September 29, 2022 Edition
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The world seems to be lurching to be overwhelmed by issues around most of the major powers being in conflict for a real risk of a global recession affecting the UK, Europe, the US and much of Asia. We seem to be in some pretty difficult times right now…
In OZ Parliament is now back after the death of the Queen and it will be interesting to see how things play out and what the Budget looks like in the face of an upcoming recession.
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Major Issues.
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A nation shorn of Britishness is still waiting for the republic
Republicans will need to make the case as to why only an Australian head of state can provide the basis of reassurance and belonging for a modern, 21st-century nation.
James Curran Historian
Sep 18, 2022 – 1.20pm
At the end of the 1954 royal tour to Australia, the political cartoonist George Finey depicted NSW Labor premier Joe Cahill standing at Circular Quay. Cahill, an Irish Catholic, was drawn staring into the distance, bereft as the Queen’s ship sailed through Sydney Heads on its way back to Britain.
Plumes of black smoke from its funnel wafted over the harbour. He looked forlorn, his brow furrowed. The caption was blunt: “Alone”.
Cahill had been constantly by the Queen’s side during her time in NSW on that visit. At the state dinner, he compared the Queen’s arrival in Sydney to the landing of Arthur Phillip in Sydney Cove in 1788.
“It was from that very point that our British civilisation fanned out to encompass a continent” he said. “Our origin is British, our soul is British. We think British, we act British.”
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https://www.afr.com/property/residential/luxury-homes-hardest-hit-by-property-slump-20220919-p5bj48
Luxury homes hardest hit by property slump
Michael Read Reporter
Sep 19, 2022 – 8.23am
Homeowners in Australia’s most expensive suburbs are bearing the brunt of the national property price downturn, with Reserve Bank research finding people who own houses rather than apartments are the most vulnerable to rate rise-induced price swings.
The Reserve Bank of Australia’s head of domestic markets, Jonathan Kearns, said the sensitivity of house prices to interest rates differed regionally and by type of housing.
Speaking on Monday morning, Dr Kearns said properties in places with inflexible housing supply, high levels of mortgage debt, more investors and higher incomes were more vulnerable to an interest rate-driven property price downturn.
“These estimates do not indicate that these factors cause housing prices to be more responsive to changes in interest rates, but they do highlight that the sensitivity of housing prices to interest rates is not going to be uniform across the country,” he told The Australian Financial Review Property Summit.
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Rising inflation and interest rates turn property boom on its head
There’s still money for high-quality Australian office investments, the AFR Property Summit hears.
Sep 19, 2022 – 7.21pm
The Australian Financial Review Property Summit heard barbecue-stopping warnings of precipitous falls in record house prices as the pandemic boom has been turned on its head by rising inflation and interest rates.
Barrenjoey chief economist Jo Masters said that if the Reserve Bank normalised interest rates in line with market pricing, Sydney house prices could fall by up to 30 per cent. Yet that would still return house prices to just below pre-pandemic levels.
The summit also heard a more nuanced story about the correction in property values at the end of the era of ultra-cheap money.
Jonathan Kearns, the Reserve Bank’s head of domestic markets, told the summit that while the central bank’s financial stability risk modelling – which estimates a 15 per cent correction over the next two years – showed how sensitive house prices were to interest rates, this was not a forecast or prediction.
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https://www.afr.com/politics/federal/us-choppers-get-the-nod-from-albanese-20220920-p5bjma
US choppers get the nod from Albanese
Andrew Tillett Political correspondent
Sep 20, 2022 – 8.00pm
Australia has confirmed it will buy another 12 submarine-hunting helicopters in an arms deal worth about $2.5 billion, allowing the navy to create a third squadron amid rising regional tensions over China’s militarisation.
Former prime minister Scott Morrison had announced the purchase during the election campaign, using it in a bid to help improve the Liberal Party’s chances of winning the NSW marginal south coast seat of Gilmore, where the navy’s aviation wing is based.
The Albanese government’s decision to go ahead with the order comes despite the defence strategic review that is under way, which is meant to be considering the military’s acquisition schedule for new weapons and platforms.
The contract with US defence giant Lockheed Martin subsidiary Sikorsy will expand the size of the navy’s fleet of MH-60R Seahawk, or Romeo, helicopters from 24 to 36. The purchase completes the navy’s plan to axe its six MRH-90 Taipan helicopters, which have suffered from maintenance issues and high operating costs.
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‘Bold action’ call to spend $1.5b on creating semiconductor industry
Phillip Coorey and Tom McIlroy
Sep 21, 2022 – 6.00am
The Albanese government should invest $1.5 billion to establish a domestic industry to manufacture semiconductors, rather than continue to rely on increasingly risky overseas providers, principally Taiwan, Australia’s pre-eminent national security think-tank has recommended.
In a new report, the Australian Strategic Policy Institute said the COVID-19 pandemic, as well as coercive trade practices by China, demonstrated that Australia could no longer rely on free-trade principles for the supply of such a crucial product.
“In this environment, bold action is warranted. Continuing to do what we did before is not an option because it will undermine the national interest,” the report says.
“A new
approach is needed that’s in part heretical to our old, market-based approach
but is driven by necessity: government intervention that works in
tandem with industry expertise and drive.”
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‘We’re still in deficit’: Gallagher stares down spending calls
Phillip Coorey Political editor
Sep 21, 2022 – 5.23pm
Finance Minister Katy Gallagher has been forced to emphasise that the budget remains mired in deficit, as she faces calls for more spending prompted by revelations of a $50 billion windfall.
A day after announcing the 2021-22 budget deficit would be about $50 billion lower than the most recent forecast of $80 billion, Senator Gallagher stressed that the windfall was temporary, and the government was still borrowing money for everyday expenses.
“We were forecasting a deficit in the order of $80 billion. Now it will come in just over $30 billion for the end of the last financial year,” she said.
“So it is not as if the budget is in surplus or that there is extra money lying around. We are still borrowing a lot, we still have $1 trillion of debt to manage and these are some of the pressures that we have to work through.”
Despite the shrinking of last year’s budget deficit, Treasurer Jim Chalmers said the deficits for this year and beyond would worsen because of the spiralling costs of health, aged care, the National Disability Insurance Scheme, interest payments on debt, and defence.
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A global grief for the Queen that has defied belief
12:00AM September 22, 2022
Of all the things I witnessed while in London for the state funeral service of the Queen, two experiences struck me.
The first, an early morning walk through Green Park. It was far from the pomp and ceremony of formal events. I was in my exercise gear. There were thousands upon thousands of tributes – flowers, handwritten messages and other tokens, including a sleuth of Paddington Bears.
Even in the early hours there were crowds of people: they weren’t taking selfies or posing. They were respectful of each other but largely contained in their own intimate and individual reflection on a remarkable individual.
The second was the moment the casket carrying the Queen was lowered into the royal vault at St George’s Chapel in Windsor. I hadn’t thought that I would be emotional. But I was.
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Global economy ‘on a knife edge’, says RBA deputy governor
Jonathan Shapiro Senior reporter
Sep 21, 2022 – 5.23pm
Reserve Bank deputy governor Michele Bullock says rising interest rates, energy shocks in Europe and a highly indebted and locked down economy in China have put the global economy on a “knife edge”.
Ms Bullock said China, the United States and Europe all posed economic stability threats, albeit for different reasons.
“The outlook for the world economy is looking quite uncertain and quite worrying,” she said.
“That obviously has implications for us because of the tendency to flow through to commodity prices. It’s very uncertain and on a bit of a knife edge.”
The main risk, Ms Bullock was uncertainty as to how the United States and European economies would handle sharply rising interest rates.
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Barrenjoey predicts recession as dollar forecasts tumble
Sep 23, 2022 – 5.37pm
Investment bank Barrenjoey declared a short and shallow Australian recession is a “probable” scenario after increasing its peak cash rate forecast to 3.35 per cent in December following the US Federal Reserve’s hawkish policy decision this week.
The sweeping influence of the Fed forced up projections for the Reserve Bank’s cash rate and prompted strategists to warn of further currency pain for the Australian dollar.
Friday’s 1.9 per cent fall on the S&P/ASX 200 Index extended the week’s losses to 2.6 per cent when local shares returned to trading after the Queen Elizabeth II public holiday.
“The RBA can lag the Fed but there is likely a limit to that,” Barrenjoey said on Friday, implying weaker growth and employment. Its previous peak rate forecast was 2.85 per cent.
Financial markets lifted the implied probability of a 0.5 percentage point cash rate increase from the Reserve Bank at the October policy meeting to 66 per cent from 60 per cent.
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Regime change a chance to confront our history more honestly
The Queen’s death has raised a whole range of complex issues behind that stability she represented to so many people. They are bubbling closer to the surface in her absence, amid a sense of regime change.
Laura Tingle Columnist
Sep 23, 2022 – 1.38pm
While much of the world – and our media – have spent the past fortnight eulogising a woman who represented dignified stability and certainty, things have been taking a much darker turn into instability and uncertainty.
You have to wonder how we would be thinking about the world if Queen Elizabeth had not died two weeks ago.
For within that fortnight we have seen events in Russia and Ukraine take extraordinary turns: huge territorial and military gains by Ukraine for sure but as a result, on the downside, an alarming picture of an autocrat under intense pressure, Vladimir Putin, becoming more desperate in the measures he has been prepared to take, and the rhetoric he has been prepared to use, to maintain control.
It’s been a while since the head of a nuclear state actually threatened to use tactical nuclear weapons in a conflict already under way.
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How the psychology of humans explains the inflation resurgence
Economics Editor
September 23, 2022 — 11.45am
The beginning of wisdom in economics is to realise that models are models – an oversimplified version of a complicated reality. A picture of reality from a particular perspective.
I keep criticising economists for their excessive reliance on their basic, “neoclassical” model – in which everything turns on price, and prices are set by the rather mechanical interaction of supply and demand.
It’s not that the model doesn’t convey valuable insights – it does – but they’re often too simplified to explain the full story.
Sometimes I think Reserve Bank governor Dr Philip Lowe is like someone whose brain has been locked up in a neoclassical prison. But in his major speech on inflation two weeks ago, he showed he’d been thinking well outside the bars, looking at various models for a comprehensive explanation of how inflation could shoot up so quickly and unexpectedly.
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COVID-19 Information.
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All quiet on the COVID front apparently. Not sure I believe it!
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Climate Change.
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We are being overwhelmed by the here and now right now but it has not gone away!
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Royal Commissions And The Like.
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No improvement in aged-care nutrition
10:04PM September 22, 2022
Mandatory nutrition screening in nursing homes has been left off a new list of aged-care quality indicators, despite the Albanese government saying better food was one of its priorities for improving the sector, dietitians warn.
And the government continues to measure unplanned weight loss in nursing homes as a benchmark of dietary improvement when it should be focused instead on the more pressing concern of malnutrition, Dietitians Australia chief executive officer Robert Hunt says.
New guidelines from the Department of Health and Aged Care released this week list a range of new quality indicators that residential aged-care providers will be required to monitor and report on. These include daily activities, incontinence, hospitalisations and quality of life for nursing home residents, but not nutrition.
“It shows the new federal government really isn’t giving food and nutrition in aged-care facilities the priority required, or that it said it would,” Mr Hunt said.
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National Budget Issues.
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Expected rate rises will cause recession: leading economist
Michael Read 19-08-2022
Back to the Australian Financial Review Property Summit, Barrenjoey chief economist Jo Masters says the Reserve Bank will tip the Australian economy into recession if it lifts rates in line with market forecasts.
“If the Reserve Bank follows market pricing, we will have an economy in recession and we will have house prices down materially,” Masters told the summit.
The Reserve Bank has lifted rates by 2.25 percentage points since May, and markets are pricing the cash rate will reach 3.3 per cent by the end of the year, before peaking at 3.9 per cent in April next year.
Masters expects house prices will fall by 25 per cent in Sydney and by 16 per cent nationwide, taking price to income ratios back to pre-pandemic levels.
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https://www.afr.com/politics/federal/why-stage-three-tax-cuts-should-be-here-to-stay-20220904-p5bfbi
Why stage three tax cuts should be here to stay
If Labor gives into the Greens and teals, this broken election promise will go down as a Kevin Rudd-style ‘economic conservative’ moment.
Andrew Bragg Contributor
Sep 18, 2022 – 11.58am
Misguided Greens and independents are urging Treasurer Jim Chalmers to drop the stage three tax cuts that were legislated by the former Coalition government.
A seemingly innumerate statement from independent MP Monique Ryan says it all about this debate. Ryan has said: “Anything that’s going to give $243 billion to top-income earners over our society is inadvisable.”
The last time I looked, a carpenter on $66,000 or a midwife on $78,000 were not “top income earners”. It would be a huge mistake to let Ryan and co have their way.
The reversal of what has already been legislated with the support of the Labor Party and removal of stage three tax cuts would result in significant tax increases for millions of middle-income Australians.
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Reserve Bank of Australia’s rate hikes raise risk of recession
Economics Editor
September 19, 2022 — 5.00am
Our sudden, shocking encounter with high inflation has brought to light a disturbing truth: we now have a dysfunctional economy, in which big business has gained too much power over the prices it can charge, while the nation’s households have lost what power they had to protecting their incomes from inflation.
It has also revealed the limitations and crudity of the main instrument we’ve used to manage the macro economy for the past 40 years: monetary policy – the manipulation of interest rates by the central bank.
We’ve been reminded that monetary policy can’t fix problems on the supply (production) side of the economy. Nor can it fix problems arising from the underlying structure of how the economy works.
All it can do is use interest rates to speed up or slow down the demand (spending) side of the economy. And even there, it has little direct effect on the spending of governments or on the investment spending of businesses.
Its control over interest rates gives it direct influence only on the spending of households. And, for the most part, that means spending that has to be done on borrowed money: buying a home. But also, renting a home some landlord has borrowed to buy.
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Treasurer warns of tough budget conditions
By Shane Wright
19-08-2022
Treasurer Jim Chalmers has used a meeting with his Indonesian counterpart to warn the situation facing the Australian budget is getting tougher.
Chalmers, who will present his first budget on October 25, said during a ceremony with long-term Indonesian Finance Minister Sri Mulyani that both global and domestic factors are hitting the budget.
The October 25 budget will cover the 2022-23 financial year. It follows the budget that was released by then treasurer Josh Frydenberg in March ahead of the federal election for the same time period.
It’s the first time that two budgets for the same financial year have been developed.
Chalmers said
“deeply concerning global conditions” would provide the backdrop to next
month’s budget.
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Government spending balloons to highest share of economy ever as Labor prepares first budget
10:00PM September 18, 2022
Government spending has ballooned to its highest share of the economy in history, with experts warning more public expenditure is on the way as Labor prepares its first budget, including promises on child care and wages.
Taxpayers are bearing an increasingly heavy burden to fund higher expenditure at all levels of government, a load that has been made heavier by major new commitments over the past 2½ years to fund services such as the NDIS, aged care, health care, child care and defence.
Evidence of the expanding scope of government in the economy comes as the Albanese government on Monday announced an extra $1.4bn to extend Covid response measures.
The largest component of the spending will include $840m in additional funding for the Aged Care Support Program – which reimburses providers for the costs incurred in managing Covid-19 – with $35m for ongoing onsite PCR testing in aged care.
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Australia needs ‘national conversation’ around paying for government spending: Treasurer
By Rachel Clun
September 20, 2022 — 3.51pm
Australia must prepare itself for a robust discussion about how to fund future government spending, the Treasurer has warned, as he revealed next month’s budget will be constrained to “bread and butter” spending amid rising cost-of-living pressures and slowing economic growth.
The budget deficit for the last financial year will be about $50 billion lower than the $78 billion forecast in March, but Jim Chalmers cautioned on Tuesday it was only a temporary improvement and there were unavoidable costs that Labor will have to deal with in its first budget.
Treasurer Jim Chalmers and Minister for Finance Katy Gallagher held a press conference in Canberra.
Chalmers promised “responsible cost-of-living relief” on October 25 as the government funds its election promises, including expanding the childcare subsidy from July and providing cheaper prescription medicines from January.
The government will also spend $10.8 million on an inquiry by the consumer watchdog into the costs of childcare ahead of the subsidy’s expansion. Starting early next year, the Australian Competition and Consumer Commission will look at what factors have driven childcare costs up by 41 per cent over the past eight years.
“Our investment in cheaper childcare is a cost-of-living measure with an economic dividend,” Chalmers said.
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Reserve Bank’s bond program helped save jobs and economy
By Shane Wright
September 21, 2022 — 9.38am
The Reserve Bank’s purchase of almost $300 billion in federal and state government debt through the COVID-19 pandemic kept more people in work, increased the economy by at least $25 billion and helped finance billions in extra infrastructure projects, a review of the program has found.
During the depths of the pandemic, the RBA was buying $5 billion a week worth of federal and state government debt as part of its quantitative easing program aimed at safe-guarding the economy.
The bond purchase program (BPP) was the first time the Reserve effectively printed money to stabilise the economy which during the June quarter of 2020 suffered its biggest three-month contraction since the Great Depression.
By the time the program finished in February this year, the bank had bought $224 billion of federal debt and $57 billion issued by the states and territories.
The Reserve Bank review of the BPP, released on Wednesday, found it reduced the interest rate on federal debt by about 0.3 percentage points and narrowed the gap between federal and state government debt interest rates.
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https://www.afr.com/policy/economy/rba-s-qe-experiment-could-cost-58b-20220921-p5bjq2
RBA’s experiment could cost $58b
Jonathan Shapiro Senior reporter
Updated Sep 21, 2022 – 12.01pm, first published at 10.14am
The Reserve Bank of Australia will not pay a dividend to the government “for a number of years” as it nurses balance sheet losses that could top $58 billion from its historic bond purchase program.
The central bank also flagged a $44 billion paper loss on its portfolio for financial year 2022 as sharply rising bond yields erode the value of its assets.
Still, the Reserve Bank defended its $300 billion of bond buying as part of its quantitative easing strategy, arguing it was effective in lowering borrowing rates and weakening the currency to support the economy during the pandemic.
The findings of the Reserve Bank’s internal review of the program, which ran from November 2020 to February 2022, were published on Wednesday.
It involved the purchase of long-term state and federal government bonds, and was separate to the ill-fated yield curve control policy experiment in which the Reserve Bank intervened to anchor the three-year bond rate to the cash rate.
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Stage three tax cut debate will be cancelled
Labor running a ‘big national conversation’ about ‘how we fund the things that we value’ will end up only one way – a discussion on how to raise taxes.
John Roskam Columnist
Sep 22, 2022 – 2.50pm
And so it begins. And no one should be in the least surprised. Perhaps what is surprising is that it didn’t happen even sooner.
Labor has been in office in Canberra for less than four months and already Treasurer Jim Chalmers says he wants “a big national conversation about the structural position of the budget and how we fund the things that we value not just in our economy, but in our society”.
The Labor Party running a “big national conversation” about “how we fund the things that we value” will end up only one way. It will be a discussion about how to raise taxes.
Reserve Bank governor Philip Lowe said as much last week. He also pointed out that despite unemployment at a 50-year low and the highest terms of trade on record, Australia still somehow managed to have an enormous budget deficit.
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Jim Chalmers says no to any more self-licking ice creams
If the Albanese government is going to hit us hard to cover the structural deficit, it is equally important for it not to waste our money.
Phillip Coorey Political editor
Sep 22, 2022 – 8.00pm
In the lead-up to the federal election, Jim Chalmers gave several speeches in which he made it clear Labor would not be cowed by a traditional Coalition debt and deficit scare campaign.
With the budget in ruins thanks to the profligacy demanded by the COVID-19 pandemic, Labor figured, correctly, that the polity was no longer as fiscally disciplined as it once was.
The regard for surpluses and low debt – embedded into the national mindset, especially during the Howard years – had been supplanted by the law of the jungle. Numbers once regarded as eye-watering became eye-glazing as billions upon billions were shovelled out the door during the pandemic.
In that context, Labor saw no risk in going to an election not only promising a slightly worse budget bottom line – $8.4 billion over the forward estimates – but actually making a virtue of it. It called it “better debt”.
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The five black holes in the federal budget
By Shane Wright
September 23, 2022 — 4.20am
Jim Chalmers and Katy Gallagher have inherited the fiscal cost of Australia’s fight to stave off the COVID pandemic.
The treasurer and finance minister, who in a month’s time will deliver the re-do budget of 2022-23, face a fiscal abyss spreading into the next decade that can be measured in trillions of dollars.
And five key areas of expenditure growth – the health system, National Disability Insurance Scheme (NDIS), aged care, defence and the interest bill on government debt – shape as battlegrounds in the budget repair war.
These five areas are among the most politically contentious in the budget, affecting millions of voters. They are heavily influenced by ingrained demographic changes such as the ageing cohort of baby boomers or, like defence and interest costs, determined by global factors outside the control of government.
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Bread-and-butter budget we just have to have
10:02PM September 22, 2022
Between now and handing down the budget in less than five weeks, I’ll have the opportunity to confer with my international counterparts in Washington on the deteriorating conditions we all face.
The deeply concerning developments around the world, as well as new pressures on spending, provide the backdrop for the budget my colleagues and I are working on. These global challenges we confront are intensifying, not dissipating: inflation is rampant; central banks are responding with blunt and brutal rate rises; and growth is slowing.
The economies of the US and Britain are in reverse; China’s has slowed markedly; and the war in Ukraine sparked an energy crisis that shows no signs of abating. This is why the International Monetary Fund won’t rule out another global recession.
At the same time, the ongoing impacts of Covid-19 have already forced us to fund billions of dollars in new spending for healthcare, aged care and emergency financial support – which the previous government had not budgeted for.
The final budget outcome for last year will show a substantially smaller deficit figure than what was first projected – not just because of a big temporary boost from commodity prices but also because billions of dollars that were promised weren’t invested, are now spilling into later years and still have to be paid for.
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Health Issues.
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Program to stop bad medicine at risk after government pulls funding
By Liam Mannix
September 20, 2022 — 5.00am
Key points
· The government has pulled funding from the group behind Choosing Wisely, meaning it will likely close.
· Choosing Wisely is trying to improve healthcare by cutting out procedures that are expensive and don’t work.
· The decision has been condemned by multiple health stakeholders.
· However, there is a real debate over whether Choosing Wisely actually did its job well at all.
A major initiative to stop doctors performing expensive but useless or risky procedures is under threat after the federal government pulled funding.
The possible closure comes as debate rages over whether the program, called Choosing Wisely, managed to achieve its goals, or became little more than a forum for medical professionals to snipe at each other.
Choosing Wisely launched in Australia in 2015 as part of a global campaign to stop “low-value” tests and treatments that are expensive and do not work well. Medical societies were asked to publicly name low-value treatments so doctors and patients could avoid them.
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‘Well done!’: Monkeypox cases drop as Sutton lauds community response
September 23, 2022 — 7.08pm
Chief Health Officer Brett Sutton has lauded the Victorian response to monkeypox as new infections have dropped across the state, despite fears case numbers would rise after an early spike.
The most recent figures on the Victorian Department of Health website show active monkeypox cases had fallen from 27 on September 2 to just seven on September 16. Victoria has recorded 67 monkeypox cases in total, but this tally has only grown by two since September 2.
“Victoria has had no MPX [monkeypox] cases for a few weeks now, having had significantly early growth in cases,” Sutton tweeted on Friday afternoon.
“Lo and behold, those pillars of a public health response work. Case isolation, contact tracing and early testing through close engagement with at-risk community. Well done!”
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Prescriptions for ADHD medication double in a decade
By Mary Ward
September 25, 2022 — 5.00am
Prescriptions for ADHD medications have more than doubled within a decade and scripts for adults now outnumber those for children, as rising numbers of adult women are diagnosed with the disorder.
People seeking treatment for Attention Deficit Hyperactivity Disorder, or ADHD, are facing months- long waiting lists to see a psychiatrist, with some clinicians attributing the increase in adult cases to historical under-diagnosis, particularly in young girls.
Annual data from the Pharmaceutical Benefits Scheme showed prescriptions for the two most commonly used ADHD medications, methylphenidate (Ritalin) and dexamphetamine, passed 1 million last year.
The greatest increase was seen in adults on Ritalin, which increased almost three-fold to 160,000 scripts in 2021. The number of adult scripts for dexamphetamine roughly doubled to close to 390,000.
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International Issues.
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https://www.afr.com/world/europe/putin-under-pressure-what-is-russia-s-next-move-20220918-p5biye
Putin under pressure: what is Russia’s next move?
Dramatic retreat on the battlefield is only one of a number of Ukraine setbacks that the Russian leader faced last week. Some believe he has little choice but to order a significant escalation of the conflict.
Max Seddon, Polina Ivanova and Ben Hall
Sep 18, 2022 – 9.07am
Moscow/Berlin/London | In late August, occupation authorities in the eastern Ukrainian town of Kupyansk held celebrations to mark Russian Flag Day.
A few dozen people – including both pro-Kremlin activists and locals who had stayed in the town after it was captured by Russian forces six months ago – unfurled an enormous 60-metre by 40-metre Russian tricolour on the main square, then waved flags and danced to a medley of patriotic tunes.
Just a few weeks later, the Russian occupying forces were gone after a surprise Ukrainian attack forced them to surrender more than 3000 square kilometres of territory, leaving tanks, armoured vehicles and supplies.
The stunning reversal has shattered the mantra, repeated by senior officials visiting occupied territories over the northern spring and summer, that “Russia is here forever” in south-eastern Ukraine.
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Hard reign: Charles will struggle to keep kingdom united
Journalist and author
September 18, 2022 — 7.30pm
In the ascension to the throne of King Charles III, we have been watching a modern man with an Edwardian persona, a prescient thinker who often reverts to the vocabulary of the 18th century.
In his television address to the nation and Commonwealth, he described his late parents as his “darling Mama” and “dear late Papa”, terms of endearment which sounded like dialogue from a Jane Austen novel. Yet he also openly expressed his love for Harry and Meghan, displaying an emotional largesse which would not have sounded out of place on Oprah.
His travails with leaking pens and inconveniently placed ink pots have served almost as a royal Rorschach test. They reveal a moderniser trapped in the body of a traditionalist, an impatient new monarch impeded by instruments of the past.
In many ways, then, his internal contradictions reflect the tensions that lie at the heart of modern-day Britain, between those whose politics is driven by nostalgic nationalism and those preferring a forward-thinking, cosmopolitan approach. It is a divide that reflects, if not exactly mirrors, the Brexit breach.
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Joe Biden says again US forces would defend Taiwan if China invaded
By David Brunnstrom
September 19, 2022 — 9.57am
Washington: US President Joe Biden said in an interview broadcast on Sunday that US forces would defend Taiwan in the event of a Chinese invasion.
Asked in a CBS 60 Minutes interview if US forces would defend the self-ruled island claimed by China, he replied: “Yes, if in fact, there was an unprecedented attack.”
Asked to clarify if he meant that unlike in Ukraine US forces, men and women, would defend Taiwan in the event of a Chinese invasion, Biden replied: “Yes.”
Since taking office, Biden has repeatedly used language about Taiwan that appears to change longstanding US policy.
Last year, Biden or his aides needed to clarify his remarks on Taiwan on at least four separate occasions, including his description of the island as “independent” - China’s oft-stated red line for an invasion.
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Biden baulks as Ukraine asks US to send powerful weapons
By David E. Sanger, Anton Troianovski, Julian E. Barnes and Eric Schmitt
September 18, 2022 — 11.06am
Washington: Flush with success in north-east Ukraine, President Volodymyr Zelensky is pressing President Joe Biden for a new and more powerful weapon: a missile system with a range of 190 miles (305 kilometres), which could reach far into Russian territory.
Zelensky has insisted to US officials that he has no intention of striking Russian cities or aiming at civilian targets, even though President Vladimir Putin’s forces have hit apartment blocks, theatres and hospitals in Ukraine throughout the war. The weapon, Zelensky says, is critical to launching a wider counteroffensive, perhaps early next year.
Biden is resisting, in part because he is convinced that over the past seven months, he has successfully signalled to Putin that he does not want a broader war with the Russians – he just wants them to get out of Ukraine.
A shipment of long-range guided missiles, which could also give Ukraine new options for striking Crimea, the territory Russia annexed in 2014, would likely be seen by Moscow as a major provocation, Biden has concluded.
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US Federal Reserve’s quantitative tightening sows seeds for a market rebound
6:00AM September 17, 2022
The US Federal Reserve activated a policy at the beginning of the year that can be crudely put as follows: bring down the balance sheet and boost the US dollar.
So far, the Fed has been successful on both fronts. The dollar is close to parity with the euro, at a near four-decade high against the pound and at more than a three-decade high against the yen.
Success, however, eventually leads to an end of the policy that brought it about, and sharemarket investors should be attuned to any change in course. In the short term, success by the Fed is negative for shares. And the Fed knows it.
On the other hand, when the Fed’s current balance sheet posture eventually ends it could be very good for equities.
Quantitative tightening (QT) is part of a central bank’s policy to reduce its balance sheet and liquidity. It is a reversal of quantitative easing (QE) which resulted in a cumulative $US9.8 trillion injected into markets at its peak during Covid-19, and triggered the massive rallies in equity markets around the globe from March 2020 to January 2022.
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I met President Zelensky, an even larger presence than social media suggests
Military leader and strategist
September 19, 2022 — 12.32pm
The past two weeks have answered a central question of the Russo-Ukraine War; can the Ukrainians undertake the offensives required to liberate their people and reoccupy their territory? They have answered this question emphatically with their very successful and ongoing Kharkiv offensive.
During this offensive, I had the opportunity to visit Ukraine and to speak with high-level military and government officials. I even had the privilege of meeting with President Zelensky. In person, he is an even larger presence than his social media suggests. Slight of stature but enormously engaging, funny and charismatic, one only has to be in his presence for a short time to see why his leadership has been central to Ukraine’s efforts in this war.
I took away three key observations from the visit.
First, the Ukrainians are competent. This is a gross understatement. No military this century has had to fight across all the domains of war concurrently, and do so against a larger and better-armed adversary. The Ukrainians clearly spent years preparing. The most important preparation was not physical but intellectual. They re-trained their troops away from Soviet centralised command methods to adopt more decentralised command and control. This has been a clear difference between the two belligerents and has given the less well-armed Ukrainians a significant battlefield advantage.
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https://www.afr.com/world/europe/the-world-bids-farewell-to-a-beloved-monarch-20220919-p5bj3a
The world bids farewell to a beloved monarch
Hans van Leeuwen Europe correspondent
Sep 20, 2022 – 2.43am
London | The world has bid farewell to Queen Elizabeth II, in possibly the most widely attended and watched funeral in history.
More than 200 political leaders and royals were among the 2000 people packed into Westminster Abbey on a cloud-scudded Monday morning for an elaborate, carefully staged state funeral lasting only an hour.
The Queen’s coffin then made stately progress through central London atop a 121-year-old artillery carriage, towed by naval personnel and attended by her family and a panoply of colourfully dressed troops.
Queen Elizabeth II has been laid to rest at St George’s Chapel inside Windsor Castle.
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A bit rich for governments to blame their central banks
Governments may be forced to acknowledge their own complicity in the inflation that they are so keen to be rid of.
Adrian Blundell-Wignall Economist
Sep 19, 2022 – 8.15pm
For years central banks undershot inflation targets, due in large part to the China globalisation supply shock. Governments didn’t complain and enjoyed low borrowing costs.
With the opposite problem of inflation, politicians are now calling for a review of central bank inflation-targeting frameworks. British Prime Minister Liz Truss is insisting on a review of the Bank of England, and Treasurer Jim Chalmers has already ordered one here.
But governments are not focused on the right issue, which involves their own role as accomplices in the recent inflation.
During 2020 and 2021, the US Federal Reserve and the European Central Bank adjusted their policy frameworks in the direction of long-run targets as Australia has done for years. With inflation now rising, the IMF suggested an adjustment for the US: “As an alternative to the Summary of Economic Projections, the Federal Reserve could begin publishing ... an internally consistent economic projection and rate path, produced by Fed staff and potentially endorsed ... by the FOMC [Federal Open Market Committee].”
In other words, nothing new to add.
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‘Not standing with Putin’: How Asia’s view of the war is shifting
Henry Foy, Max Seddon and John Reed
Sep 19, 2022 – 7.26am
Brussels | Moscow | New Delhi | Public admonishments of Russian President Vladimir Putin by China and India over his invasion of Ukraine signal a shift in global perceptions of the war, Western officials have said, amid efforts by Europe and the US to erode the Kremlin’s international support.
The chiding of Mr Putin by Indian Prime Minister Narendra Modi and the Russian leader’s acknowledgment of concerns raised by Chinese President Xi Jinping last week were signs of discomfort with Moscow, three Western officials said. The remarks, at a summit in Uzbekistan, came days after a Ukrainian attack forced Russia’s army to surrender more than 3000 square kilometres of territory.
The comments were “a genuine and clear signal” of annoyance, one senior European official said, adding that India and China could now adjust their actions towards both Russia and the West.
A senior European minister told the Financial Times they interpreted the comments as “actual criticism”.
“From Modi especially. I don’t think that he likes this,” the minister added. “It was way better to be in a position of ambiguity where you can be friendly with both sides. And benefit from being friends with -both.”
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Russia is struggling to annexe Ukraine, but China is annexing Russia pretty effortlessly
Political and international editor
September 20, 2022 — 5.00am
Russia is struggling to annexe Ukraine. But China is annexing Russia pretty effortlessly.
Vladimir Putin’s bungled invasion of Ukraine has damaged his political standing at home and weakened Russia’s position abroad.
One telltale sign was the summit shenanigans at a meeting of the Shanghai Cooperation Organisation’s leaders last week. A notoriously petty Putin power play was turned against him.
The Russian dictator often made foreign leaders suffer the humiliation of an extended wait before arriving for scheduled summits. For instance, he once kept Donald Trump waiting for 45 minutes and India’s Narendra Modi for 50. He routinely kept Ukrainian leaders waiting three or four hours. But the record was when he made German Chancellor Angela Merkel suffer an insufferable 4¼ hours.
So there was notable schadenfreude last week when four nations’ leaders made Putin wait. Modi took his opportunity to drive home Putin’s downgrading in the international order, and so did the leaders of Turkey, Azerbaijan and Kyrgyzstan.
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By Isabel Coles and Evan Gershkovich
The Wall Street Journal
5:28PM September 19, 2022
Russia is intensifying a campaign of long-range missile strikes targeting Ukraine’s key infrastructure after facing major setbacks on the battlefield that have raised concerns about further escalation from Moscow.
Britain’s Ministry of Defence said late on Sunday that Russian strikes had increasingly picked out civilian targets over the past week, even when no immediate military benefit could be perceived.
The aim, it said, was to “undermine the morale of the Ukrainian people and government”, which has been buoyed by the success of a recent offensive in the northeast of the country. The Ukrainian breakthrough in the Kharkiv region compelled Russian forces to relinquish more territory in a matter of days than they had gained in months of grinding combat, dramatically altering the momentum of the war.
Since then, Russian missiles have hit a dam, threatening to flood the city of Kryvyi Rih days after electricity in much of eastern Ukraine was knocked out by a strike that disabled the main power station in the country’s second-largest city of Kharkiv. A sustained Russian effort to destroy Ukrainian power stations, dams, bridges and pipelines could over time severely degrade the country’s ability to function, especially as winter sets in.
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Out of options? The west needs to be ready for Vladimir Putin’s next move
By William Hague
The Times
6:25AM September 20, 2022
“Everything is fine, and there is no need to worry at all,” the Egyptian foreign minister said to me on the phone in February 2011. As he spoke, the TV showed a million angry people in Cairo demanding the fall of the Mubarak regime of which he was a member. I had called him to ask for more security for our embassy and British nationals, but he was adamant that we could relax - “this was all anticipated”.
Two days later, his government was overthrown. Yet his words illustrate an important truth about autocratic governments: when in trouble they cannot admit any setback or danger, initially to others but sometimes even to themselves. At all costs they have to show their leader is fully in control, lest the slightest dent in their omnipotence shatters the entire, hollow structure of power on which they sit. They adopt a kind of institutionalised stupidity, denying reality for as long as possible.
The Russian version of events in Ukraine is now an extreme and risible version of this inability to admit they are in trouble. The flagship Moskva sank under tow in stormy seas, it was said, even though the weather was fine; the retreat from Snake Island was a “goodwill gesture”; devastating explosions at Crimean bases were merely numerous accidents, and the headlong recent retreat from Kharkiv was a “regrouping”. The Kremlin will say anything rather than admit that Putin has blundered on a vast, historical scale, with a radical underestimation of the country he chose to bully and wished to annihilate.
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https://www.afr.com/world/europe/britain-s-enduring-appeal-that-shaped-our-world-20220919-p5bjc0
Britain’s enduring appeal that shaped our world
What brought billions to watch the Queen’s funeral was the enduring qualities in British history that should not be obscured by its sometimes controversial colonial past.
Sep 20, 2022 – 7.35pm
The first royal funeral at the new abbey in Westminster was Edward the Confessor’s in early 1066. With Elizabeth II’s funeral on Monday, the British have been doing the same thing in the same place for almost 1000 years. In 2022, billions watched on television and heads of governments representing much of the world’s population attended in person. What brought them was not a royal family that’s now a sort of high-class soap opera. The real drawing power is the enduring qualities in British history – including the British enlightenment that Australia inherited – that should not be obscured by its sometimes controversial colonial past.
The huge crowds on London’s streets and the flocking of world leaders there was a spontaneous response that no one could have just ordained. They came to bury a British monarch with no power, except to remind people they have more in common than not. This is crystallised political legitimacy. It is what emperors, kings and presidents were happy to literally share a bus with each other to be part of.
London is a global city even without its empire. Much of the pomp on Monday – the red coats, plumed helmets and medals – was symbolic holdovers from the relatively recent imperial past. But the ideas behind these trappings of power are still very much alive. It is too much to say that Britain invented the modern world, as some historians do. But in the Enlightenment achievements it spread around the globe – like the rule of law, the ideal of free trade, the empirical tradition and the first industrial revolution – and the English language that lets the world communicate, Britain has done more than its share of shaping the world we live in. That was the secret pull for statesmen and spectators alike on Monday.
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The new dynamic of the ‘no limits’ relationship is a problem for Xi
A seriously weakened and embarrassed Russia is already a much less useful partner for China. And the results of the war in Ukraine are still unfolding.
Gideon Rachman Columnist
Sep 20, 2022 – 9.18am
On February 4 this year – three weeks before Russia’s invasion of Ukraine – Vladimir Putin met Xi Jinping in Beijing. A joint statement by the two leaders said friendship between Russia and China “has no limits”.
Seven months on, Xi may be regretting those words. Speaking before a meeting of the Shanghai Co-operation Council in Uzbekistan, Putin promised to address the “questions and concerns” that China has about the Ukraine war.
Neither Putin nor Xi chose to elaborate on those concerns in public. But it is not hard to guess. The war has weakened Russia, destabilised Eurasia and strengthened the Western alliance. None of that looks good, viewed from Beijing.
The February 4 statement made it clear that the foundation of the Russian-Chinese friendship is shared hostility to American global leadership. A swift Russian victory in Ukraine, coming just a few months after the chaotic US withdrawal from Afghanistan, would have been another serious blow to US prestige and power. That would have suited Beijing well; and might even have set the stage for a Chinese attack on Taiwan.
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Russia’s elites are split over Vladimir Putin’s uncertain future
For 21 years, Putin was a highly convenient political leader for Russia’s ruling elites, preserving the status quo. But suddenly, he’s turned into a destroyer.
Tatiana Stanovaya
Sep 21, 2022 – 5.00am
Ukraine’s successful counterattack means that for the first time in Russian President Vladimir Putin’s 22 years in power, he has to deal with elites who disagree with him – on strategic decisions over Russia’s war in Ukraine and how the war may end.
Having launched the war not just without any internal discussions, but without even informing key players, Putin has taken huge risks politically. If the war were going well, that gamble would have paid off, but today, as Ukraine is counterattacking and Russia is retreating, questions about Putin’s decisions are mounting.
There are fears that Russia may lose outright. If the president fails to convince the elites that he remains a strong leader with a clear understanding of where he is taking the country, uncertainty may become a significant political risk to Putin’s regime.
It’s true that a portion of the Russian elites – the most powerful, ambitious, and dominating players – consider the war a disaster. But virtually everyone in the elite not only empathises with Putin’s political motives but also shares his understanding of the situation and motives in launching the war.
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Putin announces partial military mobilisation in Russia
Karl Ritter
Sep 21, 2022 – 4.39pm
Kyiv | Russian President Vladimir Putin on Wednesday announced a partial mobilisation in Russia as the war in Ukraine reaches nearly seven months and Moscow loses ground on the battlefield.
Mr Putin’s address to the nation comes a day after Russian-controlled regions in eastern and southern Ukraine announced plans to hold votes on becoming integral parts of Russia. The Kremlin-backed efforts to swallow up four regions could set the stage for Moscow to escalate the war following Ukrainian successes.
Mr Putin said he has signed a decree on the partial mobilisation, which is due to start on Wednesday.
“We are talking about partial mobilisation, that is, only citizens who are currently in the reserve will be subject to conscription, and above all, those who served in the armed forces have a certain military specialty and relevant experience,” Mr Putin said.
The referendums, which have been expected to take place since the first months of the war, will start on Friday in the Luhansk, Kherson and partly Russian-controlled Zaporizhzhia and Donetsk regions.
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https://www.afr.com/markets/equity-markets/wall-st-advances-as-fed-statement-awaited-20220709-p5b0c4
Wall St tumbles as Fed reaffirms higher rate path
Timothy Moore Before the Bell editor
Sep 22, 2022 – 3.03am
All three major benchmarks closed sharply lower, after the Federal Reserve’s updated view and plan to tackle persistent inflation with higher interest rates for longer than some market participants hoped.
“We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2 per cent,” Powell told a press conference in Washington.
Powell also said a soft landing for the US economy will be “very challenging” to achieve.
· On Wall St: Dow -1.7% S&P 500 -1.7% Nasdaq -1.8%
· In New York: BHP -2.8% Rio -3.4% Atlassian -1.2%
· Tesla -2.6% Apple -2% Amazon -3%
Consumer discretionary stocks paced all 11 of the S&P 500’s industry sectors lower on the day. The VIX settled up 3 per cent to 27.98. The NYSE Fang + Index fell 2.6 per cent.
The Dow fell 522 points to finish below 31,200. The S&P 500 shed 66 points to 3789.93.
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https://www.afr.com/world/north-america/federal-reserve-lifts-key-rate-by-0-75pc-20220922-p5bk15
Federal Reserve lifts key rate by 0.75pc
Matthew Cranston United States correspondent
Sep 22, 2022 – 4.05am
Washington | The Federal Reserve raised interest rates by 0.75 percentage point for a third straight time, lowered its economic forecast for the US and increased its expectations for higher inflation and unemployment.
Fed chairman Jerome Powell said policymakers were “strongly committed” to curbing inflation and that there was no easy way to do this but to keep lifting rates.
The central bank officials now forecast the official fed funds rate to reach a high of 4.6 per cent in 2023 before stepping down to 3.9 per cent in 2024. The bank does not expect to cut rates at all next year.
“We’re committed to getting inflation back down to 2 per cent because we think that a failure to restore price stability would mean far greater pain later on,” he told a press conference in Washington on Wednesday (Thursday AEST).
The target range for the benchmark federal funds rate is now between 3 per cent and 3.25 per cent – the highest since before the 2008 financial crisis, and up from near zero at the start of this year.
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Biden accuses Putin of making ‘irresponsible’ nuclear threats
Matthew Cranston United States correspondent
Sep 22, 2022 – 7.24am
New York | US President Biden has condemned Russia’s unprovoked invasion of Ukraine and accused President Vladimir Putin of making “irresponsible” threats to use nuclear weapons, while urging nations to strengthen their commitment to nuclear non-proliferation.
Speaking at the United Nations General Assembly overnight (AEST), Mr Biden accused Russia of “shamelessly” violating the core tenets of United Nations membership by invading Ukraine on February 24.
“A permanent member of the UN Security Council invaded its neighbour, attempted to erase a sovereign state from the map. Russia has shamelessly violated the core tenets of the UN charter,” he said.
The speech came just hours after Mr Putin escalated the seven-month war by ordering a Russian mobilisation to fight in Ukraine and made a thinly veiled threat to use nuclear weapons, in what NATO called a reckless act of desperation in the face of a looming Russian defeat.
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India’s Modi is a rising geopolitical force
The focus in Samarkand was on Putin and Xi. But it was India’s prime minister who played his cards most shrewdly.
John McCarthy Former Australian ambassador
Sep 21, 2022 – 1.29pm
The gathering of the Shanghai Co-operation Organisation in the Uzbek city of Samarkand last week focused heavily on the bilateral meeting between China’s Xi Jinping and Russia’s Vladimir Putin, dominated as it is by the course of the Russia-Ukraine war and the slower-moving crisis over Taiwan.
Unlike the “no limits” agreement between Xi and Putin at their last meeting in February on the eve of Russia’s invasion, there was not much advance on their relationship.
The SCO brings together China, Russia, Iran, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Pakistan, and India – 40 per cent of the world’s population.
And it was India’s Prime Minister Narendra Modi who came out with his authority enhanced, while after his reversals in Ukraine, the Russian leader was in no position to press on Xi for anything.
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Trump sued by New York over ‘fraudulent’ asset valuations
Erik Larson and Bob Van Voris
Sep 22, 2022 – 3.34am
New York | Donald Trump and three of his children were sued for inflating the value of his real estate company’s assets, the culmination of a years-long probe by the New York attorney-general into the former president.
Attorney-General Letitia James filed the suit on Wednesday (Thursday AEST) in New York state court, naming Mr Trump, the Trump Organisation, and Donald Trump jnr, Ivanka Trump and Eric Trump, who are senior executives at the company. Ms James is seeking penalties including a permanent ban on the four Trumps running companies in New York, their home state.
“Donald Trump falsely inflated his net worth by billions of dollars to unjustly enrich himself and to cheat the system, thereby cheating all of us,” Ms James said at a press conference.
The suit is the latest legal threat to Mr Trump as he weighs another run for the presidency in 2024. He is already facing a federal criminal investigation of his handling of classified documents that FBI agents recovered from his Florida Mar-a-Lago home. The Justice Department also continues to investigate his actions preceding the January 6 assault on the Capitol.
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Putin’s aggression should make your blood run cold: Biden to UN
September 22, 2022 — 2.54am
New York: US President Joe Biden has delivered a stinging rebuke of Russia’s aggression towards Ukraine, telling global leaders that Vladimir Putin’s actions – including his latest threat to unleash nuclear weapons – should make the world’s “blood run cold”.
Hours after Putin declared a partial military mobilisation to call up as many as 300,000 reservists and hinted he was prepared to deploy “all the means at our disposal”, Biden used a speech at the United Nations General Assembly to accuse the Russian president of war crimes.
He also called out China for what he said was an “unprecedented nuclear build-up without any transparency”.
“A nuclear war cannot be won, and must never be fought,” he told the General Assembly.
Biden also used his UN address to clarify his position on Beijing after explicitly saying over the weekend he would be prepared to send in US troops to defend Taiwan if China makes an unprecedented attack.
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Sky high airfares, queues at borders and thousands arrested following Putin’s partial mobilisation
Panicked Russians are fleeing for the border while airfares have jumped to ten times the normal price after Putin’s desperate mobilisation plan.
September 22, 2022 - 10:53AM
Hundreds of Russian protesters were arrested as protests broke out across 15 cities for the first time since Mr Putin launched his invasion of Ukraine.
Russians are fleeing the country after Vladimir Putin announced a partial mobilisation to save his faltering war in Ukraine.
On the day of Putin’s speech, it was claimed that Google’s top search term in the country was “how to leave Russia”.
Huge queues were seen at some border posts.
Meanwhile, demonstrations have broken out in major cities. That’s despite any opposition to the war being an arrestable offence.
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Escalation reveals Vladimir Putin is getting desperate
The Times
September 22, 2022
Putin is cornered. Squeezed between pro-war nationalists and a swelling anti-war sentiment among Russia’s metropolitan youth, confronted by battlefield losses in Ukraine and an increasing loss of face abroad, the Russian leader has chosen to escalate.
He gave a clue to his future behaviour in his ghosted autobiography 22 years ago. As a kid in the tenements of Soviet Leningrad, he recalled, he and his gang would chase rats with sticks. One day he chased a huge rat to the end of a corridor. “Suddenly it lashed around and threw itself at me,” he wrote. “Now the rat was chasing me.” The young Putin jumped over a landing and just managed to slam the door on the nose of the pursuing rodent.
His extraordinary speech tried to present Russia’s predicament in similar terms. The West, he claimed, was attempting to dismember Russia (reality check: Russia is striving to weaken and undermine western unity).
Moreover, he claims, the West is using nuclear blackmail against Moscow (reality check: Putin threatens Ukraine and the West with a nuclear attack). It’s a Cold War-style inversion of reality. It is supposed to signal both a reluctance and a readiness for a showdown.
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Putin is already defeated and shouting at Russians, not us
The Times
September 22, 2022
Above all, the thing to remember is that Vladimir Putin didn’t expect it to turn out like this. By now, seven months after he gave the command to attack, eastern Ukraine was supposed to be formally annexed to Russia following the necessary plebiscites.
A pliant Vichy regime in Kyiv would curse the dead-or-fled Zelensky as a fool and get on with the business of rooting out “Nazis”. The West would fulminate and sanction for a while but a rejuvenated Trump, rising partly on the back of Biden’s humiliation, might say it was all Europe’s problem and promise to hold a “best-ever” meeting with the victorious Russian president. Gas and oil would once again flow freely westwards, passing the money going the other way.
So Putin’s address yesterday was the address of a defeated man. As such it was one of two speeches he could have made. The speech ungiven, of course, was the one that began to prepare the Russian people for a Kremlin peace initiative. We can imagine some of its rhetorical components: the blood shed, the danger of escalation, Russia’s historic commitment to world peace, how most objectives have been met with cast-iron guarantees of autonomy for the gallant Donbas, yadayada.
But of course not. Instead we got the only other possibility: the doubling down. There was the illusion of limited victory, embodied in the promise of fake votes in the “liberated territories”, the “whatever-it-takes” rhetoric of more soldiers and the suggestion of incredible but unused weapons.
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Zelensky presents plan to end war with Russia
John Hudson
Sep 22, 2022 – 3.14pm
New York | Ukrainian President Volodymyr Zelensky unveiled a plan to end the nearly seven-month war between Russia and Ukraine on Wednesday (Thursday AEST) at the annual gathering of world leaders at the UN General Assembly.
The five-point plan urged world powers to punish Russia and surge military aid to Kyiv in an effort to force Moscow forces out of Ukraine, which Russia invaded on February 24.
“Russia wants war, it’s true, but Russia will not be able to stop the course of history,” Mr Zelensky said.
The remarks were an implicit rebuke of non-Western and developing countries that called on Ukraine and Russia to immediately engage in a negotiated end to the conflict.
“Russia will be forced to end this war, the war it has started,” Mr Zelensky said. “I rule out that the settlement can happen on a different basis.”
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https://www.afr.com/world/europe/three-possible-endings-for-the-war-in-ukraine-20220921-p5bjrz
Three possible endings for the war in Ukraine
Despite Ukraine’s recent success on the battlefield, there is a certain undertow of anxiety across Europe about how the war might come to an end.
Thomas Friedman Contributor
Sep 22, 2022 – 8.00am
Last week was an interesting week to be in Europe talking to national security experts, officials and business executives about Ukraine. Ukraine and its allies had just forced Russian invaders into a chaotic retreat from a big chunk of territory, while the presidents of China and India had seemed to make clear to Russian President Vladimir Putin that the food and energy inflation his war has stoked was hurting their 2.7 billion people.
On top of all that, one of Russia’s iconic pop stars told her 3.4 million followers on Instagram that the war was “turning our country into a pariah and worsening the lives of our citizens”.
In short, it was Putin’s worst week since he invaded Ukraine – without wisdom, justice, mercy or a Plan B.
And yet … maybe I was just hanging around the wrong people, but I detected a certain undertow of anxiety in many of my conversations with Ukraine’s European allies.
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Powell warns of US recession
Cecile Lefort Markets reporter
Sep 22, 2022 – 10.46am
US Federal Reserve chairman Jerome Powell has conceded that the world’s largest economy might be heading for a recession, but the need to defeat inflation is so urgent that interest rates will keep going up at the expense of growth and American jobs.
“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” he admitted on Wednesday (Thursday AEST) after raising the US benchmark rate 0.75 percentage points to 3 per cent to 3.25 per cent. The Fed upgraded its projected peak policy rate to 4.6 per cent in 2023 from 3.8 per cent.
The Fed's hawkish move puts more pressure on the Reserve Bank to deliver a fifth outsized 0.5 percentage point interest rate increase when it meets next month. Mr Powell's comments pushed the US dollar up against other currencies, tipping the Australian dollar below US66¢ for the first time since May 2020.
A lower Australian dollar increases the price of imported goods, strengthening the case for a higher cash rate to minimise currency pain.
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Putin in secret plan to mobilise one million men
Nataliya Vasilyeva
Sep 23, 2022 – 9.12am
Istanbul | Vladimir Putin has secretly approved a law that could send a further one million men to fight in Ukraine, according to information leaked from the Kremlin.
The target, revealed to a Russian newspaper, is more than triple the number given under Mr Putin’s “partial mobilisation” plan.
The new figure is likely to exacerbate fears of conscription among Russians – a worry that has already sparked mass protests and queues to leave the country since the plan was announced on Wednesday.
It comes as some protesters detained at the anti-war rallies were threatened with deployment to the frontlines and reports that men with no military experience were being called up, despite the Kremlin’s assurances that would not happen. Stories emerged from the remote region of Buryatia, a major source of soldiers in the first wave of the invasion, that university students were being pulled straight out of class.
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Bank of England lifts key rate by 0.5pc in split decision
Philip Aldrick and David Goodman
Updated Sep 23, 2022 – 2.50am, first published at Sep 22, 2022 – 9.39pm
London | The Bank of England delivered a second consecutive half-point interest-rate increase in its battle to bring down inflation, as three officials pushed for the institution to join its global peers in moving at an even quicker pace.
The move to 2.25 per cent was backed by five of the nine-member Monetary Policy Committee, including governor Andrew Bailey, while one voted for a smaller move. It was the seventh increase in a row, with officials voting to tighten policy at every meeting since December.
The MPC lowered its forecast for peak inflation from more than 13 per cent to less than 11 per cent and suggested a deep recession may be averted as a result of new Prime Minister Liz Truss’ energy relief plan.
Details of that plan, as well as tax cuts and other measures, are due to be unveiled on Friday, and the MPC noted that the aid will support demand, with implications for inflation.
The committee said it would “respond forcefully as necessary” if price pressures look more persistent, reinforcing the view that tightening is far from done. That, coupled with the push for a three-quarter point move from some officials, may set the stage for a bigger increase later this year.
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https://www.afr.com/policy/foreign-affairs/twin-dangers-expose-global-risks-20220922-p5bk96
Twin dangers expose global risks
Australia can feel insulated from global economic shocks, but the US Fed’s latest interest rate rise and threats from Vladimir Putin show its perceived stability is fragile.
Jennifer Hewett Columnist
Sep 22, 2022 – 5.12pm
The preferred Australian narrative is of a resilient domestic economy that can withstand global shocks and take advantage of new opportunities far better than most.
Jim Chalmers’ announcement this week of a $50 billion improvement to the budget bottom line last financial year reinforces this idea even though the Treasurer is keen to emphasise the good news on the deficit is strictly temporary.
That won’t deter all those calls for more spending in next month’s budget. But mounting global risks should soon ensure the prospect of a gloomier outlook heading into 2023 will become “message received” by the Australian public.
These are clearly not just economic threats.
Vladimir Putin restating a willingness to use nuclear weapons actually sounds far more ominous now that his seven-month-long war on Ukraine has gone so badly wrong. This weekend’s sham referenda in four Ukrainian territories is an obvious pretext to declare them part of the Russian motherland, supposedly justifying the use of tactical nuclear weapons if threatened. Putin’s mobilisation of as many as 300,000 Russian reservists to compensate for accumulating Russian disasters on the battlefield is another sign of military desperation. But desperate despots facing humiliating defeats are extremely dangerous.
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Why Powell is finally using the R word
Central bankers are always loath to utter the R-word, but Federal Reserve boss Jerome Powell is now emphatic that he will accept recession as the necessary cost of reducing US inflation.
Karen Maley Columnist
Sep 22, 2022 – 5.18pm
It’s shown an extreme reluctance to do so all year, but finally the US Federal Reserve is conceding that its spate of supersized rate hikes – it has now delivered its third consecutive 0.75 percentage point rate hike – will likely tip the US economy into recession.
And, for the first time, Fed boss Jerome Powell has publicly entertained the prospect that the world’s largest economy could be headed for a recession.
“No one knows whether this process will lead to a recession or, if so, how significant that recession would be”, Powell responded when asked whether rising rates will crimp economic activity.
“We certainly haven’t given up the idea that we can have a relatively modest increase in unemployment. Nonetheless, we need to complete this task.”
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Dow plunges anew, UK markets collapse in broad rout
Timothy Moore Before the Bell editor
Sep 24, 2022 – 4.30am
Shares tumbled anew in New York as fears of a recession drove key benchmarks below or almost below their June lows, with losses trimmed in a last-minute buying reprieve.
All 11 S&P 500 industry sectors fell, with energy down 6.8 per cent as US oil slid below $US80 a barrel.
· On Wall St: Dow -1.6% S&P 500 -1.7% Nasdaq -1.8%
· In New York: BHP -4.6% Rio -5.8% Atlassian -1.4%
· Tesla -4.6% Apple -1.5% Amazon -3% Chevron -6.5%
The Dow slid 486 points to 29,590, its lowest close of 2022; it earlier fell more than 800 points. The VIX leapt 9.4 per cent to 29.92; it briefly topped 32. The S&P 500 settled at 3693.
ASX futures ended down 82 points or 1.25 per cent to 6478. The S&P/ASX 200 shed 125.5 points or 1.87 per cent on Friday.
“Unsettling market volatility is going to be here for a while as Wall Street broadly downgrades their end of year S&P 500 targets,” Oanda’s Edward Moya said in a note.
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Larry Summers warns pound may tumble below $US1 on ‘naive’ UK policies
Christopher Anstey
Updated Sep 24, 2022 – 6.22am, first published at 4.47am
Former Treasury Secretary Lawrence Summers blasted the economic policies being adopted by newly installed UK Prime Minister Liz Truss, saying they’re creating the circumstances for the pound to sink past parity with the US dollar.
“It makes me very sorry to say, but I think the UK is behaving a bit like an emerging market turning itself into a submerging market,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin.
“Between Brexit, how far the Bank of England got behind the curve and now these fiscal policies, I think Britain will be remembered for having pursuing the worst macroeconomic policies of any major country in a long time.”
Truss’s government has set out the most radical package of tax cuts for the UK since 1972, reducing levies both on worker pay and companies in an effort to boost the long-term potential of the economy. Economists are concerned the package is unaffordable and will trigger a currency crisis over concerns about rising debt.
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Investors flee as UK bets the lot on tax cuts, massive borrowing
David Milliken and Andy Bruce
Sep 23, 2022 – 10.36pm
London | Britain’s new finance minister Kwasi Kwarteng unleashed historic tax cuts and huge increases in borrowing on Friday in an economic agenda that floored financial markets, with sterling and British government bonds in freefall.
Kwarteng scrapped the country’s top rate of income tax, cancelled a planned rise in corporate taxes and for the first time put a price tag on the spending plans of Prime Minister Liz Truss, who wants to double Britain’s rate of economic growth.
Investors unloaded short-dated British government bonds as fast as they could, with the cost of borrowing over 5 years seeing its biggest one-day rise since 1991, as Britain raised its debt issuance plans for the current financial year by £72.4 billion ($121 billion). The pound slid below $US1.11 for the first time in 37 years.
Kwarteng’s announcement marked a step change in British economic policy, harking back to the Thatcherite and Reaganomics doctrines of the 1980s that critics have derided as a return to “trickle down” economics.
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Goldman slashes year-end S&P 500 target to 3600
Timothy Moore Before the Bell editor
Sep 24, 2022 – 6.55am
Goldman Sachs’ equity strategist David Kostin has taken a machete to his mid-August year-end target for the S&P 500, slashing it by 16 per cent to 3600. It was previously 4300.
“The expected path of interest rates is now higher than we previously assumed, which tilts the distribution of equity market outcomes below our prior forecast,” Kostin wrote.
The S&P 500 fell 1.7 per cent o 3693; the benchmark has tumbled 10.6 per cent in the last month.
Kostin said the decision to revise the target came after the Federal Reserve’s revised rate projections released earlier this week.
“The higher interest rate scenario that we now incorporate into our valuation model supports a price to earnings of 15 times from a prior forecast of 18 times,” he said.
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European stocks benchmark sinks into bear market
Sagarika Jaisinghani and Macarena Munoz
Sep 24, 2022 – 5.03am
Europe’s Stoxx 600 Index joined US and regional peers in a bear market as fears of a looming recession hammered demand for risk assets.
The index sank 2.3 per cent by the close in London, to the lowest level since December 2020. Total declines from a January record high are now 21 per cent, confirming a technical bear market.
Energy and miners led the sell-off among sectors today as commodities slumped on reduced demand concerns as global rate hikes weigh on economic growth. More defensive sectors like food and healthcare outperformed, while cyclicals slumped.
The European equity benchmark is the last major regional index to cross the bear market threshold after the German DAX and the Euro Stoxx 50 closed in that territory in March, and the S&P 500 followed in June amid concerns about staunchly hawkish central banks, with this week’s outlook by the Federal Reserve adding to fears.
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https://www.afr.com/politics/federal/vladimir-putin-s-nightmare-scenario-20220923-p5bker
Vladimir Putin’s nightmare scenario
The world’s awash in pessimism as the Ukraine conflict escalates. But scenarios for ending Putin’s aggression are also mounting.
Andrew Clark Senior writer
Updated Sep 23, 2022 – 11.53am, first published at 10.20am
History gives Grigory Rasputin, the “mad monk” from deepest Siberia, a bad rap. He’s pictured as a depraved schemer who inveigled his way into Russia’s corridors of power during the final, chaotic years of Tsar Nicholas II’s reign.
But a plain-speaking Rasputin would be an asset in Vladimir Putin’s Kremlin right now. It’s the same Rasputin who warned the Tsar not to mobilise his forces against Germany at the beginning of World War I because it would spell disaster.
“It will be the end for all of you,” Rasputin presciently told Nicholas II, according to a biography of the leader of the subsequent Russian Revolution, Vladimir Lenin, titled Lenin the Dictator, and written by the Hungarian-British historian and journalist, Victor Sebestyen.
More relevant to the escalating war between Russia and Ukraine, the pre-World War I Russian Interior Minister Pyotr Durnovo, who was from the far right, predicted with what Sebestyen calls “remarkable accuracy” the onset of revolution should the Tsar declare war on Germany.
Of course the two situations are different. The Tsar’s army used obsolete equipment, was badly led and no match for the German Army. Its collapse led to chaos in Russia followed by revolution.
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Dow sinks to 2022 low as recession fears roil world markets
By Damian J. Troise and Alex Veiga
September 24, 2022 — 8.17am
Stocks have fallen sharply worldwide on worries an already slowing global economy could fall into recession as central banks raise the pressure with additional interest rate hikes.
The Dow Jones Industrial Average fell 1.6 per cent on Friday, US time, closing at its lowest level since late 2020. The S&P 500 fell 1.7 per cent, close to its 2022 low set in mid-June, while the Nasdaq slid 1.8 per cent.
The selling capped another rough week on Wall Street, leaving the major indexes with their fifth weekly loss in six weeks.
Energy prices closed sharply lower as traders worried about a possible recession. Treasury yields, which affect rates on mortgages and other kinds of loans, held at multiyear highs.
European stocks fell just as sharply or more after preliminary data there suggested business activity had its worst monthly contraction since the start of 2021. Adding to the pressure was a new plan announced in London to cut taxes, which sent UK yields soaring because it could ultimately force its central bank to raise rates even more sharply.
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In Moscow, war suddenly went from near-invisible to urgent and personal
By Special Correspondent in Moscow
September 23, 2022 — 11.12am
Until this week, Russian President Vladimir Putin’s Ukraine war had been almost completely invisible to most Muscovites.
Prominent “Z” signs – the war’s symbol – had disappeared from awnings, shop windows and even private cars in Russia’s capital by April. Closed-down branches of McDonald’s and Starbucks were replaced by local lookalike clones. Restaurants, cafes and nightclubs continued a roaring trade. After a short period of panic buying at the beginning of the war, supermarket shelves were full – including many sanctions-busting imported goods – and the ruble even rose to new heights.
Citywide festivities continued as normal, and with the exception of a handful of shows deemed “unpatriotic” by a new Duma committee, the theatres were packed too. “Moscow is an enchanted kingdom where everything is completely, completely normal and nothing bad is happening anywhere,” joked one prominent Moscow theatre producer. “Definitely in no way the capital of a country fighting the biggest war of the 21st century.”
On Wednesday that illusion came crashing down in the wake of Vladimir Putin’s belligerent speech announcing partial mobilisation.
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7.27AM 25 September 2022
Pro-Kremlin TV turns on Putin’s mobilisation
Reuters
The strongly pro-Kremlin editor of Russia’s state-run RT news channel expressed anger on Saturday that enlistment officers were sending call-up papers to the wrong men, as frustration about a military mobilisation grew across Russia.
Wednesday’s announcement of Russia’s first public mobilisation since World War II, to shore up its faltering invasion of Ukraine, has triggered a rush for the border by eligible men, the arrests of over 1000 protesters, and unease in the wider population.
Now, it is also attracting criticism from among the Kremlin’s own official supporters, something almost unheard of in Russia since the invasion began seven months ago.
“It has been announced that privates can be recruited up to the age of 35. Summonses are going to 40-year-olds,” the RT editor-in-chief, Margarita Simonyan, railed on her Telegram channel.
“They’re infuriating people, as if on purpose, as if out of spite. As if they’d been sent by Kyiv.”
In another rare public sign of turmoil at the top, the defence ministry said the deputy minister in charge of logistics, four-star General Dmitry Bulgakov, had been replaced “for transfer to another role”. It gave no further details.
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https://www.afr.com/world/asia/us-sending-dangerous-signals-on-taiwan-says-china-20220924-p5bkpb
US sending ‘dangerous signals’ on Taiwan, says China
Humeyra Pamuk, Michael Martina and David Brunnstrom
Sep 24, 2022 – 2.30pm
New York | China has accused the United States of sending “very wrong, dangerous signals” on Taiwan after the US secretary of state told his Chinese counterpart on Friday that the maintenance of peace and stability over Taiwan was vitally important.
Taiwan was the focus of the 90-minute, “direct and honest” talks between Secretary of State Antony Blinken and Chinese Foreign Minister Wang Yi on the margins of the UN General Assembly in New York, a US official told reporters.
“For our part, the secretary made crystal clear that, in accordance with our long-standing one-China policy, which again has not changed, the maintenance of peace and stability across the Strait is absolutely, vitally important,” the senior US administration official said.
China’s foreign ministry, in a statement on the meeting, said the United States was sending “very wrong, dangerous signals” on Taiwan, and the more rampant Taiwan’s independence activity, the less likely there would be a peaceful settlement.
“The Taiwan issue is an internal Chinese matter, and the United States has no right to interfere in what method will be used to resolve it,” the ministry cited Wang as saying.
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China, India call for negotiated way out of Ukraine war
AFP
September 25, 2022
China and India on Saturday called at the United Nations for a negotiated end to the Ukraine war, stopping short of robust support for traditional ally Russia.
India, unlike China, has a warm relationship with the United States but it has historic ties with Russia, its traditional defense supplier.
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Inflation fight: Are central banks going too far, too fast?
Chris Giles and Valentina Romei
Sep 25, 2022 – 9.25am
London | With their bills sharpened and talons on display, the world’s central banks fully adopted the posture of the hawk this week. Backed by sharp rises in interest rates and currency intervention, they have used pointed language to advertise their singular aim of defeating the scourge of inflation.
In one of the most sudden shifts in global economic policymaking in decades, central bankers say they have had enough of rapid price rises and insist they are prepared to act to restore price stability, almost at any cost.
But after a week of dramatic announcements from central banks around the world, at least some economists are beginning to ask — are they going too far, too fast?
The US Federal Reserve has been by far the most important actor in this shift of temperament. On Wednesday, it raised its main interest rate by 0.75 percentage points to a range between 3 and 3.25 per cent. At the start of the year, this rate had been close to zero.
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I look forward to comments on all this!
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David.
