Digital jail

Delivered on By Justin Pyvis

Good morning! The sanctions imposed by Western nations so far were described by media personality Karl Stefanovic during an interview with ScoMo yesterday as being “the equivalent of a wet lettuce leaf”.

He’s not wrong. According to Bloomberg, in the 24 hours after Russia invaded Ukraine’s Donbas region:

“…the European Union, the U.K., and the U.S. bought a combined 3.5 million barrels of Russian oil and refined products, worth more than $350 million at current prices. On top of that, the West probably bought another $250 million worth of Russian natural gas, plus tens of millions dollars of aluminium, coal, nickel, titanium, gold and other commodities. In total, the bill likely topped $700 million.”

As you might have expected, the sanctions failed to deter President Putin. Russian forces have since launched attacks from the north, east and south of Ukraine, leading US President Biden to impose additional sanctions that appeared to avoid the sticky subject of oil, the global Swift banking system and other commodities entirely.

That’ll show ‘em! ๐Ÿ™„


Reading the tea leaves

Daily % change

AUD/USD

71.7

-1.0%

AUD/CNY

4.53

-0.9%

AU Bond

2.24

-0.6%

US Bond

1.97

-0.4%

ASX200

6,991

-3.0%

S&P500

4,249

+0.5%

Brent (bbl)

98.4

+1.7%

Gold (oz)

1,889

-1.0%

Iron ore (t)

139.1

0.0%

Bitcoin

38,594

+3.5%

Ethereum

2,659

+2.7%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries. The S&P500 is a snapshot 30 minutes before close.

In a case of dรฉjร  vu, the US S&P500ย opened down -2.22% only to rally to be +0.56% at the time of writing, after US President Joe Biden announced new sanctions against Russia, adding that Russia’s invasion is “unfolding largely as we predicted”.

Locally, theย ASX200 plunged -2.99% in a bloodbath of a session with all 11 sectors finishing in the red, led by tech (-6.4%), as unconfirmed reports emerged that Russia had launched a full-scale invasion of Ukraine.

The pain was shared around the world with Japan’s Nikkei 225 falling -1.81%, Singapore dropped -3.25%, Shanghai down -1.70%, Korea’s Kospi -2.60%, India’s Sensex losing -4.72% and the UK FTSE100 shedding -3.88%.

The price of Brent crude crossed $US100 per barrel for the first time since 2014, while the gold price briefly hit a one-year year high.

A notable mover was mining giant BHP (-6.9%), which weighed heavily on the index after going ex-dividend (it has a weighting of over 10% in the ASX200).


Food for thought

Everyone defines an emergency differently.
Everyone defines an emergency differently.

Yesterday Canada’s government ended the use of its controversial Emergencies Act after just 10 days. The timing was very deliberate by Prime Minister Justin Trudeau, coming just hours ahead of an uncertain Senate vote where members had expressed reservations that they were being asked for support on the basis of “secret information” for a crisis “that is not visible”.

For those unfamiliar, the Emergencies Act was activated when truckers were blockading the capital of Ottawa. It allowed the Canadian government to “to monitor and freeze digital accounts and payments from anyone, to anyone, without a court order”, bringing to light other, more fundamental questions about political overreach as our world becomes ever more digital.

According to Howard Anglin, when Canada’s Emergencies Act was passed in 1988:

“…you could probably still participate in society, albeit with some inconvenience, without a bank account. Not so in 2022. Now, without a working bank account, you can’t pay for a telephone or internet. You can’t make car payments, rent, or travel. You also can’t exercise most basic rights from freedom of speech to freedom of assembly. You can’t even pay a lawyer to defend you. Think of it as digital jail. There may be no bars, but you are far from free.”

This all happens invisibly, without judicial oversight: there are no tanks in the streets; no troops dispersing crowds โ€“ there’s almost no accountability when an innocent person is locked up in digital jail:

“The government doesn’t need to break down your door anymore to effectively remove you from society. They can do it with the press of a button.”

Intentions don’t mean a whole lot when talking about powers such as those contained within the Emergencies Act. Political power is fleeting, and it’s plausible that once the groundwork has been laid and the precedent set that someone will come along and use it irresponsibly and permanently.

While Canada’s political institutions held up this time, the risk of pre-digital age powers being used by governments to undermine people’s basic rights is a very real one, especially once central bank digital currencies (CBDCs) start to emerge.

Take China and its digital yuan (DCNY), which allows the government to bypass financial intermediaries entirely:

“Now, by building out the DCNY, the PBOC [People’s Bank of China] will be able to create a digital architecture that is significantly more effective at capturing the types of data that the government is interested in having, with no intermediary capable of pushback.”

Anglin concludes that without updated protections for “an interconnected digital world, our freedom depends more than ever on the wisdom, good intentions, and forbearance of government and big business. And that is a chilling thought.”


Chewing the fat


Bits and bytes

๐Ÿ—๏ธ One of Australia’s largest construction companies, Melbourne-based Probuild, entered into voluntary administration yesterday “with $5bn worth of unfinished projects around Australia”.

โœŠ More than 150 senior Russian officials signed a letter condemning Putin’s invasion of Ukraine, while Russian people took to the streets of St Petersburg and other Russian cities in anti-war protests.

๐Ÿšจ Estonia, Latvia, Lithuania and Poland triggered NATO Article 4, which involves consulting on “strengthening NATO’s deterrence and defence stance in the Baltic region”. Lithuania’s President declared a state of emergency, asking for NATO troops to be deployed along its border.

๐Ÿ›‘ “The office of Governor General Mary Simon is telling Canadians that they can’t dissolve the federal government simply by contacting her office.”

๐Ÿ‘ฎโ€โ™€๏ธ Whoops. “Some 1200 Victoria Police officers and protective service officers have been working without proper authorisation for up to eight years. Victoria Police chief commissioner Shane Patton says they will need to be sworn in again.”

๐Ÿ›‚ Ukrainians currently in Australia “with visas that expire by 30 June will have them extended by six months”.

๐Ÿšš A convoy of truckers intending to protest vaccine mandates in Pennsylvania, US was called off after just one rig showed up… and it had two flat tyres.

๐Ÿฅฝ Facebook’s parent company Meta unveiled a taste of what it means by the metaverse, showing off a legless Mark Zuckerberg avatar creating “a basic virtual world using Builder Bot, commanding the AI to add features such as an island, trees and a beach”.

โœˆ๏ธ Qantas CEO Alan Joyce said the WA government’s decision to delay its border reopening cost the airline over $A60 million.

๐Ÿค’ Ambulances rushed Clive Palmer and his wife to hospital two days after the billionaire and vocal anti-vaxxer first disclosed he was suffering from COVID-like symptoms.

๐Ÿง€ Bega Cheese warned that food inflation is taking off in Australia, with “virtually everybody, whether retail or companies like ours… people are talking about food inflation. It’s the subject on everybody’s lips at the moment”.

๐Ÿ•บ South Australia’s government will relax pandemic restrictions from this weekend, permitting dancing, singing and larger crowds at sporting events.