Here's our summary of key economic events over the weekend that affect New Zealand, with news the string of losses and instability is building - just as the RBA and RBNZ meet to to review their OCR settings.
As something of a canary, private equity deals are failing to get funded now. You can’t do a leveraged buyout without the debt, and financing markets are seizing up. Certainly banks are much less willing to do the debt part of these deals. More than US$1 tln in these deals were done in 2021, and 2022 started strong. But now markets are repricing valuations and that undercuts deals in process. Investors no longer agree the price-to-earnings ratios that private equity is pitching. Some icon deals being promoted are failing. Further, many private equity portfolio companies will be facing cost pressures they can’t pass on to customers. High-cost leverage can push weak businesses into a critical condition. Expect to see some big-time collapses and value-destruction. Some will be very public. Failures will raise the price of debt for others in similar situations.
However first in Japan, new official data shows that last week, their government spent about NZ$34 bln intervening in the foreign exchange market to prop up the yen. It worked but it drained nearly 15% of funds it has readily available for these types of interventions (meaning they have about NZ$225 bln left in these reserves which doesn't seem a lot for the world's third largest economy).
Japanese industrial production surged unexpectedly in August to be +5.1% higher than a year ago, its best non-pandemic result since 2014.
Meanwhile Japanese retail sales rose by +4.1% in August from a year ago, exceeding market consensus of +2.8% and following a +2.4% gain a month earlier.
In China, there were PMIs released late yesterday. The official factory PMI reports a very slight improvement to a steady state (neither expanding not contracting). But the private Caixin version has it going the other way, a growing contraction.
The official release also included data on their services sector and that was negative, falling from a modest expansion in July to no expansion in August. That is the third straight month of a decrease in their services expansion.
This coming "Golden Week" isn't going to generate any travel-induced activity. Authorities are warning everyone to stay put during the week. Some cities are even putting their whole community into a lockdown again.
And in an ominous sign, ocean carriers are canceling dozens of sailings on the world’s busiest routes including Chine to the US West Coast during what is normally their peak season, the latest sign of the economic weakness hitting companies as inflation weighs on global trade and consumer spending.
Hong Kong retail sales were reported for August, and they weren't flash, falling -2.9% year-on-year.
And staying in Hong Kong, Bloomberg is reporting that the value of Chinese firms listed there has sunk -14% to their lowest valuation on record. They are now trading at just 60% of their book value, the cheapest ever.
Investors may shifting funds back to the US in a risk-off flow, but not all funds are flowing that way. The rush out of China also is seeing investment move to Vietnam - and India.
India reviewed its policy interest rate late on Friday and as expected it raised it by +50 bps to 4.9%.
In the US, the inflation measure the Federal Reserve takes note of, the PCE, slipped in August from July to be +6.2% higher than a year ago. But the "core" result rose slightly to 4.9% and "stubbornly high". Personal income rose again at the expected rate, but personal spending rose faster than expected.
US petrol prices have stopped falling, still at about US$3.80/gallon as a national average and stable for the past month - and still +20% higher than a year ago.
Overall American grain stocks are holding up and came in very much as expected and larger than a year ago. But corn stocks were lower than expected and that firmed its price at the end of last week. Soybean stocks were high and its price fell sharply at the end of last week. Both were outsized moves that will have global impacts. And they spilled over to wheat prices which have risen to a three month high.
The latest University of Michigan consumer sentiment survey has stayed very low, even if it did rise marginally from July.
In Europe, German reported that its labour force didn't grow in August, the first time in 18 months that this has happened. They also said the numbers out of work fell by -125,000 and their jobless rate stayed at just 3.0% of their 44 mln labour force.
Meanwhile the EU said its overall inflation rate rose to +10.0% in September. German inflation was higher at +10.9% whereas French inflation was at 6.2% which was about the lowest of the larger countries in the block.
European Union countries agreed to impose emergency taxes on energy firms' windfall profits, and began talks on their next move to tackle Europe's energy crunch - possibly a bloc-wide oil and gas price cap.
In the UK, Chinese-owned British Steel has reportedly asked the UK Government for substantial public subsidy to keep much of its capacity running there.
More globally, according to Dealogic data, global M&A fell for the third consecutive quarter in Q3-2022 as rising interest rates forced lenders to pull back from financing large deals and the soaring American dollar failed to spur US companies into snapping up foreign targets.
In Australia, their Productivity Commission is reminding policymakers that first home buyer subsidies push up housing values is counter-productive and doesn't make home ownership more affordable. "This money would be better spent preventing homelessness", they say.
The UST 10yr yield starts today at 3.83% and unchanged from this time Saturday. A week ago it was at 3.70%. The UST 2-10 rate curve is more inverted at -45 bps. But their 1-5 curve is a positive +5 bps. And their 30 day-10yr curve is more positive at +106 bps. The Australian ten year bond is firmer, up +2 bps at 3.91%. The China Govt ten year bond is unchanged at 2.77% and a two month high. The New Zealand Govt ten year will start today at 4.32%, up +16 bps in a week.
The price of gold will open today at US$1661/oz. This is down -US$1 from this time Saturday but up +US$20 from this time last week.
And oil prices start today unchanged from Saturday at just over US$79.50/bbl in the US while the international Brent price has risen to be just under US$85.50/bbl. These levels are similar to where we were at last week and eight month lows. Natural gas prices are still falling. OPEC is reported to be considering a big production cut in an attempt to prop up prices.
The Kiwi dollar will open today at just under 56 USc more than -1c lower than where we ended on Friday and back to a 13 year low (pandemic excepted). Against the Australian dollar we are unchanged at 87.7 AUc. Against the euro we are down at 57.5 euro cents. That all means our TWI-5 starts today at just 66.3, and down -160 bps in a week. That is an 11 year low (also pandemic excepted).
The bitcoin price is now at US$19,197 and down -3.0% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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108 Comments
It will be interesting if Mr Orr either raises the OCR by more than 0.5% (Should) or if does less than 0.5%.
Mr Orr is on waitand watch mode so will go by 0.5% as expected by the overall market and for any default can blame, what is happening in the world but themselves.
“Expect to see some big-time collapses and value-destruction. Some will be very public. Failures will raise the price of debt for others in similar situations.”
Rumours of 2 BIG European banks struggling. This is sourced from Twitter but can’t find any info outside of that. (Swiss Bank & Deutsche bank)
https://www.forexlive.com/news/there-are-some-serious-rumours-doing-the…
Yes there's certainly a few rumours going around. Could be an interesting month.
I saw that on the weekend, and the Forex Live link posted earlier (they don't usually get up to much on weekends so that must have been solid enough to bother reporting on).
Could be a very interesting open for Credit Suisse. These things have a way of becoming self-fulfilling.
Nothing like a good rumour. Like the one last week that President Xi was under house arrest and all commercal aircraft were grounded.
https://www.aljazeera.com/news/2022/9/27/chinas-xi-makes-appearance-in-…
When you push your foot gently on the brake pedal, only the front brakes are applied and if you hit the accelerator at the same time, a rear wheel drive car will do burnouts and smoke the rear tyres. This is an analogy what the Uk GOVT is doing with its monetary policy.
And us, don't forget. Raising interest rates while the FLP is still going on... one wonders if the RBNZ management is giving the banks such an amazing deal so when they exit (found naked once the tide goes out) they might have some cushy board positions awaiting them.
Putting lipstick on a pig.........
https://www.msn.com/en-nz/news/national/cooling-not-crashing-auckland-w…
Just wait till next year. I have a feeling that all of those tired of the exploitive nature of the inbalance of income tax vs untaxed debt hiding in property have a new party vote to seriously consider. Those engaging in interest only debt speculation could be doing more than sweating...
https://i.stuff.co.nz/national/politics/130049986/the-opportunities-par…
HOP pulling the same con job as major parties. Increased taxes now but the UBI can kicked down the road until 2029 (so in other words, never).
Also trying to put a new spin on charging Granny rent for living in her flat that they'll syphon off her estate when she's dead, and treating people who own single family homes (and who can't pass on increased costs like investors can) as if they're the drivers of the housing shortage.
In other words: Here's a bill for keeping a stable roof over your family's head.
Clearly you are biased to a particular shade of green/red/blue, as is your comment doesn't include the massive income tax break they would be giving working families which would cover this... and you missed out the bit where grannies tax can be deferred and built into the sale of property.
It would mean a lot more efficient use of housing use as well. Right now we are sitting in a rich suburb surrounded by 4 old couples/singles living in 3-5 bed properties by themselves. The local school roll is down while these old folks love to sit in their huge houses, not doing general maintenance, barely contributing to the community... imagine if those houses were freed up for working families? Also locally a new multi story old folks home has been built, but the old folks still want to stay in their houses, so it might take quite some time to fill.
Encouraging more efficient use of housing is never a bad thing.
No, in my experience fantastically complex solutions to problems generally create more problems than they solve, and TOP is the ultimate fetishist of this theory. I'm not wedded to the idea that thinking something is complex makes it good or that thinking it is good makes me smart.
If your tax programme requires Granny to defer against her estate until she's dead, then maybe your tax programme just sucks. Maybe opening a massive can of worms where government spending can be loaded against household equity because you can't justify stripping it out of income taxes is a terrifying precedent and the issue is actually the huge amounts of spending you're proposing.
Also, you might find that plenty of young Kiwis with families are reliant on grandparents who live locally to help with childcare or raising a family, but sure, driving them into accommodation where that's no longer possible comes with a significant cost. But no one seems to want to talk about that, or how this would basically drive the elderly away from cities and access to medical care and their support networks.
I guess every policy is great if you're incapable of considering the short-comings though.
They have similar estate sale tax deferral programs all over the world. But yeah, go on believing that it's incredibly complex when it's not, that's fine.
If houses become multi generational more than they are now, that's also not a bad thing. People putting up granny flats for their elderly parents in their back yards would also be encouraged, again making more use of suburban land. I aren't suggesting all the old folks get forced to the regions, that's not happening anyway as we are building huge retirement villages, high density multi story ones, in many of the city centres, which enables them to continue access to medical facilities and/or allow them to still be close enough to their families homes to help with child rearing if needed.
So don't vote for something different, go for red or blue. Then we can just keep land speculating, driving our cities into massive old folks home paradises where they pay no tax on their outrageously priced properties while parents of young families have to commute longer and longer hours into further and further urban sprawled "cities" where nobody can afford to build infrastructure to anymore. That's a great solution and what the two major parties are continuing to promote. Feel free to continue to vote for the status quo which has got us into a right mess.
If you aren't happy with the status quo GV (which you clearly aren't because you always complain about it), then we need to make a change away from land speculation and forcing the productive to pay the entire tax burden. Or at least tell us an idea that will help.
Every tax policy has short comings, TOPs would be no exception. Which is why tax systems need to evolve to keep addressing the current issues. Ours hasn't changed in well over a decade and should have changed probably 2-3 decades ago. This has meant everyone has learned how to best exploit the current settings, which means land/housing speculation being the most tax efficient game in town while the productive non speculators pay for everything.
Same applies to wages for work. And income tax was brought in later than land tax, and was originally supposed to be temporary. So, time to stop stealing exclusively from earned income and rebalance again. Private property rights are not equivalent to the right to live untaxed, off others' earnings.
My rationale for voting for TOP the last couple of times is that we need someone in Govt that's prepared to makes noises about the current tax system. I'm not completely wedded to their policies but I don't expect them to be carried out even if they get over the 5% threshold. So if they manage a couple of people in Govt they won't have the weight to enact their policies but may be enough to at least force the larger parties to make compromises if they end up being needed to form a majority Govt.
Sorry, there appears to be some confusion here, I'm not the one standing for office or trying to get elected and be given the powers of compulsion when it comes to tax. Why should I be required to draft an alternative manifesto before I can point out the problems with a tax policy the electorate has rejected multiple times already?
Almost all of the benefits you are citing here of this policy are actually urban planning issues and Council issues and you won't get any of the benefits with this policy until those are resolved, likewise the ability to actually build and develop the kind of infrastructure to service intensive land use. All you'll get is another tax, and the same people in charge of the current tax system (which is suffering as much from lazy administrative neglect as much as anything else) are going to be in charge of it. I'm not seeing a recipe for success here, just someone trying to flog silver bullets.
And that's not before we address the issue that governments haven't been able to bring down land prices even when they have a political incentive to do so, and we're now going to make core crown revenue contingent on land prices staying high. So... how's that going to work out? Predictably so, I suspect. And as far as deferral goes - that's all well and good overseas, but here we have a massive issue with government delivery and accountability, and giving them an endless bottomless pit of funding in the form of dipping into everyone's equity is pretty much sending the opposite message to what voters should be demanding in terms of disciplined government spending.
I am unhappy with the status quo, but just because someone floats a proposal that sounds wildly different doesn't mean it's any bloody good or above scrutiny, and TOP voters seem to struggle with this concept.
I see the irony, but your understanding of it is misplaced. Given that we all only have the ability to cast a single vote, I vote for change, because I recognise the policies from either red team or blue team are simply doubling down on failed ideology and populist idiocy. That's using all the power at my disposal to enact change. Neither blue/red team can lead us out of the issues they have caused because in doing so, they would have to reverse course on their own actions, vote against their own self interest (see the pecuniary register) and alienate a lot of their base who has got rich with their policies. Those same people fund their campaigns.
TOPs policies won't be perfect. But it will target the majority of the problems we have with the tax system. Your anger appears to be that you want a perfect policy, but perfect is the enemy of good. In our political environment that means you vote to keep the status quo forever because nobody has invented the utopian policy you appear to desire. And waiting for it only entrenches the current issues even deeper.
TOPs policies target the worst issues that currently exist in our system, rebalancing and broadening the tax base. They won't be perfect, but they will be a hell of a lot better than the current hot mess.
The local school roll is down while these old folks love to sit in their huge houses, not doing general maintenance, barely contributing to the community..
You must be talking about our street. It's nice because they are quiet and keep the street peaceful and we don't have many big houses rented out to groups, but the houses are slowly rotting, and the sections could be incredible if used properly. It could be so much more efficient use of housing and the community resources here. But it would be a downgrade for those residents to move, they don't need care facilities yet and they won't find anywhere as nice.
Meanwhile in a different country our Swiss uncle gave the 4-bed family home to the middle son as their family started to grow, uncle and auntie moved down the road into a brand new apartment (in the village of ~5000 pop), the son took 6 months off and gave the home the renovation it was waiting for.
What kind of socialist arrogance breeds someone who thinks they are entitled to decide what is best for their neighbours family home that they worked for to own and enjoy while you decide that since they now contribute less than they once did they have no value. Reap what you sow buddy.
It's debatable whether investors can pass on costs, but where they can those costs are being passed on to renters, who clearly have far less ability to absorb them than the average homeowner. But I'm guessing you and most of your mates are homeowners, so that's not your priority.
The truth is that "people who own single family homes" are (a) fairly privileged and (b) the biggest beneficiaries of our current tax settings. As a society we need to cut the mythology of the noble Kiwi homeowner and make the Kiwi productive worker our hero instead.
Ah yes, because I currently own a home, my experience as a renter before it is now totally invalidated. Good to know. Nowhere did I say I wasn't lucky to own a home, but don't let that get in the way of a good snark.
And last time I checked, the current tax settings are a response to investor-driven hoovering-up of affordable housing at the lower ends at a time of limited supply, using finance partially underwritten by the taxpayer. If you want to pretend that one of the biggest driving forces behind our current situation never happened so you can pin something on people who only owned one home and always will as 'the biggest beneficiaries of our current tax settings' which are literally a response to that then sure, but don't act like you're arguing this on the basis of genuine concern either.
Renters: only income is from labour, pay full tax. No advantage.
Landlords: pay full tax on labour and capital dividends (rental income); sometimes pay tax on capital gains (brightline).
Homeowners: pay full tax on labour, never pay tax on capital dividends, never pay tax on capital gains.
Where is the delusion? Homeowners clearly have the most advantageous settings, and you shouldn't be surprised because they are a more powerful voting bloc than renters or landlords.
The issue with these policies is they drive spending on goods, goods we don't make, so our currency goes down and our inflation goes up. So we need to tax the few net contributors we have to the tax base more, so we can spend more on goods...
Productivity will come from a very different direction to these policies, we need to fix the banking sector, de-incentivise residential home lending, incentivise business lending as a start. We need to get an ACTUAL commerce commission who can actually engage with markets to address oligopolies that plague our nation. We need to revise the RMA to stop kicking infrastructure projects in the privates and further disadvantaging our future productivity.
Rather than taxing those actually pay tax (8% of the tax base pay 47% of the net tax in this country) to give it to people to spend on goods made overseas, how about using the existing tax base to build houses for the poor rather than revising our propaganda set-up, or 3 waters that half the country does not want or even a revision of the health sector that looks a lot like central planning (shudder)?
Agreed, before we accept the current logic of "Increase taxes on X so we can spend it on Y", it's time to ask "Are we actually going to get Y? Or are we going to get a big government department, a new tax that will never be adjusted for inflation and a fraction of the amount of Y you said we would?".
Frankly my faith in the NZ civil service and ministerial accountability is at an all-time low and I think we seriously need to revisit the social contract behind the whole "We need tax because it pays for roads and schools and hospitals" argument - because my reply is increasing becoming "Does it, really?".
100% on the money.
We appear to be reaching a point where there is an inverse relationship between tax levied (on the portion of the population that actually pays tax) and the quality of public services ... ok that's a bit tongue-in-cheek but it does feel that way sometimes.
I've got no issue with paying more tax IF it means better public services, but to me better public services does not equal a burgeoning Wellington civil service swanning around the Koru lounge or attending pointless conferences and workshops.
Coming up to the 2023 election, I appear to have two choices, and two choices only:
- More tax, and crap roads, declining education standards, a police force that can't stop teenyboppers from robbing shopping malls, and a collapsing healthcare system OR
- Less tax, and crap roads, declining education standards, a police force that can't stop teenyboppers from robbing shopping malls, and a collapsing healthcare system
At least with the latter option, I can spend the savings on a new set of all-terrain tires for the 4x4 so I don't need to worry about all the potholes, and private health cover so I can maybe have the chance of getting medical care in a reasonable timeframe.
Tax me more and give me more police, nurses, teachers, firefighters etc (and pay them well) and that's ok. But all that seems to happen is the money disappears into this public sector blackhole to reappear as massive pay packets for big consulting firms and middle/upper management.
Sure is. Some people are going to experience fear as they see the OCR increased. Not exactly the scenario they expected after listening to spruikers who said house prices would continue to increase in value and interest rates would stay low. Those with big loans have some pain coming. I hope they can cope with it and survive.
I like most of JFoes comments and we agree on many things - but often he appears to think that normalisaiton of interest rates is the problem....when in reality it was the artificial distortion of them for many years via QE that is going to be the cause of the problems that we face in my opinion.....and we may only be seeing the very start of that process (and the challenges it presents).
Having interest rates at 0% causes (in my opinion) financial instability as it destroys the value/costs of risk. Higher interest rates/ cost of capital do the reverse (if free markets are allowed to naturally regulate and redistribute capital within the economy). And that is the problem - we have highly concentrated capital/debt in non-productive areas of the economy now. And that has been caused by 0% interest rates. That is the problem....no the normalisation of the cost of risk/capital.
Thus instead of the central banking narrative that lower rates lead to higher growth, the empirical and verifiable reality is that higher growth leads to higher rates and lower growth leads to lower rates. If rates are the result of growth, they cannot be the cause.
This raises some new questions. Firstly, if it is not interest rates that drive growth, what then? And secondly, why do central banks keep insisting that they are using interest rates as their main monetary policy tool, when this is simply impossible? Recently, central banks have been lowering rates, while proclaiming that this is a measure to stimulate the economy. But the empirically verifiable fact is that they lowered rates, because economic growth has decelerated. Falling growth means interest rates must follow down. And what has been the role of central banks in the growth slowdown preceding the lower rates? We may presume that they had not used their vast powers to engineer economic growth – powers they worked hard to obtain in previous decades, in the form of independence with little meaningful accountability.
Instead of unravelling this mystery, central bankers have been making counter-factual assertions about the causation of interest rates and growth. Yet we know them to be in possession of thousands of highly trained staff and the best quantitative data sources on the economy of anyone. Since the hypothesis of complete incompetence or irrationality is a last resort, it stands to reason to adopt the working hypothesis that central banks have employed these counter-factual assertions on purpose. Two reasons come to mind: Firstly, they are using the interest rate narrative in order to suggest that they are adopting beneficial policies, when this may not really be the case. Secondly, they may in this way be able to distract public attention from the true causal relationships in the economy. In this case, a far less benevolent interpretation of central bank policy becomes suggestive.
As Forder (2002) has argued, obfuscation has served central banks particularly well since they have become so all-powerful: the danger for them in this era of unprecedented powers is that the general public may simply (and rightly) link bad economic outcomes to bad economic policies adopted by central banks, not to the – now far less powerful – governments. In other words, since almost all economic keys have been handed over to the central banks, one can reasonably expect them to be blamed for the economic mess that is such a recurring feature of economic policy during those decades of ever greater central bank power. As a defense mechanism, central banks could be expected to argue that they are doing all in their power to help the economy, while pinning the blame on other actors. But for this to work, observers need to be misinformed about what the true levers of monetary policy are.
A desire by central banks to misinform would explain why they have spent vast resources on “economic research” – pseudo-scientific writings that are often far removed from reality, but are designed to place any blame for the terrible economic performance that they have been responsible for on other actors – preferably the government, fiscal policy or ‘irrational’ and ‘uneducated’ ordinary people who are looking for ‘easy answers’ or seeking ‘populist explanations’, while anyone contemplating the possibility that big banks and central banks might not always look after the public interest and instead might collude in order to put their own objectives first is identified as a ‘conspiracy theorist’. In other words, the “economic research” produced by central banks is usually of a kind that at best looks like political PR to objective observers, if not outright propaganda. Link
See comment below. I don't care where we park interest rates - just pick somewhere beteen 1% and 4%. My point is that moving interest rates up or down quickly is really dangerous - and pretending that interest rates have the impact that monetarists think they do is naive in the extreme.
Speculation continues at high and low rates - although I agree that low rates encourage bad behaviour. My point though is that very rapid changes to a critical variable in the global financial and trading system is mind-boggingly stupid. Whether the change is up or down is not the point. What happened in the UK is a classic example. Pension funds hedged against changes in bond yields, but when the changes happened quickly (due to the mere threat of a major out of cycle rate hike), their positions quickly unravelled and they ended up selling bonds left right and centre to get the cash to cover their margin calls (which pushed yields up and created a doom loop).
If we are so set on reaching a long-term average - then move gently to that average and stop it with the macho bullsh*t already.
"Chinese-owned British Steel has reportedly asked the UK Government for substantial public subsidy"
Highly paid union workers? Don't know what coking coal is produced in the UK but if imported then paying USD prices. Similarly for iron ore. Other energy costs will impact as well but that's no different from other UK industries.
don't worry same thing has happen in NZ, everyone pushed for a big wage increase to cope with rapid inflation. As companies BS start to take a pounding and then if prices slip back down, they will start to look at cost cutting measures, the biggest one most companies carry...yep wages/salaries. Hope people have a rainy day fund stashed as I think a few will need it.
I was talking to a labour economist at a seminar who believes we're in a unique situation here.
He reckons at the best of times, the NZ economy operates at high labour capacity utilisation compared to the average OECD levels. During tough times, NZ has historically witnessed higher outflows of workers, mainly out-of-work migrants returning to their home countries and Kiwis moving to greener pastures. This reduces the slack in the labour market that one would expect during a recessionary economic phase.
Good comment. However a large chunk of technical services employment is vulnerable to a construction slow down. Think all the design professions.
Also, is there really a big infrastructure pipeline? Labour have not advanced plans for many roading projects, and things like light rail are going nowhere fast.
In terms of labour market slack and international labour movements, there’s less slack now as two of the main destinations for kiwi workers, the UK and Aus, have vulnerable economies. We may see positive net migration of kiwis as less leave for overseas, and more return.
This will help labour shortages in NZ and mitigate rising wages, but may also result in higher unemployment.
I agree. There will still be demand for skilled labour in economies such as UK and Aus because of ageing population and expedited energy transition plans.
The infrastructure pipeline here in NZ is smaller in $ terms than just the energy projects announced in Northern Territory. Australia, as a whole, has some half a trillion dollars worth of projects sitting at different stages; so expect those skills to move westwards leaving a big gap in local markets.
Russia's attempt to annex part of Ukraine doesn't seem to be having much impact on the ground. Ukraine's attacks continue, this time Lyman has fallen and there is talk of a breakthrough near Kherson. ISW does not give much credence to Russia using tactical nukes:
"The chaotic agglomeration of exhausted contract soldiers, hastily mobilized reservists, conscripts, and mercenaries that currently comprise the Russian ground forces could not function in a nuclear environment. Any areas affected by Russian tactical nuclear weapons would thus be impassable for the Russians, likely precluding Russian advances"
I guess given Russia's actions around Chernobyl, there is a chance they would send troops into a nuclear wasteland and simply not worry about the resultant radiation sickness.
https://www.understandingwar.org/backgrounder/russian-offensive-campaig…
I'm no Putin fan but there's zero chance he'll go nuclear. Someone would fix that problem before he got near the button.
I'm so confident about the resulting power vacuum and you're unlikely to get a Gorbachev moderate as opposed to another strongman who wants to flex their muscles. That's the bit I'm worried about.
Might not use a number of small tactical nukes against oncoming fronts of the Ukraine army approaching the annexed areas? Apparently if they are small and detonated as air bursts the radiation impacts can be minimal.
I would put their chances of use as moderately high.
I still think there are lines he won't cross and I suspect that's one of them.
Far more likely the Russians will discover 'fissile material' somewhere and try to convince people that the US/Nato allies have used some sort of dirty bomb in said areas, but I can't see him actually using a nuclear weapon.
He's being backed into a corner and that is when he'll get unpredictable. I'm not convinced totally either way but think the odds are he will seriously consider escalation. As far as Europe is concerned the situation is rapidly becoming much, much more serious as they realise they were asleep while the rat stole the cheese. CNN are running a headline that suggest nine NATO country presidents favour Ukraine's membership (I couldn't find just who they were), but with 30 members,28 in Europe, that is less than half. I cannot see it happening as it would immediately commit NATO to a full scale war, and the politicians are too afraid of escalation. Any NATO response would need to be overwhelming and very very fast with no warning.
Depending on what weapons Russia would escalate to is an important question, as the wrong type would poison the land for an awful long time. So the outcome wouldn't be good anyway. Putin keeps digging his hole deeper. To try to escape accountability he may engineer a way for the Chechen leader to get some nukes to use, and then say he didn't authorise it so it wasn't him.
The main body of conscripts will not have made the field yet, this is a building force so its too early to call out this has had no impact. Having said that, actually even getting the clothing and arms required for 200k new personnel to fight a motivated enemy in a Russian winter seems a big ask.
Tactical nuclear weapons have a significant and somewhat unpredictable fallout area. Large numbers of Russian troops leaving an area without being pressed would be a warning sign...
There are several different types, but even an airburst can have a fireball hit the surface and irradiate debris. A neutron bomb is designed to be a people killer with high radiation, with very short contamination period, and limited blast damage. Not sure if they can be fitted as a Tactical nuke. At the end of the day it is semantics. A nuke is a nuke and that is a line that cannot be pulled back from once it is crossed. Even without full understanding of the horror of deploying nukes at the time (It was still all theoretical despite testing) the US is still castigated for their use against Japan. I hope he won't cross that line.
Reality seems to have gone against this argument. Ukraine are still attacking, NATO is still supportive. The sabotage of Nordstream means that the main reason Europe might push Ukraine to peace talks has gone. Russia is no longer able to resume their previous supply of gas to Europe, so they have to find another way regardless of the war.
The annexation has not made any difference on the ground. Putin claiming ownership of regions he does not fully control and in some cases is retreating further looks like a desperate move.
The legal position is set out very clearly here:
5.5 Consistent with this general approach, international law has not treated the legality of
the act of secession under the internal law of the predecessor State as determining the effect
of that act on the international plane. In most cases of secession, of course, the predecessor
State‟s law will not have been complied with: that is true almost as a matter of definition.5.6 Nor is compliance with the law of the predecessor State a condition for the declaration
of independence to be recognised by third States, if other conditions for recognition are
fulfilled. The conditions do not include compliance with the internal legal requirements of
the predecessor State. Otherwise the international legality of a secession would be
predetermined by the very system of internal law called in question by the circumstances in
which the secession is occurring.5.7 For the same reason, the constitutional authority of the seceding entity to proclaim
independence within the predecessor State is not determinative as a matter of international
law. In most if not all cases, provincial or regional authorities will lack the constitutional
authority to secede. The act of secession is not thereby excluded. Moreover, representative
institutions may legitimately act, and seek to reflect the views of their constituents, beyond
the scope of already conferred power.That is a commendably concise and accurate description of the legal position. Of major relevance, it is the legal opinion of the Government of the United Kingdom, as submitted to the International Court of Justice in the Kosovo case. Link
Which way would you have voted when the people carrying out the referendum carried guns and had the reputation of not being afraid to use them, and being able to do so with impunity audaxes? The referendum was BS garbage! Just another move to legitimise and illegal act.
In late March, Milošević’s government refused to accept an ultimatum that he allow 30,000 NATO forces to enter Serbia and effectively occupy Kosovo. The proposal also asserted that NATO forces had the right to move freely throughout the entire country, not just Kosovo, and that NATO personnel “shall be immune from all legal process, whether civil, administrative, or criminal.” The demands were even too much for former U.S. Secretary of State Henry Kissinger, one of the greatest warmongers in U.S. history. Kissinger criticized the ultimatum, calling it a “terrible diplomatic document” and “a provocation, an excuse to start bombing.” It seems that Kissinger’s analysis was correct, as a senior State Department official boasted at the time that the U.S. had “deliberately set the bar higher than the Serbs could accept.” Link
After the GFC, the talented economist Hyman Minsky got a lot of attention. Minsky disagreed with a lot mainstream views - particularly that economies tend towards equilibrium. His forecasts of how financial crises would play out as speculative asset bubbles popped proved to be highly accurate.
Over the weekend, people have reasonably been asking what Minsky would have made of the Fed rate hikes. The general view is that he would have said that 'shock and awe' increase in interest rates are obvioously going to be highly destabilising - and when the bubbles, leveraged positions, over-valued financial assets / funds etc start to sway, they build their own momentum and things start to look very dicey.
Turning to custard? Maybe.
I have a simplistic idea for our country. I think we need a population target in this country to reach a new and lower level of consumption for our population. Where the houses available match the population and we live within the export income we receive. Where we produce much of what we need and reduce reliance on imports. This would mean a reduction in our current lifestyle choices and the probable loss of many of our citizens who would not want to live this way and emigrate. These losses would need to be made up with immigrants of all skill levels to maintain said infrastructure and economic output. These new immigrants along with our declining birth rate should maintain a viable enough population to maintain our country’s current level of infrastructure and economic output. Implement this system over a decade to allow for adjustments. Of course this would never fly as it involves living with less choice and living within our means. Both unpopular for most.
Our declining birth rate is a response to population pressure and the costs that come with it.
Maybe we could see how many kids Kiwis wanted to actually have if we stopped making it so hard for them to raise families. Otherwise you're treating the symptoms, not the disease.
I find it enlightening how many of the young women in our extended family and acquaintances are not interested in motherhood. So refreshing to see these young ladies making informed choices and not being coerced into motherhood through some means. Unlike my my mothers generation where the choices were so narrow that they were almost forced in to motherhood by society.
https://www.nzherald.co.nz/business/igneo-wins-oio-approval-for-waste-m…
Hmm private equity market... Value reductions and some may be selling to free up liquidity, reduce debt exposure. So not so much leveraged buyouts but plenty of churn towards those with bigger pockets. Until more and more is consolidated into the hands of a few giant financial institutions. You will own nothing and be happy. The greatest con job ever on humanity... Own everything first by force to be followed by converting worthless tokens into real things.
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