December 29, 2022 Edition
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In the US we are seeing the country digging itself out from a biblical blizzard that has killed many.
In Europe the war drags on and the mood is hardly festive.
In China COVID is running rampart and the limits of Chinese power are being tested.
In OZ we seem to actually be having a few days of Summer and the year end torpor drags on!
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Major Issues.
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Hey RBA boomer, things have changed a lot since the 1970s
Economics Editor
December 18, 2022 — 1.45pm
Sorry, but Reserve Bank governor Dr Philip Lowe’s call for ordinary Australians to make further sacrifice next year in his unfinished fight against “the scourge of inflation” doesn’t hold water. His crusade to save us all from a wage-price spiral is like Don Quixote tilting at windmills only he can see.
In one of his last speeches for the year, Lowe “highlighted the possibility of a wage-price spiral” in Australia. A lesson from the high inflation we experienced in the 1970s and ’80s is that “bringing inflation back down again after it becomes ingrained in people’s expectations is very costly and almost certainly involves a recession”.
He noted that this was a real risk in “a number of other advanced economies [which] are experiencing much faster rates of wages growth”.
But not to worry. “This is an area we are watching carefully.” The Reserve Bank board is “resolute in its determination to return inflation to target, and we will do what is necessary to achieve that”.
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https://www.afr.com/politics/federal/voters-choose-labor-on-the-issues-that-matter-20221218-p5c797
Voters choose Labor on the issues that matter
Phillip Coorey Political editor
Dec 19, 2022 – 5.00am
Federal Labor has pulled strong leads over the Coalition in almost all key areas of voter concern, and is level pegging with the Liberals on their signature strength as economic managers, according to an exclusive new poll.
The poll by Freshwater Strategy finds that on the issue of the greatest concern to voters, the cost and standard of living, Labor is the preferred manager by 41 per cent to 27 per cent.
The online poll of 1209 voters, taken from Friday to Sunday, confirms the cost of living dominates every other concern with 71 per cent listing it as one of the three most important issues the federal government needs to deal with.
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The cascading shocks that could come from ‘one rate rise too many’
Ronald Mizen Economics correspondent
Dec 19, 2022 – 5.00am
What happens to the Australian economy if house prices fall 30 per cent? Or if the country experiences a period of stagflation?
These are two “low probability, high-impact” situations actuaries have been thinking about since another such scenario – the COVID-19 pandemic –turned the world on its head for the better part of two years.
“[The pandemic] demonstrated more than ever that a lot of the traditional sensitivity testing done in financial markets and in financial services don’t prepare you for these sorts of big shocks,” actuary Hugh Miller says.
A paper being released on Monday by the Actuaries Institute, The Long Run: Low probability, high-impact scenarios for the Australian economy and financial markets, aims to fill in the gaps.
So, what happens if house prices drop 30 per cent – double the current consensus – because people become convinced the market is overpriced?
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https://www.afr.com/politics/federal/trust-frays-as-ceos-become-wary-of-canberra-20221217-p5c74u
Trust frays as CEOs become wary of Canberra
What most corporate leaders believed would be a moderate, business friendly Labor government is showing distinct signs of being far more interventionist than expected.
Jennifer Hewett Columnist
Dec 18, 2022 – 5.00pm
The business community didn’t see it coming. What most business leaders believed would be a moderate, business-friendly Labor government is showing distinct signs of being far more interventionist than they had expected.
This has certainly not severed Labor’s relationship with business in general or frozen either sides’ stated ambitions for further co-operation, but trust is fraying as a new wariness sets in about what might come next.
After the government’s industrial relations legislation that was roundly condemned by business, an appalled gas industry is reeling at what it sees as the ambush of Labor’s energy plan.
Not that all of the business community shares the opposition to the government’s energy measures, of course. Manufacturing companies in particular argue it’s vital for the government to do what’s necessary to help protect them from the sharp rise in energy prices for households and businesses.
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Liberals must change culture to win: Dan Tehan
By SIMON BENSON
and GEOFF CHAMBERS
10:35AM December 19, 2022
Senior Liberal frontbencher Dan Tehan has called for wholesale cultural change within the party, claiming the Coalition could not win the next election until it reformed from the grassroots up.
A post-election review to be handed to the party’s federal executive this week will deliver a damning assessment of the State Liberal party divisions, claiming that they no longer represented modern Australia.
Mr Tehan, the shadow minister for immigration, said it was vital the party adopted the recommendations of the review. It will also recommend the need for more women and greater ethnic representation.
“Well, what the review shows is that we’ve got to make sure that we’re doing that outreach, doing that engagement and ensuring that we are in touch with modern Australia,” he said.
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When it’s time to say goodbye to your DIY super fund
Just because an SMSF was a great idea when it was set up doesn’t mean it will stay that way forever. So, what might prompt winding one up?
Meg Heffron Contributor
Dec 20, 2022 – 5.00am
Most people who set up a self-managed superannuation fund hope to keep it running for their whole lives; probably a little longer, as in however long it takes their beneficiaries to get the money out after they die and wind up the fund.
But just because an SMSF was a great idea when it was set up doesn’t mean it will stay that way forever. So, what might prompt winding one up?
The flippant answer to when an SMSF should be wound up is “when the members don’t want to do it any more” but in fact, that’s not a bad place to start. An SMSF takes time, effort and attention. The moment that effort outweighs the benefits is a perfectly reasonably time to wind up.
Diminishing capacity
Another trigger is diminishing capacity. Often two members of a couple belong to an SMSF, so it’s not such a problem when the first member starts to decline. The second member can simply take over the running of the fund as long as there is an important document known as an “enduring power of attorney” in place. But it can be a problem at some point if neither can look after the fund.
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Australia has a habit of sensing global political shifts. So, what’s coming?
Journalist and author
December 20, 2022 — 5.00am
Australia has developed a habit over the years of offering a glimpse into the political future for other Western nations. Bob Hawke and Paul Keating served up a governing blueprint for Tony Blair’s New Labour. John Howard’s focus at the start of the century on border security foreshadowed how the politics of fear and the “othering” of immigrants would become a dominant theme of the populist right, as evidenced by the Brexit referendum and the victory of Donald Trump.
Fifteen years ago, it was easy to identify a growing disaffection in Australia with the emergence of a professional political class: what looked like a closed shop of MPs who had graduated from student or union politics into paid positions as political aides and, from there, pre-selection and parliament. The rejection of political elites, whether it was Hillary Clinton or cosmopolitan Remainers, became another recurring theme of the populist revolt.
Tony Abbott’s skill at sloganeering, with pithy phases such as “Axe the Tax” and “Stop the Boats”, anticipated the trend of simplifying complex issues with words that could fit on a bumper sticker. “Take Back Control” became the battle cry of the Brexiteers. “Make America Great Again” found an echo in the derelict factories of the Rust Belt.
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Six inheritance strategies to make your children richer
Bequests and gifts are a potential legal minefield, not to mention tax implications and family fallouts. These strategies will help you get succession right.
Duncan Hughes Reporter
Dec 21, 2022 – 5.00am
Baby Boomers planning to give an estimated $3.5 trillion in cash and other assets to future generations are facing closer scrutiny by courts and tax authorities in addition to having to deal with more complex family structures and finances.
Longer lives and record wealth means the nation’s richest generation in history will be passing on an estimated $224 billion a year in inheritances by 2050, the Productivity Commission says.
By comparison, Boomers’ children and other beneficiaries are often facing big debts from university, more expensive housing, less generous company pensions than older generations and rising costs of living.
“The most critical ingredient in effective estate planning is periodic reviews,” says Anne-Marie Tassoni, partner at Cameron Harrison, a wealth-management company.
“Families change, circumstances change, finances and law changes,” says Tassoni. “Death can occur quickly and unexpectedly, which means you need to adapt to changing circumstances quickly and effectively.”
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Scott Morrison looks to a business career after politics
Aaron Patrick Senior correspondent
Dec 22, 2022 – 5.00am
Former prime minister Scott Morrison does not intend to remain in parliament for the long term and is likely to start thinking about pursuing a business career in the new year, according to confidants.
As an opposition backbencher, the 54-four-year-old former head of Tourism Australia, the New Zealand Office of Tourism and Sport and the NSW Liberal Party is on a salary of $217,060.
With two young children and a wife to support, Mr Morrison was considering working for or consulting to a large company, sources said, a step that would require him to resign from the House of Representatives. He also intends to give speeches around the world on leadership.
With the Coalition out of office, Mr Morrison is unlikely to be appointed to a government position, unlike another former prime minister, Kevin Rudd, who will become Australia’s next ambassador to the United States.
Former senior political leaders have had mixed success establishing or re-establishing business careers, in part because of limited experience before entering politics and the notoriety from being associated with political controversy.
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The future is now, and politics has to cope with the consequences
This was the year when so many dire predictions came true. Events have transformed the discussion about what governments can afford to do, and about investments in the future.
Laura Tingle Columnist
Dec 21, 2022 – 5.18pm
Dire warnings of momentous consequences if issues aren’t addressed are part of the everyday business of politics.
Whether it’s the opposition sparring with the government of the day over issues that it is not confronting, or third parties releasing reports highlighting looming problems in one policy area or another, projections of what will happen without action are a staple of our media diet.
It is part of the process of trying to set the agenda – and expectations – for what we talk about as a country.
Conspicuous examples: the country will become so bogged in debt it won’t be able to function; the hospital system will collapse without an urgent injection of extra funding; or the climate will deteriorate alarmingly to a point where we face persistent natural disasters.
Then there are the international trends which are beyond our capacity to control but loom in our consciousness, whether that be terrorism or the rise of China.
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‘Liberal brand not fit for purpose’
By SIMON BENSON
10:51AM December 22, 2022
An official post mortem examination of the federal election has warned that the Liberal Party was no longer “fit for purpose” and had presided over the collapse of its volunteer base which left it incapable of defending key seats against teal independents.
Party membership levels had also hit crisis point after years of deliberate hollowing out by the factional warlords in control of state divisions, the review has found.
The review will also reinforce findings of the ALP post-election review that former prime minister Scott Morrison’s unpopularity was a decisive factor in the election loss on May 21.
The Australian understands that the post-election review, conducted by former Liberal Party federal director Brian Loughnane and Victorian senator Jane Hume was presented to the 30-member federal executive on Wednesday and is due to be released on Thursday.
It is highly critical in its assessment of the party’s separate state divisions – which were riddled with factional infighting and personality cults – and blames them for a “grassroots” failure and neglect of community networks.
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https://www.afr.com/politics/federal/zelensky-arrives-at-white-house-20221222-p5c85w
Coalition ‘lost control of its brand’: Liberal review
Georgie Moore 22-Dec-2022
A damning Liberal post-mortem following its crushing election loss has called for an overhaul to ensure the party is “fit for purpose meet the demands and sophistication of modern elections”.
Factional warring, the demands of managing the COVID-19 pandemic, instability and scandals within the former Morrison government and allegations of poor treatment of women are among reasons pointed to in a review of the party’s fall from power.
“Put simply, by the time of the election the Coalition had lost control of its brand, with the parties and their leaders being defined in the public’s mind by our opponents,” the review said.
“We were not in control of the politics, and we were unable to frame the electoral contest. Rather it was set by our opponents.”
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The nine reasons the Liberal Party thinks it lost the election
Michael Read Reporter
Dec 22, 2022 – 3.10pm
Scott Morrison’s unpopularity, factional brawls, and falling support from women and Chinese-Australians were key drivers of the Liberal Party’s drubbing at the May election.
The findings were included in former Liberal Party federal director Brian Loughnane and Victorian senator Jane Hume’s long-awaited review into the party’s election loss, released on Thursday.
Here is a summary of what they found.
Scott Morrison
Scott Morrison’s unpopularity was a “significant negative” with voters who saw the former prime minister and the party he led as “out of touch”.
“The leadership choice between Scott Morrison and Anthony Albanese became the most influential driver of voting intention during the campaign period,” according to Senator Hume and Mr Loughnane.
“The Coalition did not define Labor and its leader before the campaign. Consequently, Anthony Albanese came to be seen as an acceptable, low-risk alternate prime minister.”
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The good, bad and ugly of business in 2022
Heroes became villains and green became gold – or at least copper. Here are the biggest thrills and spills from a huge year in business.
James Thomson Columnist
Dec 21, 2022 – 9.15am
As Australians head for the airport and their summer holidays, it’s a good time to reflect on one business leader who defied characterisation in our annual good, bad and ugly list: Qantas chief executive Alan Joyce.
For shareholders, Joyce has been very good, delivering a $400 million buyback and an 18 per cent share price gain for the year, including a 43 per cent rise since mid-July.
But for many members of the travelling public, a year of cancelled flights and lost luggage would place Joyce and his airline somewhere between “bad” and “ugly”. After all, It’s not every year a CEO gets turned into a verb – for a while there, having your travel plans blown up meant you’d been “Joyced”.
But perhaps it’s fitting that we couldn’t fit Joyce into 2022’s list. This is a year in which heroes like Elon Musk and Hamish Douglass became villains for many investors, and seemingly groundbreaking ideas like cryptocurrency became poison. Green turned into gold (or at least copper), a Star fell to earth, and central bankers found themselves in a harsh spotlight.
If anything, 2023 looms as an even more fascinating year, when the true impacts of war, rising interest rates and a spluttering energy transition are fully felt. But that’s tomorrow’s story. For now, bask in a year of stunning highs and staggering lows.
Just don’t miss your flight.
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Reserve Bank put on notice by House economics committee over rate hikes
By Shane Wright
Updated December 22, 2022 — 5.44pmfirst published at 4.33pm
Parliament’s high-powered economics committee has taken a swipe at the Reserve Bank of Australia, saying that lifting interest rates could be the wrong response to inflation that is being driven by international supply-chain factors, and risked harming Australian households.
In a departure from previous annual reports into the Reserve Bank, the House of Representatives’ economics committee on Thursday also urged the RBA to learn from its missteps including its repeated forecasts that interest rates would remain on hold until 2024.
The economics committee oversees the bank, holding public hearings with the governor every six months. The latest committee, now headed by Labor MP Daniel Mulino - who holds a PhD in economics from Yale University - grilled governor Philip Lowe in September this year.
The annual report, which had unanimous cross-party support, said the committee understood the difficulties forecasting the economic outlook given this year’s unexpected lift in inflation.
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Brace yourself for these seven challenges in the year ahead
By James Kirby
9:41AM December 23, 2022
After what we just went through in 2022, your capacity to be surprised may well be diminished.
But never fear, the investment market offers infinite possibilities to catch you off guard. If you have been reading the Wealth section in recent weeks, we have covered the distinct possibility that both property and the share market could recover by the end of 2023. Inflation may subside and the need for rate rises may ebb.
Alternatively, we could just as easily have another year of rotten markets, as many economists suggest.
It’s time to think ahead. As an investor you must be ready for just about anything, including the seven potential surprises of 2023.
Government intervention skews the markets in which you invest
One of the fundamental changes to the Australian economy in 2022 was the return of government intervention in markets. The headline move has been the Federal Government move in the gas and coal sector, where there are now capped prices. At its most extreme in the state of Victoria, the state government bought back into the State Electricity Commission of Victoria (SECV).
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Voice would undermine equal rights of citizens
Chris Merritt
5:58PM December 22, 2022
As the year draws to a close, there is no avoiding the fact that these are dark times for two great principles that were once unquestioned: equal rights as citizens and the presumption of innocence.
These are the institutional pillars that enabled this nation to shake off its authoritarian beginnings and transform itself into the land of the fair go.
But these pillars will be tested next year in two important matters: the first is the debate over the proposed Indigenous voice to parliament; the second is the question of whether the federal and ACT governments can repair the damage caused by the catastrophic handling of the Brittany Higgins affair.
This unresolved rape accusation has left doubts about the probity of the ACT justice system and the federal compensation payout to Higgins.
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https://www.afr.com/politics/federal/defence-chiefs-want-more-weapons-fast-20221209-p5c51c
Submarines or tanks: Australia’s pressing military puzzle
The Albanese government is promising to muscle up as the strategic outlook deteriorates. Whatever it chooses will carry a supersize price tag.
Andrew Tillett Political correspondent
Dec 22, 2022 – 5.00am
If Ukraine ultimately prevails over Russia, a factory in rural Arkansas will have played an instrumental part in victory.
The plant, owned by US defence giant Lockheed Martin, churns out the High Mobility Artillery Rocket System, better known as HIMARS, a truck-like vehicle with a rocket and missile launcher on the back.
Known for its ability to “shoot and scoot”, HIMARS can fire GPS-guided missiles 80 kilometres, double the range of howitzer guns, allowing Ukrainian soldiers to accurately hit hundreds of targets well beyond the enemy frontline such as ammunition dumps and bridges used to resupply troops.
Ukrainian President Volodymyr Zelensky credited the system for helping recapture the city of Kherson last month.
HIMARS was recently named the “coolest thing made in Arkansas” in a competition run by the state chamber of commerce, beating snack food Cheetos among its rivals.
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What we have learned from the Albanese experiment
Forget the modesty of its ‘safety first’ election mandate. What began as a cautious, even tentative government, has begun to reveal its true character.
By PAUL KELLY
December 24, 2022
Australia in 2022 embarked upon a new national experiment – a Labor government under a down-to-earth progressive political veteran, Anthony Albanese, who just managed to form a majority government in May but who governs with an assurance that has surprised his own party.
The lesson from recent weeks is that what began as a cautious, even tentative government, has begun to reveal its true character – a government with the audacity and reforming mission to change Australia’s national direction, its priorities and its governing values.
Forget the modesty of its “safety first” election mandate. At year’s end, the story is that Albanese Labor has the will, the momentum and the parliamentary control to offer a new pathway for the nation.
This is partly a pre-planned agenda but mainly a response to structural challenges Australia faces – including inflation, energy costs, lagging wages, struggling living standards, the climate-change transition, a deepening US alliance and fresh openings with an assertive China that has revised its tactics.
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RBA warning: Our supply-side problems have only just begun
Economics Editor
December 23, 2022 — 11.51am
In one of his last speeches for the year, Reserve Bank governor Dr Philip Lowe has issued a sobering warning. Even when we’ve got on top of the present inflation outbreak, the disruptions to supply we’ve struggled with this year are likely to be a recurring problem in the years ahead.
Economists think of the economy as having two sides. The supply side refers to our production of goods and services, whereas the demand side refers to our spending on those goods and services, partly for investment in new production capacity, but mainly for consumption by households.
Lowe notes that, until inflation raised its ugly head, the world had enjoyed about three decades in which there were few major “shocks” (sudden big disruptions) to the continuing production and supply of goods and services.
When something happens that disrupts supply, so that it can’t keep up with demand, prices jump – as we’ve seen this year with disruptions caused by the pandemic and its lockdowns, and with Russia’s attack on Ukraine.
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Radical intervention threatens a return to Fortress Australia
12:00AM December 24, 2022
One of the buzzwords at large in the globalist arena is polycrisis. It describes the confluence of today’s economic, health, social, climate and security maladies, which sees populist, desperate and spendthrift governments lunging for the controls: from price freezes to cash handouts, industry subsidies to curbs on foreign investment.
Intervention is back and, bit by bit, globalisation is being reversed, as countries disengage from the trading order that has been the engine of prosperity for decades. Lower growth and higher prices are just the beginning of this disintegration.
Visiting Australia last month, World Trade Organisation director-general Ngozi Okonjo-Iweala said deglobalisation would prove to be not only economically costly but also “would leave all countries more vulnerable to the global commons problems that now represent some of the biggest threats to our lives and livelihoods”.
“As the world navigates the polycrisis – climate change, pandemic, the war in Ukraine, economic slowdown, inflation, food insecurity, monetary tightening and debt distress – we need multilateral co-operation and solidarity more than ever,” Okonjo-Iweala told the Lowy Institute in Sydney.
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ScoMo, we hardly knew you
Niki Savva has written the definitive study of the fall of the Morrison government. It is as powerful as it is persuasive.
By Stephen Loosely
From Review
December 24, 2022
There is a platinum law in Australian politics that applies equally to both sides of the political aisle. It is simply this. If a government dodges a bullet electorally at one election, it will be hit by a shotgun blast at the next.
The key element in such a devastating landslide occurring is that the government concerned misreads the electorate when winning an election, unexpectedly, in an environment which favours the Opposition. The classic example is in 2019 when the Morrison Coalition government was returned against the predictions of most pundits. Something similar happened with the victory of the Keating government in 1993.
In the wake of the 2019 surprise outcome, Prime Minister Morrison declared that he believed in miracles. He seemed to believe that divine intervention had saved his government. The truth was far less biblical and far less inspiring.
Federal Labor under Bill Shorten was travelling along the third rail of Australian politics, being tax policy. It was ambitious and the electorate recoiled in uncertainty.
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COVID-19 Information.
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Economic modelling shows vaccine rollout saved billions and 142,000 jobs
By REMY VARGA
12:00AM December 19, 2022
The vaccine rollout saved the national economy $181bn in potential damage that could have been inflicted by ongoing lockdowns if a jab had been unavailable, new economic modelling says.
The peer-reviewed research also estimates the comparatively quick availability of vaccines against Covid-19 saved 142,000 jobs and prevented the pandemic knocking $395bn off gross domestic product.
The modelling, produced by consultancy Biointelect and Victoria University with support from Pfizer Australia, said the vaccine rollout also pumped $28bn into tourism exports and $26bn into education exports.
Biointelect co-founder and report author Jennifer Herz said the Therapeutic Goods Administration took on average about 1375 days to approve a new vaccine under normal circumstances.
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https://www.afr.com/world/asia/xi-jinping-s-huge-covid-gamble-20221214-p5c64y
Xi Jinping’s huge COVID gamble
Dec 15, 2022 – 6.00am
This week in The Fin podcast, North Asia correspondent Michael Smith explains China’s U-turn on COVID-zero, whether it will work and what it means for both the global economy and Xi Jinping’s grip on power.
In late November, a surprising wave of dissent swept across China. After three years of snap lockdowns, mass testing and harsh quarantines to stamp out COVID-19, young people gathered to protest against the restrictions.
At some demonstrations, they even called for China’s President Xi Jinping to step down.
And then last week, an even bigger surprise. China’s leaders backed down, reversing the COVID-zero policy that had brought the country to breaking point.
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China’s reopening from COVID isn’t going well
Senior business columnist
December 20, 2022 — 12.00pm
China’s reopening after relaxing its draconian COVID policies isn’t going well. In fact, the early experience appears even worse than even the pessimists had predicted.
Infections are soaring, hospitals are being overwhelmed, there are shortages of medications, the streets of major cities are deserted and economic activity is being as disrupted by the reopening as it was by the harsh former “zero COVID” approach to the pandemic.
The abrupt reopening in response to the wave of protests in major cities against the previous approach to outbreaks of COVID, which included widespread and severe lockdowns, has revealed a complete lack of preparation by authorities that have had the best part of three years to put the infrastructure, people and supplies in place to manage living with COVID.
That suggests that, if not for the protests, China’s authorities were convinced the zero COVID approach could and would be maintained indefinitely.
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‘Matter of time’: Photos show bodies piling up in China as Covid cases explode
Beijing is downplaying the Covid crisis suddenly sweeping the nation – but disturbing photos reveal a very different story.
December 21, 2022 - 10:08AM
Scores of horrifying photos and videos have revealed just how devastating China’s current Covid crisis has become, despite authorities insisting the situation is under control.
Recent pictures taken in the nation – which has quickly emerged as the world’s Covid hotspot – show piles of bodies lying on the ground in morgues and hospital hallways, with footage revealing medical centres already stretched to the limits and funeral parlours buckling under a sudden surge in demand.
However, despite the clear evidence of the escalating crisis, the official Covid death toll for December stands at just 10, with officials doubling down on the decision to abandon China’s zero-Covid policy after years of draconian lockdowns.
Within days of the harsh restrictions lifting, cases began to explode, with international epidemiologists and studies predicting the latest wave could result in millions of deaths.
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Mystery of Covid smell loss may be solved
By Dominique Mosbergen
Dow Jones
10:03AM December 22, 2022
The nose knows why some people still can’t smell long after recovering from Covid-19.
A haywire immune response in the olfactory system was found to explain why some people still can’t smell long after symptoms of the disease have abated, according to a small study published Wednesday in the journal Science Translational Medicine. In some cases, the inflammation was detected in patients with smell loss years after recovery from Covid-19.
Compared with people who can smell normally, patients with long-term smell loss had fewer olfactory sensory neurons, cells in the nose responsible for detecting smells and sending that information to the brain. Patients with lingering loss of smell had an average of 75 per cent fewer of the neurons compared with healthy people, said Brad Goldstein, a study co-author and sinus surgeon at Duke University.
“We think the reduction of sensory neurons is almost definitely related to the inflammation,” Dr Goldstein said.
Loss of smell is a common Covid-19 symptom, though its prevalence varies widely depending on factors including which variant caused the infection, head and neck specialists said.
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As COVID cases spiral, China’s official death toll convinces no one
Keith Bradsher, Amy Chang Chien and Joy Dong
Dec 24, 2022 – 9.51am
BEIJING — The hearses bearing black and yellow funeral paper flowers crept in a steady stream toward the Dongjiao crematory in eastern Beijing. Several dozen people crowded around the closed gate waiting to be let in. A man unable to get a spot in line could only watch, wondering what to do with the body of a relative who had just died of COVID-19.
The hospital could not keep the body — there were already too many in its morgue. When he called the crematory, an employee told him he had to wait a week. When he called again, nobody answered.
A country trying to mourn its dead from an explosive COVID-19 outbreak is grappling with a system unprepared for the surge in fatalities. Two weeks after China abruptly abandoned its “zero-COVID” policy, cases have soared in cities like Beijing, along with reports of people dying.
Funeral home directors and sellers of funeral supplies describe a flood of phone calls from families needing help handling the bodies of relatives. On Chinese social media, people are sharing videos and photos of morgues crowded with bodies, as well as their own personal accounts of losing loved ones to the outbreak.
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‘Entire Greater Shanghai will fall’: Hospital warns of ‘tragic battle’ with COVID
By Zoey Zhang and Bernard Orr
Updated December 23, 2022 — 12.52pmfirst published December 22, 2022 — 10.05pm
Shanghai: A Shanghai hospital has told its staff to prepare for a “tragic battle” with COVID-19 as it expects half of the city’s 25 million people will get infected by the end of next week, while the virus sweeps through China largely unchecked.
After widespread protests against strict mitigation measures, China this month began dismantling its zero-COVID regime, which had taken a great financial and psychological toll on its 1.4 billion people.
China’s official death count since the pandemic began three years ago stands at 5241 – a fraction of what most other countries faced – but now looks bound to rise sharply.
It reported no new COVID deaths for a third consecutive day for Thursday, even as funeral parlour workers say demand for their services has increased sharply over the past week.
Authorities – who have narrowed the criteria for COVID deaths, prompting criticism from many disease experts – confirmed 393,067 cases with symptoms on the same day.
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Post-Christmas COVID wave looms as some get infected for a fifth time
By Melissa Cunningham, Liam Mannix and Andrew Taylor
Updated December 24, 2022 — 7.30pmfirst published at 5.00am
Some Australians are battling their fifth bout of COVID-19 as the Christmas period fuels another surge of infections and newer sub-variants make it increasingly difficult to predict the latest wave.
For some, their re-infection is milder, but others are more sick with the virus than they’ve ever been.
Infectious diseases physician Paul Griffin, who is director at Mater Health in Brisbane, said the emergence of new, more evasive sub-variants of Omicron, posed an increased threat to both vaccinated and previously infected people, sparking an extraordinary rise in reinfections.
“Many people assume they will have less severe infections on successive re-infection, that’s not necessarily the case,” Griffin said. “We’ve certainly seen people who have had COVID a few times: they’ve been hospitalised with their third or fourth or fifth infection and that’s the one that’s turned out to be more significant and more severe.”
His warning comes as Victoria’s Chief Health Officer Brett Sutton confirmed on Friday that the state’s latest wave was being driven by multiple immunity-dodging Omicron offshoots most notably the recombinant strain XBF, which now makes up almost a third of wastewater detections.
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Climate Change.
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How timely, targeted and temporary is the energy market intervention?
How does the government’s energy plan measure up against the three-part test economists use to judge unusual interventions into the market?
Chris Richardson Economist
Dec 18, 2022 – 2.29pm
Economists usually hate market intervention, especially heavy-handed intervention. But I’ve been calling for it in electricity and gas markets for many months. Why the unthinkable? Because the war in Ukraine came on top of two existing failures: how we tax gas, and how we regulate east coast energy markets.
Adding war to those two failures means electricity and gas prices are now a key problem for inflation, which means they’re also central to what the Reserve Bank does next on interest rates, to what happens to the economy’s growth from here, and to what’s happening to the cost of living for families.
So yes, they’re a big deal.
That’s why intervention, usually a dumb idea, became the best available alternative – it would take much too long to fix how we tax gas and regulate east coast electricity markets, so we wouldn’t so much be intervening in markets as we would be intervening in a mess.
Well, the government’s plan is now public. How did they do?
Economists use a three-part test of unusual interventions like these, looking for them to be timely, targeted and temporary.
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‘This could be existential’: Behind gas’ desperate global game plan
By Peter Milne
December 18, 2022 — 5.00am
One of the world’s largest gas producers’ lobby groups is coordinating a global campaign to rebrand gas as green to skew the climate change debate, according to an environmental group that has obtained its internal documents.
The climate change debate is “potentially existential for the global natural gas value chain” and regulatory changes, combined with less access to finance, “could have highly damaging effects” according to the International Gas Union’s strategy documents, which were inadvertently left accessible to the public on its website.
Santos and Origin remain gas union members; Woodside has left, but is considering rejoining; AGL has left. Credit:Gas industry lobby group messaging for members and former members.
UK-based InfluenceMap, which has tracked corporate lobbying on climate issues for five years, on Thursday released a report based on documents whose publication dates ranged from 2017 to 2021.
InfluenceMap program manager Faye Holder said the documents exposed the playbook of one of the world’s largest gas lobby groups.
“They reveal the industry’s rebranding strategy to promote gas as ‘green’ despite the increasingly urgent warnings from climate scientists,” she said.
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https://www.afr.com/politics/albanese-plan-has-dealt-a-blow-to-east-coast-gas-supply-20221222-p5c8ah
Albanese plan has ‘dealt a blow’ to east coast gas supply
Samantha Hutchinson National reporter
Dec 22, 2022 – 3.24pm
A federal government plan to lower energy bills by capping the price of gas and coal has been attacked as a heavy-handed and “radical” move that puts at risk more investment beyond Senex Energy’s decision to pause its $1 billion expansion plan in Queensland.
A day after the NSW Parliament passed coal price-capping legislation that functions as a central plank of the federal government plan, energy and gas players have blasted the legislation as rushed and damaging to the country’s prospects for new supply.
On Wednesday evening, The Australian Financial Review revealed Senex Energy had suspended plans for a $1 billion expansion of its Surat Basin developments.
Senex Energy chief executive Ian Davies said that after the passing of the gas measures last week, including a mandatory code of conduct and a temporary $12 a gigajoule wholesale price cap, it was “prudent” to review all investments. It was also not possible to sign new gas sales contracts despite demand.
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Royal Commissions And The Like.
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Bupa named and shamed on aged care
By STEPHEN LUNN
and SARAH ISON
12:39AM December 20, 2022
Australia’s best and worst nursing homes have now been identified, with aged-care provider Bupa the poorest performer under the government’s new star rating system, but the highly anticipated rollout was marred by hundreds of homes not yet being allocated a rating.
Of the 22 nursing homes to receive a one-star rating out of five, Bupa owned four, in Clemton Park and Waratah in NSW, Bairnsdale in Victoria’s east and Woodville in South Australia.
A further eight of Bupa’s 59 facilities were rated two stars, below the standard considered acceptable by the federal government.
Eighteen aged-care facilities across the nation received the top rating of five stars, including Carinya Nursing Home in Melbourne’s southeast and Regents Garden Four Seasons in Booragoon, WA.
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National Budget Issues.
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‘No easy way out’: Future Fund urges investing reset
Jonathan Shapiro Senior reporter
Dec 19, 2022 – 5.00am
Australia’s Future Fund says it has repositioned its $200 billion portfolio for a world of higher inflation and increased volatility, lifting its exposure to select commodities including gold, and lowering its proportion to equities, as well as being wary of regulatory risk in areas such as utilities.
The Future Fund is also investing in real estate and infrastructure but only if the assets are sufficiently resilient to higher inflation, as it revealed that it now owns a 3 per cent stake in Sydney Airport.
Dr Raphael Arndt, the chief executive of the sovereign wealth fund, said the paradigm of falling interest rates and central bank rescues had likely come to an end, which would challenge equities and bond valuations.
“Central banks are causing the problem, and if they didn’t do that we would have a bigger problem which is unsustainable inflation,” he told The Australian Financial Review.
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https://www.afr.com/chanticleer/future-fund-has-a-stark-warning-for-investors-20221218-p5c77x
Future Fund has a stark warning for investors
Future Fund boss Raphael Arndt says the investment community is wrong to hope the tools it has used for decades will work in a dangerous new economic world.
Dec 19, 2022 – 5.00am
Raphael Arndt, the chief executive and chief investment officer of Australia’s $200 billion Future Fund, wants to deliver a blunt warning to Australian investors and the financial community that exists to serve them.
Simply waiting for the world to go back to normal is not a plan.
For the second straight year, Arndt has released a white paper that sets out how the Future Fund believes the economic and market environment is changing, and how the sovereign wealth fund is restructuring its portfolio in response.
Although many investors are banking on inflation quickly fading and central banks responding to slowing economic growth with rate cuts – thus taking markets back towards the lower-rate environment of the past decade – the Future Fund sees a much more challenging scenario ahead.
The recent drivers of economic growth have probably stalled, Arndt says, and persistent inflation will mean rates remain higher. A highly volatile, stagflationary environment like in the 1970s is coming, but it will have some nasty twists, including climate change, demographic headwinds and high debt levels.
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Giant Future Fund adds risk amid historic market shift: ‘It’s time to act’
5:00AM December 19, 2022
The $190bn Future Fund has signalled a major shift in how it invests as it pushes up the risk curve by taking on more private equity, moving into commodities such as gold and prepares further big-ticket infrastructure buyouts.
Chief executive Raphael Arndt says the way global markets operate is at a turning point.
The giant investment fund argues a combination of factors – war; a move away from globalisation; increasingly populist policies; high government debt; an energy transition; and the view that inflation is going to be more persistent in future – requires a change of investment style to continue to secure market-beating returns.
Dr Arndt said the Future Fund’s strategies needed to respond to structural forces that were overturning many of the assumptions underpinning investing over the past three decades.
His comments are significant, because given the size of the Canberra-backed fund, small changes in investments can have outsized effects on markets. At the same time, big super funds could start moving down a similar path.
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Economists predict ‘vanilla’ slowdown for 2023
10:00PM December 19, 2022
Australia’s economy will “muddle through” in 2023, experts say, as this year’s string of interest rate rises, along with recessions across large parts of the developed world, take the heat out of inflation, at the price of rising unemployment and sharply slower growth.
For many households, 2022 has been a year of climbing anxieties: about the cost-of-living pressures, declining real wages, sharp house price falls, and surging interest rates.
But it has also been a year of wealth and opportunity, with more Australians in work than ever before and the lowest unemployment rate in a generation.
KPMG chief economist Brendan Rynne said “as next year progresses, economic conditions are going to feel tighter and tighter”.
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Health Issues.
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CSL’s new boss eyes fresh drivers of growth
Yolanda Redrup Reporter
Dec 18, 2022 – 2.48pm
Incoming CSL chief executive Paul McKenzie will not be able to rely on the growth drivers that have propelled the company in the last five years when he steps into the job next March, but that’s why analysts say he’s the right man for the job.
Coming off years of strong earnings growth driven by CSL’s flu vaccine business Seqirus and its speciality products Kcentra and Haegarda, new CSL chief executive Paul McKenzie will need to find operational efficiencies to maintain profit growth in the short-term, while it waits for products in the pipeline to progress through clinical trials and hopefully be approved by regulators.
Speaking to The Australian Financial Review, Barrenjoey’s Saul Hadassin said Mr McKenzie’s operational experience made him a logical replacement for outgoing CEO Paul Perreault.
“It makes sense in terms of where the business is heading. It has invested a lot in capex and facilities in the last few years,” he said.
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Media release
Private health insurers with big profits and high management expenses fail value for members test
Published 20 December 2022
Private health insurer profits are up on the back of increased member numbers and reduced elective surgeries, with management expenses for executive salaries also on the rise, the Australian Medical Association’s Private Health Insurance Report card has found.
The 2022 report card showed a continued two-year upward trend in members with 45.2 per cent (up 0.7 of a percentage point from June 2021) of people with hospital treatment insurance, AMA President Professor Stephen Robson said.
Professor Robson said the challenge for private health insurers now was to deliver better value for money to their policyholders — including the 235,699 new members with hospital cover, to try and ensure the membership uptick is not a flash in the pan.
“Insurers’ profitability rose in recent years not only because of growth in new members, but also elective surgery cutbacks during the pandemic,” Professor Robson said.
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A giant leap for blood clot research?
By Rhys Blakely
The Times
11:00AM December 23, 2022
When glass frogs fall asleep in the trees of the tropics they fade from view. The muscles and bellies of these small amphibians become translucent, hence their name.
Now scientists have discovered how they perform this vanishing act: by hiding almost all of their bright-red blood in a unique mirror-coated liver.
This makes much of the frogs’ bodies see-through, which helps them to hide from predators.
The findings could open new avenues of research into blood clots, which the frogs somehow avoid even though they regularly cram about 90 per cent of their red blood cells into their livers each day.
“There are more than 150 species of known glass frogs in the world, and yet we’re really just starting to learn about some of the really incredible ways they interact with their environment,” said Dr Jesse Delia of New York’s American Museum of Natural History, a co-author of the study, which has been published in the journal Science.
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International Issues.
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Russia’s war plans show a series of mistakes that started with Putin
The military expected an easy victory. Instead, Putin faces his nation’s greatest human and strategic calamity since the end of the Soviet Union.
Michael Schwirtz, Anton Troianovski, Yousur Al-Hlou, Masha Froliak, Adam Entous and Thomas Gibbons-Neff
Dec 18, 2022 – 6.00pm
They never had a chance.
Fumbling blindly through cratered farms, the troops from Russia’s 155th Naval Infantry Brigade had no maps, medical kits or working walkie-talkies, they said. Just a few weeks earlier, they had been factory workers and truck drivers, watching an endless showcase of supposed Russian military victories at home on state television before being drafted in September. One medic was a former barista who had never had any medical training.
Now, they were piled onto the tops of overcrowded armoured vehicles, lumbering through fallow autumn fields with Kalashnikov rifles from a half-century ago and virtually nothing to eat, they said. Russia had been at war most of the year, yet its army seemed less prepared than ever. In interviews, members of the brigade said some of them had barely fired a gun before and described having almost no bullets anyway, let alone air cover or artillery. But it didn’t frighten them too much, they said. They would never see combat, their commanders had promised.
Only when the shells began crashing around them, ripping their comrades to pieces, did they realise how badly they had been duped.
Flung to the ground, a drafted Russian soldier named Mikhail recalled opening his eyes to a shock: the shredded bodies of his comrades littering the field. Shrapnel had sliced open his belly, too. Desperate to escape, he said, he crawled to a thicket of trees and tried to dig a ditch with his hands.
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20 ways the Ukraine war has changed the world
Vladimir Putin’s invasion of Russia’s neighbour is a watershed in modern history. The impact of the invasion stretches from nuclear fears to longer holiday flights.
By Peter Conradi
From The Times
December 19, 2022
1: Weakened Putin – and Russia
On the eve of Russia’s invasion of Ukraine on February 24, Vladimir Putin seemed at the top of his game. Ten months later, the Russian President is trapped in a war that has gone disastrously wrong – with no exit strategy.
The cancellation last week of his traditional marathon end-of-year press conference suggested he is concerned about the growing unpopularity of the conflict and fuelled rumours that he may be terminally ill and planning to flee. “The increasingly untenable Ukraine war is undermining Putin’s popular legitimacy and his standing with a ruthlessly pragmatic elite that wonders whether he is still the ruler they need,” argues Mark Galeotti, the author of more than 20 books on Russia, Ukraine and the Soviet Union. “Paradoxically, though, this also makes him more dangerous – repression is having to replace genuine authority.”
Putin has found an unexpected new status in the developing world as “an anti-colonial warrior”, Galeotti adds.
“Countries with experience of Western imperialism are susceptible to Putin’s claims to be pushing back against an arrogant US using Ukraine as a proxy.”
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January 6 committee considers Donald Trump charges
Patricia Zengerle
Dec 19, 2022 – 6.26pm
Washington | The US House of Representatives committee probing the January 6, 2021, assault on the Capitol by Donald Trump supporters moves to wrap up its work this week with what could be as many as three criminal referrals against the former president.
The Democratic-led panel has spent 18 months probing the unprecedented attempt to prevent the peaceful transfer of power by thousands of backers of the Republican president, inspired by Mr Trump’s false claims that his 2020 election loss to Democratic President Joe Biden was the result of widespread fraud.
Possible criminal referrals to the Justice Department could be on charges including obstruction of an official proceeding of Congress, conspiracy to defraud the United States, and insurrection, multiple media reports say.
The committee is scheduled to meet on Monday (Tuesday AEDT) to consider referrals and vote on its final report, which it expects to release in full on Wednesday. Panel members have declined to provide specifics ahead of the meeting.
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Lessons from 2022 for elitists and authoritarians
9:59AM December 20, 2022
Annus mirabilis or horribilis? The temptation to look back on a passing year for clues to a larger historical narrative is irresistible. Despite the inevitable short-termism of late-December amateur historiography, I’m not going to resist it.
For some, 2022 was the year when liberty fought back. After a decade of liberal democratic recession and the seeming supremacy of “strongmen” and their authoritarian style, the world’s top three poster boys of tyranny, Vladimir Putin, Xi Jinping and Ayatollah Ali Khamenei, got a reminder of the limitations of autocracy. Russia’s disastrous war in Ukraine, China’s futile war on Covid and Iran’s brutal war on its own women are testaments to the evil and folly of a system in which leaders face no accountability. Their failures and cruelties — and the tragic human cost — call for humility from those in the West who have spent the past few years denouncing liberal democracy and its works.
Still, we should be mindful of that temptation of short-termism. This could prove to be not the twilight of the tyrants but a prelude to a darker era. Neither Mr. Putin, Mr. Xi nor Mr. Khamenei seems especially chastened. Only a real optimist sees the writing on their walls in 2023.
In the West, these reversals have been aligned by the voices of the ancien regime with this year’s setbacks to the supposed existential threat to democracy posed by the rise of populism. In the re-election of Emmanuel Macron in France, the ouster of Boris Johnson in Britain, the defeat of Jair Bolsonaro in Brazil and, above all, the various blows to Donald Trump’s hopes of a restoration in the U.S., the establishment sees the cultural and political revolution launched against its rule in the past decade as all but over — proof that it was merely a brief spasm of anger by tribes of “deplorables,” fuelled by nefarious right-wing media, “disinformation” and foreign interference in elections.
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Wall Street’s 2023 profit decline could rival GFC
Alex Gluyas Markets reporter
Dec 20, 2022 – 11.08am
US stocks could be facing the largest fall in corporate profits next year since the global financial crisis, a scenario that is plainly underestimated by investors heading into 2023, Morgan Stanley warned.
While equity markets have continued their fixation on inflation and the US Federal Reserve, the broker believes that Wall Street’s latest decline has been triggered by investors finally starting to turn their attention to the deteriorating earnings outlook.
However, the severity of the looming wave of earnings downgrades is still underappreciated and cannot be ignored for much longer, says Michael Wilson, Morgan Stanley’s chief US equity strategist.
“The earnings recession by itself could be similar to what transpired in 2008-09,” Mr Wilson said. “Our advice – don’t assume the market is pricing this kind of outcome until it actually happens.”
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What the Bank of Japan decision means to the rest of the world
The BoJ is now starting to take the strong medicine it needs. It will have to maintain a steely resolve. Investors globally will be on watch.
Marcus Ashworth
Dec 21, 2022 – 7.22am
The year isn’t yet done with rattling investors’ cages. The Bank of Japan’s surprise widening of its yield curve-control policy on 10-year government bonds will have an impact far beyond its shores.
The decision may be ostensibly designed to improve the functioning of its domestic government and corporate bond markets – which have sunk into an illiquid quagmire – but the unspecified reasons may be more compelling.
Most importantly, the move adds weight to the recent downturn in the strength of the US dollar. The BoJ had been struggling to square a circle: to boost inflation by maintaining super-easy monetary policy without having the yen suffer disproportionately.
According to Kit Juckes, currency strategist at Société Générale, the yen is at its lowest real effective rate since 1973. In October, when the yen briefly topped 150 to the dollar, Japan had some tactical success turning the tide when it deployed foreign exchange reserves. Now there is some definitive policy strategy to back it up.
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Bank of Japan stuns world, inches towards policy reset
Cecile Lefort Markets reporter
Dec 20, 2022 – 6.12pm
The Japanese yen rocketed and equities in Asia suffered sharp selloffs after the Bank of Japan stunned financial markets by loosening its grip on the benchmark government bond rate, paving the way for a possible departure from decades of easy money policy.
The BoJ will widen the band within which it allows the 10-year government bond yield to trade at, being 0.5 per cent above or below its zero per cent target. It was previously 0.25 per cent.
The surprise decision caused Japan’s risk-free rate to immediately rise to the upper end of the BoJ’s cap. The S&P/ASX 200 Index fell 1.5 per cent to 7024.3 points and the Nikkei 255 dropped 2.5 per cent, dragged lower by the manufacturing sector and its flagship exporters Mitsubishi, Olympus and Mazda.
The US dollar plunged 3 per cent against the yen to ¥132.78, a level last seen in August.
“It does suggest that change is afoot and speculation on a formal change of policy next year will intensify,” said Ray Attrill, head of FX strategy at NAB. “The very fact they’ve done it when the governor just a month or two ago was saying that they had no intention of doing it is clearly significant.”
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Top university erase common phrases ‘causing harm’
To ensure that no humans or animals are upset by Stanford University’s websites, IT administrators have embarked on a bold bid to eliminate all harmful language — including the phrase ‘trigger warning’.
By Will Pavia
From The Times
December 21, 2022
In an effort to ensure that no humans or animals are upset by the websites of Stanford University, administrators at the college have embarked on a bold effort to eliminate all harmful language from its pages and computer code.
Users of these websites should not be referred to as “users”, for a start, lest they feel that they are being compared with drug addicts, though one should not say “addict” either as the word tends to “define people by just one of their characteristics”. You have to be careful with the word “addicted” too, if using it to describe your devotion to a TV series or a bar of chocolate, as this “trivialises the experiences of people who deal with substance abuse issues”.
The Elimination of Harmful Language Initiative, launched by Stanford’s IT department, followed on from the efforts of other US universities including Brandeis to help students and staff prune from their vocabulary words and phrases that might cause offence.
At Brandeis this initiative was called the Oppressive Language List, although in August last year the list itself was retitled as the Suggested Language List. Its critics included the novelist Joyce Carol Oates, who noted that even the phrase “trigger warning”, meant to protect the unwitting from language or images they might find distressing, was now being proscribed. Oates felt it was strange “that while the word ‘picnic’ is suggested for censorship, because it evokes, in some persons, lynchings of black persons in the US, the word ‘lynching’ is not itself censored”.
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Dolphin strandings may be caused by dementia
By Rhys Blakely
The Times
7:19PM December 20, 2022
Dolphins may become stranded in shallow waters because they follow leaders with a condition similar to Alzheimer’s disease, a study suggests.
An analysis of the brains of dolphins found beached on the shores of Scotland found changes also seen in people with Alzheimer’s, the most common type of dementia.
The findings may support the “sick leader” theory; the idea that otherwise healthy pods of whales and dolphins sometimes find themselves in dangerously shallow waters because they have followed a leader that has become confused or lost through illness.
“In humans with Alzheimer’s, normal spatial and time awareness is affected,” said Mark Dagleish of the University of Glasgow, who led the research. “This still needs to be investigated, but if a parallel condition exists in dolphins, it could certainly explain some mass strandings.”
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https://www.afr.com/wealth/investing/xi-jinping-may-cost-china-27-trillion-20221221-p5c7xy
Xi Jinping may cost China $27 trillion
The leader’s authoritarian policies may contribute to a slowdown in the Chinese the economy that prevents it surpassing the US.
Aaron Patrick Senior correspondent
Dec 21, 2022 – 12.22pm
The underlying force propelling Australia’s relationship with China is an assumption that the Middle Kingdom will become, within a decade or two, the world’s largest economy. Everything flows from this presumed pre-eminence: the structure of the Australian economy, strategic positioning, even its cultural development.
Xi Jinping may be now challenging the assumption. This month, Japan’s Centre for Economic Research, a private think tank, said that it no longer expected China’s economy to surpass America’s, an event of historic importance it had predicted would happen in 2029.
The reasons: China’s ageing workforce, newly protectionist trade policies, and Xi’s authoritarian leadership. These growth brakes will cost China the equivalent of a year’s economic output, $US18 trillion ($27 trillion), in the decade starting 2025, according to the think tank.
It sees no convergence between the US and Chinese economies. A $US5 trillion-a-year economic gap will persist for the foreseeable future, it predicts. If correct, this should allow the US to preserve its global geostrategic leadership for decades.
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https://www.afr.com/policy/economy/glimmers-of-light-in-a-terrible-year-20221221-p5c84o
Glimmers of light in a terrible year
It is easy to be overwhelmed by the dangers, injustices, conflicts and failures of our world. Surely, enough of them exist. But not all that happened this year was a disaster.
Martin Wolf Columnist
Dec 21, 2022 – 6.04pm
Few will regret the passing of 2022. It has seen a brutal onslaught on a peaceful neighbour by a vile despot. It has seen soaring inflation and falling real incomes in a global cost-of-living crisis.
It has seen rising interest rates, a strong dollar and widespread difficulties over debt: according to the IMF, 60 per cent of low-income countries are in debt distress or at high risk of being so.
The year has seen falling asset prices and heightened volatility in markets. It has seen important moves towards uncoupling between the United States and China and the formation of competing blocs centred on the two superpowers, with Russia firmly in China’s camp.
It has seen the failure of the COP27 conference to bend the curve of emissions of greenhouse gases downwards. It has not even seen full recovery from the dire outcomes of the COVID-19 pandemic, especially among the world’s poorest people.
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Internal Revenue let Trump avoid tax audits while in office
Charlie Savage, Emily Cochrane, Stephanie Lai and Alan Rappeport
Dec 21, 2022 – 4.37pm
Washington | The Internal Revenue Service failed to audit former US president Donald Trump’s tax filings during his first two years in office despite a program that makes the auditing of sitting presidents mandatory, a House committee revealed on Tuesday (Wednesday AEDT) after an extraordinary vote to make public six years of his tax returns.
Mr Trump filed returns in 2017 for the two previous tax years, but the IRS began auditing those filings only in 2019 – the first on the same day in April that the Ways and Means Committee requested access to his taxes and any associated audits, a report by the panel said. The IRS has yet to complete those audits, it said, and the agency started auditing his filings covering his income while president only after he left office.
The revelation could transform the political context of the committee’s nearly four-year fight to obtain information about Mr Trump’s taxes and any related audits. Its chairman, Representative Richard E. Neal of Massachusetts, had said the panel needed the data to assess the IRS’ mandatory presidential audit program, but Mr Trump’s lawyers and Republicans called that a pretext for a politically motivated fishing expedition.
The suggestion of dysfunction in the auditing program was an early takeaway in what could be a series of disclosures related to the release of Mr Trump’s returns. Democrats said it might be several days before thousands of pages of tax filings from Mr Trump and several associated businesses from 2015 to 2020 became public as they redacted sensitive details, such as street addresses and bank account numbers.
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Why petulant oligarchs like Elon Musk rule our world
By Paul Krugman
December 20, 2022 — 3.38pm
Some years ago — I think it was 2015 — I got a quick lesson in how easy it is to become a horrible person. I was a featured speaker at a conference in São Paulo, Brazil, and my arrival flight was badly delayed. The organisers, worried that I would miss my slot thanks to the city’s notorious traffic, arranged to have me met at the airport and flown directly to the hotel’s roof by helicopter.
Then, when the conference was over, there was a car waiting to take me back to the airport. And just for a minute I found myself thinking, “What? I have to take a car?”
By the way, in real life I mostly get around on the subway.
Anyway, the lesson I took from my moment of pettiness was that privilege corrupts, that it very easily breeds a sense of entitlement. And surely, to paraphrase Lord Acton, enormous privilege corrupts enormously, in part because the very privileged are normally surrounded by people who would never dare tell them that they’re behaving badly.
That’s why I’m not shocked by the spectacle of Elon Musk’s reputational self-immolation.
Fascinated, yes; who isn’t? But when an immensely rich man, accustomed not just to getting whatever he wants but also to being a much-admired icon, finds himself not just losing his aura but becoming a subject of widespread ridicule, of course he lashes out erratically, and in so doing makes his problems even worse.
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Why Japan’s bombshell risks another global credit crunch
The Bank of Japan has gone from a bad but stable equilibrium to an unstable equilibrium.
Ambrose Evans-Pritchard
Dec 23, 2022 – 8.01am
Japan is the world’s top creditor with $US3.6 trillion ($5.4 trillion) of net assets overseas. It is the marginal buyer of British, eurozone, and American debt, and a central pillar of the international bond market.
In good times, the constant flow of investment via the yen “carry trade” is like a global ATM for needy debtors. When the flows reverse and the Japanese repatriate their money – as they did in late 2007 and 2008 – it can lead very quickly to a systemic credit crunch and a financial chain reaction.
“Ultra-easy monetary policy in Japan has been holding down yields in the rest of the world, but the tectonic plates are now moving,” said Mark Dowding from BlueBay Asset Management.
Western bonds markets suffered instant contagion this week after the Bank of Japan (BoJ) lifted its cap on 10-year yields from 25 to 50 basis points, setting off convulsions in the country’s domestic bond market. This may be the first taste of what may become a wholesale Japanese retreat from the world markets.
The Japanese stopped buying Western bonds months ago. NatWest Markets estimates that they sold €33 billion of debt from the eurozone’s big four since April, and have sold $US136 billion of US debt since late last year. Liz Truss chose a bad moment to test market appetite for fiscal hooliganism.
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https://www.afr.com/world/asia/xi-jinping-s-big-test-as-covid-bodies-pile-up-20221215-p5c6jz
Crunch time for Xi Jinping as COVID bodies pile up
With reports that funeral homes and crematoriums across Beijing are struggling to keep up with demand, the risks of China’s rapid post-pandemic reopening are skyrocketing.
Michael Smith North Asia correspondent
Dec 22, 2022 – 5.00am
In a few weeks’ time, hundreds of millions of Chinese people will cram into planes, trains and cars to celebrate an annual tradition denied to them for the past three years.
The world’s biggest mass migration kicks off in late January when many in China make the annual pilgrimage home for the Lunar New Year celebrations to see distant relatives and celebrate the country’s most important holiday.
This tradition has not been possible since the early days of the global pandemic three years ago. COVID-19 restrictions made travelling long distances in China a risky proposition. Even during periods when outbreaks were contained, there was the risk of being trapped and isolated far from home if you were a close contact and your health code turned red.
Three years after the pandemic started in the central city of Wuhan, people in China are on the move again. Xi Jinping’s abrupt retreat from his “all-out war” against COVID-19 means the country’s 1.4 billion people can suddenly travel without restrictions. There are now suggestions the country’s borders will fully reopen to the outside world as early as January.
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Trump found to be ‘central cause’ of US Capitol riots: final report
Updated December 23, 2022 — 4.39pmfirst published at 2.04pm
Washington: The January 6 Committee’s final report into the US Capitol riots has concluded that Donald Trump was the “central cause” of the attack and that the extraordinary assault on American democracy would never have happened without him.
After an 18-month probe involving 1000 witnesses, a million documents and 10 public hearings, the committee has released its 814-page account of the event, asserting that Trump criminally engaged in a “multi-part conspiracy” to overturn the lawful result of the 2020 presidential election and that he failed to act to stop his supporters from attacking the building.
It also warned America would be at risk of future coup attempts without sweeping changes to its electoral system and called for those responsible to be held accountable – including Trump.
“Evidence has led to an overriding and straightforward conclusion: the central cause of January 6th was one man, former President Donald Trump, who many others followed,” the committee wrote. “None of the events of January 6th would have happened without him.”
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Kremlin says Joe Biden and Volodymyr Zelensky ignoring ‘Russia’s concerns’
By AFP
6:18PM December 23, 2022
The Kremlin has accused Kyiv and Washington of turning a deaf ear to its concerns and charged the US was using Ukraine as a battleground to weaken Russia.
It came as President Vladimir Putin insisted Russia was aiming for a speedy end to the fighting.
“Our goal is … to end this conflict. We are striving for this,” he said. “We will seek to make sure that it all ends, and the sooner, the better. All conflicts end, some way or another, with talks … The faster our adversaries (in Kyiv) understand that, the better it will be.”
However, US Secretary of State Antony Blinken said Russia has shown no real interest in ending the war in Ukraine.
Mr Blinken said he spoke virtually on Thursday with G7 foreign ministers about ideas for a “just peace” proposed by Ukrainian President Volodymyr Zelensky during a historic visit to Washington a day before.
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https://www.afr.com/world/north-america/china-s-future-isn-t-what-it-used-to-be-20221223-p5c8jw
China’s future isn’t what it used to be
Paul Krugman
Dec 24, 2022 – 3.18pm
The world’s two most powerful leaders have just had very different years.
At the beginning of 2022, Joe Biden was widely portrayed as a failed president. His legislative agenda appeared stalled, while economic troubles seemed to guarantee devastating losses in the midterms. What happened instead was that the Inflation Reduction Act — which is mainly a game-changing climate bill — was enacted; the much-hyped “red wave” was a ripple; and while many economists are still predicting a recession, unemployment is still low and inflation has been subsiding.
By contrast, early this year Xi Jinping, China’s paramount leader, was still boasting about his triumph over COVID-19. Indeed, for a while, people commonly heard assertions that China’s apparent success in pandemic management heralded its emergence as the world’s leading power. Now, however, Xi has abruptly ended his signature “zero COVID” policy, with all indications pointing to a huge surge in hospitalisations and deaths that will stress health care to the breaking point; the Chinese economy seems set to face major problems over the next two or three years; and long-term projections of Chinese economic growth are being marked down.
China’s future, it seems, is not what it used to be. Why?
China’s ability to limit the spread of the coronavirus with Draconian lockdowns was supposed to demonstrate the superiority of a regime that doesn’t need to consult the public, that can simply do what needs to be done. At this point, however, Xi’s refusal to make preparations to move on, his failure to adopt the most effective vaccines and get shots in the arms of his most vulnerable citizens, have highlighted the weakness of authoritarian governments in which nobody can tell the leader when he’s getting it wrong.
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How Xi’s COVID failure has put the global economy at risk
China is on the brink of a catastrophe that will undermine the president and hit supply chains across the world.
Matt Oliver
Dec 24, 2022 – 9.00pm
Smoke billows round the clock from the chimneys of Beijing’s crematoriums, as hearses queue outside and body bags pile up in metal containers. Elsewhere, the city’s hospital wards are overflowing with severely ill patients.
In state-controlled media, there is little sense of this unfolding catastrophe. But to experts around the world, it is clear China is gripped by a devastating new wave of Covid-19.
After the sudden easing of President Xi Jinping’s zero-COVID rules, the country is now on course for up to 280 million infections and at least a million deaths as the virus rips through the population, according to some models.
In addition to the brutal human toll, the virus risks crippling the world’s second-largest economy just as it was attempting to reopen.
As ports shut down because of sickness, supply chains seize up and millions of consumers panic, the implications are dire - both for China and the West. Could China’s Covid disaster prove to be the “black swan” moment of 2023?
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Kyiv outflanks analogue Russia with ammunition from big tech
By George Grylls
The Times
4:48PM December 24, 2022
Ukrainian soldiers have revolutionised the way battles will be fought in the 21st century by waging an “algorithmic war” that enables Kyiv to outgun invading forces with far fewer troops.
Artificial intelligence developed by companies in the West has given Ukraine a technological edge over Russia, military experts said, turning the tide of the war.
Artillery continues to dominate the war in a way that would be familiar to generals fighting battles centuries ago. However, the accuracy, speed and deadliness of Ukrainian strikes has dramatically increased thanks to software developed by Palantir, a US tech firm co-founded by the Republican billionaire Peter Thiel.
Those who have witnessed the AI in action have been left in no doubt about its revolutionary power. “The Russians are using their artillery like it’s the First World War. What the Ukrainians are doing is completely different,” one defence source said. “A digital army is fighting an analogue army. What you are seeing is that the digital army, despite being a fraction of the size, is able to massively outperform its analogue adversary.”
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David.
