Version: 4 (current) | Updated: 11/13/2025, 6:22:13 AM
Added description
The drafts reference specific events (e.g., Romania energy subsidy, Turkey rate cut, China zero‑Covid) and include citations to external sources such as the World Bank and OPEC. They also feature commentary from prominent figures such as Al Gore and John Kerry. The material is organized by topic and includes metadata linking each draft to its author, date, and related events.
**Metadata – collection of unpublished newsletter drafts**
@file_pinax:document {
title: "Unpublished Newsletter Drafts on Energy and Economic Issues",
creator: [@financial_times:organization, @marton_dunai:person, @robin_wigglesworth:person, @haitham_al_ghais:person, @al_gore:person, @john_kerry:person, @soofian_zuberi:person, @recep_tayyip_erdogan:person, @paul_graham:person, @mohamed_el_erian:person, @brad_setser:person, @matthew_pines:person, @one_bubble_to_rule_them_all:organization, @edward_white:person, @leo_lewis:person, @kana_inagaki:person, @eri_sugiura:person],
created: @date_2022,
language: "en",
subjects: ["energy crisis", "economic policy", "energy subsidies", "inflation", "currency devaluation", "monetary policy", "global economy", "climate change", "renewable energy", "financial markets", "emerging markets", "Turkey", "Japan", "China", "Sri Lanka", "Romania", "United States", "European Union"],
place: ["Romania", "Bucharest", "Europe", "United States", "New York", "United Kingdom", "Tokyo", "Japan", "China", "Sri Lanka", "Turkey", "Germany", "France", "Indonesia", "Thailand", "Malaysia", "Mongolia", "Laos"]
}
**File → content relationships**
@file_pinax -> documents -> @romania_energy_subsidy:event {description: "Romania’s subsidy scheme for household electricity and gas, its cash‑flow crisis and delayed refunds to utilities", when: @date_2022, where: @bucharest:place {country: @romania}}
@file_pinax -> documents -> @everybody_bailout:event {description: "Discussion of the “Everybody Bailout” concept – fiscal support for energy prices across the EU", when: @date_2022, where: @europe:place}
@file_pinax -> documents -> @turkey_rate_cut:event {description: "Turkey’s second‑month interest‑rate cut despite 80 % inflation", when: @date_2022_09, where: @ankara:place {country: @turkey}}
@file_pinax -> documents -> @china_zero_covid:event {description: "World Bank forecast that China’s GDP growth will fall behind the rest of Asia due to zero‑Covid policy", when: @date_2022_08, where: @beijing:place {country: @china}}
@file_pinax -> documents -> @japan_yen_intervention:event {description: "Japan’s first yen‑strengthening intervention since 1998", when: @date_2022_09, where: @tokyo:place {country: @japan}}
@file_pinax -> documents -> @japan_yield_curve_control:event {description: "Bank of Japan’s possible exit from Yield Curve Control (YCC) and related market risks", when: @date_2022_12, where: @tokyo:place}
@file_pinax -> documents -> @corporate_yen_impact:event {description: "Impact of a weak yen on major Japanese corporations (Sony, Hoya, Honda, Fast Retailing, Nitori)", when: @date_2022, where: @japan}
**Key persons & organisations (first‑time definitions)**
@martin_dunai:person {full_name: "Marton Dunai", role: "author"}
@robin_wigglesworth:person {full_name: "Robin Wigglesworth", role: "author"}
@haitham_al_ghais:person {full_name: "Haitham Al Ghais", role: "Secretary‑General of OPEC"}
@al_gore:person {full_name: "Al Gore", role: "former US Vice‑President, climate advocate"}
@john_kerry:person {full_name: "John Kerry", role: "US climate envoy"}
@soofian_zuberi:person {full_name: "Soofian Zuberi", role: "head of global equity at Bank of America"}
@recep_tayyip_erdogan:person {full_name: "Recep Tayyip Erdoğan", role: "President of Turkey"}
@paul_graham:person {full_name: "Paul Graham", role: "entrepreneur, essayist"}
@mohamed_el_erian:person {full_name: "Mohamed El‑Erian", role: "economist"}
@brad_setser:person {full_name: "Brad Setser", role: "economist, FT columnist"}
@matthew_pines:person {full_name: "Matthew Pines", role: "economist, FT columnist"}
@one_bubble_to_rule_them_all:organization {description: "Twitter account that curates FT commentary"}
@edward_white:person {full_name: "Edward White", role: "author"}
@leo_lewis:person {full_name: "Leo Lewis", role: "author"}
@kana_inagaki:person {full_name: "Kana Inagaki", role: "author"}
@eri_sugiura:person {full_name: "Eri Sugiura", role: "author"}
@romania:place {country: @romania, capital: @bucharest:place}
@bucharest:place {country: @romania}
@laurentiu_urluescu:person {full_name: "Laurentiu Urluescu", role: "Chair of Afeer"}
@afeer:organization {full_name: "Afeer", description: "Romanian utilities association"}
@eon_romania:organization {full_name: "Eon Romania", parent: @eon:organization}
@eon:organization {full_name: "EON", description: "German utility with 1.5 mn customers in Romania"}
@volker_raffel:person {full_name: "Volker Raffel", role: "Chief Executive of Eon Romania"}
@bank_of_japan:organization {full_name: "Bank of Japan", role: "Japan’s central bank"}
@haruhiko_kuroda:person {full_name: "Haruhiko Kuroda", role: "Governor of the Bank of Japan"}
@sony:organization {full_name: "Sony", industry: "electronics & entertainment"}
@hoya:organization {full_name: "Hoya", industry: "optical glass"}
@honda:organization {full_name: "Honda", industry: "automotive"}
@fast_retailing:organization {full_name: "Fast Retailing", brand: "Uniqlo"}
@nitori:organization {full_name: "Nitori", industry: "furniture retail"}
@world_bank:organization {full_name: "World Bank"}
@china:place {country: @china}
@japan:place {country: @japan}
@turkey:place {country: @turkey}
**Event‑specific relationships**
@romania_energy_subsidy -> caused_by -> @energy_price_spike:event {description: "EU‑wide rise in electricity and gas prices after Russia’s invasion of Ukraine", when: @date_2022_02}
@romania_energy_subsidy -> managed_by -> @afeer
@romania_energy_subsidy -> financed_by -> @government_budget:event {budget: "€2 bn", year: @date_2022}
@afeer -> reported -> @cash_flow_crisis:event {description: "Utilities facing cash‑flow shortfalls because state compensations are delayed", when: @date_2022_06}
@eon_romania -> wrote_letter_to -> @recep_tayyip_erdogan {content: "Letter warning of critical financial situation due to subsidy delays", when: @date_2022_08}
@turkey_rate_cut -> announced_by -> @central_bank_of_turkey:organization {new_repo_rate: "12 %", previous_rate: "13 %", when: @date_2022_09}
@turkey_rate_cut -> criticised_by -> @atilla_yesilada:person {role: "economic commentator"}
@china_zero_covid -> forecast_by -> @world_bank {gdp_growth: "2.8 %", year: @date_2022, comparison: "rest of East Asia & Pacific 5.3 %"}
@japan_yen_intervention -> executed_by -> @bank_of_japan
@japan_yen_intervention -> ordered_by -> @ministry_of_finance:japan:organization
@japan_yield_curve_control -> policy_of -> @bank_of_japan
@japan_yield_curve_control -> expected_exit -> @haruhiko_kuroda {expected_after: @date_2023_03}
@corporate_yen_impact -> examined_by -> @sony
@corporate_yen_impact -> examined_by -> @hoya
@corporate_yen_impact -> examined_by -> @honda
@corporate_yen_impact -> examined_by -> @fast_retailing
@corporate_yen_impact -> examined_by -> @nitori
**Analyst & commentator statements (as relationships)**
@brad_setser -> tweeted_about -> @bank_of_japan:event {text: "BOJ surprised markets by widening YCC band to 50 bp", when: @date_2022_12_20}
@matthew_pines -> tweeted_about -> @japan_yen_intervention:event {text: "Japanese savers heavily buying US Treasuries, linking yen weakness to USD‑JPY‑UST10YR correlation", when: @date_2022_10_31}
@haitham_al_ghais -> opined_on -> @energy_crisis:event {quote: "Mixed messages are holding back oil investment", when: @date_2022}
@al_gore -> warned -> @fossil_fuel_companies:organization {message: "Resist efforts to lock in long‑term fossil‑fuel dependence", when: @date_2022}
@john_kerry -> called_for -> @international_financial_bodies:organization {reform: "climate‑finance governance", when: @date_2022}
**Publications & reports referenced**
@ft_content_af21a9ee_6794_4381_9561_2efb7f096e66:document {title: "Romania offers cautionary tale on pitfalls of energy subsidies", author: @marton_dunai, when: @date_2022_09}
@ft_content_b528e56c_d6ee_4152_a42e_442e68334e8d:document {title: "Europe’s dark, expensive winter", author: @robin_wigglesworth, when: @date_2022_09}
@ft_content_9b2d191f_87fd_4347_84e7_579fef4a0e04:document {title: "Tweet by Daniela Gabor on derisking state", when: @date_2022_09_09}
@ft_content_4df65b03_818d_40ed_ae6b_9f0ec1ed2fac:document {title: "What the bubble got right (Paul Graham essay)", author: @paul_graham, when: @date_2004}
@ft_content_7dc54c2c_898e_4c96_b312_dad57e250a61:document {title: "Bank of Japan’s inevitable pivot looms as a risk for markets", author: @mohamed_el_erian, when: @date_2022_12}
@ft_content_eed2bb55_e769_4a0f_b2f1_0141698ae3f3:document {title: "Japan stimulus", author: @mohamed_el_erian, when: @date_2022}
**Concepts (content‑specific)**
@everybody_bailout:concept {definition: "EU‑wide fiscal support to cap consumer energy prices"}
@yield_curve_control:concept {definition: "BOJ policy capping long‑term yields by buying bonds"}
@energy_subsidy_pitfalls:concept {definition: "Risks of state‑funded price caps leading to fiscal strain"}
**Cross‑entity links**
@romania_energy_subsidy -> part_of -> @energy_crisis:event
@turkey_rate_cut -> part_of -> @inflation_crisis:event
@china_zero_covid -> part_of -> @pandemic_response:event
@japan_yen_intervention -> part_of -> @currency_market_intervention:event
@japan_yield_curve_control -> part_of -> @monetary_policy_shift:event
@corporate_yen_impact -> illustrates -> @exchange_rate_impact:concept
---
*All entities are defined only once; subsequent mentions use the short code (e.g., @marton_dunai). Common‑knowledge entities such as @romania, @japan, @turkey, @europe, @united_states, @financial_times, @bank_of_japan, @world_bank, @opec, @united_nations, @european_union, @china, @us_federal_reserve, @eurozone, @g7, @g20, @ft are referenced without a type.*<!--
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<p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/af21a9ee-6794-4381-9561-2efb7f096e66">https://www.ft.com/content/af21a9ee-6794-4381-9561-2efb7f096e66</a><br><br>Romania offers cautionary tale on pitfalls of energy subsidies As Bucharest struggles to make promised refunds to utilities, energy groups warn they face a cash flow crisis A woman joins a protest in Bucharest in which demonstrators called for government-controlled energy prices and other measures to alleviate poverty © Andreea Alexandru/AP Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Marton Dunai in Budapest 7 HOURS AGO 11 Print this page Romania’s government was among the first in the EU to respond as energy prices started to rise. Even before the Ukraine war began, Bucharest last November launched a subsidy scheme to shield one of the bloc’s poorest populations from their impact. Now, as other EU nations roll out their own consumer protection programmes, Romania’s experience demonstrates the pitfalls of such initiatives as prices hit unforeseen records in the wake of Russia’s full-blown invasion of Ukraine. Under Bucharest’s scheme, launched after the global reopening following the Covid pandemic and a shortage of supplies from Russia pushed prices up, utilities buy at the full market price and sell at a capped price, with the state compensating them for the difference. But the price surge as sanctions were imposed on Russia over the invasion and Moscow throttled gas supplies to Europe has left the government struggling to maintain payments. As a result refunds are coming late — and potentially not at all — and energy utilities are warning they face a cash flow crisis. “The situation is getting worse,” said Laurentiu Urluescu, chair of Romanian utilities association Afeer, adding that the first payments did not arrive until June. The government budgeted about €2bn to cover the refunds this year. But Afeer estimated the cost at €6bn despite gas prices falling from August’s record highs, while the energy regulator ANRE put it at €8bn — around 3 per cent of GDP. According to ANRE, as of mid-October the government had paid just over €1bn to the utilities. Romania only fully liberalised its energy market in 2021, but the government is considering a return to regulated prices in an effort to stop bills rising further. The ruling coalition began talks on the move last week, with a decision due this week, according to senior coalition politicians. Urluescu warned that the cash flow crisis imposed on suppliers had forced many to borrow to cover the shortfall, in some cases all but exhausting their credit lines. “It is sector wide . . . About 100 suppliers have the same problem. “We see the same effect on all market participants,” he added. “There are still no forward deals, only the spot market is liquid.” The government in April tried to cover some of the costs by imposing an 80 per cent windfall tax on electricity producers and gas wholesalers, levied on revenues above a certain level. Many of the companies have posted record profits as prices soared. But the effort backfired. With their margins under pressure, wholesalers lifted their prices further, said Cristina Prună, a liberal opposition MP who specialises in energy policy. Meanwhile, utilities assumed they would be reimbursed for the gap between the wholesale and capped price, so did not force wholesalers to compete for business by cutting prices. This left the state facing even higher costs, said Prună. “This was a social measure using private money. This is completely wrong and destroys the energy sector,” she said. “There is a high risk of a negative domino effect on the whole supply chain.” The energy ministry did not reply to requests for comment. Even big multinationals are feeling the pressure. Germany utility Eon, which has 1.5mn customers in Romania, was so concerned about the market impact of the government measures and payment delays that in August the chief executive of its Romanian subsidiary wrote to the country’s prime minister Nicolae Ciucă. Eon Romania faced an “extremely critical financial situation as a result of the extraordinary cash deficit, with serious implications for the security of supply to Romanian consumers,” Volker Raffel wrote in the letter, which was seen by the FT. The company was “completely vulnerable” to wholesale price increases and refund delays, Raffel said, and its debt load had nearly quadrupled to about €500mn since December as a result. About a week after the Eon letter, the government introduced a tax package — which it described as a “solidarity package” — to raise funds from other parts of the energy sector. It included a clawback on trading margins, taxes on gas and electricity exports and imports and a cap on the level of wholesale prices for which the government was prepared to reimburse companies. However, the package has deepened the problems, according to industry figures and observers. It placed a 98 per cent tax on energy trading, levied on the margin — the gross difference between the purchase and sale price — rather than on profits. That had a chilling effect on the market as participants faced paying immediate overheads such as salaries from depressed margins. “Trade activity will all but die,” Urluescu said. “In September we saw exactly zero deals in forward markets on electricity or gas. It is nothing short of disastrous.” Romania, which has significant domestic gas resources, has nearly filled its gas storage facilities, Ciucă told reporters last week. However, at 3bn cubic metres they only cover about a quarter of the country’s annual consumption, making imports vital. The new tariffs had kept cross-border traffic at a fraction of normal levels since September even when Romanian spot prices were favourable, Prună said. Urluescu warned many utilities were considering shutting down or abandoning customers. Recommended Free LunchMartin Sandbu How (not) to intervene in energy prices Premium content The utilities’ troubles are having a knock-on impact on banks, Eon Romania warned in its August letter. The company’s €500mn debt alone amounted to about 0.5 per cent of the Romanian banking system’s total balance sheet, central bank data shows. The Romanian Bank Association did not respond to requests for comment. “I am concerned about the entire system,” said Razvan Nicolescu, a former energy minister. “It is not sustainable. They went a bit too far with the taxation, especially with the trading companies . . . it was a mistake.” Instead, Bucharest should set a total amount of subsidy it could afford, target it at exposed industries and those households facing the greatest difficulties and raise the funds through taxes sustainably, he said. “Companies should have a social role, especially in eastern Europe where wages still lag behind the EU average while prices are almost the same,” he added. “But don’t cover groups that don’t need it. No reason to protect businesses [that do not rely on large amounts of energy], like real estate agencies. Protect bakeries or glass factories instead.” Additional reporting by Patricia Nilsson in Frankfurt</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/b528e56c-d6ee-4152-a42e-442e68334e8d#myft:my-news:page">https://www.ft.com/content/b528e56c-d6ee-4152-a42e-442e68334e8d#myft:my-news:page</a><br><br>FT Alphaville Global EconomyAdd to myFT Europe’s dark, expensive winter Pray for warm weather Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Robin Wigglesworth 6 HOURS AGO 10 Print this page TS Lombard’s Dario Perkins, the Paolo Maldini of sellside economists, has just written a grim-as-hell interesting new report on the predicament facing Europe this winter. Perkins estimates that the cost of governments trying to soften the economic hit from spiralling energy prices could cost “at least” 5 per cent of gross domestic product. If that bill seems steep to some governments, the alternative is worse, Perkins argues. Our emphasis below. Inevitably, governments are under enormous pressure to support their economies through this difficult period. They have already announced various fiscal interventions, including liquidity provisions (for utilities companies facing extreme margin calls), income transfers, and even “price caps” on energy. The eventual bill for the public finances could be huge, with a successful intervention likely to cost at least 5% of GDP per annum (depending on what happens to energy prices). But Europe’s politicians have no alternative, especially as — unlike central bankers — they will eventually be seeking re-election. Many low-income households are facing real poverty this winter, while rapidly rising input prices are set to destroy the profitability of European companies (especially the region’s SMEs, which already operate on relatively thin margins). Unless governments act swiftly and decisively, they could find themselves facing an economic crisis similar to the one they successfully dodged during the pandemic: enormous strains on corporate balance sheets, which trigger a wave of bankruptcies and a sharp increase in unemployment. In short, another COVID-style economic crisis demands a COVID-sized policy response. The problem, as Perkins points out, is that all central banks currently seem to see is uncomfortably high inflation. Although the European Central Bank is not acting as aggressively as the Federal Reserve, the direction of travel is pretty clear. So there is currently a tug of war between European governments opening the fiscal spigots in various ways to soften the hit from higher energy costs — what Perkins calls “The Everybody Bailout” — and monetary policy that is essentially trying to gently but firmly choke economic growth. As Perkins notes, this is pretty much a complete reversal of policy over the past decade, when monetary policy was historically easy and fiscal policy was arguably much tighter than it should have been. The question is where this leads. Naturally, a large fiscal expansion runs directly against the philosophy of Europe’s monetary guardians. Governments are, in effect, trying to shield the economy from an adjustment that central banks say is inevitable. But is the public sector’s response to the energy crunch necessarily inflationary? The answer depends on the persistence of the shock. If energy prices quickly return to their pre-2022 levels — or governments withdraw their support quickly — governments will have delivered a one-off increase in public debt, which is not likely to generate persistent inflation. Problems arise, however, if the energy crisis lingers. Wholesale energy prices could remain high in 2023 and possibly beyond, which would make it extremely hard for governments to reduce their support to households and businesses. Instead, the public sector would be under enormous pressure to continue to subsidize private living standards, leading to large, persistent deficits and higher medium-term inflation. Throw in periodic energy blackouts and sectoral lockdowns and we could face another COVID-style dynamic, where governments are simultaneously supporting incomes and restricting supply. Central banks would not be happy, especially as the longer inflation stays high, the greater the risk of “de-anchoring” expectations. Buckle up.</p><!--
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<div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/DanielaGabor/status/1568173349221662721?s=20&t=mEisfyDjnRFKrh_qI6fyFA","full_text":"move aside outdated neoliberal/Keynesian*MMT macro analysis, \nwe cant understand the Tory embrace of Big Spending without the CMF lens of the derisking state, intervening to preserve distributional, pro-Kapital status-quo \n\n","username":"DanielaGabor","name":"Daniela Gabor","date":"Fri Sep 09 09:43:56 +0000 2022","photos":[],"quoted_tweet":{},"retweet_count":25,"like_count":114,"expanded_url":{"url":"https://www.ft.com/content/9b2d191f-87fd-4347-84e7-579fef4a0e04","image":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/749af1dd-45d1-4bbe-be6f-9de7858662e6_2492x1401.png","title":"Subscribe to read | Financial Times","description":"News, analysis and comment from the Financial Times, the worldʼs leading global business publication","domain":"ft.com"},"video_url":null,"belowTheFold":false}"><a class="tweet-link-top" href="https://twitter.com/DanielaGabor/status/1568173349221662721?s=20&t=mEisfyDjnRFKrh_qI6fyFA" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/DanielaGabor.jpg" alt="Twitter avatar for @DanielaGabor"><div class="tweet-header-text"><span class="tweet-author-name">Daniela Gabor </span><span class="tweet-author-handle">@DanielaGabor</span></div></div><div class="tweet-text">move aside outdated neoliberal/Keynesian*MMT macro analysis,
we cant understand the Tory embrace of Big Spending without the CMF lens of the derisking state, intervening to preserve distributional, pro-Kapital status-quo
</div><a class="expanded-link" href="https://www.ft.com/content/9b2d191f-87fd-4347-84e7-579fef4a0e04" target="_blank"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/749af1dd-45d1-4bbe-be6f-9de7858662e6_2492x1401.png" class="expanded-link-img"><div class="expanded-link-bottom"><span class="expanded-link-domain">ft.com</span><span class="expanded-link-title">Subscribe to read | Financial Times</span><span class="expanded-link-description">News, analysis and comment from the Financial Times, the worldʼs leading global business publication</span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/DanielaGabor/status/1568173349221662721?s=20&t=mEisfyDjnRFKrh_qI6fyFA" target="_blank"><div class="tweet-footer"><span class="tweet-date">9:43 AM ∙ Sep 9, 2022</span><hr><div class="tweet-ufi"><span href="https://twitter.com/DanielaGabor/status/1568173349221662721?s=20&t=mEisfyDjnRFKrh_qI6fyFA/likes" class="likes"><span class="like-count">114</span>Likes</span><span href="https://twitter.com/DanielaGabor/status/1568173349221662721?s=20&t=mEisfyDjnRFKrh_qI6fyFA/retweets" class="retweets"><span class="rt-count">25</span>Retweets</span></div></div></a></div><!--
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<p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/f3d5bccf-c15f-4ea1-a9de-e3a34d1f914e#myft:my-news:page">https://www.ft.com/content/f3d5bccf-c15f-4ea1-a9de-e3a34d1f914e#myft:my-news:page</a><br><br>Opinion: ‘Mixed messages’ are holding back oil investment Haitham Al Ghais is secretary-general of Opec Over the past year and in the run-up to COP27, the discourse around energy, climate and sustainable development has become increasingly emotive and more forceful. This is warranted, given the energy crisis in Europe, the pressing need to reduce global emissions, and the scourge of energy poverty that has been worsened by the pandemic. The challenges before us are enormous. But the discourse needs to be inclusive, welcoming all voices to the table. We cannot return to a world that is limited by the question: are you for or against fossil fuels? It cannot be just one or the other. This limits the options available to help the world meet the interwoven challenges of energy affordability and security that have emerged starkly in the past year, while also reducing greenhouse gas emissions. Expanding populations and growing economies mean the world will need more energy — we calculate 23 per cent more energy by 2045. Meeting this extra demand, while also lowering global emissions in line with the Paris agreement, calls for a broad energy mix and unprecedented collaboration. Investment will be key to providing the energy needed. For example, we calculate that the oil industry alone must spend more than $12tn between now and 2045, or more than $500bn per year. But spending on energy has been down in recent years: a legacy of industry downturns, the pandemic, and markets’ growing focus on environmental, social, and governance issues. The shortfall now threatens the very sustainability of the global energy system. This is a problem all stakeholders must work together to address, creating a long-term investment-friendly climate that makes sufficient finance available. It must be an investment environment that works for both producers and consumers, developed and developing countries. We have heard calls for oil and gas producing countries to ensure stable and sustainable global energy supplies. But we have also heard industrialised countries pledge to end financing in fossil fuel projects. These mixed messages will do little to spur the investment needed in an oil industry that is characterised by high upfront costs that might pay off only over decades. We need clear signals of oil’s continuing importance to the world’s long-term energy future. The chronic under-investment we have seen in the oil industry has resulted in shrinking spare capacity, constraints on production, and reduced refinery output — all at a time when demand for crude and oil products continues to rise. Bear in mind, too, that global oil production declines at an average rate of about 5 per cent a year. In today’s 100mn barrels-a-day market, that’s 5mn more barrels a day that must be produced just to hold output steady each year. It requires huge investment — and that’s before we think about how much more oil the world might need next year, and beyond. We need a holistic view of this investment challenge, one that accepts all forms of energy to enable an orderly, inclusive and just energy transition. If the world does not get it right, it could sow the seeds of future energy crises. Opec members are ready, willing and able to play a central role. We are investing in long-term oil capacity, in both the upstream and downstream. We are mobilising cleaner technologies and our expertise to help the industry reduce its carbon footprint as we make major investments in everything from renewables to new hydrogen capacity. History shows that energy transitions can take many decades and follow different paths. Furthermore, the developed and developing world have vastly different capabilities, economic drivers, and above all needs — such as the 700mn people who lack access to electricity and the 2.4bn still using inefficient and polluting systems. Today’s market turmoil shows what happens when we ignore the complexity of our global energy system and seek solutions that are too narrow. We need to work with each other, not against each other. The investment the world needs must focus on an “all-peoples, all-fuels and all-technologies” approach. This will be vital in finding a sustainable future that leaves no one behind. (Haitham Al Ghais)</p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/ed5cd15c-3bb3-4743-a9da-048928612d65#myft:my-news:page">https://www.ft.com/content/ed5cd15c-3bb3-4743-a9da-048928612d65#myft:my-news:page</a><br><br>The energy crisis is making the green movement’s case We are at an unexpected tipping point in the long campaign to force polluters to pay and slow climate change CAMILLA CAVENDISHAdd to myFT © Rory Griffiths/FT/Getty Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Camilla Cavendish YESTERDAY 164 Print this page As the world braces for an energy shock even bigger than that of 1974, it is striking that Vladimir Putin’s war in Ukraine has foisted upon us something more like a global carbon tax than anything achieved by UN climate summits. Yet the green movement is oddly silent. It would be callous to cheer price hikes that could devastate less well-off families and bankrupt businesses. The scale of the human cost will be enormous and the most needy must have protection. But help ought to come in ways that don’t derail the underlying incentive to adapt to higher energy bills — especially for those who are rich enough to have an outsize impact on the planet. That is what environmentalists should be saying. When I studied environmental economics two decades ago, climate scientists were already pushing to make polluters pay the true cost of greenhouse gas emissions. Carbon pricing, they thought, would give incentives to reduce energy use, most efficiently. More than 30 jurisdictions around the world now have some form of carbon pricing or emissions trading scheme. But last year most of them priced carbon dioxide at $40 a tonne, or less — which is too cheap. The International Energy Agency says that the average carbon price needs to hit $200-250 a tonne for the world to achieve net zero emissions by 2050. How do today’s astronomical prices change the equation? Adair Turner, chair of the Energy Transitions Commission, reckons the gas hike is the equivalent of a “massive” carbon tax, of around $600-$950 a tonne. If prices persist at anything like this level, he says, technologies like green hydrogen will be adopted much sooner than expected. The payback times for installing renewables and home insulation will also shorten dramatically. Lengthening wait times for heat pumps and solar panels in the UK and the Netherlands suggest that richer consumers are already responding. In the US, president Joe Biden’s Inflation Reduction Act has doubled down, with subsidies and tax credits for renewables and carbon capture. Yet in the UK, the frontrunner to be the next prime minister has dubbed solar panels ‘paraphernalia’. Whoever wins will need to support households and businesses while launching a radical programme to help us all adapt, through renewable subsidies and insulation. An astonishing report suggests that Britain’s draughty homes will bust the entire carbon budget unless there is a dramatic upscaling of retrofitting. It is still unclear how long energy bills will remain high. But as I stand in my garden looking at brown grass, enduring freak storms and wondering why certain birds are no longer migrating, I recall with a creeping dread the warning that one day we will reach a tipping point that leads to runaway global warming Unexpectedly, we are at a different kind of tipping point: one that could accelerate the adaptations we need to make. Many governments are currently capping bills which would otherwise be crippling. That’s understandable, given the exponential rises. But price caps do little to reduce energy use, or help economies adapt. In the UK, British Gas’s decision to donate 10 per cent of profits to its most vulnerable customers was certainly better targeted than the government’s perverse decision, back in May, to include second-home owners in its energy rebate. No one wants the poor to face a choice between heating and eating. But nor should governments be protecting the rich. In 86 countries, the wealthiest tenth of people consume about 20 times more energy than the bottom tenth, according to one recent study. Under a conventional carbon tax, governments receive the revenue to compensate those who lose out from higher prices. But this ‘tax’ has been imposed by Putin. Every therm of gas we burn benefits his regime. It is surprising that more leaders have not echoed President Emmanuel Macron’s call for French citizens to use less energy as part of the national effort to support Ukraine. As he has said, “freedom comes with a cost” — and so does energy security. People may prove more amenable to sacrifice than politicians imagine. On a business trip to Tokyo after the Fukushima meltdown, I found executives complying with government instructions to limit air conditioning and jettison jackets. It was high summer, and we were all sweating, but it didn’t matter. More recently, the Spanish government has asked businesses to keep air conditioning no lower than 27C, and shops to switch off lights at night. Germany is switching off hot water in public buildings. Far more will be needed. But in this strange, global experiment, we are about to learn what changes industry and individuals find it easiest to make, and what requires a giant leap of faith.</p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/f7dc3078-bb19-454f-847c-119d3e488731#myft:my-news:page">https://www.ft.com/content/f7dc3078-bb19-454f-847c-119d3e488731#myft:my-news:page</a><br><br>Europe must resist industry efforts to cash in on energy crisis, warns Al Gore Countries must balance short-term oil and gas supply needs with green transition, says former US vice-president Al Gore: ‘We must resist the efforts of gas and oil and coal sellers to lock in long-term increased dependencies on fossil fuels’ © Daniel Leal/AFP/Getty Images Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Harriet Agnew in London and Simon Mundy in Singapore AN HOUR AGO 1 Print this page European governments must push back against fossil fuel companies’ efforts to capitalise on the energy crisis by locking consumers into long-term dependence on hydrocarbons, former US vice-president Al Gore has said. Countries are rushing to balance their green ambitions with the need to ensure energy security. At least €50bn of spending is planned by EU governments this winter on fossil fuel infrastructure and supplies after imports of oil, gas and coal from Russia plunged amid sanctions and restrictions imposed following its invasion of Ukraine. “We must resist the efforts of gas and oil and coal sellers to lock in long-term increased dependencies on fossil fuels, which are accompanied by long-term increases in greenhouse gas emissions,” Gore told the Financial Times. Gore, who co-founded sustainable investment fund management firm Generation Investment Management in 2004 with financier David Blood, said fossil fuel providers “will be looking to ensure as long a period for the contract as possible” in negotiations on supply agreements. “Nations planning their strategies have to be on guard in all those negotiations, whether with private companies or sovereigns,” he added. The PCK oil refinery in Schwedt, Germany. The war in Ukraine has highlighted the urgent threat that a reliance on fossil fuels poses to global security and democracy, says Al Gore © Krisztian Bocsi/Bloomberg As winter approaches, the EU and member states are aiming to protect consumers from higher energy prices, while diversifying away from imports of Russian fossil fuels. Some of the measures proposed include a windfall tax on non-gas energy producers and a separate levy on oil and gas majors. Gore said that mostly countries appear to be striking a “successful balance” but warned that governments must “take great care” to ensure they limit their fossil fuel-related expenditure “to programmes that will assist in the short-term supply crunch [but] will not lock us into decades of higher greenhouse gas emissions in the future”. EU countries are increasing imports of liquefied natural gas from countries including the US and Algeria, with plans for as many as 19 floating storage and regasification unit projects at an estimated expenditure of €9.5bn. The war in Ukraine had highlighted the urgent threat that a reliance on fossil fuels posed to global security and democracy, said Gore, arguing that such dependence exacerbated the geopolitical “instability that Russia is trying to worsen and the blackmail they’re trying to perpetuate”. Gore accused fossil fuel companies of using “legacy networks of influence” to lobby for favourable political treatment, alleging that “they mimic the tobacco industry strategy of many decades ago — putting out false information on an industrial scale”. Though renewables make up about half of the US electricity generation mix compared with the EU, Gore is confident that America will build momentum behind emissions reduction following the passage of the Inflation Reduction Act. He called the legislation, which includes significant measures to support green energy and infrastructure, “a historic event”. Gore also waded into the debate around the backlash to environmental, social and governance investing in the US. Nineteen state attorneys-general, all of them Republicans, sent a letter to BlackRock last month, accusing the world’s largest money manager of prioritising “activism” over fiduciary duty to their state pension funds. Recommended The Big Read Europe’s new dirty energy: the ‘unavoidable evil’ of wartime fossil fuels Gore said asset managers had a fiduciary duty to their clients “to maximise returns by using all the relevant factors that should be taken into account”, including non-financial considerations such as climate risk. “I think it’s unlikely that courts will allow politically motivated officials to order asset managers to ignore clearly relevant factors,” he added. Gore was speaking as Generation Investment Management published its annual sustainability trends report. It found that global carbon emissions from electricity generation could start to decline within a few years as renewable sources such as wind, solar and hydropower become a bigger part of the energy mix. He said the shift to low-emissions vehicles had reached a tipping point, with electric and hybrid cars now accounting for nearly 10 per cent of the industry’s global sales. But he warned that some stubborn problems — such as low levels of investment in clean energy, especially in developing countries, and shortages of minerals like lithium — needed to be resolved to speed up the low-carbon energy transition. “We need to move quickly in spite of the geopolitical situation we’re facing — indeed, because of it,” he added.</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/931fe889-2b9f-4132-8803-c1b3222ff48c#myft:my-news:page">https://www.ft.com/content/931fe889-2b9f-4132-8803-c1b3222ff48c#myft:my-news:page</a><br><br>Kerry calls for reform of international financial bodies over climate change New York climate week attendees agitate for action as leaders gather for UN General Assembly A mural on sustainability by Brazilian artist Eduardo Kobra is displayed outside the UN headquarters ahead of the General Assembly © Mary Altaffer/AP Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Aime Williams in New York, Camilla Hodgson in London and Richard Milne in Oslo AN HOUR AGO 3 Print this page US climate envoy John Kerry called for the reform of international financial institutions over a failure to marshal funds related to climate change, but refused to be drawn on whether the Biden administration had confidence in the leadership of the World Bank. Speaking at a climate week event held alongside the UN General Assembly in New York, Kerry said it was not for him to speak about the leadership of the World Bank Group, the largest and oldest of the multilateral banks. The bank led by Trump appointee David Malpass has come under sustained criticism over its policies towards funding fossil fuel projects from those involved in the UN as well as climate experts such as former vice-president Al Gore, who again called for his resignation on Tuesday. Kerry expressed frustration, however, about the role of the banks that provide loans and grants to poorer countries and are seen as crucial to distributing money to the developing world to help limit global warming as their economies grow. He had “been pushing for months” for an overhaul of the financial institutions established as a result of the Bretton Woods agreement in 1944, including the IMF and what became the World Bank Group. A group of nations had discussed the matter at a meeting earlier on Tuesday, he said. “We made it crystal clear that we all believe the time is passed, that we have to have major reform and major restructuring with respect to the [multilateral banks],” said Kerry. The US is the largest World Bank Group shareholder and the only member nation that has a veto over certain changes in its structure. The climate envoy also said the G20 deal was nearing a deal with Indonesia to finance its shift away from coal. “Indonesia will raise their climate ambition, and will try to deploy more renewables, and they will shut some coal,” he said at the New York Times climate week event. Guterres attacks fossil fuel financiers and ‘enablers’ UN secretary-general António Guterres told world leaders at the 193-member assembly earlier in the day that multilateral development banks “must step up and deliver” and that helping poor countries adapt to worsening climate shocks “must make up half of all climate finance”. He strengthened his call for governments to impose a windfall tax on the profits of oil and gas companies, for the process to be redistributed to help countries harmed by climate change and those struggling with food and energy costs. He also attacked those who financed and acted for the industry. “We need to hold fossil fuel companies and their enablers to account,” he said. “That includes the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution. And it includes the massive public relations machine raking in billions to shield the fossil fuel industry from scrutiny.” Norway oil fund steps up its climate promises Norway’s sovereign wealth fund and a group of investors with more than $10tn under management led a series of corporate climate change pledges that are timed to coincide with New York climate week. Recommended ESG investing Norway oil fund warns of ‘danger’ that environment falls down agenda The world’s largest sovereign wealth fund said it would require the companies it invests in to reach net zero emissions by 2050 and to publish those goals by 2040 at the latest. At present, only one in 10 of roughly 9,000 companies it has invested in have a net zero target, it said. The $1.2tn fund, which is based on assets from Norway’s oil and gas revenues, has already sold out of coal producers and consumers as well as some oil explorers. Institutional investors put another $2.5tn down At the same time, the UN-convened Net Zero Asset Owner Alliance, a group of 74 institutional investors with $10.6tn in assets, said in an annual progress report that two-thirds of its members had committed to short-term 2025 decarbonisation targets. That represented an additional $2.5tn worth of assets that were covered by short-term targets, the group said. Speaking to the Financial Times, alliance chair Günther Thallinger said the energy crisis had created a “very difficult context” that put action on climate change “under pressure” but backsliding must be avoided. The alliance is part of the Glasgow Financial Alliance for Net Zero, a broad coalition of financial institutions that committed to decarbonising their portfolios at last year’s COP26 climate summit. The group and its members have come under pressure from campaigners for being too slow to act. Thallinger, who helped found the Net Zero Asset Owner Alliance in 2019 ahead of the creation of Gfanz, said the groups needed to get away from “conceptual discussions” and start to “do the work”. “We do not want to have concept on top of concept . . . This is something we are trying to communicate to other initiatives,” he said. Time and expertise should be focused on making the real economy cleaner and greener, rather than on writing “another new standard”. On Tuesday, a report co-authored by the International Energy Agency estimated that annual investments of about $1tn in renewables would be needed to supply clean power to the world’s growing population and avoid the catastrophic effects of climate change. Final push by Sharma on deforestation finance The president of COP26, Alok Sharma, and members of the UN’s Race to Zero campaign will once again push financial institutions to eliminate commodity-driven deforestation from their portfolios by 2025, as part of a new report released at the New York climate week summit. “Due to the unique role of deforestation in driving emissions, and the role of the standing forest and terrestrial ecosystems in mitigating carbon, the financial sector must front load its transition to net zero,” Sharma will say. Sharma will hand over the presidency in a matter of weeks to his Egyptian counterpart, Mahmoud Mohieldin, who will host the COP27 UN climate summit in the first week of November.</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/0b373f7f-ae94-4887-8a4a-986846999816">https://www.ft.com/content/0b373f7f-ae94-4887-8a4a-986846999816</a><br><br>Slow growth knocks the wind out of EU renewable energy targets War and inflation upend traditional thinking on transition to cleaner fuel Fan base: prices for wind turbine materials have skyrocketed due to global supply issues © Francesco Mou/Alamy Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Alice Hancock YESTERDAY 15 Print this page For years, six onshore wind farms due to be built in the picturesque Italian regions of Puglia, Sardinia and Basilicata were stuck in bureaucratic wrangles. Italy’s ministry of culture argued that the sight of the wind farms was an eyesore. The ministry of ecological transition pushed back. Gaining permission for wind parks in situations like this can take eight years. But, in March, Italy’s highest executive body, the council of ministers, stepped in to secure the approvals. Roberto Cingolani, Italy’s minister for ecological transition, said this highlighted the government’s “commitment to the development of energy from renewable sources throughout the country”. All EU states are now realising this need for more renewable power, as they wake up to the dangers of relying on Russian gas. With Russia cutting supplies to the west, following opposition to its invasion of Ukraine, traditional thinking about a transition to cleaner fuel to combat climate change has been upended. The process of moving from coal to gas to renewables has now become a question of increasing coal power to see citizens through winter, while targeting as high a capacity of renewable power as possible. Nuclear power is also back on the table for some countries — even for those such as Germany that have been historically opposed to it. © Lisi Niesner/Reuters In its RePowerEU proposals set out in May, the EU said it wanted to increase its already enlarged target for renewable energy from 32 per cent of total power production to 45 per cent by 2030. But, despite desperate attempts to speed up clean power production, hurdles remain. The gas crisis “increases the motivation and the determination” for renewable energy, says Graham Weale, professor of energy economics at Ruhr University Bochum and former chief economist at German energy producer RWE. “But, on the other hand, it is increasing problems of cost and so on, which are hampering proposed developments.” The EU’s new renewables targets, he adds, are “fairyland figures”. The UAE-based International Renewable Energy Agency, an intergovernmental body, recorded the average EU capacity growth of onshore wind farms in the past five years as 8.3GW, with a maximum annual increase of 9.9GW. To reach the EU’s target, however, 26.8GW would need to be built each year. © Bloomberg It is a similar story for solar panels. Average EU growth over the past five years has been 13.7GW with a maximum achieved of 21.4GW. But the EU target requires 55.4GW of annual growth. Waiting on permissions is the biggest hold up to progress. Projects that take months to build can take up to 10 years to receive approval, the European Commission has said. Legislation to speed up the process has yet to be adopted. Nils Torvalds, a European Parliament member working on the EU’s Renewable Energy Directive, says the environmental lobby can be obstructive in challenging the building of renewable parks on grounds that they may harm natural habitats. “Everyone knows some small species on the verge of extinction and that emotionality makes it difficult to find functioning solutions,” he says. Recommended Special ReportEnergy Transition Crisis spurs clean energy’s push to secure supply At the building stage, parks face big supply headaches. Punishing price rises on materials for wind turbines and photovoltaic cells are in part due to Covid lag in China, a leading parts supplier, and because of the Ukraine war. Industry body WindEurope says the price of balsa wood needed for rotor blades is up 300 per cent since February. Steel prices have almost doubled and the cost of nickel, a commodity needed in the production of turbine components, has increased by 35 per cent. Wind turbine manufacturers have typically signed contracts at fixed prices with developers, says Giles Dickson, WindEurope chief executive. With little sign of an end to price rises, though, these have become unsustainable. Slow permission procedures also mean developers are fighting over a limited number of available sites: “They are competing for a smaller pie than they should be,” Dickson adds. “So the prices that are winning auctions are not necessarily prices that are possible for manufacturing wind turbines.” © Jeremy Suyker/Bloomberg In April, Sheri Hickok, GE Renewable Energy’s chief executive for onshore wind, warned: “We have an inflationary market that is beyond what anybody anticipated even last year.” She noted that suppliers were cutting jobs, too. “If the government thinks that on a dime this supply chain is going to be able to turn around and meet two to three times the demand, it is not reasonable.” Once wind and solar farms are built, the final element is whether the grid is ready to cope with such intermittent power sources. Laurent Schmitt, utilities head at clean power company Dcbel, says: “While grids have, so far, not been major roadblocks to renewable integration, we should anticipate they will become bottlenecks.” Energy Transition Summit Register your place for this year’s Energy Transition Summit to be held in London on October 17-19 here See the full list of events, including the upcoming Mining Summit on October 20-21 here More investment is needed, Schmitt argues, in storage capacity near clean energy sources, as part of a more dynamic effort to capture the benefit of sun and wind energy when it’s around. Weale points to a high court ruling in Germany stating that the government must do more to expedite the green transition. He says there may be political obstacles to a faster renewables rollout, but “any problem can be solved by throwing a great deal of money at it.” However, he adds that a massive investment in renewables to make them a viable replacement for Russian gas would present a challenge to a fundamental EU precept: that member states should not dole out huge amounts of state aid, lest it imbalance fair competition in the single market.</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/3c277b6f-bca0-47ae-a01a-6dd11eeb7275">https://www.ft.com/content/3c277b6f-bca0-47ae-a01a-6dd11eeb7275</a><br><br>Solar power generation hits EU record in energy crisis New peak for output comes amid squeeze on gas, hydropower and nuclear supplies Panels at a solar power plant in Kozani, Greece © Bloomberg Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Shotaro Tani in London SEPTEMBER 9 2022 116 Print this page Solar power generation reached a new record in the EU over the summer months as supplies from gas, hydropower and nuclear were all squeezed during the energy crisis. Sunny weather across the continent and a boost in solar installations contributed to the record generation, which was 28 per cent higher than the previous summer, according to research from Ember, the UK environmental think-tank. Solar power generated 99.4 terawatt hours of electricity between May and August. It accounted for 12 per cent of power generation, up from 9 per cent the previous summer, although the rise in proportion was in part due to the fall in supply of most other energy sources. The record solar generation came as Europe also experienced record heatwaves. That led to increased energy demand for cooling purposes at a time when countries were trying to conserve the use of gas due to soaring prices as a result of Russia’s war on Ukraine affecting supplies. “The fact that we . . . can already generate above 10 per cent of EU electricity from solar gives hope” for a transition to cleaner energy and better energy security, said Paweł Czyżak, senior analyst at Ember and one of the authors of the report. The share of solar power in electricity generation was highest in the Netherlands, at 23 per cent, and Germany, at 19 per cent. Solar power generation saved the EU 20bn cubic metres’ worth of gas imports during the four months, Ember estimated, assuming that all solar was replacing gas. Dolf Gielen, director of technology and innovation at the International Renewable Energy Agency, said that the main reason for record solar power generation was the installation of more farms across Europe. “The capacity expands every year by about 15 per cent. So that gives you at least a 15 per cent gain, maybe a little bit more because the efficiency of the latest panels is higher,” he said. Solar power’s share of overall energy generation in Europe was also affected by droughts, which curbed hydropower and nuclear output from countries such as France. Even so, the intermittent nature of solar power means it has to be complemented with other power sources that can generate electricity at night, such as gas or coal-fired power plants. European countries are seeking to boost their capacity to store energy to cope with the growth in renewables. European gas prices have soared on the back of restricted gas supplies from Russia, with contracts linked to TTF, the wholesale European gas price, trading more than 300 per cent higher than they were a year ago, straining households as well as utility companies. Climate Capital Where climate change meets business, markets and politics. Explore the FT’s coverage here. Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here The EU agreed in July to reduce gas use in the region by 15 per cent until next spring, and the European Commission is preparing price caps on Russian gas to tackle the energy crisis. Poland had the biggest increase in solar power generation in the past five years, with a 26-fold increase between the summer of 2018 and the summer of 2022, Ember said. Finland, Hungary, Lithuania and the Netherlands had also seen big increases in solar power generation over that period, it added. “The big takeaway is that renewables are the way forward if we want to pay less for imported fossil fuels, if we want to be more energy secure, and not be blackmailed by suppliers like Russia,” Czyżak said.</p><!--
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<p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/a9825d3c-2d91-46b3-b9b3-49132eaa1dcd#myft:my-news:page">https://www.ft.com/content/a9825d3c-2d91-46b3-b9b3-49132eaa1dcd#myft:my-news:page</a><br><br>Soofian Zuberi 7 HOURS AGO 5 Print this page The writer is head of global equity at Bank of America. He writes in a personal capacity The toxic trifecta of soaring food and energy prices, coupled with the threat of drought, is having a severe impact on a number of developing nations. Several countries commonly referred to as emerging markets could perhaps be better described as “submerging markets”. Sri Lanka, where frustrated citizens stormed the presidential palace in July, could be merely the opening act in a wave of instability across the developing world. In 2015 the G7 made a commitment (reiterated in 2022) to lift over 500mn people out of hunger and malnutrition by 2030. At this point, however, we appear to be going in the opposite direction. The World Food Programme predicts that over 320mn people are at risk of acute hunger. Many emerging market countries took advantage of the era of low global interest rates to fund spending by raising debt in the international capital markets. But rate increases by the US Federal Reserve, combined with weaker EM currencies, are now resulting in severe debt servicing burdens which are eating into governments’ discretionary spending on health and education. The impact of emerging market meltdown could be felt in developed countries across North America and Europe in the form of increased migration flows. As several Central American countries, among others, grapple with dramatically slowing growth and food price inflation, we may again see waves of refugees gathering along the US’s southern border. We could also see more boatloads of desperate people from Africa and the Middle East arrive on European shores in search of better lives. Food insecurity and economic downturns will result in many countries experiencing civil war-type conflicts as local groups compete for scarce resources. And these economic and security challenges will result in migration flows that adversely affect both potential migrants and the countries that receive them. There are several steps that can be taken to address the challenges facing emerging market nations. In the short term, the IMF and sovereign donors should announce a three-year debt servicing moratorium for the most vulnerable countries. This will help create much-needed fiscal space, and should be coupled with a requirement that the proceeds saved in lieu of debt payments be invested in agriculture, health and education. Furthermore, the IMF, together with the G7 and EU, should also increase lending to emerging markets to help fund fertiliser, food and energy imports. Countries such as Saudi Arabia and the United Arab Emirates, which benefit from higher energy prices, should be strongly encouraged to contribute to these global efforts, along with China and Japan. Aid should also be channelled towards groups such as the World Food Programme and the International Rescue Committee, which together operate in over 120 developing countries and have built-in processes to direct food and other supplies to the most needy. The G7 and larger trading blocks across Europe, North America and Asia should also encourage targeted duty free imports from these countries, with the assistance of the World Trade Organization. The G7 summit in July announced an incremental $4.5bn to combat hunger — but the Greek bailout packages in the last decade totalled over $300bn. While stabilising Greece helped to stabilise Europe, the gap between these numbers is massive. We don’t want a planet where millions go hungry, countries default on their debt, the hungry are forced to leave their homes to find subsistence elsewhere and civil wars rage — in short, a world in which countries submerge. We can and must do better.</p><!--
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<p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/21546448-9081-44b5-a5fd-e158bd58af5e#myft:my-news:page">https://www.ft.com/content/21546448-9081-44b5-a5fd-e158bd58af5e#myft:my-news:page</a><br><br>Turkey has cut interest rates for the second month running as president Recep Tayyip Erdoğan seeks to prioritise growth over financial stability ahead of next year’s elections. The central bank announced on Thursday that it was lowering its benchmark one-week repo rate from 13 per cent to 12 per cent despite rampant inflation that exceeded 80 per cent in August. The lira hit a record low after the announcement, falling to 18.387 against the dollar. The decision to lower rates once again after a surprise rate cut last month pushes Turkey’s real interest rate — once inflation is taken into account — even deeper into negative territory to minus 68 per cent. Atilla Yeşilada, a prominent economic commentator, said the move, which comes at a time when central banks around the world have been raising borrowing costs, showed that Turkey’s central bank had “gone off the rails”. Ultra-low real interest rates are the centrepiece of Erdoğan’s deeply unorthodox approach to managing the $830bn economy as he prepares for a challenging bid for re-election next year. The president, who is notorious for his rejection of the established economic wisdom that high interest rates help to tame inflation, has argued that he is pursuing a new economic model that will bring down inflation by prioritising exports, investments and jobs. But his loose monetary policy has deterred local savers and foreign investors from holding lira or lira-denominated assets, heaping pressure on the currency. Turkey’s ballooning external debt burden — with $182bn coming due in the next 12 months — and its wide current account deficit are further sources of demand for foreign currency that weaken the lira. The weak currency, which has lost 27 per cent of its value against the dollar this year, has fed through into soaring inflation in a country that is heavily dependent on imports. Authorities have sought to stabilise the currency by rolling out a serious of contentious measures, including a state-backed scheme aimed at encouraging savings in lira rather than dollars and a requirement for exporters to convert 40 per cent of their foreign currency revenues into local currency. The central bank also continues to spend billions of dollars each month on intervening in the currency markets. Recent rate cuts have not been fully passed on to households and companies. The average interest rate on consumer loans was about 31 per cent in early September, according to central bank data. Policymakers have also sought to direct lending to more productive sectors in a bid to stop uncontrolled credit growth. Still, analysts warned that the fresh rate cut would pile renewed pressure on the lira. Robin Brooks, chief economist at the Institute of International Finance, an industry association, said a similar string of rate cuts in the autumn of 2021 “set off a cycle of uncontrolled lira depreciation”. He added: “The risk is that the same will happen now.” Recommended News in-depthTurkish economy Turkey’s ‘Darwinian’ companies ride out 80% inflation Erdoğan’s hope is that cheap credit will sustain the country’s fast-paced GDP growth, which stood at 7.6 per cent in the second quarter of this year, to create jobs and a feel good factor in the run-up to next year’s polls. But Selva Demiralp, a professor of economics at Istanbul’s Koç University, said that goal might be unachievable, arguing that “growth is not sustainable in an inflationary environment”. “The rest of the world acknowledges that the costs of inflation on the economy are higher than the costs of reducing inflation,” she said. “But the Turkish central bank continues to remain detached from the rest of the world.”</p><p>https://www.ft.com/content/21546448-9081-44b5-a5fd-e158bd58af5e#myft:my-news:page</p><!--
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<p>Paul Graham 2004 what the bubble got right</p><p>http://www.paulgraham.com/bubble.html</p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/4df65b03-818d-40ed-ae6b-9f0ec1ed2fac#myft:my-news:page">https://www.ft.com/content/4df65b03-818d-40ed-ae6b-9f0ec1ed2fac#myft:my-news:page</a><br><br>John Thornhill YESTERDAY 43 Print this page When the dotcom bubble burst in 2000 many investors slapped their foreheads at their collective stupidity and shouted: what were we thinking? How was it that Pets.com, a profitless start-up more famous for its floppy-eared sock puppet mascot than any coherent business plan, could float on the Nasdaq before going bust within the year? Some investors may be squirming again today as they watch the 29 per cent fall in the Nasdaq this year and survey the wreckage of special purpose acquisition companies, which enabled several profitless companies without coherent business plans to come to market. These Spacs were, in the words of one veteran investor, the “last degenerate spasm of an over-extended bull run.” However, as the tech entrepreneur Paul Graham wrote in a brilliant essay in the aftermath of the first dotcom crash, stock market investors were right about the direction of travel even if they were wrong about the speed of the journey. “Despite all the nonsense we heard during the bubble about the ‘new economy’ there was a core of truth,” he wrote in “What The Bubble Got Right”. Written in 2004, Graham’s list of 10 things the bubble got right still stands the test of time. The internet has indeed revolutionised business. Casually dressed, California-based, 26-year-old nerds with good ideas have often out-innovated 50-year-old suits with powerful connections. Technology doesn’t add, it multiplies, he wrote. What have investors got right in the latest bubble? It would be fascinating to hear Graham’s updated thoughts. Sadly, he has not yet replied to my email. So, to trigger the debate, here are five things I think the latest bubble got right, drawing on interviews with investors and entrepreneurs. FT readers will doubtless have better, or contrary, ideas. First, the stock market has been right to attach enormous value to data, even if accountants have a hard time recognising it on the balance sheet. Those companies that can gather, process and exploit meaningful data have a significant competitive edge in almost every market. Second, while globalisation may be slowing, e-globalisation is accelerating. The International Telecommunication Union estimates that 4.9bn people — or 63 per cent of the world’s population — were connected to the internet by 2021. It is targeting 100 per cent by 2030. Not only are people increasingly accessing the internet but they are accessible on it, too. A teenage programmer in a bedroom in Tallinn or Lagos or Jakarta can reach a global audience overnight. Third, the Covid pandemic has permanently changed the world of work. Stock market investors may have suffered a sugar rush in excessively bidding up lockdown favourites such as Netflix, Spotify, Peloton and Zoom. But many companies will never be able to force valuable employees back to the office. So-called liquid enterprises that successfully hire and manage employees around the world are going to thrive — as are the companies that service this decentralised workforce. Fourth, the energy transition will translate into colossal stock market wealth. Tesla might have become the most overhyped, if not overvalued, company on the planet. But by spearheading the electric vehicle revolution, it nevertheless symbolises an important trend. Fifth, the evangelists touting crypto and Web 3 may have so far failed to deliver many answers, but they are asking the right questions. How do we own and trade digital assets? “Blockchain is a game-changer. It is going to restructure the back office of the world,” says one bank chief executive. This year’s cyclical downturn in public and private tech markets is crushing these secular trends. But in the past few weeks investors have been warming again to the attractions of fast-growing tech companies. One example is Figma, a collaborative software business that has just agreed an eye-popping $20bn takeover offer from Adobe. Dylan Field, Figma’s 30-year-old co-founder, tells me his company has been built on the “mega-trends” reshaping the tech sector. About 81 per cent of Figma’s active users are now outside the US. It may have become a cliché to say that “software is eating the world” (to use the tech investor Marc Andreessen’s phrase) but it remains true. “People assume that it is over. But it is just starting,” Field says. At times, the latest tech bubble has resembled the unintentional dotcom Ponzi scheme described by Graham at the beginning of the century. But that does not mean investors’ instincts were not sound, both then and now. The only question is: what price to attach to them?</p><!--
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<p></p><p></p><p></p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/Brad_Setser/status/1605056295081345024","full_text":"BoJ Governor Kuroda seems to have surprised the markets (and certainly surprised me) by not waiting until the new year to adjust Japan's policy of yield curve control -- widening the band around the 10y bond (allowing yields of up to 50bp)\n\n1/\n\n","username":"Brad_Setser","name":"Brad Setser","date":"Tue Dec 20 04:23:35 +0000 2022","photos":[],"quoted_tweet":{},"retweet_count":48,"like_count":191,"expanded_url":{"url":"https://www.bloomberg.com/news/articles/2022-12-20/kuroda-shocks-by-tweaking-boj-s-yield-cap-sparking-yen-jump?sref=pKfngeVk","title":"Bloomberg - Are you a robot?","description":null,"domain":"bloomberg.com"},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/Brad_Setser/status/1605056295081345024" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/Brad_Setser.jpg" alt="Twitter avatar for @Brad_Setser" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Brad Setser </span><span class="tweet-author-handle">@Brad_Setser</span></div></div><div class="tweet-text">BoJ Governor Kuroda seems to have surprised the markets (and certainly surprised me) by not waiting until the new year to adjust Japan's policy of yield curve control -- widening the band around the 10y bond (allowing yields of up to 50bp)
1/
</div><a class="expanded-link" href="https://www.bloomberg.com/news/articles/2022-12-20/kuroda-shocks-by-tweaking-boj-s-yield-cap-sparking-yen-jump?sref=pKfngeVk" target="_blank"><div class="expanded-link-bottom"><span class="expanded-link-domain">bloomberg.com</span><span class="expanded-link-title">Bloomberg - Are you a robot?</span><span class="expanded-link-description"></span></div></a></a><a class="tweet-link-bottom" href="https://twitter.com/Brad_Setser/status/1605056295081345024" target="_blank"><div class="tweet-footer"><span class="tweet-date">4:23 AM ∙ Dec 20, 2022</span><hr><div class="tweet-ufi"><span href="https://twitter.com/Brad_Setser/status/1605056295081345024/likes" class="likes"><span class="like-count">191</span>Likes</span><span href="https://twitter.com/Brad_Setser/status/1605056295081345024/retweets" class="retweets"><span class="rt-count">48</span>Retweets</span></div></div></a></div><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!-v3S!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!-v3S!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 424w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 848w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 1272w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png" width="834" height="1106" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1106,"width":834,"resizeWidth":null,"bytes":277217,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":false,"topImage":true,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!-v3S!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 424w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 848w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 1272w, https://substackcdn.com/image/fetch/$s_!-v3S!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff3ed6088-6b0d-4e8d-98e0-e610d15682e1_834x1106.png 1456w" sizes="100vw" fetchpriority="high"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>https://thedailyshot.com/2022/12/15/the-fed-to-markets-can-you-hear-me-now/</p><p></p><p>After falling for 30 years land prices in Japan are finally rising again. </p><p>https://thedailyshot.com/2022/12/16/the-week-of-synchronized-rate-hikes/</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!vtg3!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!vtg3!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 424w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 848w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 1272w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png" width="826" height="1072" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":1072,"width":826,"resizeWidth":null,"bytes":301322,"alt":"","title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" title="" srcset="https://substackcdn.com/image/fetch/$s_!vtg3!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 424w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 848w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 1272w, https://substackcdn.com/image/fetch/$s_!vtg3!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb99323f8-ff90-425f-9834-b45e86ba83a5_826x1072.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p></p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!7jxU!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!7jxU!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 424w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_848,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 848w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_1272,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 1272w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 1456w" sizes="100vw"><img src="https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png" width="1314" height="928" data-attrs="{"src":"https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png","srcNoWatermark":null,"fullscreen":null,"imageSize":null,"height":928,"width":1314,"resizeWidth":null,"bytes":342731,"alt":null,"title":null,"type":"image/png","href":null,"belowTheFold":true,"topImage":false,"internalRedirect":null,"isProcessing":false,"align":null,"offset":false}" class="sizing-normal" alt="" srcset="https://substackcdn.com/image/fetch/$s_!7jxU!,w_424,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 424w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_848,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 848w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 1272w, https://substackcdn.com/image/fetch/$s_!7jxU!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fac8fcb96-5af9-4fd9-90e0-92c21cfd0068_1314x928.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a></figure></div><p>https://thedailyshot.com/2022/11/08/will-year-over-year-changes-in-home-prices-dip-into-negative-territory/</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/Brad_Setser/status/1583556374759235584?s=20&t=q3_lWw0JxW6w-OkzTJPfxw","full_text":"Japan's intervention in the fx market has renewed interest in the role foreign creditors in general and Japanese investors in particular play in US bond markets.\n\nOver the last 4qs, foreign investors have bought about 1/2 of net Treasury issuance. Japan was $50b of $500b.\n\n1/ ","username":"Brad_Setser","name":"Brad Setser","date":"Fri Oct 21 20:30:35 +0000 2022","photos":[{"img_url":"https://pbs.substack.com/media/FfnqRQlXEAIKVSf.png","link_url":"https://t.co/NdFHzKA2ti","alt_text":null}],"quoted_tweet":{},"retweet_count":67,"like_count":221,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/Brad_Setser/status/1583556374759235584?s=20&t=q3_lWw0JxW6w-OkzTJPfxw" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/Brad_Setser.jpg" alt="Twitter avatar for @Brad_Setser" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Brad Setser </span><span class="tweet-author-handle">@Brad_Setser</span></div></div><div class="tweet-text">Japan's intervention in the fx market has renewed interest in the role foreign creditors in general and Japanese investors in particular play in US bond markets.
Over the last 4qs, foreign investors have bought about 1/2 of net Treasury issuance. Japan was $50b of $500b.
1/ </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!n1N1!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFfnqRQlXEAIKVSf.png"><img class="tweet-photo" src="https://pbs.substack.com/media/FfnqRQlXEAIKVSf.png" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/Brad_Setser/status/1583556374759235584?s=20&t=q3_lWw0JxW6w-OkzTJPfxw" target="_blank"><div class="tweet-footer"><span class="tweet-date">8:30 PM ∙ Oct 21, 2022</span><hr><div class="tweet-ufi"><span href="https://twitter.com/Brad_Setser/status/1583556374759235584?s=20&t=q3_lWw0JxW6w-OkzTJPfxw/likes" class="likes"><span class="like-count">221</span>Likes</span><span href="https://twitter.com/Brad_Setser/status/1583556374759235584?s=20&t=q3_lWw0JxW6w-OkzTJPfxw/retweets" class="retweets"><span class="rt-count">67</span>Retweets</span></div></div></a></div><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/7dc54c2c-898e-4c96-b312-dad57e250a61#myft:my-news:page">https://www.ft.com/content/7dc54c2c-898e-4c96-b312-dad57e250a61#myft:my-news:page</a><br><br>Opinion Markets Insight Bank of Japan’s inevitable pivot looms as a risk for markets Central bank faces a tricky but necessary exit from its ‘yield curve control’ policy MOHAMED EL-ERIANAdded Bank of Japan currently caps a key longer-term interest rate by buying bonds when the market yield tests that level © AFP/Getty Images Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save current progress 0% Mohamed El-Erian 7 HOURS AGO 19 Print this page The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and Gramercy After occupying a central role in international trade and currency developments in the 1980s and 1990s, Japan’s influence on the global economy and markets gradually declined. “What happens in Japan stays in Japan” became the mantra for many. But this could change if the Japanese authorities do not prepare well for what increasingly looks like an inevitable exit from its “yield curve control” policy. YCC is a monetary policy regime introduced in 2016 under which the Bank of Japan caps a key longer-term interest rate by buying bonds when the market yield tests that level. By capping this, and by influencing short-term bond yields through the setting of benchmark policy rates, the central bank seeks to stimulate growth and counter deflation. Whatever your views on the effectiveness of YCC (and this is subject to debate), rising yields around the world make it hard to maintain the policy without intensifying collateral damage and unintended consequences. This has included a rapidly depreciating currency, large central bank foreign exchange interventions, and recurrent stress in market functioning for Japanese government bonds (including days with little if any trading). The longer Japan sticks with YCC in the current global context, the more the authorities will have to spend to resist a depreciation, and the greater the structural damage to the core of the country’s financial system. No wonder most observers expect Japan to have to exit this policy — a view reinforced by higher inflation and the mounting wage demands from the major labour unions. When it comes to the timing of this, the consensus forecast is after the second five-year term of the current governor, Haruhiko Kuroda, ends in March of next year. If correct, this gives the Japanese authorities months to prepare for what is an inherently tricky policy manoeuvre. Time and time again, history has shown that exiting a protracted fixed price regime is full of complexities, whether it involves the currency, interest rates, or domestic prices and subsidies. This is particularly true when the peg in question has already caused multiple distortions. We should expect a good part of the Japanese interest rate structure to move significantly higher when YCC is removed. The impact would be particularly acute for the domestic large holders of Japanese government bonds who, long confident in the longevity of the interest rate cap, had found ways to leverage their “safe asset” holdings in order to increase returns. On the surface, this is the type of behaviour that was adopted by UK pension schemes. Its viability was turned upside down by the sudden increase in market yields caused by the “mini” budget debacle. I say “on the surface” as there are three notable differences. First, while the UK situation predominantly involved the leveraging of government “interest rate” risk, that of Japan appears to involve more “credit risk”. Second, a good portion of that risk has been obtained through claims on entities outside Japan such as companies or sovereigns. Third, the Bank of Japan would face many more obstacles in pursuing surgical interventions to calm markets if this were required. The risk scenario here is the possibility that large losses and margin calls pressure certain overexposed Japanese entities to dispose of assets in a disorderly manner. Given the extent of crossholdings, this would fuel contagion across markets and borders which would be felt notably in places such as US and European investment grade corporates, high yield, leveraged bank loans, and emerging markets. It would come at a time when US Federal Reserve’s now-rapid rate hikes to tackle rising inflation has contributed to large losses for investors and unsettling volatility. There has been a sense of nowhere to hide. The importance of minimising this risk scenario is heightened by the existing concerns about liquidity and the orderly functioning of other markets in advanced countries. It is even more vital at a time when a slowing global economy can ill-afford contamination from market accidents. The policy approach for Japan involves the early identification of “pain trades”, the encouragement of pre-emptive orderly deleveraging, and clarity on the nature and duration of an emergency intervention if needed, including the degree of acceptable regulatory forbearance. None of this is easy, and it is not guaranteed to work immediately. Yet the alternative of letting markets do it their way would be more problematic for both Japan and the rest of the world.</p><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/matthew_pines/status/1586898501799141378","full_text":"To add &amp; speculate off this good thread:\n\nStarved for yield at home, Japanese savers have long gorged themselves on USTs, providing one of the few remaining reliable(?) bids in that increasingly volatile, illiquid &amp; geostrategic market.\n\nThus the tight USDJPY/UST10YR correlation. ","username":"matthew_pines","name":"Matthew Pines","date":"Mon Oct 31 01:51:00 +0000 2022","photos":[],"quoted_tweet":{"full_text":"24/24. The BOJ then has 2 choices: raise interest rates, which puts government into a debt-service trap, with an accelerating debt-GDP ratio, or bring back capital controls to defend the yen once its FX reserves run dry. What will it do?","username":"shortl2021","name":"One Bubble to Rule Them All"},"retweet_count":0,"like_count":1,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/matthew_pines/status/1586898501799141378" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/matthew_pines.jpg" alt="Twitter avatar for @matthew_pines" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">Matthew Pines </span><span class="tweet-author-handle">@matthew_pines</span></div></div><div class="tweet-text">To add & speculate off this good thread:
Starved for yield at home, Japanese savers have long gorged themselves on USTs, providing one of the few remaining reliable(?) bids in that increasingly volatile, illiquid & geostrategic market.
Thus the tight USDJPY/UST10YR correlation. </div><div class="quote-tweet"><div class="quote-tweet-header"><img class="quote-tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_40/shortl2021.jpg" alt="Twitter avatar for @shortl2021" loading="lazy"><div class="quote-tweet-header-text"><span class="quote-tweet-name">One Bubble to Rule Them All </span><span class="quote-tweet-username">@shortl2021</span></div></div>24/24. The BOJ then has 2 choices: raise interest rates, which puts government into a debt-service trap, with an accelerating debt-GDP ratio, or bring back capital controls to defend the yen once its FX reserves run dry. What will it do?</div></a><a class="tweet-link-bottom" href="https://twitter.com/matthew_pines/status/1586898501799141378" target="_blank"><div class="tweet-footer"><span class="tweet-date">1:51 AM ∙ Oct 31, 2022</span></div></a></div><div data-component-name="Twitter2ToDOM" class="tweet" data-attrs="{"url":"https://twitter.com/shortl2021/status/1586366953882808321","full_text":"1/24. Is Japan in a debt trap and is that trap now snapping shut? A long thread. We start with the Ministry of Finance's \"Japanese Public Finance Fact Sheet' (a must read for everyone). \n\n<a class=\"tweet-url\" href=\"https://www.mof.go.jp/english/policy/budget/budget/fy2022/03.pdf\">mof.go.jp/english/policy…</a> ","username":"shortl2021","name":"One Bubble to Rule Them All","date":"Sat Oct 29 14:38:49 +0000 2022","photos":[{"img_url":"https://pbs.substack.com/media/FgPJLVMWIAEOeZI.png","link_url":"https://t.co/CV5UB65RzU","alt_text":null}],"quoted_tweet":{},"retweet_count":378,"like_count":1334,"expanded_url":{},"video_url":null,"belowTheFold":true}"><a class="tweet-link-top" href="https://twitter.com/shortl2021/status/1586366953882808321" target="_blank"><div class="tweet-header"><img class="tweet-header-avatar" src="https://substackcdn.com/image/twitter_name/w_96/shortl2021.jpg" alt="Twitter avatar for @shortl2021" loading="lazy"><div class="tweet-header-text"><span class="tweet-author-name">One Bubble to Rule Them All </span><span class="tweet-author-handle">@shortl2021</span></div></div><div class="tweet-text">1/24. Is Japan in a debt trap and is that trap now snapping shut? A long thread. We start with the Ministry of Finance's "Japanese Public Finance Fact Sheet' (a must read for everyone).
<a class="tweet-url" href="https://www.mof.go.jp/english/policy/budget/budget/fy2022/03.pdf" target="_blank">mof.go.jp/english/policy…</a> </div><div class="tweet-photos-container one"><div class="tweet-photo-wrapper "><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!Lv0r!,w_600,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fpbs.substack.com%2Fmedia%2FFgPJLVMWIAEOeZI.png"><img class="tweet-photo" src="https://pbs.substack.com/media/FgPJLVMWIAEOeZI.png" alt="Image" loading="lazy"></picture></div></div></a><a class="tweet-link-bottom" href="https://twitter.com/shortl2021/status/1586366953882808321" target="_blank"><div class="tweet-footer"><span class="tweet-date">2:38 PM ∙ Oct 29, 2022</span><hr><div class="tweet-ufi"><span href="https://twitter.com/shortl2021/status/1586366953882808321/likes" class="likes"><span class="like-count">1,334</span>Likes</span><span href="https://twitter.com/shortl2021/status/1586366953882808321/retweets" class="retweets"><span class="rt-count">378</span>Retweets</span></div></div></a></div><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" target="_blank" href="https://substackcdn.com/image/fetch/$s_!Nd1Y!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fae950496-ca0b-475b-a69e-29d0f472c5b4_488x592.png" data-component-name="Image2ToDOM"><div class="image2-inset"><picture><source type="image/webp" srcset="https://substackcdn.com/image/fetch/$s_!Nd1Y!,w_424,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fae950496-ca0b-475b-a69e-29d0f472c5b4_488x592.png 424w, 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https://substackcdn.com/image/fetch/$s_!Nd1Y!,w_1272,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fae950496-ca0b-475b-a69e-29d0f472c5b4_488x592.png 1272w, https://substackcdn.com/image/fetch/$s_!Nd1Y!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fae950496-ca0b-475b-a69e-29d0f472c5b4_488x592.png 1456w" sizes="100vw" loading="lazy"></picture><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><div class="pencraft pc-reset icon-container restack-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-refresh-cw"><path d="M3 12a9 9 0 0 1 9-9 9.75 9.75 0 0 1 6.74 2.74L21 8"></path><path d="M21 3v5h-5"></path><path d="M21 12a9 9 0 0 1-9 9 9.75 9.75 0 0 1-6.74-2.74L3 16"></path><path d="M8 16H3v5"></path></svg></div><div class="pencraft pc-reset icon-container view-image"><svg xmlns="http://www.w3.org/2000/svg" width="20" height="20" viewBox="0 0 24 24" fill="none" stroke="currentColor" stroke-width="2" stroke-linecap="round" stroke-linejoin="round" class="lucide lucide-maximize2 lucide-maximize-2"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></div></div></div></div></a><figcaption class="image-caption"></figcaption></figure></div><p>https://www.economist.com/finance-and-economics/2022/10/27/asias-vast-financial-institutions-are-being-enlisted-to-defend-currencies</p><p>Japan stimulus </p><p>https://www.ft.com/content/eed2bb55-e769-4a0f-b2f1-0141698ae3f3</p><p>https://www.ft.com/content/6073ee6a-ff96-41bf-82a5-b14dc81a3823#myft:my-news:page</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/ef425da7-0f94-484a-9f0c-40991be70ccc#myft:my-news:page">https://www.ft.com/content/ef425da7-0f94-484a-9f0c-40991be70ccc#myft:my-news:page</a><br><br>China growth to fall behind rest of Asia for first time since 1990 World Bank is latest financial institution to slash Chinese economic forecast Consumer activity has been sapped by Xi Jinping’s commitment to his zero-Covid policy © Jade Gao/AFP/Getty Images Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Edward White in Seoul and Mercedes Ruehl in Singapore AN HOUR AGO 7 Print this page China’s economic output will lag behind the rest of Asia for the first time since 1990, according to new World Bank forecasts that highlight the damage wrought by Xi Jinping’s zero-Covid policies and the meltdown of the world’s biggest property market. The World Bank has revised down its forecast for gross domestic product growth in the planet’s second-largest economy to 2.8 per cent compared with 8.1 per cent last year, and down from its prediction made in April of between 4 and 5 per cent. At the same time, expectations for the rest of east Asia and the Pacific have improved. The region, excluding China, is expected to grow at 5.3 per cent in 2022, up from 2.6 per cent last year, thanks to high commodity prices and a rebound in domestic consumption after the pandemic. “China, which was leading the recovery from the pandemic, and largely shrugged off the Delta [Covid variant] difficulties, is now paying the economic cost of containing the disease in its most infectious manifestation,” Aaditya Mattoo, the World Bank’s chief economist for east Asia and the Pacific, told the Financial Times. China had set a GDP target of about 5.5 per cent this year, which would have been a three-decade low. But the outlook has deteriorated markedly over the past six months. Xi’s policy of relentlessly suppressing coronavirus outbreaks through snap lockdowns and mass testing has restricted mobility and sapped consumer activity just as China’s property sector — which accounts for about 30 per cent of economic activity — suffers a historic collapse. The Washington-based group’s latest forecast follows a series of financial institutions, including Goldman Sachs and Nomura, slashing their outlook for next year, too. The rise in pessimism is based on assessments that Xi would probably pursue his zero-Covid policy beyond 2022. Many economists and analysts had predicted Beijing would significantly increase stimulus measures in response, boosting consumption and accelerating easing measures to help arrest the housing market downturn. However, Mattoo said that while China had “immense ammunition to provide powerful stimulus”, it appeared Beijing had concluded that fiscal stimulus would be “emasculated” by the zero-Covid restrictions. The data comes against a backdrop of broader concerns that policies under Xi — who is set to secure an unprecedented third term as leader of the Chinese Communist party next month — are undoing the economic dynamism that began under Deng Xiaoping’s reform era. The World Bank has also worried that the property slowdown represented a deep “structural” problem. To reduce the immediate risk of contagion from the property sector “turmoil”, the bank said Beijing needed to provide more liquidity support to distressed developers and financial guarantees for project completion. In the longer-term, however, fiscal reforms were needed to give local governments new sources of revenue beyond land sales, including a property tax. By contrast, economies in east Asia and the Pacific, particularly the export-driven economies of south-east Asia, are mostly expected to grow faster and have lower inflation in 2022. In Indonesia, Thailand and Malaysia, government fuel subsidies have helped keep inflation low by global standards. Domestic consumption has risen as the region abandoned lockdowns and stricter approaches to managing the pandemic. Recommended The Big Read Fortress China: Xi Jinping’s plan for economic independence At the same time, higher commodity prices sparked by the global energy crisis have boosted the region’s export-reliant economies. Indonesia, a big exporter of coal, last week revealed that exports brought in a record $27.9bn in August. Some central banks, including Indonesia, Vietnam and the Philippines, have started raising interest rates. Even so, the region was under less pressure than other parts of the world, said Mattoo. “I think the gradual tightening we’re seeing . . . can be sustained for some time.” Some of the measures such as food and fuel subsidies, however, could end up being a drag on growth by the end of the year, the bank warned. Price controls distort the market, often helping the wealthy and large corporations while increasing public debt, according to the report. Already there are signs of stress. Mongolia and Laos have high debt levels — large shares of which are denominated in foreign currencies — and are vulnerable to global inflation and the subsequent exchange rate depreciation. “I would say that at this stage, this is something that needs to be watched, rather than a source of serious concern,” said Mattoo.</p><p></p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/9675cf79-f16d-4132-ab73-8bafa22ee4fc#myft:my-news:page">https://www.ft.com/content/9675cf79-f16d-4132-ab73-8bafa22ee4fc#myft:my-news:page</a><br><br>Why the weak yen no longer means what it once did for Japan Inc Country’s sensitivity to fluctuations has shifted since the currency last traded this low in the 1990s © FT montage Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Share Save Leo Lewis, Kana Inagaki and Eri Sugiura in Tokyo YESTERDAY 15 Print this page The Japanese yen has tumbled by a fifth against the dollar this year, but broad shifts in the country’s economy mean its impact on Japan Inc is far more uneven than the last time the currency traded at such weak levels 24 years ago. Japanese companies had long struggled to match the cost competitiveness of rivals in China and South Korea when manufacturing products in their home market, having historically endured a strong currency as well as high electricity bills and labour costs. The landscape is now shifting as the yen has tumbled 20 per cent this year against the US dollar, reaching a low of ¥145 on Thursday. The real effective exchange rate, a measure of the currency’s strength against those of trading partners adjusting for price levels, has reached its lowest level since 1970, according to Bank of Japan data. Japan last week sharpened its verbal intervention against the weakening yen. The Bank of Japan contacted banks to check on currency rates, which has in the past been a precursor to a market intervention, which would be ordered by the country's finance ministry. While officials may be growing more nervous about a weak yen, its effects are far more nuanced now than in years past. Historically, a weak yen has been a boon for Japan Inc. It provided a boost to the country’s sprawling export sector by making Japanese goods cheaper for foreign buyers. However, corporate Japan has changed since the last time the yen was this cheap in 1998. Almost a quarter of manufacturing has shifted overseas and the old relationships with an exchange rate that once ruled supreme have now been broken. “Relative to Asian competitors, it has never on record been as cost-competitive as it is now,” said Nicholas Smith, Japan strategist at CLSA, who added that the Chinese real effective exchange rate has almost doubled since 1994 as Japan’s has been in long-term decline. There has also never been a time when Japan has been as price-competitive as it currently is relative to South Korea. Here are five case studies showing how the weak yen is now having a more nuanced effect across Japan’s $5tn economy. Sony: tech and entertainment conglomerate © Xing Yun / Costfoto/Future Publishing/ Getty ImagesInfo Founded: 1946 Business: Electronics Headquarters: Tokyo Employees: 110,000 Market value: ¥12.9tn ($89bn) 6-10 per cent Price rise for PlayStation 5 consoles in Japan, Europe, China and other key markets this summer due to rising production costs, the global semiconductor shortage and yen weakness For Sony, with its diverse range of businesses, the weaker yen is a mixed blessing. The Japanese electronics and gaming group began outsourcing the production of its PlayStation consoles and consumer electronics products in the past few decades. For these businesses, a weaker yen is negative since it increases the dollar-denominated costs of manufacturing as well as the prices of raw materials and components purchased in dollars. This prompted an unprecedented price rise for the PlayStation 5 last month. But for image sensors that Sony has continued to manufacture in Japan to sell to Apple and other mobile phonemakers, the yen’s decline is a boost for its overseas exports. Overall, the net currency impact is only “slightly positive” for the group’s three businesses. “The weaker yen impact is still there, but clearly it isn’t what it was,” said long-term Sony analyst Pelham Smithers. Hoya: world leader in lenses © Joby Sessions/Future/Shutterstock /AFP/Getty ImagesInfo Founded: 1941 Business: Optical glass Headquarters: Tokyo Employees: 38,000 Market value: ¥5.2tn ($36bn) ¥60bn Size of Hoya’s share buyback programme after its net profit rose 17 per cent year on year in April-June 2022, helped by a weaker yen Optical glass specialist Hoya manufactures almost all of its products outside Japan. With the company generating about 75 per cent of its sales outside its home market, it benefits from the weaker yen when profits made overseas are repatriated and converted into yen. In fact, the gain was significant enough that Hoya announced a ¥60bn share buyback programme after reporting a 17 per cent year-on-year boost in net profit for the April-to-June quarter. “A lot of our cash is held in foreign currency, so when there was an increase in yen basis, we decided we should be paying back to our shareholders when we can,” its chief financial officer Ryo Hirooka said when asked about the share buyback. The big question, said Macquarie analyst Damian Thong, was whether companies would continue the repatriation. “If Japanese companies decide not to invest in Japan by bringing the money back to take advantage of Japan’s growing economic competitiveness, and decide to use it for [mergers and acquisitions] or to build factories abroad, then the yen could remain under pressure with no benefit to the Japanese economy,” he said. The ratio of overseas production for Japan manufacturing companies has risen from average 3.8 per cent in 1990 to 17 per cent in the post-global financial crisis period of 2008-2012 to more than 22 per cent recently. These decisions have been made by manufacturers which, historically, benefited most strongly when a weakening yen improved the competitiveness of their products. Honda: Japan’s offshoring pioneer © AFP/Getty ImagesInfo Founded: 1948 Business: Automaker Headquarters: Tokyo Employees: 204,000 Market value: ¥6.3tn ($44bn) ¥10bn Rise in operating profits for every depreciation of ¥1 against the US dollar, due to Honda moving 85 per cent of its production overseas Among carmakers, Honda has been one of the most aggressive companies pursuing offshoring in the Japanese car industry, with the ratio of its overseas production rising from 68 per cent in 2008 to 85 per cent last year. As a result, a depreciation of ¥1 in the yen against the US dollar increases its operating profits by ¥10bn ($70mn), compared with a nearly ¥20bn boost it received 15 years ago. These offshoring decisions were not, in general, made to chase cheaper labour but to more effectively cater to the demands of customers in foreign markets. As such, the offshoring is likely to continue as Japan’s domestic markets continue to shrink. “[Exchange rates] cannot be a big factor to choose production location. At least 1mn vehicle production is needed for a market to sustain production technology,” said Koichi Sugimoto, analyst at Mitsubishi UFJ Morgan Stanley Securities. Even with a smaller benefit from the weaker yen, Honda upgraded its annual guidance last month as the currency tailwind helped to offset a rise in raw material costs. Companies are still grappling with supply chain disruptions and a slowdown in the global economy, but analysts say Honda’s case suggests there is more room for upgrades in the coming quarters for corporate Japan. Fast Retailing: Asia’s biggest clothing brand © SOPA Images/LightRocket/Getty Images/BloombergInfo Founded: 1963 Business: Apparel retailer Headquarters: Yamaguchi Employees: Around 56,000 Market value: ¥8.7tn ($60bn) ¥1.2bn Rise in Uniqlo profits from a ¥1 depreciation against the US dollar when repatriated. This is offset by rises in the cost of importing materials Earlier this year in April, Tadashi Yanai, the chief executive of Uniqlo owner Fast Retailing, warned that the weak yen had “no merit whatsoever”. That may have been true 15 years ago when its Uniqlo business was mainly domestic. But with its Uniqlo stores currently generating nearly half of their annual profits outside of Japan, a depreciation of ¥1 against the US dollar increases its profits by ¥1.2bn when repatriated. The costs of imported materials are still higher with a depreciation of ¥1 against the US dollar, wiping ¥4bn in Uniqlo profits. Since Asia’s largest clothing retailer has used hedging tools called foreign exchange forwards, the weakening yen will only seriously start to bite in 2024. Thus, for the fiscal year that ended in August, the group is forecasting record profits. Going forward, Uniqlo has already announced price hikes for some of its products and its overseas sales are expected to grow further. “It’s a wrong to assume that all retailers will do badly as a result of the weaker yen,” said Credit Suisse analyst Takahiro Kazahaya. Nitori: Cut-price furniture for a deflationary generation Nitori furniture for sale © BloombergInfo Founded: 1967 Business: Furniture retailer Headquarters: Hokkaido Employees: Around 19,000 Market value: ¥1.5tn ($10bn) –¥2bn Fall in profits for every ¥1 depreciation against the US dollar, due to rising costs of imported materials The discount furnishing group generates most of its sales in Japan so the weaker yen impact is negative due to the rising cost of imported materials. Until the end of this month, the company has foreign exchange forward contracts locking the dollar-yen rate at ¥115. But for the rest of the fiscal year until the end of February, Nitori will be buying materials at market prices since it had assumed that the yen would strengthen by the year-end due to a recession in the US. A depreciation of ¥1 against the US dollar decreases its profits by ¥2bn. Like Uniqlo, it could also raise prices to offset rising import bills. “A price increase poses two issues: there is the question of whether the products will sell if Nitori transferred the costs to consumers, and there is also a time lag until it can transfer the costs,” said Kazahaya. The lag is especially long for Nitori since it will need to sell all of its old products before it can raise the price of its new furniture. Either way, the company will have no choice but to transfer some of the costs to consumers.</p><p>Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of <a href="https://www.ft.com">FT.com</a> <a href="https://help.ft.com/help/legal-privacy/terms-conditions/">T&Cs</a> and <a href="https://help.ft.com/help/legal-privacy/copyright/copyright-policy/">Copyright Policy</a>. Email <a href="mailto:licensing@ft.com">licensing@ft.com</a> to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be <a href="https://www.ft.com/tour">found here</a>. <br><a href="https://www.ft.com/content/3e039392-a302-440d-9ad6-47ddecd44567#myft:my-news:page">https://www.ft.com/content/3e039392-a302-440d-9ad6-47ddecd44567#myft:my-news:page</a><br><br>Kana Inagaki and Leo Lewis in Tokyo YESTERDAY 80 Print this page Japan intervened to strengthen the yen for the first time since the late 1990s on Thursday, after the currency tumbled to a 24-year low on pledges by the central bank to stick with its ultra-loose policy. Masato Kanda, the country’s top currency official, said the government had “taken decisive action” to address what it warned was a “rapid and one-sided” move in the foreign exchange market. It was the first time Japan had sold dollars since 1998, according to government data. Finance minister Shunichi Suzuki declined to comment on the scale of the intervention. The move, which traders said was conducted shortly after 5pm local time in Tokyo, caused the yen to surge to ¥140.34 to the dollar in the space of a few minutes. In the currency’s most volatile day since 2016, it had previously hit a low of ¥145.89 after the Bank of Japan signalled it would not change its forward guidance about interest rates. So far this year, the yen has lost about a fifth of its value against the dollar. “It’s the next logical step of the psychological game the Japanese are trying to play here. The yen was heading very steeply to 146, and the [Japanese authorities] had to get a message out quickly. I think the idea is to plant the idea in the market that this is their line in the sand,” said one Tokyo-based trader. The move to steady the yen cascaded across global currency markets. Both the pound and the euro swung into positive territory after starting the day lower. The intervention also highlighted the powerful impact of a surging US dollar on the world’s biggest economies. Japan is now the only country in the world to retain negative interest rates as the US Federal Reserve and most other major central banks aggressively raise interest rates to fight inflation. Hours after Japanese policymakers decided to hold their main interest rate at negative levels, the Swiss National Bank lifted its own rates into positive territory. The Fed raised its main interest rate by 0.75 percentage points for the third time in a row on Wednesday, forecasting further big rate rises — so lifting the bar for other central banks. Because investor funds generally flow to regions with higher interest rates, a widening gap between the US and countries such as Japan puts upward pressure on the dollar. But on Thursday the BoJ kept overnight interest rates on hold at minus 0.1 per cent. It said it would conduct daily purchases of 10-year bonds at a yield of 0.25 per cent — part of a programme to keep long-term borrowing costs pinned at ultra-low levels. Japan’s core consumer prices, which exclude volatile food prices, hit 2.8 per cent in August, rising at the fastest pace in nearly eight years on the back of soaring commodity prices and the weaker yen. The BoJ has long argued that the underlying demand in the Japanese economy remains weak, predicting that inflation will fall back below 2 per cent in the next fiscal year. “You can expect that there will be no change to our forward guidance for about two to three years,” BoJ governor Haruhiko Kuroda said at a news conference, although he added that there could be minor tweaks depending on economic and price developments. “With clear differences in economic and price situation, there is no need for Japan to remove negative rates because others have done so,” Kuroda added. He said the BoJ needed to continue supporting the economy with monetary easing measures until it fully recovered from the pandemic. The BoJ also ended a scheme to offer cheap loans to banks financing small and medium-sized companies to survive Covid disruption, but unexpectedly extended other parts of its pandemic-related funding programme. Recommended News in-depthYen Why the weak yen no longer means what it once did for Japan Inc Citigroup economist Kiichi Murashima said that even if the BoJ were to fine-tune its policy, it would not fundamentally change the broader picture of a gap in financial conditions between Japan and the rest of the world. “It’s very questionable how far the government can actually avert the yen’s fall against the dollar.” BoJ officials last week phoned currency traders to inquire about market conditions in a so-called rate check, illustrating the government’s alarm about the yen’s sharp fall against the US dollar. Government intervention in currency markets, which is ordered by the ministry of finance and executed by the BoJ, is generally rare but especially so when it is conducted to strengthen the currency. The authorities have deployed ¥86tn on intervention since 1991, of which ¥81tn was spent on selling yen, with the last time being in the shadow of the Asian financial crisis in June 1998.</p>No children (leaf entity)