🌍 The Fed hikes interest rates again

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🗺️ AROUND THE WORLD

1. 🇰🇵 North Korea: Pyongyang has marked the end of joint US-South Korea military exercises by carrying out a series of missile launches. North Korea accuses the two allies of staging an “invasion rehearsal”.

2. 🇧🇾 Belarus: UN chief António Guterres is trying to convince the EU to loosen sanctions on Belarusian fertiliser exports and bolster global food production. Several Baltic states oppose loosening the sanctions, which aim to squeeze Belarus for supporting Russia’s invasion of Ukraine.

3. 🇮🇳 India: Rahul Gandhi, India’s main opposition leader, has been sentenced to two years in prison for a 2019 comment suggesting folks named Modi (such as India’s prime minister) are thieves. He’ll appeal the ruling, which comes a year before India’s general elections.

4. 🇧🇷 Brazil: President Lula da Silva heads to China this weekend with nearly 250 business executives. More than a quarter of them hail from Brazil’s meat sector, which depends heavily on sales to China.

5. 🇱🇧 Lebanon: The Lebanese currency has sunk to a new low against the US dollar, prompting hundreds of citizens, mainly retired soldiers, to stage anti-government protests.

🇺🇸 US | ECONOMICS

Fed raises rates, but uncertainty reigns

Briefly: The US Federal Reserve increased interest rates by another quarter point on Wednesday, seeking to cool a hot economy without further spooking jittery markets. US rates are now at their highest level since 2007.

Most economists were (by Wednesday) expecting this decision. But just a week ago, things weren’t so clear:

• After four bank failures in 11 days, some thought the economy didn’t need the Fed’s help to cool down

• And others worried a decision not to raise rates might’ve spooked markets, by suggesting the Fed held concerns for the financial system’s stability

The Fed Chair (Jerome Powell) was clearly mindful of all this. And initial systemic fears seemed to have receded by Wednesday. So he took the calculated risk that he could tame inflation without spreading further financial turmoil. 

Intrigue’s take: Imagine you’re flying a plane. A cockpit alarm goes off, but it’s not yet clear what it means. You’ve got to make a decision, but it might make things worse. Oh, and it’ll be a year before we know if you’ve saved the day or crashed the plane.

That’s Powell’s job right now. And given the Fed’s global influence, we’re all passengers. The last time a pilot faced this kind of decision was 2007-8 and, though the facts were different, we all know how that ended. We’ll find out next year whether Powell got it right this time.

Also worth noting:

• Central banks around the world (eg, Philippines, Taiwan, Saudi Arabia, Qatar, Switzerland, and the UK) quickly followed the US Fed’s lead and raised rates.

• Financial markets are functioning, though one analyst described the primary loans market as a “Scooby Doo ghost town.”

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Today’s briefing is sponsored by The Report

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🇨🇦 CANADA | SECURITY

Canadian intelligence accuses China of election interference

Briefly: A Canadian lawmaker has been accused of secretly helping Beijing at the expense of Canadian interests. Toronto-area representative Han Dong has denied wrongdoing, but on Wednesday night agreed to leave the ruling Liberal Party and sit in Parliament as an independent.

Dong’s accusers say he advised China’s consul-general in Toronto to delay the release of two Canadian citizens in China (widely seen as political prisoners), to avoid benefiting China-sceptic voices in the opposition.

His accusers within Canadian intelligence also allege Dong benefited from a “subtle but effective” effort by China’s consulate to back his 2019 election campaign.

Meanwhile, Prime Minister Trudeau has already opened a private inquiry into alleged election interference in Canada. But as geopolitical divides widen and social media connectivity deepens, election meddling might just get worse.

Intrigue’s take: Canada isn’t the only Western government dealing with election interference. Australia’s PM Malcolm Turnbull introduced world-first foreign interference laws back in 2017 after similar concerns surfaced down under.

And it’s a tough nut to crack:

• Every government wants to protect the integrity of its democracy

• Every intelligence agency wants to protect its secrets, and

• Every modern society wants to avoid isolating citizens with roots abroad.

The solution in Canada, Australia and elsewhere seems to be a controlled leak of intel to shine a light on the issue, followed by carefully calibrated public debate.

Then again, Canadians recently got constitutional protection for the right to flip the bird, so maybe folks will now think twice about messing with their elections.

Also worth noting:

• The Canadian prisoners, Michael Spavor and Michael Kovrig, were released on 24 September 2021, four days after Canada’s elections.

• Canada’s former opposition leader claims his party lost 8 or 9 seats in parliament due to interference by Beijing.

• Rumours emerged overnight that New Zealand is quietly toughening its own approach to foreign interference.

👀 EXTRA INTRIGUE

A few recommendations from Team Intrigue to get you cartwheeling into the weekend. If you have:

• 10 mins: Read this article on the similarities between China’s demographic challenges and Japan’s lost decade. ($)

• 37 mins: Listen to ‘Paid in Blood’ from ‘A Matter of Degrees’, about landownership in Brazil and deforestation in the Amazon.

• 1 hour: Watch ‘Myanmar Diaries’, detailing life after the 2021 military coup from the perspective of everyday people turned journalists.

📜 ON THIS DAY IN HISTORY

Bhutan officially becomes a democracy…

On 24 March 2008, Bhutan held its first general election as it transitioned from an absolute monarchy to a parliamentary democracy. Today the Himalayan kingdom is rated as ‘partly free’ by democracy NGO Freedom House.

❓ FRIDAY QUIZ

Answers: 1-c, 2-d, 3-a.