Crypto News: Ballooning risk

Enthusiasm for the first trip by an American secretary of state to China in nearly five years — a visit both sides pitched as a way to help reset ties — has been punctured by news that a high-altitude surveillance balloon was spotted by the Pentagon over the western US this week.

The balloon was most recently seen over Montana, where Minuteman III intercontinental ballistic missile silos are based, at an altitude above where commercial airliners fly. It poses no security threat, US officials said, but shooting it down could raise the risk of debris hitting populated areas.

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The development threatens to undercut Antony Blinken's visit to China next week. Expectations for the meeting were modest, yet just the fact that talks were taking place was reason for optimism after years of limited engagement and strains over everything from trade to security and technology.

While President Joe Biden's administration downplayed any immediate risk — the balloon can't collect the wealth of information that both nations' spy satellites can, officials said, and it's not the first balloon seen over the country — Republicans were quick to pounce.

House Speaker Kevin McCarthy called it "a destabilizing action that must be addressed, and President Biden cannot be silent." The Republican head of a new House committee formed to highlight Chinese geopolitical risks said the news signaled Beijing's recent diplomatic overtures were just for show.

China hasn't claimed the balloon and Blinken's trip to Beijing for now is still on. Foreign Ministry spokeswoman Mao Ning urged the US to stay "cool headed" as it investigates.

But the incident underscores the fragile state of affairs between the world's two biggest economies, and the complications Biden will face on the foreign policy front with Republicans running the House of Representatives.

If a balloon can disrupt talks, it doesn't bode well for progress on more contentious issues, such as trade or Taiwan. — Bill Faries

A high altitude balloon floats over Billings, Montana, on Wednesday. The Pentagon would not confirm that the balloon in the photo was the surveillance balloon. Source: Larry Mayer/The Billings Gazette/AP Photos

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Delayed impact | A new bomb-tipped long-range rocket will be part of the US's latest $2.2 billion arms package for Ukraine due to be announced today. The satellite-guided weapon has roughly double the range of the HIMARS system prized by Ukrainian forces, but won't be deployed anytime soon. An industry official said first deliveries would take about nine months once the Air Force issues a contract.

A Russian offensive in eastern Ukraine appears imminent even as Kyiv holds out for more weapons deliveries for its own push in the south in the spring, US and European officials said.
Ukrainian President Volodymyr Zelenskiy holds summit talks with top European Union officials in Kyiv today focused on his country's potentially years-long bid to join the bloc.
The only limit to weapons deliveries to Ukraine should be nuclear arms, incoming Czech President Petr Pavel, a former top NATO general, said in a Bloomberg Television interview.

Republican flex | US House Republicans began an investigation into the activities of Biden's climate envoy John Kerry, in another show of authority after winning a majority in the midterm elections. The head of the House Oversight and Accountability Committee demanded in a letter that Kerry turn over information about his office's actions, spending and staffing, including any dealings with the Chinese Communist Party and left-wing environmental groups.

Workforce drop-outs have become an economic dead weight that has left the UK facing its bleakest outlook in generations, according to the Bank of England. In one of the most dismal forecasts it has produced, the central bank said the economy is already in recession and will struggle for growth even when the downturn is over, and the main culprit is the shrinking workforce.

Balkan brawl | The Serbian parliament devolved into chaos yesterday as President Aleksandar Vucic urged lawmakers to stay the path toward joining the EU despite the bloc's demands for concessions on Kosovo. Legislators scuffling on the floor of the assembly laid bare the resistance Vucic faces as he seeks to make a deal over Kosovo and avoid torpedoing Serbia's EU membership bid.

Lawmakers hold banners reading "No to the ultimatum" and "Treason" during a special parliament session in Belgrade yesterday. Photographer: Andrej Isakovic/AFP/Getty Images

Easing tensions | Israeli Foreign Minister Eli Cohen made a surprise visit to Sudan yesterday and said the nations plan to sign a peace accord, highlighting the improving ties between the Jewish state and the Muslim nation. Yet the signing ceremony will only take place after the transition to civilian rule in Khartoum, and no date for that has been set.

Electoral calculus | The Adani Group's stock market rout after Hindenburg Research accused it of fraud roughly equates to India's annual infrastructure budget. But the government has shown few signs of worry publicly. It's a tricky calculation for Prime Minister Narendra Modi, said to be close to billionaire Gautam Adani. A show of support may assuage investors and stabilize losses for the conglomerate. But rallying around Adani may become a political liability ahead of next year's national elections.

India's opposition stepped up pressure on Modi over his ties to Adani and parliament was adjourned for a second day over raucous demands for a parliamentary investigation.

Bloomberg TV and Radio air Balance of Power with David Westin on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online here.

Manhattan District Attorney Alvin Bragg has begun pressing Allen Weisselberg, the jailed former CFO of the Trump Organization, to cooperate with an investigation of alleged wrongdoing by former US President Donald Trump during his 2016 campaign.
Britain's rail network is snarled by another mass strike today, with the biggest train drivers' union warning that more industrial action could be announced if talks next week don't lead to a breakthrough.
Mexico's Foreign Affairs Minister Marcelo Ebrard is confident of getting the nomination to fight for the presidency next year, even as he faces a fierce battle within the ruling party to succeed Andres Manuel Lopez Obrador.
Myanmar's military government imposed martial law in 37 townships across the country where clashes with resistance groups have intensified in the past months.
When Joko Widodo ends his final term as Indonesia's president next year, he will have a dynasty in place that expands his influence. His youngest son is the latest in the family to reveal political ambitions with a bid to become a mayor in the 2024 elections.

Pop quiz (no cheating!) Which country buys the bulk of the lithium production in Chile, the world's second-biggest source after Australia? Send your answers to balancepower@bloomberg.net.

And finally ... A 2021 ransomware attack on Ireland's public-health system felt familiar at first. Hackers rendered most of its 70,000 devices inoperable by encrypting reams of data and demanded $20 million — what would have been one of the biggest ransomware payouts ever — to reverse the action. Then, Conti, the Russia-based group behind the attack, abruptly called it off. Ryan Gallagher reports that as patients suffered, some hackers were spooked by the consequences of attacking hospitals.