June 16, 2022 Edition
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The world is still upended and frankly I can see on end to the suffering and destruction. This will be a defining moment of the 2000s in my view. The world has lost its way sadly…. hard to see a way out.
In the US the risk of decay and civil war seems to be rising and I am really mot sure in Joe Biden has any answers.
Boris seems still to be there – no idea how.
In OZ our new PM seems to be going well and we are seeing a period of calm. China still and issue but we seem to made friends with France – a very good thing!
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Major Issues.
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Worried about the market? This is why you should stay put
When it’s hard to see anything but trouble ahead for equities, moving into defensive assets such as cash might seem a tempting way to protect your nest egg.
Duncan Burns Contributor
Jun 6, 2022 – 5.00am
Watching share market movements has probably felt akin to a bad rollercoaster ride for many investors recently, given the ASX and many global stock indexes are spending more time in the red than many are used to.
When it’s hard to see anything but trouble ahead for equities, moving into defensive assets such as cash might seem a tempting way to protect your nest egg.
Even though a partial de-risking of your portfolio probably makes sense if you are nearing or already in retirement, what about if you’re at the peak of your earning years and retirement is at least a few decades away? It would be an entirely different story and what your emotions are imploring you to do are almost certainly at odds with what’s right for your long-term investment success.
Exiting the share market now will lock in losses permanently. Grappling with figuring out when to return is another dilemma. Often, the flight to “safety” money is not reinvested until confidence returns and the market has already recovered, by which time you’ve fallen into the sell low/buy high trap.
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https://www.afr.com/politics/federal/the-return-of-frank-fearless-advice-20220605-p5ar98
The return of frank, fearless advice
The former Morrison government’s sidelining of public servants meant that Australian politics lost the benefit of their ideas and corporate memory.
Craig Emerson Columnist
Jun 6, 2022 – 12.26pm
Canberrans – or Ken Behrens as they have become known – are stopping me in the street, their greetings universally featuring the word “relief”. Theirs is a relief that the government of Australia is returning to the Westminster system.
On the day of their swearing in, ministers in the Albanese government were meeting with officials of their departments to discuss the brief prepared for an incoming government.
Foreign Minister Penny Wong was an exception, having been sworn in earlier and travelling to our Pacific Island neighbours to begin repairing relations damaged by years of Australian government neglect and poor jokes about water lapping at their feet as sea levels rose.
The Red Book – a brief for an incoming Labor government – sets out the portfolio issues confronting the new minister and the wider government. Senior departmental officials could be confident that the minister would take the briefing seriously and that their advice would carry weight into the cabinet room.
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An uncertain economy in dire need of a productivity reboot
A rate rise will be another test for consumer sentiment that is already facing challenges from multiple directions.
Jo Masters Economist
Jun 6, 2022 – 1.07pm
Cast your mind back to late last year: the economy was bouncing back from the delta lockdowns, vaccination rates were hitting targets, the country was opening up and the economic forecasts painted a rosy picture.
As an economist, there was a sense of relief that the trials of trying to assess the economy, let alone forecast it, in the middle of a pandemic were fading. A grateful return to something like business as usual.
Fast-forward to today. There is no doubt that the Reserve Bank will raise rates on Tuesday afternoon, but there is plenty of doubt about how big its move will be. The Australian Financial Review’s survey shows economists fairly evenly split between 25 basis points and 40 basis points, with a few calling for 50 basis points.
This uncertainty amid certainty reflects an economic landscape that has seen a tectonic shift in a matter of months. I don’t think I have seen so many moving parts in the economy in my career, and so much volatility within each of those.
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Investors brace for supersized RBA rate hike
Cecile Lefort Markets reporter
Jun 6, 2022 – 3.20pm
Bond market investors have placed a 50 per cent chance the Reserve Bank will increase the cash rate by half a percentage point on Tuesday, which would mark the largest jump in more than two decades, as rising consumer prices threaten to overheat the Australian economy.
The RBA is all but certain to increase interest rates in its monthly monetary policy meeting after a 25 basis point increase in May, but investors and economists are divided on the scale of the move.
Interbank bond futures have fully priced in a 25 basis point increase and give a one-in-two chance that the RBA will raise rates by 40 basis points.
Bond market pricing also indicates a one-in-three chance the central bank will increase rates by half a percentage point, which would take the cash rate to 0.85 per cent.
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China offers Australia friendship but expects the full kowtow
Political and international editor
June 7, 2022 — 5.00am
It started the moment the Albanese government was elected. The government of China started making overtures. Premier Li Keqiang sent the new Australian prime minister a note of congratulations.
It was the first direct communication between the senior leadership of the two countries in 2½ years. “The Chinese side is ready to work with the Australian side,” he said, to “uphold the principle of mutual respect and mutual benefit”.
Next, Beijing’s ambassador to Australia, Xiao Qian, said that “with this new government in power we are looking forward to a possible opportunity … so that we can put this relationship back on the right track”. The “political relationship” was the source of the problem, he said, and the onus was on the Australian side to make a concession.
On the same day, China’s Foreign Affairs Minister, Wang Yi, said “the crux of the problem lies in the fact that some political forces in Australia insist on treating China as an adversary rather than a partner” and it was time to “seek common ground while shelving differences”.
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Labor can’t kick diplomacy goals without the right players
The Albanese government has signalled cultural change in foreign affairs. But the promises must be matched by revitalising the nation’s security and policy capacity.
Rory Medcalf Geopolitical analyst
Jun 7, 2022 – 4.24pm
The Labor government is barely more than two weeks old, yet its foreign policy settings are compellingly defined and active.
It’s an impressive start: the Quad summit in Tokyo is already old news, followed rapidly by listening-rich diplomacy in the south-west Pacific and Jakarta.
Prime Minister Anthony Albanese and Foreign Minister Penny Wong have seized – and generated – immediate opportunities to demonstrate seriousness on first-rank external issues of security, development and sustainability.
They’ve shown mature continuity with the direction of previous governments in building the Quad, a can-do coalition with the United States, India and Japan, and balancing against China’s bid for dominance.
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The RBA’s failings are legion. It needs a truly independent review
The RBA did not foresee the surge in inflation. It would be naive to believe they can now forecast how and when it can be tamed.
Andrew Mohl Contributor
Jun 8, 2022 – 2.24pm
Early last year, I warned that the Reserve Bank had lost its way. It had vacated the classic traditional role of a central bank to metaphorically remove the punchbowl as the party was getting going.
Instead, it was adopting radical policies to further fuel growth in activity and credit, prolonging the asset price booms, apparently to create more jobs and to reduce unemployment. We are now living with the consequences of this flawed approach.
The RBA’s credibility is in tatters. So much for cash rates not rising until at least 2024. So much for its commitment to hold medium-term bond rates at 0.1 per cent. So much for its forecast that inflation would remain below 3 per cent.
In hindsight, the warning bells were ringing loudly in late 2020. Broad money supply then was growing at an annual rate of almost 13 per cent after the RBA had resumed money financing of budget deficits – a practice that had been abandoned more than 30 years earlier because it was so inflationary.
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https://www.afr.com/policy/economy/food-shock-will-surpass-the-energy-crisis-20220607-p5armq
Food shock will surpass the energy crisis
Australia will do better than most as food prices surge. But we are less good at managing the proceeds of these booms.
John Kehoe Economics editor
Jun 8, 2022 – 2.43pm
The global energy shock will soon be compounded by an international food crisis.
For Australia, the lucky country, this global disruption once again presents opportunities and pitfalls.
The war between energy-rich Russia and Ukraine has put a rocket under the price of oil, gas and coal, and will amplify a shortage of agricultural produce.
The ramifications will be even higher inflation, humanitarian disaster, geopolitical turbulence and increased national security risks around the world.
UN Secretary General Antonio Guterres has warned of a “hurricane of hunger”.
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Inflation could hit 8pc before finding a new normal: Macfarlane
Yolanda Redrup Reporter
Jun 8, 2022 – 1.41pm
Former Reserve Bank of Australia governor Ian Macfarlane says inflation is unlikely to get back to the long-standing target of 2 per cent to 3 per cent in Australia or the US, and is more likely to settle as high as 5 per cent.
Mr Macfarlane, who served as governor of the RBA between 1996 and 2006, backed Tuesday’s 50 basis point rate hike to 0.85 per cent, and said Australians should brace for interest rates to climb above 4 per cent.
“I find it hard to think that it will just come back to 2 per cent. I think there’s enough scarcity out there, particularly with such a tight labour market both in the US and here, and with the feeding through of all the supply shocks... I think 3-4-5 per cent is more likely. It could go up to 7 or 8 per cent,” Mr Macfarlane told the Morgan Stanley Australia summit on Wednesday.
“[Interest rates] are obviously going to have to go up a lot more from where they are now. Everyone accepts that.
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https://thenewdaily.com.au/finance/finance-news/2022/06/09/inflation-stupidities-alan-kohler/
6:00am, Jun 9, 2022 Updated: 8:08pm, Jun 8
Alan Kohler: The two great stupidities behind our inflation
Here’s a wild idea for mainstream economists to smile at condescendingly: How about the Reserve Bank stands back and lets this inflation episode run its course.
There’s a wise old saying that the best cure for high prices is high prices, since they naturally reduce demand on their own, but central bankers are trained to scoff at that idea.
Unlike previous episodes, this inflation is NOT caused by galloping consumer demand or runaway wages, which is what higher interest rates are designed to suppress, but by two colossal stupidities that are entirely impervious to the Reserve Bank.
The first, of course, is Vladimir Putin’s idiotic invasion of Ukraine, about which enough is said already.
As discussed here last week, that mistake has resulted in an energy shock like that of 1973, which caused an immediate recession in 1974. Note that then Federal Reserve chairman Paul Volcker’s subsequent inflation-fighting recession didn’t happen until eight years later.
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Beware of a bear market that is more than a cub
The dotcom crash, the most recent multiyear bear market, was a crash in three acts, and so the latest sell-off could easily have more room to run.
Nir Kaissar
Jun 9, 2022 – 4.59am
The US sharemarket is experiencing the worst start to a year in five decades. Technology stocks, long a favourite of investors, are collapsing. And yet investors don’t seem bothered. I count five bear or near-bear markets in my adult lifetime, and I don’t recall investors ever being this sanguine about a declining market.
One reason might be that, technically, this isn’t a bear market, which is generally defined as a decline of 20 per cent or more from its most recent peak. The S&P 500 Index briefly dipped into bear territory on May 20 but rallied back by the end of the day. It’s down about 14 per cent from its record high in January. So investors haven’t yet been bombarded with scary headlines that typically accompany a bear market.
Another reason could be that investors are becoming better at tuning out the market’s gyrations. With every sell-off, they gain confidence that the market recovers eventually, even from harrowing declines like the dotcom bust in 2000 or the 2008 financial crisis. That may also explain why, by all indications, most investors hung on to their stocks during the pandemic-induced selloff in 2020.
But there may be another, more concerning, explanation. Bear markets have become ever shorter over the past two decades, which may be giving investors the mistaken impression that sharemarket sell-offs are brief, if uncomfortable, affairs.
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“I often cite the example of 9/11 - sometimes something happens that changes everything.”
‘For every winner there is a loser’: Why fund managers fall short
By John Collett
May 31, 2022 — 7.30pm
The extent to which active share fund managers – particularly those that invest in global markets – struggle to produce returns exceeding their benchmarks has been laid bare in new research.
Active funds promise to outperform markets after fees, but few do so, and those that outperform for a period often fall back to the pack, performance data analysed by online investment adviser and fund manager Stockspot shows.
The study by Chris Brycki, founder of Stockspot, shows just six of 244 global share funds, or 2.5 per cent, were able to outperform their benchmark, after fees, in the five years ended April 30.
“There has been a lot of money put into fund managers that invest in global sharemarkets, but the results show how hard it is to outperform,” Brycki says.
Brycki uses Stockspot’s preferred exchange-traded funds (ETFs) as proxies for market returns in the study.
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The days of political pork-barrelling are numbered
Political and international editor
June 11, 2022 — 5.00am
When the Morrison government was handing out cheques to build new car parks for commuters at Melbourne railway stations, it judged that some commuters were more worthy than others. Specifically, the truly worthy ones were those who used train stations in areas held by Liberal members of parliament. If you took the train from a station represented by a Labor MP, you were much more likely to be treated as a second-class citizen as measured by your entitlement to a car park.
Or, as the 2019 scandal became known, “car pork”.
So if you caught your morning train to the city from any of 13 stations in the federal seat of Isaacs to Melbourne’s south, held by Labor’s Mark Dreyfus, bad luck. No money. No car pork.
But if you boarded your train at any of the 12 stations a bit further north in the seat of Goldstein, then held by the Liberals’ Tim Wilson, your chances were much better. Morrison promised car parks for six of the stations in the electorate.
Labor’s Mark Dreyfus would have applied for a government grant for the stations in his electorate if he’d known that it was a thing. But the first he and other Labor MPs heard about it was when the Morrison government announced the lucky winners.
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Re-elect PM? Turns out some weren’t so Kean
8:30AM June 11, 2022
It was less than two weeks from election day when Matt Kean, the second most senior Liberal in NSW and the state’s Treasurer, inserted himself into the political campaign against Scott Morrison’s re-election.
Kean shot a message to a young journalist on the road with the then-prime minister, encouraging her to ask questions around the political controversy over Katherine Deves. The Warringah candidate had backtracked on her apology over comments about transgender children being “surgically mutilated’’ the night before in an interview with Sky News host Chris Kenny.
Kean, 11 days out from polling day, messaged the Ten Network’s Stela Todorovic, urging her to ask questions about the issue.
Morrison was standing with Liberal state minister Natalie Ward announcing an extension of the Epping Road Bridge in Sydney’s north.
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Government reaches $830m subs deal settlement
Prime Minister Anthony Albanese has confirmed that a compensation deal has been reached between Australia and French defence company Naval Group over a submarine contract that was scrapped by the Morrison government last year.
The deal will see the Australian Government pay the Naval Group $830 million – a settlement Mr Albanese labelled "fair and equitable."
The Prime Minister thanked French president Emmanuel Macron and the Naval Group for the way they conducted relations during the settlement, adding that he had accepted the president's invitation to visit the European nation.
"We can now reset the relationship without this clouding that relationship going into the future," he said. "Both of us want to reset the relationship."
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Policy path transitioning to a new world poses the make-or-break for Labor
12:00AM June 11, 2022
The Albanese government confronts a global and domestic inflation trauma that will demand a new political narrative and transformed economic policies from the recent election with the public facing higher costs, rising interest rates and prolonged real wage cuts.
The character of this new Labor government is going to be formed much faster than usual. Its test is managing an inflation surge that will cause much pain across the community and drive policy changes in relation to prices, wages, tax and energy regulation.
Political management will be a supreme task. While the government will stick by its election promises, the shift in economic policy is pivotal yet a work in progress. Central to this job will be retaining the new government’s authority and optimism as it heads towards a policy recalibration and an explanation to the public.
The first message from new Treasurer Jim Chalmers, confronting an unpredictable and high-risk outlook, has been essential – a pledge to be “upfront and honest and not mince our words” about the task. He sees the challenge as “incredibly serious”. His instinct is to be blunt, not to “tiptoe” around. Indeed, the worse mistake would be to pretend there aren’t bad things happening.
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https://www.afr.com/policy/economy/homes-loans-at-7pc-will-hurt-like-17pc-here-s-why-20220609-p5asfa
Why rising rates will hurt more than the ’90s
Skyrocketing house prices have changed the game and mean that even historically small increases in interest rates will hurt home owners.
Ronald Mizen and Michael Bleby
Updated Jun 10, 2022 – 3.39pm, first published at 1.59pm
Soaring house prices with mortgages to match mean interest rate rises could hurt households more than when the cash rate hit 17 per cent in the early-1990s, and recent homebuyers will be the most affected.
Hundreds of thousands of Australians who entered the property market for the first time or took on more debt to upsize or renovate over the past three years could be forgiven for being angry at the Reserve Bank right now.
After being told that interest rates would remain at record low levels until early-2024, they now find – after Tuesday’s RBA move – rates on a sharp upward trajectory that will add thousands and tens of thousands to their annual mortgage repayments.
Indeed, if financial markets are correct – and they have been pretty accurate so far – by November 2023, months before the RBA was tipping it would begin normalising rates, the cash rate could hit 3.65 per cent.
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The inflection point: can you feel it, too?
The Weekend Australian Magazine
12:00AM June 11, 2022
There are times in Australia’s cultural history when we have transitioned from one era to the next. Our recent change of government is consistent with the early 2020s being an inflection point in the Australian way of life. I think there have been four such shifts in my lifetime.
The first was the cultural revolution brought about by the coming of age of the baby boomer generation in the late 1960s. The rise of the counterculture, the advent of the contraceptive pill and opposition to the Vietnam War all coalesced to build a case for change. That change found expression in the election of the Whitlam Labor government in December 1972.
Two decades later, there was another shift. Businesses collapsed, unemployment peaked and recession ensued. At a geopolitical level, the USSR dissolved and globalisation got underway. These changes, while scary at the time, ushered in an era of prosperity for a trading nation like Australia. Cheap air travel followed, and lifestyle genres such as seachange and treechange emerged. The tech world delivered the breakthrough invention of the mobile phone. Casinos popped up in mainland capitals. Smoking was banned indoors. Outdoor cafes flourished in the inner city and quickly spread to suburbia and the regions.
The third point of transition was caused by the global financial crisis. This too was scary at the time. The collapse of Wall Street’s Lehman Brothers in September 2008 was watched closely from Australia. It was like witnessing a nuclear explosion from afar; we braced for a shockwave that was surely hurtling across the Pacific. But it didn’t arrive. What did arrive was a surge in demand for Australian resources by our new trading friend China. For the next few years we talked of a patchwork economy and of new ways of working, namely FIFO. A new generation of Millennials colonised the inner city. The term hipster entered the vernacular. Minimalist apartment living was the go. Social media platforms surfaced. Prime ministers and governments came and went.
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COVID-19 Information.
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No entries in this section – it is not going well however!
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Climate Change.
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https://www.afr.com/companies/energy/politics-of-energy-hits-a-perfect-storm-20220605-p5ar61
Politics of energy hits a perfect storm
This week’s emergency meeting of federal and state energy ministers will be big on the rhetoric of co-operation but short on practical answers for soaring energy prices and inadequate supplies.
Jennifer Hewett
Jun 5, 2022 – 3.59pm
It’s hardly the start Chris Bowen wanted in his new role as climate change and energy minister. But it’s the reality of an energy market facing a far more difficult policy climate than the campaign rhetoric of either Labor or the Coalition.
These energy contradictions have been a long time building, even if surging power prices have only recently turned them into a new cost of living crisis for Australian consumers. Nor are they about to be solved by the general enthusiasm in the community or among Australian corporates for the transition to renewables. The emergency meeting of state and federal energy ministers this week will do little more than solemnly agree the market is a mess with no short-term fix feasible but long-term plans are a definite must.
Loading LNG on Curtis Island in Gladstone, Queensland. Energy Minister Chris Bowen says the official trigger for requiring Queensland’s LNG exporters to keep even contracted gas for domestic use is as “blunt as a baseball”.
Blaming the former federal government for nine years of delay in establishing a “robust” framework is logical so soon after the election. It only offers temporary protection. For all those manufacturing businesses having to adapt to costs well beyond any business plan or households horrified by escalating power bills, high prices have already become Bowen’s problem to manage.
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https://www.afr.com/companies/energy/gas-trigger-hinges-on-lack-of-supply-not-cost-20220603-p5aqvu
Gas trigger hinges on lack of supply, not cost
Colin Packham Energy and resources reporter
Jun 3, 2022 – 5.45pm
Labor is mulling whether to pull the so-called gas trigger, which would free up domestic supply by limiting exports, but the process is neither easy nor quick.
The Australian Domestic Gas Security Mechanism can be triggered if there is a forecast shortage of gas, but it cannot be activated based on high gas prices, as is the situation at present.
To pull the trigger, the government must ask the Australian Energy Market Operator whether it sees a domestic supply shortage for the forthcoming calendar year. If the market operator does not, the government cannot implement the export controls.
The government has yet to ask AEMO for an updated 2023 outlook.
If AEMO does establish a shortage is looming, the government can then seek to limit exports by LNG participants, which include Woodside, Shell and Santos.
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https://www.afr.com/policy/energy-and-climate/moral-overdose-is-no-climate-fix-20220601-p5aqe5
Moral overdose is no climate fix
The closure of coal-fired generators will not be determined by wealthy activists. They will exit when the full suite of cost competitive, cleaner technology is available to replace them.
Matthew Warren Energy expert
Jun 5, 2022 – 2.23pm
The current plight of AGL, Australia’s biggest electricity generator, is a useful metaphor for the current state of the national energy market. Operationally, the business is flat out trying to manage the gaggle of black swan events besetting energy markets.
Strategically the business is directionless, the result of ongoing conflict between pragmatism and ideology; between those trying to find enough coal and gas to keep the lights on while their challengers want to shut them all down as quickly as possible.
Australia has an energy shortage, not a capacity problem. Russian energy sanctions have sent fossil fuel prices skyrocketing. Coal has become scarce locally as miners have diverted production to exports to take advantage of record coal prices – more than $500 a tonne. It’s a similar story with gas.
Low wind generation in April and May didn’t help, although strong winter winds have returned this month, helping to fill the gap.
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https://thenewdaily.com.au/opinion/2022/06/06/alan-kohler-energy-cost-australia/
6:00am, Jun 6, 2022 Updated: 8:00pm, Jun 5
Alan Kohler: It’s 1973 all over again, but with a greater energy cost for Australia
Without a legislated price on carbon, everything had to go right for the transition from fossil fuels to solar and wind to go smoothly.
But everything didn’t go right, did it? Russia invaded Ukraine and two of the world’s biggest exporters of oil, gas, coal and food are out of the market.
The expulsion of the world’s biggest commodity exporter – Russia – from the global trading system, on top of Ukraine’s removal from it, carries a high price: An energy and food shock as bad as, if not worse than, the 1973 oil embargo.
Both events, 49 years apart, have caused a surge in inflation, as well as a geopolitical realignment of the world. This time it’s into the ethical and the unscrupulous.
“The west”
and “the east” don’t really cut it any more as descriptors of how the world
divides; “developed” and “emerging” won’t do either.
Human society is dividing into those countries that trade with Russia and burn
fossil fuels, and those that ostracise Russia and are trying to cut carbon
emissions to net zero by 2050, with a large interim reduction by 2030.
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https://www.afr.com/policy/economy/gas-price-spike-to-stoke-inflation-crimp-growth-20220605-p5ar6w
Gas price spike to stoke inflation, crimp growth
Ronald Mizen Economics correspondent
Jun 6, 2022 – 5.00am
Australia’s gas price crisis will stoke inflation and crimp economic growth if it drags on, according to economists, but the effects will be partially offset by strong consumer demand for the remainder of the year.
A snap poll of 26 leading economists conducted by The Australian Financial Review ahead of the Reserve Bank of Australia’s June board meeting also revealed a strong divide about the bank’s next interest rate move.
Just under half tipped a 40 basis point (0.4 of a percentage point) increase on Tuesday, while 11 believe the bank would proceed with a “businesses as usual” rise of 25 basis points.
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Dutton flags switch to nuclear power
Phillip Coorey Political editor
Jun 5, 2022 – 10.30pm
The federal opposition is gearing up for a fight with Labor over nuclear energy with the appointment of leading proponent Ted O’Brien to the climate change and energy portfolio.
The deliberate move by Opposition Leader Peter Dutton was part of a complete overhaul of the Coalition frontbench in which the Nationals flexed their muscle against a weakened Liberal Party by wresting back the trade portfolio.
The junior Coalition partner has a record six members of the shadow cabinet, including former leader Barnaby Joyce.
Announcing his new shadow ministry on Sunday, Mr Dutton said his 24-member shadow cabinet, which is one more than the 23 in Anthony Albanese’s cabinet, will include 10 women, the same number as in Labor’s cabinet.
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Four lessons from an energy crisis we could have avoided
Without a stable energy system that includes gas, the mandate for a green transition could be lost.
Robert Wheals
Updated Jun 6, 2022 – 2.31pm, first published at 2.21pm
This is the electricity crisis Australia didn’t have to have.
A perfect storm of extreme cold weather, coal plant closures, unscheduled outages and coal supply issues, and lower-performing renewables is creating enormous challenges to our east coast electricity market.
To fill the electricity supply gap, gas generation increased by a staggering 50 per cent in May to account for 9 per cent of our National Electricity Market generation – compared to 6 per cent this time last year – adding to the pressure on prices.
Talk now of gas triggers and other market interventions will be cold comfort (literally) to energy consumers dealing with price shocks and supply issues.
The fact is, there is no quick fix to where we find ourselves today after a decade of failure to deliver a national energy plan.
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‘Mind-boggling’ challenge demands deep energy reforms: chief energy adviser
By Mike Foley and Nick Toscano
June 7, 2022 — 5.00am
Australia’s chief energy adviser says switching the power grid from coal to clean energy is a “mind-boggling” challenge that demands urgent reforms to drive funds into energy projects like gas, pumped hydro and big batteries to back up renewables and stop blackouts and power bill spikes.
Energy Security Board chief Anna Collyer will brief state and federal ministers at an emergency meeting on Wednesday on a plan to move to a “capacity market”, which would force retailers to pay generators to invest in power projects that can quickly be called on when the wind isn’t blowing and the sun isn’t shining.
Wholesale power and gas prices have been surging across the eastern seaboard amid a burst of cold weather hiking demand for heating, a series of outages at coal-fired power stations forcing gas-fired electricity to fill the gap, and spiking commodity prices because of the war in Ukraine.
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Shock Snowy 2.0 delay stirs energy mess
Jacob Greber and Angela Macdonald-Smith
Jun 9, 2022 – 7.30pm
Snowy 2.0 will not begin dispatching power until late this decade after another round of unexpected project blowouts, potentially forcing states led by Victoria and NSW to temper their opposition to using coal and gas in a planned capacity market mechanism.
The Australian Financial Review has learnt that a series of issues involving contractors and construction at the former Coalition government’s flagship solution to the accelerating collapse of coal power mean project owner Snowy Hydro is being forced to delay the start date for power generation by as long as 19 months, or to around 2028.
The setback has stunned the new Labor government as the $5.1 billion pumped hydro scheme – one of the world’s most ambitious engineering projects, and currently under construction high in the Snowy Mountains wilderness in southern NSW – was originally commissioned to offset the closure of crumbling power stations such as AGL Energy’s Liddell in the Hunter Valley, which shuts down next year.
As energy prices soar, the need for pumped hydro has become more urgent, not least because of Origin Energy’s shock announcement in February that it will bring forward the closure of Australia’s biggest coal-fired plant, Eraring in NSW, by seven years to 2025.
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‘Outcomes, not spin’: The possible upside of this energy crisis
Australia’s energy ministers and regulators have picked the “low-hanging fruit” on energy reform, now the really hard work begins.
Angela Macdonald-Smith, Mark Ludlow and Colin Packham
Jun 10, 2022 – 4.25pm
It took a full-blown energy crisis to do it, but finally the conversation between federal and state energy ministers has taken on a fresh tone of co-operation and purpose.
Wednesday’s emergency meeting led by federal Minister for Climate Change and Energy Chris Bowen of his state and territory counterparts played out against a backdrop of the most severe energy crunch in the eastern states for at least the last 20 years, evident through sky-high prices for both wholesale electricity and gas.
That the ministers could come up with little to provide immediate relief was no surprise: options are few, if any.
Australia is in the middle of a perfect storm of energy problems: outages at coal-fired plants, problems with supplies of coal, surging global gas prices and a cold snap that has increased demand.
But energy industry leaders were encouraged by both the tenor and content of the communiqué that followed. And state ministers such as Victoria’s Lily D’Ambrosio, among the most critical of the federal void on energy and climate under the Morrison government, were also on board.
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Royal Commissions And The Like.
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No entries in this category.
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National Budget Issues.
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https://www.rba.gov.au/media-releases/2022/mr-22-14.html
Statement by Philip Lowe, Governor: Monetary Policy Decision
Number 2022-14
Date 7 June 2022
At its meeting today, the Board decided to increase the cash rate target by 50 basis points to 85 basis points. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 75 basis points.
Inflation in Australia has increased significantly. While inflation is lower than in most other advanced economies, it is higher than earlier expected. Global factors, including COVID-related disruptions to supply chains and the war in Ukraine, account for much of this increase in inflation. But domestic factors are playing a role too, with capacity constraints in some sectors and the tight labour market contributing to the upward pressure on prices. The floods earlier this year have also affected some prices.
Inflation is expected to increase further, but then decline back towards the 2–3 per cent range next year. Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago. As the global supply-side problems are resolved and commodity prices stabilise, even if at a high level, inflation is expected to moderate. Today's increase in interest rates will assist with the return of inflation to target over time.
The Australian economy is resilient, growing by 0.8 per cent in the March quarter and 3.3 per cent over the year. Household and business balance sheets are generally in good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed. Macroeconomic policy settings are supportive of growth and national income is being boosted by higher commodity prices. The terms of trade are at a record high.
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Central banks find out the cost of their Faustian pact
As central banks ratchet interest rates higher, there’s a growing focus on how rising income inequality is blunting the effectiveness of their monetary tools.
Karen Maley Columnist
Jun 7, 2022 – 2.35pm
Central bankers haven’t flinched as prices for risk assets, such as bitcoin and tech stocks have cratered this year. But they’re likely to pay more attention as the drop in housing prices accelerates the response to their rate rises.
Their biggest concern will be in trying to assess the extent to which less affluent households are forced to tighten their belts – by reducing their spending on non-essential items – to keep up with their rising mortgage payments.
Only then will central bankers know how much of a Faustian pact they entered into in the early days of the pandemic when they slashed interest rates to unprecedented lows and embarked on unprecedented bond-buying programs.
As a new book, Inequality hysteresis and the effectiveness of macroeconomic stabilisation policies, published by the Bank for International Settlements notes, central banks are about to discover the longer-term costs associated with this monetary largesse.
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The steep costs if heroic budget assumptions fail to land
John Kehoe Economics editor
Jun 9, 2022 – 3.50pm
People’s incomes would be $32,000 lower and the federal government’s net debt would blow out by an extra $500 billion over the long term if heroic productivity growth assumptions embedded in the federal budget fail to materialise, according to a Treasury estimate.
Treasurer Jim Chalmers has expressed scepticism about the high productivity growth assumptions used by Treasury for the former Coalition government, hinting they may need to be revised lower to more realistic levels.
The revelation about the steep financial costs of a productivity undershoot comes after Treasury secretary Steven Kennedy warned that productivity growth had slowed since the mid-2000s.
Dr Kennedy suggested that a wave of productivity-enhancing reforms, such as to government service delivery in aged care and disability support, would be required to revive productivity.
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Treasury boss’s quiet message: The cure for our debt and deficit problem is higher taxes
Economics Editor
June 10, 2022 — 11.30am
Anthony Albanese and his Treasurer, Dr Jim Chalmers, have inherited many problems that won’t be solved quickly or easily. Nor will they be solved without the new government being willing to persuade voters to accept the sort of tax changes no pollie wants to talk about in an election campaign.
That’s the conclusion I draw from Treasury secretary Dr Steven Kennedy’s belated annual speech to the Australian Business Economists this week.
Election campaigns are times when we hear about all the wonderful things the politicians want to do to improve the public services we get and reduce the taxes we pay. It’s after the election that pollies present the bill.
Especially when the election has changed the government. This wasn’t Chalmers bringing us the bill, it was the waiter reminding us we’d eaten quite a lot and the bill was getting pretty long.
The economic story had “shifted significantly”, Kennedy said. Inflation pressures had emerged faster and more strongly than most people expected. These were likely to persist into next year “at the very least”.
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Health Issues.
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Unprecedented $4.5 billion boost for NSW hospitals, health services
By Lucy Cormack
June 6, 2022 — 12.00am
The Perrottet government will recruit more than 10,000 nurses, doctors and other staff to the state’s hospitals and health services as part of a $4.5 billion boost to the struggling sector.
The funding commitment in the state budget will mark the largest ever boost to the overwhelmed health sector, which has hit crisis point amid chronic understaffing and surging demand throughout the pandemic.
Midwives, paramedics, pathologists, pharmacists and allied health professionals will also make up 10,148 full-time recruits under the four-year plan, with more than two-thirds of staff to sign on in the first year, according to the state government.
Overworked nurses and paramedics have walked off the job this year as part of rolling public-sector industrial action to demand better pay and conditions, including improved nurse-to-patient ratios.
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‘Complete mayhem’ as healthcare system buckles under pressure
By Lucy Carroll and Mary Ward
June 11, 2022 — 5.00am
A senior nurse working in a critical role at one of Sydney’s biggest hospitals despairs at the tidal wave of patients flooding emergency every day.
“Triage is complete mayhem,” she says. “In 14 years, I have never seen it this bad. I don’t want to do it anymore. How are we supposed to control the sheer volume of patients coming in? We often have two or three nurses staring at a sea of 50 people in the emergency waiting room.”
The state’s hospitals are facing an avalanche of seriously ill patients. Deep-seated problems simmering well before the pandemic have been magnified under two years of the health system operating on a war-like footing.
“You honestly sometimes feel like somebody could die waiting, and you’ll just miss something, you might miss a patient who quietly came in and just didn’t get seen in time,” says the nurse, who cannot be named because she is not authorised to speak publicly.
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Advances show tide is turning at last in the war on cancer
By Sean O’Neill
The Times
10:52PM June 11, 2022
The vast McCormick Place convention centre in Chicago was thronged this week with around 40,000 people attending the world’s biggest cancer research jamboree. The annual meeting of the American Society of Clinical Oncology (Asco) in Chicago was taking place in person for the first time since the pandemic.
The atmosphere was abuzz with oncologists, research scientists and pharma executives; the air thick with news of breakthroughs and brainstorms. “Asco is where you go to hear the latest, to meet colleagues and people you’ve worked with — I’ve met people this week that I’ve been collaborating with for the past three years but never actually met in person,” says Mark Lawler, professor of digital health at Queen’s University Belfast. “The excitement in the room was palpable – especially around the presentations on breast cancer and rectal cancer.”
Half a century after Richard Nixon declared a “War On Cancer” and called for “the same kind of concentrated effort that split the atom and took man to the moon”, there is real belief that some cancers can be cured, many managed and others treated more kindly.
The pioneering studies unveiled at Asco drew gasps and even standing ovations in the conference hall. A “small but mighty study” showed that a precision immunotherapy treatment to target a specific genetic defect in rectal cancer had produced a 100 per cent response in the first patients to receive it. “I believe this is the first time this has happened in the history of cancer,” announced one of the study authors.
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International Issues.
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Russian missiles strike Kyiv, shattering sense of calm
John Leicester
Jun 5, 2022 – 7.00pm
Kyiv | A barrage of Russian missiles struck Ukraine’s capital early on Sunday, hitting unspecified “infrastructure” targets, Kyiv’s mayor said. No one was reported killed, with one person hospitalised with injuries.
But the attack shattered a sense of calm in Kyiv, which hadn’t seen similar strikes since the April 28 visit of UN Secretary-General António Guterres. And it showed that Russia still had the capability and willingness to target Ukraine’s capital since abandoning its wider offensive across the country to instead focus its efforts in the east.
The missiles hit the Darnytski and Dniprovski districts in the city and emergency services had arrived at the scene, Kyiv Mayor Vitali Klitschko said on the Telegram messaging app. Air raid sirens had gone off around the time of the blasts.
An acrid smell of smoke filled the air in the Darnystki district of eastern Kviv, with a billowing pillar of smoke rising in the sky. Soldiers and police blocked off a main road to the site. Smoke billowed from the charred and blackened wreckage of a warehouse-type structure.
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Ukraine rejects Macron plea not to ‘humiliate’ Russia
By Andrew E. Kramer and Jason Horowitz
June 5, 2022 — 12.00pm
Kyiv: As Ukrainian troops tried to claw back territory and stave off a blistering Russian assault along the country’s embattled eastern front, the government sought also to repel a demand earlier in the day by President Emmanuel Macron of France that Moscow not be humiliated to improve chances of reaching a diplomatic solution.
“We must not humiliate Russia so that the day when the fighting stops we can build an exit ramp through diplomatic means,” Macron, who has sought to position himself as the world’s chief negotiator with the Kremlin, said in an interview with French newspapers on Saturday. “I am convinced that it is France’s role to be a mediating power.”
Ukrainian Foreign Minister Dmytro Kuleba responded with a scathing post on social media.
“Calls to avoid humiliation of Russia can only humiliate France and every other country that would call for it,” Kuleba wrote. Instead, he argued, peace and the saving of lives could best be achieved by Russia being “put in its place.”
The exchange comes as Ukraine’s capital, Kyiv was rocked early on Sunday by several explosions, the first assault on the Ukrainian capital in weeks as life had slowly begun to resemble normal in the city and its suburbs.
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https://www.afr.com/world/europe/is-putin-winning-here-s-a-ringside-view-20220602-p5aqfi
Is Putin winning? Here’s a ringside view
Lithuanians worry that Ukraine’s toughest days still lie ahead, in a potentially long and bitter war. And whether Russia wins or loses, the fight isn’t over.
Hans van Leeuwen Europe correspondent
Updated Jun 6, 2022 – 2.04pm, first published at 11.12am
Vilnius | In the Lithuanian capital of Vilnius, you are as likely to see Ukraine’s blue and yellow flag as the Lithuanian one.
The city’s distinctive trolleybuses don’t display only their destination, but also the message “Vilnius ♥ Ukrainia”. Many a Lithuanian’s jacket lapel has a Ukrainian emblem pinned to it.
Lithuania and Ukraine don’t share a border, but they have a common history as subjects of Russian imperial ambition. As a former Soviet state, the Baltic country of 2.8 million people feels perpetually vulnerable to the predations of President Vladimir Putin.
This is why Lithuania, alongside its Baltic cousins Estonia and Latvia, are among the most urgent, insistent voices calling for Western military and economic support for Ukraine.
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Why the Ukraine invasion could be the start of a second Cold War
The US once again sees itself as engaged in a global struggle with Russia and China.
Gideon Rachman Columnist
Jun 7, 2022 – 9.35am
Since Russia invaded Ukraine, there has been much talk of the echoes of the Second World War and the dangers of a third one. But the current global moment is much more like a return of the Cold War.
Once again, the US is assembling a coalition of democracies to face off against a Russia-China axis. Once again, the dangers of a nuclear war are central to international politics. And once again, there is a large bloc of non-aligned countries – now generally referred to as the “global south” – that is intensively courted by both sides.
Many in the global south insist that Ukraine is a regional conflict that must not be allowed to disrupt or change the whole world. But policymakers in the Biden administration already frame the war in global terms.
They see Russia and China as partners in a challenge to the “rules-based order”, upheld by the US and its allies. The battles in Ukraine are the central theatre of that wider struggle.
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Chinese policymakers revert to their old playbook (again)
With President Xi seeking a further five-year term in power at a Communist Party congress late this year, Beijing might finally decide to boost consumer spending.
Karen Maley Columnist
Jun 7, 2022 – 5.00am
Perhaps the most worrying aspect of the slowdown now clearly under way in the world’s second-largest economy is that China’s leadership is rigidly sticking to its old playbook, even though this approach is unlikely to do much to boost flagging growth.
There’s no doubt economic activity has been dented by the strict COVID-19 lockdowns that have shuttered Chinese major cities for weeks, if not months, bringing business activity to a halt.
But Chinese President Xi Jinping has shown no indication of softening his zero-Covid policy even as both Shanghai and Beijing finally relax their harsh lockdown restrictions.
Not surprisingly, the threat of future lockdowns is sapping business and consumer confidence.
Even though the Chinese central bank has cut its benchmark lending rates for mortgage and business loans, and directed banks to boost lending, borrowers remain wary.
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Indonesian president issues warning on regional tensions
Andrew Tillett Political correspondent
Jun 6, 2022 – 7.00pm
Indonesia’s leader, Joko Widodo, has warned that tensions between Western allies and China in the Indo-Pacific region must be well managed to avoid the risk of open conflict.
And Prime Minister Anthony Albanese has sought to mollify the president over Australia’s acquisition of nuclear submarines.
China’s increasingly assertive behaviour was a key topic during the annual leaders’ meeting at the Bogor Presidential Palace in Jakarta on Monday, as well as both leaders’ plans to boost bilateral trade.
Mr Albanese confirmed that he would attend the G20 summit to be hosted by Mr Joko in Bali in November, amid concerns that some Western leaders might boycott the event because of the attendance of Russian President Vladimir Putin, who has been accused of war crimes over the invasion of Ukraine.
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China to begin construction of PLA naval facility in Cambodia this week, Western officials say
By Ellen Nakashima and Cate Cadell
June 7, 2022 — 11.10am
China is secretly building a naval facility in Cambodia for the exclusive use of its military, with both countries denying that is the case and taking extraordinary measures to conceal the operation, Western officials said.
The military presence will be on the northern portion of Cambodia’s Ream Naval Base on the Gulf of Thailand, which is slated to be the site of a groundbreaking ceremony this week, according to the officials, who, like others, spoke on the condition of anonymity because of the matter’s sensitivity.
The establishment of a Chinese naval base in Cambodia - only its second such overseas outpost and its first in the strategically significant Indo-Pacific region - is part of Beijing’s strategy to build a network of military facilities around the world in support of its aspirations to become a true global power, the officials said.
China’s only other foreign military base right now is a naval facility in the East African country of Djibouti. Having a facility capable of hosting large naval vessels to the west of the South China Sea would be an important element of China’s ambition to expand its influence in the region and would strengthen its presence near key Southeast Asian sea lanes, officials and analysts said.
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Mafia rules crime gang networks
As many as 5000 mafia members are in Australia, with Italian organised crime responsible for smuggling tonnes of illicit drugs and washing billions in dirty money.
By Ellen Whinnett and David Murray
From Nation
June 6, 2022
As many as 5000 members of the mafia have been identified in Australia, with Italian organised crime responsible for smuggling tonnes of illicit drugs onto our shores and washing billions in dirty money through the economy.
The Australian Federal Police is investigating 51 Italian organised crime clans, 14 confirmed as ’Ndrangheta, or Calabrian mafia families, some taking their orders from the godfathers back in Italy.
They are operating across Victoria, NSW, the ACT, South Australia, Western Australia and Queensland, and working closely with Middle Eastern crime gangs, Asian triads, South American cartels and local outlaw motorcycle gangs.
In a major breakthrough in combating organised crime in Australia, the AFP has compiled a family tree of the mafia, parts of which it has shared with The Australian, charting marriages and associates of the Italian organised crime clans by using data obtained from the elaborate undercover Operation Ironside investigation, built largely around the encrypted app AN0M.
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https://www.afr.com/world/europe/why-the-world-is-fixated-on-vladimir-putin-s-health-20220607-p5arng
Why the world is fixated on Vladimir Putin’s health
The Russian President is dying from thyroid cancer, has trembling hands from Parkinson’s or suffering from dementia. Rumours spread far and fast but be careful what you wish for.
Katie Stallard
Jun 8, 2022 – 8.00am
Vladimir Putin is dying from blood cancer. Or thyroid cancer. Or maybe abdominal cancer. No, it is Parkinson’s. He has dementia. He is losing his sight. His limbs are “shaking uncontrollably”. On any given day, depending which news outlets you believe, the Russian president is terminally ill with any number of different diseases. Or perhaps, as several British tabloids have suggested recently, he is already dead.
Citing an unnamed intelligence source at the UK’s Secret Intelligence Service MI6, the Daily Star reported on May 28 that Putin was “very ill”, possibly “already dead”, with the Kremlin using lookalikes to conceal his demise. Not to be outdone, the Sunday Mirror followed up the next day with its own wholly unverified assertions under the headline, “Vladimir Putin may already be dead with body double taking his place, MI6 chiefs claim.”
The rumours about Putin’s decline spread so far and so fast that Russia’s foreign minister, Sergei Lavrov, was forced to deny them during an interview with the French television channel TF1. “President Vladimir Putin makes public appearances on a daily basis,” Lavrov said, according to the Russian news agency Tass. “You can see him on TV screens, read and listen to his speeches. I don’t think that a sane person can suspect any signs of an illness or ailment in this man.”
To be clear, there is no verifiable evidence that Putin is seriously ill. Still less so that he is dead. The unnamed sources who are quoted in these articles do not offer definitive proof, perhaps unsurprisingly given the secrecy surrounding the president’s health and security. Instead, they rely largely on rumours swirling within the intelligence community and the old Soviet-era practice of Kremlinology, in which analysts scrutinise the leader’s public appearances for signs of physical decline and clues as to who might be in favour or out, in the absence of reliable information.
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‘Great pain’ will force central banks to cut rates
Matthew Cranston United States correspondent
Jun 8, 2022 – 9.55am
Washington | Bridgewater founder Ray Dalio says central banks around the world will have to start cutting interest rates again in two years in an effort to rebuild their economies following a damaging bout of stagflation.
In an interview with The Australian Financial Review, the billionaire founder of the world’s biggest fund manger said that stagflation - low growth and high prices - would end up hurting the US economy so much that central banks would have cut rates again in 2024 - the same year as the next presidential election.
“We believe that we are in a tightening mode that can cause corrections or downward moves to many financial assets,” he said.
“The pain of that will become great and that will force the central banks to ease again probably somewhere close to the next presidential elections in 2024.”
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Humiliation in Ukraine is the price Russia must pay for its brutality
Military leader and strategist
June 7, 2022 — 3.30pm
Populations in democracies can be fickle. Opinions change often and attention spans can be short. But this is part of the to and fro, and open expression of views, that is so essential in democratic systems.
One quality that is sometimes observed as lacking in democratic societies is patience. We have become used to rapid Amazon deliveries, 24/7 news cycles, and shorter, faster versions of old sports. This is hardly a new phenomenon.
In his book The Vertigo Years, an exploration of the technological and societal changes in the lead up to World War I, author Philipp Blom wrote that “speed and exhilaration, anxiety and vertigo were recurrent themes of the years between 1900 and 1914, during which cities exploded in size and societies were transformed”. But, as shown in the long wars of the 20th century, the populations of democracies also have the capacity for strategic patience in the right circumstances.
The Russo-Ukraine War, which began in the hopes of a rapid and decisive victory by the Russians, has now settled into the ebb and flow that is normal for large-scale international wars of this type. Both sides have suffered massive casualties, and both have made gains and suffered battlefield losses. This will be a long war. Those supporting Ukraine must commit to long-term assistance. But leaders of democratic nations must explain to their citizens why this fight is important, why it will take time, and why we must nurture strategic patience if Ukraine is to successfully throw back this invasion of its territory.
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Janet Yellen, World Bank expect elevated inflation to persist
By Andrew Duehren and Yuka Hayashi
The Wall Street Journal
June 8, 2022
Treasury Secretary Janet Yellen warned that the US is likely facing a prolonged period of elevated inflation, while the World Bank sharply lowered global growth forecasts and flagged a risk of recession in many countries.
The World Bank, in a report, projected several years of high global inflation and tepid growth reminiscent of the stagflation of the 1970s. Ms Yellen told lawmakers that the White House would likely revise upward its U.S. inflation forecast – which already showed prices rising this year at nearly twice the prepandemic rate.
“I do expect inflation to remain high, although I very much hope that it will be coming down now,” Ms Yellen said, adding that the Biden administration was updating its forecast from March that inflation would average 4.7 per cent this year. In recent months, consumer inflation has trended above 8 per cent.
“The numbers aren’t locked in, but it’s likely to be higher” than the initial 4.7 per cent forecast, she said.
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China’s drone fleet threatens nuclear subs’ stealth advantage
China’s new semi-autonomous drone carrier will enable Beijing to monitor large areas of ocean, above and below the surface, with limited risk or effort. It raises serious questions for Australia’s short and long-term defence capability planning.
June 8, 2022
Many labour under the illusion that drone wars belong to a galaxy far away, with apologies to Star Wars. Yet they are here and operating on our doorstep, in possibly menacing terms. It’s time we paid far greater notice, in the context of fraught Australia-China relations, beyond recent aerial and traditional naval tensions.
Defence Minister Richard Marles rightly identifies bridging the defence capability gap as “just about the No.1 priority” for his portfolio. He was referring to the 20-plus year gap between the identified need for submarines and expected earliest delivery. However, the gap already may be wider than many appreciate.
On May 18, the Chinese Communist Party launched a new class of ship: a semi-autonomous drone carrier, the Zhu Hai Yun (or Pearl Sea Cloud). The Zhu Hai Yun carries a fleet of surface, air and underwater drones. It comes just a year after China’s Zhongtian Feilong first tested an airborne autonomous drone carrier.
The technology piloting China’s new ship is termed the Intelligent Mobile Ocean Stereo Observing System; its development kickstarted in 2019. Construction of the ship began less than a year ago. It’s on the water, being tested.
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How Boris Johnson undid the Tory Party’s mythology
The Economist
June 8, 2022
“Shy Tories” are common. Voting for the Conservative Party is never chic, so people often keep quiet about it. In the 1992 and 2015 general elections, voters took pollsters by surprise and handed the Conservative Party unexpected majorities.
It is voters rather than MPs who are supposed to be nervous about this allegiance. But during a vote of no confidence on June 6th into Boris Johnson’s leadership of the Conservative Party, just under 160 MPs — a clear minority of the party — pledged their fealty to the Prime Minister publicly. In the end, 211 MPs voted for him. It is this sort of shy Tory MP who quietly keeps Mr Johnson in power.
They also believe the lore that Conservative MPs are cold-hearted killers. The party is often described as an “absolute monarchy tempered by regicide”. The continued failure to remove Mr Johnson, after months of plunging approval ratings, government drift and a steady stream of scandals, reveals it to be anything but.
That the Conservatives are ruthlessly regicidal is only the latest myth surrounding the Conservatives to be crushed during Mr Johnson’s leadership. This is a party of government that cannot govern. It is the party of business that hates business. It is dedicated to staying in power, yet refuses to take the steps necessary to keep itself there. Even more recent folklore is misleading: this is a populist party with an unpopular agenda.
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The bright side of Anglo-American populism
British and American belligerence and jingoism led them to the right position on Ukraine.
Janan Ganesh Contributor
Jun 8, 2022 – 11.23am
Some Englishmen, Daniel Defoe is supposed to have said, would “fight to the death against popery, without knowing whether popery was a man or a horse”. The author of Robinson Crusoe was on to something about nativists: their indiscriminate and almost cheerful belligerence. The precise identity of the adversary matters less to them than the opportunity to show strength.
The chief political surprise of 2022 starts to make sense in the light of that centuries-old epigram. To go by form, the populists of Anglo-America should have equivocated over the war in Ukraine, if not sided with the aggressor.
Britain’s Conservatives had taken Russian donations and ennobled an oligarch’s son. The US Republicans’ own dealings with Moscow led to the first impeachment of Donald Trump. For some, the eastward orientation was philosophical, not just transactional, with Russia hailed as a fortress against wokery.
What happened instead has passed with too grudging a salute from those of us in the liberal centre. For his quick and lavish support, British Prime Minister Boris Johnson is better liked in Ukraine than at home. Republicans have scolded President Joe Biden for not raising sanctions on Russia earlier. Neither the Tories nor the GOP is walking on eggshells around Vladimir Putin’s amour-propre or warning against the “humiliation” of a major power.
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Is the US careening towards a recession?
Karen Maley Columnist
Jun 8, 2022 – 4.52pm
It’s hard to believe US consumers are powering along, after the giant US retailer Target was forced to cut its profit outlook for the second time in three weeks as it cuts prices and cancels orders to quickly clear out unwanted inventory.
But now consumers are turning away from goods such as furniture, appliances and casual clothes, which were in demand during the pandemic, and are spending more on travel and restaurants.
More worrying, the huge spike in the cost of basic goods, such as food, petrol and rent, has left shoppers with much less money to spend on discretionary items.
This problem isn’t confined to Target. The past few weeks have seen other major US retailers, including Walmart and Macy’s, reveal they also are over-stocked.
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The World Bank’s gloomy economic outlook might be too optimistic
Senior business columnist
June 8, 2022 — 11.57am
The latest World Bank assessment of the state of the global economy and its outlook makes for gloomy, even depressing, reading with its focus on comparisons with the stagflationary era of the 1970s.
While it likens current inflation levels and slumping growth rates amid surging energy and food prices to the period of the oil shocks of the 1970s (when food prices also spiked), the outlook depicted in the bank’s latest Global Economic Prospects report isn’t quite as grim as the experience of the 1970s.
Nevertheless, the bank is depicting “a protracted period of feeble growth and elevated inflation” and therefore the risk of stagflation.
It has cut its forecasts for global growth from last year’s 5.7 per cent to 2.9 per cent – well down on the 4.1 per cent it anticipated at the start of the year. Most of the 1.2 percentage points revision between the January and current forecasts is attributable to the effects of the war in Ukraine.
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Out-of-control inflation for Americans’ food, petrol may see Biden’s Democrats lose control of Congress
June 9, 2022 — 6.22am
Washington: Beth Schaffer knows exactly how hard it is to make ends meet in America.
The South Carolina resident works 62 hours a week, seven days a week, juggling two low-paid jobs. The first, at KFC, pays $US12 ($16. 60) an hour; the second, at a gas station, pays $9 an hour. Not surprisingly, Schaffer says, “I’m exhausted.”
“Everything keeps going up and yet the minimum wage is so far behind that you have to work two jobs just to maintain,” the 38-year-old says.
“And then it’s still not enough, so you have to think: Ok, if I put this money aside to put food on the table, how am I going to pay the light bill? Or if I pay my light bill then how am I going to be able to put food on the table?
“I struggle to pay my rent, I’m facing eviction every month and my elderly father who is also disabled lives with me. You try to juggle everything, then you still end up far behind.”
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Communism still haunts Russia, Vladimir Putin’s tyranny rooted in Soviet ideology
By Robert D. Kaplan
June 9, 2022
Commentary magazine published one of the most important essays of the 20th century in November 1979: “Dictatorships and Double Standards” by Jeane J. Kirkpatrick, who would go on to become former US president Ronald Reagan’s ambassador to the United Nations.
Right-wing authoritarian regimes, she explained, controlled only the levers of power and thus didn’t tamper with the “habitual rhythms” of traditional societies; nor were they bent on revolution. Thus, they left their countries intact. Communist systems and ideology sought to remake societies, claiming “jurisdiction over the whole life” of their peoples, and therefore destroyed them utterly from top to bottom for decades to come.
Though Kirkpatrick’s focus was communist regimes in the Third World, no better example of this can be found than Russia, a superficially Europeanized society that sustained more than 70 years of communism. When the Soviet system finally collapsed in 1991, the result was not stability but a decade of near-anarchy. With such an inheritance, Vladimir Putin’s tyranny followed organically.
Mr Putin has been described accurately as a fascist, owing to his cult of personality and ferocious ultranationalist assault on Ukraine. But as the extreme right and extreme left have always shared uncanny resemblances in their methods of control and demonisation of enemies, it is also true that Mr Putin has been Soviet in his style of rule. He has amassed more personal power than any Russian since Joseph Stalin.
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https://www.afr.com/world/europe/western-support-for-ukraine-has-peaked-20220607-p5arn7
Western support for Ukraine has peaked
The honeymoon that Ukraine’s leaders have enjoyed with the West may be coming to an end as the economic cost of the war sinks in.
Andrew Exum
Jun 10, 2022 – 5.00am
We’ve likely reached the high-water mark of the grand alliance to defeat Russia in Ukraine. In the coming months, relations between the Ukrainian leadership and its external supporters will grow strained, and the culprit will be economic pain exacerbated by the war.
When our children and grandchildren study this conflict, they will marvel at the speed and audacity with which the Western powers—Europe and the United States, primarily—mobilised to arm the Ukrainian people in the face of Russia’s onslaught.
In stark contrast to the Winter War of 1939–40, when Russia invaded Finland and various Western powers hemmed and hawed before providing only token assistance to the plucky Finns, Europeans have fallen over themselves to provide lethal aid to the Ukrainians.
And it really is lethal aid, which amazes me: I had the misfortune of helping deconflict allied and Russian operations over Syria from 2015 through 2017, when we went to extraordinary lengths to avoid killing any Russians, for fear of starting World War III.
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Gradually, then suddenly: how the US could slide into civil war
Edward Luce Columnist
Jun 10, 2022 – 5.00am
In the northern summer of 2015, America caught a glimpse of how its future could unfold. The US military conducted a routine exercise in the South that triggered a cascade of conspiracy theories, particularly in Texas. Some believed the manoeuvre was the precursor to a Chinese invasion. Others thought it would coincide with a massive asteroid strike.
The exercise, called Jade Helm 15, stood for “homeland eradication of local militants”, according to one of the right’s dark fantasy sites. Greg Abbott, Texas’s Republican governor, took these ravings seriously. He ensured the 1200 federal troops were closely monitored by the armed Texas National Guard.
In that bizarre episode, which took place a year before Donald Trump became the Republican nominee for president, we see the germs of an American break-up.
As with any warning of impending civil war, the very mention of another American one sounds impossibly alarmist – like persistent warnings from chief Vitalstatistix in the Asterix comic series that the sky was about to fall on Gaulish heads. America’s dissolution has often been mispredicted.
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El-Erian says it’s ‘way too early’ to say inflation has peaked
John McCorry and Jonathan Ferro
Jun 10, 2022 – 3.44am
Mohamed El-Erian, who almost a year ago accurately forecast that elevated US inflation would be persistent, says it hasn’t peaked.
The closely followed bond-market strategist agrees with monthly consensus estimates for May’s consumer price index to be reported on Friday, but told Bloomberg Television’s The Open on Thursday that “what worries me is that the June month-on-month print will be worse than the May month-on-month print. Those who boldly said inflation has peaked and is coming down may have to change their minds”.
The CPI for April rose 8.3 per cent, down from 8.5 per cent the prior month, but still close to the biggest increase in four decades.
Annual inflation likely climbed at an 8.2 per cent pace in May, according to the median projection in a Bloomberg survey ahead of the release on Friday. That’s still more than four times the levels seen before the pandemic.
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Vladimir Putin, in speech, hints at further territorial expansion for Russia
June 10, 2022 — 6.30am
In a speech made three months after Russia’s invasion of Ukraine began, President Vladimir Putin appeared to leave the door open for further Russian territorial expansion.
Paying tribute the founder of St Petersburg, Peter the Great, on the 350th anniversary of his birth, Putin drew parallels between Peter the Great’s founding of St Petersburg and modern-day Russia’s ambitions.
Putin opened the speech by discussing Peter’s conquest of the Baltic coast during Russia’s 18th-century conflict with Sweden.
When Peter founded the new capital, “no European country recognised it as Russia. Everybody recognised it as Sweden,” Putin said. He added: “What was (Peter) doing? Taking back and reinforcing. That’s what he did. And it looks like it fell on us to take back and reinforce as well.”
“It’s impossible — Do you understand? — impossible to build a fence around a country like Russia. And we do not intend to build that fence,” the Russian leader said.
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https://www.afr.com/policy/economy/us-inflation-hits-a-new-40-year-high-of-8-6pc-20220610-p5asyw
US inflation hits a new 40-year high of 8.6pc
Matthew Cranston United States correspondent
Jun 10, 2022 – 11.27pm
Washington DC | Pressure is mounting on President Joe Biden and the Federal Reserve to rein in rampant inflation after the latest readings showed the costs of gas, food, rent and other necessities jumped well ahead of forecasts to a new 40-year-high.
Prices jumped 1 per cent in May, a steep rise from the 0.3 per cent increase in April, sending the annual inflation rate to 8.6 per cent, up from 8.3 per cent. Economists expected a 0.7 per cent rise in May.
Mr Biden said on Friday (Saturday AEST) that inflation was his No.1 priority, once again seeking to shift blame to the impact from Russia’s war against Ukraine, calling higher petrol prices “Putin’s tax”.
“I understand Americans are anxious, and they are anxious for good reason,” Mr Biden said from the Port of Los Angeles.
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‘Trump summoned the mob’: Jan 6 committee blames ex-president for ‘coup attempt’
Updated June 10, 2022 — 4.26pmfirst published at 12.56pm
Washington: Former US president Donald Trump incited the January 6 Capitol attack and was central to a sweeping and methodical conspiracy to overturn the 2020 US election despite the advice of his top aides and family members, a year-long investigation has found.
In its explosive first public hearing, the Congressional committee investigating last year’s violent insurrection claimed that the attack was an “attempted coup” that put “two and half centuries of constitutional democracy at risk” - and that Trump was central to its execution.
“There is no room for debate. Those who invaded our capital and battled law enforcement for hours were motivated by what president Trump had told them: that the election was stolen, and that he was the rightful president,” said the committee’s vice-chair, Republican Liz Cheney, who has broken ranks with her party to lead the committee.
“Trump summoned the mob, assembled the mob and lit the flame of this attack.”
The January 6 insurgency took place shortly after Trump gave an incendiary speech to thousands of supporters repeating his false claims that the 2020 election was rigged, urging them to “fight like hell” to stop Joe Biden’s victory from being certified by Congress that day.
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Putin is another chapter in Russia’s blood-soaked story
Jamie Walker 12:00AM June 11, 2022
If there is a Russian way of making war, Antony Beevor is impeccably placed to describe it. The best-selling British author and knight of the realm delved deep into once-sealed communist military archives to flesh out his searing accounts of the battles for Stalingrad and Berlin in World War II, shedding fresh light on the brutality of warfare on the Eastern Front.
He has raked over familiar ground in a new book on the bloody prelude to that epic, ideology-infused clash between Stalin’s Red Army and Hitler’s Wehrmacht. Russia: Revolution and Civil War 1917-1921 tells the gripping story of what spun out of the fall of the tsars and rise of the communist Bolsheviks in 1917 – a conflict of staggering scope that killed 12 million people, dragged in the armed forces of the West – including Australian volunteers – and set the scene for even greater slaughter when the world went to war in 1939.
It couldn’t be more timely, given the fraught situation in Ukraine. Vladimir Putin certainly fits the bill of any Russian or Soviet-era autocrat, given his monstrous disregard for human life, be it of a purported enemy or of his own soldiers. Think Nicholas II’s nihilistic arrogance or Lenin’s contemptuous view of “individuals as completely expendable objects”, to quote Russian revolutionary exile and writer Teffi, whose acerbic observations enliven Beevor’s book.
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Bond market rout is so bad that double-digit losses are normal
Finbarr Flynn and Tasos Vossos
Jun 10, 2022 – 9.43pm
Bonds denominated in the world’s leading currencies are suffering double-digit losses following the European Central Bank’s decision to end quantitative easing.
Investors have now lost 10.1 per cent this year on euro high-grade corporate bonds, Bloomberg debt indexes show. The more rate-sensitive US dollar and sterling credit markets have already been nursing double-digit negative returns in 2022.
To put the euro credit decline in perspective, its year-to-date drop eclipses all previous routs. After the COVID-19 pandemic hit Europe in 2020, the Bloomberg Euro Aggregate Corporate Total Return index showed losses of as much as 7.3 per cent, while negative returns peaked at 6.1 per cent in 2008, following the collapse of Lehman Brothers.
The global pain follows a brief respite in May, when investors hoped that slowing economic growth would help ease price pressure. But inflation has been sticky and oil surged yet again, pushing the ECB to announce that it will stop adding to the world’s biggest bond-buying program this month and raise rates soon after.
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https://www.afr.com/policy/economy/why-monetary-policy-has-become-so-difficult-20220611-p5asza
Why monetary policy has become so difficult
Both the Federal Reserve and European Central Bank have taken greater risks to bolster growth, a positive which also has costs.
Paul Krugman
Jun 11, 2022 – 9.05am
Today’s column isn’t about what the Federal Reserve or its counterpart the European Central Bank should be doing. I have views, of course: For what it’s worth, I think the Fed is getting it roughly right and the ECB is overreacting.
But that’s a debate both huge and inconclusive; in fact, it may never be resolved, since people are so good at convincing themselves that they were right.
What I want to focus on instead is why the job of each central bank seems so challenging right now — why each institution seems to be facing agonising trade-offs.
The background: For a while, inflation seemed to be largely an American problem. Yes, prices were rising in Europe too, but not as much as in the United States, and the ECB, unlike the Fed, wasn’t talking about raising interest rates. Recently, however, European inflation has surged — to the point where it’s basically as high as US inflation.
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US Capitol riot probe accuses Trump of ‘attempted coup’
Lisa Mascaro, Mary Clare Jalonick and Farnoush Amiri
Jun 10, 2022 – 1.49pm
Washington | The House panel investigating the January 6 insurrection at the US Capitol laid the blame firmly on Donald Trump on Thursday night (Friday AEST), saying the assault was not spontaneous but an “attempted coup” and a direct result of the defeated president’s effort to overturn the 2020 election.
With a never-before-seen 12-minute video of the deadly violence and startling testimony from Trump’s most inner circle, the committee provided gripping detail in contending that Mr Trump’s repeated lies about election fraud and his public effort to stop Joe Biden’s victory led to the attack and imperiled American democracy.
“Democracy remains in danger,” said Democrat Bennie Thompson, chairman of the panel, during the hearing, timed for prime time to reach as many Americans as possible.
“January 6 was the culmination of an attempted coup, a brazen attempt, as one rioter put it shortly after January 6, to overthrow the government,” Mr Thompson said. “The violence was no accident.”
In a previously unseen video clip, former attorney-general Bill Barr testified that he told Mr Trump the claims of a rigged election were “bullshit”.
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Don’t look away from Ukraine now, says Volodymyr Zelensky
AFP
11:30PM June 11, 2022
European Union chief Ursula von der Leyen visited Ukraine on Saturday to discuss the country’s hopes of joining the union, as President Volodymyr Zelensky warned the world not to look away from the conflict devastating his country.
Ms von der Leyen said Saturday her executive would by the end of the coming week finalise its opinion on whether Ukraine should be a candidate country to join the EU.
“The discussions today will enable us to finalise our assessment by the end of next week,” she told Ukrainian President Volodymyr Zelensky in Kyiv during a surprise visit.
Ms von der Leyen’s visit — her second since Russia’s February 24 invasion — came as fierce battles continued in the east and south of Ukraine.
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Ukraine dependent on allied arms after exhausting Soviet weaponry
By Paul Handley
AFP
4:22PM June 10, 2022
Ukraine has depleted its Soviet and Russian-designed weaponry and is now completely dependent on allies for arms to defend against Russia’s invasion, US military sources say.
Once part of the Soviet Union, Ukraine’s army and its defence industry were built around Soviet and Russian-standard equipment, small arms, tanks, howitzers and other weapons not interchangeable with those of neighbours to the west.
More than three months into the conflict sparked when Russia invaded Ukraine on February 24, that equipment has been used up or destroyed in battle, the US sources said. Now, Kyiv’s forces are using, or learning to use, arms wielded by the US and European NATO allies.
Early in the war, the West was cautious about supplying much to Kyiv, worried that doing so risked bringing about a NATO v. Russia conflict. They also feared their advanced weapons technology would fall into Russia’s hands.
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I look forward to comments on all this!
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David.
