of the global wheat export market. The two countries are also big suppliers of metals and other commodities to the rest of the world.
Ukraine is considered by analysts to be the “breadbasket of Europe” and experts have long remained wary of what an invasion could do to the global food supply chain.
David Beasley, a former Republican governor of South Carolina who now heads the United Nations World Food Programme, has warned that the ports must be reopened within the next two month or Ukraine’s agriculture-dependent economy will collapse.
He called for further pressure from international governments to ensure trade resumed before any further damage could be done.
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We must learn defence lessons from Ukraine
12:00AM May 14, 2022
Military lessons from the Ukraine war are being absorbed quickly in Asia. The message for democracies arming against the threat from authoritarian regimes is to select weapons that are simple and available rather than small numbers of expensive and complex ships, aircraft and vehicles that may not survive the first hours of conflict.
The Politico news service, well connected in Washington DC, revealed last week that the US State Department had rebuffed Taiwanese requests to buy submarine-hunting MH-60R Seahawk helicopters. The Biden administration’s reported view is “these expensive items, while fine for peacetime operations, would not survive an all-out assault from the (Chinese) mainland”.
The US is urging Taiwan to buy low-cost sea mines able to blunt an amphibious assault, along with smaller mobile weapons such as drone swarms, Stinger anti-aircraft missiles and Javelin antitank missiles.
The US State Department told Politico: “Bolstering Taiwan’s self-defences is an urgent task and the most effective approach to doing so is through investing in asymmetric capabilities that are credible, resilient, mobile, distributed and cost-effective.”
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Why Ukraine’s army still uses a 100-year-old machinegun
The Economist
4:17PM May 13, 2022
Ukrainian forces are fighting off Russian invaders with types of machineguns which entered service when Ukraine was part of a Russian Empire ruled by a tsar.
The Maxim M1910 has a steampunk aesthetic: it weighs 68kg and has an armoured gun shield on a distinctive two-wheeled mount allowing it to be towed behind a vehicle or manoeuvred by the gun crew.
Russian media mock these antiques and say the Ukrainians use them because they lack modern weapons.
The truth is more complex.
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https://www.afr.com/policy/economy/how-the-rampant-us-is-wrecking-the-global-economy-20220515-p5alen
How the rampant $US is wrecking the global economy
Enda Curran and Amelia Pollard
May 15, 2022 – 7.46am
The soaring US dollar is propelling the global economy deeper into a synchronised slowdown by driving up borrowing costs and stoking financial-market volatility, and there’s little respite on the horizon.
A closely watched gauge of the greenback has risen 7 per cent since January to a two-year high as the United States Federal Reserve embarks on an aggressive series of interest-rate increases to curb inflation and investors have bought dollars as a haven amid economic uncertainty.
A rising currency should help the Fed cool prices and support American demand for goods from abroad, but it also threatens to drive up the import prices of foreign economies, further fuelling their inflation rates, and sapping them of capital.
That’s especially worrying for emerging economies, which are being forced to either allow their currencies to weaken, intervene to cushion their slide, or raise their own interest rates in a bid to buttress their foreign exchange levels.
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Goldman slashes year-end target for S&P 500 to 4300
Timothy Moore Online editor
May 14, 2022 – 8.39am
Heightening concerns about rising US interest rates and the impact on the US economy have led Goldman Sachs to lower its year-end forecast for the S&P 500 by 8.5 per cent to 4300.
Goldman previously was forecasting a 4700 point finish. The new forecast contrasts with the market’s April and May swoon. It has shed 13 per cent since March 29 to be down 16 per cent year-to-date.
The index closed up 2.4 per cent to 4023.89 on Friday in New York (Saturday AEST) amid a broad rally, although it finished the week down 2 per cent, the sixth consecutive weekly decline.
In a note, Goldman equity strategist David Kostin said: “Our new baseline forecast assumes no recession and implies the [price to earnings ratio] ends the year unchanged at 17 times. A recession would see the index fall by 11 per cent to 3600 as the P/E drops to 15x. Focus on high v low margin growth stocks.”
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Putin has blood cancer, oligarch recorded saying
By George Grylls
The Times
5:33PM May 14, 2022
President Putin is “very ill with blood cancer”, an oligarch close to the Kremlin is reported to have said.
The unnamed oligarch was recorded discussing Putin’s health with a Western venture capitalist in mid-March in a recording obtained by New Lines, a US magazine.
The Russian says in the recording that Putin had surgery on his back linked to his blood cancer shortly before ordering the invasion of Ukraine. He complains that the president has gone “crazy”.
He says that there is deep dissatisfaction in Moscow about the state of the economy and, appearing to speak on behalf of other oligarchs, says “we all hope” that Putin dies.
“He absolutely ruined Russia’s economy, Ukraine’s economy and many other economies - ruined [them] absolutely,” the oligarch says. “The problem is with his head. One crazy guy can turn the world upside down.”
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Corpses piling up in train cars as Russia delays return
Nataliya Vasilyeva
May 15, 2022 – 8.48am
Russia is reportedly refusing to take the bodies of its soldiers killed in fighting in Ukraine, with corpses piling up in refrigerated train cars outside the Ukrainian capital.
Colonel Volodymyr Lyamzin, Ukraine’s chief civil-military liaison officer, said several hundred bodies have been collected from the battlefield in the Kyiv and Chernihiv region and brought to a rail yard outside the Ukrainian capital. They are being kept on a train until the Russian government agrees to take them.
“Ukrainian authorities are dealing with this issue because Russia refuses to take them,” he told Al Jazeera.
“Each body testifies to war crimes. If they keep refusing to take the bodies, Ukraine will bury them.”
Soldiers dressed in white protective suits were seen loading bodies of Russian soldiers, wrapped in white body bags, on refrigerated train cars on Friday afternoon. Inside the cars, the bodies were stacked up several layers deep.
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I look forward to comments on all this!
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David.
