Here's our summary of key economic events overnight with news Russia's invasion of Ukraine deepens, as does the resistance. The IMF is bolstering Ukraine's finances. The US is proving substantial aide too. Talk is surfacing on how Russia will be expected to make reparations when the conflict is over. Damage tops US$100 bln so far. Peace talks are non-starters so far.
Elsewhere, US jobless claims rose last week to 218,000 claiming these benefits. That was marginally above what was expected even if these are back to pre-pandemic levels. There are now just over 1.9 mln people on jobless benefits and still close to 40 year lows.
Going the other way, American consumer inflation is at a 40 year high. In February, the headline rate rose to 7.9% which was what analysts were anticipating. Core inflation, without food or energy, was up to 6.4%, also as expected, but showing how embedded inflation has become in the US. Rents were up +4.7% in the February year, clothing up +6.6%. Food was up 7.9%. But of course the main driver is fuel costs. Again, it is medical costs that lag, up only 2.5%. Despite all this, the flow-though of the Ukraine war came after this data release. March data will be shocking, no doubt. Equity markets fell on this data, which is a bit surprising given it was what was expected. The ECB announcement (below) might have also contributed. But all this cements in a substantial Fed response next week, which markets assume they won't like.
Later this morning we will get the US Federal Government budget out-turn for February and a small -$50 bln deficit is expected and at that level one of the smallest post-pandemic results. And perhaps an all-time low deficit for a February. The very much better management of the US economy is also showing up in their household balance sheets. Household net worth rose to more than US$150 tln in Q4-2021 with one of their biggest quarterly rises ever outside the pandemic recovery.
Better, American home ownership rates are rising according to a new report, especially for middle-class families. Housing assets now exceeds US$50 tln , but it is American households exposure to the equity and bond markets that dominate, now at US$118 tln.
Meanwhile in Japan, producer prices rose +9.3% year-on-year through to February 2022, the highest rise there in nearly 40 years.
China's economy might be in the doldrums, but that is not because they aren't shoveling out more bank debt. In fact new yuan loans rose at an astonishing rate in January, almost ¥4 tln in January alone and well higher than what was expected. It was an all-time record and three times the December rise. It is a pity for them that it isn't having more of an effect on economic activity - or perhaps it is, helping them to just tread water. You wouldn't think that they could just keep doing this however, just to stop going backwards. Beijing is in meeting mode at present, so bravado is high. But they seem in some trouble economically.
Their central bank said it will transfer ¥1 tln to the Chinese Treasury department (about NZ$225 bln), using accumulated revenues from FX asset management in past years. It will probably allow Beijing to spend it supporting their slowing economy, and those funds will wash through the banking system now. And that probably also means there will not be any more reserve ratio cuts, for a while at least. It may also mean Chinese bond yields go into a bear steepening phase say some observers.
South Korea has a new president, a conservative who says he will be less conciliatory to China and North Korea (and presumably Japan with whom South Korea has many grievances).
At the overnight ECB policy review they surprisingly speed up their asset purchase reduction schedule for the coming months and signaling their APP could end in Q3-2022 if the medium-term inflation outlook doesn't weaken. Monthly net purchases will now scale back to €20 bln in June, a sharpish and unexpected pace. Equity markets dived on this news.
The Turkish currency is falling again, weakened not only by the Ukraine war but by no change in their dopey monetary policies. And there is no respite for the Russian ruble still worth less than 1 NZc.
Globally, there have been widespread moves to ease up on border controls, and that is expected to benefit passenger air travel. Prior to this trend, there were 'good' signs that this industry was moving out of its extreme hibernation with January passenger activity rising strongly on a year-on-year basis. Domestic markets in China and India are the only ones anywhere that now show no sharp recovery.
The Ukraine war is making shipping costs more expensive, especially for bulk cargoes. But although is remains unusually expensive, at least the wheat price is off its highs. A pullback from unusual highs for rice, soybean and corn is underway too, even if it is small at this stage. The implications of these high grain prices on animal feed costs for non-pasture farmers is extreme.
RBA's Governor Lowe may be the only one thinking he can be 'patient' and not move against inflation yet. The latest Melbourne Institute survey of inflation expectations has them up to 4.9% in one year, the highest for this survey since 2013, a survey that goes back to 1995.
Separately, the RBA has lost its deputy governor. High profile Guy Debelle has announced his resignation to join Fortescue Future Industries as its chief financial office June. He aims to show that 'going green' in mining can work, or so he says.
The UST 10yr yield opens today at 2.01% and another +9 bps rise from this time yesterday. It last touched 2.0% in July 2019 - on the way down. The UST 2-10 rate curve starts today a little steeper at +28 bps. Their 1-5 curve is very much flatter at +77 bps and their 30 day-10yr curve is also steeper at +186 bps. The Australian ten year bond is up +7 bps at 2.41%. The China Govt ten year bond is another +1 bp firmer at 2.88%. And the New Zealand Govt ten year is up +7 bps at 2.96%.
In New York, the S&P500 is retreating again in Thursday afternoon trade on Wall Street, down -1.3% so far, an extension of the recent yo-yoing. Overnight European markets fell sharply too; Paris and Frankfurt both fell -3%, London was down -1.7%. Yesterday, Tokyo ended +3.9% higher. Hong Kong was +1.3% higher. Shanghai was 1.2% higher. The ASX200 ended its Thursday session up +1.1%. The NZX50 ended up +1.2%.
The price of gold starts today at US$1997/oz and down -US$4/oz from this time yesterday.
And oil prices are sharply lower again today and down by -US$7.50/bbl. In the US they are now just under US$106.50/bbl. The international price is just under US$110.50/bbl.
The Kiwi dollar will open today a little firmer at just over 68.6 USc. Against the Australian dollar we are at 93.4 AUc which is slightly lower. Against the euro we +½c higher at 62.3 euro cents. That all means our TWI-5 starts today at just on 73.7 and +40 bps higher than this time yesterday.
The bitcoin price is down sharply today, down -7.8% from this time yesterday to US$38,981. Yesterday's relief rally didn't last long. Volatility over the past 24 hours has been very high at +/- 4.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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131 Comments
... American consumer inflation is at a 40 year high.
Real wages (average hourly earnings) dropped on a YoY basis for the 11th straight month...
Speaking of the US: their home ownership rates are higher than ours, especially in the middle-income range.
Our low-income families pay a higher proportion of their earnings as rent and mortgage than their American counterparts.
My point being short-term wage movements don't matter when more people have a roof over their heads.
Let’s also bear in mind that at least 5% (20 million) of their population live in trailers and 10% plus live in appartments.
So it’s not quite comparing apples with apples because most Kiwi’s still consider not owning a detached home as some kind of travesty and still refer to anything other than a detached home with large garden as a “shitbox”. Townhouses are routinely referred to as “shitboxes” but they are still considerably more delightful than a trailer.
A must-read from Credit Suisse: birth of Bretton Woods III. Spoiler alert: China is chief beneficiary......
"We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.
A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves…"
I really don't know what the West is doing with Ukraine. They refused to stop them being in NATO which was a sensible security demand from Russia. Then when Russia responds in an obvious way in order to maintain it's security, the West doubles down and cancels Russia from the worlds financial and trading systems. I really think it's going to backfire and be miserable for everyone from an economic standpoint. It's clearly horrific for Ukrainians and creating huge humanitarian crises which are reverberating around the world as well.
The only conclusion I can make is that we are run by idiotic children who cannot sit around a table and understand each others viewpoint. Instead they are all prideful, arrogant twits who just want to dominate each other and find any excuse to do so. We call ourselves civilised? These idiots will be sitting on a pile of charred bodies speared with their flags poles proclaiming "But we won!". Idiots.
They refused to stop them being in NATO which was a sensible security demand from Russia.
I don't under stand this argument. Estonia, Latvia Poland and Lithuania are all full NATO members and share a land border with Russia. Georgia wants to join, Ukraine wants to join, the majority of people in Finland want to join. Are you proposing none of these countries should be allowed to join because they are 'buffer states', when it is demonstrably false that a buffer already exists?
I support autonomy of foreign policy for all countries. It is undemocratic to say otherwise. Is it a TOP policy?
It's stupid to refer to people with a different opinion as apologists. You seem to want all out nuclear war and think that Russia will roll into the rest of Europe after Ukraine if they are not stopped. I really don't understand as you seem to have been reasonably sensible up until this year.
I've never said I want all out nuclear war, indeed when this started I was under the misapprehension that there were no nukes in Europe, but there are and they have always been there. Putin put nukes on the table. I have just argued that he needs to be faced down. None of his justifications stand up to any form of scrutiny. Ukraine being a member of NATO is not a threat to Russia. If it is then Latvia, Estonia, Poland and Lithuania are all threats. If Putin succeeds the four more NATO states will border on Russia or it's vassal states. As to Nazi's running Ukraine - What Nazi's?
And what of Ukraine's right to self determination? Apparently a principle upheld by the west? Blobbles and you seem to be of the opinion that Ukraine should have been thrown under the bus in the name of peace. That is appeasement, and to argue that you don't believe Ukraine has any right to self determination. As people on the ground have identified Putin's campaign began with the invasion of Georgia in 2008. He then went on to Chechnya. So the west lets him have Ukraine now, where's he going to invade next? He's demonstrated he will do it.
The threat was never NATO or Nazis. It was always Putin. Appeasement generally has not worked in the past. It won't work now.
Ukraine's recent history makes this more complicated.
However Russia is being punished for its actions according to "international law" and we have to give it time to work. I think things are moving along at an acceptable pace. No need to panic and unnecessarily endanger the World. It's not like nothing is being done.
Ukraine's "recent history" do you refer to the Soviet policy of resettling ethnic Russians in it's vassal states to undermine any future aspirations of independence? Or Russia's illegal invasion and annexation of Crimea? Or the people voting out a Putin sycophant, ignoring the other experienced and established but likely corrupt politicians and choosing instead a complete novice and worse - a comedian, who is actually turning out to be a pretty impressive and smart national leader? Or are you referring to the reported discovery of oil deposits, and suggest that somehow Russia is justified in taking these?
Consider this - if for any rationale you believe there is justification for Russia to invade Ukraine, or even dictate its political direction, then what of us if Australia, or China decide to do that to us?
I am inclined to agree with Zach. I am very far from a Putin apologist and am appalled by what is unfolding in Ukraine. Nonetheless, many millions would die in a world war and so I would never encourage sabre rattling at this early stage. It’s not pacification to delay hot war with Putin, it is part of triggering war of attrition and giving time to Cold War strategies. Yes, this is throwing Ukraine under the bus, but the other option is to risk global warfare, which is guaranteed mass destruction of human life, resources and unintended consequences ad infinitum.
Sanction the hell out of Putin, reduce his economic clout. The West needs to heavily invest and speed up conversion to renewables and do what it does best…..advance tech and innovation. Hurry the f%$k up weaning itself off carbon, redevelop more localised supply lines (which will help rebuild the working and middle classes after decades of their being hollowed out by corporate labour outsourcing). This will solve a world of domestic problems long term. We need to localise for the sake of the climate anyway, the global supply chain, as it existed was NOT sustainable, the last few decades have been head in the sand recklessness, pretending like we had time and that globalisation could keep expanding. It could not have, there is a real tangible resource scarcity limit that would always have been reached. There is simply not enough resources for us to have kept living this way.
Maybe Putin is the shock we needed? Our economies were castles built on sand (actually not sand, sand is running out)… castles built on debt that can never be paid.
GN the west stood by and did nothing when Putin invaded Georgia, then Ukraine, and Afghanistan. they did a bit of moaning when he helped out Assad in Syria, but nothing substantive. So there was nothing to discourage him anywhere. He has every reason the believe, despite his rhetoric that NATO, the EU and the west in general are a paper tiger. Yes we have weapons and an impressive military capability. But for all that we also demonstrate a marked lack of will to use them.
It's not the west but the whole world which needs to convert away from fossil fuels. Putin's actions puts far more at risk.
A lot will now depend on if it escalates to involve chemical tactics. That may draw the West in like it or not. Would likely be a right mix up. The Russians would claim the Ukrainians zapped themselves to trigger said entry from the West? Otherwise it appears Russian superior numbers will eventually achieve encirclements and reduce those trapped to life running out food & fuel. Been done before, more or less, Leningrad WW2. Russia cannot afford to give up now, or at least Putin can’t if he wants to survive. What may swing it is tensions & illness exacerbating amongst his troops and discontent rising amongst the masses at home, plus of course the not unlikely prospect of a palace revolution. Undoubtedly the sanctions and media reports outside of Russia that are accessible, will be fuelling the pressure of all of that.
Murray, I don’t disagree, but the invasion of Ukraine has triggered hitherto unprecedented sanctions, the reaction has hardly been a paper tiger response . IMO it’s the strongest possible reaction short of war. I’m not suggesting there should be no military response under any circumstances, but that perhaps on the balance of risk, continuing to work at attempts to avoid WW3 might be sensible.
I think given the circumstance, Putin would not find it easy to increase his war machine at this stage. But the West are now urgently moving to rearm and firm up defences.
Would suggest Putin’s war machine is depleted. Severely depleted in fact, weaponry, armour, morale, leadership and reputation. Generals have been killed and generals are being fired. The aura, the very invincibility of the Russian forces have been exposed as both extremely lacking in planning, equipment and operation. This cannot help but undermine Russia’s military profile and capability, broadly on the world theatre. If this was to be a showpiece by Putin of Russia’s might and power, well he’s achieved the dead opposite.
Putin has certainly made his defenders look caught out a few times though, such as their earlier admonitions that talk of invasion was mere Western propaganda and he wouldn't, and the "special military operation" that turned out to be invading from multiple sides. Even China looked rather surprised and floundering about.
I don't see where the commenter you are replying to favoured nuclear war though, where was that?
So do you think Russia should be able to escalate without being matched? Or do you think it inappropriate for the leadership who started this war and will drive any escalation to be targeted directly?
Or should we just waggle our fingers at them and say naughty, naughty?
And as I have pointed out before, Russia was apoplectic that those countries were allowed to join, I won't accept any form of revisionist history of people claiming Russia were absolutely fine with them joining. You will note that Finland has not yet joined and the most they are going to do is discuss it at this point, but Sweden understands the destabilising effect it would have on the border. It is clear that joining NATO could mean US controlled nuclear weapons placed on the border with Russia. If you don't understand how that could be damaging for Russian security, you are one eyed in the extreme and I suggest you look up the Cuban Missile Crisis when Russia tried to do the same to the US. You will note, in that situation, the USA stomped all over the sovereignty of Cuba to allow it to define what it wanted to do. The US had first attempted to invade Cuba. Sound familiar?
Well, maybe we should just see how the US responds if Russia decides to deploy it's hypersonic missiles to Cuba. If we are all OK for any state to define it's foreign policy, then the US should be absolutely fine if Cuba has Russian hypersonic missiles right?
Also note that one of the most ardent supporters of US foreign policy, a man hugely experienced in both setting US foreign policy and organising military and US operations all over the world, Henry Kissenger, disagrees with you. When the US's most aggressive, anti Communist, Putin understanding advisors say their country is doing the wrong thing, the rest of us should listen.
The Russian invasion is horrific, but the Wests refusal to sit down at the table and understand the other side is as much the cause as Putins stupidity and arrogance. Again, it's two sides acting like children and throwing their toys that causes war.
And murray is laughably under skilled in the understanding of the situation but appears to have outsized opinions based on faulty analysis. Considering he didn't even know NATO was nuclear armed, thought Russia was fine with other states joining NATO, doesn't even know how nuclear energy works, has a rudimentary understanding of military tactics, it's disturbing how much he posts on the subject. Every day he seems to think posting 12 times on the subject makes him look like an expert, believe the propagandist at your own risk. You can tell one because he calls everyone who doesn't rah rah rah for his side an "enemy sympathiser".
"Again, it's two sides acting like children and throwing their toys that causes war."
Silly me, I thought it was a hostile state invading a neighbouring one that caused this particular war. But I guess that's an easy mistake to make when you're not prepared to write-off Ukrainians as a second-tier people with no right to self-determination or their own foreign policy. It's wild how comfortable I am making that mistake, huh?
It seems you still don't understand the NATO nukes are controlled by the US, Russia's major adversary for the past 60 years or so and looking even more adversarial. Europe has very strong trade with Russia and much warmer relations than the US. If you look at a map and you will see the further West you go from Russia, the more anti Russian the countries become. If the extremely anti Russian US is allowed to deploy nukes along the Russian border, that is a very provocative action, much like Russia putting nukes into Cuba.
There's a clear difference having adversaries nukes over your fence as opposed to having your friends nukes over your fence. If you can't see the difference, well, it's beyond me to try and get you to see sense.
It seems you don't understand what the collapse of the Soviet Union meant? America wasn't the opponent of Russia, it was the stated opponent of the Soviet Union and its open goals of world domination. Russia in and of itself after 1991 is a completely different matter, as demonstrated by the world relations with it since then. Most definitely not threatening! The paranoia and threats come from Putin nowhere else!
Those nukes used to be housed in places that border the Soviet Union, they don't border Russia and NATO makes no mention of moving them from where they are held. Again Putin's arguments are rank BS.
On the one hand you argue that Russia isn't threatening, then argue that Russia is threatening as it invaded Georgia/Afghanistan etc? Or are you saying the West isn't threatening, considering the US and it's allies also invaded Afghanistan... plus Iraq... plus Yemen... plus NW Pakistan... NATO bombed Libya... hang on... who is definitely not threatening? If you can't admit that both Russia and the US are just as threatening to other sovereign nations, well you are reading some strange history books.
The NATO nuclear sharing agreement is a threat to the NPT and also includes Turkey, not a stable democratic country by any measure and not an ex Soviet country. There is no reason why, when a newer member of NATO asks for it, the US won't install a base on a Russian border. The nukes are currently (not used to be) housed in US controlled air bases in participating NATO countries. Now is not equal to future and with NATO continued expansion East, there is clear reasons why Russia feels threatened.
No reason why they can't, except that it would be very provocative. This was talked about 20 years ago when they were being admitted. But past does not equal future, despite NATO saying they have no current reason to put nukes into these countries, this does not mean there won't be a reason in the future.
Every reason why they can't. The nukes are very tightly controlled not only by the US, but will also be by NATO Command. And this will include where they are stored/held. Five long established very secure locations which will not change without a degree of public knowledge and Governmental agreement.
We are talking about Europe. But Ok why was Russia in Afghanistan? Why did the US go there? (I agree they screwed it up). When did the west invade Yemen or NW Pakistan? NATO was carrying out a UN resolution (1973) in Libya in 2011. Has the UN authorised military actions against Russia, before they invaded Ukraine? As you have said the nukes are US controlled. But under NATO command. So technically NATO can veto their use if the US wanted to, as could the US if NATO wanted to. But then the NATO command structure is such they would unlikely to want to use them without full agreement of all countries Governments. So any threat from NATO is a threat from those countries too. And if they were a threat to Russia then it would be public knowledge? I also suggest you're conflating Putin as Russia. I think if viewed critically this is all Putin, not Russia. So please explain where the threat was/is?
You keep talking of the future, current events tell us Putin is the future threat, not anyone else.
"If you look at a map and you will see the further West you go from Russia, the more anti Russian the countries become." If you listen to the people the closer you go to Russia the more anti-Russia they become. Why? Perhaps it's because they remember what it was like under their jackboots?
Because its reducing the buffer between them, while they wont have been happy about the baltics joining NATO they are not a location viable to attack Russia from while Ukraine is the Ideal route, NATO is far more conventionally powerful than Russia if Ukraine is NATO and article 5 got triggered there is no way for them to defend without going Nuclear the reduction in strategic depth reduces the decision time they have to go nuclear all this just makes nuclear war more likely.
Terrain is still as limiting as it ever was, The current Russian invasion of Ukraine is very much stuck to advancing on roads as even tanks get stuck in the mud they have this time of year and their advance can only go as far as their supply trucks let them.
As well as difficult terrain any build up in the baltics region is liable to be cut off like the Germans at Courland they would have to take Belarus and Kalingrad first.
I've never been to Eastern Europe so only know their mud by reputation. Judging by my garden North Shore is a good competitor for mud; I've never snapped a garden spade until I came here. Note all our main roads go along (or went along until expensive straightening or bypasses) the top of ridges. Probably dates back to Māori footpaths.
Thanks for the article. I note it was from 2014, and doesn't say as much as you say it does as it has been overtaken by events. Sure, number 2 is Ukraine shouldn't join NATO, but:
1. Ukraine should have the right to choose freely its economic and political associations, including with Europe.
4. It is incompatible with the rules of the existing world order for Russia to annex Crimea. But it should be possible to put Crimea’s relationship to Ukraine on a less fraught basis. To that end, Russia would recognize Ukraine’s sovereignty over Crimea.
Well the US already tried that, maybe learn what the Bay of Pigs was? Not long after, when the boats with Soviet nukes were sailing across to be installed into Cuba, the US blockaded them, forcing Cuba to accept US foreign policy. Let's just forget about actual history huh?
Russia has no way to blockade nukes getting to NATO countries in the same way the US has the ability to blockade Cuba. Hence Russia has to front foot the situation by demanding they can't be part of the US nuclear alliance.
You must be the richest person on earth considering your ability to predict the future.
Why on earth do you think Putin is just thinking about his lifetime and not his countries future security?
Latvia and Estonia also have the Baltic Sea right behind them as well as Kaliningrad, home of the Russian Baltic fleet, right behind them. The security situation is significantly different to Ukraine which has NATO countries right behind it.
The bay of pigs was a US sponsored attempt to take Cuba back from a communist dictatorship by Cuban exiles to put a democracy in place. It wasn't an attempt to establish a puppet state. Consider why the US blocked the Russian nukes being set up in Cuba Blobbles? I explained it to you a couple of days ago. Launched from there, there was no effective defence for the time, the flight time was too short, and the Soviet Union had a clear open goal of world domination. The threat was beyond serious. But guess what? The US did NOT invade Cuba. You're right don't forget history but get it right too.
Well, your first sentence contradicts your second and then your second to last again. How many contradictions can we get in one go? And just like US backed Cuban exiles attacking Cuba, Russian backed rebels in Ukraine aren't supported by Russia huh? You can't have it both ways.
The US didn't invade Cuba because it stopped the nukes from arriving and forced the Soviets to remove installed nukes. If it hadn't, it would have invaded or bombed the nuclear sites, potentially igniting a nuclear war. That's why it was a crisis.
Hypersonic missiles change the game again, get up with the state of play. Hypersonic missiles will make flight times much shorter if they manage to mount nuclear weapons on them, which everyone major power is working on if not already done. Even for existing nuclear weapons, the recent upgrades to the B61 nuclear weapons allowing stealth fighters to carry them also changes the game. Nuclear weapon delivery systems are constantly being upgraded and nobody knows what each other will come up with in the future. So the only thing that states can do is put enough distance between each other to allow a response. Without the buffer, response times shorten and this endangers their security.
Best way to solve all of this is: Everyone get rid of their nuclear weapons. Then there is little need to worry about this. But the biggest idiots in the room of course are the biggest holdouts (Russia/China/France/UK/US).
"Russian backed rebels in Ukraine aren't supported by Russia huh?" Where the hell has this come from?
But you're becoming nonsensical Blobbles. The first and second sentence don't contradict each other, and nor does the second to last. And you yourself say it - the US didn't invade Cuba.
Hypersonic missiles do change the game, and only Putin has claimed to have them operational. The US seem to be a long way from being able to field any. The US has a program underway to upgrade their nukes true, but they are not deployed yet.
1st contradiction, you write: "The bay of pigs was a US sponsored attempt to take Cuba back from a communist dictatorship by Cuban exiles to put a democracy in place".
Then write: "It wasn't an attempt to establish a puppet state".
- Of course the US was attempting to put in a puppet state. Why else would they have invaded? Read the Bay of Pigs wikipedia page:
"Tensions percolated when the CIA began to act on its desires to snuff out Castro. Efforts to assassinate Castro officially commenced in 1960,though the general public did not become aware of them until 1975, when the Senate Church Committee, set up to investigate CIA abuses, released a report entitled "Alleged Assassination Plots Involving Foreign Leaders".Some methods that the CIA undertook to assassinate Castro were creative, for example: "poison pills, an exploding seashell, and a planned gift of a diving suit contaminated with toxins." More traditional ways of assassinating Castro were also planned, such as elimination via high-powered rifles with telescopic sights"
That's not my imagination, the US tried to create regime change in Cuba, much like they have in the past all over the world.
2nd contradiction, you write: "The US did NOT invade Cuba", vs: "The bay of pigs was a US sponsored attempt to take Cuba..."
- Surprised I have to point this out to you, you flip flop from "It wasn't and invasion" to "It was an invasion". The US recruited people in it's country, funded and trained them up to become soldiers to attempt to take Cuba or at least oust/assassinate Castro. It was an invasion, no matter what way you try to spin it. Sure it was doomed to failure, but a clear threat showing they weren't scared to invade properly. From the Bay of Pigs wikipedia page: "The invasion was a U.S. foreign policy failure. The invasion's defeat solidified Castro's role as a national hero and widened the political division between the two formerly-allied countries." Do you notice how many times the word "invasion" appears?
I wrote: "The US didn't invade Cuba because it stopped the nukes from arriving and forced the Soviets to remove installed nukes. " - Here I am talking about the Cuban Missile Crisis which happened AFTER the Bay of Pigs. It meant the US didn't have to invade as it solved the problem of national security. Prior to this they did invade at the Bay of Pigs to try and remove Castro. That's not non-sensical, it's the order things happened in - Bay of Pigs invasion first, Cuban Missile Crisis after, resolving the issue.
I wrote: "Russian backed rebels in Ukraine aren't supported by Russia huh?" to contrast with the Cuban exile soldiers created by the US. It's near enough to exactly the same thing, training sympathetic soldiers to try to create regime change in another country.
Regarding hypersonics, if you believe all the press releases of everything that any country says regarding weapons it has available, a bigger fool you. All of these large countries consistently have more advanced weapons available that are unknown to the public or that they admit, there are clear examples of this in the past.
So if the US, in 2 years develops nuclear warheads mounted to hypersonic missiles (highly likely) and put them in Lithuania as a "deterrent" (possible under NATO rules), that's not a problem huh? Previously there were a few thousand kilometers separating the two adversaries major cities and their WMDs. When there is a few hundred km with faster travelling delivery systems, is it the same thing?
Its true Bobbles, the whole thing turned into a giant pissing contest. It only needed 1 of 3 leaders to back down and the war could have been averted. There is no way the Ukraine was ever going to be allowed into NATO anyway. Personally I blame the USA and NATO for the resulting conflict. The Ukraine were flat out naïve thinking the West would come to its rescue if Russia invaded. Not sure what Biden discussed with Zelenskyy but no doubt there was a lot of BS in there looking at the way Zelenskyy comes across on TV wondering why the west is not stepping in, you cannot help but be left with the impression he was promised something that never eventuated. The Russian tactics are pretty clear if you watch Aljazeera, they are just going to flatten the place. Zelenskyy better have a good exit plan or he is toast.
" Personally I blame the USA and NATO for the resulting conflict. "
how on Earth can you blame Putin starting a war on anyone other than Putin? US, NATO, and Ukraine were doing NOTHING to suggest an imminent invasion of Russia.
Do you blame the US invasion of Iraq on Russia?
It depends on what you mean by 'sensible'. Russia making the demand that the Ukraine stays out of NATO makes sense as part of keeping the Ukraine in Russia's sphere of interest (similar to NZ's response to the Cook Islands becoming an Australian or Indonesian protectorate). But until a fortnight ago NATO was not a security threat to anyone let alone Russia. They couldn't even sort out the Bosnian war (pop 3m) with their NATO peacekeepers an embarrassing mockery. The invasion of a sovereign nation has unified NATO unlike any other event - now NATO's incompatiblities of language, weapon systems, national politics will be ironed out.
Nope, I am saying the US and NATO precipitated the invasion by not taking into account Russian security concerns, which were perfectly valid. Putin absolutely should have shown restraint and not invaded AND he should be done for war crimes considering the stuff that is happening there, so far. I don't support any invasion of any country as it's people are the ones who suffer because of the mad, prideful personalities of their leaders.
What is Putin trying to achieve by invading? He wants to set up a government who is sympathetic to Russian security concerns. Or, if that's not possible, he will withdraw if NATO assures Ukraine will never become a member. He has said as such many times, we just refuse to listen in the west.
One day you will wake up to the fact countries like Ukraine are treated as political footballs whenever they reside on a border of a super power and begin being friendly with their adversaries. Many countries have found this in the past, be it Vietnam, Tibet, Korea, Belarus, Cuba...
“we just refuse to listen, “ not exactly, more accurately refuse to believe, and for good reason. after all all those forces building up on the border but Putin emphatic that there was no intention to invade. on that basis, sure listen, but best to take the exact opposite meaning of what he says.
Rather than invading sovereign countries these strong-man-genital-wagglers should man up and duke it out themselves. A 20mm Anti Aircraft gun in each corner of an old stadium (maybe infrastructure left over from an Olympics could be used, hosting rights bought with cash given to charities). If enough tough-guys with in-trouser worries could be found, one at either end of the half-way line too. 100 rounds each. Vice-president / 2ic / Head of Intelligence as loader and target advisor (all in home country flag-coloured speedos). 10 minutes, safety-off... Streamed live. Last team standing. Winners (if any) pick up their "Toughest Man in-the-World" medals from centre circle and have two minutes to get to the limo idling with aircon on since the first shots rang out, fuelled with $20USD of Premium.
Drones (diverted from their essential task of crashing weddings in Afghanistan) then take out the limo. If drones miss and destroy a target they weren't aiming at, honest; the Israelis are there with their attack helicopters diverted from keeping the peace in Palestine; the USAF in support with A10s and their veteran Iraq 'battle-tested' Road of Death aircrews are itching to get involved as they've been told the limo has 'baddies' in it. British stand by waiting for equipment to be delivered following budget blow-outs and delivery problems caused by not-our-fault-honest decisions.
SMGW1 (TBC): Putin, Kim Jong Un, Bolsanaro, Bashar al-Assad. Boris Johnson, Priti-Patel and Jacob Rees Mogg on the bench until a suitable halfway opponent can be found from a long, long, list of other suitable 'fighters'. It'd be a ratings winner, save many an innocent, give the military some practice at only actually killing unpleasant types, and, as a bonus, bring about peace through limited war, as these muppets claim to be doing.
Spin-off franchise opportunities abound - perchance an "Influencers-in-Dubai" edition, with gold plated guns, obvs. Oligarchs vs MPs?
China's economy might be in the doldrums, but that is not because they aren't shoveling out more bank debt. In fact new yuan loans rose at an astonishing rate in January, almost ¥4 tln in January alone and well higher than what was expected.
Odd Curve Shapes, or More Chinese Than Russian
What’s bothering – therefore distorting and transforming – financial and money curves isn’t really Russia nor is it next week’s Fed. These are concerns that run far deeper, to the point that oil prices where they are merely add perhaps too much more to what serious weakness must be underlying all this time.
Demand destruction due to crude prices (and grocery; see: wheat) is one possible maybe likely outcome which could explain some of the market behavior. And if that potential demand destruction gets piled on top of a global slowdown, one that predates all these more recent disturbances, these together would indeed account for these shapes which in this context really wouldn’t be all that odd.
For this other possibility, any clues lie with another of Russia’s neighbors besides Ukraine, in this economic instance China. If we factor the Chinese economy as leading the world’s general and eventual direction, downturn potential already apparent there would have long before become a huge factor in upsetting Treasury yields and eurodollar futures prices.
Recent data has done little or nothing to dispel any gross financial hedging demand arising from the indicated trajectory.
"Their central bank said it will transfer ¥1 tln to the Chinese Treasury department (about NZ$225 bln), using accumulated revenues from FX asset management in past years"
Is this how China prints money, a version of QE, maybe.
Old Joe warned Vlad P about invading Ukraine.
Via the media, Xi has warned Old Joe that China is not to be pushed aside, but to be recognised as a world power.
And the 'inner' mongolians.
https://en.wikipedia.org/wiki/Racism_in_China#Discrimination_against_Mo…
US inflation at 7.9%, bad news.
Fed expected to raise interest rates. 0.25%, nah. Oops, don't know, with Freedom under attack in Ukraine and so many reports on geo-political tensions. Even COVID was pushed to small print.
On the home front, Parliament protests is the bellweather, for J Adern and G R, maybe.
Is PM Luxon coming next. Another safe pair of hands.
To me Luxon is still of unknown quantity but obviously his CV as an executive reveals definite acumen. What needs to happen now though, is for National to introduce candidates for the next election, of far greater quality and integrity than in last two or three, in support. And that includes culling some of the obvious relics, sleepwalkers and non performers.
A brief snippet I heard during a RNZ interview which I wasn't paying much attention to was his comment "I'm a natural leader of men". I almost choked on that. In my experience most people who claim to be leaders aren't really. They generally vary from egotists to minor despots to tyrants. The real leaders just do.
So we can go back to rapid population growth from migration, mass tourism, barely a cent spent on the services and infrastructure needed to support all that and continued erosion of our quality of life. Removing Labour's tax changes on housing investment should kick start that again. Win all round (if you're over 50 and have 7 investment properties).
I was listening to a snippet where the Russian Foreign Minister Lavrov was talking about what they want, and I thought that what Zelensky should demand is Russia's immediate and unconditional surrender of all forces in Ukraine. Nothing less.
What I don't think the EU realises is that there is no solution to this other than utter abandonment of Ukraine to Russia which dramatically increases the threat to Europe, or Europe guaranteeing Ukraine's security. Russia has possibly significantly miscalculated here, because if they lose, they will have to be forced from Crimea too. If they escalate to nukes, the exchange will cost them much more. (I hope any escalation will result in the Russian leadership being targeted, not the people or assets.) It is ironic that the Russian leadership has sent two high level Generals to Ukraine to get things moving again, and both have been killed. There is a clear message in that alone!
Yes there is a part of me that sees demilitarisation as an ideal. But for Russia to be demilitarised then the world would have to protect it from China. Russia apparently has significant, possibly selective, memories about being invaded. But that ideal defies human psychology, so i can't see it ever being achieved.
Besides there are considerable benefits for communities and countries from maintaining militaries. Certainly despite the views of some apologists for Putin in these threads, none of his justifications or claims stand up to scrutiny, and indeed some become worse if he succeeds.
It all seems stalled Murray. Maybe what will evenuate is Russia will keep Crimera and also the russian orientated areas in the east. Acknowledging there is never a correct dividing line on sorting out 'ethnic' issues.
Long term it would be better for the US to just butt out. They have an internallly driven need to interfere in disputes which should be obscure, leading to millions of deaths. Started with Vietnam.
There is some logic here, but yes I really agree that from a leadership perspective the US should totally butt out. Historically they tend to run a little roughshod over friends too, and screw things up. Potentially this scenario is a lot like WW2 with a twist - a European issue backed by US strength, not led by the US.
But as some of the other commenters also point out there are much bigger issues at stake as well. A biggie for me is one of self-determination, the right of a people to chose their own alignment. With Ukraine it seems every one, Putin's Russia, the EU and US are denying them just that
Maybe that was the original objective and perhaps more, a corridor to Odessa, blocking Ukraine access to the Black Sea and then start squeezing the rest of it. Now it seems though the resistance has escalated matters to subjugation of Ukraine entirely. Biggest country in Europe, 44mill population, if Putin is only starting to think about the pros & cons of that, and from the way it’s going it looks like he hasn’t, only now, then there is trouble and consequences aplenty. Would suggest the military is getting restless, generals are being fired, Putin is acting like Stalin now, unhappy and resentful generals are undesirable enemies. That’s why Stalin in his day, had them shot.
Putin is actually having to keep seasoned troops back in case the Central Asian countries start dropping away. Putin was a respected leader of those peoples 12 days ago, now they are wondering what has gone wrong with him and what they are to do.
He now doesn't know who to trust. It wasn't the resistance that escalated matters to subjugation of Ukraine, it was the idea that instead of taking a land bridge to existing Russian populated areas along the Black Sea why not take the whole country that escalated matters. Now the Russians are stuck, the West are stopping trade with Russia because of the threat Russia now presents to Europe. It's a complete mess.
The Russians will have to negotiate with the Americans to get back into the international trading system after this is all over but they may be going back to using cut up pieces of Tass or Pravda in the toilet just like I had to do in 1983 when I visited Leningrad for 3 days. I'd never seen a person with a pegleg or black teeth before I went there. They really don't want to go back to those days.
Yes, fair points, and better thinking than me. The fact that they came in immediately from the north too, indicates a strategy that wasn’t limited to securing the sth west, Black Sea coast and ports. Well then you could forgive me from my former suggestion then, because how the campaign has evolved to date, it does look rather convincingly like it was not planned with regard to the scope of the entire land mass of Ukraine anymore than the resistance that has arisen from both the Ukrainian military and people.
In 'merica: "Housing assets now exceeds US$50 tln , but it is American households exposure to the equity and bond markets that dominate, now at US$118 tln."
I assume the NZ figures would be around the other way, with housing assets much higher than equity & bond market holdings?? Does anyone have the data?
Russia will be expected to make reparations when the conflict is over. Damage tops US$100 bln so far.
About $300bn of Russian funds are frozen which should provide a running start at the rebuild. A huge effort will need to be made to clear munitions due to the use of cluster bombs and old ordinance.
Demand destruction.
"Short-term power prices on Monday surged above 550 euros ($597.46) per megawatt hour in some countries, or 1,000% higher than pre-crisis levels. At those levels, large chunks of the continent’s manufacturing industry, particularly energy intensive companies like aluminum smelters or paper mills, simply aren’t viable. The cost of natural gas in the wholesale market rose to a record of 345 euros per megawatt hour. A year ago, the same gas sold for as little as 15 euros.
The 1970s oil crisis largely affected the world’s transportation system: Driving, trucking and flying became prohibitively expensive. But this time the shock moves beyond transportation to heating, cooking and electrification. "
https://www.bloomberg.com/opinion/articles/2022-03-08/europe-needs-to-c…
Like I said above, the West are totally shooting themselves in the foot, going to create a major depression right throughout Europe especially but that will reverberate around the world.
And it could have been avoided just by keeping Ukraine out of NATO. Seems like a pretty simple demand which likely would have kept Russia happy enough that they wouldn't have invaded. May have even meant Russia stopped being active in the disputed regions of Ukraine near the Russian border. But hey, the West needs to "win", even if we destroy our own economies and push our own people to the brink, while treating another country (Ukraine) like a political punching bag.
Last time I looked, NZ didn't border China. And five eyes is not a military alliance, it's a sigint alliance. You will note, China has not even put the lightest of sanctions on NZ for being part of it.
Maybe you should contemplate the same question, but instead you should ask what would happen if Vietnam joined the AUKUS military alliance and received subs capable of firing US nuclear missiles, that would be controlled by the US. That's an equivalent argument.
Last time I checked, Finland, Estonia, and Lativa all bordered Russia. Should we throw them to the dictator as well?
In fact the Eastern Russian Coast is only ~100km from the US coast. Maybe USA should hand Alaska back?
But yes, lets go hunt Nazis in Ukraine. Let's face it, Putin's issue isn't Nato.
No need to get all upset when I show you making invalid comparisons, by backing them up with more invalid comparisons with a good dose of goal post shifting thrown in. If you find yourself unable to argue a point, admit it was an invalid point, doubling down on it does your original argument no favours.
The similarities between 1929 and where we find ourselves (Robert Shiller).
Shiller said those same investors continue to pour money into stocks because of an overwhelming sense of FOMO (fear of missing out).
“The market is often in a situation where price movement is not justified by fact. There’s a sense of regret that we didn’t get into Bitcoin (for example) earlier, often there’s this fear of missing out… They don’t want to think that they were one of the laggards, even if they know that it might be overpriced.
“It reminds me of 1929, I don’t mean to be alarmist but people thought the market was overpriced apparently in 1929 before the crash. But it kept going up so they kind of through maybe I’m wrong.
“I think we’re (currently) in that situation too.”
Money continues to pur into stocks, because many governments actively legislate it.
Take NZ, 6% of our pay each month is essentially funnelled into stocks. All of the default schemes must hold shares.
In Australia it is 9%.
Now start looking around the rest of the world. Most of the shares are being bought my institutional investors on behalf of super schemes.
I think the biggest difference I've noted between the last 2 years and any other period in recent history is the involvement of new/individual/retail investors into the market and who are buying not based upon fundamentals - but simply because its become cool to do it. A fashion or fad.
Interesting that more or less no of my close friends/social contacts have had any interest in discussing share market investing the last 20 years or so, then suddenly in mid-late 2020 they all started asking me for advice on playing markets (and still do now). It was a massive red flag for me. If my friends are doing, then its quite possible that is reflective of all of society.
And they weren't interested in learning about fundamentals and cash flow analysis or anything like that - they primarily ended up buying tech stocks - many of which are now tanking (or have already tanked).
Reminds me of Joseph Kennedy and the story about the shoeshine boy.
Might be a case of the ant and the ferrari - the ant who has lived his/her life on the ferrari thinks the whole world is red. But only because it hasn't experienced anything else. Same is true for nearly every property investor I meet in NZ...yet if I talk to those abroad who have experienced crashes and tell them about NZ they think its absolutely bonkers.
Even in Auckland I have met people who have lost out with property. One was a real estate agent who sold in Beachhaven just before it went up (~15 years ago) and bought in one of the few places in Auckland where property didn't go up dramatically. Still it is fairly easy to know whether you like a particular house and then transfer that knowledge on to the market. You can go wrong when buying for a theoretical tenant and assuming they will like the mid-range new apartment or townhouse whereas you would never live in it yourself. Anything you understand is a better bet than something you don't know - that's why Buffet doesn't buy shares in software companies whereas I know a little about software and might take a punt given plenty of disposable cash.
If only energy policy wasn't driven by virtue signalling of a hysterical teenage girl.
"Last January, the US informed Israel, Greece and Cyprus that they no longer supported the proposed EastMed natural-gas pipeline from Israel to Europe citing the need to “(allow) for future exports of electricity produced by renewable energy sources, benefiting nations in the region.”
The financial trust question is now yuge, given that deposits in banks in other countries can now quite evidently be frozen, sequestered, nullified or simply repurposed, because Reasons.
Hence Zoltan Pozsar's postulation that, henceforth, Commodities Rule. A return to a gold standard, of sorts.....and barter, counter-trades etc.
But perhaps only between countries on the Besty Friendy List.....
"South Korea has a new president, a conservative who says he will be less conciliatory to China and North Korea (and presumably Japan with whom South Korea has many grievances)."
The presumption there is incorrect, and somewhat insulting. Yoon's platform is on having a better relationship with Japan (so long as Japan don't ruffle the feathers) compared to Moon, and to have a closer bond with the US.
I think you will find Yoon comes from a very privileged background. He attended one of the top universities in Korea based on family connections (it took him 9 times to pass the bar exam) and his father was educated in Japan while Korea was under Japanese ruling. His competitor, Lee, in the election had the exact opposite background of poverty and working his way up through the system.
Please don't make such presumption flippantly on politics when the campaigning of said politicians has been openly transparent. It discredits a lot of work Interest does and comes off as ignorance, which unfortunately the Western media is far too guilty off on Eastern politics.
American home ownership rates are rising according to a new report, especially for middle-class families.
"Since the Great Recession, the homeownership rate has declined across all income groups, with the largest drop among the middle-income homeownership rate, which fell from 78.1% to 69.7%. Low-income households observed homeownership rates fall, but to a smaller degree – two percentage points – while high-income households saw declines at four percentage points."
I read a decline in home ownership rates. Am I reading something incorrectly here?
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