Breakfast briefing; Stupidity has consequences

China applies to join the TPP; World Bank dumps key report that favoured NZ; US retails sales strong; OECD wants global ETS; UST 10yr 1.34%, oil holds, gold sinks; NZ$1 = 70.7 USc; TWI-5 = 74

17th Sep 21, 7:42am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand with news great power rivalry continues in the wake of some blindingly stupid choices made in Washington five years ago.

First today, we should note that China has formally applied to join the Trans Pacific Partnership (now the CPTPP). There is grand irony in this, because the TPP was originally an American idea to contain China. But Trump thought he knew better and pulled out unilaterally. That had little impact other than to sideline the Americans. The deal went ahead to be the world's largest multilateral trade pact that had high labour and environmental standards. China's push to join will take a long time, but it sort of isolates the Americans in this essentially Asian trade area.

Its an application that comes just one day after US, the UK and Australia announced new defense partnership aimed at containing China.

Separately, we should also note that China has now vaccinated 1 bln of its people against Covid-19, about 70%.

And China is also the center of a storm at the IMF and the World Bank. The current IMF boss has been accused of trying to manipulate scores in the World Bank "ease of doing business" assessment to improve the results for China and other countries when she worked there. That report has ranked New Zealand as top for a while. Now the World Bank has dumped it due to the dodgy ethics behind its construction.

Back in China, cement prices are surging and now at an all-time high as production cutbacks bite resulting from tougher environmental standards being enforced.

And the Evergrande train wreck keeps developing with the company offering investors three options - cash installments, property swaps, or promissory notes. It is unlikely to appease the thousands who have besieged the company headquarters. But investors face a 75% loss. Meanwhile Chinese stock exchanges are limiting the ability to trade its securities.

In a small positive data surprise, US retail sales rose in August when a fall was expected after the July fall. And it was an August rise that came despite a continuing weakness in car sales, undermined by low production amid the shortage of computer chips. The overall result is actually quite impressive.

Meanwhile, the level of new jobless claims continued to fall on an actual basis (up marginally on a seasonally adjusted basis). This is encouraging also. However the total number of people on these types of support benefits has fallen to just over 2.3 mln, it lowest level since the onset of the pandemic. But the fall is now a combination of a lower number of people claiming, and a rise in the expiry of qualifications.

Also positive in the US is the September edition of the Philly Fed factory survey. This turned back higher in its close-watched "current conditions" indicator, and is still reporting very high price increases. Firms in that region remain optimistic about future growth, although less so that the previous very high readings.

In Canada, data for housing starts, and employment growth stayed at good levels although both are starting to drift.

The OECD is looking at the widely disparate carbon trading systems, from the EU, NZ, Australia, the US and China, and is worried that they will be the spark for a new trade war. It is trying to corral countries into finding a more global system that can't be gamed, arbitraged, or abused, one that will avoid the EU's inclination to slap tariffs on anyone who doesn't pay the prices of their system.

Meanwhile on the commodities front, the cost of container shipping rose another +2.9% over the past week with no sign these rampant increases are slowing yet. The Baltic Dry index is staying at its recent highs.

In Australia, their new lockdowns are skewing their labour market noticeably now. They lost -146,000 jobs in August, -78,000 were part time, -68,000 were full-time jobs. But participation fell as an unexpectedly large number of people dropped out of their workforce, and that left their official jobless rate at 4.5%. The number of hours worked fell by -3.7% in August from July.

At the same time, inflation expectations rose sharply in Australia from 3.3% in June to 4.4% in September.

And staying in Australia, there were another 1351 new community cases in NSW reported yesterday with another 1252 not assigned to known clusters, so going backwards there again. They now have 14,273 active locally acquired cases. Victoria is reporting another 514 new cases yesterday, so it is worse there too. Queensland is reporting one new case. The ACT has 15 new cases again. Overall in Australia, more than 44% of eligible Aussies are fully vaccinated, plus 25% have now had one shot so far.

The Thursday session on Wall Street has traded lower since its opening, with the S&P500 now down -0.3% in early afternoon trade. Overnight, European markets were mostly higher between the range of Paris up 0.6% and London up +0.2%. Yesterday the very large Tokyo market fell another -0.6%. And Hong Kong dived another another -1.5%. Shanghai fell another -1.3%, with building sell-offs. It isn't turning out to be a good week in Asian equity markets. The ASX200 closed up +0.6% and the NZX50 Capital Index closed down -0.2%.

The UST 10yr yield opens today at just over 1.34%, so recovering another +4 bps from this time yesterday. The US 2-10 rate curve is at +111 bps and marginally steeper. Their 1-5 curve is steeper too at +76 bps, while their 3m-10 year curve is steeper at +129 bps. The Australian Govt ten year benchmark rate starts today at 1.28% and also up another +3 bps. The China Govt ten year bond is at 2.91% and down -1 bp. The New Zealand Govt ten year is now at 1.82% and up +3 bps.

The price of gold has fallen another -US$35 today and now at US$1757/oz which takes it back to about where it dipped briefly to in mid-August. It hasn't been a good day for the yellow metal. Silver has fallen harder.

But oil prices have held unchanged overnight so in the US they are now still just on US$72.50/bbl, while the international Brent price is now under US$75.50/bbl.

The Kiwi dollar opens today at just on 70.7 USc and losing -¼c since this time yesterday. Against the Australian dollar we are up to just over 97 AUc. Against the euro we are little-changed at 60.1 euro cents. That means our TWI-5 starts today still at just under 74 and still right at the top of the 72-74 range of the past ten months.

The bitcoin price has slipped today, now at US$47,622 and -0.9% softer than this time yesterday. Volatility in the past 24 hours has been modest at just over +/- 1.3%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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90 Comments

by powerdownkiwi | 17th Sep 21, 7:55am 1631822121

There's an interesting seminar coming Monday evening:

http://wiseresponse.org.nz/2021/08/31/seminar-are-there-biophysical-lim…

To be chaired by Girol Karacaoglu, School of Government/Vic. Simon Michaux, Steve Keen, Tim Jackson, Susan Krumdieck - should be a doozy.

by Kate | 17th Sep 21, 9:38am 1631828321

Thanks! Have just posted to my students. Should be very good.

by Uninterested | 17th Sep 21, 11:37am 1631835460

I prefer independent thought rather than to become a clone of my teacher....

by Plutocracy | 17th Sep 21, 10:17am 1631830664

Current industrialization has a foundation in the continuous supply of natural resources. The methods and processes associated with this foundation have significant momentum. This paradigm will not be undone easily. Human nature and human history make it so. Currently, our industrial systems are absolutely dependent on non-renewable natural resources for energy sources.

Current thinking is that all industrial businesses, will replace a complex industrial ecosystem that took more than a century to build. This system was built with the support of the highest calorifically dense source of energy the world has ever known (oil), in cheap abundant quantities, with easily available credit, and unlimited mineral resources. This task is hoped to be done at a time when there is comparatively very expensive energy, a fragile finance system saturated in debt, not enough minerals, and an unprecedented number of human populations, embedded in a deteriorating environment.

It is apparent that the goal of industrial scale transition away from fossil fuels into non-fossil fuel systems is a much larger task than current thinking allows for. The majority of infrastructure and technology units needed to phase out fossil fuels has yet to be manufactured. Recycling cannot be done on products that have yet to be manufactured. It is clear that society consumes more mineral resources each year. It is also clear that society does not really understand its dependency on minerals to function. Availability of minerals could be an issue in the future, where it becomes too expensive to extract metals due to decreasing grade.

It sounds like he needs Nymad to tell him about 'technology' and how this is all a non-issue.

by powerdownkiwi | 17th Sep 21, 10:45am 1631832330

Chuckle. I wonder if he's sited (sic) it yet?

T'wll be interesting; I'm told a grunty cross-section are going to attend.

by scarfie | 17th Sep 21, 10:49am 1631832543

Inertia, as opposed to elasticity, I'm not sure many really grasp that. Even some that get it in one field miss it in others because of their blinkers.

by nymad | 17th Sep 21, 11:44am 1631835891

Thanks.

Might tune in for the echo chamber of righteous doomsdayers and Steve Keen idiocy.

by Plutocracy | 17th Sep 21, 12:36pm 1631839004

Indeed, you could be the voice of optimism and educate them on how we can leverage technology to overcome all natural limits.

by nymad | 17th Sep 21, 1:08pm 1631840888

When did I say tech could overcome physical limits?

I said tech determines the ability to extract and consume. I never sad it can overcome physical limits. (Unsurprisingly) You're trying to misrepresent me, spaceman.

by powerdownkiwi | 17th Sep 21, 2:14pm 1631844856

Interesting

by profile | 17th Sep 21, 8:04am 1631822661

Putting our sheep and beef country on the pyre isn't sacrifice enough to please the global warming head priests. So we can kiss goodbye the theoretical 0.17 degrees of cooling the Paris agreement was going to bring us by 2100.

'...Of particular concern are Australia, Brazil, Indonesia Mexico, New Zealand, Russia, Singapore, Switzerland and Vietnam: they have failed to lift ambition at all, submitting the same or even less ambitious 2030 targets than those they put forward in 2015. These countries need to rethink their choice," said Bill Hare, CEO of Climate Analytics, another CAT partner.

...None of the world's major economies -- including the entire G20 -- have a climate plan that meets their obligations under the 2015 Paris Agreement, according to an analysis published Wednesday'

https://edition.cnn.com/2021/09/15/world/climate-pledges-insufficient-c…

https://onlinelibrary.wiley.com/doi/full/10.1111/1758-5899.12295

by Foxglove. | 17th Sep 21, 8:14am 1631823254

Think read some weeks ago that Switzerland’s powers that be had voted to wind down on their emission obligations as they realised that what the nation was actually doing amounted to virtually nothing in terms of a global percentage, and there was little point in doing something about nothing.

by murray86 | 17th Sep 21, 8:16am 1631823416

Of those countries a number are so small their contribution is like ours so small as to make little difference.

But there is still much doubt, and PDK possibly won't appreciate this comment but the book is not yet written on what will happen if the average temperature increases by 1.5 degrees or more. It will be clear that parts of the planet will essentially become uninhabitable, but to be fair there are are already, and have always been parts that are for all intents and purposes, uninhabitable without significant technological intervention (Antarctica comes to mind). Weather events will become much more significant, and some stretches of coastal land may well vanish under water or be washed away.

The big concern is with the rise in average temperature become self sustaining? The extra energy feeding sufficiently more wild fires to keep the rises going. All this will mean existing populations will end up being limited to smaller land areas, further exacerbating the issues with high population pressures. And yet population size is still not a point of discussion in all this.

by Beanie | 17th Sep 21, 8:48am 1631825319

To be fair to ACT they have stated their position on population size in NZ. From their website "we are a pro immigration party".

Oh I wish there was a credible opposition party that one could vote for...

by Galloleous | 17th Sep 21, 8:53am 1631825610

NZ needs immigration, in moderation of course. Anti all immigration is ignorantly ideological.

by HouseMouse | 17th Sep 21, 8:55am 1631825737

Nailed it

by rastus1 | 17th Sep 21, 9:02am 1631826124

If you want more people there is any number of overpopulated places you can move to - see ya later.

by murray86 | 17th Sep 21, 8:56am 1631825787

Why does it need immigration? The skills can be developed here. Technology allows companies to reach out across the world to gain the knowledge and skills to do almost anything. Companies can sponsor people to travel to learn if necessary. Apart from undercutting local wages, i don't see much rationale that stands up to scrutiny otherwise.

by HouseMouse | 17th Sep 21, 9:04am 1631826278

Good points.

But let's be realistic, we still need at least a moderate level.

But as you say if we actually invested in training and development then that need should reduce.

However remember that a certain proportion of our population has no interest or aptitude to upskill.

by murray86 | 17th Sep 21, 9:11am 1631826672

You haven't said why you believe we need any immigration?

by HouseMouse | 17th Sep 21, 9:34am 1631828057

We need 'some' immigration because we have skill shortages in certain areas.

We have an ageing population, we will need more carers- as one example.

I am all for upskilling kiwis, and also importantly and linked to that providing better employment conditions and pay. That's a big part of getting more kiwis into these areas.

But there's still an aptitude issue.

by murray86 | 17th Sep 21, 10:06am 1631829980

Disagree that thee is an aptitude issue. There is an attitude issue though. Carers is not a skill shortage issue it is an issue of undervaluing their role and work. Immigration is not needed, fair pay is.

There needs to be greater separation between benefits and work incomes. those on a benefit lose too much to quickly when they start transitioning to work. I suggest that that is because there is some institutional ignorance that doesn't understand that physical, emotional and intellectual fitness are impacted when moving from doing nothing to doing something, and people need to be given time to transition and realise the benefits of working. The body and mind has to cope together as people learn confidence. For some this will be a struggle. But there needs to be strong encouragement. Media calls around poverty are mostly around people on benefits. I suggest build in strong motivators to get them wanting to work will help. But then there needs to be the work available.......

by Uninterested | 17th Sep 21, 11:44am 1631835891

For me school was moderate, university was tough and relentless, work was moderate but relentless and had responsibility but paid well.

That was the progression in work ethic. To have no breaks was important. ie I had no OE period of drunken/ drugged slackness

by Shoreman | 17th Sep 21, 12:24pm 1631838282

Murray86 - In the real world in this country try finding young people who are prepared to work outside in the sun and heat to pick fruit or to even be reliable no matter what you are prepared to pay them, when they realise they need to work 8-10 hours everyday until the harvest is done - game over.

The Pacific islanders are real happy to do these seasonal jobs, it's good money for them and they work bloody hard and are appreciated and looked after.

In labour intensive seasonal jobs we are screwed without over seas workers.

by Lapun | 17th Sep 21, 12:32pm 1631838728

Short term stays in NZ are not counted as immigrants in the stats - you need to stay a year. So the PI fruit pickers is an issue separate from immigration. Picking seasonal fruit requires outsiders; whether they are Kiwis or PIs. Strengthening ties with our neighbours and helping their economies makes good sense - that's why reading about exploitation of PI seasonal workers makes me angry. It is a good scheme if well administered.

by murray86 | 17th Sep 21, 12:37pm 1631839065

I know plenty actually and they are all farm workers! Long hours, hard work and some don't even earn that much, but they are there. The problem with fruit picking is that it is seasonal, and the season is very short, and probably until recently the pay really sucked! I know I did it for a while. With a little experience in it i don't buy the rhetoric that a lot of the orchardists spout.

by lowercase capitalist | 17th Sep 21, 10:11am 1631830314

Why do we need to import people though? There's already 5 million of them here and a large number of them are already capable of being a carer.

Google tells me that the average carer makes $47,288 a year, it's a salary shortage, not a labour one.

by Lapun | 17th Sep 21, 12:25pm 1631838354

Brain surgeon maybe yes necause it takes a decade to learn. Carer we can train our own in a few months. Under cutting pay by relying on immigrants is wrong.

by KH | 17th Sep 21, 9:10am 1631826608

We do need international cross fertilisation of skills and ideas. With a stable population policy it's still easily done. One out, one in.

by murray86 | 17th Sep 21, 9:14am 1631826852

Cross fertilisation can still be achieved without immigration. And your one in - one out idea would never work. Kiwis going on an OE would be being asked to surrender their citizenships, and residency would only be dependent on those they replaced not coming back. Just too hard.

by Palmtree08 | 17th Sep 21, 1:46pm 1631843203

No, one out, one in easily achieved. Those with residency and citizenship, jump the queue. Thing is, this massive movement of people around the globe every second of the day, is contributing to biosphere collapse. Perhaps thinking twice about adding to this emissions driven exodus, may be a net benefit for a liveable future?

by refactornz | 17th Sep 21, 3:15pm 1631848530

Why don't you go a step further and ban people from leaving their local area? Or maybe ban them from leaving their house?

NZ can support way more than 5,000,000 people.

by Cobolt24 | 17th Sep 21, 10:45am 1631832304

The only issue I have with that policy on ACTs website is how vague it is. If it means a laissez faire approach to highly skilled/in demand people I'm fine as long as it means they take into account the state of infrastructure there to support it. If it means tens of thousands of student visas only for them to work at petrol stations, I'm against it.

by murray86 | 17th Sep 21, 8:53am 1631825620

Yes, just like the others, they don't get it. Worrying really.

by HouseMouse | 17th Sep 21, 8:54am 1631825669

Yep that's a big cross against them.

But expected, right? As neoliberals they believe in freedom of movement of people across borders etc.

by KH | 17th Sep 21, 9:05am 1631826330

I find it difficult to vote for ACT for a single reason. Clueless on the need for a stable population policy.

by sparrow | 17th Sep 21, 10:49am 1631832557

They plan to remove all restrictions on foreign investment and land use also. So if you want to sell of NZ to the likes of Shell and Exxon so they can carpet it with pine trees, vote for those clowns.

by HouseMouse | 17th Sep 21, 10:56am 1631832986

Yeah, I guess it's a reminder that despite Seymour's charm and articulateness, they have plenty of policies to dislike

by Lapun | 17th Sep 21, 12:39pm 1631839194

At least they have policies. I'd rather risk a beer with a taste I dislike than a bland tasteless beer. I appreciate a party that makes the diificult arguments. Surely better than announcing a climate change emergency and then postponing even making a plan or having a big public apology for deporting Pacific Islanders decades ago while still doing it during a pandemic. However still not sure who will get my vote next time.

by Casual Observer | 17th Sep 21, 2:54pm 1631847260

Just keep voting Labour to sell off NZ to offshore owners to plant trees on farmland. Ikea have recently been approved to buy a 27,000 stock unit farm in Southland - to plant trees and leverage of NZ's environmental creds offshore. https://www.stuff.co.nz/business/farming/126397325/ikeas-investment-arm…

by powerdownkiwi | 17th Sep 21, 10:13am 1631830405

Murray - when (not if) it gets into feedback-loop territory, all bets are off. Mass extinction, probably including us.

So you have to stay prior - if indeed we aren't too late already. There is much mixed messaging; the IPCC seems to have a Woke/green growth element, for instance. Fish are the litmus test for me; they are migrating away from the Poles at 5-10 km/year. That tells us the rate of change. Trees, of course, cannot move as fast and may succumb.

In theory, to stay below/at 1.5 degrees (which may or may not be enough to avoid tipping points) we need to be off carbon completely, by 2030 (E/R say 2025). And Labour are just wasting 5 months. Excellent. There's leadership, then there's virtue signalling.

by murray86 | 17th Sep 21, 10:34am 1631831661

We are a carbon based life form PDK, we can never be "off" carbon completely, but I do agree that the emission rate needs to drop a long way back to restore some form of balance. The biggest problem is population size. No one acknowledges it. in all the papers, and debates i have seen it gets mentioned almost as a side bar, not something significant. I believe that nothing can be achieved until the whole world agrees that the population MUST fall back to some sustainable level (consumption of resources). But that will result in some very hard and uncomfortable conversations. But unless everyone agrees and the limits and solutions are universal (world wide birth control) then it will never work. Rogue countries will use their population size to threaten others. It's already happening! So are we past the tipping point? I fear that is a moot question as it won't matter if there is not universal agreement.

by profile | 17th Sep 21, 10:43am 1631832204

When are you going off carbon completely PDK?

The trees are doing just fine so relax about them not being able to move fast enough.

'To track global tree cover changes, the researchers studied data from advanced very high-resolution radiometers aboard a series of 16 weather satellites covering the years 1982 to 2016. By comparing daily readings, the researchers were able to see small changes occurring regularly over a relatively long period of time—which added up to large changes. Over the entire span, the researchers found that new tree cover had offset tree cover loss by approximately 2.24 million square kilometers—which they note is approximately the size of Texas and Alaska combined.'

https://phys.org/news/2018-08-global-forest-loss-years-offset.html

by powerdownkiwi | 17th Sep 21, 10:49am 1631832592

I planted my forest many years ago. Reckon I'm neutral or better, but don't worry about it. I just did it for the planet, for everyone. That why I'm not in the ETS.

Nor am I a huckster - what's it like?

by profile | 17th Sep 21, 11:42am 1631835756

Well we have a few things in common then.

by Beanie | 17th Sep 21, 2:43pm 1631846588

"Reckon I am neutral or better"

Love to see your maths on that one. Unless you are taking carbon from the air and storing it underground for millions of years you are kidding yourself about being carbon neutral. Those trees growing on your land will be releasing every bit of carbon back into the atmosphere when they eventually die and decompose. Unless it's a permanent forest that will never be cleared, then congratulations, you have used up that finite land for your own personal offset so nobody else gets to use it.

Living a low carbon lifestyle is commendable, but every time you buy something you are sucking oil out of the ground. Don't kid yourself about offsetting it.

by Beanie | 17th Sep 21, 12:42pm 1631839348

And when I tut-tut my youngest about driving his 400+hp monster with a lead foot he replies with "if I don't use it do you really think nobody else will?..every drop of oil will be sucked out and burned".

He is cleverer than I thought. He is also screwed.

by Lapun | 17th Sep 21, 12:42pm 1631839355

The oceans are warming so why aren't the fish migrating towards the poles?

by Rob Reid | 17th Sep 21, 12:56pm 1631840216

I don't specifically know about the fish, but the poles are warming much faster.

by powerdownkiwi | 17th Sep 21, 1:01pm 1631840460

Lapun - they are. As I pointed out. At 5-10 km/year.

by The Person | 17th Sep 21, 2:41pm 1631846514

you said they were migrating away from the poles. If the poles are warming, you migrate away fromthem towards even warmer water at the equator?

Now, migrating towards the poles, that make much more sense.

by powerdownkiwi | 17th Sep 21, 3:13pm 1631848417

Ah, my bad, mental block x2. I meant away from the Equator.

never get old.....

by Pietro | 17th Sep 21, 10:56am 1631832997

Many people get this wrong: temperatures have already increased by around 1.2* above the 1860(?) benchmark, as in limiting temperature rises to 1.5* above what they were then. The battle now is about limiting rises by that last 0.3*. New Zealand will have no impact on that unless it pulls the plug and sinks beneath the waves. In fact, that would probably increase global emissions given that we are efficient protein producers by virtue of our animals being grass fed. I am not a climate change denier, by the way. Solar energy, rain water, grow our own food, don’t buy crap from Asia. All means more in climate terms than buying an EV.

by Galloleous | 17th Sep 21, 8:51am 1631825498

That may also be due to the fact that for us, using the 1990 amount of emissions as our base line is a stupid idea. We were still intensifying well after that date, unlike other countries that have been basically at max intensification for over 100 years.

Different countries need different base dates.

by powerdownkiwi | 17th Sep 21, 9:42am 1631828571

Nonsense. You just need to do what has to be done.

Not I, said the little............hen.

by murray86 | 17th Sep 21, 8:07am 1631822822

So China wants to join the CPTPP? NZ should take the opportunity to have the clauses that penalise and limit our independence taken out.

by Gummy Bear Hero | 17th Sep 21, 9:12am 1631826744

... if China was allowed to join AUKUS ... the new nuclear powered submarine alliance , would it be CHAUKUS ? .... has a nice ring to it .... Romania would be better though .... who doesn't love a RAUKUS ... 'specially on a Friday ....

by murray86 | 17th Sep 21, 9:19am 1631827159

The telling point is we are being excluded from almost every functional defence arrangement. We are seen as having no functional military capability, and therefore unable to effectively contribute in a meaningful way at the sharp end.

I'm listening Nania Mahuta on RNZ expose her blinkers on nuclear powered ships. Really poor strategic understanding, but demonstrates why NZ would be seen as an unreliable defence partner with our left leaning history and shooting ourselves in the foot.

by frazz | 17th Sep 21, 9:24am 1631827482

5 Eyes..seem quite strategic Murry?

by murray86 | 17th Sep 21, 9:33am 1631828031

It's only information gathering and sharing. Nothing else. What information does Waihopai or Tangimoana gather that is that important? It is as minimal as it is possible to get.

by Hans Brink | 17th Sep 21, 10:04am 1631829875

I agree with you murray, but any contribution from our small economy would be meaningless in the scheme of global military matters. I say save our money for more local things, keep trading with whoever wants our stuff and if it all turns to custard then I am sure Aus US will quickly fill our ports and airfields with war machines. No doubt closely followed with soldiers.

by Uninterested | 17th Sep 21, 11:47am 1631836030

Freeloader

by C_T_20 | 17th Sep 21, 12:11pm 1631837493

No, Realist. Unless you tell us where the money comes from to be equal partners in that club…?

by sparrow | 17th Sep 21, 10:51am 1631832675

What exactly could we contribute to the defence arrangement? An ageing Hercules?

by Pietro | 17th Sep 21, 11:06am 1631833613

We most definitely have not been excluded. We couldn’t afford nuclear subs, which is what this is mainly about. North Australia is a massive strategic location, too, in terms of the Indo-Pacific. We are in 5 Eyes, are about to do a trade deal with the UK, and are inextricably bound to Australia. And how are we going to know if nuclear subs are in our EEZ? Don’t ask, don’t tell. Nudge, nudge, wink, wink. We are a western-style democratic nation, and will remain so. Cultural proximity is everything.

by Uninterested | 17th Sep 21, 11:48am 1631836102

Yeah and what is worse is if those nuclear subs in NZ waters are Chinese!

by murray86 | 17th Sep 21, 11:50am 1631836218

Shh! You'll frighten the lefties into denials!

by murray86 | 17th Sep 21, 11:49am 1631836141

Which functional defence arrangements are we active in currently? We still attend ASEAN exercises but due to lack of equipment to to just be observers. We have a very modest participation in RIMPAC, What else?

by CWBW | 17th Sep 21, 8:23am 1631823797

Evergrande bonds are selling 28 cents to a dollar. If CCP is forced to bail it out, bond holders will make a fortune. Nothing like making money trading on moral hazard.

by Audaxes | 17th Sep 21, 8:44am 1631825056

Indeed: Fannie Mae and Freddie Mac are large companies that guarantee most of the mortgages made in the U.S. Together, they are also known as the government sponsored enterprises (GSEs). Historically, they were private companies operating with government permission and under government regulation. In late 2008, following the financial crisis, the U.S. government took over operations at both companies. Link

Hence US banks' balance sheets are loaded with US government guaranteed agency mortgage backed securities - graphic evidence

by murray86 | 17th Sep 21, 8:52am 1631825539

That's an interesting bit Audaxes. Makes me wonder what does it mean? Does it mean that because it's Government run and sponsored, that when shit happens more leeway can be given to allow people to fight their way out and keep their homes rather than losing everything? Or does it just mean that the US government becomes responsible for ordinary people being driven to the wall?

It seems that a lot of the events that impact on ordinary folk are the result of Government action or inaction, and that can mean it is extremely unjust that those who pay the most as a consequence are people who don't have much to come and go on, and therefore can lose everything very easily.

by Rob Reid | 17th Sep 21, 10:17am 1631830622

The Evergrande situation gets a mention in this interesting interview:

https://www.youtube.com/watch?v=GCEaubSZfMc

But the interview is more about the risk that China takes Taiwan because it feels strangled without control of semi-conductor production (as Japan felt strangled without control of oil and bombed Pearl Harbour). There is a comment from someone called Jeff Teza that caught my eye:

George is on it. I've been in the semiconductor industry for 30 years, started one of the first Fabless companies, the CEO of TSMC was on my Board of Directors in the late 90's, and I filled a passport making trips to Hsinchu to visit TSMC. Semiconductor capability is the biggest geopolitical strategic issue in the world. The average american is clueless how big a deal this is. In the 1960's your "transistor radio" had 5-7 $1.00 transistors, today the industry manufactures 80 Trillion transistors PER SECOND! China is compelled to take over Taiwan to achieve they're stated goals. We've put ourselves in a position that forces a war between the US and China if they move on Taiwan/TSMC before we can replace the capacity. It will take 5-10 years or more to replace the decades of "globalization" that moved us from 50% to 15% of semiconductor manufacturing market share. I'm scared sh*tless.

by CWBW | 17th Sep 21, 10:42am 1631832126

I wouldn't worry that much on TSMC being captured. By the time they ramp up production, their machines would had been a generation or 2 behind. The sole supplier of these machines won't be selling them new ones anytime soon. It would be costly mistake for China if your fears do play out.

by Uninterested | 17th Sep 21, 11:52am 1631836362

Chinese bombs reigning down all around but not on the TSMC plant..... One man who is the last to leave strikes up a match and whooommmph....

by NZChinese | 17th Sep 21, 11:16am 1631834170

It will be interesting to see how it plays out.

Evergrande is not the only one stuck in the situation. If Xi bails them out, it will be more to come. In such a case, those private businesses will control CCP, is it something they will allow?

When you have absolute control over the law enforcement, military, judicial system and more importantly, the media, let it fall and control the ramifications (e.g. force small investors to suck it up) may be a better option.

by HouseMouse | 17th Sep 21, 8:50am 1631825401

Interesting perspective to effectively blame the USA for China's evolving behaviour. I don't buy that at all.

by Gummy Bear Hero | 17th Sep 21, 9:14am 1631826897

... news out overnight , that China is 67 % responsible for worldwide state sponsored cyber-attacks ....

Gosh .... who didn't already guess that !

by HouseMouse | 17th Sep 21, 9:20am 1631827240

Yet some people seem intent to demonize the USA.

China has become a very naughty boy indeed over recent years. They have largely, if not totally, got themselves to blame.

It reminds me of people who excuse Japan's aggression in WW2 on the basis that the west had antagonized and excluded Japan. Forgetting that there was a very good reason for that - invasion and atrocities in China etc.

by HouseMouse | 17th Sep 21, 9:39am 1631828358

I note that the USA isn't faultless of course. There were valid reasons behind many of Trump's actions against China, but the way he went about them was certainly inflammatory. The opposite of diplomatic. And anyone who understands East Asian culture knows the importance of 'face'.

'Inflammatory' sums up Trump's reign, really.

by frazz | 17th Sep 21, 9:25am 1631827531

Ha..and there I was thinking you were Gummy..happy Friday!

by Zachary Smith | 17th Sep 21, 12:14pm 1631837640

67 % responsible for worldwide state sponsored cyber-attacks

Reminds me of the old quip, "73.6% of all statistics are just made up".

by Gummy Bear Hero | 17th Sep 21, 12:51pm 1631839887

... the other 32.7 % are factually incorrect ...

by HouseMouse | 17th Sep 21, 8:51am 1631825486

IMF - yet another highly flawed and corrupt international behemoth

by Galloleous | 17th Sep 21, 8:54am 1631825653

Nailed it.

by Tigadee | 17th Sep 21, 9:05am 1631826358

China wants to join the TPP? Which was designed to exclude China? Facepalm moment right there... It's like the Arab countries and Russia being on the Human Rights commission...

by stuart786786 | 17th Sep 21, 10:17am 1631830667

"Short term stupidity has long term consequences"

David not to forget that definition of stupidity is different to different people but you are correct......

by HouseMouse | 17th Sep 21, 12:56pm 1631840219

China messing with our way of life and freedoms, once again...

Now they are manipulating Wikipedia

by blobbles | 17th Sep 21, 1:15pm 1631841344

Various ETS schemes/scams are a horrific idea, it's just multiplying an already bad idea.

Only thing that will ever work: global carbon tax. Starting off low, then ramping up quickly. With the money earmarked for renewable investment across the world.

Governments have taxed undesireables since forever and guess what? It mostly works.

by murray86 | 17th Sep 21, 1:40pm 1631842829

Disagree Blobbles. A carbon tax in any form will never work. many will just not pay it, just as they are avoiding cutting their emissions now.

What is required is global agreement to cut emissions and how, but even that would probably not work as there is no effective world Government to mandate and then enforce it. The end result is that the planet will ultimately revolt against us. The horsemen of the apocalypse cometh, and they can already be heard!

by blobbles | 17th Sep 21, 2:10pm 1631844615

But it WILL work if the blocks who are enforcing it build it into the price of imports from countries who aren't, much like the EU is suggesting to tax carbon heavy products from jurisdictions who aren't playing ball. If the US also heads along a similar path, change will come.

"Will never work" was a phrase also used quite a lot before the Montreal Protocol was signed. Currently, it's working quite well.

We can try and save our civilisation from doom, or we can throw our hands up and say "nothing will work". But it requires real leadership from all countries to act in our own best interests. The more we advocate for real solutions instead of idiotic lip services solutions like ETS's (which do nothing to solve the issue, just create a new market to game), the better our chances of survival.

I suspect we have already locked in 2 deg temp rises at least, due to the lag in warming (thermal inertia plus increased sink activity), but if we continue to emit more and more, we will be in for runaway, with negative feedbacks kicking in. One only has to look to Venus to see how hot it can really get.