January 12, 2023 Edition
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In the US we have watched as the US Congress spent days rying to elect a Speaker. You would have to wonder how this US system will ever work again after 20 years of dysfunction!
In the UK and Europe the war goes on and no solution seems to be coming.
In OZ we have floods all over from WA to NSW. The suffering and losses are just staggering! Sadly COVID seems to be on the rise again!
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Major Issues.
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https://www.afr.com/world/europe/extreme-care-super-funds-warned-on-liquidity-risks-20230101-p5c9ow
‘Extreme care’: Super funds warned on liquidity risks
Josephine Cumbo
Jan 1, 2023 – 1.00pm
Pension funds should be “extremely careful” when investing in illiquid assets, as rising interest rates and falling stock markets increase the likelihood of their having to access cash quickly, the OECD has warned.
In the recent era of low interest rates, pension funds poured money into alternative investments, such as infrastructure projects and private equity, in an effort to escape the low yields available on government bonds.
But such investments are typically illiquid, meaning the funds cannot quickly convert them into cash if needed. While there has been little need for funds to do that over the past decade, the UK pension crisis in October exposed how a sharp rise in interest rates can change that.
“There is a call now for greater flexibility in regulation to allow [defined contribution] schemes to invest in illiquids and infrastructure and this is fine,” said Pablo Antolin, principal economist at the private pension unit of the OECD Financial Affairs Division.
“But we also have to be extremely careful because liquidity issues are very important in the management of investment strategies.“
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Parliament, not the devil, should control the detail on the Voice
Constitutional expert
January 1, 2023 — 2.06pm
The devil is in the detail – so it is said. But how much detail do you need before you vote on a constitutional amendment?
What you need to know is the nature of the amendment to the Constitution. What words are being changed? What will it permit or prohibit? This is important because once a change is entrenched in the Constitution, it can only be changed by another referendum.
But if that constitutional change empowers parliament to make certain types of laws in the future, you only need to know the scope of the power – not every law that will be made under that exercise of power. This is for two reasons.
First, it is a matter for each democratically elected parliament to decide what laws it makes, within the scope of its power. It will depend on who is in government, who has the balance of power in the Senate, how influential public pressure is, what negotiations occur and what compromises are made. Different laws will be made to suit the community expectations of the time.
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The Liberals face 2023 lost in electoral no-man’s land
Labor is basking in an aura of competence. The Liberals do not even know what their product is any more. Could that change this year?
John Roskam Columnist
Jan 2, 2023 – 3.56pm
If Anthony Albanese could call an election for the weekend after Australia Day he would. Now into its eighth month, his political honeymoon shows no sign of ending any time soon. Honeymoons can, of course, conclude abruptly. Kevin Rudd’s lasted almost his whole first term in government until to his surprise (and the surprise of much of the Australian public) it was ended by Julia Gillard.
Labor’s policy program that in many regards is quite radical has so far been successfully smothered with an air of professional competence. After everything the country’s been through, the desire of the public for some calm and quiet shouldn’t be underestimated. The administration that preceded Albanese (and indeed that in the United States preceded Joe Biden) was anything but calm.
One of the reasons why the Indigenous Voice to parliament referendum might fail is that a proposal with as far-reaching and significant consequences as it has sits outside the prevailing popular mood. That there is a universal desire in the community to improve the life opportunities of Indigenous Australians is undeniable. Whether the creation of a separate system of legal and political rights is the way to achieve that outcome is controversial.
When just after Christmas the prime minister said of the referendum “How about we give this a crack?” he did so with a sense of resigned hope rather than unbridled optimism. “Let’s give it a go” is the sort of enthusiasm that could be applied to many walks of life, but perhaps not to permanently changing the constitution.
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Treasurer Jim Chalmers reveals major issue facing Aussies in 2023
Treasurer Jim Chalmers has revealed the “big issue” facing Australians which will hurt their hip pockets this year.
Madeleine Achenza
January 3, 2023 - 10:01AM NCA NewsWire
Treasurer Jim Chalmers has revealed his grim outlook for the Australian economy in 2023, with one “big issue” predicted to spell trouble for hip pockets.
Speaking to radio station 2GB on Tuesday, Dr Chalmers pointed at one in particular of five major concerns facing the national economy as the factor most likely to hurt Aussie bank balances.
“I think one of the big issues here is that a fifth of mortgages will become variable rate mortgages in 2023,” he said.
Many Aussies who entered into fixed-rate mortgages at the height of soaring house prices are going to see their contracts switch over to a variable rate in 2023.
Dr Chalmers reiterated that interest rate rises take some time to be felt in the economy and predicted Australians would be hit hardest in the “middle of the year”.
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Silence on details is already dooming the voice to failure
12:00AM January 2, 2023
The Indigenous voice has entered the slow, long death dive of Australian referendums. Unless it pulls out, it will crash and burn on polling day.
The problem is not malice, trickery or incompetence. It is the absolute refusal of the Albanese government to provide details for the voice. The red lights are flashing clearly. Statistically, recent polls show support for the voice collapsing as the referendum slowly draws closer. This is typical of Australian referendums, but this early and for a referendum without detail it is catastrophic.
As a director of the pro-voice organisation Uphold and Recognise, I have been involved in numerous attempts to bring out wise, respected, moderate Australians in favour of the voice. Much less than a handful have agreed. The polite refusals are all the same. Eminent Australians will not back the voice until they know what it is.
Yet it seems a point of honour with the government that it would rather die than divulge, even if this takes the referendum with it.
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Penny Wong is weaving a new regional tapestry for Australia
The foreign minister is making a coherent blend of traditional alliances and the crucial roles of our Southeast Asian neighbours.
James Curran Historian
Jan 3, 2023 – 11.06am
As the unforgiving minute ticked over into the new year, there appeared reams of media commentary decreeing 2022 to be a bad one for authoritarians Vladimir Putin and Xi Jinping.
The assessments were broadly correct. But the pundits can hand out all the red cards they like. The reality is that Putin remains firmly in the Kremlin and Xi has finally woken up to the realities, epidemiological and otherwise, of COVID-19.
And this year is unlikely to end the dire predictions that both remain existential and imminent threats.
In his much-vaunted speech to the US Congress, Ukrainian President Volodymyr Zelensky, sensing the bullish mood in Washington, said it was just a matter of time before Russia strikes other US allies.
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https://www.afr.com/politics/after-the-storms-of-2022-we-should-expect-a-calmer-2023-20230102-p5c9td
After the storms of 2022, we should expect a calmer 2023
Our politics would work much better if abusive partisanship was finally dumped from the public debate.
Alexander Downer Columnist
Jan 2, 2023 – 11.06am
There are two things we like to do at the beginning of a new year. First we like to make a series of New Year’s resolutions that are almost impossible to keep. And secondly, we tried to predict what will happen in the following year. So every year starts off with this difficult-if-not-fruitless exercise!
Let’s start with this year’s predictions. And just to put that into some context, my predictions for 2022 were good but not great! I didn’t think China would invade Taiwan and I thought in time China would realise the errors of its wolf-warrior diplomacy and start to soften its attitude to the outside world. That proved to be right. I thought there would be inflationary pressures coupled with rising interest rates coming from the $14 trillion of extra global spending in response to the COVID-19 crisis. That prediction turned out to be right.
Where I was wrong was this: I thought President Vladimir Putin would be too cautious to launch a full-scale invasion of Ukraine. My prediction was that if he did, he would get bogged down there for years to come and be subjected to expensive and damaging western sanctions. Common sense suggested Putin wouldn’t want that fate. As it turned out, Putin was more foolish and reckless than I had imagined! But I was right, he did get bogged down in Ukraine!
So what about 2023?
Let’s start with Ukraine. My prediction is that Putin’s troops will remain bogged down there throughout the year. There will be no lasting peace agreement because there is not a rational basis for such an agreement. Russia would have to be prepared to withdraw from all the territory it has occupied in Ukraine for President Volodymyr Zelensky to think an agreement was acceptable to the Ukrainian public.
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Better policy and a greater say: What the Voice will really mean
A vote is planned for second half of 2023. But for many Australians the idea of a Voice, derived from the Uluru Statement from the Heart, is still a nebulous concept.
Tom McIlroy Political reporter
Dec 28, 2022 – 5.00am
In his landmark Boyer Lecture series on Indigenous recognition, Noel Pearson delivered a warning to all Australians – white and black.
Highlighting the toxic tribalism corroding American society, the respected lawyer and academic invoked the opening words of the preamble to the United States Constitution, saying Australia must not become so divided as to lose a sense of its collective self.
“Americans have abandoned the highest plane of their civic mutuality – the first-person plural – and descended into the tribalism of us versus them, blue versus red, north versus south,” he said.
Pearson’s comments on an Indigenous Voice to federal parliament were made ahead of a year when the issue of constitutional recognition for Aboriginal and Torres Strait Islanders will be at the forefront of national politics due to a referendum championed by Prime Minister Anthony Albanese.
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Austal on deck with US Navy nuclear-powered subs
Brad Thompson Reporter
Jan 3, 2023 – 4.00pm
Leading defence shipbuilder Austal says the Morrison government made the right call when it axed a $90 billion French-designed submarine project and opted for a nuclear option that could result in US Navy submarines being based in Perth as an interim measure.
Austal chief executive Paddy Gregg said Australia would be much better served under the AUKUS deal to acquire nuclear-powered submarines which, unlike the diesel-powered French option, could remain hidden from enemies for long periods.
Perth-headquartered Austal, already a trusted shipbuilder for the US Navy, has just gained a toehold in work on the US nuclear-powered submarine fleet, including on the Virginia and Columbia class vessels.
The breakthrough deal to build submarine components at its US shipyards comes amid suggestions at least two Virginia class nuclear submarines could be home-ported at Garden Island off Perth in the short to medium term until the Australian navy begins to receive its own submarines under the AUKUS deal.
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Australia’s population to hit 30m two years later than expected
Ronald Mizen Economics correspondent
Jan 3, 2023 – 10.30pm
Australia’s population at the end of the decade will be 1.2 million people smaller than the pre-COVID-19 pandemic forecast, due to lower migration and a continued decline in the fertility rate.
By 2032-33 the population will hit just shy of 30 million people, according to extracts from the Albanese government’s Population Statement 2023, two years later than predicted in the 2020 document.
Treasurer Jim Chalmers said the updated forecasts were an important tool to understand how demographic shifts influence the economy, with a lower population likely to drag on future growth.
The 2023 statement, slated for release on Friday, paints a challenging picture for policymakers, particularly given the nation’s strong population growth has done much of the economic heavy lifting over the past decade.
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Jim Chalmers shares five biggest factors setting Australia up for a ‘difficult year’
Australia’s ability to weather a bleak financial year will rest on five major factors, according to Jim Chalmers.
January 4, 2023 - 10:20AM
NCA NewsWire
Treasurer Jim Chalmers has warned that the global economy is in for a “difficult year” with Australia’s ability to weather the struggle dependent on five key issues.
This comes as major international and domestic institutions have predicted a widespread recession, with one agency forecasting that this could affect a third of the global economy.
Appearing on ABC Radio, Mr Chalmers said the degree Australia will be affected by the concerning global trends will be determined by interest rates, the future of the Ukraine war, as well as China’s continued battle with Covid.
“What’s happening in China is a big part of the story, but (so is) a war in Ukraine, obviously the prospects for the US, UK and Europe and here at home the implications of the rate rises plus the uncertainty around natural disasters,” he said.
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Six experts share what 2023 has in store for investors
Lucy Dean Wealth reporter
Jan 4, 2023 – 11.10am
Last year was a bit of a doozy for retail investors. Wall Street marked its worst year since 2008, with the S&P 500 down nearly 20 per cent by the bitter end.
Down Under, the S&P/ASX200 finished 7.26 per cent lower. And according to the experts, 2023 will see more volatility as central banks attempt to tackle inflation.
Six fund managers share their predictions for investors in 2023.
No new normal yet
Capital Group portfolio manager, Jody Jonsson
While investors are longing for a return to normal, equity investor Jody Jonsson doesn’t see that as the path forward.
“Several seismic shifts ... will likely define the next decade of investing,” she says.
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HIMARS part of ‘massive increase’ in army’s strike power
Georgie Moore Breaking news reporter
Updated Jan 5, 2023 – 9.31am, first published at 5.00am
Australia is spending up to $2 billion on a long-range artillery rocket system that will help give the military a strike range of 500 kilometres before the end of the decade.
The Department of Defence has signed a contract with Norwegian company Kongsberg for a Naval Strike Missile system to be used from Hobart Class destroyers and Anzac Class frigates from 2024. The federal government says it will work with Kongsberg to look at producing additional missiles locally down the track.
It has also signed up for 20 Lockheed Martin-produced High Mobility Artillery Rocket Systems, or HIMARS. The US approved the sale in May, but the contract was not signed until recently. Ukraine has used HIMARS, provided by the Biden administration, to fight back against Russia.
The HIMARS will include a weapon-locating radar by Australian defence contractor CEA Technologies to detect and respond to land, air and maritime threats.
At the moment, the army’s longest-range missiles are howitzers, which can strike about 30 kilometres away. HIMARS, expected to be delivered by 2026-27, will expand that to 300 kilometres. The government is also looking at the Precision Strike Missile (PrSM), also by Lockheed, which can be fired from the HIMARS.
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Australia buys 20 ‘god of war’ missile launchers
January 5, 2023 — 12.10am
The Albanese government will spend up to $2 billion beefing up Australia’s missile capabilities, including buying a renowned long-range rocket system credited with helping Ukraine turn the tide in its war against Russia.
The government is purchasing 20 land-based High Mobility Artillery Rocket System (HIMARS) launchers from the United States, which have been hailed by one analyst as the “new god of war” after their success on the battlefield in Ukraine.
The Australian Navy’s fleet of Anzac Class frigates and Hobart Class destroyers will also be equipped with new cutting-edge naval strike missiles from next year, replacing the current stock of ageing Harpoon anti-ship missiles.
Defence Minister Richard Marles said: “In the current strategic environment, it’s important the Australian Defence Force is equipped with high-end, targeted military capabilities.
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Lower migration leaves 500,000 population shortfall
Ronald Mizen Economics correspondent
Jan 2, 2023 – 10.30pm
Net overseas migration will return to pre-pandemic levels this financial year after turning negative for the first time since World War II in a shift that will leave the population almost 500,000 people smaller than expected.
About 85,000 more people left Australia than arrived in 2020-21, with strict border rules stymying migrant inflows. The result reversed in 2021-22 and is expected to fully recover to 235,000 net arrivals this year.
But the toll from pandemic border closures will shrink the population by 473,000 by 2025-26, according to the Albanese government’s Population Statement 2023, slated for release on Friday.
The shortfall is a key cause of the current skills and labour shortages, which Treasurer Jim Chalmers said was holding businesses and the economy back.
“These pressures have compounded a decade of migration policy chaos and under-investment in skills and training by the Liberals and Nationals,” Dr Chalmers said, before adding that migration was not a panacea.
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The new rules of investing as interest rates rise
Bitcoin, gold, private equity and central banks reversing decades of cheap money are ripping up the rule book and there are plenty of ways to profit.
Tom Richardson Markets reporter and commentator
Jan 6, 2023 – 5.00am
Soaring inflation, rising interest rates and a global recession are a horror prospect for investors already nursing losses to their paper wealth, after house prices followed stock and bond markets lower last year.
As interest rates rise, asset prices fall – and the kicker is that investing rules have changed after central banks reversed a decade-long policy of cheap borrowing rates and money printing to fund government spending.
“You can’t count on central banks to bail you out now,” warns Dion Hershan, head of equities at Yarra Capital Management. “Over the last three decades, by cutting interest rates, central banks have bailed out economies and asset prices. They smoothed over some pretty significant cracks.”
The radical policy pivot in 2022 gave traditional investment portfolios split between 60 per cent US equities and 40 per cent fixed income treasuries their worst year since 1937, according to The Economist.
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How to avoid million-dollar mistakes in retirement
Over the next 10 years almost 4 million Australians face tough choices over how to spend their super savings.
Duncan Hughes Reporter
Jan 6, 2023 – 5.00am
Retirees are “clueless” about how superannuation income works and were ill-prepared for their retirement even before the latest inflationary surge put pressure on their household budgets, financial advisers say.
The advice dilemma is worsening as the super industry scrambles to meet a surge in the number of retirees and the number of registered financial advisers slumps to less than half of what it was before the Hayne royal commission in 2018, according to research house Adviser Ratings.
Over the next 10 years, an estimated 3.6 million Australians will move from the accumulation phase to the retirement phase of superannuation, which will affect about $750 billion in savings, according to Helen Rowell, deputy chairman of the Australian Prudential Regulation Authority (APRA).
More than 90 per cent of strategies being developed by super scheme trustees under a federal government plan to improve retirement income planning are adopting a “one-size-fits-all” approach, according to analysis by global consultant Mercer.
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Historic drop in house prices will hit within three months
Early data suggests the housing market correction will continue with gusto this year.
Christopher Joye Columnist
Jan 6, 2023 – 1.24pm
The new year is playing out as expected. Central banks are, for the time being, clinging to their hawkish rhetoric that further rate increases will be required to crush the inflation crisis.
They refuse to seriously countenance the risks of over-tightening policy, explicitly favouring erring on the side of lifting rates too far over the alternative of allowing consumer price pressures to become entrenched.
This is terrible news for asset prices, which is why US equities are already trading almost 1 per cent below their December 30 marks. And it only raises the already elevated probability of both a US and a global recession.
An emboldened US Federal Reserve, cock-a-hoop from the recent roll-over in the headline and core inflation data, has been at pains to dismiss rampant speculation of interest rate relief in 2023 notwithstanding the bond market pricing in 33 basis points of cuts before the year is out.
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Older, smaller poorer: Australia’s demographic challenge
There is a sting in the tail for taxpayers from news this week that Australia’s population will grow more slowly and be 1.2 million smaller in a decade than anticipated pre-COVID.
John Kehoe Economics editor
Jan 6, 2023 – 1.49pm
There is a sting in the tail for taxpayers from news this week that Australia’s population will be 1.2 million smaller in a decade’s time than anticipated before the pandemic.
The closure of the international border to migrants for two years means Australia will be older and have fewer workers compared to projections if COVID-19 had not hit our shores.
Migrants are typically younger, work more, earn higher incomes and produce children who become future taxpayers. The temporary drop in migration will exacerbate a long-running national challenge. The budget burden of an ageing population will fall on a smaller share of working-age taxpayers in the years ahead.
The federal government’s Centre for Population report, released by Treasurer Jim Chalmers this week, reveals: “As the population ages, there will be a larger percentage of older Australians relative to the people of working age.” The report continues: “This presents long-term economic and fiscal challenges similar to those faced in most comparable countries.”
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The unanswered questions undermining support for the Voice
Columnist and communications adviser
January 7, 2023 — 5.00am
At the Garma Festival last year, Prime Minister Anthony Albanese issued an invitation. In promising a referendum on enshrining an Indigenous Voice to parliament in the constitution, he offered what he made clear was draft wording: a formulation inviting improvement.
But no one has taken up the challenge. Instead, as the year of the referendum begins, with the government-funded campaign said to be launching in February, the government seems intent on making the referendum about something else: are you for Indigenous people or against them? If you’re in favour of Indigenous Australians, then the way to show it is to vote “yes” to a Voice.
If that were the question, then I’d lay my hand in the fire that 99.99 per cent of Australians would vote yes with a full heart. Whether they’re aware of the full extent of Indigenous disadvantage in this country or not, whether they have spent time in Indigenous communities or not, there are very few Australians who would not wish to be fully reconciled with the people who inhabited the continent for tens of thousands of years before white settlers arrived.
But that is not the question. The question is whether and how to amend the constitution to give Indigenous Australians a say in decisions that affect them. The question is about the mechanism, so the mechanics matter.
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https://www.afr.com/policy/economy/labor-cannot-afford-more-unforced-errors-in-2023-20230106-p5casv
Labor cannot afford more unforced errors in 2023
Australian politics no longer resembles the horror shows of Washington and Westminster. But we are still making errors that will come back to bite us.
Jan 6, 2023 – 5.47pm
The US Republican Party this week could not even manage to elect a House of Representatives Speaker and ensure Congress can actually open for business. Britain’s Conservatives are in a fragile truce after a year of unprecedented chaos.
Two of the great centre-right parties have self-indulgently turned on themselves, oblivious to the public looking on, and to the work of actually governing. And it wasn’t long ago that Canberra too was being ridiculed as the coup capital of the Pacific under both Labor and the Coalition.
Even among natural parties of government, politics can turn to junk all too quickly. At the root of Republican and Tory dysfunction are two quixotic projects, Make America Great Again and Brexit, which never added up and which needed two hucksters in Donald Trump and Boris Johnson to blag their way through the contradictions until it all caught up with them.
Yet there are grains of truth in these rebellions. Some of the Republican holdouts are now protesting against a Congress that keeps voting for trillion-dollar spendathons, and at the hypocrisy in both parties in voting for unsustainable deficits when it suits them.
Liz Truss was right that Britain needs a growth agenda, and has a coalition of vested interests (many of them in the Conservative Party) simply not prepared to make the compromises needed for the country to grow for all. Her hare-brained solution of ill-timed budget-wrecking tax cuts does not alter the basic question.
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A tale of two party reviews: only Labor took insights to heart - and won
By Shane Wright and James Massola
January 8, 2023 — 5.30am
After the 2019 federal election, Labor and the Coalition both commissioned reviews of their respective campaigns. As the 2022 election was to make clear, one party took the advice to heart while the other did not.
In the past month, the two major parties have released their 2022 election reviews. These examinations of the choices made by 15.5 million Australians on May 21 will be the building blocks for the next election.
But they are also a reflection of the lessons taken from the 2019 election which delivered a far different result.
Labor’s 2019 review, by former cabinet minister Craig Emerson and ex-South Australian premier Jay Weatherill, identified how “economically insecure, low-income voters” had failed to be wooed by the party’s policy offerings that campaign.
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Unintelligible gobbledygook: Government paperwork needs urgent overhaul
Columnist
January 8, 2023 — 5.00am
I nearly greeted the new year by putting my laptop through a mulcher. Not by accident – out of frustration and despair. I am surprised that despite the most intense digital provocation, I have managed to maintain my usual calm and cheerful demeanour.
On two successive days, I was sucked into a vortex of unintelligible gobbledygook, undoubtedly crafted by some evil boffin intent on torturing the unsuspecting public. On both occasions, I had committed no greater offence than to try to access a government website that undoubtedly was intended to be user-friendly. About as user-friendly as Hannibal Lecter.
Offender No.1 – the ATO. I was thwarted attempting what ought to have been a simple task. How hard could it be to change from the paper version of the quarterly business activity statement (BAS) to online lodgement?
I am reasonably computer-literate and manage to do every other day-to-day activity online without much trouble. So, how stressful could it be to go paperless for the BAS? How complex can it be to devise a system so that I type some numbers onto a screen and hit send and the information required from our micro business arrives within the appropriate part of the ATO portal?
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Dutton's warning to Albanese over voice
STAFF WRITERS 08-01-2023
Peter Dutton has challenged Anthony Albanese over his refusal to release more detail on the indigenous voice to parliament, labelling the move a “catastrophic mistake” that will doom this year’s referendum to failure.
In an open letter laying out 15 questions about the voice he wants answered, published in The Sunday Telegraph, the Opposition Leader accused the Prime Minister of running a deliberate political strategy to prevent Australians making an informed decision.
“I believe you are making a catastrophic mistake in not providing accessible, clear and complete information regarding your government’s version of the Voice, condemning it to failure and, in turn, damaging reconciliation efforts in our country,” he wrote.
“Your approach will ensure a dangerous and divisive debate grounded in hearsay and misinformation.”
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COVID-19 Information.
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COVID test to be required for Chinese travellers
By Anna Patty
January 1, 2023 — 2.07pm
Travellers from mainland China, Hong Kong and Macau will need to take a COVID-19 test and get a negative result before flying to Australia from January 5.
Australian health minister Mark Butler said the new requirement was in response to the significant wave of COVID-19 infections in China and the potential for emerging viral variants there.
“The decision to implement these temporary measures has been made out of an abundance of caution, taking into account the dynamic and evolving situation in China and the potential for new variants to emerge in an environment of high transmission,” he said.
“This small but sensible move will help to protect people who are at risk of severe illness and safeguard our healthcare system.”
From 12:01am on Thursday January 5, travellers will be required to undertake a COVID-19 test within 48 hours before travel and show evidence of a negative test result when travelling to Australia.
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Health Minister Mark Butler reveals reason behind new Covid rule for China
By Madeleine Achenza
NCA NewsWire
10:25AM January 2, 2023
Health Minister Mark Butler has revealed why the government has introduced new rules for passengers travelling from China into Australia.
Travellers entering Australia will have to return a negative Covid-19 test at the airport within 48 hours of boarding flights into the country from Thursday.
It comes as China endures the world’s largest Covid outbreak in history, with hundreds of millions of people potentially infected.
“The key driver of this decision is what the World Health Organisation has described as an absence of comprehensive information about what is a very fast moving situation in China,” Mr Butler told Sunrise on Monday.
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China COVID-19 outbreak a key risk for ‘optimistic’ Chalmers
Ronald Mizen Economics correspondent
Jan 2, 2023 – 3.30pm
Treasurer Jim Chalmers says the hit to Australia’s economy of China’s huge COVID-19 outbreak could be substantial and is a key risk heading into 2023, with millions of cases already disrupting global supply chains.
With hospitals and crematoria overflowing with sick, dying and dead, Dr Chalmers warned the situation within the borders of Australia’s largest trading partner would likely get worse before it got better.
“As we look ahead to what will be a challenging year for the global economy, a big part of that, in a whole range of industries, will be the pressure on supply chains brought about by this COVID-19 wave in China,” he said.
Citing Australia’s reliance on Chinese markets and workers for many goods, the Treasurer labelled the disruption to supply chains as “one of the key risks” to the local economy heading into 2023.
“They are obviously going through a transition period when it comes to how they manage COVID-19. That will impact supply chains right across the board and the flow on impacts on our economy could be substantial.”
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https://www.afr.com/world/asia/covid-19-wave-a-challenge-for-china-and-the-world-20230102-p5c9v6
COVID-19 wave a challenge for China, and the world
The exit wave of COVID-19 sweeping across China says all the wrong things about Xi Jinping’s newly consolidated rule in the country.
Jan 2, 2023 – 6.06pm
The Albanese government has rightly taken measured steps to screen passengers arriving from China, rather than risk Australia being caught up in China’s struggle with a massive exit wave of COVID-19.
China is set to open its international borders next week ahead of the Chinese New Year, even as official information from the country about the spread of infection there has been drying up. Like governments across Europe and Asia, Australia now wants proof of a negative test before departure from China. Other nations are planning to test all passengers from China after they arrive.
The business and higher education sectors have understandably been wary of a knee-jerk return to the world of pandemic restrictions. But the lesson of 2020 was that timeliness is everything in dealing with a rapidly spreading coronavirus that spins off new variants as it goes.
Australians, along with the rest of the developed world, are now largely protected by vaccines and past exposure. But the lack of information from China, or sharing of genomic sequencing data that detects new COVID-19 strains, has led to governments such as Australia’s, which were initially cautious about slapping on new restrictions, deciding to put safety first.
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9.27AM 03-01-2023
Butler addresses decision to ignore top doctor’s advice
Campbell Kwan
Health Minister Mark Butler has addressed the opposition from Chief Medical Officer Paul Kelly regarding his decision to require travellers from China to perform COVID-19 testing predeparture.
Butler conceded to FiveAA Radio in Adelaide this morning that there was no imminent public health threat to Australia from resuming travels between China and Australia, but said the government was concerned about what’s happening on the ground with China which was why it introduced the restrictions.
He did not specifically address why he opposed Kelly’s advice to not impose the conditions and instead focussed on how other western countries had also placed restrictions on Chinese travellers.
“Australia is very well placed in the fight against COVID right now, we have high levels of vaccination, we have very good access to treatments particularly the antiviral medicine ... so we’re well positioned in that fight,” he said.
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Butler defends ‘perplexing’ decision to ignore expert advice on China COVID testing
January 3, 2023 — 10.34am
Health Minister Mark Butler has defended imposing mandatory COVID-19 testing on arrivals from China, against the advice of the government’s chief medical officer, saying the “fast moving” situation and lack of transparency in China justified the decision.
The Coalition has attacked the government for ignoring expert health advice while racial justice groups said Chinese travellers were being unfairly singled out for discriminatory treatment.
In written advice to Butler, dated December 31, Chief Medical Officer Paul Kelly said: “I do not believe that there is sufficient public health rationale to impose any restriction or additional requirements on travellers from China.”
Kelly said there was a “strong consensus” among state and territory chief medical officers that any new restrictions would be inconsistent with Australia’s national approach to living with the virus and “disproportionate to the risk”.
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Chinese health official raises Covid alarm ahead of Lunar New Year holiday
By Elaine Yu
Dow Jones
9:49AM January 3, 2023
A top Chinese public-health official warned of widespread Covid-19 outbreaks across the country’s more vulnerable rural areas as millions of citizens prepare to travel home for the coming Lunar New Year holiday.
Infections have exploded across China after authorities in November and December abruptly scrapped almost all of the country’s stringent pandemic controls amid a sharp economic downturn and rare nationwide protests against the “zero-Covid” policy that has governed daily life for the past three years.
Beijing’s sudden pivot from its strict pandemic measures came just weeks ahead of the weeklong Lunar New Year holiday, which begins this year on Jan. 21. Tens of millions of Chinese people typically travel across the country to celebrate the holiday with their families, and for many people, it’s the one time of year that they travel.
The annual ritual has largely been put on hold for the past three years, as pandemic measures tended to tighten during the cold-winter months and authorities urged the public to celebrate the holiday where they were.
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COVID-19 subvariant wreaking havoc in US reaches Australia
January 4, 2023 — 4.15pm
As the pandemic enters its fourth year, a new COVID-19 subvariant that is spreading fast in the US and leading to increasing hospitalisations has been detected in Australia, where high transmission rates have also led to the country’s first homegrown strain.
Virologist Associate Professor Stuart Turville said his team had already detected about eight samples of the US’s Omicron offshoot, dubbed XBB.1.5, in Australia.
The variant first emerged in New York state in late October. By the end of December, the number of cases in the US had more than doubled in a week. The strain now accounts for 40 per cent of coronavirus cases in the country and has been linked to rising hospitalisations.
Turville said that while XBB.1.5 “is definitely one to watch”, there was no evidence it caused more severe disease than any of the other hundreds of Omicron subvariants already circulating.
“A lot of the virus trackers across the world that I collaborate with are saying, ‘Look, it could push the prevalence of cases in Australia up a little bit and it might dominate eventually’,” said Turville, who is head of the containment lab at the Kirby Institute.
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Australians’ life expectancy drops after spike in deaths
Ronald Mizen Economics correspondent
Jan 5, 2023 – 10.30pm
Australia’s average life expectancy fell for the first time in a generation in 2021-22 and is expected to fall again this year due to a temporary spike in deaths from COVID-19 and other causes.
The life expectancy for women and men is projected to have fallen by nearly five months in the year to June 30, 2022, while life expectancy this year is expected to fall a further 3.6 months for women and 2.5 months for men.
However, the drop will only be temporary, according to the Albanese government’s Population Statement 2022, which is released on Friday.
From 2023-24 onwards, life expectancies will return to long-term trend growth, increasing from 85 years to 87 years for females and just over 80 years to 83.5 years for males by the end of the decade.
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Five things you need to know about COVID-19’s new ‘kraken’ variant
Low De Wei
Jan 6, 2023 – 10.31am
A new COVID-19 variant that was first detected last year has quickly become the dominant strain in the US, and picked up a creepy moniker along the way.
Nicknamed the “kraken variant” by some, it surged through the nation and has been identified in at least 28 other countries, according to the World Health Organisation. Is it more dangerous? Does it spread more easily? And how will it affect China’s COVID-19 outbreak?
Here are five key questions:
What is the new variant?
XBB.1.5 is a descendant of the omicron XBB subvariant, which is itself a cross between two earlier strains: BA.2.75 and BA.2.10.1.
The original XBB variant has already caused waves of infection in countries including Singapore and India since the WHO first raised concern about it last October.
How fast is it spreading?
While it accounted for just 1 per cent of all COVID-19 cases at the start of last month, estimates from the US Centres for Disease Control and Prevention show that it surged to become the dominant strain by the end of the month, responsible for about 41 per cent of all infections. In north-eastern states, that figure has jumped above 70 per cent.
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Calls for urgent action as Covid deaths soar in aged care
By JOE KELLY and STEPHEN LUNN
9:44PM January 6, 2023
New Health Department figures have revealed 164 aged-care residents died from Covid-19 in the past two weeks and the presence of 5610 active cases in facilities across the country, prompting calls for urgent government action to protect the elderly.
The federal Coalition demanded on Friday that Anthony Albanese “step in” and provide “real and tangible solutions to protect older Australians in care” after the new data recorded 120 resident deaths and 6306 combined resident and staff infections since December 29.
Since the publication of the last update on December 23, the total number of aged-care resident deaths has risen to 4612 from 4448 – an increase of 164 – prompting opposition health and aged care spokeswoman Ann Ruston to warn Labor not to “dismiss the disproportionate level of risk from contracting Covid for older Australians”.
“Sensible measures, like supplying PPE and RATs to residential aged care are important, but the tragic statistics show that it is not enough,” she said.
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Climate Change.
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Climate change a harsh reality for emergency minister after year of record floods
By Mike Foley
January 1, 2023 — 6.16pm
Three months before Labor’s win at the federal election in May, Emergency Management Minister Murray Watt was calling for the sacking of disaster recovery tsar Shane Stone for blaming flood victims for choosing to live in disaster-prone locations.
But less than six months in the hot seat, as he led the Albanese government’s response to record-breaking floods across the eastern seaboard, Watt echoed Stone’s sentiment, albeit more tactfully, when he called for new laws to stop houses being built in high-risk floodplains or bushfire zones.
“We must think more seriously about climate and disaster risk when planning future housing development,” Watt said in November.
“It makes absolutely no sense for all levels of government to spend billions in disaster recovery while we continue to see housing built on floodplains.”
Speaking to this masthead in a recent interview, Watt conceded that he had raised expectations for the emergency minister’s role when he piled pressure on the Morrison government, which had battled controversy over natural disasters ever since then-prime minister Scott Morrison’s trip to Hawaii during the Black Summer bushfires in 2019-20.
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Renewables break records but still lag 2030 target
Angela Macdonald-Smith Senior resources writer
Jan 3, 2023 – 4.45pm
Renewable energy contributed a record 40.4 per cent of the National Electricity Market supply in the December quarter, but growth is slipping further behind the levels needed to meet the 2030 target and has not been enough to prevent a surge in average wholesale prices.
Data from the University of NSW shows that the size of the National Electricity Market – a reflection of the level of wholesale prices – more than doubled last year because of the unprecedented spike in prices last winter amid a spate of outages at ageing coal plants.
Turnover on the NEM jumped to a record $36 billion last year, compared with the more typical level of a few billion dollars on either side of $15 billion, according to Dylan McConnell, a renewable energy and energy system analyst at UNSW.
By the end of the year, wholesale prices had softened by 60-70 per cent from their peaks in the June quarter but in some states, the December quarter average prices were still double or triple the levels of a year earlier, at more than $100 a megawatt-hour in NSW, Queensland and Tasmania.
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https://www.afr.com/world/asia/a-new-world-energy-order-is-taking-shape-20230104-p5ca8k
China’s new world energy order is taking shape
The rise of the ‘petroyuan’ should be an incentive for both the US and Europe to move away from fossil fuels as quickly as they can.
Rana Foroohar Contributor
Jan 4, 2023 – 9.22am
On Valentine’s Day in 1945, US president Franklin Delano Roosevelt met Saudi King Abdul Aziz Ibn Saud on the American cruiser USS Quincy. It was the beginning of one of the most important geopolitical alliances of the past 70 years, in which US security in the Middle East was bartered for oil pegged in US dollars.
But times change, and 2023 may be remembered as the year that this grand bargain began to shift, as a new world energy order between China and the Middle East took shape.
While China has for some time been buying increasing amounts of oil and liquefied natural gas from Iran, Venezuela, Russia and parts of Africa in its own currency, President Xi Jinping’s meeting with Saudi and Gulf Co-operation Council (GCC) leaders in December marked “the birth of the petroyuan”, as Credit Suisse analyst Zoltan Pozsar put it in a note to clients.
According to Pozsar, “China wants to rewrite the rules of the global energy market”, as part of a larger effort to de-dollarise the so-called “BRIC” countries of Brazil, Russia, India and China, and many other parts of the world after the weaponisation of dollar foreign exchange reserves following Russia’s invasion of Ukraine.
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Small firms hit as gas prices treble despite caps
Angela Macdonald-Smith Senior resources writer
Jan 3, 2023 – 8.00pm
The federal government’s gas price caps have failed to afford relief to uncontracted small manufacturers so far, and some firms have been slugged with temporary tariffs for gas of more than three times the limit on wholesale prices.
Retailers are stalling on making new offers of supply as they and their advisers try to understand the details of the Albanese government’s shock gas market intervention just days before Christmas.
That means business customers whose supply contracts have lapsed are, in the meantime, being charged default tariffs at much higher rates.
NSW magnesium products maker Causmag International has been asked to pay an eye-watering $39.67 a gigajoule for gas when it restarted its plant in Young on Tuesday, about four times higher than the spot price for gas and 230.5 per cent higher than the $12/GJ cap on wholesale prices introduced last month.
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We’ve entered the era of unnatural disasters. Here’s what we must do
Climate scientist
January 6, 2023 — 5.00am
The Aussie summer of my childhood is no more. The past three years, in particular, have been marred by record-breaking bushfires and floods. Globally, 2022 is expected to be one of the warmest years on record, despite a persistent La Nina which has a cooling influence on global temperatures.
There is a possibility of an El Nino event later this year, which typically brings hot, dry conditions to Australia. El Nino, combined with rising temperatures from the burning of fossil fuels, could bring record-breaking heat in 2023.
Throughout my 20 years of advocating for climate action, we have been warned that climate change would intensify the severity and frequency of extreme weather events. That future has now well and truly arrived.
The Black Summer bushfires gave us a visceral taste of the warnings as we watched blood-red skies and choked on the acrid smoke blanketing the east coast. One of the worst bushfires in our recorded history was then replaced by the great deluge that swept through low-lying communities throughout last year.
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Royal Commissions And The Like.
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Seven in 10 nursing homes operating at a loss
By STEPHEN LUNN
12:26AM January 6, 2023
The future of Australia’s residential aged-care system is under “critical” threat with seven in 10 nursing homes operating at a financial loss, rapidly declining occupancy levels and severe staff shortages jeopardising the care of hundreds of thousands of vulnerable older residents.
The financial performance of nursing home operators is plummeting, with a new analysis revealing centres lost an average $21.29 a bed a day in the September quarter compared to $7.30 in the same quarter in 2021.
This is a significant deterioration just in the past few months, the latest StewartBrown aged-care financial performance survey shows. The sector had already reached a crisis point in June when facilities were losing $14.67 a bed a day. In 2018 they were making a profit.
Occupancy is also falling fast, the report reveals, down from 95 per cent in 2018 to just over 91 per cent in September.
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National Budget Issues.
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Chalmers warning on Australia’s population challenge
Ronald Mizen Economics correspondent
Jan 1, 2023 – 10.30pm
Treasurer Jim Chalmers has warned the portion of working age population will dwindle dramatically in the years ahead, leaving fewer people to pay for government services such as aged care, the NDIS and defence.
Precipitated by a falling fertility rate and people living longer, the forecast drop contained in the Albanese government’s Population Statement 2023 also highlights Australia’s growing reliance on overseas migration.
Extracts from the statement, which is slated for release on Friday, show the so-called old age dependency ratio – the ratio of working-age people to those over 65 – fell from 7.3 in 1975 to 4 today, and is expected to hit 2.7 by 2061.
Reflecting findings of the Treasury’s 2021 Intergenerational Report released just over 12 months ago, the statement reiterates the major demographic challenges facing the economy in the next 40 years.
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https://www.afr.com/markets/debt-markets/australia-will-dodge-close-call-recession-20221216-p5c71b
Australia will dodge ‘close call’ recession
Cecile Lefort Markets reporter
Jan 2, 2023 – 8.00pm
The reopening of China’s economy is good news for the rest of the world because it will unleash consumer spending at a time when growth everywhere is desperately in need of a boost, says Jo Masters, chief economist at financial services firm Barrenjoey.
Financial markets – from stocks to bonds and currencies – have been rattled by fears of a 2023 global recession as central banks promise to keep raising borrowing costs to defeat inflation.
China, Australia’s biggest export customer, could help soften the downturn, but it very much depends on how authorities manage the explosion of infections. There are millions of daily cases after China scrapped three years of COVID-19 curbs in just one month.
If managed right, Chinese households will be no different to the rest of us: indulging in the typical post-pandemic revenge spending shopping spree where Australia is poised to gain.
“As people start to come out of lockdown and are able to move around, we expect an acceleration in spending,” says Masters.
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Time to move out of 1970s tax mindset
DAVID BASSANESE
2:10PM January 2, 2023
As Treasurer Jim Chalmers has lamented since coming into office, Australia now faces a serious structural budget deficit problem.
This year’s budget papers projected the underlying deficit will remain stuck at around 2 per cent of national output over at least the next decade.
That means gross Federal Government debt will keep rising, reaching almost 50 per cent of national output over this period.
Interest payments on this debt will more than double as a share of national output to 2 per cent, and reach 6.5 per cent of total budget payments.
Various factors account for the budget blowout, including more realistic assumptions about future expected economic growth, likely future interest rates payable on debt and the mounting cost of worthy, but expensive social programs such as the National Disability Insurance Scheme.
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Business failures spike as owners hit by ‘sheer exhaustion’
By Glen Norris and Chris Herde
6:00AM January 4, 2023
A wave of more than 5500 Australian companies hit the wall over the past year as many business owners succumbed to “sheer exhaustion.”
The number of companies going into administration or liquidation topped 5560, according to Australian Securities and Investments Commission data.
NSW accounted for roughly 40 per cent with 2177 companies going bust over the past 12 months. Victoria had 1236 insolvencies, followed by Queensland with 970, 432 in West Australia and 225 in South Australia.
Revive Financial director Jarvis Archer said the Australian Taxation Office’s return to recovering tax debts after a two-year hiatus drove a lot of the increase in insolvencies.
“Director warning letters and director penalty notices triggered company directors to deal with their hefty tax debts that accrued during the pandemic,” said Mr Archer.
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Health Issues.
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Improving conditions for GPs requires more than just a Band-Aid fix
General practitioner
January 5, 2023 — 3.43pm
The Victorian and NSW governments have again banded together to push Prime Minister Anthony Albanese to commit to a substantial investment in general practice for the betterment of all.
Currently, the Medicare rebate, which has been effectively frozen since 2013, is what the federal government contributes towards the cost of a patient seeing their doctor. A bulk-billing doctor is discounting their service by more than 50 per cent to run their small private practice.
Victorian Premier Daniel Andrews argues that “we need to pay GPs more”. If by this he means pay parity with doctors in hospitals, then we are talking about salaries – hourly wages and leave entitlements including maternity leave, carer leave, annual leave and sick leave, none of which is paid at present to GPs who are entirely private contractors.
Increasing university places for doctors does not solve the inherent problem that medical students and junior doctors consider general practice as a poorly paid, thankless career choice compared to non-GP specialities with better security after the initial training period. At present, many feel the hardship truly begins after general practice fellowship, where many of us are regularly subsidising patients out of our own pockets just to stay viable.
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Neuren’s focus on rare childhood diseases elevates it to No.1 health stock for 2022
By JARED LYNCH
7:11PM January 6, 2023
Neuren’s focus on rare neurological conditions in children instead of targeting higher-profile conditions like Alzheimer’s and Parkinson’s has lifted the company to finish 2022 as Australia’s best performing health stock.
And there are more gains expected in the year ahead.
Neuren soared 110.8 per cent in 2022 earning it a spot on the ASX300. It advanced 11 per cent to $8.85 in the first week of trade of the new year, giving it a market value of $1.2bn.
The company is awaiting a decision from the Food and Drug Administration on one of its marquee treatments, although the US regulator has already approved phase-two trials for one of its other drugs which could be more lucrative given its potential to treat multiple disorders.
The ASX’s health and biotech index slightly underperformed the broader market last year, sagging 8.6 per cent. The sector came under pressure as companies struggled to articulate their complex science into language that appealed to investors, or simply failed to deliver on their promises.
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Baker Institute research leads to simple tests for heart and diabetes disease
By Helen Trinca
The Deal Editor and Associate Editor
12:00PM January 7, 2023
One of Australia’s leading research facilities, the Baker Heart and Diabetes Institute, had the technology to potentially revolutionise testing for heart disease and diabetes, using just a single drop of blood. All it lacked for this global breakthrough was commercial nous, developmental infrastructure and marketing know-how.
On the other hand, Trajan Scientific and Medical, a Melbourne-based ASX biotech company, had the technology and expertise to take products to market.
In the end, says Peter Meikle, head of the Baker’s systems biology domain, the decision to collaborate in 2020 was a natural fit.
Now he and Trajan chief executive Stephen Tomisich are on the edge of a world-class development in the risk assessment of a range of cardio and metabolic diseases. In two years they hope to be commercially marketing a simple test that can be used at home by patients or in remote areas to test for a range of cardiovascular conditions.
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International Issues.
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China is bad news for the global economy in 2023, warns IMF head
Dan Burns
Jan 2, 2023 – 6.10am
For much of the global economy, 2023 is going to be a tough year as the main engines of global growth – the United States, Europe and China – all experience weakening activity, the head of the International Monetary Fund said on Sunday.
The new year is going to be “tougher than the year we leave behind”, IMF managing director Kristalina Georgieva said on the CBS Sunday morning news program Face the Nation.
“Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously,” she said.
In October, the IMF cut its outlook for global economic growth in 2023. That reflected the continuing drag from the war in Ukraine as well as inflation pressures and the high interest rates engineered by central banks such as the US Federal Reserve aimed at bringing those price pressures to heel.
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https://www.afr.com/world/europe/putin-boasts-of-courage-as-missiles-hit-kyiv-20230101-p5c9ny
Putin boasts of ‘courage’ as missiles hit Kyiv
James Kilner
Jan 1, 2023 – 8.19am
Vladimir Putin saluted Russia’s “courage” and “moral righteousness” on Sunday (AEDT) as his military fired missiles at civilians in Ukraine celebrating New Year’s Eve, killing one person.
People had crowded Ukrainian cities to mark the biggest holiday of the year but in the early afternoon, the busiest time of the day, Russian forces launched 20 missiles at Kyiv and at Khmelnytskyi, in western Ukraine.
Vladimir Putin has formally invited his Chinese counterpart to Moscow, as he seeks to deepen ties with Beijing, describing their relationship as the 'best in history.'
Vitaliy Klitschko, the mayor of Kyiv, said that the city’s air defence systems shot down 12 of the missiles but eight smashed into buildings, including a kindergarten. One person was killed and 14 people injured, including a Japanese journalist. He said that 30 per cent of the capital was without power.
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How the US House Speaker’s election could devolve into chaos
By Catie Edmondson
January 2, 2023 — 7.13am
The election of the House speaker on the floor of the chamber is usually a largely ceremonial exercise devoid of surprises.
But if Representative Kevin McCarthy of California, the Republican leader, is unable to put down a rebellion among a group of hard-right lawmakers before the vote on Tuesday (US time), the result could be a whirl of chaos not seen on the House floor in a century.
McCarthy has pledged to fight for the speakership on the House floor until the very end, even if it requires lawmakers to vote more than once.
Every speaker since 1923 has been able to clinch the gavel after just one vote, but there is a precedent in the House’s long history of turbulent elections. In 1855, for example, electing a speaker took two months and 133 ballots to yield Rep. Nathaniel P. Banks of Massachusetts the winner, a reflection of a House divided by pre-US Civil War factions.
Here’s what you need to know about the election.
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Brazil’s Luiz Inácio Lula da Silva has been sworn in as president
By Diane Jeantet and Carla Bridi
Updated January 2, 2023 — 5.33amfirst published January 1, 2023 — 4.29pm
Brasilia: Brazil’s Luiz Inácio Lula da Silva has been sworn in as president in the capital, Brasilia, assuming office for the third time after thwarting outgoing incumbent Jair Bolsonaro’s reelection bid.
Lula was president from 2003-2010, and his return to power marks the culmination of a political comeback that is both thrilling supporters and enraging opponents in a fiercely polarised nation.
His presidency is unlikely to be similar to his previous two mandates, coming after the tightest presidential race in more than three decades in Brazil and resistance to his taking office by some of his opponents.
The leftist defeated far-right Bolsonaro in the October 30 vote by less than 2 percentage points. For months, Bolsonaro had sown doubts about the reliability of Brazil’s electronic vote and his loyal supporters were loath to accept the loss.
Many have gathered outside military barracks since, questioning results and pleading with the armed forces to prevent Lula from taking office.
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Chief Twit Elon Musk must regain his wits
The multi-billionaire’s erratic leadership of the social media group has not been comforting. For now, the enterprise value of Twitter may be less than the $US13 billion of debt it carries.
The Lex Column
Jan 2, 2023 – 11.51am
Twitter, as we knew it, is dead. Elon Musk made sure of that when he agreed the $US44 billion ($64.6 billion) acquisition. The incorrigible provocateur has until now escaped accountability for his eccentricities by making enough electric cars to please Wall Street.
Shares in Tesla have fallen 65 per cent over 2022 amid a broad sell-off in tech stocks. High debt costs mean an Ebenezer Scrooge-like reinvention might be the trick for Musk’s revival.
Musk’s erratic leadership of the social media app has not been comforting. See the sudden ejection of staff and messy implementation of a new model to verify users. Twitter is bleeding advertisers and advertising revenue. With annual interest expense from debt topping $US1 billion, Musk himself has floated the idea of bankruptcy.
Worse for Musk is that he was forced to sell billions of dollars in Tesla shares amid the stock’s rout to help fund the Twitter acquisition. For now, the enterprise value of Twitter may be less than the $US13 billion of debt it carries. Banks have not been able to sell that debt into the market yet.
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Scores of Russian troops killed in one of Ukraine’s deadliest strikes
Pavel Polityuk
Jan 3, 2023 – 8.03am
Kyiv | Russia acknowledged on Monday that scores of its troops were killed in one of the Ukraine war’s deadliest strikes, drawing demands from Russian nationalist bloggers for commanders to be punished for housing soldiers alongside an ammunition dump.
Russia’s defence ministry said 63 soldiers had died in the fiery blast which destroyed a temporary barracks in a former vocational college in Makiivka, twin city of the Russian-occupied regional capital of Donetsk in eastern Ukraine.
It said the accommodation had been hit by four rockets fired from US-made HIMARS launchers, claiming two rockets had been shot down. Kyiv said the Russian death toll was in the hundreds, though pro-Russian officials called this an exaggeration.
Russian military bloggers said the huge destruction was a result of storing ammunition in the same building as a barracks, despite commanders knowing it was within range of Ukrainian rockets.
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9.48AM 03-01-2023
China’s economy ends year in slump as COVID-19 infections surge
Bloomberg
China’s economy ended the year in a major slump as business and consumer spending plunged in December, with more disruption likely in the first few months of the year as COVID-19 infections surge across the country.
Official data over the weekend showed the decline in manufacturing worsened last month, while activity in the services sector slumped the most since February 2020.
Separately, a private survey of businesses by China Beige Book International published on Monday suggested the economy contracted in the fourth quarter from a year earlier.
China’s abrupt ditching of strict COVID-19 controls in December fuelled a surge in infections in major cities, prompting people to stay home as they fell ill or feared becoming infected.
While the outbreak has likely peaked in places like Beijing, and economic activity is starting to rebound there, the virus is spreading fast across the country. A likely travel rush during the upcoming Lunar New Year holiday could see cases spread to rural areas, disrupting activity in the first quarter.
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https://www.afr.com/world/asia/stopping-china-s-growth-cannot-be-a-goal-for-the-west-20230103-p5ca0j
Stopping China’s growth cannot be a goal for the West
It is crucial for the US and the EU to be clear that their goal is not to prevent China from becoming richer. It is to prevent China’s growing wealth from being used to threaten its neighbours or intimidate its trading partners.
Gideon Rachman Columnist
Jan 3, 2023 – 9.23am
Do we want China to fail? That question came up at a recent seminar I attended for Western policymakers and commentators.
The group was leafing through a report on the year ahead, when one of our number asked why one of the dangers listed for 2023 was a sharp slowdown in Chinese growth. “Isn’t that what we want to happen?” he asked.
It is a fair question. After all, the US president has repeatedly said he is willing to go to war with China to defend Taiwan. The EU describes the country as a “systemic rival”. Britain is debating formally labelling China a “threat”. Surely, if you regard a country as a threat and a rival, you do not want to see its economy growing rapidly?
Or maybe you do. Those who believe that continued Chinese economic success remains in the interests of the West have plausible arguments to make. First, China is a huge part of the world economy. If you will China to go into recession, you are quite close to wanting the world to also slide into recession. And if China were to crash — for example if its property sector melts down — the consequences would ricochet through the global financial system.
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Russian drones attack critical infrastructure around Kyiv
Pavel Polityuk and Herbert Villarraga
Jan 2, 2023 – 3.24pm
Kyiv/Donetsk Province | Several waves of Russian drones targeted critical infrastructure in Ukraine’s capital of Kyiv and surrounding areas on Monday, officials said, as Moscow extended its constant bombardment into a second day in 2023.
Ukrainians cheered from balconies as their air defences blasted Russian missiles and drones out of the sky in the first hours of the New Year, which Moscow ushered in by attacking civilian targets across Ukraine.
“Glory to Ukraine! Glory to heroes!” some shouted as air raid sirens blared during the late night attack.
Ukrainian forces shot down 45 Iranian-made Sahed drones fired by Russia on the first night of the year, President Volodymyr Zelensky said on Sunday (Monday AEDT), praising Ukrainians for showing gratitude to the troops and one another.
“Drones, missiles, everything else will not help them,” he said of the Russians. “Because we stand united. They are united only by fear.”
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How the mysterious deaths of 23 elite Russians sparked a global murder mystery
How can so many billionaires with bodyguards and the best healthcare just drop dead? Many people are suggesting Russian President Vladimir Putin is involved.
January 3, 2023
A member of the Russian elite dies in a freak accident? Happenstance. Then another dies in similar circumstances? Could be written off as a coincidence. But a spiralling body count of 23 deaths in less than a year has sparked fears of “enemy action”, as Auric Goldfinger famously put it to James Bond in the classic 1964 spy film.
Since late January 2022, Russia’s accident-prone business tycoons are rapidly in danger of becoming an endangered species.
The string of mysterious deaths has attracted global attention, with growing fears sinister forces are at play, even though the deaths have mostly been attributed to misadventure and mental health issues.
The trail of bloodshed, which started shortly before Russian President Vladimir Putin’s invasion of Ukraine, has spanned time zones and continents.
The manner of death has varied from the seemingly straightforward (strokes and suicides) to freak accidents (falling down stairs or from a speeding boat) to the downright bizarre (poisoning from a shaman’s toad venom).
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The US Constitution’s flaws about to be put on show
Journalist and author
January 3, 2023 — 5.00am
For more than a quarter of a century, American politics has doubled as a civics lesson from hell. The Clinton years introduced us to the impeachment process, something not witnessed since the mid-19th century. The disputed 2000 election reminded us of the vagaries of the Electoral College and revealed how the Supreme Court could intervene to determine the outcome of a presidential election – who knew? The January 6 hearings, which culminated in the first-ever referral of a former president to the Justice Department for criminal prosecution, served both as a prime-time crime drama and a tutorial in constitutional law.
To mark the opening of the 118th Congress on Tuesday, the Republican Party intends to conduct its own teachable moment. If he wins the House Speakership – a contest that looks like it will provide a lesson in the chaotic state of the modern-day GOP – the Republican leader Kevin McCarthy intends to read in its entirety the US Constitution on the floor of the House of Representatives.
This ritual will border on the liturgical. The Constitution, despite Donald Trump’s recent threat to terminate it, has taken on a near Biblical status. Its framers are regarded as patron saints. Yet Americans who listen in may well be shocked to hear these portions of scripture take on a different meaning when placed in their rightful context.
No passage has been more misappropriated than the Second Amendment, which notes that “the right of the people to keep and bear arms, shall not be infringed”. As people will hear, however, the primary focus of the founding fathers was the creation of a “well-regulated militia” rather than the firearms they would carry. The intention was to guard against a standing army, which in post-revolutionary America was seen as a tyrannical throwback to the days of British rule.
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US economy headed for recession, but only a mild one
The US economy will experience a recession this year as the Fed remains resolute in its mission to halt inflation. But Goldman and Morgan Stanley disagree.
Cecile Lefort Markets reporter
Jan 3, 2023 – 12.49pm
The US economy will tip into a “mild” recession this year as the Federal Reserve remains committed to defeating inflation by raising interest rates further, dashing hopes for global growth in 2023.
Fed chairman Jerome Powell has said the world’s largest economy can maintain “modest” growth and just a small increase in unemployment. But The Australian Financial Review’s survey of 32 economists disputes this, saying US growth will stall early.
“Although a recession is imminent for the US, the duration will be short –first half of 2023 – and shallow – an average of -0.4 per cent per quarter,” said Matthew Peter, chief economist at QIC.
There is a relentless debate on what constitutes a recession in the US. The focus elsewhere is on gross domestic product or GDP, but the US National Bureau of Economic Research (NBER) defines it as a widespread contraction in the economy that lasts more than a few months. In Australia, a recession is defined by two consecutive quarters of GDP contraction.
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https://www.afr.com/policy/economy/the-coming-financial-contagion-20230103-p5ca1k
The coming financial contagion
A sustained wave of monetary tightening could expose unexpected vulnerabilities in the global financial system.
Kenneth Rogoff Columnist
Jan 3, 2023 – 11.27am
The fact that the world did not experience a systemic financial crisis in 2022 is a minor miracle, given the surge in inflation and interest rates, not to mention a massive increase in geopolitical risk.
But with public and private debt having risen to record levels during the now-bygone era of ultra-low interest rates, and recession risks high, the global financial system faces a huge stress test. A crisis in an advanced economy – for example, Japan or Italy – would be difficult to contain.
True, tighter regulation has reduced risks to the core banking sectors, but that has only led to risks shifting elsewhere in the financial system. Rising interest rates, for example, have put huge pressure on private-equity firms that borrowed heavily to buy up property. Now, with housing and commercial real estate on the cusp of a sharp, sustained drop, some of those firms will most likely go bust.
In that case, the core banks that provided much of the funding for private equity real-estate purchases could be on the hook. That has not happened yet, partly because lightly regulated firms are under less pressure to mark their books to market. But suppose interest rates remain stubbornly high even during a recession (a distinct possibility as we exit the ultra-low-rate era). In that case, widespread payment delinquencies could make it hard to maintain appearances.
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https://www.afr.com/world/asia/why-china-s-economy-faces-a-perilous-road-to-recovery-20230103-p5c9zt
Why China’s economy faces a perilous road to recovery
The damage that ‘zero-COVID’ inflicted on China’s once-unbeatable attractiveness as a manufacturing hub could be hard to repair.
Keith Bradsher
Jan 3, 2023 – 2.59pm
Beijing | Three weeks after Xi Jinping, China’s top leader, tried to reinvigorate China’s stalled economy by abruptly abandoning his stringent pandemic restrictions, he struck an upbeat note in his annual New Year’s Eve address. “China’s economy has strong resilience, great potential and vitality,” he said.
But that optimism is hard to find in downtown Guangzhou, the commercial hub of southern China. Nearly three years of “zero-COVID” measures have crushed businesses. Streets are lined with shuttered stores and workshops. Walls are plastered not with “help wanted” signs, but with notices from entrepreneurs putting their businesses up for sale.
Roads and alleys once packed with migrant workers are now mostly empty.
China’s reversal of its COVID-19 restrictions in early December was meant to help places like Guangzhou. But the chaotic approach has contributed to a tsunami of infections that has swept across the nation, overwhelming hospitals and funeral parlours. In many industries, truck drivers and other workers have quickly fallen ill, temporarily stretching staff and slowing operations.
Now, faced with an unpredictable – and uncontrolled – epidemic and financial uncertainty, people and companies are spending cautiously, suggesting that the road to recovery will be uneven and painful.
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‘Untrainable’: Russian army faces backlash over conscripts’ death in Ukraine attack
Ben Hall and Polina Ivanova
Jan 4, 2023 – 9.56am
London/Berlin | The killing of scores of Russian conscripts in a Kyiv-led missile attack on their barracks in occupied eastern Ukraine has rekindled recriminations in Moscow over the conduct of the war — and raised fresh questions over the military’s capacity to learn from its mistakes.
Russia said 63 of its troops were killed when precision rockets destroyed a vocational college in Makiivka in Donetsk province on New Year’s Eve. The school had been commandeered as a temporary barracks for a battalion of mobilised soldiers. The basement was reportedly used as an ammunition store and exploded in the strike.
Kyiv claimed the Russian death toll was several times higher. But the figure of 63 was still the largest number of war deaths in a single incident admitted by Moscow and the first official comment on casualties of any kind since September, a sign that the Kremlin is adjusting its narrative about the war.
The death toll sparked anger among Russian pro-war military bloggers and calls for commanders to be punished for allowing a large number of soldiers to be housed together and in an unprotected building.
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By year’s end, Trump will likely realise he’s had his last dance
60 Minutes reporter
January 4, 2023 — 5.00am
Two years since he incited an attempted coup and just 12 months out from the US election primaries, Donald Trump is more likely to end up in prison than back in the Oval Office.
A combination of legal and political woes make it highly improbable the 45th president will secure the Republican nomination. His days as leader of the free world are almost certainly over, leaving only two questions: will Trump control the chosen GOP candidate, and can he stay out of jail?
Remarkably, it seems the man who inspired his supporters to attack the world’s most recognised symbol of democratic government has finally committed the only truly unacceptable political sin: losing.
Trump has thrown away the last three US election cycles including the 2018 midterms, the 2020 presidential poll and the 2022 midterms, where Democrats unexpectedly held onto the Senate. All but one of Trump’s handpicked election-denier candidates lost.
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https://www.smh.com.au/national/nsw/we-can-t-rely-on-putin-to-self-destruct-20230103-p5ca51.html
We can’t rely on Putin to self-destruct
January 3, 2023 — 4.40pm
The mysterious death of 23 members of the business and government elite in the past year leaves little doubt that Vladimir Putin’s Russia is a troubled society.
As Carrie Fellner reported in Tuesday’s Herald, Russian bankers, billionaires and oil and gas tycoons have all died by misadventures which are hard to explain given they had the cash to pay for bodyguards and top healthcare.
Some “fell” out of windows, some suffered sudden heart attacks, some were killed with their entire families in “murder suicides” and others were gunned down outside their apartments. One died after a shaman gave him a potion of extract of toad.
It is highly likely that many of these deaths were not accidental but the result of contract killings. Many are perhaps a sign of the growing dissent facing Putin.
But it would be wishful thinking to believe that they portend an imminent collapse of his regime.
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Ukraine has digitised its fighting forces on a shoestring
By Sam Schechner and Daniel Michaels
Dow Jones
10:58AM January 4, 2023
Ukraine has achieved a cut-price version of what the Pentagon has spent decades and billions of dollars striving to accomplish: digitally networked fighters, intelligence and weapons.
Kyiv’s improvised web of drones, fighters and weapons, linked through satellite communications and custom software, is giving its soldiers a level of intelligence, co-ordination and accuracy that has allowed the initially outnumbered and outgunned forces to run circles around Russia’s massive but lumbering armies.
Ukraine’s grab bag of systems, built largely around off-the-shelf equipment, remain a far cry from the US military’s sprawling and hugely ambitious digitisation effort, which has evolved and expanded with technological advances and carries names such as network-centric warfare. The Defence Department aims for network scale, security and bandwidth that far exceed Ukraine’s ambitions.
Still, say veterans of US and allied digitisation projects, Ukraine’s success cobbling together a virtual command-and-control system on the fly offers valuable lessons for the West, particularly about the need to experiment and include non-military experts.
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Moderate’s hopes for US House speaker wither in face of hardliners
David Morgan, Moira Warburton and Gram Slattery
Jan 4, 2023 – 12.22pm
Washington | Hardline Republicans in the US House of Representatives on Tuesday repeatedly blocked fellow Republican Kevin McCarthy’s bid to become the chamber’s powerful speaker, leaving the chamber leaderless and plunging their new majority into turmoil.
In the first day of what could prove to be a brutal showdown between about 20 hardliners and the other 202 members of the Republican caucus, Mr McCarthy failed in three ballots to achieve the 218 votes needed to become speaker, a role second in line to the Oval Office after the vice president.
It was a disconcerting start for the new Republican majority and highlights the challenges the party could face over the next two years, heading into the 2024 presidential election. Their slim 222-212 majority gives greater clout to a small group of hardliners, who want to focus on defeating Democrats and pushing investigations of President Joe Biden’s administration and family.
Mr McCarthy, 57, from California, knew he faced an uphill climb heading into Tuesday’s (Wednesday AEDT) vote and had vowed to continue to force votes, but the chamber on Tuesday evening voted to adjourn until noon on Wednesday (4am Thursday AEDT), a move that would give Republicans time to discuss other candidates.
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https://www.afr.com/world/europe/what-should-the-world-do-when-this-war-is-over-20230104-p5caau
What should the world do when this war is over?
A healthy post-Ukraine world order has to look more like 1945 than the lost peace which followed the First World War.
Harold James Economic historian
Jan 4, 2023 – 1.29pm
It is not too soon to think about what will follow Russia’s war on Ukraine. Figuring out the post-conflict future is essential not just for Russia’s Ukrainian victims, but also for Europe and the world. Yet, despite the urgent need to ensure that the first half of this century does not come to resemble the first half of the last one, discussions of the matter have been quite limited.
Russian President Vladimir Putin’s war of aggression eerily recalls the conflict that devastated Europe after 1914. The First World War – the Great War – set the stage for subsequent catastrophes. It, too, began as a war in which an aggressor gambled on a quick victory; and it, too, evolved into a broader conflict in which each side tried to undermine the other’s fighting capacity and political stability.
By November 8, it was clear that Putin had miscalculated in assuming that the United States and the European Union would tire of the conflict and bully Ukraine into accepting a humiliating peace settlement. The critical moment came when the US midterm elections turned out not to be a shellacking for President Joe Biden and his Democratic Party. Immediately thereafter, Russia finally withdrew from Kherson city and pressed a new strategy of imposing as much misery and devastation as possible on Ukrainian civilians.
The Western coalition has held together remarkably well. But the next big test will come when the war ends. When embroiled in an existential struggle, everyone accepts that crisis measures are needed, and that skimping to satisfy some budget rules can lead to catastrophe. But eventually, the state of exception must end, and that is when the real choices come. If the return to a rules-based order is associated with economic misery – as it happened in 1920 – it will fail.
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Embattled British PM vows to get economy and healthcare back on track
Hans van Leeuwen Europe correspondent
Jan 5, 2023 – 7.02am
London | British Prime Minister Rishi Sunak has vowed to dig his country out of its economic hole this year, patch up the failing healthcare system and “stop the boats” of illegal migrants arriving from France.
Mr Sunak used a year-opening speech on Wednesday (Thursday AEDT) to try to instil some public confidence in a beleaguered Conservative government that is trailing the Labour opposition by more than 20 points in the polls.
He acknowledged that many Britons are looking at their country – beset by a debilitating wave of industrial action, ever-lengthening hospital waiting lists, soaring inflation and a looming recession – with “apprehension”.
But he vowed to “work night and day to change that – and quickly”.
“People don’t want politicians who promise the earth and then fail to deliver,” he told an audience at the headquarters of IT company Plexa in east London.
“They want government to focus less on politics and more on the things they care about: the cost of living, too high; waiting times in the National Health Service, too long; illegal migration, far too much.”
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Ukraine to get more armoured vehicles, but presses for tanks to fight Russia
Reuters 05/01/2023
Kyiv | Western allies moved toward supplying armoured battle vehicles to Ukraine for the first time but not the heavier tanks it has requested to fight Russia, while Washington predicted intense combat would continue for months on the eastern frontline.
French President Emmanuel Macron told Ukrainian President Volodymyr Zelensky his government would send light AMX-10 RC armoured combat vehicles to help its war effort, a French official said on Wednesday after a phone call between them.
“This is the first time that Western-made armoured vehicles are being delivered in support of the Ukrainian army,” the official said.
Hours later, US President Joe Biden said Washington was considering sending Bradley Fighting Vehicles to Ukraine, which since Russia’s invasion in February has been fighting Europe’s biggest land conflict since 1945. Cities have been destroyed, millions of people displaced and tens of thousands killed.
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UK Prime Minister Rishi Sunak pledges to halve inflation and ‘stop the boats’
5:30AM January 5, 2023
Britain’s prime minister Rishi Sunak has pledged to halve the rate of inflation in a headline-grabbing five-point state of the nation-style address overnight (AEDT).
In addition to halving inflation, Mr Sunak said he would grow the British economy, shrink national debt, reduce NHS waiting lists and pass new laws to “stop the boats” coming across the English Channel.
“(We will be) making sure that if you come to this country illegally, you are detained and swiftly removed,’’ he said, as government figures show 45,756 people arrived on small boats across the English Channel in 2022, most of whom are accommodated in hotels and hostels for months while being processed.
This first wide-ranging policy announcement comes 71 days after Mr Sunak was appointed prime minister in October and following criticism that he has been missing in action amid a cost of living crisis, and as the British economy falters under debilitating strikes across train, buses, post and the border force. Energy costs, which have increased fourfold in the past year, will increase another 20 per cent in the coming months.
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https://www.afr.com/chanticleer/five-potential-catastrophes-you-need-to-think-about-20230105-p5cagh
Five potential catastrophes you need to think about
Australia enjoys one of the world’s richest, safest, and fairest societies. But an expert in “discontinuous risks” says we need to challenge our cosy assumptions.
Updated Jan 5, 2023 – 12.06pm, first published at 11.14am
When working as a banking regulator, Charles Littrell spent a good deal of time thinking about “plausible risks that are discontinuous” as part of his job of protecting deposits in the financial system.
He says he spent 40 years being paranoid about risks, including 15 years at the Australian Prudential Regulation Authority and five years as the prudential regulator for the Central Bank of the Bahamas.
He says the top five “discontinuous risks” Australia needs to think about are: the electricity grid going down because of a massive cyberattack or natural event; the Western security alliance collapsing; war with China; an international financial collapse; and possible wrong-way risk, which happens when other risks are correlated.
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Republicans suffer from a case of leopards eating faces
The party of insurrection can’t even manage the orderly transfer of power to itself. Rarely does karma play out so neatly.
Michelle Goldberg
Updated Jan 5, 2023 – 1.54pm, first published at 1.38pm
As we approach the anniversary of the January 6, 2021 attack, it’s been grimly amusing to see that the party of insurrection can’t even manage the orderly transfer of power to itself. Rarely does karma play out so neatly.
Kevin McCarthy nurtured the spirit of reactionary nihilism in the Republican Party, first by trying to harness the energy of the Tea Party for his own ambition, and then by his near-total capitulation to Donald Trump.
Now the chaotic forces he abetted have, at least for the moment, derailed his goal of becoming House Speaker, subjecting him to multiple public humiliations at what was supposed to be his moment of triumph.
It is still possible that McCarthy will manage to eke this thing out by making even more concessions to the growing bloc of Republicans who oppose him. It is not possible, however, that he’ll emerge, in any real sense, as a leader.
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Expect ‘rolling recessions’ in 2023, top Citi economist says
Emma Rapaport Markets reporter
Jan 5, 2023 – 4.13pm
Citi’s top economist, Nathan Sheets, forecasts a series of “rolling recessions” and more interest rate rises this year as the hangover from the pandemic, surging inflation and the Russia-Ukraine war plague the global economy.
His stormy outlook comes as US policymakers remind investors there is still more work to do on the inflation front, cautioning in the Federal Reserve’s latest set of meeting minutes that an “unwarranted” easing of financial conditions would complicate efforts to restore price stability.
Mr Sheets expects global growth to slow below 2 per cent in 2023, pencilling in mild downturns in several major economies. Excluding China, global growth is likely to run at less than 1 per cent.
“As we survey the prospects for the global economy, we see many reasons for concern,” he said.
“Reflecting these factors, the global economy is likely to endure ‘rolling’ country-level recessions during the coming year – where it starts in one place and finishes in another.”
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The rise and rise of far-right populists: why democracies can’t be smug
Professor of politics at Griffith University
January 6, 2023 — 5.00am
Looking back at recent elections, you’d be tempted to say the last year was not a bad one at all for liberal democracy, or even that far-right populism might be in decline. That would be a shortsighted conclusion and a dangerous one.
For sure, 2022 was a mixed electoral year for the populist far-right, with some very high-profile losses. A sweeping victory of Trumpist candidates in the United States midterms didn’t come to pass; in France Marine Le Pen once again failed to defeat Emmanuel Macron; and Jair Bolsonaro lost the presidency of Brazil to Luiz Inacio Lula da Silva.
On the other side of the ledger, the populist far-right’s successes included Giorgia Meloni becoming Italy’s first far-right prime minister since the end of World War II; the Sweden Democrats overcoming their extremist past to be accepted as a partner by the country’s ruling coalition; and a new Israeli government with prominent far-right ministers.
Considering the respective sizes of these countries, you might think that liberal democracy is in credit. Here’s the problem: far-right populism’s successes in 2022 reflect continuing long-term structural changes, while its defeats reflect short-term wins for liberal democratic forces that are in deep trouble globally.
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Sunak pins Britain’s future on five new promises
January 5, 2023 — 11.59am
London: Rishi Sunak has made his first major speech as British Prime Minister, re-framing his government’s plans as answers to the “people’s priorities”.
Setting the scene for the next 18 months, Sunak, who in October became the third prime minister in two months, made five promises that will likely test his ability to salvage his beleaguered Conservatives. Polls say the party is on track to lose government to Labour at the next election due next year.
He pledged to halve inflation and grow the economy this year, cut hospital waiting lists, reduce debt, and “stop the boats” of asylum seekers arriving on Britain’s south-east coast from France.
He acknowledged the sense of decay pervading the country in the face of multiple strikes including by rail workers, paramedics, nurses, postal workers and London transport workers finding it hard to manage the rising cost of living with stagnant wages.
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China’s myth of Communist competence
Thomas J. Duesterberg
11:52AM January 6, 2023
Xi Jinping doubtless expected to celebrate the New Year by touting the superiority of his authoritarian economic and governance model. Instead, he is trying to manage a healthcare crisis, a weakening economy, and political protests. These vulnerabilities – each attributable to the Chinese Communist Party under Mr Xi’s leadership – allow the US to combat the party’s mercantilist policies and debunk its narrative that China’s rise to global dominance is inevitable.
Mr Xi’s climb-down from his signature zero-Covid policy, and the broad and poorly controlled spread of the virus, has exposed the weaknesses of China’s social safety net. The public demonstrations since November are signs of underlying discontent. The participation of the well-off and normally passive urban populations affirms that Mr Xi can’t expect to maintain political control if he continues to impose such authoritarian restrictions.
As Simone Gao recently wrote in these pages, the end of zero Covid was in large part an admission of the government’s unsustainable financial situation. In early December, Beijing said local governments would be responsible for the cost of daily Covid testing. These already distressed institutions were put in charge of the healthcare emergency in addition to their responsibilities for education, unemployment insurance and retirement. They are also still expected to stimulate economic growth through building infrastructure and subsidising local industries.
Achieving those goals would be difficult in the best of times. But China’s local authorities have been operating with one hand tied behind their backs, thanks to Mr Xi’s economic policies. More than 40 per cent of local government revenue in recent years has come from land sales to real-estate and industrial developers. That led to one of the global economy’s largest bubbles, which Mr Xi attempted to deflate by forcing developers to deleverage their balance sheets and limiting any government bailout of private real-estate firms. The crisis has devastated the government’s balance sheet and contributed to the economy’s slowing. Unemployment crept up to 6.7 per cent in the 31 largest cities in November and is in the high teens for the young.
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US Speaker shambles bodes ill
Editorial
12:00AM January 6, 2023
Not since 1923 has there been a shambles over the election of a new Speaker of the US House of Representatives such as the embarrassing spectacle being witnessed in Washington this week. Even Donald Trump, no shrinking violet when it comes to creating chaos, appears appalled by the antics of the so-called Taliban 20 and Never Kevin hard-right Republican congressmen and women blocking the path to the speakership (and to become second in line to the presidency) of Republican majority leader Kevin McCarthy. “DO NOT TURN A GREAT TRIUMPH INTO A GIANT & EMBARRASSING DEFEAT,” Mr Trump, writing in capital letters, warned fellow Republicans as they failed after a sixth vote to use their small majority – won in last November’s midterm election – to take over the Speaker’s chair vacated by the Democrats’ Nancy Pelosi.
The irony of Mr Trump’s intervention, which was aimed at backing Mr McCarthy, could not have been more remarkable. Virtually all the Taliban 20 congressmen and women owe their political lives to Mr Trump. They are ardent supporters of his false claims that the 2020 election was rigged. Eighteen are returning members who, as election deniers, voted against certification of the electoral college count on January 6, 2021, that confirmed Joe Biden as President.
Following the Republicans’ 222-212 victory in the November midterms, the rump of hard-right congressmen and women appears hellbent on keeping Mr McCarthy out of the Speaker’s chair, even though he is supported by Mr Trump. They despise Mr McCarthy for no discernible reason beyond that, in their eyes, he is not conservative enough. They accuse him of not doing enough to fight “radical leftists” and see him as being too willing to work cooperatively with the Biden administration and Democrat-controlled Senate. Mr McCarthy may oppose abortion rights, back gun rights and be committed to cutting government spending, but that has done nothing to assuage the views of those determined to scupper his candidacy even if, in doing so, they harm the Republican Party and the country. Six successive votes on Wednesday and Thursday AEDT left no doubt about just what a dog’s breakfast the election had become. The final vote before the house adjourned showed the limits of Mr Trump’s influence amid his faltering campaign to return to the White House.
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‘Electing the Speaker is the easy part’: US lawmakers prepare for trouble ahead
Kevin McCarthy’s tortuous quest to take the gavel foreshadows years of legislative disarray.
Lauren Fedor
Jan 8, 2023 – 7.41am
Washington | For a man who knows his political history, Kevin McCarthy will be all too aware that he has earned his place in the annals for all the wrong reasons.
Last week the Republican House majority leader became the first party leader in a century to fail to be elected Speaker in the initial round of voting. He solidified his place in the record books by coming up short in 13 subsequent votes spread across three days — a tally that was last surpassed in the run-up to the American Civil War.
The opening day of Congress on Tuesday was supposed to be one of celebration as lawmakers, many of them flanked by their families, were sworn is as members. By the end of the week, they were still there after successive rounds of voting failed to deliver McCarthy the Speaker’s gavel he has coveted for much of his political career, owing to a group of far-right rebels who had appeared determined to deny him a position that puts him next in line to the presidency after the vice-president.
Even though McCarthy eked out a victory in the early hours of Saturday morning, the days-long gridlock set the stage for an escalation of chaos in a Washington that has become well accustomed to dysfunction and discord in recent years.
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Turkish President Recep Tayyip Erdogan on the brink of triggering war
He’s trashed his country’s economy. Locked up all opposition. Now this President is on the brink of triggering a war.
January 8, 2023 - 8:30AM
He’s trashed Turkey’s economy. He’s locked up all opposition. He’s playing a deadly game standing between East and West. Now President Recep Tayyip Erdogan is on the brink of triggering a war to boost his re-election chances.
It’s the centenary of Turkish democracy. On June 23, the nation that sits at the crossroads of Europe, Asia and the Middle East will go to the polls to choose a new president. It may be the last time its 85 million citizens get a chance to have a say in what path it chooses.
President Erdogan is in serious trouble. That’s despite rewriting the constitution, stacking the courts, jailing political opponents, guaranteeing the military’s loyalty and whipping up nationalistic fervour.
After two decades of uninterrupted political success, his Islamist Justice and Development Party (AKP) is polling just 30 per cent support.
It’s little wonder why.
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Republicans count cost of McCarthy’s Speaker election
The price of Kevin McCarthy’s victory has been high – both in lost authority for the new Speaker and perhaps in the ability of the new Republican majority to get anything done.
By Wall Street Journal Editorial Board
January 7, 2023
Kevin McCarthy finally won enough votes to become Speaker of the US House early Saturday (US time), on the 15th roll call. His latest concessions turned 15 votes, and then enough of the last holdouts voted “present” to give him a majority. But the price of victory has been high – both in lost authority for the new Speaker and perhaps in the ability of the new Republican majority to get anything done.
Don’t believe the happy talk that this was a healthy display of deliberative democracy. This was a power play. A group of backbenchers saw an opportunity to exploit the narrow GOP margin of five seats to put themselves in positions of power that they hadn’t earned through seniority or influence with colleagues.
They couched their demands in claims of high principle and fixing a “broken” House by returning to “regular order.” Some of what they sought could do some good, such as holding votes on all 12 spending bills for a change. Democrats and some Republicans prefer trillion-dollar omnibus bills that hide a thousand special-interest favours and earmarks. Holding votes on a constitutional amendment for term limits and a balanced-budget resolution are symbolic but have no chance of becoming law.
But note that the rebel demands included gaining seats of power for themselves. They won two seats on the Rules Committee that sets the terms for floor debate and amendments. This could narrow Mr. McCarthy’s manoeuvring room as he tries to put together majorities for legislation.
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The roots of American governance by chaos started 20 years ago
The zero-sum politics of the Tea Party, M.A.G.A. Republicans and this week’s speaker debacle began with Newt Gingrich.
Robert Draper
Jan 8, 2023 – 9.36am
Washington | Newt Gingrich was disdainful.
After watching days of House Republicans failing to elect a speaker, Gingrich, the most famous of all recent GOP House speakers, vented about the hard-right holdouts, among them Matt Gaetz of Florida.
“There’s no deal you can make with Gaetz,” Gingrich said in an interview last week. “He’s essentially bringing ‘Lord of the Flies’ to the House of Representatives.”
In contrast, Gingrich said of his own speakership, which sought a revolt in the Republican Party and the way Washington does business, “We weren’t just grandstanders. We were purposeful.” He would be glad to show the current rebels how to do it, he said. “But anything that takes longer than waiting for their cappuccino, I doubt they’re interested in.”
Even though Kevin McCarthy eked out a victory in the early hours of Saturday, the days-long gridlock set the stage for an escalation of chaos in a Washington that has become well accustomed to dysfunction and discord in recent years.
History does not precisely remember it that way. It is true that Gingrich’s tenure from 1995 through 1998 produced several legislative accomplishments, including two balanced budgets signed into law by a Democratic president, Bill Clinton. But to both Democrats and Republicans, the jut-jawed intransigence of House Republicans opposing Kevin McCarthy’s ultimately successful bid to be speaker did not materialise out of nowhere.
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David.
