Here's our summary of key economic events overnight with news that with market price volatility in just about everything, we have seen some unprecedented leaps before market forces steadied.
First up, the United States has banned imports of oil, natural gas, and coal from Russia. This has shifted the international market price signals dramatically in the past few hours. At the same time, they are releasing significant flows from their own strategic oil reserves, ramping up domestic production, and using this shift to encourage a transition away from fossil fuels. It is a brave move because there is probably no domestic political upsides from this in terms of short-term inflation.
And the EU is ending its reliance on Russian gas as more countries in the region rally to harden their response to the invasion of Ukraine, even at severe costs to themselves.
But China is objecting politically to bans on Russian trade. The Europeans are ignoring their advice. The Russian are warning of US$300/bbl oil but that is just being seen as propaganda. Even the Venezuelans are turning away from Russia.
In Ukraine, Russia is targeting civilians, especially those fleeing the fighting - even those fleeing east. Now more than 2 mln have fled the fighting for safer havens outside the country. That's a doubling in less than a week. Ukraine has a population of 43 mln.
Meanwhile, off a lowish base a year ago, US retail sales held their big gains last week on a year-on-year basis according to the Johnson Redbook survey.
However, American consumer debt rose at a much slower rate in January than was expected, up at an annualised rate of just +1.9% to US$4.4 tln, November rose 10.8% and December by +6.1%, so the January miss involved almost -US$15 bln. Primarily the low levels was caused by American shrinking their credit card debt.
The full US trade deficit widened to a record high of US$90 in January from an upwardly revised $82 bln in the previous month and above market forecasts. Soaring energy costs pushed imports to a record high while the services surplus retained its level. Trade deficits of this size are only a minor issue for the US given they have a US$24 tln economy, and their currency is what the world's reserves are held in.
Today's tender of US Treasury 3 year bonds was well supported but sought much less than the prior equivalent event as the US deficits start to shrink away. But the yield rose to 1.71%, up from 1.54% a month ago. Given the background economic environment, they will be happy with that.
Canada shifted back into a trade surplus in January, after their unusual December deficit. Their surplus was larger than expected, but falling imports drove this result
Japan's current account slipped further into a larger deficit as the cost of imports far exceeded its exports in Q4-2021. It was their largest deficit since 2014 and their second largest deficit ever. They normally post surpluses.
China is making a show of supporting Russia in diplomatic circles. That mirrors similar popular support on Chinese social media. But deep within the Beijing bureaucracy, level heads are still in charge keeping their options open. China is no longer recognising Russian letters of credit drawn up for commodities trades. (H/T DM.) That is not an insignificant action. Chinese banks are trying to avoid secondary sanctions.
Taiwan exports rose sharply again for a February, powering their trade surplus higher again. Their CPI inflation rate actually fell to 2.4% in February. Like many Asian economic powerhouses, they seem to be avoiding the global inflationary surge - so far at least.
Appreciate this coverage? Support us and go ad-free. Find out how.
(We are not supported by the Public Interest Journalism Fund, nor Google, nor Facebook's similar programs.)
You might think that the sharp rise in commodity prices isn't news anymore. "We all know that". But the action has been spectacular. The LME cancelled trading in nickel after the price soared over US$100,000/tonne, the most extraordinary surge in the 145-year history of the exchange.
In Australia, the NAB business confidence index jumped in February and January was revised up. This February result is the highest reading in four months, which was way above the long run average. During the month the Omicron virus wave eased and the late 2021 momentum was regained. Confidence rose in every sector. But neither the Ukraine conflict or the east coast flooding will have been fully reflected in the February data and both could have more of an effect over coming months.
Last week a major rainstorm hit NSW, but missed Sydney. This week it has hit the city full force. Major flooding is extensive and will have wide economic repercussions.
The UST 10yr yield opens today at 1.87% and up +14 bps from this time yesterday. The oil price rise will be sharply inflationary; higher inflation is then expected to bring sharp Fed rate hikes to try and limit it. The UST 2-10 rate curve starts today a little steeper at +25 bps. Their 1-5 curve is much steeper at +71 bps and their 30 day-10yr curve is also much steeper at +168 bps. The Australian ten year bond is up a very sharp +16 bps at 2.32%. The China Govt ten year bond is +1 bps firmer at 2.86%. And the New Zealand Govt ten year is up +8 bps at 2.82%.
In New York, the S&P500 was down only very marginally in Tuesday afternoon trade on Wall Street which seems a tame reaction. But subsequently it has taken off very much higher, up +1.8% so far. Overnight European markets were down about -0.2% but that was before the indications on oil from Washington. Yesterday, Tokyo ended -1.7% lower. Hon Kong was -1.4% lower. Shanghai was -2.4% lower as consequences keep biting them all hard. It is likely the strong downward trend will continue today. The ASX200 ended its Tuesday session down -0.8%. The NZX50 ended down another -1.4%.
The price of gold started today at US$2044/oz and up a spectacular +US$65/oz from this time yesterday. Much of that has come in the past two hours in New York. London missed the jump. Silver is up proportionately more. Subsequently gold has fallen back a but to US$2021/oz for a net +US$42/oz rise.
And oil prices are very sharply higher today and up by +US$7/bbl. In the US they are now just under US$120.50/bbl. The international price is just on US$126/bbl. Of course, all this is due to the US about to push ahead with the ban on importing Russian oil. Just after the announcements it spiked much higher but is settling back now.
The Kiwi dollar will open today little changed at just over 68.3 USc. Against the Australian dollar we are at 93.7 AUc which is up more than +½c. Against the euro we at 62.3 euro cents and a little lower. That all means our TWI-5 starts today at just on 73.4 and little net change from this time yesterday.
The bitcoin price is up a bit today, up +1.1% from this time yesterday to US$38,395. Volatility over the past 24 hours has been moderate at +/- 2.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
121 Comments
Commodities up, NZD flat. And, I fear, the global market possibly already pricing in future significant rate hikes which I'm not sure we have the fortitude to serve up - which means anything less will see NZD walking back even further.
That $200 to fill the tank for my Mini could be a lot closer than I thought...
At least the criminally high grocery prices let me earn more fuel discounts.
Laughing all the way to the foodbank.
We have started shopping at Reduced to Clear. This is not an ad for them as I have no link to the business. It is really good for staples like Pasta and Cheese. They also get random stock items which makes each trip quite fun. We get veggies from a local green grocer. People don't have to use the Supermarkets.
I'm stocking up on a few supplies on the off chance that Polish jets flying over Ukraine are seen as an excuse to start WWIII. I can't see prices coming down until after a recession.
Time to get an EV or scooter/small motorcycle. As for inflation...just make sure your wages keep up with inflation because the Reserve Bank won't save the economy now.
"Make sure" as in pay off a mate in the payroll department to make a few errors in your favour each fortnight, or try and get Kiwi employers who have an aversion to meeting market rates to retain staff to offer something extra that's approaching the rate of inflation without invoking the "but our costs are up too!" argument?
Frankly I don't rate many people's chances at either.
Be more of a push for working from home now, and instant $140 payrise not driving to work and back. (Plus parking for some)
Lots of people, myself included, working entirely from home these days. Bit of a blessing given fuel costs. Although I still have a lot of run arounds for my daughter.
By the same token, many still working in person, shops, hospo etc. Hard for them, if they drive.
Good one Joe. Court Iran when you could just restart Keystone XL.
"If the United States is serious about this, they could come back and help us build Keystone XL," Premier Jason Kenney said at a press conference on Monday. "If President Biden had not vetoed that project, it would be done later this year – 840,000 barrels of democratic energy that could have displaced the 600,000 plus barrels of Russian conflict oil"
Democratic energy: brought to you by bald eagles, baseball, apple pie, and freedom.
'Murica.
*wailing rock version of US national anthem*
*fireworks*
*USAF flyover*
I despair.
Fact: US and Russia are the only 2 big countries that can be self-sufficient on Energy and Food
Canada, Australia, Argentina, Brazil or do you mean large population?
InterestedIn.
Yes but this is in large part because we had a highly specialised global supply chain that perpetually sought the cheapest supply for each commodity. So as each country itself became wealthier, the global supply chain sought to use the cheaper labour in the poorer country to keep costs down.
Many countries could be considerably more self sufficient if they paid the real price of the production rather than keeping costs artificially low by outsourcing poorer countries. Russia is not the only country that has fertiliser, they are just the country that made is more cheaply so they dominated the supply chain. And now we need to invest in other sources and encourage production from other countries in a mad rush.
This was inevitable at some point IMO. The race to find poor countries for commodities and manufacturing was always going to meet sustainability limits at some point this century. I mean, building sand was going to run out in a few decades…. So we’d have no cement or glass. That was never not going to be a problem. The issue was always going to be, what triggered the world to realise how unsustainable and fragile the global supply chain really was.
In real terms, richer Western countries can be much more sustainable, but it will be more costly for them and they will have to get used to paying a realistic price. Localisation is not as profitable to the global mega corporations but if there is going to be a pull back from globalisation (which appears to already be underway) then new supply chains (more expensive) will need to be invested in. Including, more sustainable production and energy tech.
If we are headed into a major global upheaval, even if it is not as dramatic as WW3, we must remember that necessity is the mother of invention. WW1 And WW2 saw a huge and rapid advancement in technology and resourcefulness. We have dillydallied with weaning ourselves off fossil fuels, but WW3 would definitely necessitate huge cultural changes and a scientific race to new energy tech.
It won’t be pleasant of course. I’m not suggesting that Western science is going to solve the problems, things will get ugly (as PDK often reminds us) but we were already past the point of being able to avoid this ugliness. The unravelling and upheaval is baked in at this point. So whether now, or at some point this century, this scrabble for resources and withdrawal from globalisation was going to happen because the resources the global supply chain are currently dependent on, are finite.
GN - comment of the day
Agree. We need a Comments of the Day widget sidebar like there used to be.
I had to google that. After I read approved by Trump and then worlds dirtiest fossil fuel I realized you were joking. Ta
We had Australian relatives here for dinner last night. Has been a long time between drinks, they live not that far from Lismore, but if you excuse the pun, they are buoyant and so too is their community. Ordinary folk like us, a bit younger. Just running through normal day to day stuff costs, rates, insurance, whiteware, housing,petrol, basic food, their particular household budget is a whole lot lighter than ours. Everyone is over covid, life is forging ahead. QED.
The latest polls show why Labour doesn't want COVID to be over; it's too important for them. They wouldn't have had a snowball's chance in hell of winning in 2020 if they had to rely on actual policy. I don't think they're going to be able to keep the fearmongering up much longer though, and that's being reflected in the polls.
Have listened to two Luxon interviews this week - the honeymoon is over, he's sounding uninspiring and unimpressive.
Oh, but he talks fast. = competence.
It's a long time to maintain the pretence of competence
Somebody should coach him to drop the “you knows.” Firstly if of said high executive calibre, it shouldn’t be needed in any speech delivery, and secondly, we don’t know, that’s why we are bothering to listen to him. And thirdly it’s irritating.
Oh absolutely. Luxon is an empty suit. The only thing National have going for them at present is that they're not Labour, and even then only in name.
As long as the Nats don't promise to build 100k homes they should increase their vote but it won't be enough imo to gain power.
A lot of people lost interest in covid once the Ukraine stuff happened. I just checked 200k active cases, 750 in hospital but not much action in ICU. The difference between vaxed and unvaxed has dropped significantly, almost to the point where there is barely a difference. People who are going to work regardless aren't getting tested, people who are getting a forced staycation are getting tested all the time. I spent 2h in a tractor cab with a guy who got a positive later that day, but apparently I don't need to self isolate because that is no longer a close contact.
Hey Jack,how are things in your area-here in Southland we could be facing a perfect storm ,lack of rainfall & Covid affected freezing works down days due to illness.Alot of stock need to be processed before winter & feed & supplement are being used up very quickly.Regards
It's getting a bit dry here, which is a bit surprising, according to fonterra average farms down 15% and top 10% are down 12%. I booked my May culls last November so hopefully I don't still have them in June which is what happened last winter. I've used more supplement than ever before, it's been an expensive season but it's starting to look like we'll be better off than last season - at least financially.
Where are you seeing the Omicron-only hospitalisation by vaccination status? The cumulative hospitalisation data is strongly supporting of vaccination, but this includes all the previous outbreaks too. By that measure, about an 8x reduction in hospitalisation risk if double vaccinated and more if boosted (but the boosted in particular will look better in this data as the population barely existed in previous outbreaks with more dangerous strains)
https://www.health.govt.nz/covid-19-novel-coronavirus/covid-19-data-and…
If you record the numbers each day you can calculate the difference which is effectively the case numbers.
RNZ is one site that does this for you. There's a who's catching section.
Thanks for that - interesting.
Looks like the 8x reduction in hospitalisation overall has reduced to ~2x for double vaccinated and ~4x for boosted. Definitely less effective, but still looks worth having to me.
Likely to be a little more effective than the numbers suggest if the average unvaccinated person is younger and healthier than the average vaccinated person.
Careful about assuming cases and vaccinations are (independently) randomly distributed amongst the population. I don't think we have the numbers to calculate vax effectiveness at an individual level, there will be an extensive list of potential confounds.
We have very few cases amongst the older age groups (very highly boosted) that are still used in denominator of the vaxed and booster groups.
If we look at the cases, vax may have a very negative effectiveness against transmission so its unlikely that the vax is stopping transmission amongst retirees. It also raises questions about vax passports and what the R number would be without anyone being vaxed.
Havent done the full analysis like last time but does this take into account the unvaccinated before vaccinations were available. Lasttime I had a deeper dig, when I had the time. A comparison was made using todays vaccinated figures ie all vac v unvac even when vaccinations were not available. Something smells bad, I do not know what, I am by professional titles as a Forensic Accountant
https://interactives.stuff.co.nz/2020/05/coronavirus-covid-19-new-zeala…
I just look here, shows hospitalisation for vaxed and unvaxed, scroll down further shows active cases.
Perhaps a double or triple shot of a favored single malt will ward off the Lurgi. With hot milk if that doesn't spoil things.
Yes and absolutely zero coverage or discussion on the Pfizer Covid Vax papers released 75 years early, perfect timing for them its totally flown under the radar, zero coverage even on Aljazeera. Unbelievable.
A lot of irony at play currently. Looking back at discussions of recent times and in particular the housing scam, a lot of people were so supremely confident (and some still are) that the NZ housing market was absolutely bulletproof. People would often comment that it would take a war, or a major global event or downturn for things to change, which when the major economies around the world were printing money like there is no tomorrow seemed highly unlikely. Roll on 2022!!!
NZ is so under prepared for what is heading our way. A 30% drop in your house value may well be the least of peoples concerns. Wether it is individuals or govt, blindly going down a path of maximum benefit with short term views and assuming the party will continue indefinitely is insane as we are about to find out.
Well Smudge I suggest COVID - Omicron counts as a major global event, and now we have a war too, that has all the potential to spill over and spread!
Guess those house prices just gotta fall!
I own 3 properties with two occupied by family and the other a tenanted CBD apartment. No plan to sell. A 30% drop or even a 50% drop (quite possible if prices were rational) would not affect me. The probable interest rate increases are making me think but will not cripple me. A serious drop in property prices will have an effect on the six children anticipating an inheritance.
A 30% drop or even a 50% drop (quite possible if prices were rational) would not affect me.
Yes of course, it won't affect me either but it will affect a lot of people. Also my point is, house prices will not be our main concern.
A serious drop in property prices will have an effect on the six children anticipating an inheritance.
This is true. It would make them less dependent on inherited wealth and more capable of depending on their own merits and hard work.
Fuel prices are now high enough that it's got to the point where I can tick up a cheap Nissan Leaf (and charge it) for less than it would cost me and my wife in petrol each week in our existing car.
Actually very tempted ... has anyone else here got on okay with a cheap Leaf just for urban commuting, occasional short trips out of town etc?
Yeah maybe. I'd be very cautious though about the remaining battery life in second hand electric cars, they wouldn't get as much range as if they were new, and if it needs a new battery, well its probably the most expensive part of the car. Its also a difficult thing to examine when buying a car. You'd just have to rely on the sellers honesty.
crikey! what are you driving?! and how far?!
Just don't drive to Germany. “At the AC charging stations, the price of electricity will rise from 38 cents per kilowatt hour (kWh) to 49 cents/kWh, at DC fast charging stations, the amount jumps from the current 38 cents/kWh to a 69 cents per kWh.”
https://www.merkur.de/wirtschaft/e-auto-elektroauto-laden-muenchen-prei…
That's about the same as some charge here.
So from one tenth the price of petrol to one ninth. How do EV drivers sleep at night with that kind of financial pain?
Yeah , its still alot cheaper. And if you charge at home , or off solar , its very cheap . Or from a free site , but I think they are mainly restricted to Teslas.
So at 50 euro cents per kWh, and an average consumption of 15 kWh / 100 km, you get 7.5 euros per 100km.
A modern petrol engine can do 6 l /100 km on average, petrol being 1.88 euros / l there means 11.28 euros per 100 km.
I have no idea how you got the 1/10 and 1/9 figures.
There was actually a really good article on stuff covering this a while back. https://www.stuff.co.nz/travel/green-travel/122548778/teething-problems…
The EV while cheaper, was not as much of a bargain as expected. I also can't help but think that once the EV fleet reaches critical mass, the prices will actually increase faster and higher than petrol.
- RUC, Roading Levies, ACC Levies will be applied.
- The charging network will need to be massively expanded.
- Electricity prices are and will continue to increase significantly.
- REE materials for batteries will increase markedly.
The reality is it doesn't matter how you travel. It is the fact that you are travelling that is the problem.
Agreed. The lack of road user charges for EVs is a big distorting factor. But as EVs increase as a proportion of the fleet then this distortion will have to be removed.
KeithW
I will be interested to see how they will be applied.
Diesel vehicle incur by KM driven. Where as petrol (i.e. the bulk of the current fleet) are by Litre.
Swapping a Litre tax to a kWh tax will be almost impossible without definitively knowing what electricity is going to vehicle (Think charging at home to avoid it), and would need to be significantly higher in terms of the percentage applied.
RCU via km travel means the whole entire fleet incurs the onerous admin and required oversight of Diesel spread across the entire fleet. a) who can be bothered and b) Could we even enforce it.
Neither seems viable, so I anticipate some real issues.
I can see a kWh tax isn't practical, but what's the issue with electric vehicles being be treated the same way as diesel ones with RUC charges per km?
"Neither seems viable"
They don't need to do anything new, it will be RUC once the exemption expires.
How are RUCs not be viable? It's the system we use today for diesels which are about 17% of the light vehicle fleet. The only issue i anticipate is the usual odometer fiddling.
RUCs are already avoided by the simple action of not paying them. You drive and hope you aren't checked.
Now apply to this to the entire fleet. Something like 30% of Kiwis drive without a warrant, license, or rego. But all of them still at least pay the RUC via fuel.
Do you think those same people can be trusted paying the RUC themselves?
Will average Joe or Jane pay it once they realise it requires more admin on their part? and may well mean the EV cost more to run than their ICE?
I'd want to see a source for your 30% figure. Sounds like pure BS to me. If you said 30% in some small low socioeconomic decile east coast/northland town I might believe it, but 30% of NZers driving without a WOF or Rego? I'm going to have to see evidence.
Not paying RUCs will be picked up when you get a WOF, the mileage is entered as part of the WOF process, and the RUCs can be automatically checked. And when found short on RUCs I believe you get charged triple.
WOF, Rego, or License. It is likely the figures overlap substantially, but I don't have the base data to do that sort of check. Just a combination of articles and web searches.
There are a myriad of way to catch them, but my point is that it is an added step that people can and will avoid, and that then requires a whole additional layer of beauracracy to manage.
If you want compliance it has to be simple.
unless the exemption is extended again, RUCs are due to be charged on EVs from 31 March 2024.
https://www.transport.govt.nz/assets/Uploads/2021-07-05-EV-RUC-Exemptio…
Is our electricity infrastructure, generation and supply up to the task when we plug these data centres into the network as well?
https://www.nzherald.co.nz/sponsored-stories/why-hyperscale-data-centre…
I agree. EV is largely a con. The con being we will swap out ice and carry on as normal in the ev. That is just not going to happen as per the points you list above.
Of some merit for reducing city smog, but the pollution exists - just elsewhere.
Far less pollution, but yes, there is still some.
Why are EV's not being charged RUCs ? They should be, or am I missing something.
There's currently an exemption, which keeps getting extended (see https://www.transport.govt.nz//assets/Uploads/OC210437-Extension-of-lig… ). It's likely they'll keep extending until they make up a certain percentage.
You do realize that EV drivers will have to start paying the $ equivalent of fuel tax any day soon, which will probably come in the form of a RUC?
Yes , it seems some posters think the RUC is some kind of energy tax . Its , not , its a contribution to the maintenance and renewal of the road network , plus ACC etc . It just happens to be calculated per litre for petrol cars , for that is the easiest way for the majority of non business users .
A per k.m RUc , the same as diesel is the best fit. Wether the govt chooses to reduce it to encourage EV use , is another matter. .
RUC's should be replaced with widespread congestion charging. Means those who are using the peak roading capacity are paying for it.
I agree conjestion charging would be a good thing , we still need to maintain rural highways etc too.
Why the same as diesel RUC? That would be subsidising road damage.
what? how is it being subsidised?
It's been long acknowledged that the cost of the damage to roads caused by heavy trucks is spread across all road users. During Helen Clark's Labour Government an information release identified that heavy trucks caused about 98% of all road wear/damage, but they paid less than 10% cost. (Don't hold me to the figures). So the trucking industry is quite heavily subsidised from then, and then under JK they allowed to total weights of the trucks to increase!
What has that got to do with the RUCs charged to light passenger vehicles?
Exactly, the idea that EVs would damage the road more than other ICE cars if they pay RUC but they don't when they are exempt?
RUC rates are by weight by axle
https://www.nzta.govt.nz/vehicles/licensing-rego/road-user-charges/ruc-…
We had one for 2.5 years and covered 30,000km in it. That was a 2012 model, was mainly used for school and shopping runs, and was fine for Hastings-Napier return trips and so on. Surprisingly peppy off the line but tails off higher up. The faster you go the more "optimistic" the range is.
Perfectly adequate for commuting, rear leg room is a little underwhelming. If you're stuck in a traffic jam you're barely using any power so that's not an issue. Plug in at night, refueled in the morning.
We'd still have it if we hadn't moved rural and needed a heavy tow vehicle, but we're actually considering getting another for a farm hack.
Hi GC - were you running backwards facing child seats at any point?
No, but pretty sure there'll be provision for them. From memory there's ISOFIX anchors in the back.
Our expenses, other than power, WOF and insurance, ran to a set of wipers, and a set of tyres, which we only changed because the tyres it arrived on were pathetic and I could get wheelspin at 40km/h with the traction control off.
provision for them is one thing. ISOFIX has been mandatory in Japan since 2007 i think. The real question is if you can still fit a person in the front seat once it's moved forward enough to fit a rear facing seat in.
me old Prius was great on the farm . Mainly because of the traction control , you could leave it idling in drive , and get out and push !.
Everyone should get a cheap Leaf as a second car - by far the cheapest way to get around by car.
Rule of thumb: buy a car with 1.5 times your needed range (as shown fully charged) so that battery degradation won't be an issue. If you are doing 100km/h on your commute then buy 2x the displayed range.
Any dealers should be able to provide you a battery state of health report or you can buy a $30 dongle and download the LeafSpy app and do it yourself.
Battery replacements are not too bad either - to go from 55% to 75% (which will add 5 years more life) is $5,200 (cheaper than the petrol over that time) - see calculator at the bottom of the page here for pricing: HV Battery Swaps and Upgrades - EVs Enhanced
Toying with the idea of importing one myself. Unfortunately the 'cheap Leafs' increased in value by the price of the rebate and the 40kwh ones command a premium at the moment due to high oil prices. So I'm stuck spending money I could be saving on a new car on an ICE which ironically is getting more expensive with each passing day.
The easiest way to get rich in this country is to already have money to spend so you can spend less money. It doesn't really work any other way.
PRICING101: add the quantum of any rebate to the asking price. Houses, cars, fuel.....
Why would I buy a second car? Way more expensive to run than my e-bike.
E bikes are by far the most energy efficient form of transport .
Only problem is that cycleways / bridges get pounded by those sitting in their cars at traffic jams , so we haven't got as many as we should have.
I would argue walking, running, skateboarding, and cycling are all more energy efficient that an E-Bike.
yup , happy for you to do all 3 . maybe not at once.
The thing with Ebikes is it allows you to do a longer distance , without been buggered or arrivng in a sweat . Great or the oldies too , who zoom along the rail trail like theyre 20 again.
people with families often need two cars and cannot do alternative transport? ev for your daily grind in traffic, and hybrid/ice for your longer commutes/bigger payloads
daily grind is on a bike, daycare->school->office. 1 ICE car for weekends / holidays / big box shopping
My family of 4 only have 1 car (an EV) and an e-bike. But if you must have 2 cars then a cheap Leaf is the best second car. Most who go down this route end up with the Leaf being the main car which does most of the annual kms with an ICE sitting around just for longer trips and when 2 cars are needed at once.
Lowest buy now on trademe is 10999. You spend 11K on petrol every week? half a million on petrol every year?
Cheapest is $6,900 2011 Nissan Leaf G 24KWh | Trade Me Motors
Still, $7000/week on petrol is allot
I’m not really sure how Russia/China can sustain each other’s economies long term even if they agree to buy each other’s commodities. What will China need all the coal and oil for if they are not running factories to mass produce and sell to the West?
The West will now fast track decoupling from China.
Is trade with Russia going to replace the hole that trade with the West leaves as that recedes?
China still hasn’t fulfilled its social contract of lifting all their people out of poverty. And whilst they might be about to unleash another round of stimulus, how many more empty tower blocks are they going to build before that strategy fails? Surely debt fueled infrastructure spending only leads to productivity long term where the infrastructure is actually needed and encourages competition and innovation?
Not to suggest that the West has that perfected either, NZ certainly doesn’t but NZ can at least pivot to other wealthy markets. If the UN sanction votes show where the fracture lines are being drawn, then China is choosing to join a side that has very very low wealth. So sure, they can buy cheaply from Russia or Eritrea but who exactly to they then sell to? They haven’t yet reached the level of transitioning to a service based economy and their FIRE economy is in trouble.
Russia doesn’t work as a productive, innovative economy. They are a country of oligarchs and corruption. Innovation and intellectualism is discouraged. Last time they went down the rabbit hole of extreme patriotism, propoganda and believing their scientists were superior to everyone elses (when they were not) led to Lysenkoism. Which led to famine.
They already appear to be headed down that rabbit hole, by claiming to have the world’s second best military and then failing to demonstrate competent military (let alone 2nd best).
What Happened To The ‘Growth Scare?’ China Found It
In managed decline, the direction as the destination is all but guaranteed here. The true central planning emphasis insofar as China’s authorities are concerned is only how China might be able to get there.
Geopolitical drama will eclipse the issues that this article refers to surely? The decisions being made seem to be ideological.
I am not sure what drama you expect to unfold other than the continuing failure to get global economic growth on a trajectory to that prevailing prior to 2008.
Great post.
I have long been a China skeptic. Basically, they are pretenders.
First up, the United States has banned imports of oil, natural gas, and coal from Russia.
UK as well, EU to reduce. Looks like they're going to really put their foot on Russias throat to expedite a military or economic collapse (default.)
The best thing for Russia is for the Russian leadership to remove Putin, and unilaterally withdraw with a huge mea culpa.
The worst is to try to ramp the war up.
Somewhere in between, closer to the worst thing, is to maintain the current offensive with on going low pressure. Just shows their weakness's and will embroil them in an unwinnable guerrilla war of attrition which will bleed them of resources and bodies creating political mayhem at home.
I do wonder what hold Putin has over those around him? Does he have some sort of personal guard known for brutality?
Don't forget the reparations. Russia will need to be able to trade to make reparations. As Churchill pointed out many times, one of the causes of WWII was the unfairness of the reparations for WWI that France insisted on, and there were trade sanctions that didn't allow for Germany to trade its way back into the good books. Without these, Hitler wouldn't have been able to get a foothold on the grievance. So reparations would need to be sensible.
Totally agree. Interesting though as I hadn't heard that Churchill identified it. I came to the conclusion just through studying the economic effects of the Treaty of Versailles on Germany while trying to understand how the Nazi's came to power.
Reparations should be required but the removal of Putin and re-establishment of verifiable democratic elections should be a requirement first, and would see trade open up pretty quickly. Russia has huge reserves of natural resources so economic recovery should happen quickly.
I have the 6 volume World War II by WSC. Volume I I believe is where he re-made his claim.
Me too. But another good read is Insanity Fair (Douglas Reed, 1938, Jonathan Cape). It's a stunner, well worth owning. Very prescient, given the current shenanigans.
Interestingly enough, Gary Kasparov called out the Putin danger and shortcomings in the West's initial engagement with a post-Perestroika Russia (lack of support) as big problems early on. Pointed out that Russia could have been another burgeoning Eastern-European democratic economy, with the right support and with earlier action on Putin and the gangster oligarchs raiding Russia's resources.
Reparations might have a part but it seems there will also be a lot of support needed to enable Russians to have a better future without the likes of Putin and the Oligarchs, who should not be anything other than a small indie rock band name in the future.
In many respects, Putin is incompetent.
Where I don't doubt his competence is the lengths he would have gone to to ensure his inner circle are his clones. I bet he monitors the living daylights out of them, too. No room to move, no room to concoct a rebellion. They would be executed at any hint of it.
I just don't foresee any of his inner circle taking him out. I really wish they would, though...
And the whole chain of command will be living in fear.
My thoughts too.
This is like economic bombing
"He said executives and board members should get past the idea that "somehow there's a win-win solution" and recognise that forcing an economic collapse on the Russian people is part of preventing a harsher outcome for them."
So lets escalate in the hope of regime change ..yet limited nuclear has always been part of Russian military planning.. under pressure they will use it..be it to take out a Ukraine city or high altitude explosion will take out all power in a city below...is that priced into the markets?
A high altitude EMP burst would do damage to surrounding countries as well as their own military. Can't see them trying that one. A nuke in Ukraine would also go against them if they want to take over it, and prove that Putin is really unstable enough to use them. Strong likelihood of a nuke in a neighbouring country to stop military support of Ukraine. Again prove Putin is unstable, but would also bring in the EU and NATO.
Rationally there is so much against using nukes that it is hard to envisage, but then rationally an invasion of Ukraine makes no sense either....
Something to consider, these scenarios the US expects as possible, based on their own war game planning in this instance ...
Seeing as Russia is downwind of Ukrainian fallout I doubt it. Anyway what would the point be in "winning" some scorched earth that no one could grow crops on for a hundred years.
We're on the verge of the greatest humanitarian crisis in over 80 years, and not just in the Ukraine. It is only a matter of time before high prices for fuel, wheat and other commodities bring widespread famine, war and resultant death/destruction to the third world. The masters of war have really done a number on us this time. The lack of concerted international effort to de-escalate this thing is making me sick. Edit to add: suggestions that Putin is an irrational actor who can't be negotiated with, serve only one cause - War.
To your edit - it maybe that the shortest and cheapest way to the end is to go all out. Yes war. It's happening anyway - don't for a moment suggest that what is happening in Ukraine is anything other than a war regardless of what Putin or others might be calling it. To go softly softly will only increase the cost all over.
Here's a question - if Putin exploded a couple of nukes in Ukraine, how would the West react?
The West has said it won't directly confront Russia in a military sense, however the moral stakes are lifted far higher if he uses a nuke in Ukraine, even a small one in a low populated area.
I have no doubt the west would go in if he nuked a city.
Hard question. Putin would very much be a pariah if he did that. But more what would he gain? He'd likely get a bunch of his own military too which would really turn them against him, and possibly their leadership on the ground. It's be a serious shot in the foot!
Would the US/NATO react? I think they'd load their weapons if they are not already. Note that this morning I read a report that the US have identified that although Putin identified putting his nuclear forces on alert, they have not detected any change in posture on the ground of those forces. This would mean they have not seen any movement of weapons or support equipment as preparation to deployment. But in that scenario I think they would hold back, to see if he would use them else where, and then all gloves would be off. I think at this stage US and NATO have inventoried their weapons, confirmed they are ready to go and done all they need to do short of loading them. If you like they've loaded the magazine, but as yet the magazine is not yet inserted in the gun.
I read an article where it had been war gamed (https://carnegieendowment.org/2022/03/03/how-does-this-end-pub-86570), and the most likely best outcome for the west was a proportionate retaliatory strike to show they mean business.
Trade deficits of this size are only a minor issue for the US given they have a US$24 tln economy,"
When was the last time the US turned in a year in the black?
1975
Living beyond their means, is what they're doing. Tell it like it is.
Works well while you are the reserve currency - can act like an economic bully.
You can imagine the case now for the likes of India, Russia and China to come up with a deal to move away from the USD.
Add Iran to that mix and recall that Russia, Armenia, Kazakhstan and others are in a customs union which makes a nonsense of export sanctions. We are looking at a Pacific to East Europe single trading bloc, with its own reserve currency, transport links, ports, rules. It's autarky on a grand scale. March 11, Russia turns on its own Great Interweb Wall.
Final point, li'l old NZ is on Russia's Unfriendly Nation list...so exporters, company by company, need approvals from apparatchiks to do business.
Edit: that trading bloc stretches to Morocco, check map in AsiaTimes article.
Wow, they can trade with Iran, and Armenia. I guess they are a small enconomy so trading with a handful of small nations could keep them going.
If you add all those countries together, at a rough guess it would be about half the worlds population. So not an insignificant trading partnership.
India and China in the same block? Can't see that happening
Link to Ukraine news
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.