Stocks Tumbles 20% After US Research Group Accuses Adani Group Of Stock Manipulation

Shares of Adani Enterprises plunged on Friday as a scathing report by a US-based short seller triggered a massive selloff in the conglomerate’s listed firms, casting doubts on the company’s record $2.45 billion secondary offering, reported news agency Reuters.

The selloff in Adani’s corporate empire accelerated on Friday, erasing more than $50 billion of market value in less than two sessions as Asia’s richest man struggles to contain the fallout, reported news agency Bloomberg.

Adani Group’s share prices of its seven listed companies nosedived last week, after Hindenburg Research stated that it assumed a short position, in particular securities of the conglomerate. In response, Adani Group dismissed the allegations as ‘baseless’, termed the report as ‘malicious combination of selective misinformation and stale,’ and is contemplating legal action against the American investor.

“If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process,” Hindenburg said while also asserting that it fully stands by its findings.

As per reports, Hindenburg Research said that the company hasn’t addressed a single substantive issue raised in the 32,000-word report. “At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions,” the short seller has reportedly said.

The report alleges that the Indian group, headed by Asia’s richest man, Gautam Adani, had engaged in brazen stock manipulation and accounting fraud. It contains details of the Adani family’s alleged shell companies in tax havens across Mauritius, the United Arab Emirates, and the Caribbean, established for facilitating money laundering and tax evasion through siphoning money from the group’s listed entities.

Following the accusations, Adani Transmission shares crashed above 19 percent and Adani Gas tumbled 19.1 percent in their biggest downward trajectory since March 2020, while Adani Green Energy depreciated around 16 percent on the BSE during today’s early trading session. The share prices of Ambuja Cements, NDTV, and ACC, the Indian conglomerate’s recent acquisitions, also declined 7.71 percent, 4.98 percent, and 7.26 percent respectively, on Wednesday, according to reports.

The Adani Group announced on Jan 26, 2023, that it is considering taking legal action against Hindenburg Research for a report from January 23, 2023, that accused the Indian conglomerate of “brazen stock manipulation and accounting fraud scheme.”

Jatin Jalundhwala, legal head for Adani Group, said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors.”

The report was released ahead of the Rs 20,000 crore follow-on public offer (FPO) by Adani Enterprises, the flagship company of the Adani Group. The FPO had raised Rs 5,984.9 crore from 33 anchor investors on Wednesday.

A foreign brokerage house has said that Indian banks have an exposure of Rs 81,200 crore to Adani Group, whose group debt is Rs 2 lakh crore (about $24 billion), according to media reports.

Analysts said the listed Adani firms lost more than Rs 3 lakh crore in market capitalisation on Friday and more than Rs 4.10 lakh crore since Wednesday.

The three companies recently acquired by the Adani group — Ambuja Cement, ACC and NDTV — also wilted. The tycoon has seen over $7 billion of his personal wealth wiped out since the start of the year, according to the Bloomberg Billionaires’ Index which has yet to factor in last week’s meltdown.

India Continues As World’s Fastest-Growing Economy With 5.8% Growth Rate

United Nations– India will remain the fastest-growing major economy recording a growth of 5.8 per cent this year, while the rest of the world will grow by a paltry 1.9 per cent, the UN said on Thursday.

The UN’s World Economic Situation and Prospects (WESP) report sliced off 0.2 per cent from the 6 per cent gross domestic product growth projection made last May without affecting India’s rank as the country faces headwinds from the global economy.

Overall, the report said: “Growth in India is expected to remain strong at 5.8 per cent, albeit slightly lower than the estimated 6.4 per cent in 2022, as higher interest rates and a global slowdown weigh on investment and exports.” Next year, the UN expects India’s economy to grow by 6.7 per cent.

Picture : Rediff.com

The WESP gave a positive picture of India’s jobs scene, noting that its “unemployment rate dropped to a four-year low of 6.4 per cent in India, as the economy added jobs both in urban and rural areas in 2022”. For the world, the WESP forecast is 1.9 per cent this year and rising to 2.7 per cent next year.

In New Delhi, India’s President Droupadi Murmu credited India’s economic performance to “its leadership. India has been among the fastest-growing major economies because of the timely and proactive interventions of the government. The ‘Aatmanirbhar Bharat’ initiative, in particular, has evoked great response among the people at large,” Murmu said in her Republic Day speech.

China, which came in second, is projected to grow by 4.8 per cent this year and 4.5 next year, after a 3% growth in 2022. The US economy, which grew by 2.9% this year is projected to grow by 0.4% this year and 1.7 per cent the next.

For South Asia as a whole, the report said the region’s “economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities” and it forecast a 4.8 percent growth year and 5.9 percent next year.

This was buoyed by India as the report said: “The prospects are more challenging for other economies in the region. Bangladesh, Pakistan, and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 2022.”

Rashid attributed the Indian economy’s growth to three factors: falling unemployment that signals strong domestic demand; easing of inflation, and lower import bills.

He said that the “unemployment rate has come down significantly in the last four years” to 6.4 per cent and “that means the domestic demand has been pretty strong”.

The WESP said that this occurred because “the economy added jobs both in urban and rural areas in 2022”.

“The inflation pressure also has eased quite significantly,” Rashid said with the year-on-year inflation rate to be 5.5 per cent this year and 5 per cent next year.

“That means that the central bank would not have to be aggressive over monetary tightening,” he said.

India has also benefitted to from lower imports, especially energy import cost that has been lower than in previous years, he added.

“I think this is a sustainable growth rate for India, given India also has a significant number of people living in poverty. So this would be a great boost if India can sustain this growth rate in the near term,” Rashid said.

He also pointed to two risk factors for India’s economy mainly emanating from the global situation.

One is from higher interest rates that would raise the debt servicing cost which has exceeded 20 per cent of the budget, he said.

“That is a significantly high debt servicing cost and that would probably have some drag on the growth prospect,” he said.

The second risk is from global external demands falling.

If Europe and the US go into a very slow growth mode resulting in lower global exports, the world economy may suffer, Rashid said.

“But on the balance, we believe that Indian economy is on a strong footing given the strong domestic demand in the near term,” he said.

For South Asia as a whole, the report said the region’s “economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities” and it forecast a 4.8 per cent growth year and 5.9 per cent next year.

This was buoyed by India as the report said, “The prospects are more challenging for other economies in the region. Bangladesh, Pakistan and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 2022.”

Bangladesh, Pakistan and Sri Lanka have gone to the International Monetary Fund for help. Rashid said, “We call for greater international support in this difficult time for countries, especially countries that are facing significant challenges with debt burden and again we call for more meaningful restructuring of debt.”

“It might be more prudent and may make more economic sense to re-profile the debt, reschedule the debt, (the) external debt burden,” he said. But he said that the assistance should not go into consumption, but into investment in “productive capacity (that) can be very important driver of both short-term recovery and long-term resilience”.

Richest 1% Have Two-Thirds Of New Wealth Created In The Last Two Years

Over the last two years, the richest 1% of people have accumulated close to two-thirds of all new wealth created around the world, a new report from Oxfam says.

A total of $42 trillion in new wealth has been created since 2020, with $26 trillion, or 63%, of that being amassed by the top 1% of the ultra-rich, according to the report. The remaining 99% of the global population collected just $16 trillion of new wealth, the global poverty charity says.

“A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 percent,” the report, released as the World Economic Forum kicks off in Davos, Switzerland, reads.

It suggests that the pace at which wealth is being created has sped up, as the world’s richest 1% amassed around half of all new wealth over the past 10 years.

Oxfam’s report analyzed data on global wealth creation from Credit Suisse, as well figures from the Forbes Billionaire’s List and the Forbes Real-Time Billionaire’s list to assess changes to the wealth of the ultra-rich.

The research contrasts this wealth creation with reports from the World Bank, which said in October 2022 that it would likely not meet its goal of ending extreme poverty by 2030 as the Covid-19 pandemic slowed down efforts to combat poverty.

Gabriela Bucher, executive director of Oxfam International, called for taxes to be increased for the ultra-rich, saying that this was a “strategic precondition to reducing inequality and resuscitating democracy.”

In the report’s press release, she also said changes to taxation policies would help tackle ongoing crises around the world.

“Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else,” Bucher said.

Coinciding crises around the world that feed into each other and produce greater adversity together than they would separately are also referred to as a “polycrisis.” In recent weeks, researchers, economists and politicians have suggested that the world is currently facing such a crisis as pressures from the cost-of-living crisis, climate change, and other pressures are colliding

5% Of Indians Own More Than 60% Of The Country’s Wealth

Just 5% of Indians own more than 60% of the country’s wealth, while the bottom 50% possess only 3% of wealth, according to Oxfam India’s latest report ‘Survival of the Richest: The India story’, which will be released today at the World Economic Forum in Davos.

An appeal

Oxfam India, an NGO that works in the sectors of child education, women empowerment and addressing inequality, through this report, seeks to urge the Union finance minister to implement progressive tax measures, such as wealth tax, in the upcoming Union Budget, it said in a press statement.

India currently does not have any wealth tax – which essentially refers to tax levied on one’s entire property in all forms.

India used to have a system under which a tax was levied at 1% on the net wealth in excess of Rs 30 lakh under the Wealth Tax Act 1957 – which was abolished in 2015. The taxation system, however, was not progressive in nature, as it did not have any slabs to ensure that the percentage of tax increased with an increase in wealth beyond the flat mark of Rs 30 lakh.

India’s richest

The total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022.

The report highlights that the combined wealth of India’s 100 richest has touched $660 billion (Rs 54.12 lakh crore) – an amount that could fund the entire Union Budget for more than 18 months.

“While the poor face severe hardships, the wealth of the top 10 richest in India stands at Rs 27.52 lakh crore ($335.7 billion) – an increase of around 32.8% compared to 2021,” the statement said.

The wealth of the top 10 richest can finance the Ministry of Health and Family welfare and Ministry of Ayush for more than 30 years, India’s Union education budget for 26 years, or can fund MGNREGA for 38 years, it said.

Factors That Could Determine How 2023 Shapes Up For Global Equity Markets

Optimists may point out that the rate-hiking peak is on the horizon, possibly in March, with money markets expecting the Fed to switch into rate-cutting mode by the end of 2023. A Bloomberg News survey found 71 per cent of top global investors expect equities to rise in 2023.

Vincent Mortier, chief investment officer at Amundi, Europe’s largest money manager, recommends defensive positioning for investors going into the New Year. He expects a bumpy ride in 2023 but reckons “a Fed pivot in the first part of the year could trigger interesting entry points”.

But after a year that blindsided the investment community’s best and brightest, many are bracing for further reversals. One risk is that inflation stays too high for policymakers’ comfort and rate cuts don’t materialise. A Bloomberg Economics model shows a 100 per cent probability of recession starting by August, yet it looks unlikely central banks will rush in with policy easing when faced with cracks in the economy, a strategy they deployed repeatedly in the past decade.

“Policymakers, at least in the US and Europe, now appear resigned to weaker economic growth in 2023,” Deutsche Bank Private Bank’s global chief investment officer Christian Nolting told clients in a note. Recessions might be short but “will not be painless”, he warned.

Big tech troubles

A big unknown is how tech mega-caps fare, following a 35 per cent slump for the Nasdaq 100 in 2022. Companies such as Meta Platforms Inc. and Tesla Inc. have shed some two-thirds of their value, while losses at Amazon.com Inc. and Netflix Inc. neared or exceeded 50 per cent.

Expensively-valued tech stocks do suffer more when interest rates rise. But other trends that supported tech’s advance in recent years may also go into reverse – economic recession risks hitting iPhone demand while a slump in online advertising could drag on Meta and Alphabet Inc.

In Bloomberg’s annual survey, only about half the respondents said they would buy the sector – selectively.

“Some of the tech names will come back as they have done a great job convincing customers to use them, like Amazon, but others will probably never reach that peak as people have moved on,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Bloomberg Television.

Earnings recession

Previously resilient corporate profits are widely expected to crumble in 2023, as pressure builds on margins and consumer demand weakens.

“The final chapter to this bear market is all about the path of earnings estimates, which are far too high,” according to Morgan Stanley’s Mike Wilson, a Wall Street bear who predicts earnings of $180 per share in 2023 for the S&P 500, versus analysts’ expectations of $231.

The upcoming earnings recession may rival 2008, and markets are yet to price it in, he said.

China, a turning point

Beijing’s early-December decision to dismantle stringent Covid curbs seemed like a turning point for MSCI’s China Index, whose 24 per cent drop was a major contributor to global equity market losses in 2022.

Options boom

Technicals are increasingly driving day-to-day equity moves, with the S&P 500 witnessing below-average stock turnover in 2022, but explosive growth in very short-term options trading.

Professional traders and algorithmic-powered institutions have piled into such options, which were until recently dominated by small-time investors. That can make for bumpier markets, causing sudden volatility outbreaks such as the big intraday swing after October’s hot US inflation print.

Finally, with the S&P 500 failing to break out from its 2022 downtrend, short-term speculation remains skewed to the downside. But should the market turn, it will add fuel to the rebound.

India’s Billionaire Club Shrinks To 120, Gautam Adani Tops Rich List

In comparison, Ambani, who topped the list last year, has seen a 2.5 per cent decline in his family’s net worth to $101.75 billion from $104.4 billion a year ago

The year 2022 saw many lose the ‘billionaire’ tag, though some of the richest Indian promoters have become even richer. According to the report, the number of promoters with a net worth of over $1 billion has declined to 120 this year from an all-time high of 142 at the end of 2021.

Picture : Bussiness Standard

The billionaire promoters’ combined wealth is down 8.8 percent to around $685 billion ( ₹56.5 trillion) from $751.6 billion ( ₹56.62 trillion) a year ago, said the report, although it added that the fall in rupee terms is not significant owing to the currency depreciating against the US dollar.

Gautam Adani has been an outperformer in 2022, replacing Mukesh Ambani as India’s richest person. Adani’s net worth stands at $135.7 billion, up 69.6 percent from $80 billion last year, it said, citing Bloomberg data, that also highlights that he is also the richest person in Asia and third-richest in the world.

Meanwhile, Ambani has seen a 2.5 percent decline in his family’s net worth to $101.75 billion from $104.4 billion a year ago, added the report.

In fact, only three of the top 10 billionaires – Adani, Dilip Shanghvi of Sun Pharma, and Sunil Mittal of Bharti Airtel – saw an increase in the net worth this year, as per the report.

Mittal’s gains can be attributed to a rise of Bharti Airtel, which benefited from tariff hikes announced by mobile services operators, clarity over regulatory issues, and a stable business environment, mentioned the report.

While, gains for Shanghvi were driven by factors like an improved performance of Sun Pharma, which benefited from a better show in its specialty business in North America and growth in its India formulations business, added BS.

Radhakishan Damani of Avenue Supermarts (DMart), who is India’s third-richest promoter, saw a 21 percent decline in the net worth at $23.8 billion in 2022.

Other promoters in the top 10 list include Shiv Nadar of HCL Technologies, Azim Premji of Wipro and Uday Kotak of Kotak Mahindra Bank.

World Economy To Face More Pain In 2023 After A Gloomy Year

After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns or other restrictions  This was supposed to be the comeback year for the world economy following the Covid pandemic.

Instead, 2022 was marked by a new war, record inflation and climate-linked disasters. It was a “polycrisis” year, a term popularized by historian Adam Tooze. Get ready for more gloom in 2023.

Picture : The Grocer

“The number of crises has increased since the start of the century,” said Roel Beetsma, professor of macroeconomics at the University of Amsterdam “Since World War Two we have never seen such a complicated situation,” he told AFP.

After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns or other restrictions.

Central bankers insisted that high inflation would only be temporary as economies returned to normal. But Russia’s invasion of Ukraine in late February sent energy and food prices soaring.

Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending.

“Everything has become more expensive, from cream to wine and electricity,” said Nicole Eisermann from her stand at the Frankfurt Christmas market.

Central banks played catch-up. They started to raise interest rates this year in an effort to tame galloping inflation — at the risk of tipping countries into deep recessions, since higher borrowing costs mean slower economic activity. Inflation has finally started to slow down in the United States and the eurozone.

Careful spending

Consumer prices in the Group of 20 developed and emerging nations are expected to reach eight percent in the fourth quarter before falling to 5.5 percent next year, according to the Organisation for Economic Cooperation and Development.

The OECD encourages governments to provide aid to bring relief to households.

In the 27-nation European Union, 674 billion euros ($704 billion) have been earmarked so far to shield consumers from high energy prices, according to the Bruegel think tank.

Germany, Europe’s biggest economy and the most dependent on Russia energy supplies, accounts for 264 billion euros of that total.

One in two Germans say they now only spend on essential items, according to a survey by EY consultancy.

“I am very careful but I have a lot of children and grandchildren,” said Guenther Blum, a shopper at the Frankfurt Christmas market.

Rising interest rates have also hurt consumers and businesses, though US Federal Reserve chairman Jerome Powell signalled last week that the pace of hikes could ease “as soon as” December.

He warned, however, that policy will probably have to remain tight for some time to restore price stability.

For her part, European Central Bank president Christine Lagarde sent a clear signal that the ECB would maintain its tightening policy, saying that eurozone inflation had yet to peak.

Economists expect Germany and another major eurozone economy, Italy, to fall into recession. Britain’s economy is already shrinking. Rating agency S&P Global foresees stagnation for the eurozone in 2023.

But the International Monetary Fund still expects the world economy to expand in 2023, with growth of 2.7 percent. The OECD is forecasting 2.2-percent growth.

The coronavirus pandemic, meanwhile, remains a wildcard for the global economy.

China’s zero-Covid policy restrained growth in the world’s second biggest economy, but the authorities have started to relax restrictions following nationwide protests.

Climate costs

But for Beetsma, the biggest crisis is climate change, which is “happening in slow motion”.

Natural and man-made catastrophes have caused $268 billion in economic losses so far in 2022, according to reinsurance giant Swiss Re. Hurricane Ian alone cost an estimated insured loss of $50-65 billion. Floods in Pakistan resulted in $30 billion in damage and economic loss this year.

Governments agreed at United Nations climate talks (COP27) in Egypt in November to create a fund to cover the losses suffered by vulnerable developing countries devastated by natural disasters.

But the COP27 summit ended without new commitments to phase out the use of fossil fuels, despite the need to cut greenhouse gas emissions and slow global warming.

“It is not an acute crisis but a very long-term crisis, protracted,” Beetsma said. “If we don’t do enough this will hit us in unprecedented scale.” (This story has not been edited by thenn.com  staff and is auto-generated from a syndicated feed.)

After Mass Layoffs, Facebook Offers Immigration Help To H-1B Visa Holders

As large-scale layoffs begin at Facebook’s parent company Meta, employees on work visas such as H-1Bs are now faced with uncertainty over their immigration status, with CEO Mark Zuckerberg acknowledging “this is especially difficult if you’re here on a visa” and offering support to those impacted.

Meta announced that it is laying off 11,000 employees or 13 per cent of its workforce, with Zuckerberg describing it as “some of the most difficult changes we’ve made in Meta’s history.” US-based technology companies hire a large amount of H-1B workers, the majority of whom come from countries such as India.

The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise. Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.

“I’ve decided to reduce the size of our team by about 13 per cent and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1,” Zuckerberg said in a letter to employees.

“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” he said.

Acknowledging that “there is no good way to do a layoff”, Zuckerberg said the company hopes to get all the relevant information to those impacted as quickly as possible and then do whatever it can to support them through this.

Among the measures being put in place by the company in the US to help those impacted by the layoffs is “immigration support”.

“I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need,” he said.

H-1B visa holders can stay and work in the US for a period of three years, extended by another three years.

They are then required to leave the country unless their employee sponsors them for permanent residency, known as the Green Card, the backlog for which runs into decades. If H-1B visa holders lose their jobs, they only have a “grace period” of 60 days to find an employee willing to sponsor their H-1B, failing which they will be required to leave the US.

A Washington-based reporter Patrick Thibodeau wrote on Twitter Monday that “Facebook layoffs may hit H-1B workers hard. Facebook is classified as H-1B “dependent,” meaning 15 per cent or more of its workforce is on the visa. When visa holders lose their job, they may have to leave the US if they don’t quickly find a new employer sponsor.” Other support measures announced by Meta include severance pay for 16 weeks of base pay plus two additional weeks for every year of service, with no cap; coverage of healthcare cost for people and their families for six months and three months of career support with an external vendor, including early access to unpublished job leads.

He said outside the US, support will be similar, and the company will follow up soon with separate processes that take into account local employment laws.

In his explanation of how the company got to the point where it had to undertake such drastic cost-cutting measures, Zuckerberg said the world rapidly moved online at the start of the Covid pandemic and the surge of e-commerce led to outsized revenue growth.

“Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” he said.

Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused Meta’s revenue to be much lower than he had expected. “I got this wrong, and I take responsibility for that,” he said.

Zuckerberg said in the new environment, the company needs to become more capital efficient.

“We’ve shifted more of our resources onto a smaller number of high-priority growth areas – like our AI (Artificial Intelligence) discovery engine, our ads and business platforms, and our long-term vision for the metaverse.

“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go,” he said.

Stock Market Rally After Inflation Report Shows High Prices May Ease

Stocks surged in their biggest rally in two years last week, after a better-than-expected inflation report showed that the galloping price increases that consumers have endured all year are beginning to slow.

The Dow Jones Industrial Average rose 1200 points, or more than 3.7%, over the course of the day to close at 33,715.37, the highest since the middle of August. The Nasdaq soared more than 7% and the S&P 500 more than 5%.

Consumer prices in October were 7.7% higher than a year ago, according to the Labor Department. That’s a slower pace of inflation than September’s 8.2% rate. It’s also the smallest year-on-year increase in prices since January.

And the price hikes between September and October were significantly smaller than forecasters had expected.

Wall Street greeted the report as as a sign that the Federal Reserve may ease up on the gas in its current drive to contain inflation.

The Fed has been raising interest rates aggressively in an effort to tamp down demand and bring prices under control. After ordering jumbo rate hikes of 0.75 percentage points at each of its last four meetings, the Fed is widely expected to adopt a smaller increase of 0.5 points when policymakers next meet in December.

Wall Street analysts said that Thursday’s inflation reading will give the central bank good reason to go with a smaller hike.

Excluding volatile food and energy costs, annual inflation was 6.3% in October — down from 6.6% the month before.

Housing costs accounted for nearly half the monthly price increase, but rents showed their smallest increase in five months. Food costs rose at the slowest pace in 10 months. Gasoline prices rose 4% in October but remain well below their peak price in early summer.

“Today’s report shows that we are making progress on bringing inflation down,” President Biden said in a statement. “It will take time to get inflation back to normal levels – and we could see setbacks along the way – but we will keep at it and help families with the cost of living.”

While prices still rose a swift 7.7 percent over the past 12 months, the annual inflation rate was less than the 7.9 percent expected by economists and lower than the 8.2 percent rate seen in September. The 0.4 percent monthly increase in the consumer price index was also less than the 0.6 percent increase that economists had projected.

Inflation is still near levels not seen since the 1980s and hindering American households. Prices that have already shot up are continuing to rise for food, shelter and other basic needs, pinching the economy along the way.

But the October decline in inflation brought some relief to those struggling to get by.

Used car prices

One of the first pockets of the economy hit by the inflation surge is finally seeing prices come down.

“The run-up in prices for used cars is now unwinding as supply of cars is recovering and demand is hit hard by higher interest rates,” wrote Preston Caldwell, head of U.S. economics for Morningstar Research Services, in a Thursday analysis.

Prices for used cars and trucks fell 2.4 percent in October alone, marking the fourth straight month of declines. While prices are still far above pre-pandemic levels, Americans searching for a used car or truck may finally see relief after months of shortages and supply chain snarls.

Used car and truck prices soared throughout much of 2020 and 2021 as supply chain issues and shortages hindered automobile manufacturing around the world. But supply chains made progress in recovery, making it easier for buyers to trade in older cars for new ones.

Cheaper household supplies

Prices for a wide range of basic household goods fell in October as consumers spent more time bargain-hunting and less money on items once in higher demand.

Picture : WAMU

Household supplies and furnishings fell 0.2 percent in October broadly, with prices for appliances, dishware, furniture and bedding falling sharply. Many of these goods were popular among locked-down American households during the depths of the pandemic and limited by supply chain dysfunction, which boosted their prices.

“Retail promotions are a huge opportunity in inflation. Maybe it’s adjusting your promotions, eliminating profit-draining promotions altogether, or addressing lumpy inventory issues,” said Matt Pavich, senior director at consulting firm Revionics.

“Retailers are looking at all of their options right now to correct issues earlier in the supply chain,” he continued. “Pricing is the fastest lever to do this.”

Clothing and accessories

Prices for apparel dropped 0.7 percent in October after rising 4.1 percent over the past year. The biggest drops came in prices for jewelry, infant and toddler clothes, women’s outerwear and men’s formalwear.

The decline in apparel prices comes before a holiday shopping season that will be closely watched by economists for signs of fading consumer power.

The National Retail Federation expects spending from Nov. 1 to Dec. 31 could total as much as $960 billion, which would shatter records. Sales rose 13.5 percent between 2020 and 2021, but the group expects that pace of growth to slow after a booming year for the sector.

Household gas

Households with heating or cooking gas may have caught a break in October as prices for utility gas service plunged 4.6 percent. It was one of the few parts of the energy sector to see prices drop in October, a month when fuel oil prices shot up nearly 20 percent and gasoline prices rose 4 percent.

High prices for oil and gas have been one of the major forces behind the inflationary surge. While prices were destined to rise from 2020 levels — when global lockdowns curtailed energy usage — the war in Ukraine has fueled intense volatility in energy markets.

“We expect some easing in pipeline pressures and rather large negative base-year effects inside the energy complex that will bring down both headline and core inflation through the middle of next year,” wrote Joe Brusuelas, chief economist at audit and tax firm RSM, in a Thursday analysis.

A slower increase in food prices

Food prices are still on the rise, due largely to the war in Ukraine limiting the global supply of wheat and fertilizer. Prices for food are up 10.9 percent on the year, and groceries alone are up 12.4 percent since last October.

Equilibrium/Sustainability — A rainy future for the desert Southwest Democrats want answers after CBP failed to interview corralled Haitian migrants

The October inflation report showed that while prices are still increasing, they are moving up at a slower rate — the first step toward a plateau.

Prices for food rose 0.6 percent in October, down from increases of 0.8 percent in August and September and three straight months of increases of at least 1 percent from May to July.

Monthly inflation in groceries also fell from 0.7 percent in September to 0.4 percent in October.

IRS Announces New Tax Brackets And Standard Deduction For 2023

Inflations isn’t fun, but it could help lower your taxes in 2023. The IRS has announced the new 2023 tax brackets and the new standard deduction.

The Internal Revenue Service recently announced its inflation adjustments to the standard deduction and federal income tax brackets for 2023. Knowing these numbers can allow you to make some smart tax-planning moves before the year’s end. If you expect to be in a low bracket next year, you may want to try and delay some income to next year. On the other hand, if you expect to be in a high tax bracket in 2023, you may want to delay some tax deductions until next year.

New Standard Deduction For 2023

There is some good news for taxpayers regarding inflation; in 2023, the standard deductions will increase. For married couples filing jointly, the new standard deduction for 2023 will be $27,700. This is a jump of $1,800 from the 2022 standard deduction.

The 2023 standard deduction for single taxpayers and married filing separately will be $13,850. This is a jump of $900 from the 2022 standard deduction.

You may be wondering what is the standard deduction and what does it mean? The standard deduction is the number of tax deductions you can subtract from your income before you begin to owe taxes. For example, if you were a single filer and made $13,850 in 2023, you could take the standard deduction and not owe any federal income taxes. You may still owe payroll taxes and state taxes.

For taxpayers 65 or older, you can add $1,500 to your standard deduction for 2023 if you are married. This increases to $1,850 if you are unmarried or a surviving spouse (age 65 or older in 2023).

Changes To the Federal Tax Rates For 2023

The income that fits in each tax bracket for 2023 is the only change. Put more plainly; the federal marginal tax rates will remain the same in 2023. This is unless some new legislation was to change tax rates or brackets further. Each tax bracket has been adjusted for 2023 to account for inflation.

High inflation has led the IRS to increase the federal income tax brackets. This increase in tax bracket could help lower your 2023 taxes.

2023 Tax Brackets for Single Filers

37%: incomes higher than $578,125

35%: incomes over $231,250

32%: incomes over $182,100

24%: incomes over $95,375

22%: incomes over $44,725

12%: incomes over $11,000

10%: incomes of $11,000 or less

2023 Tax Brackets for Married Couples Filing Jointly

37%: incomes higher than $693,750

35%: incomes over $462,500

32%: incomes over $364,200

24%: incomes over $190,750

22%: incomes over $89,450

12%: incomes over $22,000

10%: incomes of $22,000 or less

The marriage penalty for federal income taxes doesn’t kick in until you reach the 37% tax bracket. If you are itemizing your tax deductions, there are other limitations to tax breaks you can benefit from, as well as more examples of the marriage penalty in the tax code. For example, the $10,000 SALT cap is the same whether you are single or married.

The higher your income, the more valuable proactive tax planning guidance can be. As a Los Angeles Financial Advisor, California residents can face a combined state and federal income tax rate beyond 50% on income that falls into the highest tax brackets. The tax burden can be tough on business owners who must pay both sides of the Social Security payroll taxes. Work with your tax pro and Certified Financial Planner™ to ensure you optimize your retirement plans and minimize taxes along the way.

Indian Economy Shows Great Resilience Post Covid; Marches Strongly Towards 2047 Goal

India has one of the most promising economies globally. India has surpassed Britain to become the world’s fifth largest economy. The manufacturing MSME- start-up ecosystem has boosted the economy and created new job opportunities.

As a result of these efforts, the Indian economy has recovered from the negative effects of Covid, and the country is on its way to becoming the world’s third and $5 trillion economy.

The good news is that the eight key industries that drive the country’s economy — coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement, and electricity — have grown by 4.5 per cent.

This simply means that the Indian economy has returned to normalcy and is progressing.

India has the big goal of becoming developed and self-reliant by 2047, when the country attains its 100th independence day.

The Indian economy has recovered from the pandemic and is back on track. In the first quarter of the current fiscal year, GDP increased by 13.5 per cent (April-June).

At constant prices, the country’s GDP was Rs 32.46 lakh crore in the first quarter of the fiscal year 2021-22, while it grew by 13.5 per cent to Rs 36.85 lakh crore in the first quarter of the current fiscal year.

Simultaneously, the common index of eight core industries, which contribute significantly to the country’s economy, has increased by 4.5 per cent since July 2021.

The final growth rate of the eight core industries was revised to 9.5 per cent in April 2022, up from 8.4 per cent previously.

Prime Minister Narendra Modi’s ongoing efforts to strengthen the economy are bearing fruit.

These latest figures show that the Indian economy has recovered from the pandemic’s negative effects.

The country is now rapidly moving towards becoming self-reliant.

Picture : Prescious Kashmir

India has surpassed Germany to become the world’s fourth largest automobile market. In 2021, India sold 37.6 lakh vehicles, while Germany sold 29.7 lakh vehicles. August is the fifth month in a row that more than 3 lakh cars have been sold in India.

In the global market, Indian products are now emerging as the first choice. India is the world’s leading exporter of electronics, petroleum, and engineering goods.

Exports of these products increased by 17 per cent this year compared to the same period in 2021 (April-August).

The Indian government recognised an important fact when Covid first appeared — the economic impact of this epidemic differed from the effect of the previous epidemic because the Covid epidemic was designed to have a negative impact on demand.

As a result, there was concern that the pandemic would have long-term economic consequences for the country.

However, the government’s tight machinery was in place to ensure that such a situation did not last long.

As a result, a number of reform initiatives were launched. Labour reforms, agricultural reforms, changing the definition of a micro, small, and medium-sized enterprise, and implementing the production-linked incentive scheme were among them.

These reforms attempted to formalise the country’s economy to a large extent.

The identification of shell units, the Insolvency and Bankruptcy Code and the goods and services tax were all critical steps in bringing the economy under a set of rules and regulations.

The benefit of this was that there was an attempt to shape the economy in terms of shape, type, and behavior. Simultaneously, a focus on job creating industries was sought.

The government had a clear vision that the country needed to address not only the immediate challenges but also ensure the recovery of economy and infrastructure development, both of which are critical to achieving the objectives.

The new generation of the country is now taking the risk of innovation, learning from mistakes, and getting involved with new energy.

Employment in MSMEs has increased by 116 per cent as compared to 2019-20.

It is the charisma of the growing youth power that drives the small scale industry, that is, India’s MSME and start-up ecosystem is growing at the fastest rate in the world. (IANS)

$2.04 Billion Powerball Jackpot Ticket Was Sold In California

A lone winning ticket for the record $2.04 billion Powerball lottery jackpot was sold in Altadena, California, lottery officials said Tuesday, making the lucky ticket holder the winner of the largest lottery prize ever, media reports stated.

The ticket was sold at a Joe’s Service Center, the California Lottery said on Twitter. Results posted to Powerball.com similarly said there was one winner who matched all six numbers in California – the odds of which were 1 in 292.2 million, according to the Multi-State Lottery Association.

The winning numbers, which were announced Tuesday morning after Monday night’s drawing was delayed, were 10-33-41-47-56 and the Powerball was 10, according to the association.

The odds of winning the jackpot in Monday’s draw are one in 292.2 million, according to Powerball. The premier lottery game has had no winner in more than three months after 40 consecutive drawings.

Here is what you need to know about the lottery and its big prize.

The previous world-record jackpot was set in 2016, when $1.59bn was split between three Powerball players.

“Like the rest of America, and the world, I think we’re all eager to find out when this historic jackpot will eventually be won,” Drew Svitko, the chair of the Powerball Product Group, said in a statement.

While no-one claimed Saturday’s winning prize, there were 16 tickets matching the five main numbers to win $1m each. Another ticket – drawn in Kentucky – won $2m , while 219 tickets across the US won $50,000 and 51 won $150,000.

Only one other Powerball jackpot reached 41 consecutive drawings. The 2021 drawing ended with a nearly $700m winner in California.

Picture: CBS

How do you play Powerball?

Powerball tickets cost $2 to buy, and a winner has the option to choose a lump sum payment, which is currently estimated at $929. Winners can also choose to receive the full amount in an annuity paid over 29 years, but almost all winners opt for the upfront cash option.

The game, which began in 1992, is played in 45 of the 50 US states, the capital city of Washington, and in the US territories of Puerto Rico and the Virgin Islands.

A ticket must match all six numbers drawn to score the jackpot. If multiple winners select the same combination of numbers in the draw, they will equally share the jackpot.

The winnings are subject to federal taxes of between 24% and 37%, and, in most cases, state taxes. Only 10 states do not have state taxes. In several locations – such as New York City – the winnings are also subject to municipal taxes.

According to BBC, the jackpot was last won on August 3rd, when the owner of the winning ticket opted for a lump sum payment of $206.9m. In July, a “Mega Millions” ticket sold in Illinois won $1.34bn.

Players have to be at least 18 years old, but some states have set the age limit at 21. Some states also allow winners to remain anonymous.

Why is there such a big jackpot?

This record-breaking jackpot is being attributed in part to changes the lottery made in 2015. To boost sales, it made smaller prizes easier to win – but the jackpot harder.

It tweaked the game, notably including having players choose five numbers from one to 69 instead of from one to 59 under the previous rules.

Players also select the Powerball – their sixth number – from one to 26, instead of the previous one to 35 .

That increased the odds for the grand prize from one in 175.2 million to the current 1 in 292.2 million.

It’s not the first time to lottery the game rules were adjusted – it has made regular changes in its 30-year history, and recently added the Monday night draw.

Can Powerball be played outside the US?

Powerball tickets can be purchased from abroad online. Participants do not need to be US citizens nor residents.

Winnings, however, need to be claimed in the state to which a ticket belongs.

For US residents, this means that those living in states that don’t participate in the Powerball would need to travel to buy a ticket and claim winnings.

Similar rules are in place for other lottery games.

In 2015, a 37-year old Iraqi man from Baghdad won a $6.4m (£5.5m) “Megabucks” jackpot in Oregon after purchasing the ticket through a Malta-based website.

Lottery winners have also been reported in a number of other countries, including Australia and El Salvador.

Who owns Powerball?

Powerball is coordinated by the Multi-State Lottery Association (MUSL), a US non-profit comprised of 38 state lotteries from across the US, Washington DC, Puerto Rico and the US Virgin Islands. It was formed in 1987 and launched its first game – Lotto America – the following year.

The organisation provides a number of services to its constituent members, such as game development, central accounting and the actual conduct of lottery drawings.

Money from tickets sales goes both towards the prize money and the rest to the government-run state lotteries that participate in Powerball, as well as to retailer commissions.

According to the North American Association of State and Provincial Lotteries, US lottery sales totalled over $91bn in the 2019 fiscal year.

10 Richest People Who Ever Lived

The likes of Elon Musk, Bill Gates and Gautam Adani may be worth billions, but their riches pale in comparison to the entrepreneurs, emperors and rulers of days past

Russia’s Catherine the Great and Joseph Stalin sat atop trillions, Mali’s Mansa Musa had insane amounts of gold, and Genghis Khan founded the world’s biggest empire – so who’s. 

Forbes estimates the serial tech entrepreneur’s fortune at be about US$220 billion, thanks to his portfolio of companies including electric car manufacturer Tesla, rocket producer SpaceX and tunnelling project The Boring Company.

Yet, despite his astonishing net worth, the 51-year-old’s billions don’t even come close to the wealth of the richest people in history – proportionally speaking.. Yup, that means Amazon’s Jeff Bezos, Microsoft’s Bill Gates and Indian tycoons Gautam Adani and Mukesh Ambani also don’t make the cut.

It is however important to note that the further we go back in time, the harder it is to put an accurate or fair figure on how relatively rich an individual was as, well, times were much different back then. Wealth was based on gold, land, salt and power – and not all academics agree on the valuations. But we’ve done our best stocktaking, and according to several sources, and the work of a number of historians, these are richest people to ever walk the earth – after factoring in inflation and the worth of commodities in the day – in 2022 dollars.

  1. John D. Rockefeller (1839-1937)

Estimated net worth today: US$340 billion

According to numerous sources including Celebrity Net Worth, John D. Rockefeller built up a fortune that would be worth around US$340 billion in today’s money.

The American business magnate and philanthropist established the Standard Oil Company in 1870, which controlled 90 per cent of US refineries and pipelines by the early 1880s, according to the website History. While the New Yorker faced controversy for monopolising of the industry, Rockefeller also played a big part in giving back to the community, donating about US$500 million to educational, religious and scientific causes through the Rockefeller Foundation.

  1. Andrew Carnegie (1835-1919)

Estimated net worth today: US$372 billion

Money.com states that this Scottish-born industrialist stacked up the equivalent of around US$372 billion by leading the expansion of the American steel industry in the 19th and early 20th century.

He eventually sold his Carnegie Steel company in 1901 to JP Morgan for US$480 million (in the currency of the day). Carnegie also donated 90 per cent of his earnings to philanthropic causes by the time of his death in 1919.

  1. Catherine the Great (1729-1796)

Estimated net worth today: US$1.5 trillion

The Russian monarch inherited and controlled a vast network of land, wealth and political power, after assuming the throne in 1762 – investments worth 5 per cent of Russian GDP, or the equivalent of US$1.5 trillion today, according to Luxuo.

  1. Augustus Caesar (63BC-14AD)

Estimated net worth today: US$4.6 trillion

the founder of the Roman empire needs no introduction as one of the greatest and most famous rulers in history.

Augustus Caesar’s empire produced around 25 to 30 per cent of the world’s global output, and around a fifth of that was his own personal wealth, according to Luxuo. That means he would have been worth around US$4.6 trillion today.

  1. Joseph Stalin (1878-1953)

Estimated net worth today: US$7.5 trillion

Money.com says that it’s virtually impossible to separate Stalin’s wealth from the wealth of the Soviet Union, with economists claiming that his complete control of the USSR makes him one of the richest people to ever live.

Data from The Organisation for Economic Co-operation and Development (OECD) indicates that in 1950, the USSR made up about 9.5 per cent of the global economic output (about US$7.5 trillion in today’s money).

Though Stalin didn’t technically “own” the money, he did have the power to “control the wealth of the country”, points out George O. Liber, a professor of history at the University of Alabama at Birmingham.

  1. Empress Wu (624-705)

Estimated net worth today: US$16 trillion

he first and only female emperor of China was intelligent, politically savvy – and famous for being ruthless when it came to bumping off her opponents. She ruled the country when the economy of China accounted for around 23 per cent of global GDP, which would be around US$16 trillion today. Despite her sometimes controversial methods of wielding power, she nevertheless built up the country’s wealth by trading tea and silk on the Silk Road, and oversaw the expansion of Imperial China into central Asia. Some call her the richest woman ever.

Genghis Khan, John D. Rockefeller, Mansa Musa, Empress Wu and Catherine the Great all had immense wealth. Photos: Handout; Shutterstock; @Dr_TheHistories/Twitter; Mary Evans Picture Library; @catherinee_thee_greatt/Instagram

  1. Akbar I (1542-1605)

Estimated net worth today: US$21 trillion

Akbar I lived far more extravagantly than European leaders with equivalent wealth at the time. 

Abu’l-Fath Jalal-ud-din Muhammad Akbar, popularly known as Akbar the Great, was the third emperor to rule the Mughal empire.

Thanks to his ability to extract wealth from the population, Money.com claims that he ruled over an empire valued at 25 per cent of the global GDP. Comparable to the wealth of Elizabethan England at the time, the extravagance of Akbar I’s lifestyle nevertheless easily “surpassed that of the European society”, according to economic historian Angus Maddison.

  1. Emperor Shenzong (1048-1085)

Estimated net worth today: US$30 trillion

The sixth emperor of China’s Song dynasty ruled over an immensely economically powerful empire worth 25 to 30 per cent of the world’s GDP at the time, according to Money.com. Historians claim that the kingdom was light-years ahead of European governments when it came to effective tax collection, and its technological innovations and centralised form of governance also added to their wealth.

  1. Genghis Khan (1162-1227)

Estimated net worth today: US$120 trillion

It is believed that Genghis Khan was so powerful, and his Mongol empire so wide-reaching, that his DNA can be found in as many as 16 million men today, according to a 2003 scientific report.

And, having created the largest empire of all time – which covered most of China and Central Asia during his lifetime, and stretched as far as Poland and Vietnam afterward – The Richest estimates that he would have been worth about US$120 trillion in today’s money.

It is believed that Genghis Khan was so powerful, and his Mongol empire so wide-reaching, that his DNA can be found in as many as 16 million men today, according to a 2003 scientific report.

And, having created the largest empire of all time – which covered most of China and Central Asia during his lifetime, and stretched as far as Poland and Vietnam afterward – The Richest estimates that he would have been worth about US$120 trillion in today’s money.

  1. Mansa Musa (1280-1337)

Estimated net worth … “Incomprehensible”

Mansa Musa is considered the richest man to have ever lived, according to historians.

Coming in strong at No 1 is a name that you may not even recognize. Mansa Musa was the ruler of the Mali empire, which was immensely rich in land, salt and gold. Historians estimate the Mali Empire was at one point the largest gold producer in the world, meaning its ruler was in possession of “incomprehensible wealth”. While Celebrity Net Worth has estimated his wealth to have been the equivalent of around US$400 billion, historians believe it’s virtually impossible to come to a conclusion on the real number.

The African ruler was famous for making the most extravagant pilgrimage to Mecca of all time, with the BBC reporting that the king left Mali with about 60,000 men, from royal officials to camel drivers and slaves. He spent so much gold in Cairo during his three month stay there that he destabilized the local economy, affecting the price of gold in the region for the next 10 years!

Today’s Richest

Right now, Elon Musk is by far the richest person on earth. Tesla boss Elon Musk’s immense fortune pales into insignificance compared to the richest people in history. 

Forbes estimates the serial tech entrepreneur’s fortune at be about US$220 billion, thanks to his portfolio of companies including electric car manufacturer Tesla, rocket producer SpaceX and tunnelling project The Boring Company.

Yet, despite his astonishing net worth, the 51-year-old’s billions don’t even come close to the wealth of the richest people in history – proportionally speaking.. Yup, that means Amazon’s Jeff Bezos, Microsoft’s Bill Gates and Indian tycoons Gautam Adani and Mukesh Ambani also don’t make the cut.

Amazon CEO Jeff Bezos is currently the second richest person on the planet – but not necessarily the second richest of all time. Photo: AP

It is however important to note that the further we go back in time, the harder it is to put an accurate or fair figure on how relatively rich an individual was as, well, times were much different back then. Wealth was based on gold, land, salt and power – and not all academics agree on the valuations.

But we’ve done our best stocktaking, and according to several sources, and the work of a number of historians, these are richest people to ever walk the earth – after factoring in inflation and the worth of commodities in the day – in 2022 dollars. (Courtesy: Forbes)

Picture: Life Byond Post

Chinese Yuan Becomes World’s Fifth Most Traded Currency, Survey Finds

The Chinese currency, yuan leaped over the Australian, Canadian and Swiss currencies to become the fifth most traded currency in the world, according to the Bank for International Settlements’ Triennial Central Bank Survey.

The Chinese yuan has become the world’s fifth most traded currency, jumping from eighth place three years ago, according to a Bank for International Settlements (BIS) report, as the renminbi continues to gain international traction amid heightened geopolitical tensions.

The Chinese currency was involved in 7% of all trades in 2022, compared with 4% three years ago, Basel-based BIS said in a report on Thursday. Meanwhile, total daily trades rose 14% to $7.5 trillion. 

The dollar maintained its decade-long place as the world’s most traded currency, accounting for one side of 88% of all transactions. The euro, yen and pound also held their spots in the top four.

According to Bloomberg News, the yuan is becoming a more important global currency as China takes steps to open its financial markets. This is reflected in an increase in yuan cross-border settlements as well as a higher share of yuan among global FX reserves.

Bloomberg says the increase in cross-border yuan settlements, as well as the higher share among global foreign exchange reserves, is due to Beijing’s moves to open up its financial markets.

The BIS survey covered more than 1,200 banks and other intermediaries worldwide. Russia, which accounted for less than 1% of the global total in 2019, was excluded this year, while Dubai was included for the first time.

The Forgotten 3 Billion People

By, Wolfgang FenglerHomi Kharas, and Juan Caballero

In his 1969 poem “The Poor,” Roberto Sosa writes “The poor are many /and so/ –impossible to forget.” At that time, over half of the global population lived in extreme poverty ( less than $1.90 per day per person). The World Bank estimates that around 8.5 percent of the world’s population (685 million people) could be extremely poor by the end of 2022, and that poverty is now declining at a very slow rate of only 2 percent a year.

Meanwhile, the rich—defined by World Data Lab as those in households spending more than $120 per day per person (2017 purchasing power parity)—numbering about 250 million worldwide, capture the most media attention. Oxfam’s “Inequality Kills” report shows that the richest 10 people made $810 billion between March 2020 and November 2021, and that the richest 1 percent are responsible for the same level of carbon emissions as the poorest 3.1 billion people.

In between the rich and poor, lives the middle class ($12-120 per day), numbering some 3.6 billion people. The 2022 OECD Economic Survey of the United States, described a “hollowing out” of the middle class. Their economic analysis has called on governments to help the struggling middle class for several years, and the attention given to inflation, taxes, trade, and energy policy all aims at generating a process of globalization that delivers greater prosperity to the middle class.

However, there are only 4.6 billion people in these three groups out of the 8 billion people on the planet. There are 3.4 billion people who are seemingly forgotten, not extremely poor, not part of the middle class, and not rich. Who are they?

The missing group is perhaps best described as the “vulnerable.” They are not poor enough to feature prominently in the poverty and inequality discourse, yet they have been seriously affected by the recessions caused by COVID-19, and by food and fuel shortages and price increases. Academics have long argued that the most vulnerable groups may not coincide with the poorest groups. For example, Whelan and Maitre look at the experience of Irish households and find that just over one-third of their vulnerable cluster is drawn from the poor, while two-thirds are drawn from the non-poor. They conclude that “poverty and economic vulnerability are obviously related but are still distinct.”

We look at vulnerability in terms of the risk of being pushed back into poverty and the risk of having expectations of entry into the middle class dashed. Both have significant welfare and behavior consequences.

Clearly, the risk of falling back into poverty, usually due to an economic, health, or conflict shock, depends upon a household’s distance from the extreme poverty line. The most vulnerable to this risk are those spending $2-5 per day per person. There are 1.3 billion people in this segment. The bulk of the 85 million people who may have fallen into poverty in 2020 came from this group.

At the other end of the spectrum is a group spending $8-12 per day per person. This group would have had reasonable prospects of joining the middle class in a few years. In normal times, over 100 million people move out of this group into the middle class. This has slowed to 90 million this year and a further loss of 5 million is expected in 2023, meaning that for tens of millions of people, the hope for entry into the middle class has been derailed.

In between, the group spending $5-8 is subject to both kinds of risk, although to a lesser extent. The chance of falling into poverty is smaller, and the prospects for advancing into the middle class are also smaller, so it is a more stable category. Nevertheless, it is a group where income volatility is high—a spell of unemployment, a poor crop, or a family health crisis can create proportionally large income losses. On the other side of the coin, a family member gaining meaningful employment, migrating and sending home remittances, or enjoying a good harvest can propel a family toward the middle class. Both the risk of something bad happening and something good not happening can affect these households significantly.

Figure 1. Global population living in different spending groups

Source: World Data Pro, World Data Lab 2022

Figure 1 shows how the vulnerable are distributed among these spending categories today and in 2030 based on current projections of growth and distribution. The figure shows that the vulnerable are evenly spread across the three categories we have identified. It also shows that there is not likely to be a significant reduction in the size of this group in the next few years.

Given the size of the vulnerable group, governments would do well to pay more attention to them. Targeting social assistance based on spending/income levels is only likely to exclude a substantial portion of the vulnerable group. Additional metrics, based on country-by-country risk characteristics, are needed to build a more resilient population.

This recommendation is particularly important for Asian countries. There, great inroads have been made in reducing the absolute number of extremely poor people, so the vulnerable group is less likely to overlap with those in poverty. At the same time, Asian countries are witnessing severe climate-related shocks, so the vulnerability of many households has increased. By contrast, in Africa, levels of extreme poverty remain high, and the overlap between the vulnerable and the poor is larger. Then, targeting based on poverty, as is commonplace in many social assistance programs, will also assist in building resilience against vulnerability.

Although Asian countries have reduced poverty considerably, most people are still vulnerable. In fact, more than half of the Asian population is still poor or vulnerable. It will take another two to three years for Asia to cross the point where the majority of its population is middle-class or rich.

We need to pay more attention to the forgotten 3 billion. They are vulnerable on many dimensions, and their hopes and aspirations are in danger of destruction in today’s slow-growth and volatile economies. Identifying vulnerabilities is more complex than simply adjusting income poverty lines, although it should be one component. But the three-plus billion vulnerable people are many, and so—they should be impossible to forget. (Courtesy: Brookings Instituite)

World Economy Battered By High Inflation And Stalling Growth

By, Eswar Prasad & Aryan Khanna

The post-COVID recovery has run out of steam and the global economy is stalling, with many countries already in or on the brink of outright recession amid heightened uncertainty and rising risks. The October 2022 update of the Brookings-Financial Times TIGER indexes shows that growth momentum, as well as financial market and confidence indicators, have deteriorated markedly around the world in recent months.

A series of self-inflicted wounds, ranging from China’s zero-COVID policy to the United Kingdom’s fiscal recklessness, piled on top of persistent supply chain disruptions and the protracted war in Ukraine, have severely constricted space for policy maneuver. High and persistent inflation worldwide, and the actions by central banks to rein it in, are depressing economic activity, dampening household and business confidence, and roiling financial markets.

Major advanced economies such as the eurozone, Japan, and the United Kingdom have been dented by various adverse external shocks, often compounded by sluggish and tepid policy responses, throwing their growth trajectories off kilter. Many developed markets are now facing the combination of steep currency depreciations (relative to the U.S. dollar), rising government bond yields, strained public finances, and tightening policy constraints that have long characterized periods of economic and financial stress in emerging market economies.

The U.S. economy is rife with conflicting signals. Consumer demand remains strong and employment has continued to grow at a reasonably healthy pace. At the same time, GDP growth is anemic while inflation remains high by any measure, leaving the Federal Reserve with little choice but to hike rates further despite the tightening of financial conditions resulting from the stronger dollar and falling values of financial assets.

Energy supply disruptions are fueling inflation and constraining growth in European economies, with prospects of energy shortages in the winter damaging private sector confidence. Emblematic of the stresses on the U.K. economy, the plunge in the pound sterling’s value reflects a combination of these adverse external circumstances, the ongoing fallout from Brexit, and undisciplined fiscal policies. Many European countries face added concerns about populist policies that could increase the risks to fiscal and financial stability.

Japan is the sole major advanced economy that has the luxury of keeping monetary policy loose as inflation remains contained. This could help maintain stable albeit low growth, with the yen’s rapid depreciation not having any appreciable negative effects thus far.

Emerging market economies are facing similar challenges as their advanced economy counterparts, including high inflation and depreciating currencies, but have generally better growth prospects. Still, weak demand worldwide and tighter financial conditions will increase pressure on developing economies with current account deficits. Barring a few exceptions such as Turkey, Sri Lanka, and Venezuela, where rampant economic mismanagement has precipitated currency collapses, emerging markets at large do not seem at imminent risk of balance of payments crises, however.

China is facing a raft of problems resulting from the government’s rigid adherence to a zero-COVID strategy, a faltering real estate sector, and financial system stresses boiling over. Inflation remains under control, though the renminbi’s depreciation relative to the dollar has limited the People’s Bank of China’s ability to cut interest rates. The government and the PBOC have invoked a number of fiscal and monetary stimulus measures, but these have had limited traction in boosting private consumption and investment. Export growth, meanwhile, is likely to be restrained by weak global demand. (Courtesy: Eswar Prasad and Aryan Khanna (Cornell), The Brookings Institution, October 2022)

Movie Star Anna May Wong To Be First Asian American Featured On US Currency

Movie star Anna May Wong, who broke into Hollywood during the silent film era, will become the first Asian American to appear on US currency, a century after she landed her first leading role. Wong’s image, with her trademark blunt bangs and pencil-thin eyebrows, will feature on the back of new quarters from October 24th, 2022.

The design is the fifth to emerge from the American Women Quarters Program, which highlights pioneering women in their respective fields. The other four quarters, all put into production this year, feature poet and activist Maya Angelou; the first American woman in space, Sally Ride; Cherokee Nation leader Wilma Mankiller; and suffragist Nina Otero-Warren. The latter two were, along with Wong, selected with input from the public.

“These inspiring coin designs tell the stories of five extraordinary women whose contributions are indelibly etched in American culture,” the US Mint’s acting director, Alison Doone, said in a statement to CNN last year, when the list was revealed.

Considered the movie industry’s first Chinese American star, Wong overcame widespread discrimination to carve out a four-decade career in film, theater and radio. She acted alongside icons including Marlene Dietrich, Joan Crawford and Laurence Olivier and appeared on stage in London and New York.

Born in Los Angeles, she began acting at 14 and took a lead role in “The Toll of the Sea” three years later, in 1922. She went on to appear in dozens of movies but faced deeply entrenched racism in Hollywood, where she struggled to break from stereotypical roles.

She moved to Europe in the 1920s, but later returned to the US to make hits including “Shanghai Express,” the 1932 adventure-romance movie that gave Wong one of her best-known roles — it starred Dietrich as a notorious courtesan who takes a three-day rail journey through China during the Chinese Civil War and is held hostage on board, with Wong playing a fellow first-class passenger.

Throughout her life, Wong advocated for greater representation of Asian American actors in Hollywood. She received a star on the Hollywood Walk of Fame in 1960, the year before she died aged 56.

Her keen sense of style also made her a fashion icon, with Wong often mixing traditional Chinese gowns and flapper-era styles with eccentric touches. A biopic of the actor’s life, which will see her portrayed by “Crazy Rich Asians” star Gemma Chan, is currently in production.

“Many prominent actors from the 1920s and 1930s saw their name framed by lightbulbs on movie theater marquees, so I thought it made sense to feature Anna May Wong in this way,” said the coin’s designer, Emily Damstra, in a press release.

“Along with the hard work, determination, and skill Anna May Wong brought to the profession of acting, I think it was her face and expressive gestures that really captivated movie audiences, so I included these elements next to her name.”

The American Women Quarters program will choose five different women each year to be featured on the coin’s reverse side through 2025. Next year’s confirmed designs will spotlight pilot Bessie Coleman, composer Edith Kanakaʻole, former first lady Eleanor Roosevelt, journalist and activist Jovita Idar and ballerina Maria Tallchief. (The Hill)

New IRS Rules Mean Your Paycheck Could Be Bigger Next Year

Inflation may be pushing prices up, but it also may help push up your take-home pay starting next year.

Thanks to inflation adjustments to 2023 federal income tax brackets and other provisions announced by the Internal Revenue Service this week, more of your 2023 wages may be subject to lower tax rates than they were this year, and you may be able to deduct higher amounts of income.

“It is very likely that you would see more in your paycheck starting in January [due to the IRS inflation adjustments, which] tend to result in lower withholding for a given level of income,” said Mark Luscombe, principal federal tax analyst for Wolters Kluwer Tax & Accounting.

Since the changes don’t apply until 2023, they won’t have any affect on your 2022 tax return that you must file by mid-April of next year.

Here are some of the big changes the IRS is making:

Income tax brackets

  • There are seven different federal income tax rates at which earned income is taxed: 10%, 12%, 22%, 24%, 32%, 35% and 37%. And the range of income subject to each of those rates is called a tax bracket.
  • The more you earn, the higher your “top” rate – that’s the rate at which your last dollar is taxed.
  • The IRS inflation adjustments amount to a roughly 7% increase in each bracket.
  • Starting next year, here are the amounts of income that will apply to each rate:
  • 10% applies to the first $11,000 of income for single filers ($22,000 for married couples filing jointly).
  • 12% applies to income over $11,000 ($22,000 for joint filers)
  • 22% applies to income over $44,725 ($89,450 for joint filers)
  • 24% applies to incomes over $95,375 ($190,750 for joint filers)
  • 32% applies to incomes over $182,100 ($364,200 for joint filers)
  • 37% applies to incomes over $578,125 ($693,750 for joint filers)

Standard deduction

The standard deduction, which most filers claim, will go up by $900 to $13,850 for single people and by $1,800 to $27,700 for married couples filing jointly.

The standard deduction is the dollar amount that those who don’t itemize deductions can subtract from their adjustable gross income before federal income tax is applied.

Healthcare Flexible Spending Account contribution limits

Next year, you will be allowed to contribute up to $3,050 to a flexible spending account, which can cover some out-of-pocket healthcare costs not covered by health insurance. That money is deductible so it will reduce the amount of tax taken out of your paycheck. If your employer’s plan also allows you to carry over unused portions of your FSA amount, the maximum carryover permitted will be $610, $40 higher than this year’s maximum.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) enables low-income workers to keep more of their paycheck. However, they will not get paid the money until they file their 2023 taxes in early 2024.

The IRS raised the maximum amounts one can claim for the EITC by about 7%.

For example, a qualifying taxpayer with three or more qualifying children could get an EITC of up to $7,430 in 2023, up from $6,935 this year.

India Cancels Foreign Contribution Regulation Act License Of Rajiv Gandhi Foundation

India’s Union Home Ministry has cancelled the Foreign Contribution Regulation Act (FCRA) licence of Rajiv Gandhi Foundation (RGF), a non-governmental organisation headed by Sonia Gandhi, for allegedly violating the foreign funding law.

The foundation will no longer be allowed to receive foreign funds.

According to sources, the FCRA license of the foundation has been cancelled due to violation of foreign funding rules. The Ministry of Home Affairs (MHA) had also constituted a committee in 2020 to probe this. This decision has been taken on the basis of the report by the same inquiry committee.

The trustees of the organization include former Prime Minister Manmohan Singh, former Finance Minister P. Chidambaram and MPs Rahul Gandhi and Priyanka Gandhi Vadra.

According to sources, the RGF came under the scanner in July, 2020. The MHA then constituted an inter-ministerial committee headed by an Enforcement Directorate (ED) officer to investigate NGOs, including the RGF, linked to the Gandhi family. The foundation was accused of tampering with income tax returns, including suspected FCRA violations.

The RGF was established in 1991. For many years, this foundation worked on important issues regarding health, science and technology, women, children and education, etc.

In 2020, BJP President J.P. Nadda also alleged that the foundation took such funds from China, “which were not in the interest of the country”. (IANS)

Loan Forgiveness Application Available For Students Now

The Department of Education launched a beta test version of its student loan relief website on Friday with an application that borrowers can fill out ahead of the site’s official launch later this month.

Since August, when President Biden announced that he would fulfill his campaign promise to cancel up to $20,000 in student loan debt, borrowers have been waiting diligently to hear the next steps. While the application—which was originally supposed to open in early October—is not fully functional, the Department of Education is welcoming applicants to submit their applications on the beta test site.

The beta site’s application will be available “on and off” over the next few weeks, according to the Education Department. The department chose to launch its beta version early so their technical team can work to detect and remedy any issues that might come up

How does the beta application process go?

The federal agency said that there’s no advantage to completing the application before its official launch because it won’t be processed until then, but if a borrower fills out the application during the beta period, they won’t have to worry about filling it out again later. 

The application process takes about 5 minutes, and it’s available in English and Spanish. Applicants also don’t need to log in or provide any documents, according to the department. About 95% of federal student loan borrowers are eligible for relief.

The Education Department’s technical team will be responding to potential issues in real-time, and although the application itself won’t change, the team may make changes to the website if faced with any glitches. 

The beta version of the site will have scheduled pauses for the team to observe its progress and refine any errors, so the department is encouraging applicants to check back later if the site is down when they try to visit it. The department’s website crashed in August on the day of the student loan relief announcement, so the department is likely testing the site thoroughly to avoid a repeat.

How quickly are borrowers expected to receive relief?

The Biden administration initially said that the debt relief application would become available in early October, but in a legal filing on Friday, the Department of Education announced that it won’t be available before Oct. 23. From that point, the application will be available until Dec. 31, 2023.

​​The application asks borrowers to submit their Social Security numbers and to corroborate that they meet the income caps for the program, which are limited to a salary less than $125,000, or under $250,000 for married couples, in 2020 or 2021. Borrowers are eligible to cancel $10,000 of federal student loan debt and Pell Grant recipients are eligible for up to $20,000 of relief.

The Federal Student Aid office will confirm applicants’ eligibility, and reach out to applicants if more information is needed. Applicants’ loan service providers will be responsible for contacting them once their relief has been processed.

Borrowers can expect to see their relief granted within four to six weeks after filling out the application, according to Education Secretary, Miguel Cardona. With looming legal action challenging the student loan relief program and an imminent renewal of student loan payments beginning in January, experts have encouraged borrowers to fill out the application as soon as possible.

US And India Need To Collaborate On A Higher Scale: AIMA Chief Shrinivas Dempo

Shrinivas Dempo is not one to mince words. The president of the All India Management Association (AIMA) – the country’s apex non-profit, non-lobbying body for management professionals with over 38,000 members – is not optimistic about the current geopolitical and economic situation, even as he is hopeful about the future.

“These are extremely difficult times,” he told indica in an exclusive interview on the sidelines of the 5th US-India Conference jointly hosted by AIMA and Haas School of Business at UC Berkeley, on October 11. “We are facing all sorts of crises – climate, energy, interest rates, foreign exchange. But when there are challenges there are also opportunities.”

The 1969-born Dempo, who hails from the state of Goa in western India, is the chairman of the Dempo Group of Companies – a diversified conglomerate with interests in industries such as calcined petroleum coke, shipbuilding, food processing, real estate and newspaper publishing. The company also owns a popular football club.

The theme for this year’s conference was ‘US-India Partnership: A New Paradigm in a Changed World’. In his speech, Dempo acknowledged the issues faced by the world and not just India. “We believe in the strength of people,” he said, “and together we (the US and India) can achieve.”

He told indica, “With so much uncertainty, thought leaders will have to come up more ideas for our economies to collaborate. India is one of the world’s most promising nations. Our demographic dividend, our younger population is our greatest strength.”

He added that the Russia-Ukraine conflict and the China-Taiwan geopolitical tensions give an opportunity for India and the US to collaborate on a higher scale. “India in the east and US in the west will play a major role in sorting out the issues.”

He said collaboration is better than competition, and for that to happen, he proposed a summit where industry and academia from the two countries can come together.

Dempo said the AIMA is not like other business associations, “nor are we an advocacy organization,” but added that AIMA talks about adapting better management practices. “AIMA not only addresses corporate leaders but we also manage students that are our future corporate leaders. The idea of hosting the summit is to collaborate with education institutes and work on a common theme.”

Apart from hosting the US-India Conference, the AIMA delegation visited Silicon Valley tech companies to see innovation first hand and perhaps take back some lessons for Indian industry.

The delegation has people from manufacturing, transportation and logistics sectors. “The dialog can evolve into specific business opportunities,” Dempo said. “When things are bad, it is the best time to get things at a good price.”

He said India’s current growth rate (7% annually) can sustain for at least 30 more years and “while we cannot compare with the US, we will probably make India the best destination for investment.”

He opined that the Indian government needs to pay greater attention to the tourism sector. “Tourism potential remains largely untapped, even though we have made great progress. The past need not be an indicator, but we need to focus on heritage tourism, nature tourism, ecological tourism, and much more. Infrastructure needs to be set up on a much larger scale… more hotels, better facilities.”

He said in his speech that India’s industrialization and digitization has improved leaps and bounds, but “we still have a long way to go. “Indian youth today have an unprecedented opportunity to be entrepreneurs. I know the US has traditionally done well in this area and so we need greater collaboration in this field. Prime Minister Modi is bullish on Make in India and Start-up India.”

Dempo has a personal connection with America. He is a graduate of the Tepper School of Business at Carnegie Mellon University and serves as a trustee at the university.

In 2011, he made a $3 million gift to endow a professorship at Tepper called the Vasantrao Dempo Reflective Chair, to support teaching and research on India-relevant issues. There are two simultaneous reflective chair professors – one in the US and the other in India. Prof Sudhir Kekre was appointed the first such professor in 2017.

HM Nerurkar, chairman of TRL Krosaki Refractories Limited has one-line advice for new-age entrepreneurs – Silicon Valley is where you get cutting-edge tech and this is where you can learn the most.

Nerurkar was a keynote speaker at the 5th US-India Conference jointly organized by the All India Management Association and the Haas School of Business at the University of California, Berkeley, on October 11. In an exclusive interview with indica, Nerurkar said that despite several agencies lowering India’s GDP growth forecast for 2023, “It is quite pessimistic and I believe it will be around 7 percent.”

He said this is possible because India is still not an export-led economy, and India cannot suffer thanks to its domestic consumption. “I think we will still manage to retain the 7 percent GDP growth target.”

Nerurkar, who has spent more than half his professional career with the Tata group, still serves on its board. He is also an advisor to several multi-billion-dollar conglomerates such as the Adani group.

The soft-spoken Nerurkar earned a bachelor’s degree in metallurgical engineering from the College of Engineering, Pune (CoEP). He joined Tata Steel in 1972 and rose to becoming its managing director in charge of India and South East Asia operations.

He commented on the Deloitte report that stated that India is a more challenging business destination compared to countries such as China and Vietnam. “There is some truth (in the report). Our rank is still not where it should be on ease of doing business. There are issues and the government is trying to address them.”

He added that India still lacks the infrastructure needed to become a fast-growing exporting nation. “If you improve the operational efficiency and improve the export infrastructure, we can become a bigger export house.”

He is an optimist, though. “I think India will not allow any opportunity to slip away at this juncture. For example, Adani group is trying to be number one. That kind of ambition and that kind of leadership was not something you have dreamt of 10 years back.” He said this is the right time for India to grab US investors, given the tension between China and the US.

In his short speech at the conference, Nerurkar spoke about his ideas on the metaverse. “All of us in business and in government have to ensure that the younger generation gets training or the skill development that is appropriate for the jobs that are coming up.” (IndicaNews)

India Slips To 107 Out 121 In Global Hunger Index

In the 2022 Global Hunger Index, India ranks 107th out of the 121 countries with sufficient data to calculate 2022 GHI scores. India was ranked 101st in the 2021 ranking.

With a score of 29.1, India has a level of hunger that is serious. It was 28.2 in 2014. The higher the score, the worse is the situation, according to the methodology. There are five levels of hunger severity, according to this methodology. Scores of ≤ 9.9 are Low; 10.0–19.9 are Moderate; 20.0–34.9 are Serious; 35.0–49.9 are Alarming; and ≥ 50.0 are Extremely Alarming. 

At 19.3 per cent, according to the latest data, India has the highest child wasting rate of all countries covered in the GHI. This rate is higher than it was in 1998-1999, when it was 17.1 per cent. Child wasting is the share of children under the age of five who have low weight for their height, reflecting acute undernutrition.

Nepal is ranked higher at 81, Bangladesh at 84 and even Pakistan at 99. India is ranked below African countries like Sudan, Congo, Ethiopia, Nigeria, and Rwanda.

The Global Hunger Index is a peer-reviewed annual report, jointly published by Concern Worldwide and Welthungerhilfe, designed to comprehensively measure and track hunger at the global, regional, and country levels. The aim of the GHI is to trigger action to reduce hunger around the world.

According to the data analysts, since 2000, India has made substantial progress, but there are still areas of concern, particularly regarding child nutrition.

India’s GHI score has decreased from a 2000 GHI score of 38.8 points, considered alarming, to a 2022 GHI score of 29.1, considered serious. India’s proportion of undernourished in the population is considered to be at a medium level, and its under-five child mortality rate is considered low.

While child stunting has seen a significant decrease — from 54.2 per cent in 1998-1999 to 35.5 per cent in 2019-2021 — it is still considered very high.

Each country’s GHI score is calculated based on a formula that combines four indicators that together capture the multidimensional nature of hunger:
Undernourishment: the share of the population with insufficient caloric intake.
Child stunting: the share of children under age five who have low height for their age, reflecting chronic undernutrition.
Child wasting: the share of children under age five who have low weight for their height, reflecting acute undernutrition.
Child mortality: the share of children who die before their fifth birthday, partly reflecting the fatal mix of inadequate nutrition and unhealthy environments.

Hunger is usually understood to refer to the distress associated with a lack of sufficient calories. The Food and Agriculture Organization of the United Nations (FAO) defines food deprivation, or undernourishment, as the habitual consumption of too few calories to provide the minimum dietary energy an individual requires to live a healthy and productive life, given that person’s sex, age, stature, and physical activity level.

Undernutrition goes beyond calories and signifies deficiencies in any or all of the following: energy, protein, and/ or essential vitamins and minerals. Undernutrition is the result of inadequate intake of food in terms of either quantity or quality, poor utilization of nutrients due to infections or other illnesses, or a combination of these immediate causes. These, in turn, result from a range of underlying factors, including household food insecurity; inadequate maternal health or childcare practices; or inadequate access to health services, safe water, and sanitation.

Malnutrition refers more broadly to both undernutrition (problems caused by deficiencies) and overnutrition (problems caused by unbalanced diets that involve consuming too many calories in relation to requirements, with or without low intake of micronutrient-rich foods). Overnutrition, resulting in overweight, obesity, and noncommunicable diseases, is increasingly common throughout the world, with implications for human health, government expenditures, and food systems development. While overnutrition is an important concern, the GHI focuses specifically on issues relating to undernutrition. (IndicaNews)

India Has Potential To Attract US $475 Billion FDIS In 5 Years

A majority of MNCs believe that the Indian economy will perform significantly in the next three to five years, a report by EY-CII titled ‘Vision – Developed India: Opportunities and Expectations of MNCs” revealed. This projection is in the light of 71 per cent of multi-national companies (MNCs) considering India for global expansion. The report stated that the country has the potential to attract US$475 billion worth foreign direct investment (FDI) in the next five years with its sharp focus on reforms and economic growth.

According to reports, even as the pandemic and geopolitical conflict resulted in investor uncertainty, India has the potential to attract Foreign Direct Investment (FDI) flows of $475 billion in the next five years due to the focus on reforms and economic growth, according to a report by the Confederation of Indian Industries (CII) and EY.

The report noted that FDI in India has seen a consistent rise in the last decade, with FY 2021-22 receiving FDI inflow of $84.8 billion despite the impact of the COVID-19 pandemic and geopolitical developments on investment sentiment.

“India is seen as an emerging manufacturing hub in global value chains, as a growing consumer market and as a hub for ongoing digital transformation. In addition, in a rapidly changing geopolitical environment, India’s large and stable democracy and consistent reform measures are recognized by the MNCs (multinational company),” the report said.

The report titled ‘Vision—Developed India: Opportunities and Expectations of MNCs’, added that 71% of MNCs working in India consider the country an important destination for their global expansion. The optimism is driven by both short-term as well as long-term prospects.

“A majority of MNCs feel that the Indian economy will perform significantly better in 3-5 years backed by 96% of respondents being positive about overall India’s potential,” the report said.

Connecticut Is the 3rd Most Expensive State to Retire

If you’re planning on retiring in Connecticut, you better start saving yesterday, according to a new report.

Great schools, beautiful shoreline, classic architecture, deep woods, fabulous arts — but you better enjoy all Connecticut has to offer while you’re young. That’s the take-away from a new report that names the Nutmeg State the 3rd most expensive, and 8th worst overall, in which to retire. 

Personal finance website Bankrate ranked each state from the perspective of what matters most to a prospective retiree. The most heavily weighted category was affordability, at 40 percent, followed by well-being (20%), culture and diversity (15%), weather (15%) and crime (10%).

Of course, there’s more than a little subjectivity involved in selecting your final nesting place. Sunbelt states topped Bankrate’s list for retiree nirvana, but what if you burn easily and prefer skiing to snorkeling? And a state’s affordability drops way low for retirees if the home in which they live is already bought and paid for. But let’s all just play along…

Connecticut’s tied for 4th with Vermont in the crime category, and is ranked 8th overall for retiree “well-being,” but takes a beating in the data when it comes to affordability. The state ranks No. 48, right behind affluent enclaves Hawaii and California.

The New England winters didn’t work in Connecticut’s favor either; the state ranked No. 39 when it came to weather, a dip mitigated somewhat by its No. 14 ranking in culture and diversity.

Connecticut’s overall score of 23 tied that of Hawaii and Washington. 

The best state for retirees, according to BankRate, and your own intuition, is Florida. The Sunshine State not only scored high for its weather (No. 5), but was ranked first in culture and diversity, and 18th in affordability.

86% Of Global CEOs Expect Recession In 2023: KPMG Survey

Top global CEOs expect the recession to be mild and shorter, according to a survey by KPMG. As per KPMG 2022 CEO Outlook, 86 per cent of CEOs surveyed believe a recession over the next 12 months will happen, but 58 per cent feel it will be mild. The risk of recession has risen in the last few months as central banks across the world are hiking interest rates to contain super-hot inflation caused by a combination of factors such as the pandemic and Russia’s invasion of Ukraine.   

A survey of more than 1,300 chief executive officers (CEOs) at the world’s largest businesses reveals that over the next year, 86% of these global leaders anticipate a recession to hit.

However, 58% of these leaders expect the recession to be mild and short. Fourteen percent of senior executives identify a recession among the most pressing concerns today — up slightly from early 2022 (9%), while pandemic fatigue tops the list (15%), said the survey — the KPMG 2022 CEO Outlook.

These leaders were asked about their strategies and outlook during the survey. Over the next year, more than 8 out of 10 (86%) global CEOs anticipate a recession to hit, with 71% predicting it will impact company earnings by up to 10 per cent, said the survey.

Most of the top executives are of the opinion that the recession will make the post-pandemic recovery difficult. As per the survey, 73 per cent of CEOs believe the recession will upend anticipated growth over the next three years, and 75 per cent also believe a recession will make post-pandemic recovery harder. 

“71 percent of CEOs predict a recession will impact company earnings by up to 10 per cent over the next 12 months,” the survey stated.

A strong majority of senior executives believe that a recession will disrupt anticipated growth (73%). However, three-quarters (76%) have already taken precautionary steps ahead of a looming recession, it added.

Despite those concerns, senior executives also feel markedly more confident about the resilience of the economy over the next six months (73%) than they did in February (60 per cent), when KPMG surveyed 500 CEOs for its CEO Outlook Pulse survey.

Further, 71% of leaders are confident about the global economy’s growth prospects over the next three years (up from 60% in early 2022) and nearly 9 in 10 (85%) are confident about their organization’s growth over the next three years.

“Tested by enormous challenges in quick succession — a global pandemic, inflationary pressures and geopolitical tensions — it’s encouraging that CEOs, surveyed in our 2022 CEO Outlook, were confident in their companies’ resilience and relatively optimistic in their own growth prospects,” said Bill Thomas, global chairman and CEO, KPMG.

US In Record $31 Trillion Debt

(AP) — The nation’s gross national debt has surpassed $31 trillion, according to a U.S. Treasury report released Tuesday that logs America’s daily finances.

Edging closer to the statutory ceiling of roughly $31.4 trillion — an artificial cap Congress placed on the U.S. government’s ability to borrow — the debt numbers hit an already tenuous economy facing high inflation, rising interest rates and a strong U.S. dollar.

And while President Joe Biden has touted his administration’s deficit reduction efforts this year and recently signed the so-called Inflation Reduction Act, which attempts to tame 40-year high price increases caused by a variety of economic factors, economists say the latest debt numbers are a cause for concern.

Owen Zidar, a Princeton economist, said rising interest rates will exacerbate the nation’s growing debt issues and make the debt itself more costly. The Federal Reserve has raised rates several times this year in an effort to combat inflation.

Zidar said the debt “should encourage us to consider some tax policies that almost passed through the legislative process but didn’t get enough support,” like imposing higher taxes on the wealthy and closing the carried interest loophole, which allows money managers to treat their income as capital gains.

“I think the point here is if you weren’t worried before about the debt before, you should be — and if you were worried before, you should be even more worried,” Zidar said.

The Congressional Budget Office earlier this year released a report on America’s debt load, warning in its 30-year outlook that, if unaddressed, the debt will soon spiral upward to new highs that could ultimately imperil the U.S. economy.

In its August Mid-Session Review, the administration forecasted that this year’s budget deficit will be nearly $400 billion lower than it estimated back in March, due in part to stronger than expected revenues, reduced spending, and an economy that has recovered all the jobs lost during the multi-year pandemic.

In full, this year’s deficit will decline by $1.7 trillion, representing the single largest decline in the federal deficit in American history, the Office of Management and Budget said in August.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in an emailed statement Tuesday, “This is a new record no one should be proud of.”

“In the past 18 months, we’ve witnessed inflation rise to a 40-year high, interest rates climbing in part to combat this inflation, and several budget-busting pieces of legislation and executive actions,” MacGuineas said. “We are addicted to debt.”

A representative from the Treasury Department was not immediately available for comment.

Sung Won Sohn, an economics professor at Loyola Marymount University, said “it took this nation 200 years to pile up its first trillion dollars in national debt, and since the pandemic we have been adding at the rate of 1 trillion nearly every quarter.”

Predicting high inflation for the “foreseeable future,” he said, “when you increase government spending and money supply, you will pay the price later.”

Rupee Plunges To All-Time Low Against Dollar

The Indian Rupee pared most of its initial losses and settled 4 paise lower at a fresh lifetime low of ₹82.34 (provisional) against the U.S. dollar on Monday, October 10, 2022, weighed down by as risk-averse sentiment among investors.

Indian rupee on Friday last week fell sharply to its all-time low of 82.33 against the dollar owing to a rise in US bond yields and firming up of crude oil prices. Rupee had closed at 81.89 on Thursday.

It was trading at 82.30 against the dollar in the morning after opening at 82.19 a dollar. Later, it touched an all-time low of 82.33 against the dollar.

The all-time low plunge in the rupee has come a day after the World Bank had on Thursday cut India’s growth forecast for this financial year by a full percentage point amid rising inflation and adverse geo-political conditions. (IANS)

The US dollar has surged this year. The world’s largest wealth manager explains why that dizzying rally isn’t done yet.

Meanwhile market watchers say, the surging US dollar has yet to peak. That’s according to UBS, which thinks the Federal Reserve is unlikely to start cutting interest rates any time soon, keeping the dollar rising against rival currencies globally. 

The greenback has already flown up 16.7% this year, bolstered by Fed rate hikes and weaknesses among major counterparts. But hopes of a pivot in the Fed’s policy pumped the brakes on its rise recently, with the US dollar index, which measures the buck against a basket of six currencies, retreating on the speculation fueled by a fall in US job openings and a lower-than-expected rate increase in Australia.

However, UBS’s analysts, led by CIO Mark Haefele, said in a note to clients this week that it’s too early to call a peak in both Fed hawkishness and the US dollar. 

“The number of job openings in the US remains much higher than those unemployed, while the latest core personal consumption expenditure price index showed that inflation is still elevated,” the note read. 

“Fed officials including Chair Jerome Powell have stressed that the central bank’s job is not yet done.” 

Against a backdrop of global uncertainty amid the war in Ukraine, the pressure weighing on the euro is likely to prop up the dollar in the near future, UBS says. 

Multinationals See India As Global Manufacturing Base: CITI Investment Bank Boss

After the consumer banking exit, Citigroup which is focused on servicing large local corporates, multinationals, financial institutions, emerging and mid-sized corporate clients in India says that multinationals are starting to see India as a global manufacturing base, which will positively impact small- and mid-sized businesses.

In an exclusive interview to ANI, Citigroup’s Global Co-Head of Banking, Capital Markets and Advisory, Manolo Falco said that there is tremendous opportunity to support India’s capital and advisory needs.

Here is the transcript of an email interview of Manolo Falco to ANI:

Q: India is the 5th largest economy of the world. What does it mean to you? What reforms/measures pushed India to make in top 5 economies?
Falco: Fiscal prudence and discipline, development of physical infrastructure, ease of doing business, thriving start-up ecosystem, and the build out of India’s digital and financial infrastructure (UPI is recognized as amongst the best in the world), underpin the country’s growth. Recent Government policies on logistics, hydrogen, spectrum, EV, will support further growth, self-reliance, and efficiency. Multinationals are starting to see India as a global manufacturing base, which will positively impact small- and mid-sized businesses. For us at Citi, there is tremendous opportunity to support India’s capital and advisory needs. What I hear from our clients is that they want to grow more. What I hear from investors is they want to find meaningful opportunities to take part in.

Q: What are your plans for India after the consumer banking exit?
Falco: Citi will be focused on servicing large local corporates, multinationals, financial institutions, and emerging and mid-sized corporate clients. Through our universal banking proposition, we help clients with long-term financing, our global footprint, cash management, and protection against rate increases and volatility. We will double down on this strategy. I believe banking models such as what we’ve created will be extremely valuable in helping clients navigate through the uncertainty we see in today’s world. In India, within my business, we have advised clients on episodic business, including capital raising and M&A, worth ~$500 billion over two decades. We will continue to capitalize on our deep global relationships. There is also opportunity to support capital needs of mid and emerging corporates, who bank with our commercial banking business. Our investment bankers will be tasked with identifying these leaders of the future. Our focus and business strategy meant we were on every tech IPO last year.

Q: Indian stock markets are facing the heat of a higher interest rate environment globally. What is your medium-to-long term view on the Indian stock market?
Falco: While I don’t expect recovery too soon given the high interest rate environment, inflation, and volatility in commodities, we may be closer to a recovery given the work by central banks. India would be at the forefront of that as the economy is performing well. So we expect markets to do well, on a relative basis. Over the last two years, including 2022YTD which was a tough year, India will be a relative outperformer, up 22% 2021-2022 YTD and -2% 2022 YTD. India trades at a very healthy premium to its global EM peers. The country has witnessed high interest rates in the not-so-distant past and yet finds opportunities for continual growth. Recent green shoots and the revival of foreign inflows have resulted in a pickup in secondary market deal activity, albeit in narrow execution windows.

 

Q: What is your view on India’s Primary market. When do you see a revival?
Falco: India has a strong Primary Market and ranks amongst top 5-7 in capital formation globally across years. India’s primary capital markets positioning was further strengthened as it hosted multiple jumbo, $1 billion+ IPOs in the tech space, allowing India’s tech champions to list in their home market, rather than other large financial markets. India’s primary markets attract best-in-class global investors and Sovereign Wealth Funds; in addition, there is a captive pool of domestic capital. We are bullish the ability of India’s primary markets to finance its long-term equity story. Even short term, India did not close its door to primary capital activity. In a tough year, there was the completion of LIC’s jumbo IPO and the second-largest tech IPO for Delhivery. August and September were very active months in the block and follow-on market, raising over $3 billion. Away from India, Citi, as a JGC, recently concluded the Euro 9.4bn IPO for Porsche, which is the second-largest IPO this year. The success of the IPO speaks to our global distribution, which is also available to our Indian clients.

 

Q: Given the global turmoil, like Ukraine-Russia war, Inflation in US-UK and European countries, what kind of capital demand within India can we anticipate?
Falco: India Inc. has raised a total of $20 billion and $13 billion in the private and listed equity capital markets spaces respectively so far this year. There is a healthy bid for the market though it is very price elastic – so pricing, not volume, has meant the cost of capital has fundamentally changed, which is an ongoing issue in the market. Given the continued tension in IPO markets and narrow windows in secondaries, listed equities could see $5-6 billion in activity through the last three months of 2022. The private markets remain relatively insulated and can see another $6-7 billion worth of volumes over the same time frame. We believe issuance activity should slowly recover as issuers and investors adjust to the new normal.
In terms of debt capital, we expect strong demand from Indian issuers in next 12-18 months, which is expected to result in sizeable debt issuance in 2023. Given the Indian growth story, investor interest remains high for Indian issuances. For Citi, India remains one of the most important Asia Pacific markets with huge interest from global investors.

 

Q: With MNCs looking at a China + 1 strategy, what are the investment opportunities in India for them? Are inbound M&As an opportunity?
Falco: India is a huge opportunity – it is a sizeable economy with huge growth potential as well as diverse opportunities and a Government who is really focused on the right solutions for the country. I see huge potential in India for continued high growth and the country represents a massive opportunity for both local and international clients. I expect inbound investments in Infrastructure to bring efficient long-term capital. I think we need to be more aggressive in bringing opportunities to local companies, such as in clean energy, chemicals, renewables, technology and services. My focus will be to ensure we have talented global bankers with deep sector knowledge to help clients navigate the India opportunity. (https://theprint.in/economy/multinationals-starting-to-see-india-as-global-manufacturing-base-citi-investment-bank-boss/1156602/)

S&P 500 Down 20% This Year, Retirement Savings Sink Impacting Millions

Despite stock market gains in the last couple of days, some investors are clearly tired of seeing losses in their retirement accounts this year. New data from Alight Solutions shows last month the vast majority of daily trades in 401(k) plans went from equities to fixed income.

“Almost every time Wall Street has a major dip, we see people taking their money out of stocks and moving it into bonds,” said Rob Austin, head of research for Alight Solutions, which measures the daily trading activity of more than 2 million 401(k) investors, with about $200 billion in assets.

Austin noted the movement was more pronounced in September than in August and July. “It was not surprising that it coincided at the time that the market fell,” he said.

Investors are seeking safety

Investors sought safety mostly in stable value funds, with 80% of traded assets put there in September, according to the Alight Solutions 401(k) Index. Money market funds garnered 15% of inflows, while bond funds got about 2% of assets.

Meanwhile, 50% of money that was traded came out target date funds, which are designed to invest more conservatively as you get older. And more than a third of outflows came out of large-cap U.S. equity and mid-cap U.S. equity funds.

Many stick with a 60/40 stocks, bonds split

The traditional portfolio of 60% stocks and 40% bonds has lost about 20% of its value year to date, but most investment advisors recommend sticking with a balanced strategy. With bond yields improving, that mix looks better than it has in years, some say.

Financial advisors also caution against switching strategies when the markets are in turmoil. Trying to time the market can mean investors lock in losses and miss out on the upside.

“If you wake up in the morning and decide to cash out and capture losses, it’s either too late or a bad decision,” said certified financial planner Jon Ulin with Ulin & Co. Wealth Management in Boca Raton, Florida. “Cash does not provide much in the way of a dividend and will not help to make up for 8% losses to inflation over time in as much as a diversified portfolio.” 

The 60/40 split can be a good starting point for moderate-risk investors who don’t need to pull the money for 10 years or more.  Some advisors say what we saw this year with stocks and bonds both declining at the same time could be an anomaly.

“Provided that inflation is under control, we expect that bonds will revert to their historical role of both a safe asset and one that provides relatively safe income,” said Arthur J.W. Ebersole of Ebersole Financial in Wellesley Hills, Massachusetts.

Cash is an option for the risk averse

For investors who really can’t stomach the risk, cash may not be a bad placeholder for now. But the risk adverse should know it is difficult to generate the returns they will need to retire with a 3% return.  

“It’s really easy for my teammates [and I], or our industry, to say, ‘Well, don’t worry, just take the long-term approach and everything over the long-term will be fine,’” said Jason Ray, CEO of Zenith Wealth Partners in Philadelphia.

Ray suggests investors break down their portfolios to see the returns in different asset classes. He recommends adding dividend-paying stocks as a value play and suggests younger investors with a longer time horizon add alternative investments, including investing in early stage startup companies and real estate.  (https://www.cnbc.com/2022/10/04/sp-500-down-20percent-for-year-retirement-investors-reconsider-stock-bond-strategy-.html)

UN Warns Of A Global Recession

By, Tobias Burns 

The United Nations warned of a global recession Monday amid efforts by regulators in the world’s most advanced economies — like the U.S. and Europe — to stanch sky-high inflation.  

The international body called on central banks like the U.S. Federal Reserve “to revert course and avoid the temptation to try to bring down prices by relying on ever higher interest rates.” 

The Fed is raising interest rates to try and slow the economy and bring down inflation, which is near 40-year-highs following global economic shutdowns caused by the coronavirus pandemic. Since March, rates have increased from around 0 percent to between 3 and 3.25 percent. 

But a growing number of voices, now including a major U.N. economic body, are calling for an about-face from monetary authorities. They argue that lower inflation targets are not worth the pain of continuing hikes in interest rates, which are projected to hit 4.6 percent next year, according to a median estimate from the Fed. 

The U.N. Conference on Trade and Development (UNCTAD) urged central banks in a report released Monday to change course, describing any upcoming recessions as “policy-induced” and a matter of “political will.” 

“The real problem facing policy makers is not an inflation crisis caused by too much money chasing too few goods, but a distributional crisis with too many firms paying too high dividends, too many people struggling from paycheck to paycheck and too many governments surviving from bond payment to bond payment,” Richard Kozul-Wright, director of UNCTAD’s globalization division, said in a statement. 

Monday’s UNCTAD report disparaged comparisons to the last period of high inflation in the global economy, saying that today’s economic conditions are inherently different from those in the 1970s and that drawing parallels between them was tantamount to “sifting through the economic entrails of a bygone era.” 

Specifically, the report said that wage-price spirals, whereby higher wages lead to higher prices and vice versa, are not a relevant force in today’s global price dynamics. 

“Despite the absence of the wage-price spirals that characterized [the 1970s], policymakers appear to be hoping that a short sharp monetary shock – along the lines, if not of the same magnitude, as that pursued by the United States Federal Reserve (the Fed) under Paul Vol[c]ker – will be sufficient to anchor inflationary expectations without triggering recession,” the UNCTAD report said.  

“Sifting through the economic entrails of a bygone era is unlikely, however, to provide the forward guidance needed for a softer landing given the deep structural and behavioral changes that have taken place in many economies, particularly those related to financialization, market concentration and labor’s bargaining power,” the report said. 

Some U.S. commentators have made similar observations, downplaying the wage-price spirals that drove inflation 40 years ago and emphasizing the globalized nature of today’s economy. 

“There’s a huge Greek chorus out there that believes that inflation could result in a wage-price spiral,” Westwood Capital managing partner Dan Alpert said in an interview. “But that ignores the supply side and ignores the enormous differences between the supply picture in the 1970s, when we did have a wage-price spiral, and today. Today we have an enormous volume of exogenous supply and goods — goods that are coming from all over the world.” 

The Fed has acknowledged that mutual reinforcement of higher wages and higher prices is not at play in the domestic economy, noting in the minutes of its July meeting “the apparent absence of a wage-price spiral.” 

But Fed chair Jerome Powell has often linked the two concepts in speeches and public statements. During a September press conference, he said that members of the Fed’s interest rate-setting committee “expect supply and demand conditions in the labor market to come into better balance over time, easing the upward pressure on wages and prices.” 

Asked how long Americans should be prepared to feel economic pain resulting from interest rate hikes, Powell responded, “How long? I mean it really depends on how long it takes for wages and more than that, prices, to come down for inflation to come down.” 

More broadly, Powell has argued that the pain of recession and economic slowdown is the lesser of two evils, the greater being consistently higher prices for U.S. consumers. 

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain,” Powell said in August. 

Republicans have taken a hawkish stance against inflation, arguing that wage-price spirals are still a risk for the U.S. economy as it faces recession. 

“Certainly we have a pretty dangerous wage-price spiral. No country wants to be in it, and we’re deeply in it. We have stagflation, just the traditional definition of it,” House Ways and Means ranking member Kevin Brady (R-Texas) said on the CNBC television network on Monday. 

“What worries me is I’m not sure the Fed knows what the unemployment rate needs to be to decelerate inflation. Therefore, I don’t think they know what the economic growth should be slowed to achieve that. I’m just worried that they’re winging it here,” he said. 

Despite differences on the risk posed by inflation, some Republicans and U.N. economists agree that the previous period of extra-loose monetary policy over the last decade was excessive. 

“We had a real easy money policy for too long and asset prices got inflated, got a little overdone, and now as we’re normalizing interest rates, it’s going to tend to take some of the wind out,” Sen. Pat Toomey (R-Pa.) said in an interview. 

U.N. economists said much of the same thing in a statement released with Monday’s report. 

“In a decade of ultra-low interest rates, central banks consistently fell short of inflation targets and failed to generate healthier economic growth,” UNCTAD wrote. (UN warns of a global recession as countries race to lower inflation  | The Hill)

Pound Plunges Against Dollar

By, Jill Lawless And Danica Kirka

UK markets were in focus as the pound crashed to an all-time low and bond yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England on Monday, September 26th. The market mayhem unleashed by the government’s fiscal plan on Friday went into overdrive after the government pledged further tax cuts.

The Bank of England sought to reassure financial markets after the British pound touched an all-time low against the U.S. dollar, but its entreaty fell flat for investors concerned about a sweeping package of tax cuts that further jolted a faltering economy that the government’s plan was meant to prop up.

The central bank said it was “closely monitoring” the markets and would not hesitate to boost interest rates to curb inflation. Its statement came after the pound plunged as low as $1.0373, the lowest since the decimalization of the currency in 1971, on concerns that tax cuts announced Friday by Treasury chief Kwasi Kwarteng would swell government debt and fuel further inflation as the United Kingdom teeters toward recession.

The bank, which raised rates Thursday, said it would fully assess the government’s tax and spending commitments before it meets next in November and “will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term.”

Also Monday, the U.K. Treasury said it would set out a medium-term fiscal plan on Nov. 23, alongside an economic forecast by the independent Office for Budget Responsibility.

The statements did little to ease misgivings about the government’s economic policies, with the pound dropping from $1.0857 to $1.0664 after they were issued. The pound had rallied from the record low earlier in the day on expectations that the central bank might take action to stabilize the currency.

The weakening pound piles pressure on the new Conservative government, which has gambled that it can slash taxes to spur economic growth while at the same time borrowing billions of pounds to help consumers and businesses struggling with soaring energy costs. Many economists say it’s more likely to fuel already high inflation, push down the pound and drive up the cost of U.K. government borrowing — a potential perfect storm of economic headwinds.

Kwarteng has been criticized for failing to release any independent analysis of the plans when he announced the U.K.’s biggest tax cuts in 50 years.

The government plans to cut 45 billion pounds ($49 billion) in taxes at the same time as it spends more than 60 billion pounds to cap energy prices that are driving a cost-of-living crisis.

Kwarteng and Prime Minister Liz Truss, who replaced Boris Johnson as prime minister on Sept. 6, are betting that lower taxes and reduced bureaucracy eventually will generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.

Opposition Labour Party economy spokeswoman Rachel Reeves accused the government of “a return to trickle-down economics, an idea that has been tried, has been tested and has failed.”

“They are not gambling with their money — they are gambling with yours,” she told an audience at the party’s annual conference Monday.

The new and untested Truss also faces pressure from a nervous Conservative Party, which faces an election within two years.

Some Conservatives have welcomed the tax-cutting moves as a return to free-market values after years of state intervention in the economy during the coronavirus pandemic. But others worry it is unconservative for the government to rack up huge debts that taxpayers will eventually have to pay.

Monday’s turbulence follows a 3% fall in the pound Friday, the biggest one-day drop against the U.S. dollar since Johnson announced Britain’s first COVID-19 lockdown on March 18, 2020. Before that, the pound lost more than 10% of its value immediately after the U.K. voted to leave the European Union in June 2016 before rebounding.

The sense of a government losing control led some to compare current events with Sept. 16, 1992 — “Black Wednesday” — when a collapsing pound against the backdrop of high inflation forced the U.K. to crash out of the European Exchange Rate Mechanism, which was meant to stabilize exchange rates. It took the U.K. years to recover from the economic shock.

Kwarteng insisted the government was acting responsibly — and said there were more tax cuts to come.

“We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it is the British people that are going to drive this economy,” he told the BBC.

As it is cutting taxes, the government plans to cap electricity and natural gas prices for homes and businesses to help cushion price rises that have been triggered by Russia’s war in Ukraine and have sent inflation to a near 40-year high of 9.9%.

This program will cost 60 billion pounds, and the government will borrow to finance it, Kwarteng said Friday.

He said Sunday that it was the right policy because the government needed to help consumers squeezed by the unprecedented pressures caused by the war in Ukraine and the pandemic.

Britain can afford the cost because its debt as a percentage of gross domestic product is the second lowest among the Group of Seven large industrial economies, Kwarteng said. He said the government would announce a “medium-term fiscal plan” for reducing the nation’s debt in the coming months.

Rupee Nosedives As Dollar Continues To Gain

A hattrick of record low: The rupee plunged 54 paise to provisionally close at a new all-time low of 81.63 against the US dollar on Monday. It had ended at its lowest ever on both Thursday and Friday, making Monday’s deeper plunge the third successive record low levels in three sessions.

There’s panic: It has been created by the dollar index, which has witnessed strong buying as a strong hedge against interest rate hikes and inflation cycle. The downtrend may continue for the rupee until positive triggers are not witnessed from the inflation forefront, experts feel.

The main story: The dollar has become profitable as the US Fed is hiking rates to tame inflationary trends in its market. The dollar rally reflects the ‘flight-to-safety’ approach by investors. As a result the Asian markets have become riskier and are experiencing crisis-level stress again. Two most significant Asian currencies — the yen and the yuan — have been falling under the dollar’s assault. The US is hawkish, the Asians are dovish.

RBI has a job to do: Its monetary policy committee (MPC) is meeting this week and is expected to hike rates by 50 basis points. Market experts feel this could provide some respite to the rupee but it still may lie in the 80.50-81.50 range.

Pressure on forex: RBI has been holding the rupee for quite some time through rate hikes and by selling dollars from its foreign exchange reserves. But this meant that India’s foreign exchange reserves fell below $550 billion for the first time in nearly two years last week, which marked the seventh successive week of forex decline.

And shares? The 30-share BSE index tanked 953.70 points to settle at 57,145, recovering after plummeting 1,061 points during the day. The NSE Nifty fell 311.05 points to close at 17,016. In the last four sessions, the Sensex has lost about 2,575 points and the market capitalisation of the BSE-listed companies reduced by over Rs 13.3 lakh crore.  (Times Of India)

Biden’s Student Loan Forgiveness Plan To Cost $400 Billion

President Joe Biden’s plan to forgive $10,000 in federal student debt for most borrowers will cost the government about $400 billion, the nonpartisan Congressional Budget Office said in an estimate released Monday.

The CBO’s evaluation of the administration’s policy said the price tag is “a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022.”

The estimate applies to the plan Biden announced last month to forgive $10,000 in federal student loan debt for borrowers earning less than $125,000 and $20,000 for borrowers who received Pell Grants.

The Congressional Budget Office (CBO) said 43 million borrowers shared $1.6 trillion in federal student loan debt as of June 30. Under Biden’s plan, about $430 billion of that debt will be wiped out, the reporting shows.

The CBO also estimated the costs for the Biden administration’s recent renewal of the moratorium on federal student loan payments and interest accrual, which had been set to lapse at the end of August. The extension, which punts the deadline to the end of the year, was projected to cost $20 billion in the new report. 

As of the end of June, 43 million borrowers held $1.6 trillion in federal student loans and about $430 billion of that debt will be canceled, the CBO estimated. The White House, borrowing language from the CBO analysis, responded by focusing on the agency’s own assessment that its $400 billion estimate was “highly uncertain.”

“CBO called its own estimate ‘highly uncertain.’ We agree,'” the White House said in a memo. “By law, the federal budget computes the complete cost of student loan relief over the lifetime of the loans, and then records that cost in the year the loans are modified,” the memo continued. “But that’s not how this program will affect the bottom line in reality. The cost to the government is not the long-term score, but rather, the annual lost receipts.”

Biden’s Student Loan Forgiveness Plan To Cost $400 Billion

President Joe Biden’s plan to forgive $10,000 in federal student debt for most borrowers will cost the government about $400 billion, the nonpartisan Congressional Budget Office said in an estimate released Monday.

The CBO’s evaluation of the administration’s policy said the price tag is “a result of the action canceling up to $10,000 of debt issued on or before June 30, 2022.”

The estimate applies to the plan Biden announced last month to forgive $10,000 in federal student loan debt for borrowers earning less than $125,000 and $20,000 for borrowers who received Pell Grants.

The Congressional Budget Office (CBO) said 43 million borrowers shared $1.6 trillion in federal student loan debt as of June 30. Under Biden’s plan, about $430 billion of that debt will be wiped out, the reporting shows.

The CBO also estimated the costs for the Biden administration’s recent renewal of the moratorium on federal student loan payments and interest accrual, which had been set to lapse at the end of August. The extension, which punts the deadline to the end of the year, was projected to cost $20 billion in the new report.

As of the end of June, 43 million borrowers held $1.6 trillion in federal student loans and about $430 billion of that debt will be canceled, the CBO estimated. The White House, borrowing language from the CBO analysis, responded by focusing on the agency’s own assessment that its $400 billion estimate was “highly uncertain.”

“CBO called its own estimate ‘highly uncertain.’ We agree,'” the White House said in a memo. “By law, the federal budget computes the complete cost of student loan relief over the lifetime of the loans, and then records that cost in the year the loans are modified,” the memo continued. “But that’s not how this program will affect the bottom line in reality. The cost to the government is not the long-term score, but rather, the annual lost receipts.”

Rupee Nosedives As Dollar Continues To Gain

A hattrick of record low: The rupee plunged 54 paise to provisionally close at a new all-time low of 81.63 against the US dollar on Monday. It had ended at its lowest ever on both Thursday and Friday, making Monday’s deeper plunge the third successive record low levels in three sessions.

There’s panic: It has been created by the dollar index, which has witnessed strong buying as a strong hedge against interest rate hikes and inflation cycle. The downtrend may continue for the rupee until positive triggers are not witnessed from the inflation forefront, experts feel.

The main story: The dollar has become profitable as the US Fed is hiking rates to tame inflationary trends in its market. The dollar rally reflects the ‘flight-to-safety’ approach by investors. As a result the Asian markets have become riskier and are experiencing crisis-level stress again. Two most significant Asian currencies — the yen and the yuan — have been falling under the dollar’s assault. The US is hawkish, the Asians are dovish.

RBI has a job to do: Its monetary policy committee (MPC) is meeting this week and is expected to hike rates by 50 basis points. Market experts feel this could provide some respite to the rupee but it still may lie in the 80.50-81.50 range.

Pressure on forex: RBI has been holding the rupee for quite some time through rate hikes and by selling dollars from its foreign exchange reserves. But this meant that India’s foreign exchange reserves fell below $550 billion for the first time in nearly two years last week, which marked the seventh successive week of forex decline.

And shares? The 30-share BSE index tanked 953.70 points to settle at 57,145, recovering after plummeting 1,061 points during the day. The NSE Nifty fell 311.05 points to close at 17,016. In the last four sessions, the Sensex has lost about 2,575 points and the market capitalisation of the BSE-listed companies reduced by over Rs 13.3 lakh crore.  (Times Of India)

Pound Plunges Against Dollar

UK markets were in focus as the pound crashed to an all-time low and bond yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England on Monday, September 26th. The market mayhem unleashed by the government’s fiscal plan on Friday went into overdrive after the government pledged further tax cuts.

The Bank of England sought to reassure financial markets after the British pound touched an all-time low against the U.S. dollar, but its entreaty fell flat for investors concerned about a sweeping package of tax cuts that further jolted a faltering economy that the government’s plan was meant to prop up.

The central bank said it was “closely monitoring” the markets and would not hesitate to boost interest rates to curb inflation. Its statement came after the pound plunged as low as $1.0373, the lowest since the decimalization of the currency in 1971, on concerns that tax cuts announced Friday by Treasury chief Kwasi Kwarteng would swell government debt and fuel further inflation as the United Kingdom teeters toward recession.

The bank, which raised rates Thursday, said it would fully assess the government’s tax and spending commitments before it meets next in November and “will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term.”

Also Monday, the U.K. Treasury said it would set out a medium-term fiscal plan on Nov. 23, alongside an economic forecast by the independent Office for Budget Responsibility.

The statements did little to ease misgivings about the government’s economic policies, with the pound dropping from $1.0857 to $1.0664 after they were issued. The pound had rallied from the record low earlier in the day on expectations that the central bank might take action to stabilize the currency.

The weakening pound piles pressure on the new Conservative government, which has gambled that it can slash taxes to spur economic growth while at the same time borrowing billions of pounds to help consumers and businesses struggling with soaring energy costs. Many economists say it’s more likely to fuel already high inflation, push down the pound and drive up the cost of U.K. government borrowing — a potential perfect storm of economic headwinds.

Kwarteng has been criticized for failing to release any independent analysis of the plans when he announced the U.K.’s biggest tax cuts in 50 years.

The government plans to cut 45 billion pounds ($49 billion) in taxes at the same time as it spends more than 60 billion pounds to cap energy prices that are driving a cost-of-living crisis.

Kwarteng and Prime Minister Liz Truss, who replaced Boris Johnson as prime minister on Sept. 6, are betting that lower taxes and reduced bureaucracy eventually will generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.

Opposition Labour Party economy spokeswoman Rachel Reeves accused the government of “a return to trickle-down economics, an idea that has been tried, has been tested and has failed.”

“They are not gambling with their money — they are gambling with yours,” she told an audience at the party’s annual conference Monday.

The new and untested Truss also faces pressure from a nervous Conservative Party, which faces an election within two years.

Some Conservatives have welcomed the tax-cutting moves as a return to free-market values after years of state intervention in the economy during the coronavirus pandemic. But others worry it is unconservative for the government to rack up huge debts that taxpayers will eventually have to pay.

Monday’s turbulence follows a 3% fall in the pound Friday, the biggest one-day drop against the U.S. dollar since Johnson announced Britain’s first COVID-19 lockdown on March 18, 2020. Before that, the pound lost more than 10% of its value immediately after the U.K. voted to leave the European Union in June 2016 before rebounding.

The sense of a government losing control led some to compare current events with Sept. 16, 1992 — “Black Wednesday” — when a collapsing pound against the backdrop of high inflation forced the U.K. to crash out of the European Exchange Rate Mechanism, which was meant to stabilize exchange rates. It took the U.K. years to recover from the economic shock.

Kwarteng insisted the government was acting responsibly — and said there were more tax cuts to come.

“We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it is the British people that are going to drive this economy,” he told the BBC.

As it is cutting taxes, the government plans to cap electricity and natural gas prices for homes and businesses to help cushion price rises that have been triggered by Russia’s war in Ukraine and have sent inflation to a near 40-year high of 9.9%.

This program will cost 60 billion pounds, and the government will borrow to finance it, Kwarteng said Friday.

He said Sunday that it was the right policy because the government needed to help consumers squeezed by the unprecedented pressures caused by the war in Ukraine and the pandemic.

Britain can afford the cost because its debt as a percentage of gross domestic product is the second lowest among the Group of Seven large industrial economies, Kwarteng said. He said the government would announce a “medium-term fiscal plan” for reducing the nation’s debt in the coming months.

People Are Trying To Flee The Empire State For Warmer Destinations. Here’s Why.

New York has lost more residents than any other state, a new report by moveBuddha, a company that calculates moving cost, said.  New York, maybe the people don’t quite love you anymore.

According to a new report by moveBuddha, a site where people can calculate their moving costs, New York lost more residents than any other state between April 1, 2020 and July 1, 2021, according to the U.S. Census Bureau population estimates.

Over that period, the state lost 319,020 people. New York state’s population as of 2020 was 20.2 million, according to the Census Bureau.

The report also used data collected from users looking for moving options on moveBuddha’s website between January 1, 2022 and August 5, 2022.  There were around 282,000 queries during this period.

New York is the fourth most-searched state to move out of this year, the company added. That’s behind New Jersey, California, and Illinois.

People are leaving for reasons that include unemployment or underemployment, skyrocketing rents, high cost of living, and high taxes, as compared to other states, moveBuddha said in the study.

People also appear to be leaving the Empire State for warmer pastures. New York to Los Angeles was the most popular search on moveBuddha. About 20% of New Yorkers looking to move were planning to head to Florida, followed by California, and Texas.

Of course, some parts of New York City are still hot. Rising rents and increasing pressure for workers to be in the office is driving demand for apartments in the city.

There’s also evidence that some people who left New York City earlier in the pandemic are coming back. And some are ready to spend on real estate. ‘Out of towners’ returning to New York (many of whom are actually returning former residents) have an average maximum housing budget of $1.3 million, while locals have budgeted an average maximum of $998, 011 for a home purchase, a recent Redfin report found.

But moveBuddha says that neighborhoods in Queens, the Bronx and Brooklyn all have more folks looking to leave, rather than move in, this year.

The report also found that four of the top 10 counties that saw a population decline between the same time period are in New York City: New York County (i.e. Manhattan), Kings County (i.e. Brooklyn), Bronx County, and Queens County.

Based on users searching on the moveBuddha site, the number of moves-out outnumbered the number of moves-in Jamaica, N.Y., Bronx, N.Y. and Staten Island, N.Y. the fastest.

In other words, for every 100 people moving out of Jamaica, only 27 people moved in. In the Bronx, that number was 36, and in Staten Island, 27.

The most popular city of origin for people moving to New York was San Francisco, moveBuddha added.

Nonetheless, there have been some gains for the Empire State: moveBuddha saw a lot more people moving in than out into Webster, N.Y., Ithaca, N.Y., and Fairport, N.Y.

The typical home price in Webster and in Fairport, or otherwise together known as Rochester, N.Y., was around $218,000, according to Zillow’s Home Value Index. Home values are up 11.2% from the previous year.

In Ithaca, a college town, the typical home is roughly $302,000, according to Zillow. Homes have grown in value by 21.3% from last year.

Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at [email protected]

World Could Face Recession Next Year: World Bank Report

The world could face a recession next year amid simultaneous tightening of monetary policy by central banks around the world, the World Bank has said in a new report that called for boosting production and removing supply bottlenecks to ease inflation. Several indicators of global recessions are already “flashing signs”, the report said. The global economy is now in its steepest slowdown following a post-recession recovery since 1970, it added.

Global interest rate hikes by central banks could reach 4%, double that in 2021, just to keep core inflation — which strips out volatile items such as food and fuel — at 5% levels, the bank said.

From the US to Europe and India, countries are aggressively raising lending rates, which aim to curb the supply of cheap money and thereby help bring down inflation. But such monetary tightening has costs. It dampens investment, costs jobs, and suppresses growth, a trade-off faced by most nations, including India.

“Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies,” World Bank president David Malpass said in a statement after the report was released on Thursday.

The world is facing record inflation due to factors including the Ukraine war that has dwindled food supplies, knock-on effects of the pandemic on supply chains, poor demand in China due to its persistent Covid lockdowns, and extreme weather that has upended forecasts of agricultural output.

The Reserve Bank of India (RBI) announced a third repo rate hike to 5.40% in August, up 50 basis points. A basis point is one-hundredth of a percentage point. The RBI maintained its inflation estimate at 6.7% for 2022-23 while forecasting real (inflation-adjusted) GDP growth at 7.2%.

Repel The Recession With These 5 Tips

It doesn’t hurt your bottom line to take a step back and self-evaluate. Learn how you’ll be able to repel the recession with these 5 tips.

While the professional pundits debate when or if an economic recession is imminent, it may be a good idea to ensure you’re prepared, nonetheless. It doesn’t hurt your bottom line to take a step back and self-evaluate. Learn how you’ll be able to repel the recession with these 5 tips.

Live Your Life Within Your Means

Many of you may already live your everyday lives with this money-management strategy and if you do, then you’re ahead of the curve. But let’s be honest, we all know people who do not live within their means. Saying ‘no’ when deciding on an unneeded purchase is a skill that sometimes needs to be learned.

It’s important to carefully weigh all decisions about money, especially if a recession is looming. Don’t get caught in the trap of thinking the recession may not last long. The more conscious you are about spending habits, the more you can avoid going into debt with credit cards and loans. It’s better to save now and put off making big purchases, then to build up your debt and struggle to get out from under it later in life. Speaking of saving…

Look For Ways to Save

It’s always a good idea to audit your own finances. Most people are aware of their paycheck, but they are often fuzzy about the money that leaves their account. Re-evaluate your monthly subscriptions. Do you need every single streaming service? How often do you make coffee runs to your local café? It might be time to brew a cup from home.

Divide your monthly expenses into wants and needs. Make sure you’re not overpaying for those wants. Cut down on the trips to the restaurants. If you had any planned vacations or renovations, it might be in your best interest to postpone. Perhaps we learned all those money-saving tricks during the 2020 quarantine for a reason. It might be time to revisit those lessons.

Have an Emergency Fund

You may call it a rainy-day fund. If so, the skies are getting cloudy. If you haven’t already put money aside in a secured FDIC account for emergencies, it may be time to start. In the event of a lost job or your forced to take a pay cut, you want the flexibility to cover expenses while you engage in a plan of action. This fund is designed for necessary expenses. Be diligent with how you use the money. Again, you don’t know how long a potential recession could last.

Obtain Additional Income

A smart tactic — and one that’s been popularized in recent years — is finding other streams of revenue outside of your job. We live in a gig economy and the skills you’ve honed at your current employer may prove valuable in a consulting capacity. You could replace any lost income from a job loss or salary reduction by uncovering potential freelancing opportunities in your specialty. It doesn’t hurt to add more skills to your resume. The more you know how to do, the more attractive you become to your current or future employer.

Anticipate the Worst

No one expects to lose their job, but don’t be unprepared if it happens. It would be appropriate for you to consider your options in the event of the unthinkable. Update your resume. Update your LinkedIn profile. All those professional relationships you developed, both online and in-person, could become leads to new positions. Prepare for the worst, expect the best.

(Courtesy: https://barnumfinancialgroup.com/repel-the-recession-with-these-5-tips/)

McKinsey CEO, Bob Sternfels Calls It India’s Century

McKinsey & Co CEO Bob Sternfels has said, it will not just be India’s decade, but India’s century, with all key components in place – a big working inhabitants, multinational corporations reimagining world provide chains, and a rustic leapfrogging at digital scale-to obtain one thing particular not only for the Indian financial system, however probably for the world.

“Many individuals have stated that it is India’s decade. I truly assume it is India’s century once we have a look at a few of the uncooked components right here. India is the longer term expertise manufacturing unit for the world. By 2047, India would have 20 per cent of the world’s working inhabitants,” Sternfels said in an interview with Economic Times.

According to him, India would be the world’s future expertise manufacturing unit as it should have 20 per cent of the globe’s working inhabitants by 2047. “India has leapfrogged on the digital scale. All these are the uncooked supplies to do one thing particular for not solely the Indian financial system however probably for the world,” he added.

McKinsey plans a “disproportionate commitment” to India and that’s why its global board will be coming to the country in December.  The firm has 5,000 people in India, a number he wants to double to 10,000.

Sternfels also spoke about the current scandals which have hit McKinsey, the state of the worldwide financial system, inflation woes and deglobalisation.

Reacting to a question regarding what the CEOs are telling concerning the state of their corporations, Sternfels said, “One of many issues that I did over the previous 12 months was get out and speak to purchasers, and I’ve talked to over 500 of our CEOs within the final 12 months.

“CEOs now wish to play offence and protection on the similar time. So defensive measures… shore up the steadiness sheet, enhance effectivity, and make sure the firm can face up to shocks. They’re additionally saying, my steadiness sheet is more healthy than it was in both of these downturns. And I wish to truly take two or three large strategic bets in order that I can come out on prime,” he added.

Mukesh Ambani Plans Next-Gen Leadership At Reliance Industries

Mukesh Ambani, Chairman and Managing Director of RIL, laid emphasis on Next-Gen leadership roles while he will continue to provide hands-on leadership. The 45th annual general meeting of Reliance Industries Limited (RIL) has set the stage for Next-Gen leadership.

Akash and Isha Ambani have assumed leadership roles in Jio and Retail, respectively, while Anant has joined New Energy business. They are part of a young team of leaders and professionals mentored by senior leaders, Mukesh Ambani outlined.

Mukesh Ambani will continue to provide hands-on leadership and along with existing leaders and Board of Directors, will work towards making Reliance more robust, resilient and truly future-ready.

Strengthening institutional underpinning for Reliance by enriching Reliance’s leadership capital and institutional culture along with a robust governance system to ensure accountability at all levels was another emphasis area at the AGM.

Creating robust architecture for tomorrow’s Reliance to ensure that it remains a united, well-integrated and secure institution even as it develops existing businesses and adds new growth engines, Ambani outlined.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, “A highlight of the AGM was Mukesh Ambani’s emphasis on succession planning. He concluded his address by seeking everyone’s blessings for the Gen Next taking over the reins confidently.

“With Akash heading Jio, Isha heading Retail and Anant heading Energy, the plans are clearly spelt out. Mukesh Ambani’s promise to double the value of the company by 2027 is reassuring. His commitment to India and faith in the India growth story remains as strong as ever.” (IANS)

Thousands Of Yellow Cab Owner-Drivers To See Debt Relief They Won After 45-Day Camp Out And 15-Day Hunger Strike

(New York, NY) Thousands of yellow cab medallion owner-drivers will finally begin to see the debt relief they won after NYTWA members held a 45-day camp out and 15-day hunger strike last November, as City Hall announced today that the program to provide a city-backed guarantee on restructured loans will be operational starting September 19th.

Under the program, loans that are reduced by medallion lenders to no more than $200,000 will receive a $30,000 grant and the remaining balance will be guaranteed by the city in case of default.

The average debt is currently $550,000 with average monthly payments at $3,000. Under the final program, the new loan term for thousands will be $170,000 payable at $1,234 per month.

The final program reflects an increase in interest agreed upon in November 2021 from 5% to 7.3% as rates have gone up due to inflation; and a longer term of 25 years from 20 years to help drivers offset some of that cost.

The loan will be secured by a city-backed guarantee, relieving thousands of drivers from the fear of losing their homes or thousands of dollars in case of default.

Marblegate Assets, the largest holder of loans, is ready to begin restructurings on September 19th – bringing immediate relief to the largest segment of owner-driver borrowers.

The City’s program is for all lenders and all eligible medallion owners (medallion owners who do not own more than 5 medallions.) Other lenders representing hundreds more loans are expected to also participate.

NYTWA Executive Director Bhairavi Desai said: “We are finally at the starting line of a new life for thousands of drivers and our families. The city-backed guarantee is a ground-breaking program that will save and change lives. We are thankful to City Hall, the TLC, the Mayor’s Office of Management and Budget, the Law Department, and to Marblegate for burning the midnight oil to set up this historic program to address the crisis of debt across the industry. As we collectively work to end this crisis and hit re-start, we look forward to working with all lenders. I congratulate all of our union members who chose to organize, and not despair, and won back their lives. Against the darkness of a crushing debt, their courage remained the light, and today, the triumph is fully theirs.”

BACKGROUND:

Since City Hall agreed to a city-backed guarantee in November 2021, the Adams administration’s TLC, Office of Management and Budget and Law Department have been working to make the program operational. The City negotiated program terms and documents with Marblegate Assets, the largest medallion loan holder, and NYTWA.

NYTWA members voted unanimously to give their sign-off at the end of negotiations.

The new terms for drivers means:

  • No personal guarantee in case of default
  • No Confession of Judgment; COJ are pre-signed documents by the borrower accepting responsibility in case of default and waving their right to a hearing. Lenders would be empowered to skip the court process including a trial to receive a judgment that could then be collected on immediately; including going after people’s homes as the COJ would be combined with a personal guarantee.
  • No balloon payments; Balloon payments meant that the lender could demand the full balance on a loan at the end of a balloon which would typically be every 3 or 5 years. Owner-drivers would be forced to agree to any new terms, including high interest rates, the lender would demand at the end of the balloon.
  • No pre-payment penalty in case a borrower wants to pay off the loan earlier

 

Click here to see our statement on November 3, 2021 when the agreement was first reached

India Ranks Seventh In Digital Currency Ownership Worldwide: UN

The United Nations announced that the Covid-19 pandemic has caused an unprecedented rise in According to a report by the United Nations Conference on Trade and Development (UNCTAD), around 7.3 percent of Indians owned some form of digital currency in 2021. This highlights that over the last couple of years, digital assets have surged to popularity among the Indian populace amounting to over 100 million crypto holders.

Cryptocurrency use worldwide has risen, with India moving up to the seventh-highest position in terms of ownership. The UN noted that 7.3 percent of Indians possessed assets in the form of digital currency as of 2021. According to data from 2021, developing nations made up 15 of the top 20 economies in terms of the percentage of the total population that owns cryptocurrency. The statistics for other nations were also provided by UNCTAD (United Nations Conference on Trade and Development).

The report also states that 15 of the top 20 nations in terms of digital currency ownership were developing countries, with India ranking 7th, one position behind the US. Pakistan also made it to the list coming in 15th while the UK and Australia occupied the 13th and 20th positions respectively. Topping the list was Ukraine, with 12.7 percent of its population holding crypto assets.

As per the UNCTAD report, the crypto ecosystem ballooned by over 2,300 percent between September 2019 and June 2021. However, Indian investors have grown sceptical of these digital assets, with regulatory bodies coming down hard on cryptocurrencies.

While buying and selling crypto assets is not illegal, profits from the same are being treated as winnings from gambling, and the income from the transfer of virtual assets is being taxed at 30 percent. On top of this, there is also one percent TDS deduction on all transactions.

Earlier this year, crypto exchanges in the country were also forced to halt UPI payments due to uncertainty from regulatory bodies. This made it harder to acquire digital assets. Such uncertainties are also driving crypto firms to set up bases elsewhere, with several projects looking to countries like Dubai as a hub for digital asset operations.

Billionaires Grow, India Shrinks: Triumph Of Crony Capitalism

Around two months ago, India’s fastest growing businessman remarked that if India became a USD 30-trillion-economy by 2050, no one would go to bed on an empty stomach.

While speaking at a conclave, Gautam Adani said, “We are around 10,000 days away from the year 2050. Over this period, I anticipate we’ll add about USD 25 trillion to our economy. This translates to an addition of USD 2.5 billion to the GDP every day. I also anticipate that over this period, we’ll have eradicated all forms of poverty.”

He anticipated that the stock markets would add about USD 40 trillion in market capitalisation, which translated to an addition of USD 4 billion every day until 2050. “Uplifting the lives of 1.4 billion may feel like a marathon in the short run, but it’s a sprint in the long run,” concluded Adani.

Well, those who attended the conclave would have actually felt that the person, who is now a frontrunner for the richest person in the world, also thinks of the poor. We can only wish that India’s growth story could also lead to the growth of each and every fellow citizen. However, it all seems to be a figment of the imagination!

Incidentally, the industrialist, who runs a slew of businesses from airports to ports to power generation to distribution to cement manufacturing to infrastructure development, has added USD 49 billion to his wealth in 2021! The figure is much higher than the world’s two richest persons – Elon Musk and Jeff Bezos – at that time. Jeff Bezos has moved to the third position recently.

In fact, during 2020 when the entire world came to a standstill due to the pandemic, Adani’s wealth grew at a much higher speed than the coronavirus! Immediately before the onset of the pandemic, he bought a lavish bungalow at one of the posh localities of the national capital. Unlike Ambani’s Antilia, not much has been written about his bungalow. However, the land size is much bigger than that of Ambani, if reports are to be believed.

In the month of February, Adani overtook Ambani to become Asia’s richest person. His net worth stood at USD 88.5 billion at that time. In a matter of five months, it stands at USD 115.5 billion! Be that as it may, his growth rate is certainly exponential!

Of late, Forbes has placed him at the fourth place in the list of world’s richest people. Incidentally, he just crossed Bill Gates, who has been donating his wealth to charity and who wishes to be kicked off this list.

Let us see how India’s economy fared during the last two years. The continuous lockdown in the year 2020 followed by the second wave in a few months from the unlock phase, had jolted the Indian economy. Despite this, we are termed as the fastest growing country. However, there is a caveat to this statement.

The combined fiscal deficit of the Centre and the states is more than 10 percent of the Gross Domestic Product. It only means that the government had to print more money to keep the machinery called the Indian economy going. It is an established fact that growth at the cost of fiscal consolidation is not a good practice.

We saw a similar trend in the pre-liberalisation period. In fact, India has registered a growth rate of 5.3 percent in the 1980s. However, high fiscal deficit had brought the country on the verge of bankruptcy. High fiscal deficit increases the current account deficit leading to inflation and exhaustion of foreign reserves.

During 2020-21, the Centre had a fiscal deficit of 9.6 percent, understandably to combat the emergency posed by the Covid-19 pandemic. The economic slowdown had impacted the revenue. The government had no option but to print more money. The deficit was reduced to 6.9 percent in 2021-22. The finance minister has projected it to be at 6.4 percent, which is at a higher end.

Of late, a lot is being talked about global recession in view of the Russia-Ukraine war. Experts in our country have been maintaining a stand that the Indian economy is strong enough to bear this jolt. At least the economic facts do not validate such statements.

One, foreign investors have been exiting the Indian market. Resultantly, the current value of the Rupee has gone down considerably. The exchange value of the dollar has touched Rs. 80. Generally, recession is tackled by printing more money, which means higher fiscal deficit. In the current scenario, where fiscal deficit is already high, it will be suicidal to increase it to the levels of the covid year.

A government which believes in populism will find it tempting to print more money for political reasons, a move which may not gel well with the foreign investors. The rupee may further plunge, giving way to inflation, making people at the bottom of the pyramid more vulnerable.

While people like Adani may continue to make wealth, the poor will become poorer day by day. The last few years beginning with demonetisation, imposition of GST, the sudden economic closure due to the pandemic, have affected the poor badly. The ongoing war between Russia and Ukraine has triggered retail inflation. Items of daily use have become expensive. Fuel prices have touched new heights.

On the top of it, the government’s decision to levy taxes on essential items will only make their life miserable. If one looks at the latest unemployment data released by the Centre for Monitoring Indian Economy (CMIE), it has shot up to 7.8 percent in June, with a loss of 13 million jobs, mainly in the agriculture sector. Not only this, 2.5 million people lost jobs amongst the salaried employees.

The government reduced the demand for armed personnel of late by announcing a new scheme. The job opportunities in the private equity-funded market have also started reducing. The situation is all-the-more worrying. High inflation coupled with reducing income levels, will only add more people to below the poverty line, increasing the pressure on government-funded schemes like the national food security act (NFSA), NREGA etc.

This only means more fiscal deficit, malnutrition, impacting the lives of children, women and the elderly. The youth who is left with no avenues to earn a livelihood, is more likely to contribute to social evils like drug addiction, crime etc. Uneducated, unskilled, unemployable youth will only add on to the economic burden. Unlike Japan, India will not be able to leverage this period when the young population is higher than ageing ones.

A report from the international food policy research (IFPRI) published a few days ago should set the alarm bells ringing. The institute has estimated that India’s food production is likely to reduce by 16 percent due to climate change. We have already witnessed the plunge in wheat production this year forcing us to stop exports. The quantity of wheat being distributed through the public distribution systems under schemes like NFSA have also been reduced. At many places, wheat has been completely replaced by rice and other cereals.

In view of the current circumstances, the IFPRI has also estimated that the number of people at risk for hunger is expected to increase by 23 percent. In fact, 73.9 million people are expected to be at risk in 2030. The report says that if the effect of climate change is factored in, the number is likely to increase to 90.6 million people in India coupled with reduction in food production. Globally, the production may increase considerably by 2050 but unfortunately people affected by hunger are expected to increase by 500 million people!

One can easily imagine how defective government policies, where the rich are favoured at the cost of the poor, will make the poor poorer year on year. It is because of this reason that India’s growth story has not been able to transform the lives of the marginalised and the underserved.

When it comes to the poor, the government looks at them from the lens of potential voters not as growth catalysts. The likes of Nirav Modi, Vijaya Mallya etc. enjoy the clout to exploit the system to their favour while the common man struggles to get a loan approved for setting up his enterprise.

As far as Adani’s statement is concerned, it certainly speaks about a world that seems to be Utopian. We can only imagine a world where no one sleeps with an empty stomach. It can only happen if the government does a serious introspection, introduces taxes to regulate the unquestioned growth of a few and invests the money for the benefit of the poor, something on the lines of Thomas Pikkety’s world as presented in his book “Capitalism in 21st Century”.

As of now “Sabka saath, Sabka vikas, Sabka vishwas” is a mere slogan, aimed at winning votes of the people not their hearts. We are set to see the rise of Adanis and Ambanis but not of the poor, who will remain trapped in the inter-generational cycle of poverty.

US House Panel Advances Prior Authorization Relief Bill For Seniors

Newswise — The House Ways and Means Committee has voted unanimously to advance the Improving Seniors’ Timely Access to Care Act of 2022 (H.R. 8487), positioning the bill for passage in Congress possibly this fall. The bill would reform prior authorization under the Medicare Advantage program to help ensure America’s seniors get the care they need when they need it.

Support for this commonsense legislation is overwhelming. The bill has more than 330 cosponsors in the House and Senate, and has been endorsed by more 500 organizations, including the American Academy of Ophthalmology, and more 30 additional ophthalmic subspecialty and state societies.

recent report from the U.S. Department of Health and Human Services Office of Inspector General underscored the need for reform, finding that Medicare Advantage plans have denied prior authorization requests that met Medicare coverage rules.

The bill was introduced by Reps. Suzan DelBene (D-WA), Mike Kelly (R-PA), Ami Bera, MD, (D-CA), and Larry Bucshon, MD, (R-IN). If enacted, the Improving Seniors’ Timely Access to Care Act would streamline and standardize prior authorization in the Medicare Advantage (MA) program, providing much-needed oversight and transparency while protecting beneficiaries from unnecessary care delays and denials. The legislation would improve prior authorization in MA plans by:

Establishing an electronic prior authorization (ePA) program;

Standardizing and streamlining the prior authorization process for routinely approved services, including establishing a list of services eligible for real-time prior authorization decisions;

Ensuring prior authorization requests are reviewed by qualified medical personnel; and

Increasing transparency around MA prior authorization requirements and their use.

This bill has been years in the making. The Academy is a founding member of the Regulatory Relief Coalition, a group of sixteen national physician specialty and two allied organizations advocating for a reduction in Medicare program regulatory burdens to protect patients’ timely access to care and allow physicians to spend more time with their patients. We thank the bill’s sponsors, as well as the chair and ranking member of House Ways and Means Committee, Reps. Richie Neal (D-MA) and Kevin Brady (R-TX).

“We believe this bill will help remove some of the unnecessary red tape that overburdens our healthcare system and prevents us from providing the care America’s seniors need when they need it,” said David Glasser, MD, the Academy’s secretary for Federal Affairs. “We’re confident that when this bill comes to the House floor, Congress will agree with these commonsense reforms.”

How To Understand Mixed Signals From US Economy

(AP) — The U.S. economy is caught in an awkward, painful place. A confusing one, too. Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers are still spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs each month.

In the midst of it all, prices have accelerated to four-decade highs, and the Federal Reserve is desperately trying to douse the inflationary flames with higher interest rates. That’s making borrowing more expensive for households and businesses.

The Fed hopes to pull off the triple axel of central banking: Slow the economy just enough to curb inflation without causing a recession. Many economists doubt the Fed can manage that feat, a so-called soft landing.

Surging inflation is most often a side effect of a red-hot economy, not the current tepid pace of growth. Today’s economic moment conjures dark memories of the 1970s, when scorching inflation co-existed, in a kind of toxic brew, with slow growth. It hatched an ugly new term: stagflation.

The United States isn’t there yet. Though growth appears to be faltering, the job market still looks quite strong. And consumers, whose spending accounts for nearly 70% of economic output, are still spending, though at a slower pace.

So the Fed and economic forecasters are stuck in uncharted territory. They have no experience analyzing the economic damage from a global pandemic. The results so far have been humbling. They failed to anticipate the economy’s blazing recovery from the 2020 recession — or the raging inflation it unleashed.

Even after inflation accelerated in spring of last year, Fed Chair Jerome Powell and many other forecasters downplayed the price surge as merely a “transitory” consequence of supply bottlenecks that would fade soon. It didn’t.

Now the central bank is playing catch-up. It’s raised its benchmark short-term interest rate three times since March. Last month, the Fed increased its rate by three-quarters of a percentage point, its biggest hike since 1994. The Fed’s policymaking committee is expected to announce another three-quarter-point hike Wednesday.

Economists now worry that the Fed, having underestimated inflation, will overreact and drive rates ever higher, imperiling the economy. They caution the Fed against tightening credit too aggressively.

“We don’t think a sledgehammer is necessary,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said this week.

Here’s a look at the economic vital signs that are sending frustratingly mixed signals to policymakers, businesses and forecasters:

THE OVERALL ECONOMY

As measured by the nation’s gross domestic product — the broadest gauge of output — the economy has looked positively sickly so far this year. And steadily higher borrowing rates, engineered by the Fed, threaten to make things worse.

“Recession is likely,” said Vincent Reinhart, a former Fed economist who is now chief economist at Dreyfus and Mellon.

After growing at a 37-year high 5.7% last year, the economy shrank at a 1.6% annual pace from January through March. For the April-June quarter, forecasters surveyed by the data firm FactSet estimate that growth equaled a scant 0.95% annual rate from April through June. (The government will issue its first estimate of April-June growth on Thursday.)

Some economists foresee another economic contraction for the second quarter. If that happened, it would further escalate recession fears. One informal definition of recession is two straight quarters of declining GDP. Yet that definition isn’t the one that counts.

The most widely accepted authority is the National Bureau of Economic Research, whose Business Cycle Dating Committee assesses a wide range of factors before declaring the death of an economic expansion and the birth of a recession. It defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

In any case, the economic drop in the January-March quarter looked worse than it actually was. It was caused by factors that don’t mirror the economy’s underlying health: A widening trade deficit, reflecting consumers’ robust appetite for imports, shaved 3.2 percentage points off first-quarter growth. A post-holiday-season drop in company inventories subtracted an additional 0.4 percentage point.

Consumer spending, measured at a modest 1.8% annual rate from January through March, is still growing. Americans are losing confidence, though: Their assessment of economic conditions six months from now has reached its lowest point since 2013 in June, according to the Conference Board, a research group.

INFLATION

What’s agitating consumers is no secret: They’re reeling from painful prices at gasoline stations, grocery stores and auto dealerships.

The Labor Department’s consumer price index skyrocketed 9.1% in June from a year earlier, a pace not seen since 1981. The price of gasoline has jumped 61% over the past year, airfares 34%, eggs 33%.

And despite widespread pay raises, prices are surging faster than wages. In June, average hourly earnings slid 3.6% from a year earlier adjusting for inflation, the 15th straight monthly drop from a year earlier.

And on Monday, Walmart, the nation’s largest retailer, lowered its profit outlook, saying that higher gas and food prices were forcing shoppers to spend less on many discretionary items, like new clothing.

The price spikes have been ignited by a combination of brisk consumer demand and global shortages of factory parts, food, energy and labor. And so the Fed is now aggressively raising rates.

“There is a risk of overdoing it,” warned Ellen Gaske, an economist at PGIM Fixed Income. “Because inflation is so bad right now, they are focused on the here and now of each monthly CPI report. The latest one showed no letup.’’

Despite inflation, rate hikes and declining consumer confidence, one thing has remained solid: The job market, the most crucial pillar of the economy. Employers added a record 6.7 million jobs last year. And so far this year, they’re adding an average of 457,000 more each month.

The unemployment rate, at 3.6% for four straight months, is near a half-century low. Employers have posted at least 11 million job openings for six consecutive months. The government says there are two job openings, on average, for every unemployed American, the highest such ratio on record.

Job security and the opportunity to advance to better positions are providing the confidence and financial wherewithal for Americans to spend and keep the job machine churning. (Courtesy: Associated Press)

Slowdown In Home Prices Broke Record In June

Annual home price growth dropped by nearly 2 percentage points in June, the largest single-month slowdown on record, according to new research.

Black Knight, a real estate software and analytics company that has been tracking the metric since the early 1970s, found that annual home price growth fell from
19.3 percent in May to 17.3 percent in June as the Federal Reserve continued hiking interest rates to cool off demand.

  • Existing home sales have fallen for five consecutive months as record prices and those higher interest rates drive more Americans out of the market. Black Knight’s analysis found that seasonally adjusted home sales were down by more than 21 percent since the start of the year.
  • Slowing sales have led to recent inventory increases, according to Black Knight, but nationally, the United States still faces a shortage of 716,000 home listings. The company estimates it would take more than a year for inventory levels to fully normalize even with record increases.

“While this was the sharpest cooling on record nationally, we’d need six more months of this kind of deceleration for price growth to return to long-run averages,” said Ben Graboske, the president of Black Knight’s data and analytics division. (The Hill)

When Will The Indian Rupee Stop Falling?

The Indian Rupee breached the psychological 80-mark for the first time against the US dollar on Tuesday, July 18th, declining to 80.06 per Dollar. The Reserve Bank of India intervened in the currency market to help the Rupee steady after hitting seven straight intraday record lows. A recovery in domestic shares also favored the Indian currency.

According analysts, a wobbly global macroeconomic environment marked by a spell of monetary tightening unleashed, firstly, by the Federal Reserve and being mimicked in earnest by the major central bank governors across the globe has led to an exodus of hot money from developing economies to the “safe haven” of the Dollar. The scenario is compounded further by record-breaking crude oil prices, which balloon India’s imports, diminish the cumulative value of India’s exports and widen our trade deficit.

It is a regular demand-supply market. Currently, there is a greater demand for Dollars than there is for the Rupee. Two factors have pushed demand — India’s current account deficit has sharply widened particularly after Russia invaded Ukraine, and investment in the Indian economy has fallen due to heavy flight of funds in recent months.

Depreciation of the Rupee makes imported items — including petrol and mobile phones — and gives India’s export a competitive edge. But India is a net importer. For those eyeing a trip abroad, earlier budgets on food, boarding, and transportation will now fall short – leaving one with the option to either expand their budgets or opt for countries where the rupee commands a stronger position compared to their domestic currencies.

The dollar has been appreciating against all currencies including the Euro. Market watchers, in fact, say that the Rupee has fared better compared to other currencies including the Euro.

In FY’22, as per the provisional figures released by the Reserve Bank of India (RBI), India’s current account deficit widened to $38.7 billion from a surplus of $23.9 billion in the previous FY. 

A widening current account deficit indicates that Indians have been converting more of their rupees into dollars to complete trade and investment transactions consequently spiking up the demand for dollars. It doesn’t help that foreign institutional investors (FIIs) have been dumping Indian equities after a strong bullish spell, and making a beeline for US treasury notes and bonds.

The RBI has intervened by selling Dollars to check the Rupee’s slide. Else, the free market would have seen a further weaker Rupee. The current exchange market scenarios suggest that the rupee’s fall may continue for a few more months, breaching even the 82-mark. Congress leader Shashi Tharoor took a dig at the Rupee’s slide saying a “strong government” is “giving us a weaker Rupee”.

US Dollar Gains Are Boon To Americans Traveling Abroad

The surging value of the U.S. dollar in recent weeks is a boon to the American traveler, who will get more bang for their buck overseas despite surging inflation at home.  

But a strong American currency could limit international visitors to the U.S., where tourism firms are still licking their wounds from the height of the pandemic.  

The dollar recently hit parity with the euro for the first time in two decades, making trips to Europe 10 to 15 percent less expensive for Americans than at the same time last year.  

The dollar is also soaring in destinations like Thailand, India and South Korea — countries with ample tourism interest from Americans and relatively weaker economic growth than the U.S. 

“With the rising cost of travel, the strong U.S. dollar is a net positive amidst all the disruption in the industry,” said Erika Richter, vice president of communications at the American Society of Travel Advisors.  Richter noted that Americans are spending 11 percent more on travel compared to 2019. 

The idea of a strong dollar might seem like a farce to Americans after annual inflation hit 9.1 percent in June and the price of gas and food rose far faster. But the dollar has still become more valuable abroad even as it yields less in goods and services at home. 

Demand for the U.S. dollar in other countries has skyrocketed amid concerns about a global recession caused by high inflation, the war in Ukraine and lingering COVID-19 supply shocks.  

While the U.S. is not immune from those threats, the economy has held up far stronger than other nations, making its currency more valuable abroad. The dollar is also used as the world’s reserve currency, meaning foreign individuals and companies will often boost their holdings and conduct transactions in dollars to protect themselves from financial shocks. 

The strength of the U.S. economy has allowed the Federal Reserve to boost interest rates at a much faster pace. That makes the U.S. dollar more expensive to acquire — and more valuable in other countries. 

“A stronger dollar benefits American households directly if they want to travel to Europe, as the relative cost of everything is cheaper. It also makes imports cheaper for American households and businesses,” explained Angel Talavera, head of European economics at Oxford Economics. 

Half of American travelers say high prices kept them from traveling in June, up 8 percentage points from the previous month, according to a recent survey from Destination Analysts. 

But favorable exchange rates blunt the impact of inflation, which has risen at similar rates to the U.S. in Europe. Expedia data found that searches for summer trips to popular European destinations such as Paris, Frankfurt, Brussels, Amsterdam and Dublin rose by double digits last week. Copenhagen, Athens and Madrid saw similar increases in lodging interest, according to Hotels.com. 

“The U.S. has never really developed its tourism infrastructure the way Europe has, so a lot of our inventory sold out months ago,” said Leslie Overton, an advisor at travel firm Fora. “While I’m not saying either is cheap, Europe might be considered more competitive than some of the higher end product here in the U.S. right now.” 

One dollar buys roughly 15 percent more than it did one year ago in the 19 European countries that use the euro. The dollar is trading at its highest ever level against India’s rupee and Thailand’s baht. The Mexican peso and Canadian dollar have remained mostly flat.  

But currency fluctuations won’t help much with soaring airfares. While domestic airfare is 13 percent higher than pre-pandemic levels, international flights are 22 percent pricier, according to data from travel firm Hopper. 

Those traveling to parts of Europe face a heightened risk of delays or cancellations.  London’s Heathrow Airport on Wednesday asked airlines to stop selling summer tickets after staffing shortages forced the airport to delay roughly half of its flights this month. The Netherlands’ largest airport is similarly making large cuts to its flight schedules, driving up prices.  

Conversely, the strength of the dollar will make trips to the U.S. far more expensive for many international travelers, potentially weakening the U.S. tourism industry as it aims to claw back some of the millions of jobs lost during the pandemic.  

A stronger U.S. dollar also boosts pressure on global economies to raise their own interest rates to keep up, a force that raises the risk of a severe global recession that could bounce back to the U.S. in dangerous ways. 

The U.S. welcomed 22.1 million inbound travelers in 2021 — down 79 percent from 2019 — amid COVID-19 travel restrictions that lasted throughout most of the year, according to the International Trade Administration. The agency found that the lack of tourism in the U.S. in the first year of the pandemic accounted for 56 percent of the nation’s gross domestic product decline.

The Million Missing Workers Could Solve America’s Labor Shortages

By Dany Bahar And Pedro Casas-Alatriste

The recent tragedy of the death of over 50 migrants in an abandoned overheated truck in Texas forces us to reevaluate whether there is a better way for the United States—and there must be—to deal with the immigrants trying to reach the country.  

This reevaluation includes not only adopting a more humanitarian approach to border policies, but also challenging preconceived ideas about these immigrants, which will allow us to embrace them as they are: much-needed workers that can complement the American workforce. 

A ‘help wanted’ sign is posted in front of restaurant on February 4, 2022 in Los Angeles, California. – The United States added an unexpectedly robust 467,000 jobs in January, according to Labor Department data released today that also significantly raised employment increases for November and December. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)

Our argument is simple; the U.S. workforce is aging and cannot meet the economy’s capacity. Yet, for nearly 20 years, U.S. authorities have deported over 1 million immigrants originally from Central America’s Northern Triangle to their home countries through Mexico. But these potential workers are essential to the U.S. right now: Historically immigrants have been young and have joined the workforce in occupations that very few Americans are able or willing to fill today.  

The need to fill these occupations is evident from the market forces that continue to attract immigrants from Mexico and Central America, despite the incredible and increasing difficulties they face crossing the border. On the Mexican side, the use of “coyotes” (people smugglers) has gone up by 30 percent⁠—from about 45 percent in the second half of 2020 to nearly 60 percent in the last quarter of 2020⁠—as measured by surveys of returned Mexican migrants

According to these surveys, coyotes charged sums close to $6,000 per person smuggled in 2019, though that cost is reported to have gone down in 2020, presumably because of the slowdown in crossing caused by COVID-19. Nevertheless, the mere existence of this illicit market on the border is, arguably, a result of the dramatic increase in U.S. efforts—and resources—to stop this migration. In May 2022, U.S. Customs and Border Protection registered 240,000 encounters that month, up nearly 70 percent from May 2019, putting fiscal year 2022 on track to hit a record number of border encounters in recent history.  

Despite the conditions at the border, a deep dive into the data speaks for itself on the need for the U.S. to drastically redesign its migration policy with respect to Mexico and Central America and to put forward legal pathways for immigrants to enter and work in the United States instead of trying to apprehend them at the border.  

Let’s first look at the current American reality. According to the latest data from the U.S. Bureau of Labor Statistics, there were over 11.2 million job openings (May 2022). In the construction industry, there were an estimated 434,000 job openings (May 2022), yet there were just 389,000 unemployed in that same industry (June 2022). In other words, there is a shortage of almost 50,000 workers. In retail trade, the gap is even wider. With 1.14 million job openings and 720,000 unemployed, there is a labor supply deficit of 420,000 people. If that’s still not surprising enough: The number of unemployed people in the accommodation and food services industry is 565,000, while the number of job openings totaled 1.4 million. Even if every worker in that industry were employed, there would still be 835,000 job openings.

From a broader perspective, in just 12 years, adults 65 and older will outnumber children under 18 for the first time in the history of the United States. And shortly after, by 2040, projections suggest the country will have 2.1 workers per Social Security beneficiary. According to these calculations, the system needs at least 2.8 workers per Social Security beneficiary to maintain its economic feasibility.

Let’s now add into the equation some stylized facts about the 1 million workers that the U.S. has deported back to Central America since 2009. The data comes from representative surveys carried out by Colegio de la Frontera, a Mexican research institution that surveys deportees from the U.S. in Mexico’s south border on their way back to their home countries of Guatemala, Honduras, and El Salvador.  

The vast majority of these deportees are men and have a high school diploma or less, according to the most recent data from 2019. They are also overwhelmingly young—with nearly 90 percent of them between the ages 15 to 39 and 65 percent being between the ages 15 to 29. Compare this to all other migrants in the U.S. who have a median age of 46 years.  

Among the deportees that gathered some work experience in the U.S. during their stay (the ones who stayed for longer, naturally), they worked in a very diverse set of occupations that, ironically, have remarkable overlap with the occupations in high demand right now in the U.S. For instance, about 60 percent were in the construction industry, about 20 percent worked in services (such as the food industry), nearly 10 percent worked in industry, and 8 percent were technicians and administrative staff.

Migrants on the U.S. southern border are able and capable of filling labor gaps in the American economy if they are given the chance, particularly in fundamental occupations like the ones we document above. Moreover, perhaps with some skills training, they could fill other in-demand occupations, too.

American politicians and policymakers must act to transform the energy and resources poured into keeping these immigrants away into creating enough legal pathways for these migrants to join the American labor force without further delay. These migrants are already paying enormous costs, endangering their lives, and taking massive risks to come to America, which is a testament to their need and determination.

If the United States wants to grow and compete in the global economy, immigration—including that from the Northern Triangle—is part of the solution, not part of the problem.

Wishing To Be Off Billionaires List, Bill Gates Donates $20 Billion To Foundation

That’s Bill Gates’ estimated net worth, making him the world’s fourth-richest person — but he doesn’t intend to rank that high forever. On Wednesday, the Microsoft co-founder said he wants to “move down and eventually off of the list of the world’s richest people” because he feels “obligated to return his resources to society.” 

On the same day, Gates moved $20 billion of his wealth into the endowment of the Bill and Melinda Gates Foundation, one of the largest philanthropies in the world. The foundation plans to increase its payouts from nearly $6 billion to $9 billion each year by 2026. 

Bill Gates is moving $20 billion of his wealth into the endowment of the Bill and Melinda Gates Foundation, which is ramping up its spending in the face of global challenges, including the pandemic and the war in Ukraine, media reports said. 

The foundation, one of the world’s largest philanthropies, plans to increase its payouts by 50 per cent over pre-pandemic levels, from nearly $6 billion to $9 billion each year by 2026. The foundation is primarily focused on charitable giving that’s aimed at improving global health, gender equality and education, among other issues, CNN reported.

The Microsoft co-founder and his ex-wife, Melinda French Gates, have both pledged to donate the vast majority of their wealth to the foundation they established together 20 years ago, as well as to other philanthropic endeavours.

The couple announced their divorce in May 2021, saying they would work together as co-chairs under a two-year trial period. At the end of that trial, French Gates has the option to resign and receive a payout from her former husband, who would remain in charge of the foundation.

With an estimated net worth of around $ 114 billion, Bill Gates is currently the world’s fourth-richest person, according to Bloomberg’s Billionaire Index, with most of his wealth tied to Microsoft shares.

But he doesn’t intend to rank that high forever. “I will move down and eventually off of the list of the world’s richest people,” Gates wrote in a blog.

“I have an obligation to return my resources to society in ways that have the greatest impact for improving lives. I hope others in positions of great wealth and privilege will step up in this moment too,” he said, CNN reported. (IANS)

Consulate India In New York Organizes Roadshow On One-District-One-Product

The Consulate General of India in New York, in partnership with the Department of Promotion of Industry and Internal Trade (DPIIT) and Invest India, held a Roadshow on One-District-One-Product (ODOP) on July 12th, 2022. The show was attended by stakeholders from the food, hospitality, textiles and relevant business sectors.  

Consul General Shri Randhir Jaiwal gave the opening remarks, talking about the importance of the ODOP initiative and detailing the uniqueness of the products. From Araku coffee, with its distinctive texture, flavour and aroma, to the SIMFED turmeric from the organic state of Sikkim, he talked about the individuality and exclusivity of the items at display.

Joint Secretary from DPIIT, Ms. Manmeet Nanda familiarised the audience with the ODOP initiative and its vision. She elaborated that the whole idea of the initiative is to showcase unique products from different district of India, and that this stems from the mandate of Aatmanirbhar Bharat, focusing on a resilient India that is recognized as a brand globally. Expanding on the same, she talked about the vision of promoting sustainable trade along with creating a direct market link between the makers and buyers of these unique products. 

Explaining the progress that the initiative has made thus far, Ms. Nanda highlighted that more than 700 products with a unique quality and a large export potential have been identified till date. Each product tells a story – a story of creation, craftsmanship, tradition, custom, and people. Today, India’s unique products have ties all over the world. Farmers in Jammu and Kashmir sell walnuts to distant countries like Europe, and international brands sell Indian Pashmina stoles.

Representatives of Invest India took forward the discourse and emphasized the four pillars of the ODOP initiative – ecommerce, marketing, licensing, and selling and trade.

Different products from different parts of the country were showcased, ranging from cardamom tea, millet pasta, saffron, ginger flakes and more. From the north, the range extended from walnut wood carvings to Basohli paintings. From the state of Rajasthan, items of blue pottery were displayed. From the North-East, the variety consisted of coffee, jewellery, and special silks such as Eri Silk and some non-violent silk products. The non-violent silk items are so called as their production does not involve harming of silk worms.

Members of the diaspora were urged to promote products from their districts and adopt the vision of the ODOP scheme.  They were urged to promote ODOP products through gift giving, socially as well as officially.  Earlier, the Consulate had organized a display of ODOP products at Times Square during International Day of Yoga celebrations on 21 June 2022.

Does Immigration Help Developing Countries?

Many talented brains from developing nations like India, the Philippines, Sri Lanka, Bangladesh, and Pakistan have been immigrating to economically progressive and highly developed nations for many years.

They migrate in search of a good quality of life, world-class education for their children, and social security perks, including disability and maternity benefits, unemployment allowance, employment insurance, and other attractive benefits.

This is primarily why many choose to become permanent residents of developed nations such as Canada, the USA, the UK, Australia, and New Zealand. But the youth and skilled professionals who have moved to these nations have also brought in foreign remittances and a good deal of foreign exchange that helps boost the economy and development of a country that is still wanting and in its development stage.

Contributing back home

Many immigrants with well-paying jobs in these overseas nations help their relatives, parents, and near and dear ones by sending them money for assistance. Even students who study in developed nations return home with great knowledge and expertise. They even impart their expertise and aid in medicine, engineering, technology, and other professions.

Immigrants in other nations make it up to their home nations by keeping the foreign remittances flowing. Many of these remittances help ease the constraints of credit in rural areas. It helps accelerate human capital with improved health and educational facilities besides a good lifestyle. Many immigrants who return to their nations build hotels, hospitals, schools, and places of public worship or institution.

In many cases, they make significant donations to charities, which greatly help uplift the poor and marginal areas back in their home countries. Because of their contribution, many needy and underprivileged people find a vehicle and means to make their dreams come true. Immigration has been an excellent life-changer for many people who cannot find adequate help, but through the financial assistance from these immigrants, they find a way to live the life they deserve. (IANS)

US Inflation Hits 40-Year-High, At 9.1% In June

U.S. inflation surged to a new four-decade high in June because of rising prices for gas, food and rent, squeezing household budgets and pressuring the Federal Reserve to raise interest rates aggressively — trends that raise the risk of a recession.

The government’s consumer price index soared 9.1% over the past year, the biggest yearly increase since 1981, with nearly half of the increase due to higher energy costs. 

Lower-income and Black and Hispanic American have been hit especially hard, since a disproportionate share of their income goes toward essentials such as transportation, housing and food. But with the cost of many goods and services rising faster than average incomes, a vast majority of Americans are feeling the pinch in their daily routines.

For 72-year-old Marcia Freeman, who is retired and lives off of a pension, there is no escape from rising expenses.

“Everything goes up, including cheaper items like store brands,” said Freeman, who visited a food bank near Atlanta this week to try and gain control of her grocery costs. Grocery prices have jumped 12% in the past year, the steepest climb since 1979.

Accelerating inflation is a vexing problem for the Federal Reserve, too. The Fed is already engaged in the fastest series of interest rate hikes in three decades, which it hopes will cool inflation by tamping down borrowing and spending by consumers and businesses.

The U.S. economy shrank in the first three months of the year, and many analysts believe the trend continued in the second quarter.

“The Fed’s rate hikes are doing what they are supposed to do, which is kill off demand,” said Megan Greene, global chief economist at the Kroll Institute. “The trick is if they kill off too much and we get a recession.” 

The likelihood of larger rate hikes this year pushed stock indexes lower in afternoon trading. The central bank is expected to raise its key short-term rate later this month by a hefty three-quarters of a point, as it did last month.

As consumers’ confidence in the economy declines, so have President Joe Biden’s approval ratings, posing a major political threat to Democrats in the November congressional elections. Forty percent of adults said in a June AP-NORC poll that they thought tackling inflation should be a top government priority this year, up from just 14% who said so in December.

After years of low prices, a swift rebound from the 2020 pandemic recession — combined with supply-chain snags — ignited inflation.

Consumers unleashed a wave of pent-up spending, spurred by vast federal aid, ultra-low borrowing costs and savings they had built up while hunkering down. As home-bound Americans spent heavily on furniture, appliances and exercise equipment, factories and shipping companies struggled to keep up and prices for goods soared. Russia’s war against Ukraine further magnified energy and food prices.

In recent months, as COVID fears have receded, consumer spending has gradually shifted away from goods and toward services. Yet rather than pulling down inflation by reducing goods prices, the cost of furniture, cars, and other items has kept rising, while restaurant costs, rents and other services are also getting more expensive.

The year-over-year leap in consumer prices last month followed an 8.6% annual jump in May. From May to June, prices rose 1.3%, following a 1% increase from April to May.

Fuelled by increase in the prices of oil, shelter and food, the inflation rate in the US rose to 9.1 per cent in June. The inflation rate rise was the largest 12-month increase since the period ending November 1981.

The US Bureau of Labour Statistics said: “Over the last 12 months, the all items index increased 9.1 percent before seasonal adjustment.”

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.3 per cent in June on a seasonally adjusted basis after rising 1.0 per cent in May,” it said.

According to the Bureau, the increase was broad-based, with the indexes for gasoline, shelter, and food being the largest contributors.

The energy index rose 7.5 per cent over the month and contributed nearly half of the all items increase, with the gasoline index rising 11.2 per cent and the other major component indexes also rising.

The food index rose 1.0 percent in June, as did the food at home index.

The all items – less food and energy – index rose 5.9 per cent over the last 12 months. The energy index rose 41.6 percent over the last year, the largest 12-month increase since the period ending April 1980.

The food index increased 10.4 per cent for the 12-months ending June, the largest 12-month increase since the period ending February 1981. (IANS)

280,000 Green Cards Up For Grabs Before September Deadline

The United States Citizenship and Immigration Services (USCIS) is racing against time to issue 280,000 green cards before the fiscal year ends on September 30.

While closures and limited operations at US embassies and consular offices through the pandemic led to high numbers of available employment-based green cards, as of mid-June 2022, USCIS and the US Department of State (DOS) have used significantly more visas than at the same point in FY 2021. USCIS alone using more than twice as many visas on a weekly basis than it was at this point in FY 2021.

Through May 31, 2022, the two agencies have combined to use 149,733 employment-based immigrant visas. “We remain committed to taking every viable policy and procedural action to maximize our use of all available visas by the end of the fiscal year,” the USCIS said in a statement.

Data from the US visa office shows that the US government had 66,781 unused employment-based green cards in the 2021 fiscal year, even as 1.4 million immigrants are queued up for it. A majority of these are Indians, who have been stuck in the green card backlog for years.

“We remain committed to taking every viable policy and procedural action to maximize our use of all available visas by the end of the fiscal year,” the USCIS said in a statement.

Data from the US visa office shows that the US government had 66,781 unused employment-based green cards in the 2021 fiscal year, even as 1.4 million immigrants are queued up for it. A majority of these are Indians, who have been stuck in the green card backlog for years.

USCIS eventually issued 180,000 green cards last year—more than a typical year but still falling short of the total available. The processing time for employer sponsored green cards crossed the three-year wait time in 2022.

Oil Prices Likely To Tumble By Year End, Even If Economies Avoid A Recession

Goldman Sachs reckons crude oil prices are going to $140 in the coming months. JPMorgan said they could even surge to $380 in a worst-case scenario. UBS reckons they’ll hit $130 in September.

But Citi is bucking the trend. The investment bank’s strategists predict oil will fall sharply by the end of the year, from prices of around $100 a barrel on Friday.

Francesco Martoccia, the bank’s head of European commodities strategy, warned in note to clients Tuesday that oil prices could even slump to $65 a barrel by December, if a nasty recession hits.

The same day, oil prices tumbled, with US benchmark WTI crude dropping below $100, as investors worried that central banks’ interest-rate hikes would trigger sharp slowdowns in economic growth. “The timing was exquisite,” Martoccia told Insider this week.

Yet Martoccia and his colleagues expect oil to drop even if there’s no drastic slowdown. Their so-called base case is that the price of global benchmark Brent crude tumbles to $85 a barrel by the end of the year — that’s around 18% lower than Friday’s price of $104.

At the heart of Citi’s contrarian view is its expectation that Russia will keep exporting and producing crude, even as the US and its allies batter the country with sanctions.

Many analysts expect Russian energy exports to fall sharply by the end of the year as the European Union gradually bans purchases from the country. The G7 is also exploring how to cap Russian oil prices — which could cause exports to drop further.

The logic is simple. Unable to sell its oil, Russia will shut down production. Buyers will then be competing for the remaining global supplies, driving up oil prices.

But Citi takes a different view. Its strategists believe India and China will ramp up purchases, keeping Russian oil pumping and alleviating the pressure on the market. “We actually don’t see a supply crunch in the making,” Martoccia said.

Crude oil exports to European countries in the OECD will drop from 2.5 million barrels a day in the first quarter of the year to 970,000 in the fourth, Citi predicts.

Yet it thinks China will step up its imports from 1.4 million to 2.3 million barrels a day, and India from 110,000 to 950,000 a day. Other developing economies will lift their purchases slightly, meaning Russia will be exporting more crude by the end of the year than at the start.

“I’m skeptical that the governments wouldn’t listen to their own energy needs, because we have seen already protests and riots around the world because of the increase in food prices and energy prices,” Martoccia said.

The other key ingredient in oil prices is demand. Citi thinks the world’s appetite for oil is going to slow over the coming months as the global economy cools.

Martoccia said Europe in particular is likely to cut back on its energy consumption. Many economists expect the eurozone to fall into a recession as a result of soaring inflation driven by rocketing natural gas prices. Germany has already started to dim its streetlights to save energy.

“When you look at the gas demand, for instance, from the industrial complex in Italy, or even the orders of one of the biggest industrial facilities, it’s going down,” he said. “And eventually you have to see spillover effects elsewhere.”

Oil-price prediction is a difficult game. Many analysts say the opposite to Citi, arguing Russian production will fall, and a Chinese economic recovery and the return of global tourism will boost demand.

Citi is hedging its bets. It thinks there’s a 30% chance oil jumps back up to around $120 by the end of the year. “This year, it’s very difficult to have a high conviction,” Martoccia said.

Top Billionaires Lose $1.4 Trillion In Worst Half Of Year 2022

With policy makers now raising interest rates to combat elevated inflation, some of the highest-flying shares — and the billionaires who own them — are losing their combined wealth due to economic factors that has impacted global economies around the world. 

Elon Musk’s fortune plunged almost $62 billion. Jeff Bezos saw his wealth tumble by about $63 billion. Mark Zuckerberg’s net worth was slashed by more than half.

All told, the world’s 500 richest people lost $1.4 trillion in the first half of 2022, a dizzying decline that marks the steepest six-month drop ever for the global billionaire class.

It’s a sharp departure from the previous two years, when the fortunes of the ultra-rich swelled as governments and central banks unleashed unprecedented stimulus measures in the wake of the Covid-19 pandemic, juicing the value of everything from tech companies to cryptocurrencies.

With policy makers now raising interest rates to combat elevated inflation, some of the highest-flying shares — and the billionaires who own them — are losing altitude fast. Tesla Inc. had its worst quarter ever in the three months through June, while Amazon.com Inc. plummeted by the most since the dot-com bubble burst.

Though the losses are piling up for the world’s richest people, it only represents a modest move toward narrowing wealth inequality. Musk, Tesla’s co-founder, still has the biggest fortune on the planet, at $208.5 billion, while Amazon’s Bezos is second with a $129.6 billion net worth, according to the Bloomberg Billionaires Index.

Bernard Arnault, France’s richest person, ranks third with a $128.7 billion fortune, followed by Bill Gates with $114.8 billion, according to the Bloomberg index. They’re the only four that are worth more than $100 billion — at the start of the year, 10 people worldwide exceeded that amount, including Zuckerberg, who is now 17th on the wealth list with $60 billion.

Changpeng Zhao, the crypto pioneer who debuted on the Bloomberg Billionaires Index in January with an estimated fortune of $96 billion, has seen his wealth tumble by almost $80 billion this year amid the turmoil in digital assets.

Still, the billionaire class has amassed so much wealth in recent years that not only can the vast majority withstand the worst first half since 1970 for the S&P 500 Index, but they’re likely looking for bargains, said Thorne Perkin, president of Papamarkou Wellner Asset Management.

“Often their mindset is a bit more contrarian,” Perkin said. “A lot of our clients look for opportunities when there’s trouble in the streets.” That held true in the first half of the year in some of the most distressed corners of the global financial markets.

Vladimir Potanin, Russia’s wealthiest man with a $35.2 billion fortune, acquired Societe Generale SA’s entire position in Rosbank PJSC earlier this year amid the fallout from Vladimir Putin’s invasion of Ukraine. He also bought out sanctioned Russian mogul Oleg Tinkov’s stake in a digital bank for a fraction of what it was once worth.

Sam Bankman-Fried, chief executive officer of crypto exchange FTX, bought a 7.6% stake in Robinhood Markets Inc. in early May after the app-based brokerage’s share price tumbled 77% from its hotly anticipated initial public offering last July. The 30-year-old billionaire has also been acting as a lender of last resort for some troubled crypto companies.

The most high-profile buyout of all belonged to Musk, who reached a $44 billion deal to buy Twitter Inc. He offered to pay $54.20 a share; the social-media company’s stock traded at $37.44 at 10:25 a.m. in New York. The world’s richest man said in an interview with Bloomberg News Editor-in-Chief John Micklethwait last month that there are “a few unresolved matters” before the transaction can be completed. “There’s a limit to what I can say publicly,” he said. “It is somewhat of a sensitive matter.”

How Much Health Insurers Pay For Almost Everything Is About To Go Public

Consumers, employers and just about everyone else interested in health care prices will soon get an unprecedented look at what insurers pay for care, perhaps helping answer a question that has long dogged those who buy insurance: Are we getting the best deal we can?

Starting July 1, health insurers and self-insured employers must post on websites just about every price they’ve negotiated with providers for health care services, item by item. About the only exclusion is the prices paid for prescription drugs, except those administered in hospitals or doctors’ offices.

The federally required data release could affect future prices or even how employers contract for health care. Many will see for the first time how well their insurers are doing compared with others.

The new rules are far broader than those that went into effect last year requiring hospitals to post their negotiated rates for the public to see. Now insurers must post the amounts paid for “every physician in network, every hospital, every surgery center, every nursing facility,” said Jeffrey Leibach, a partner at the consulting firm Guidehouse.

“When you start doing the math, you’re talking trillions of records,” he said. The fines the federal government could impose for noncompliance are also heftier than the penalties that hospitals face.

Federal officials learned from the hospital experience and gave insurers more direction on what was expected, said Leibach. Insurers or self-insured employers could be fined as much as $100 a day for each violation and each affected enrollee if they fail to provide the data. “Get your calculator out: All of a sudden you are in the millions pretty fast,” Leibach said.

Determined consumers, especially those with high-deductible health plans, may try to dig in right away and use the data to try comparing what they will have to pay at different hospitals, clinics, or doctor offices for specific services.

But each database’s enormous size may mean that most people “will find it very hard to use the data in a nuanced way,” said Katherine Baicker, dean of the University of Chicago Harris School of Public Policy.

At least at first, Entrepreneurs are expected to quickly translate the information into more user-friendly formats so it can be incorporated into new or existing services that estimate costs for patients. And starting Jan. 1, the rules require insurers to provide online tools that will help people get upfront cost estimates for about 500 so-called “shoppable” services, meaning medical care they can schedule ahead of time.

Once those things happen, “you’ll at least have the options in front of you,” said Chris Severn, CEO of Turquoise Health, an online company that has posted price information made available under the rules for hospitals, although many hospitals have yet to comply.

With the addition of the insurers’ data, sites like his will be able to drill down further into cost variation from one place to another or among insurers.

“If you’re going to get an X-ray, you will be able to see that you can do it for $250 at this hospital, $75 at the imaging center down the road, or your specialist can do it in office for $25,” he said.

Everyone will know everyone else’s business: for example, how much insurers Aetna and Humana pay the same surgery center for a knee replacement. The requirements stem from the Affordable Care Act and a 2019 executive order by then-President Donald Trump.

“These plans are supposed to be acting on behalf of employers in negotiating good rates, and the little insight we have on that shows it has not happened,” said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, an affiliation of employers who offer job-based health benefits to workers. “I do believe the dynamics are going to change.”

Other observers are more circumspect.

“Maybe at best this will reduce the wide variance of prices out there,” said Zack Cooper, director of health policy at the Yale University Institution for Social and Policy Studies. “But it won’t be unleashing a consumer revolution.”

Still, the biggest value of the July data release may well be to shed light on how successful insurers have been at negotiating prices. It comes on the heels of research that has shown tremendous variation in what is paid for health care. A recent study by the Rand Corp., for example, shows that employers that offer job-based insurance plans paid, on average, 224% more than Medicare for the same services.

Tens of thousands of employers who buy insurance coverage for their workers will get this more-complete pricing picture — and may not like what they see.

“What we’re learning from the hospital data is that insurers are really bad at negotiating,” said Gerard Anderson, a professor in the department of health policy at the Johns Hopkins Bloomberg School of Public Health, citing research that found that negotiated rates for hospital care can be higher than what the facilities accept from patients who are not using insurance and are paying cash.

That could add to the frustration that Mitchell and others say employers have with the current health insurance system. More might try to contract with providers directly, only using insurance companies for claims processing. Other employers may bring their insurers back to the bargaining table.

“For the first time, an employer will be able to go to an insurance company and say, ‘You have not negotiated a good-enough deal, and we know that because we can see the same provider has negotiated a better deal with another company,'” said James Gelfand, president of the ERISA Industry Committee, a trade group of self-insured employers.

If that happens, he added, “patients will be able to save money.” That’s not necessarily a given, however.

Because this kind of public release of pricing data hasn’t been tried widely in health care before, how it will affect future spending remains uncertain. If insurers are pushed back to the bargaining table or providers see where they stand relative to their peers, prices could drop. However, some providers could raise their prices if they see they are charging less than their peers.

“Downward pressure may not be a given,” said Kelley Schultz, vice president of commercial policy for AHIP, the industry’s trade lobby.

Baicker, of the University of Chicago, said that even after the data is out, rates will continue to be heavily influenced by local conditions, such as the size of an insurer or employer — providers often give bigger discounts, for example, to the insurers or self-insured employers that can send them the most patients. The number of hospitals in a region also matters — if an area has only one, for instance, that usually means the facility can demand higher rates.

Another unknown: Will insurers meet the deadline and provide usable data?

Schultz, at AHIP, said the industry is well on the way, partly because the original deadline was extended by six months. She expects insurers to do better than the hospital industry. “We saw a lot of hospitals that just decided not to post files or make them difficult to find,” she said.

So far, more than 300 noncompliant hospitals have received warning letters from the government. But they could face $300-a-day fines for failing to comply, which is less than what insurers potentially face, although the federal government has recently upped the ante to up to $5,500 a day for the largest facilities.

Even after the pricing data is public, “I don’t think things will change overnight,” said Leibach. “Patients are still going to make care decisions based on their doctors and referrals, a lot of reasons other than price.”

(This story was produced by The Hill in partnership with Kaiser Health News. KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. It is an editorially independent operating program of Kaiser Family Foundation).

Dow Tumbles 876 Points And Stocks Enter Bear Market On Worries Of Drastic Rate Hikes

US stocks have plunged into a bear market as Wall Street investors grew increasingly nervous about the prospect of even harsher medicine from the Fed to take the sting out of inflation.

The Dow (INDU) sank 876 points or 2.8%. The Nasdaq was down by 4.7% and has tumbled more than 10% in the past two trading sessions.

The broader S&P 500 fell 3.9%. That index is now more than 20% below its all-time high set in January, putting stocks in a bear-market.

Recession fears mounted after Friday’s miserable Consumer Price Index report showed US inflation was significantly higher than economists had expected last month. That could make the Federal Reserve’s inflation-control efforts more difficult.

After raising rates by a half point in May — an action the Fed hadn’t taken since 2000 — Chair Jerome Powell pledged more of the same until the central bank was satisfied that inflation was under control. At that point, the Fed would resume standard quarter-point hikes, he said.

But after May’s hotter-than-expected inflation report, Wall Street is increasingly calling for tougher action from the Fed to keep prices under control. Jefferies joined Barclays on Monday in predicting that the Federal Reserve would hike rates by three-quarters of a percentage point, an action the Fed hasn’t taken since 1994.

“After holding their breath for nearly a week awaiting the US CPI report for May, investors exhaled in exasperation as inflation came in hotter than expected,” Sam Stovall, chief investment strategist at CFRA, said in a note to clients Monday morning.

Stovall said the risk of larger hikes dragged the markets lower Monday.

Investors fear two outcomes, neither of them good: Higher rates mean bigger borrowing costs for businesses, which can eat into their bottom lines. And overly zealous action from the Fed could unintentionally plunge the US economy into a recession, especially if businesses start laying off workers and the red-hot housing market crumbles.

There’s no sign that the job and housing markets are in danger of collapse, although both are cooling off somewhat.

In an interview with CNN’s Fareed Zakaria Sunday, former Fed Chair Ben Bernanke said a US recession remains possible. But Bernanke said he had faith that Powell and the Fed could achieve a so-called soft landing, the elusive outcome in which the central bank can cool the economy down to get inflation under control without slowing it down so much that it enters a recession.

“Economists are very bad at predicting recessions, but I think the Fed has a decent chance — a reasonable chance — of achieving what Powell calls a soft-ish landing, either no recession or a very mild recession to bring inflation down,” Bernanke said.

Analysts appeared to move beyond a “buy the dip” mentality on Monday, signaling that they don’t see markets recovering quickly.

“Valuations aren’t much cheaper given rising interest rates and a weaker earnings outlook, in our view,” wrote strategists at BlackRock in a Monday notes. “A higher path of policy rates justifies lower equity prices. Plus, margin pressures are a risk to earnings.”

BlackRock will remain neutral on stocks for the next six- to 12-months, the strategists said.

Bears and bulls

The S&P 500 closed in a bear market, so the bull run that started on March 23, 2020 has come to an end. But, because of the tricky way these things are measured, the bear market technically began on January 3, when the S&P 500 hit its all-time high.

That means the latest bull market lasted just over 21 months — the shortest on record, according to Howard Silverblatt, S&P Dow Jones Indices senior index analyst. Over the past century, bull markets have lasted an average of about 60 months.

The shortest bull market followed the shortest bear market, one that lasted just over a month — from February 19 to March 23, 2020. Bear markets historically last an average of 19 months, according to Silverblatt.

Stocks briefly fell into a bear market on May 20, although a late-day rally rescued the market from closing below that threshold for the first time since the early days of the pandemic.

The tech-heavy Nasdaq has been in a bear market for some time and is now more than 32% below its all-time high set in November 2021. The Dow is still some way from a bear market. It has fallen about 16% from the all-time high it reached on the last day of 2021.

Gasoline Price Exceeds $5 Per Gallon In Most States

The average U.S. price of regular-grade gasoline spiked 39 cents over the past three weeks to $5.10 per gallon, media reports here suggested. The average price at the pump is $1.97 higher than it was one year ago.

Nationwide, the highest average price for regular-grade gas is in the San Francisco Bay Area, at $6.55 per gallon. The lowest average is in Baton Rouge, Louisiana, at $4.43 per gallon. According to the survey, the average price of diesel rose 20 cents over three weeks, to $5.86 a gallon.

Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the price jump comes amid higher crude oil costs and tight gasoline supplies.

Skyrocketing gas prices and the high inflation rate, which is 40 year high, are a glaring problem for the White House with no clear, immediate solution, presenting a major political challenge for Biden and Democrats going into the midterms. The Labor Department’s consumer price index rose 1 percent last month alone and 8.6 percent in the 12-month stretch ending in May.

Eighty-five percent of voters said they think inflation is a very serious or somewhat serious problem, according to an Economist-YouGov poll from earlier this month. In the same poll, 44 percent of respondents said Biden has “a lot” of responsibility for the inflation rate and 31 percent said he has “some.”

Energy Secretary Jennifer Granholm told CBS News this week that Americans should brace for a rough summer, with a top energy agency predicting fuel prices may not come down to less than $4 per gallon until the fall or winter.

“There will be some relief on the horizon, but during the summer driving season, it is going to be rough, no doubt about it, because we have such a demand and supply mismatch on the global market for oil,” Granholm said.

The president and his administration have pointed to steps they’ve taken in recent months to try to pump the brakes on rising gas prices.

Biden has ordered the release of millions of barrels of oil from the Strategic Petroleum Reserve to boost supply, pushed for nations in the Middle East to boost production, lifted restrictions on the sale of fuel with higher ethanol content, and promoted renewable energy sources such as electric vehicles and solar power.

But the reality, as even some Biden administration officials acknowledge, is the president has little sway over day-to-day gas prices, which are often at the mercy of global supply chains and have been impacted by the Russian invasion of Ukraine.

“This is, in large part, caused by [Russian President Vladimir] Putin’s aggression,” Commerce Secretary Gina Raimondo said on CNN this week. “Since Putin moved troops to the border of Ukraine, gas prices have gone up over $1.40 a gallon, and the president is asking for Congress and others for potential ideas. But, as you say, the reality is that there isn’t very much more to be done.”

Republican strategist Doug Heye argued the Biden administration has had a lackluster response to inflation that has contributed to the hit his approval rating has taken and the low marks he has received on the economy.

“There seems to be, on some of these issues, just a shrugging of the shoulders, and that’s why you see, overwhelmingly, Biden’s handling of the economy is unpopular,” he said. “Obviously what’s happened in Ukraine has caused a spike, and there’s nothing wrong with talking about that, but that seems to be the entire explanation when inflation has gone up every month that Biden has been president.”

Biden has stressed that he is sympathetic to the impact of high inflation on American families. “I understand Americans are anxious, and they’re anxious for good reason,” he said in remarks at the Port of Los Angeles. “Make no mistake about it: I understand inflation is a real challenge to American families,” he added. “Today’s inflation report confirmed what Americans already know: Putin’s price hike is hitting America hard. Gas prices at the pump, energy and food prices account for half of the monthly price increases since May.”

He called on Congress to pass legislation to cut shipping costs and the costs of energy bills and prescription drugs as well as tax reform so big corporations pay more. Part of the challenge for the White House, however, is that many Americans don’t realize Biden doesn’t control gas prices, said Matt Bennett, a strategist with centrist think tank Third Way.

“I think he needs to get caught trying to do everything possible. Haul the CEOs of the oil companies in to the White House and demand that they tell him exactly what they need to get production up in the short term,” Bennett said.

The White House said it was shifting gears toward a monthlong campaign in June to talk up the economy and to show the White House is prioritizing inflation while pushing the positives it has delivered on the economy.Biden reiterated that the U.S. is dealing with inflation from a position of strength, touting again the low unemployment rate.

Democratic strategist Antjuan Seawright argued that the president’s focus on the positives of the economy will resonate with voters in the midterm elections this fall. “From a messaging standpoint, I think [Democrats] have to demonstrate district by district, race by race, what efforts we have done to save the economy,” Seawright said. “Make sure we tell the story and not let the story be told about us.”

Warren Buffet Warns Of A 50% Fall In Stock Market Buffet Told Investors That They Should Be Prepared For A 50 Per Cent Fall In The Shares

Veteran investor Warren Buffett has tremendous experience in the stock market that makes everyone trust his forecasts. Not only this, he has earned a lot of wealth from the stock market. Now amidst the ongoing volatility in the stock market, he has asked to be prepared for a fall of up to 50 per cent in the shares.

Warren Buffett has shared a video on Instagram. In this video he is giving advice to the investors investing in the stock market. He told investors that they should be prepared for a 50 per cent fall in the shares. This video has been shared on Instagram with the handle Warret Buffet Videos.

He said that when Berkshire’s stock fell, there was nothing wrong with the company. He said that the mind of the investor should be right. Otherwise, your life will be spent in buying and selling shares at the wrong time and you will continue to cry for loss. Investors take decisions on the advice of others when prices fluctuate.

They say that if you cannot keep investing in a stock for a long time, then you should not buy it. He says that just as you keep the farm with you for a long period, in the same way you need to be financially and psychologically prepared to hold the shares. Buffett had also said during an interview that you should invest in only those companies, which he understands. They should expect that the company’s shares will give good returns in the long run.

Warren Buffett takes the help of three rules to buy shares. He says that the first rule is that the company should have a good income on the amount invested in the business. Second, the management of the company should be in the hands of honest and skilled managers. Third the company’s share price should be correct.

A New Billionaire Has Been Minted Almost Daily During The Pandemic

The Covid-19 pandemic has been good for the wallets of the wealthy. Some 573 people have joined the billionaire ranks since 2020, bringing the worldwide total to 2,668, according to an analysis released by Oxfam on Sunday. That means a new billionaire was minted about every 30 hours, on average, so far during the pandemic.

The report, which draws on data compiled by Forbes, looks at the rise of inequality over the past two years. It is timed to coincide with the kickoff of the annual World Economic Forum meeting in Davos, Switzerland, a gathering of some of the wealthiest people and world leaders.

Billionaires have seen their total net worth soar by $3.8 trillion, or 42%, to $12.7 trillion during the pandemic. A large part of the increase has been fueled by strong gains in the stock markets, which was aided by governments injecting money into the global economy to soften the financial blow of the coronavirus.

Much of the jump in wealth came in the first year of the pandemic. It then plateaued and has since dropped a bit, said Max Lawson, head of inequality policy at Oxfam.

At the same time, Covid-19, growing inequality and rising food prices could push as many as 263 million people into extreme poverty this year, reversing decades of progress, Oxfam said in a report released last month. “I’ve never seen such a dramatic growth in poverty and growth in wealth at the same moment in history,” Lawson said. “It’s going to hurt a lot of people.”

Benefiting from high prices

Consumers around the world are contending with the soaring cost of energy and food, but corporations in these industries and their leaders are benefiting from the rise in prices, Oxfam said.

Billionaires in the food and agribusiness sector have seen their total wealth increase by $382 billion, or 45%, over the past two years, after adjusting for inflation. Some 62 food billionaires were created since 2020.

Meanwhile, the net worth of their peers in the oil, gas and coal sectors jumped by $53 billion, or 24%, since 2020, after adjusting for inflation.

Davos is back and the world has changed. Have the global elite noticed?

Forty new pandemic billionaires were created in the pharmaceutical industry, which has been at the forefront of the battle against Covid-19 and the beneficiary of billions in public funding.

The tech sector has spawned many billionaires, including seven of the 10 world’s richest people, such as Telsa’s Elon Musk, Amazon’s Jeff Bezos and Microsoft’s Bill Gates. These men increased their wealth by $436 billion to $934 billion over the past two years, after adjusting for inflation.

Tax the rich

To counter the meteoric growth in inequality and help those struggling with the rise in prices, Oxfam is pushing governments to tax the wealthy and corporations.

It is calling for a temporary 90% tax on excess corporate profits, as well as a one-time tax on billionaires’ wealth.

The group would also like to levy a permanent wealth tax on the super-rich. It suggests a 2% tax on assets greater than $5 million, rising to 5% for net worth above $1 billion. This could raise $2.5 trillion worldwide.

Wealth taxes, however, have not been embraced by many governments. Efforts to levy taxes on the net worth of the richest Americans have failed to advance in Congress in recent years.

Fighting Inflation Excuse For Class Warfare

A class war is being waged in the name of fighting inflation. All too many central bankers are raising interest rates at the expense of working people’s families, supposedly to check price increases.

Forced to cope with rising credit costs, people are spending less, thus slowing the economy. But it does not have to be so. There are much less onerous alternative approaches to tackle inflation and other contemporary economic ills.

Short-term pain for long-term gain?
Central bankers are agreed inflation is now their biggest challenge, but also admit having no control over factors underlying the current inflationary surge. Many are increasingly alarmed by a possible “double-whammy” of inflation and recession.

Nonetheless, they defend raising interest rates as necessary “preemptive strikes”. These supposedly prevent “second-round effects” of workers demanding more wages to cope with rising living costs, triggering “wage-price spirals”.

In central bank jargon, such “forward-looking” measures convey clear messages “anchoring inflationary expectations”, thus enhancing central bank “credibility” in fighting inflation.

They insist the resulting job and output losses are only short-term – temporary sacrifices for long-term prosperity. Remember: central bankers are never punished for causing recessions, no matter how deep, protracted or painful.

But raising interest rates only makes recessions worse, especially when not caused by surging demand. The latest inflationary surge is clearly due to supply disruptions because of the pandemic, war and sanctions.

Raising interest rates only reduces spending and economic activity without mitigating ‘imported’ inflation, e.g., rising food and fuel prices. Recessions will further disrupt supplies, aggravating inflation and worsening stagflation.

Wage-price spirals?
Some central bankers claim recent instances of wage increases signal “de-anchored” inflationary expectations, and threaten ‘wage-price spirals’. But this paranoia ignores changed industrial relations and pandemic effects on workers.

With real wages stagnant for decades, the ‘wage-price spiral’ threat is grossly exaggerated. Over recent decades, most workers have lost bargaining power with deregulation, outsourcing, globalization and labour-saving technologies. Hence, labour shares of national income have declined in most countries since the 1980s.

Labour market recovery, even tightening in some sectors, obscures adverse overall pandemic impacts on workers. Meanwhile, millions of workers have gone into informal self-employment – now celebrated as ‘gig work’ – increasing their vulnerability.

Pandemic infections, deaths, mental health, education and other impacts, including migrant worker restrictions, have all hurt many. Contagion has especially hurt vulnerable workers, including youth, migrants and women.

Workers’ share of national income, 1970-2015

Ideological central bankers
Economic policies by supposedly independent and knowledgeable technocrats are presumed to be better. But such naïve faith ignores ostensibly academic, ideological beliefs.

Typically biased, albeit in unstated ways, policy choices inevitably support some interests over – even against – others. Thus, for example, an anti-inflation policy emphasis favours financial asset owners.

Politicians like the notion of central bank independence. It enables them to conveniently blame central banks for inflation and other ills – even “sleeping at the wheel” – and for unpopular policy responses.

Of course, central bankers deny their own role and responsibility, instead blaming other economic policies, especially fiscal measures. But politicians blaming central bankers after empowering them is simply shirking responsibility.

In the rich West, governments long bent on fiscal austerity left the heavy lifting for recovery after the 2008-2009 global financial crisis (GFC) to central bankers. Their ‘unconventional monetary policies’ involved keeping policy interest rates very low, enabling corporate shenanigans and zombie business longevity.

This enabled unprecedented increases in most debt, including private credit for speculation and sustaining ‘zombie’ businesses. Hence, recent monetary tightening – including raising interest rates – will trigger more insolvencies and recessions.

German social market economy
Inflation and policy responses inevitably involve social conflicts over economic distribution. In Germany’s ‘free collective bargaining’, trade unions and business associations engage in collective bargaining without state interference, fostering cooperative relations between workers and employers.

The German Collective Bargaining Act does not oblige ‘social partners’ to enter into negotiations. The timing and frequency of such negotiations are also left to them. Such flexible arrangements are said to have helped SMEs.

Although Germany’s ‘social market economy’ has no national tripartite social dialogue institution, labour unions, business associations and government did not hesitate to democratically debate crisis measures and policy responses to stabilize the economy and safeguard employment, e.g., during the GFC.

Dialogue down under
A similar ‘social dialogue’ approach was developed by Australian Labor Prime Minister Bob Hawke from 1983. This contrasted with the more confrontational approaches pursued in Margaret Thatcher’s UK and Ronald Reagan’s USA – where punishing interest rates inflicted long recessions.

Although Hawke had been a successful trade union leader, he began by convening a national summit of workers, businesses and other stakeholders. The resulting Prices and Incomes Accord between the government and unions moderated wage demands in return for ‘social wage’ improvements.

This consisted of better public health provisioning, pension and unemployment benefit improvements, tax cuts and ‘superannuation’ – involving required employees’ income shares and matching employer contributions to a workers’ retirement fund.

Although business groups were not formally party to the Accord, Hawke brought big businesses into other new initiatives such as the Economic Planning Advisory Council. This consensual approach helped reduce both unemployment and inflation.

Such consultations have also enabled difficult reforms – including floating exchange rates and reducing import tariffs. They also contributed to the developed world’s longest uninterrupted economic growth streak – without a recession for nearly three decades, ending in 2020 with the pandemic.

Social partnerships
A variety of such approaches exist. For example, Norway’s kombiniert oppgjior, from 1976, involved not only industrial wages, but also taxes, salaries, pensions, food prices, child support payments, farm support prices, and more.

‘Social partnerships’ have also been important in Austria and Sweden. A series of political understandings – or ‘bargains’ – between successive governments and major interest groups enabled national wage agreements from 1952 until the mid-1970s.

Consensual approaches undoubtedly underpinned post-Second World War reconstruction and progress, of the so-called Keynesian ‘Golden Age’. But it is also claimed they have created rigidities inimical to further progress, especially with rapid technological change.

Economic liberalization in response has involved deregulation to achieve more market flexibilities. But this approach has also produced more economic insecurity, inequalities and crises, besides stagnating productivity.

Such changes have also undermined democratic states, and enabled more authoritarian, even ethno-populist regimes. Meanwhile, rising inequalities and more frequent recessions have strained social trust, jeopardizing security and progress.

Policymakers should consult all major stakeholders to develop appropriate policies involving fair burden sharing. The real need then is to design alternative policy tools through social dialogue and complementary arrangements to address economic challenges in more equitably cooperative ways.

Rise of the Super Rich & Fall of the World’s Poor

Michael Bloomberg, the three-term Mayor of New York city and a billionaire philanthropist, was once quoted as saying that by the time he dies, he would have given away all his wealth to charity – so that his cheque to the funeral undertaker will bounce for lack of funds in his bank account.

Sounds altruistic – even as the number of billionaires keep rising while the poorest of the world’s poor keep multiplying.

The latest brief by Oxfam International, titled “Profiting from Pain” and released May 23, shows that 573 people became new billionaires during the two-and-a half-year Covid 19 pandemic —while the world’s poverty stricken continued to increase.

“We expect this year that 263 million more people will crash into extreme poverty, at a rate of a million people every 33 hours,” Oxfam said.

Billionaires’ wealth has risen more in the first 24 months of COVID-19 than in 23 years combined. The total wealth of the world’s billionaires is now equivalent to 13.9 percent of global GDP. This is a three-fold increase (up from 4.4 percent) in 2000, according to the study.

Asked about the philanthropic gestures, Gabriela Bucher, Executive Director of Oxfam International, told IPS wealthy individuals who use their money to help others should be congratulated.

“But charitable giving is no substitute for wealthy people and companies paying their fair share of tax or ensuring their workers are paid a decent wage. And it does not justify them using their power and connections to lobby for unfair advantages over others,” she declared.

Oxfam’s new research also reveals that corporations in the energy, food and pharmaceutical sectors —where monopolies are especially common— are posting record-high profits, even as wages have barely budged and workers struggle with decades-high prices amid COVID-19.

The fortunes of food and energy billionaires have risen by $453 billion in the last two years, equivalent to $1 billion every two days, says Oxfam.

Five of the largest energy companies (BP, Shell, Total Energies, Exxon and Chevron) are together making $2,600 profit every second, and there are now 62 new food billionaires.

Currently, the world’s total population is around 7.8 billion, and according to the UN, more than 736 million people live below the international poverty line.

A World Bank report last year said extreme poverty is set to rise, for the first time in more than two decades, and the impact of the spreading virus is expected to push up to 115 million more people into poverty, while the pandemic is compounding the forces of conflict and climate change, that has already been slowing poverty reduction.

By 2021, as many as 150 million more people could be living in extreme poverty.

Yasmeen Hassan, Global Executive Director at Equality Now, told IPS Oxfam’s report demonstrates systemic failings in the discriminatory nature of countries’ economies and underscores the urgent need for financial systems to be restructured so that they benefit the 99%, not the 1%.

“As with any crisis, Equality Now foresaw that gender would influence how individuals and communities experienced the pandemic, but even we were shocked at how exceptionally and intensely pre-existing inequalities and sex-based discrimination has been exacerbated”, she said.

While billionaires — the vast majority of whom are men — continue to amass vast sums of wealth, women around the world remain trapped in poverty. Wealthy elites are profiting off women’s labor, much of which is underappreciated, underpaid, and uncompensated, she pointed out.

“Economic hardship and inadequate policy responses to the pandemic have eroded many of the hard-won gains that have been achieved over recent years for women and girls. From increases in child marriage, sexual exploitation and human trafficking, to landlords demanding sex from female tenants who have lost their job, and domestic workers trapped inside with abusive employers, women and girls around the world have borne the brunt of the pandemic,” Hassan declared.

The Oxfam study has been released to coincide with the World Economic Forum’s (WEF) annual meeting—which includes the presence of the rich and the superrich—taking place in Davos-Klosters, Switzerland from 22-26 May. The meeting, whose theme is ‘Working Together, Restoring Trust’, will be the first global in-person leadership event since the outbreak of the COVID-19 pandemic in early 2020

“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic, and now the steep increases in food and energy prices have, simply put, been a bonanza for them. Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive,” said Oxfam’s Bucher.

She said billionaires’ fortunes have not increased because they are now smarter or working harder. But it is really the workers who are working harder, for less pay and in worse conditions.

The super-rich, she argued, have rigged the system with impunity for decades and they are now reaping the benefits. They have seized a shocking amount of the world’s wealth as a result of privatization and monopolies, gutting regulation and workers’ rights while stashing their cash in tax havens — all with the complicity of governments.”

“Meanwhile, millions of others are skipping meals, turning off the heating, falling behind on bills and wondering what they can possibly do next to survive. Across East Africa, one person is likely dying every minute from hunger. This grotesque inequality is breaking the bonds that hold us together as humanity. It is divisive, corrosive and dangerous. This is inequality that literally kills.”

Elaborating further, Hassan of Equality Now said women are more likely to be informally employed, low-wage earners, and this disadvantaged position has resulted in higher rates of women losing their jobs, particularly in sectors that were not prioritized in government relief packages.

“Women are also more likely to be primary caretaker and many have had to absorb increases in unpaid duties while schools and nurseries shut down. As a consequence, some women have been forced out of jobs as they found it impossible to juggle full-time work while also providing full-time childcare. This loss of income has been especially catastrophic for women in poverty and has made them more vulnerable to a range of human rights violations.”

She said world leaders must stop pursuing policy agendas that benefit the rich and hurt the poor.

“Instead, we urgently need a committed and coordinated response from governments and policymakers to reduce inequality and poverty, and address discrimination that is holding women and girls back while allowing the super-rich to get richer still,” she added.

The Oxfam study also says the pandemic has created 40 new pharma billionaires.

Pharmaceutical corporations like Moderna and Pfizer are making $1,000 profit every second just from their monopoly control of the COVID-19 vaccine, despite its development having been supported by billions of dollars in public investments.

“They are charging governments up to 24 times more than the potential cost of generic production. 87 percent of people in low-income countries have still not been fully vaccinated.”

“The extremely rich and powerful are profiting from pain and suffering. This is unconscionable. Some have grown rich by denying billions of people access to vaccines, others by exploiting rising food and energy prices. They are paying out massive bonuses and dividends while paying as little tax as possible. This rising wealth and rising poverty are two sides of the same coin, proof that our economic system is functioning exactly how the rich and powerful designed it to do,” said Bucher.

Oxfam recommends that governments urgently:

–·Introduce one-off solidarity taxes on billionaires’ pandemic windfalls to fund support for people facing rising food and energy costs and a fair and sustainable recovery from COVID-19. Argentina adopted a one-off special levy dubbed the ‘millionaire’s tax’ and is now considering introducing a windfall tax on energy profits as well as a tax on undeclared assets held overseas to repay IMF debt. The super-rich have stashed nearly $8 trillion in tax havens.

  • — End crisis profiteering by introducing a temporary excess profit tax of 90 percent to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.

— Introduce permanent wealth taxes to rein in extreme wealth and monopoly power, as well as the outsized carbon emissions of the super-rich. An annual wealth tax on millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $2.52 trillion a year —enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.

Indian Rupee Falls To The Lowest

The Indian rupee extended its losses and touched an all-time low of 77.42 against the US dollar in early trade on Monday, May 10th.

The Indian currency is weighed by the strength of the American currency in the overseas market and continued foreign fund outflows. Further, rupee slipped on surge in crude oil prices

Foreign institutional investors were net sellers in the capital market on Friday, as they offloaded shares worth Rs 5,517.08 crore, as per stock exchange data. They have been selling equities constantly in the recent months.

Rupee has been under-pressure after global central banks started normalising policy and last week RBI too started raising key interest rates.

On Friday, the rupee had slumped 55 paise to close at 76.90 against the US dollar.

“Local units are also hit by haven dollar flows, higher global rates due to rising inflation and risk-off sentiments. Weakness in Chinese yuan, which fell to its weakest level since November 2020, also weighing on regional currencies,” said Dilip Parmar, Retail Research Analyst at HDFC Securities.

So far this year, foreign institutions have withdrawn a total of nearly $19 billion from domestic equities and debt markets, Parmar said.

Parmar sees near term depreciation in rupee could continue for a few more days with lower side limited in the range of 77.70 to 78. In the event of unwinding, the rupee could see levels of 77 to 76.70.

According to Sugandha Sachdeva, VP-Commodity and Currency Research at Religare Broking, the Indian rupee has plummeted to record lows amid the deteriorating risk sentiments and the unrelenting spree of overseas outflows from the domestic equities.

Besides, an unabated rise in the dollar index towards a two-decade high, soaring US treasury yields and crude prices, all of them have worked their way to push the domestic currency on a downward trajectory, Sachdeva told IANS.

“Markets are concerned about the spiralling inflation and prospects of an aggressive tightening path that continues to threaten the growth outlook, leading to safe-haven flows in the greenback.”

Also, hardening crude oil prices as the EU is moving ahead to impose an embargo on Russian oil are roiling the sentiments, leading to worries about the widening current account deficit and exacerbating the pressure on the domestic currency.

Going ahead, as the Indian rupee has breached the previous all-time lows of the 77.14-mark, it seems poised to witness further depreciation towards the 78-mark in the near term.

Sachdeva, however, anticipates that RBI will intervene around the 78-mark to curb excessive depreciation in the Indian currency.

According to experts, this depreciation is caused by the strength of the American currency in the overseas market and continuous foreign fund outflows from the Indian market. Some also attribute the fall of the rupee to rising crude oil prices globally due to the Russia-Ukraine crisis and the COVID induced lockdown in Shanghai.

India’s Pharma Exports Rise 103% In 8 Years

India’s pharma exports have witnessed a growth of 103 per cent since 2013-14 from Rs 90,415 crore to Rs 1,83,422 crore in 2021-22. The exports achieved in 2021-22 is the Pharma Sector’s best export performance ever and is a remarkable growth with exports growing by almost USD 10 billion in eight years, said Ministry of Commerce & Industry in a statement on Sunday.

Highlighting the achievement in a tweet, the Union Minister of Commerce and Industry Piyush Goyal said: “India’s booming drugs & pharmaceuticals exports more than double in 2021-22 compared to 2013-14. Under the active leadership of PM @NarendraModi ji, India is serving as ‘Pharmacy of the World”.

The pharma exports in 2021-22 sustained a positive growth despite the global trade disruptions and drop in demand for COVID related medicines. The trade balance continues to be in India’s favour, with a surplus of USD 15175.81 Million, said the ministry.

India ranks third worldwide for production by volume and 14th by value. Indian pharma companies have made global mark with 60 per cent of the world’s vaccines and 20 per cent of generic medicines coming from India.

The share of pharmaceutical and drugs in India’s global exports is 5.92 per cent. The formulations and biologicals continue to account for a major share of 73.31 per cent in total exports, followed by Bulk drugs and drug intermediates with exports of USD 4437.64 million. India’s top five pharma export destinations are the US, UK, South Africa, Russia and Nigeria. (IANS)

US Economy Shrinks By 1.4% In 2022 Amid Omicron Surge

The US economy shrank at an annual rate of 1.4 per cent in the first quarter as effects of the Omicron surge start to show up, the US Commerce Department reported.

The latest data marks the economy’s first contraction since the Covid-19 pandemic impacted the country in early 2020, Xinhua news agency reported.

“In the first quarter, an increase in Covid-19 cases related to the Omicron variant resulted in continued restrictions and disruptions in the operations of establishments in some parts of the country,” the department’s Bureau of Economic Analysis (BEA) said in an “advance” estimate.

The BEA noted that government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households “all decreased as provisions of several federal programs expired or tapered off”.

The decrease in real gross domestic product reflected declines in private inventory investment, exports, federal government spending, and state and local government spending, while imports — a subtraction in the calculation of GDP, increased, the report showed.

Personal consumption expenditures, non-residential fixed investment and residential fixed investment increased, it added.

The US economy contracted in the first quarter as inflation remained elevated at levels not seen in four decades.

The March consumer price index surged 8.5 per cent from a year earlier, the largest 12-month increase since the period ending December 1981, according to data from the Labour Department. That compared with a 7.9 per cent year-on-year gain in February.

Since the March policy meeting, a flurry of comments from US Federal Reserve officials indicated that the urgency for rate hikes is growing, and the central bank is prepared to take more aggressive actions going forward.

Diane Swonk, Chief Economist at major accounting firm Grant Thornton, noted in a recent analysis that as the Fed moves forward with more aggressive rate hikes to combat surging inflation, “what was the strongest and fastest recovery on record may soon be among the shortest.”

Even Fed Chairman Jerome Powell, who argued that soft, or at least softish landings have been relatively common in the US monetary history, noted that no one expects that bringing about a soft landing will be straightforward or easy in the current context. “It’s going to be very challenging,” Powell said.

Former US Treasury Secretary, Lawrence Summers also pointed out that in the past decades, when inflation was above 4 per cent and unemployment was below 4 per cent, the US economy usually fell into recession within two years, which means the Fed’s task would be very difficult.

“A growth recession is likely; unemployment will rise,” Swonk said, adding, “Those waiting for a recession to hire workers may find themselves without the jobs they had hoped to fill.”

Toyota To Invest $ 624 Million In India

Toyota Group plans to invest 48 billion Indian rupees ($624 million) to make electric vehicle components in India, as the Japanese carmaker works toward carbon neutrality by 2050.

Toyota Kirloskar Motor and Toyota Kirloskar Auto Parts signed a memorandum of understanding with the southern state of Karnataka to invest 41 billion Indian rupees, the group said in a statement Saturday. The rest will come from Toyota Industries Engine India.

Toyota is aligning its own green targets with India’s ambitions of becoming a manufacturing hub though the switch to clean transport in the South Asian nation is slower than other countries such as China and the U.S. Expensive price tags, lack of options in electric models and insufficient charging stations have led to sluggish adoption of battery vehicles in India.

“From a direct employment point of view, we are looking at around 3,500 new jobs,” Toyota Kirloskar executive vice president Vikram Gulati told the Press Trust of India in an interview. “As the supply chain system builds, we expect much more to come in later.”

He added that the company would be moving toward a new area of technology — electrified powertrain parts — with production set to start in the “very near-term.”

Indian automakers could generate $20 billion in revenue from electric vehicles between now and fiscal year 2026, according to forecast by Crisil. By 2040, 53% of new automobile sales in India will be electric, compared with 77% in China, according to BloombergNEF.

Gautam Adani Is World’s 5th Richest Person

Gautam Adani, the Indian infrastructure mogul, became the richest Asian billionaire in history earlier this month–and he’s kept on climbing, reported Forbes magazine.

“Adani has now passed Warren Buffett to become the 5th richest person in the world,” said Forbes, estimating that the 59-year-old Adani has a net worth of $123.7 billion, as of Friday’s market close, edging out the $121.7 billion fortune of Buffett, who is 91.

Worth $8.9 billion just two years ago, Adani’s fortune spiked to an estimated $50.5 billion in March 2021 because of his skyrocketing share prices–then nearly doubled by March 2022, to an estimated $90 billion, as Adani Group stocks rose even further, according to Forbes.

“Adani’s estimated $123.7 billion net worth makes him the richest person in India, $19 billion wealthier than the country’s number 2, Mukesh Ambani (who’s worth an estimated $104.7 billion). He surpasses Buffett as shares of the famed investor’s Berkshire Hathaway dropped by 2% on Friday amid a broad drop in the U.S. stock market,” said Forbes.

There are now only four people on the planet richer than Adani, according to Forbes’ real-time billionaire tracker: Microsoft cofounder Bill Gates (worth an estimated $130.2 billion), French luxury goods king Bernard Arnault ($167.9 billion), Amazon founder Jeff Bezos ($170.2 billion) and Tesla and SpaceX chief Elon Musk ($269.7 billion), according to Forbes.

World today has 2,668 billionaires, including 236 newcomers—far fewer than last year’s 493

Forbes’ 36th annual World’s Billionaires List, released earlier this month, reveals 2,668 billionaires, including 236 newcomers—far fewer than last year’s 493.

Elon Musk tops the World’s Billionaires ranking for the first time ever, with an estimated net worth of $219 billion. Altogether the total net worth of the world’s billionaires is $12.7 trillion, down from last year’s $13.1 trillion.

Following last year’s record-breaking number of billionaires, the past 12 months have proven to be more volatile. The number of billionaires fell to 2,668, down from 2,755 last year. A total of 329 people dropped off the list this year—the most in a single year since the 2009 financial crisis.

“The tumultuous stock market contributed to sharp declines in the fortunes of many of the world’s richest,” said Kerry A. Dolan, Assistant Managing Editor of Wealth, Forbes. “Still, more than 1,000 billionaires got wealthier over the past year. The top 20 richest alone are worth a combined $2 trillion, up from $1.8 trillion in 2021.”

Key facts for the 2022 World’s Billionaires list:

  • Top Five: Tesla’s Elon Musk tops the list, unseating Amazon founder Jeff Bezos, who drops to the No. 2 spot after spending the past four years as the richest person in the world. Bernard Arnault of LVMH remains at No. 3, followed by Bill Gates at No. 4. Rounding out the top five is Warren Buffett, who rejoins the top five after falling to No. 6 last year.
  • Newcomers: Among the list of notable newcomers are Lord of the Rings director Peter Jackson(No.1929); OpenSea founders Devin Finzer and Alex Atallah (Nos. 1397); social media and e-commerce tycoon Miranda Qu (No. 1645) and pop star and cosmetics mogul Rihanna (No. 1729).
  • Self-Made: Of the total 2,668 people on the 2022 ranking, 1,891 are self-made billionaires, who founded or cofounded a company or established their own fortune (as opposed to inheriting it).
  • Women: There are 327 women billionaires, including 16 who share a fortune with a spouse, child or sibling, down from 328 in 2021.
  • Globally: Regionally, Asia-Pacific boasts the most billionaires, with 1,088, followed by the United States, with 735, and Europe, with 592.
  • Drop-offs: The war in Ukraine, a Chinese tech crackdown and slipping stock prices pushed 329 people off the World’s Billionaires list this year, including 169 one-hit wonders who were part of last year’s record 493 newcomers.

To view the full list, visit www.forbes.com/billionaires.

The 2022 Billionaires issue features five consecutive covers, including:

  • Igor Bukhman: When Vladimir Putin invaded Ukraine, Igor Bukhman, the Russia-born billionaire founder of gaming company Playrix, found himself with thousands of employees divided by the frontlines. His internal battlefield offers lessons for us all.
  • Ken Griffin: War in Europe. The China-Russia alliance. De-dollarization. Ken Griffin, Wall Street’s billionaire kingpin, is making the best out of the worst of times.
  • Tope Awotona: Awotona built Calendly out of frustration. Now the scheduling app is worth $3 billion—and the subject of a heated Twitter spat among Silicon Valley elite.
  • Ryan Breslow: Bolt cofounder Ryan Breslow has boosted the value of his fintech to the moon by promising an Amazon-style checkout to millions of online retailers. Now the new billionaire is making a lot of noise—and some powerful enemies—challenging the tech industry’s culture and ethics.
  • Falguni Nayar: A decade ago, when she was 49, Nayar left behind her investment banking career to launch beauty-and-fashion retailer Nykaa. She took it public in November and is now India’s richest self-made woman. Nykaa, which means “one in the spotlight,” currently sells more than 4,000 brands online and in its 102 stores.

The Forbes World’s Billionaires list is a snapshot of wealth using stock prices and currency exchange rates from March 11, 2022.

US Home Prices Rose By 20% In One Year

Prices rose 19.8% year-over-year in February, an even higher rate than the 19.2% growth seen in January, according to the S&P CoreLogic Case-Shiller US National Home Price Index.

Phoenix, Tampa and Miami reported the highest year-over-year gains among the 20 US cities tracked by the index. Phoenix led the way for the 33rd consecutive month with home prices rising 32.9% from the year before. It was followed by Tampa and Miami, which saw 32.6% and 29.7% gains, respectively.

All 20 cities reported price increases in the year ending February 2022. In January, 16 cities saw year-over-year growth. Prices were strongest in the South and Southeast, but every region continued to show big gains.

“US home prices continued to advance at a very rapid pace in February,” said Craig J. Lazzara, managing director at S&P Dow Jones Indices. “That level of price growth suggests broad strength in the housing market, which is exactly what we continue to observe.”

Although Lazarra noted that rising inflation, further interest rate hikes by the Federal Reserve and rising mortgage rates may soon take the momentum out of the housing market.

The imbalance between strong demand from prospective buyers and insufficient supply of available homes has also been pushing home prices higher, said George Ratiu, manager of economic research for Realtor.com

“Today’s S&P Case-Shiller Index highlights a housing market experiencing a renewed sense of urgency in February, as buyers worked through a small number of homes for sale in an effort to get ahead of surging mortgage rates,” he said.

While inventory has increased a bit since February, according to the National Association of Realtors, there are several other changes that have taken place since then, too.

Real estate markets have seen supply-chain disruptions from the war in Ukraine. Mortgage rates have also been rising fast, climbing above 5% for the first time since 2010. In addition, a strong labor market is driving wages and inflation higher, he said.

“For buyers, the jumps in prices and mortgage rates translated into sticker shock,” said Ratiu.

For a median-priced home financed with a 30-year loan, the monthly payment is $550 higher than a year ago, he said.

But with more inventory expected to come onto the market this spring and rising mortgage rates, housing analysts are expecting to see a cool-off in demand.

“Many buyers are deciding to take a step back and re-evaluate their budgets and timelines,” said Ratiu.

Bitcoin Miners Seek Ways To Dump Fossil Fuels

For the past year a company that “mines” cryptocurrency had what seemed the ideal location for its thousands of power-thirsty computers working around the clock to verify bitcoin transactions: the grounds of a coal-fired power plant in rural Montana.

But with the cryptocurrency industry under increasing pressure to rein in the environmental impact of its massive electricity consumption, Marathon Digital Holdings made the decision to pack up its computers, called miners, and relocate them to a wind farm in Texas.

“For us, it just came down to the fact that we don’t want to be operating on fossil fuels,” said company CEO Fred Thiel.

In the world of bitcoin mining, access to cheap and reliable electricity is everything. But many economists and environmentalists have warned that as the still widely misunderstood digital currency grows in price — and with it popularity — the process of mining that is central to its existence and value is becoming increasingly energy intensive and potentially unsustainable.

The Hardin Generating Station, a coal-fired power plant that is also home to the cryptocurrency “mining” operation Big Horn Data Hub, is seen on April 20, 2022, in Hardin, Mont. Energy from burning coal is used to power thousands of computers that are kept on site to produce the digital currency known as bitcoins. (AP Photo/Matthew Brown)

Bitcoin was was created in 2009 as a new way of paying for things that would not be subject to central banks or government oversight. While it has yet to widely catch on as a method of payment, it has seen its popularity as a speculative investment surge despite volatility that can cause its price to swing wildly. In March 2020, one bitcoin was worth just over $5,000. That surged to a record of more than $67,000 in November 2021 before falling to just over $35,000 in January.

Central to bitcoin’s technology is the process through which transactions are verified and then recorded on what’s known as the blockchain. Computers connected to the bitcoin network race to solve complex mathematical calculations that verify the transactions, with the winner earning newly minted bitcoins as a reward. Currently, when a machine solves the puzzle, its owner is rewarded with 6.25 bitcoins — worth about $260,000 total. The system is calibrated to release 6.25 bitcoins every 10 minutes.

When bitcoin was first invented it was possible to solve the puzzles using a regular home computer, but the technology was designed so problems become harder to solve as more miners work on them. Those mining today use specialized machines that have no monitors and look more like a high-tech fan than a traditional computer. The amount of energy used by computers to solve the puzzles grows as more computers join the effort and puzzles are made more difficult.

Marathon Digital, for example, currently has about 37,000 miners, but hopes to have 199,000 online by early next year, the company said.

Determining how much energy the industry uses is difficult because not all mining companies report their use and some operations are mobile, moving storage containers full of miners around the country chasing low-cost power.

The Cambridge Bitcoin Electricity Consumption Index estimates bitcoin mining used about 109 terrawatt hours of electricity over the past year — close to the amount used in Virginia in 2020, according to the U.S. Energy Information Center. The current usage rate would work out to 143 TWh over a full year, or about the amount used by Ohio or New York state in 2020.

Cambridge’s estimate does not include energy used to mine other cryptocurrencies.

A key moment in the debate over bitcoin’s energy use came last spring, when just weeks after Tesla Motors said it was buying $1.5 billion in bitcoin and would also accept the digital currency as payment for electric vehicles, CEO Elon Musk joined critics in calling out the industry’s energy use and said the company would no longer be taking it as payment.

Some want the government to step in with regulation. In New York, Gov. Kathy Hochul is being pressured to declare a moratorium on the so-called proof-of-work mining method — the one bitcoin uses — and to deny an air quality permit for a project at a retrofitted coal-fired power plant that runs on natural gas.

A New York State judge recently ruled the project would not impact the air or water of nearby Seneca Lake. “Repowering or expanding coal and gas plants to make fake money in the middle of a climate crisis is literally insane,” Yvonne Taylor, vice president of Seneca Lake Guardians, said in a statement.

Anne Hedges with the Montana Environmental Information Center said that before Marathon Digital showed up, environmental groups had expected the coal-fired power plant in Hardin, Montana, to close.

“It was a death watch,” Hedges said. “We were getting their quarterly reports. We were looking at how much they were operating. We were seeing it continue to decline year after year — and last year that totally changed. It would have gone out of existence but for bitcoin.”

The cryptocurrency industry “needs to find a way to reduce its energy demand,” and needs to be regulated, Hedges said. “That’s all there is to it. This is unsustainable.”

Some say the solution is to switch from proof-of-work verification to proof-of-stake verification, which is already used by some cryptocurrencies. With proof of stake, verification of digital currency transfers is assigned to computers, rather than having them compete. People or groups that stake more of their cryptocurrency are more likely to get the work — and the reward.

While the method uses far less electricity, some critics argue proof-of-stake blockchains are less secure. Some companies in the industry acknowledge there is a problem and are committing to achieving net-zero emissions — adding no greenhouse gases to the atmosphere — from the electricity they use by 2030 by signing onto a Crypto Climate Accord, modeled after the Paris Climate Agreement.

“All crypto communities should work together, with urgency, to ensure crypto does not further exacerbate global warming, but instead becomes a net positive contributor to the vital transition to a low carbon global economy,” the accord states.

Marathon Digital is one of several companies pinning its hopes on tapping into excess renewable energy from solar and wind farms in Texas. Earlier this month the companies Blockstream Mining and Block, formerly Square, announced they were breaking ground in Texas on a small, off-the-grid mining facility using Tesla solar panels and batteries.

“This is a step to proving our thesis that bitcoin mining can fund zero-emission power infrastructure,” said Adam Back, CEO and co-founder of Blockstream.

Companies argue that cryptocurrency mining can provide an economic incentive to build more renewable energy projects and help stabilize power grids. Miners give renewable energy generators a guaranteed customer, making it easier for the projects to get financing and generate power at their full capacity.

The mining companies are able to contract for lower-priced energy because “all the energy they use can be shut off and given back to the grid at a moment’s notice,” said Thiel.

In Pennsylvania, Stronghold Digital is cleaning up hundreds of years of coal waste by burning it to create what the state classifies as renewable energy that can be sent to the grid or used in bitcoin mining, depending on power demands.

Pennsylvania’s Department of Environmental Protection is a partner in the work, which uses relatively new technology to burn the waste coal more efficiently and with fewer emissions. Left alone, piles of waste coal can catch fire and burn for years, releasing greenhouse gases. When wet, the waste coal leaches acid into area waterways.

After using the coal waste to generate electricity, what’s left is “toxicity-free fly ash,” which is registered by the state as a clean fertilizer, Stronghold Digital spokesperson Naomi Harrington said.

As Marathon Digital gradually moves its 30,000 miners out of Montana, it’s leaving behind tens of millions of dollars in mining infrastructure behind.

Just because Marathon doesn’t want to use coal-fired power anymore doesn’t mean there won’t be another bitcoin miner to take its place. Thiel said he assumes the power plant owners will find a company to do just that. “No reason not to,” he said.

Time For A Higher Poverty Line In India

The time has come for India to raise its poverty line from the existing extreme poverty line of $1.90 per person per day to the lower-middle income (LMI) poverty line of $3.20, a level some 68 percent higher. This may seem odd to aspire to in what is not even the first post-pandemic year, but that is the main message coming out of our recent IMF working paper “Pandemic, Poverty and Inequality: Evidence from India.”

No one should be surprised at this need for a higher poverty line. Per capita GDP growth in India averaged 3.5 percent per annum for twenty years from 1983 to 2003. In 2004, the official poverty line was raised by 18 percent, when the head count ratio (HCR) was 27.5 percent. Rapid growth (5.3 percent per annum) and an improved method of measurement of consumption (the modified mixed recall period (MMRP) rather than the Uniform Recall Period (URP)), resulted in the HCR reaching the low teens in 2011-12.

The poverty line should have been raised then, as Bhalla (2010) argued. Most countries change from the concept of absolute poverty to relative poverty as they get richer, and India should too. Relative poverty—subject to minor debate—is mostly chosen to mean an HCR level of around a quarter or a third of the population. Hence, the$1.90 poverty line was already too low in 2011-12 and is extremely low today.

The HCR of the $1.90 poverty line (Figure 1) has shown a steep decline since 2004—from approximately a third of the population in 2004 to less than 1.5 percent in 2019. These numbers are lower than those shown in the World Bank’s Povcal database, the most commonly used source, because Povcal does not correct for the misleading uniform recall period used or for the provision of food subsidies.

Figure 1. The poverty rate in India steeply declined starting in 2004

Source: NSS 2011-12 MMRP data; Private Final Consumption Expenditure (PFCE)  growth rates for estimates of monthly per capita consumption; authors’ calculations.

By our estimates, in the pre-pandemic year 2019, extreme poverty was already below 1 percent and despite the significant economic recession in India in 2020, we believe that the impact on poverty was small. This is because we estimate poverty (HCR) after incorporating the benefits of in-kind food (wheat and rice) subsidies for approximately 800 million individuals (75 percent of rural and 50 percent of urban residents). This food subsidy was not small and rose to close to 14 percent of the poverty line for the average subsidy recipient (Figure 2) in 2020. This was enough to contain any rise in poverty even in the pandemic year 2020.

Figure 2. Food subsidies contained any increases in poverty

Source: NSS 2011-12 MMRP data; Private Final Consumption Expenditure (PFCE)  growth rates for estimates of monthly per capita consumption; Indian poverty line very close to PPP $1.9 per capita per month; authors’ calculations.

A notable feature of the pandemic response was the provision of a free extra 5 kilograms of wheat or rice per person per month via the Pradhan Mantri Garib Kalyan Yojana (PMGKY) program plus 1 kg of pulses. This was in addition to the existing food transfers of 5 kg per capita per month of wheat or rice at subsidized prices. Total subsidized food grain in 2020 therefore amounted to 10 kg, which is the average per capita level of food (wheat and rice) consumption by Indian citizens for the last three decades.

The additional food subsidy was a pandemic-centric response. We would conjecture that a cross-country comparative study could show that this policy response was possibly the most effective in the world. Hence, the Indian experience can provide lessons for individual countries, and multilateral agencies concerned with effective redistribution of income.

Poverty measurement) in India was in 2011-12. The following survey conducted in 2017-18 generated results that have not been officially released, on the grounds that the data were not of acceptable quality. Our paper has an extensive discussion on the validity of the evidence regarding this controversial decision where we conclude that the data is indeed unreliable and of extremely questionable quality and hence should not be released. A very recent World Bank April 2022 study by Edochie et. al. suggests support for our conclusion and inference.

Our paper presents a consistent time series of poverty and (real) inequality in India for each of the years 2004-2020. Our estimate of real inequality (Figure 3) shows that consumption inequality has also declined, and in 2020 is very close to the lowest historical level of 0.28. Poverty and inequality trends can be emotive, controversial, and confusing. Consumption inequality is lower than income inequality, which itself is lower than wealth inequality. And each can show different trends. The levels and trends are different, and intermingled use should carry a warning about this when discussing “inequality.”

Our results are different than most of the commentary and analysis of poverty in India. All the estimates are made in the absence of an official survey post-2011-12. A large part of the explanation for the difference in results is because of differences in definition. Our paper makes a strong case for the acceptance of the official consumption definition (accepted by most countries and also recommended by the World Bank); it should be measured according to the classification of consumption according to the nature of the good or service consumed. This is the MMRP method for obtaining consumption expenditures.

The Indian government has officially adopted this method, and the above mentioned “ill-fated” 2017-18 survey was the first time when the National Statistical Organization exclusively measured consumption (and poverty) according to the MMRP definition.

However, many studies continue to rely on the now obsolete uniform reference period (URP or 30-day recall for all items) method. For example, a very recent World Bank study estimated the HCR to be around 10 percent in 2019; it uses the outdated (URP) definition of consumption and does not adjust for food subsidies. Incidentally, both in 2009-10 and 2011-12, the URP and MMRP poverty estimates diverged by approximately 10 percentage points, as did their respective estimates of mean consumption.

Thus, given the approximate magnitude of definition differences observed both in 2009-10 and 2011-12 and making the necessary adjustment for food subsidies, the World Bank poverty estimate for 2019 is likely to be very close to our estimate.

Inclusive growth is a very relevant policy goal for all economies. With the pandemic ebbing and the IMF’s expected growth for India rebounding very strongly for three successive years from 2021-23, Indian policymakers will soon be confronted with a policy choice—how long should they keep the extra PMGKY subsidy? This query is part of a huge success story of poverty decline. Additionally, another query pertains to whether policies should move toward targeted cash transfers instead of subsidized food grains.

In the past, the key argument in support of a policy shift to cash transfers was to reduce leakages, but our results indicate that leakages have substantially been reduced over the last decade even in the in-kind food transfer scheme. In fact, the recent food transfer program was a very successful intervention, especially during the pandemic when supply chains were breaking down and there was heightened uncertainty. Under normal circumstances, cash transfers are likely to be more efficient, and they retain broadly the same allocative outcomes as food transfers. The debate therefore now should be on the efficiency trade-offs associated with use of either in-kind or cash transfers as the key instrument of poverty alleviation.

These debates are significant given the improvement in targeting of transfers and are consistent with the objective of building a modern social security architecture in developing countries.

Accumulating all the evidence, the strong conclusion from our work is that Indian policy has effectively delivered both growth and inclusion, and in a fundamental sense has faithfully followed the Rawlsian maximin principle—maximizing the welfare of the poorest.

Biden Admn. To Decide On Student Loans In Months

White House press secretary Jen Psaki said last week that President Biden’s use of executive action to cancel some federal student loan debt is “still on the table” and that a “decision” could be made in the coming months.

Psaki made the comments during an appearance on “Pod Save America” after being pressed about past comments by White House chief of staff Ron Klain. “Yes, still on the table, still on the table,” Psaki could be heard saying to apparent cheers from the audience attending the live podcast, which was released by the platform on Friday. She then pointed to the Aug. 31 deadline for when the freeze on student loan debt payments and interest accrual is set to lapse, saying: “We have to then decide whether it’s extended.”

“Nobody’s had to pay a dollar, a cent, anything in student loans since Joe Biden has been president,” Psaki said. “And if that can help people ease the burden of costs in other parts of their lives, that’s an important thing to consider. That’s a big part of the consideration.”

Between now and the end of August, Psaki said the moratorium is “either going to be extended or we’re going to make a decision, as Ron referenced, about canceling student debt.”

White House press secretary Jen Psaki on Friday said President Biden’s use of executive action to cancel some federal student loan debt is “still on the table” and that a “decision” could be made in the coming months.

Between now and the end of August, Psaki said the current moratorium on student loan payments is “either going to be extended or we’re going to make a decision, as [White House chief of staff Ron Klain] referenced, about canceling student debt.”

Biden last extended the pause earlier this month amid mounting pressure from advocates, borrowers and members of his own party to provide further relief.

Biden during his campaign called for federal student loan debt cancellation, and supported forgiveness of at least $10,000 per borrower. However, some top Democrats have pushed for him to go beyond that, canceling up to $50,000 per borrower or wiping out federal student loan debt entirely.

The White House called on Congress to send legislation canceling debt to Biden’s desk, but Democrats are not optimistic about their chances of doing so in the 50-50 Senate given staunch GOP opposition. Sixty votes would be needed to overcome procedural hurdles.

The background: The current pause on federal student loan payments was first implemented under the Trump administration at the outset of the coronavirus pandemic. It has since been extended six times.

Biden last extended the pause earlier this month amid mounting pressure from advocates, borrowers and members of his own party to provide further relief.

World Bank Cuts India, South Asia Growth Forecast On Ukraine Crisis

Indian Prime Minister Narendra Modi speaks during the inauguration of the Samsung Electronics smartphone manufacturing facility in Noida, India, July 9, 2018. REUTERS/Adnan Abidi

NEW DELHI – The World Bank cut its economic growth forecast for India and the whole South Asian region on Wednesday, citing worsening supply bottlenecks and rising inflation risks caused by the Ukraine crisis.

The international lender lowered its growth estimate for India, the region’s largest economy, to 8% from 8.7% for the current fiscal year to March, 2023 and cut by a full percentage point the growth outlook for South Asia, excluding Afghanistan, to 6.6%.

In India, household consumption will be constrained by the incomplete recovery of the labour market from the pandemic and inflationary pressures, the bank said.

“High oil and food prices caused by the war in Ukraine will have a strong negative impact on peoples’ real incomes,” Hartwig Schafer, World Bank Vice President for South Asia, said in a statement.

The World Bank raised its growth forecast for Pakistan, the region’s second-largest economy, for the current year ending in June, to 4.3% from 3.4% and kept next year’s growth outlook unchanged at 4%.

The region’s dependence on energy imports meant high crude prices forced its economies to pivot their monetary policies to focus on inflation rather than reviving economic growth after nearly two years of pandemic restrictions.

The World Bank slashed this year’s growth forecast for Maldives to 7.6% from 11%, citing its large imports of fossil fuels and a slump in tourism arrivals from Russia and Ukraine.

It raised crisis-hit Sri Lanka’s 2022 growth forecast to 2.4% from 2.1% but warned the island’s outlook was highly uncertain due to fiscal and external imbalances.

Sri Lanka’s central bank said on Tuesday it had become “challenging and impossible” to repay external debt, as it tries to use its dwindling foreign exchange reserves to import essentials like fuel.

Recession Fears Rise As Fed Fights Inflation

As Americans feel the squeeze of rising inflation, fears are growing that a recession is around the corner.  The U.S. economy is running hot as a record stretch of job growth, steady consumer demand and intense demand for labor has helped fuel the highest inflation rate in 40 years.

While the economy has recovered far quicker than many economists expected, the speed of the rebound is putting pressure on the Federal Reserve to take more significant action to help slow price growth.

Wendy Edelberg, director of The Hamilton Project and a senior economic studies fellow at the left-leaning Brookings Institution, said the economy has been “revving” given the amount of fiscal stimulus that has been poured into the system to keep it afloat during the coronavirus pandemic.

But in order to combat the skyrocketing inflation, Edelberg and other economists say a slowdown is vital.

“So, now the question is, how smoothly does that slowdown happen?” Edelberg said. “And slowdowns can be painful. So, there’s absolutely a risk of a recession.”

The Fed’s primary tool for keeping prices stable and the job market strong is adjusting the federal funds rate. When the Fed raises or cuts its baseline interest rate range, borrowing costs for home loans, credit cards and other lending products typically move in the same direction.

When interest rates rise, consumer and business spending tends to decrease as the costs of borrowing money increase. Higher interest rates also incentivize saving, which means less immediate spending in the economy.

After slashing rates to near-zero levels amid the onset of the pandemic, the Fed in March launched a series of interest rate hikes meant to bring down soaring inflation.

The Fed hopes higher borrowing costs will slow down the economy enough to curb price growth without halting the recovery.

“Our goal is to restore price stability while fostering another long expansion and sustaining a strong labor market,” Fed Chair Jerome Powell said last month, adding the bank is aiming for the economy to achieve a “soft landing, with inflation coming down and unemployment holding steady.”

Powell, other Fed officials and some economists believe the U.S. economy is strong enough to withstand rising interest rates without falling into recession or losing jobs. The U.S. gained nearly 1.7 million jobs over the first three months of the year, consumer spending has remained strong and there are roughly two open jobs for every unemployed jobseeker.

Those confident in the Fed’s handle on inflation believe the bank can stanch inflation while only reducing job openings and the intense need for workers, rather than slowing the economy into layoffs.

Even so, the Fed is facing serious turbulence as it attempts to steer the recovery to a sustainable pace.  The war in Ukraine, the sanctions imposed on Russia and Moscow’s response has fueled rapid price increases for oil, gasoline, food, key minerals and other essential consumer goods already hit by inflation. COVID-19 shutdowns in China have also jammed up supply chains, which were already overwhelmed by consumer demand.

Dana M. Peterson, chief economist at The Conference Board, said Fed rate hikes could help reduce consumer demand for goods and services, pent-up savings, rising wages and housing market heat, but can’t do anything about supply chain dysfunction, COVID-19 shutdowns and the war.

“The supply side drivers of inflation, which includes the supply chain disruptions and also higher global commodity prices, the Fed can do very little about. Nonetheless, the Fed is going to be raising interest rates,” Peterson said during a Thursday briefing with reporters.

“I don’t know how confident the Fed is about anything, but certainly I think they’ve abandoned expectations that there’s going to be kind of a natural solution to inflation.”

Economists warn more must be done to tighten monetary policy to cool the economy, which could still mean pain in the months ahead for more Americans’ finances.

“As you slow the economy down, inflation will fall,” Ray Fair, an economics professor at Yale University, said, adding that’s how the Fed can help lower inflation. “But the cost of that, of course, is slower output growth and higher unemployment.”

And Fair, director emeritus at the National Bureau of Economic Research (NBER), said his own research suggests the Fed has “got to do quite a bit” of intervention to slow the economy.

“They’ve got to raise the interest rate, for example, more than just two percentage points, if they expect to get much lowering of inflation,” Fair said. The Fed funds rate is currently at a range of 0.25 to 0.5 percent and bank officials expect to raise it to roughly 2 percent by the end of the year.

Some economists fear inflation may be rising too quickly for the Fed to curb without raising rates so high, it halts economic growth.

In March, consumer prices shot up 1.2 percent, according to data released by the Labor Department this week. The data also found those prices had risen to 8.5 percent in the past year alone, marking the highest yearly increase in roughly four decades.

Americans saw prices go up in a variety of areas, ranging from food to gasoline and transportation, as the Ukraine-Russian war helped exacerbate the nation’s ongoing inflation problem.

Fair, whose bureau is often looked to for measuring recessions, said the NBER’s defines such an event as roughly, but not completely, “two successive quarters of negative real growth in GDP.”

Recent weeks have seen reports of institutions like Bank of America warning of recession shocks. A recent survey by The Wall Street Journal found more economists are also changing their tune on chances of a recession, finding forecasters “on average put the probability of the economy being in recession sometime in the next 12 months at 28 percent,” compared to 18 percent in January.

In an interview, Desmond Lachman, a senior fellow for the right-leaning American Enterprise Institute, said he feels a recession is likely.

“In order for [the Fed] to get the inflation out of the system, they’re going to have to tighten policy and that’s going to produce a recession,” Lachman said.

But others believe the Fed may have to contend that higher inflation could be around for a little while longer, as the central bank proceeds in slowing down the economy.

“They’re also going to have to recognize that they may not get back to a 3 percent or 2 percent (annual inflation) target anytime soon,” Peterson said, arguing such an attempt “would essentially drive the US economy into recession.”

Mortgage Rates Hit 5 Percent, Ushering In New Economic Uncertainty

Mortgage rates swelled above 5 percent for the first time in more than a decade — an unexpectedly rapid ascent that has begun to temper the U.S. housing boom and could usher new uncertainty into an economy dogged by soaring inflation.

The 30-year fixed-rate mortgage, the most popular home loan product, hit the threshold just five weeks after surpassing 4 percent, according to Freddie Mac data released Thursday. The average has not been this high since February 2011.

The run-up comes as the Federal Reserve has launched a major initiative to rein in the highest inflation in 40 years. Fed officials are betting that higher interest rates will slash inflation and recalibrate the job market. But their plan also rests on the assumption that higher rates will cool demand for housing, especially while homes themselves are in such short supply.

Low rates fueled the revival of the U.S. housing market after the Great Recession and have helped drive home prices to record levels. But after two years of hovering at historical lows, rates have been on a tear: In January, the 30-year fixed average was 3.22 percent. It was 3.04 percent a year ago. And while mortgage rates had been expected to rise, they’ve done so more quickly than many economists predicted.

“I’m not surprised that rates have hit 5 percent, but I am surprised that everyone else is surprised,” Curtis Wood, founder and chief executive of Bee, a mobile mortgage app, said via email. “If you look at historical action by the Fed in a high-rate environment and compare that to what the Fed is doing today, the Fed is underreacting to the reality of inflation in the economy.

“I’m surprised that rates aren’t at 6 percent right now,” he added, “and wouldn’t be shocked if they’re at 7 percent by end of year.”

Consumers have been absorbing higher prices in nearly every facet of their lives, with essentials such as food and gasoline spiking 8.8 percent and 48 percent, respectively, compared with last year. But higher mortgage rates can significantly limit what they can buy, or price them out altogether.

Several months ago, a home buyer would be looking to pay $1,347 a month on a $300,000 loan at 3.5 percent interest. But if the buyer had waited until this week, the same loan at 5 percent would tack on $263, bringing the monthly payment to $1,610.

The Federal Reserve’s efforts to tame inflation are driving the rise in rates. Although the Fed does not set mortgage rates, it does influence them. The central bank took its first steps toward bringing down inflation in March when it raised its benchmark rate for the first time since 2018. In addition to the federal funds rate hike, the Fed is soon to begin the process of reducing its balance sheet.

The Federal Reserve holds about $2.74 trillion in mortgage-backed securities. It indicated it will reveal its plans for reducing its holdings at its May meeting. The more aggressively the Fed sells those bonds, the faster mortgage rates are likely to rise.

The cost of housing doesn’t only weigh on buyers and sellers. It also has proved to be a major complication for the economic recovery, and potentially jeopardizes policymakers’ ability to rein in soaring inflation.

Inflation is rising at the fastest pace in 40 years, with prices climbing 8.5 percent in March compared with the year before. Shelter is a major part — roughly one third — of the basket of goods and services used to calculate inflation, or what’s known as the consumer price index. That means that if housing costs don’t meaningfully turn around soon, it will be that much harder for overall inflation to simmer down to more normal levels.

Shelter costs also stand apart from other categories, such as gas, food or plane tickets, that may be more susceptible to forces like the ongoing coronavirus pandemic, supply chain disruptions or a war. (Courtesy: https://www.msn.com/en-us/money/realestate/mortgage-rates-hit-5-percent-ushering-in-new-economic-uncertainty/ar-AAWe1XQ)

Inflation Has Risen Around The World, But The U.S. Has Seen One Of The Biggest Increases

Americans who have been to the grocery store lately or started their holiday shopping may have noticed that consumer prices have spiked. The annual rate of inflation in the United States hit 6.2% in October 2021, the highest in more than three decades, as measured by the Consumer Price Index (CPI). Other inflation metrics also have shown significant increases in recent months, though not to the same extent as the CPI.

Understanding why the rate of inflation has risen so quickly could help clarify how long the surge might last – and what, if anything, policymakers should do about it. The recent acceleration in the rate of inflation appears to be fundamentally different from other inflationary periods that were more closely tied to the regular business cycle. Explanations for the current phenomenon proffered to date include continuing disruptions in global supply chains amid the coronavirus pandemic; turmoil in the labor markets; the fact that today’s prices are being measured against prices during last year’s COVID-19-induced shutdowns; and strong consumer demand after local economies were reopened.

How we did this

At least one thing is clear: A resurgent inflation rate is by no means solely a U.S. concern. A Pew Research Center analysis of data from 46 nations finds that the third-quarter 2021 inflation rate was higher in most of them (39) than in the pre-pandemic third quarter of 2019. In 16 of these countries, including the U.S., the inflation rate was more than 2 percentage points higher last quarter than in the same period of 2019. (For this analysis, we used data from the Organization for Economic Cooperation and Development, a group of mostly highly developed, democratic countries. The data covers the 38 OECD member nations, plus eight other economically significant countries.)

At 5.3%, the U.S. had the eighth-highest annual inflation rate in the third quarter of 2021 among the 46 countries examined, narrowly edging out Poland. The increase in the U.S. inflation rate – 3.58 percentage points between the third quarter of 2019 and the third quarter of 2021 – was the third highest in the study group, behind only Brazil and Turkey, both of which have substantially higher inflation rates in general than the U.S. does.

Regardless of the absolute level of inflation in each country, many show variations on the same pattern: relatively low inflation before the COVID-19 pandemic struck in the first quarter of 2020; flat or falling inflation for the rest of that year and into 2021, as many governments sharply curtailed most economic activity; and rising inflation in the second and third quarters of this year, as the world struggled to get back to something approaching normal.

For most countries in this analysis, 2021 has marked a sharp break from what had been an unusually long period of low-to-moderate inflation. In fact, during the decade leading up to the pandemic, 34 of the 46 countries in the analysis averaged changes in inflation rates of 2.6% or lower. In 27 of these countries, inflation rates averaged less than 2%. The biggest exception was Argentina, whose economy has been plagued by high inflation and other ills for decades. The OECD has no data on Argentine inflation rates before 2018, but in the 2018-19 period it averaged 44.4%.

At the other end of the spectrum is Japan, which has struggled against persistently low inflation and periodic deflation, or falling prices, for more than two decades, mostly without success. In the first quarter of 2020, Japan’s inflation rate was running at an anemic 0.7%. It slid into deflationary territory in the last quarter of 2020 and has remained there since: Consumer prices in the third quarter of this year were 0.2% below their level in the third quarter of 2020.

A few other countries have departed from the general dip-and-surge pattern. In Iceland and Russia, for instance, inflation has risen steadily throughout the pandemic, not just in more recent months.

In Indonesia, inflation fell early on and has remained at low levels. In Mexico, the inflation rate fell slightly during the 2020 lockdown period but returned quickly, hitting 5.8% in the third quarter of 2021, the highest level since the fourth quarter of 2017. And in Saudi Arabia, the pattern was reversed: The inflation rate surged during the height of the pandemic but fell sharply in the most recent quarter, to just 0.4%.

Sundar Pichai Announces $9.5 Bn For New Offices, Data Centres In US

Alphabet and Google CEO Sundar Pichai on Wednesday announced to invest approximately $9.5 billion for new offices and data centres in the US this year, creating 12,000 new full-time jobs and thousands more among local suppliers, partners and communities.

Pichai said that Google helped provide $617 billion in economic activity for millions of American businesses, nonprofits, creators, developers and publishers last year.

“In addition, the Android app economy helped create nearly two million jobs last year, and YouTube’s creative ecosystem supported 394,000 jobs in 2020,” he informed.

In the past five years, Google has invested more than $37 billion in its offices and data centres in 26 US states, creating over 40,000 full-time jobs.

“That’s in addition to the more than $40 billion in research and development the company invested in 2020 and 2021,” said the company.

Pichai said that while it might seem counterintuitive to step up investment in physical offices even as the world embraces more flexibility in how we work.

“Yet we believe it’s more important than ever to invest in our campuses and that doing so will make for better products, a greater quality of life for our employees, and stronger communities,” the Google CEO noted.

At the same time, the investments in data centres “will continue to power the digital tools and services that help people and businesses thrive”.

“As we work towards running our offices and data centres on carbon-free energy 24/7 by 2030, we’re aiming to set new standards for green building design”.

In California, Google will continue to invest in offices and support affordable housing initiatives in the Bay Area as part of its $1 billion housing commitment. (IANS)

China Debt Traps in the New Cold War

As China increases lending to other developing countries, ‘debt trap’ charges are growing quickly. As it greatly augments financing for development while other sources continue to decline, condemnation of China’s loans is being weaponized in the new Cold War.

Debt-trap diplomacy?
The catchy term ‘debt-trap diplomacy’ was coined by Indian geo-strategist Brahma Chellaney in 2017. According to him, China lends to extract economic or political concessions when a debtor country is unable to meet payment obligations. Thus, it overwhelms poor countries with loans, to eventually make them subservient.

Unsurprisingly, his catchphrase has been popularized to demonize China. Harvard’s Belfer Center has obligingly elaborated on the rising Asian power’s nefarious geostrategic interests. Meanwhile, as with so much else, the Biden administration continues related Trump policies.

But even Western researchers generally wary of China dispute the new narrative. A London Chatham House study concluded it is simply wrong – flawed, with scant supporting evidence.

Studying China’s loan arrangements for 13,427 projects in 165 countries over 18 years, AidData – at the US-based Global Research Institute – could not find a single instance of China seizing a foreign asset following loan default.

China has been the ‘new kid on the block’ of development financing for more than a decade. Its growing loans have helped fill the yawning gap left by the decline and increasing private business orientation of financing by the global North.

Instead of tied aid pushing exports, as before, it now shamelessly promotes foreign direct investment from donor nations. Unless disbursed via multilateral institutions, China’s increased lending to support businesses abroad has not really helped developing countries cope with renewed ‘tied’ concessional aid.

Grand ‘debt trap diplomacy’ narratives make for great propaganda, but obscure debt flows’ actual impacts. Most Chinese lending is for infrastructure and productive investment projects, not donor-determined ‘policy loans’. Some countries ‘over-borrow’, but most do not. Deals can turn sour, but most apparently don’t.

While leaving less room for discretionary abuse in implementation, project lending typically puts borrowers at a disadvantage. This is largely due to the terms of sought-after foreign investment and financing, regardless of source. Hence, the outcomes of most such borrowing – not just from China – vary.

Sri Lanka
Sri Lanka’s Hambantota Port is the most frequently mentioned China debt trap case. The typical media account presumes it lent money to build the port expecting Sri Lanka to get into debt distress. China then supposedly seized it – in exchange for providing debt relief – enabling use by its navy.

But independent studies have debunked this version. Last year, The Atlantic insisted, ‘The Chinese “Debt Trap” Is a Myth’. The subtitle elaborated, “The narrative wrongfully portrays both Beijing and the developing countries it deals with”.

It elaborated: “Our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country, much less the port of Hambantota”.

The project was initiated by then President Mahindra Rajapaksa – not China or its bankers. Feasibility studies by the Canadian International Development Agency and the Danish engineering firm Rambol found it viable. The Chinese Harbour Group construction firm only got involved after the US and India both refused Sri Lankan loan requests.

Sri Lanka’s later debt crisis has been due to its structural economic weaknesses and foreign debt composition. The Chatham House report blamed it on excessive borrowing from Western-dominated capital markets – not Chinese banks.

Even the influential US Foreign Policy journal does not blame Sri Lanka’s undoubted economic difficulties on Chinese debt traps. Instead, “Sri Lanka has not successfully or responsibly updated its debt management strategies to reflect the loss of development aid that it had become accustomed to for decades”.

As the US Fed tapered ‘quantitative easing’, borrowing costs – due to Sri Lanka’s persistent balance of payment problems – rose, forcing it to seek International Monetary Fund help. Some argue borrowing even more from China is the best option available to the island republic.

To set the record straight, there was no debt-for-asset swap after Sri Lanka could no longer service its foreign debt. Instead, a Chinese state-owned enterprise leased the port for US$1.1 billion. Sri Lanka has thus boosted its foreign reserves and paid down its debt to other – mainly Western – creditors.

Also, Chinese navy vessels cannot use the port – home to Sri Lanka’s own southern naval command. “In short, the Hambantota Port case shows little evidence of Chinese strategy, but lots of evidence for poor governance on the recipient side”.

Malaysia
China has also been accused by the media of seeking influence over the Straits of Malacca, through which some 80% of its oil imports pass. Debt-trap proponents claim Beijing therefore inflated lending for Malaysia’s controversial East Coast Rail Link (ECRL).

The Chatham House report notes, “The real issue here is not one of geopolitics, but rather – as in Sri Lanka – the recipient government’s efforts to harness Chinese investment and development financing to advance domestic political agendas, reflecting both need and greed”.

ECRL was initiated by convicted former Malaysian prime minister Najib Razak. Ostensibly to develop the less developed East Coast of Peninsular Malaysia as part of China’s Belt and Road Initiative, it rejected other less costly, but much needed options.

Borrowings are far more than needed – probably for nefarious purposes. Loan terms were structured to delay repayment – to Najib’s political advantage by ‘passing the buck’ to later generations. But such abuse is by the borrower – not the lender – unless Chinese official connivance is involved.

Non-alignment for our times
There is undoubtedly much room for improving development finance, especially to achieve more sustainable development. Instead of mainly lending to the US, as before, China’s growing role can still be improved. To begin, all involved should respect the United Nations’ principles on responsible sovereign lending and borrowing.

After more than half a century of Western donors’ largely betrayed promises, China’s development finance has significantly improved ‘South-South cooperation’. Meanwhile, sustainable development finance needs – compounded by global warming, the pandemic and Ukraine war – have increased.

After decades of the West denying China commensurate voice in decision making, even under rules it made, its role on the world stage has grown. But instead of working together for the benefit of all, rich countries seem intent on demonizing it. Unsurprisingly, most developing country governments seem undeterred.

As the new Cold War and the scope of economic sanctions spread, collateral damage is undermining development finance and developing countries. To cope with the new situation, developing countries need to consider building a new non-aligned movement for our dark times.

Gautam Adani Now 6th Richest Person In World $20.6 Billion Richer Than Mukesh Ambani Of Reliance

Gautam Adani, founder and chairman of the Adani group, a conglomerate with businesses in sectors such as energy, ports, mining, edible oil and so on, with a net worth of $118 billion is now the world’s sixth-richest person, driven by a meteoric rise in the value of Adani group’s listed stocks. The 59-year-old mogul has overtaken Google’s famed founders Larry Page and Sergey Brin, according to the Bloomberg Billionaires Index.

It is important to note here in this context that Adani’s net worth soared by $8.57 billion, or about Rs 65,091 crore, due to a rise in the share prices of Adani Green Energy, Adani Enterprises, Adani Gas and Adani Transmission on Monday. While India’s benchmark indices ended the day in the red on Monday, shares of Adani Group surged up to 16 per cent.

Adani Green Energy breaks into list of top 10 most valued firms on BSE, replaces Bharti Airtel

With an almost $41.6 billion jump in his personal fortune, Gautam Adani is the world’s biggest wealth-gainer this year. Meanwhile, Reliance Industries (RIL)— India’s most valuable company—chairman Mukesh Ambani’s total wealth now stands at $97.4 billion, and he is now the 11th richest in the world, as per the latest Bloomberg billionaire ranking. So far this year, his personal wealth has increased by $7.45 billion. If we go by the Bloomberg wealth index, Adani is $20.6 billion ahead of Ambani at present, and it could be tough for the RIL boss to catch up very quickly.

The moot question is: What’s made Adani so rich, so fast? The tycoon is pushing into clean energy, airports and power plants. The mega stock market gainer that catapulted Adani to the top position is Adani Green Energy. Shares of the company soared 16.25 per cent to settle at Rs 2,701.55 apiece on BSE on Monday. It entered the list of top-10 valued companies as its market valuation zoomed over Rs 4.22 lakh crore.

For the last 14 years, Ambani has been the leader of India’s wealthiest list. The oil-to-telecom conglomerate boss was briefly dethroned by pharmaceutical tycoon Dilip Sangavi a few years ago but grabbed the top position.

Last week, Adani had reached a net worth of $100 billion as he became the new member of the centibillionaires club. Worth mentioning here is that Amazon founder Jeff Bezos (currently have a net worth of $176 billion) was the first to hit the $100 billion milestone in 2017 since Microsoft. co-founder Bill Gates back in 1999 for a brief period.

Tesla chief executive Musk, now the world’s richest person with a fortune of $249 billion, joined the elite club in 2020.

Meanwhile, in the last 10 years, while Ambani’s wealth has grown 400 per cent, Adani has seen a 1,830 per cent jump, as per the 2022 M3M Hurun Global Rich List.

India’s Apex Court Upholds BJP Govt’s Foreign Contribution Regulation Act

The Supreme Court on Friday, April 8th affirmed the validity of the Foreign Contribution (Regulation) Amendment (FCRA) Act, 2020, which imposes new conditions on the receipt and use of funds by NGOs.

A bench headed by Justice A.M. Khanwilkar upheld the 2020 amendments made to the FCRA Act, 2010. The detailed judgment in the case will be uploaded on the top court website later in the day.

The Centre had told the Supreme Court that there exists no fundamental right to receive unbridled foreign contributions without any regulation, while defending the amendments made in 2020 to the Foreign Contribution (Regulation) Act.

The MHA emphasized that FCRA aim was to ensure foreign contribution does not adversely impinge upon the functioning of parliamentary institutions, political associations, and academic, and other voluntary organisations as well as individuals in India.

The petitioners had challenged the amendments, which included newly added sections 12 and 17, which state that the foreign contributions must be deposited in the FCRA account created in the specified branch of the scheduled bank, which was later notified as State Bank of India, New Delhi branch.

The petitioners claimed the amendments were arbitrary and stringent, which made the functioning of NGOs extremely difficult.

The Ministry of Home Affairs (MHA) in a 355-page affidavit filed in the Supreme Court, said Parliament has enacted the Foreign Contribution (Regulation) Act, laying down a clear legislative policy of strict controls over foreign contributions for certain activities in the country.

The MHA said the “legislation has also prohibited acceptance and utilisation of foreign contribution or foreign hospitality for any activities detrimental to the national interest and for matters connected therewith or incidental thereto”. The affidavit was settled by Solicitor General of India Tushar Mehta, who was assisted by advocate Kanu Agrawal.

Petitioners in the matter were — Noel Harper and Nigel Mills of Share and Care Foundation in Andhra Pradesh and Joseph Lizy and Annamma Joachim of National Workers Welfare Trust in Telangana.

British Chancellor Rishi Sunak Seeks Inquiry Into Wife Akshata Murty’s Tax Leak

Rishi Sunak of the United Kingdom, an embattled British Conservative party Chancellor of the exchequer, has defended his Indian wife Akshata Murthy, daughter of Narayana Murthy, one of the founders of software giant Infosys, against charges of avoiding paying taxes in Britain.

Sunak, who is of East African-Indian origin, told media that reports about her non-domicile status are ‘unpleasant smears’. A non-dom in the United Kingdom does not have to pay tax on her overseas income. The BBC estimated “she would have avoided 2.1 million pounds a year in UK tax”.

This, while not unlawful, is embarrassing for Sunak, under whom comes Her Majesty’s Revenue and Customs (HMRC). “To smear my wife to get at me is awful,” Sunak insisted.

Murthy is said to own a 0.9 per cent stake in Infosys, which has been calculated as being worth 500 million pounds. Annual dividends from this holding is estimated to be 11.6 million pounds. On Thursday, it emerged she pays just 30,000 pounds a year in the UK on the British income.

Rishi Sunak is now demanding a Whitehall inquiry to find out who leaked details about his wife Akshata Murty’s tax arrangements. Murty has said she will pay UK taxes on her overseas income, following a row over her non-domicile status, the BBC reported.

Downing Street has rejected newspaper reports that its staff leaked damaging stories about Sunak to the media. It has been a bruising week for the Chancellor, and now he has asked senior civil servants for a full investigation to establish who divulged his wife’s tax status.

His allies say very few people had access to the personal information, which Sunak declared to Whitehall officials when he became a minister in 2018, the BBC reported.

Some Conservative MPs say he was naive to think the details would remain private, and that he should have predicted that the tax arrangements would be criticised as inappropriate, despite being legal. Sunak’s team has dismissed suggestions of a rift with Downing Street and say the prime minister has been “incredibly supportive”.

The opposition Labor party said it would be “breath-taking hypocrisy” if the Chancellor’s wife had reduced her tax bill as he raised taxes for millions of workers — referring to the rise in National Insurance contributions imposed in last month’s budget by Sunak.

Opposition Labor Party MP Louise Haigh said: “I think the question many people will be asking is whether it was ethical and whether it was right that the Chancellor of the Exchequer, whilst piling on 15 separate tax rises to the British public, was benefiting from a tax scheme that allowed his household to pay significantly less to the tune of potentially tens of millions of pounds.”

The Chancellor’s brand, vigorously promoted since he came to office, has been damaged, with some members of the ruling Conservative Party questioning his judgement. Opposition MPs have said Sunak’s family is benefiting at a time when he is putting up taxes for millions of others, the BBC reported.

However, a section of British newspapers has claimed that Prime Minister Boris Johnson’s office is leaking damaging material about Sunak to media. 10 Downing Street described the allegations as “categorically untrue” and “baseless”.

On Thursday, the pro-Johnson Daily Mail ran a headline, which read: “Collapsed fitness chain backed by Rishi Sunak’s non-dom wife was paid up to 650,000 pounds in furlough cash – while her billionaire father’s IT firm claimed Covid handout for hundreds of UK staff”.

Earlier, the attack against Sunak ranged from he being the richest member of Parliament with a net worth of 200 million pounds, to Infosys operating in Russia, which western corporate houses are restrained from doing after the West’s sanctions against the Russian Federation following its invasion of Ukraine.

While Sunak may have built a slight fortune as an investment banker, his background is upper middle class, his father being a general practitioner and mother an owner of a chemist’s shop.

The allegation about Infosys was ridiculous as an Indian company is under no obligation to copy its western counterparts, since the government of India maintains normal economic ties with Moscow.

From December 2021 until before the Russia-Ukraine conflict — when Johnson’s continuity as head of government looked untenable, because of a series of scandals associated with him — it was widely being speculated in British print media as well as in Conservative circles that Sunak was a front-runner to succeed Johnson.

It was also pointed out at that point that while other cabinet colleagues were strenuously defending Johnson against the barrage of demands for him to step down, Sunak was lukewarm in doing so, which was interpreted as ‘ambition’.

Sunak became popular when the British government was significantly generous in protecting the livelihoods during the Covid-19 crisis. But having borrowed money to extend such assistance, it was inevitable that he would have to raise taxes to repay the debt. However, given the cost of living crisis that had descended on Britons because of inflation, the Chancellor’s recent budget has been condemned as uncaring.

In Britain, a budget is identified in particular with the Chancellor, although the intelligentsia is aware its contents have the prior approval of the Prime Minister. With Johnson not saying much to protect Sunak against the onslaught unleashed against him on his proposals or lack of them, an impression has grown that the latter is being thrown under a bus.

Rising Oil Prices To Keep Indian Rupee On A Slippery Slope

High crude oil prices combined with fears of rising inflation are expected to keep the Indian rupee under pressure, next week. Lately, the Brent crude oil price has remained elevated due to the Russian-Ukrainian war. The price has hovered in the range of $100-$110 in the last few weeks.

“Rupee has been under pressure due to rising US bond yields, inflation and high crude oil prices,” said Sajal Gupta Head Fx & Rates Edelweiss.

“These circumstances are going to be tough for the Indian rupee to appreciate. Expect rupee to trade between 75.50 and 76.25 in the next week.” Last week, the rupee closed at 75.90 to a greenback.

“Next week is a relatively shorter week but market participants will be keeping an eye on the inflation and industrial production number to gauge a view for the currency,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“Expectation is that inflation could remain elevated following the recent rise in energy and food prices. On the other hand, industrial production could grow at a slower pace in January and could further weigh on the currency.”

The Central Statistics Office (CSO) is slated to release the macro-economic data points of Index of Industrial Production (IIP), Consumer Price Index (CPI) on March 12.

On the other hand, expectations of India Inc’s healthy Q4FY22 results season should attract fresh equity focused foreign funds which might cub any sharp weakness in the Indian rupee versus the US dollar.

“Dollar index have surged past week and it is now trading near crucial psychological mark of 100,” said Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities.

“Rupee is likely to consolidate next week on back of improving sentiments for equity markets. In near term, spot USD INR expected to trade in the range of 76.20 to 75.70. with bias towards appreciation.”

$40 Billion Borrowed By US Consumers in February Alone

Americans got into a lot more debt in February this year as rampant inflation kept up the pressure, the Federal Reserve’s consumer credit report showed last week. Debt levels jumped by nearly $42 billion to a total of almost $4.5 trillion. That’s an annual increase of 11.3%, seasonally adjusted, far outperforming economists’ expectations and setting a new high. In January, total credit had grown only 2.4%.

The Fed’s historical consumer credit data goes back to the early 1940s. Revolving credit, which includes credit cards, jumped by 20.7% to about $1.1 trillion. The category increased by only 4% in the prior month.

Nonrevolving credit, such as student or car loans, grew by 8.4% to $3.4 trillion, also outpacing a smaller January gain.

Americans have been challenged with a rapid pace of price increases everywhere, from the grocery store to the gas station. Year-over-year inflation has increased at a pace not seen in 40 years.

Consumer spending has kept up the pace so far, but it is not immediately clear whether that’s because people are paying more for the same items that got more expensive or are actually buying more goods and services.

In late February, Russia’s invasion of Ukraine jolted global energy markets and boosted the price of gasoline. With prices at the pump rising higher in March, credit card spending is unlikely to have gone down after the February jump.

Biden’s Order To Release Oil From Strategic Petroleum Reserve To Reduce Gas Prices ‘Fairly Significantly’

US President Joe Biden announced last week that his administration will release 1 million barrels of oil per day for the next six months from its strategic reserve in an effort a bid to control energy prices that have spiked after the United States and allies imposed steep sanctions on Russia over its invasion of Ukraine. The releasing of over 180 million barrels from the US Strategic Petroleum Reserve is the “largest” release from national reserve in the country’s history, Biden said in a speech from the Eisenhower Executive Office Building on Thursday.

The president said it was not known how much gasoline prices could decline as a result of his move, but he suggested it might be “anything from 10 cents to 35 cents a gallon.” Gas is averaging about $4.23 a gallon, compared with $2.87 a year ago, according to AAA.

“As Russian oil comes off the global market, supply of oil drops and prices are rising,” he said, acknowledging the US energy embargo on Russia would “come with a cost”.

“The bottom line is if we want lower gas prices we need to have more oil supply right now,” Biden said. “This is a moment of consequence and peril for the world, and pain at the pump for American families.”

The president also wants Congress to impose financial penalties on oil and gas companies that lease public lands but are not producing. He said he will invoke the Defense Production Act to encourage the mining of critical minerals for batteries in electric vehicles, part of a broader push to shift toward cleaner energy sources and reduce the use of fossil fuels. The actions show that oil remains a vulnerability for the U.S. Higher prices have hurt Biden’s approval domestically and added billions of oil-export dollars to the Russian government as it wages war on Ukraine.

Tapping the stockpile would create pressures that could reduce oil prices, though Biden has twice ordered releases from the reserves without causing a meaningful shift in oil markets. Biden said Thursday he expects gasoline prices could drop “fairly significantly.”

Part of Biden’s concern is that high prices have not so far coaxed a meaningful jump in oil production. The planned release is a way to increase supplies as a bridge until oil companies ramp up their own production, with administration officials estimating that domestic production will grow by 1 million barrels daily this year and an additional 700,000 barrels daily in 2023.

The markets reacted quickly with crude oil prices dropping about 6% in Thursday trading to roughly $101 a barrel. Still, oil is up from roughly $60 a year ago, with supplies failing to keep up with demand as the world economy has begun to rebound from the coronavirus pandemic. That inflationary problem was compounded by Russian President Vladimir Putin’s invasion of Ukraine, which created new uncertainties about oil and natural gas supplies and led to retaliatory sanctions from the U.S. and its allies.

Stewart Glickman, an oil analyst for CFRA Research, said the release would bring short-term relief on prices and would be akin to “taking some Advil for a headache.” But markets would ultimately look to see whether, after the releases stop, the underlying problems that led to Biden’s decisions remain.

“The root cause of the headache is probably still going to be there after the medicine wears off,” Glickman said. Biden has been in talks with allies and partners to join in additional releases of oil, such that the world market will get more than the 180 million barrels total being pledged by the U.S.

Americans on average use about 21 million barrels of oil daily, with about 40% of that devoted to gasoline, according to the U.S. Energy Information Administration. That total accounts for about one-fifth of total global consumption of oil.

Domestic oil production is equal to more than half of U.S. usage, but high prices have not led companies to return to their pre-pandemic levels of output. The U.S. is producing on average 11.7 million barrels daily, down from 13 million barrels in early 2020.

“Look, the action I’m calling for will make a real difference over time. But the truth is it takes months, not days, for companies to increase production,” he said on Thursday. In his address, Biden also highlighted the importance of US energy independence and called for a transition to clean energy.

“Ultimately, we and the whole world need to reduce our dependence on fossil fuels altogether. We need to choose long-term security over energy and climate vulnerability,” he said. Biden, who faces with mounting pressure to address a surging inflation ahead of the midterm elections, blamed the Covid-19 pandemic and Russia’s military action for rising gas prices.

Republican lawmakers have said the problem results from the administration being hostile to oil permits and the construction of new pipelines such as the Keystone XL. Democrats say the country needs to move to renewable energy such as wind and solar that could reduce the dependence on fossil fuels and Putin’s leverage.

Sen. Steve Daines, R-Mont., blasted Biden’s action to tap the reserve without first taking steps to increase American energy production, calling it “a Band-Aid on a bullet wound.″ Daines called Biden’s actions “desperate moves″ that avoid what he called the real solution: ”investing in American energy production,″ and getting “oil and gas leases going again.”

The administration says increasing oil output is a gradual process and the release would provide time to ramp up production. It also wants to incentivize greater production by putting fees on unused leases on government lands, something that would require congressional approval.

Oil producers have been more focused on meeting the needs of investors than consumers, according to a survey released last week by the Dallas Federal Reserve.

About 59% of the executives surveyed said investor pressure to preserve “capital discipline” amid high prices was the reason they weren’t pumping more, while fewer than 10% blamed government regulation.

In his remarks last week, Biden tried to shame oil companies that he said are focused on profits instead of putting out more barrels, saying that adding to the oil supply was a patriotic obligation.

“This is not the time to sit on record profits: It’s time to step up for the good of your country,” the president said.

The steady release from the reserves would be a meaningful sum and come near to closing the domestic production gap relative to February 2020, before the coronavirus caused a steep decline in oil output.

Still, the politics of oil are complicated with industry advocates and environmentalists both criticizing the planned release. Groups such as the American Petroleum Institute want to make drilling easier, while environmental organizations say energy companies should be forced to pay a special tax on windfall profits instead.

The administration in November announced the release of 50 million barrels from the strategic reserve in coordination with other countries. And after the Russia-Ukraine war began, the U.S. and 30 other countries agreed to an additional release of 60 million barrels from reserves, with half of the total coming from the U.S.

According to the Department of Energy, which manages it, more than 568 million barrels of oil were held in the reserve as of March 25. After the release, the government would begin to replenish the reserve once prices have sufficiently fallen.

Among 108,000 New Immigrants To Canada, Indians Top The List

Canada, which plans to admit a record 432,000 new immigrants in 2022, is on target to hit this mark as the country welcomed 108,000 newcomers in the first three months of the year.

“Canada is proud to be a destination of choice for so many people around the world, and we will continue to work hard to provide the best experience possible for them,” said Sean Fraser, Minister of Immigration, Refugees and Citizenship, releasing the figures for the first quarter on Thursday.

Though there is no country-wise break-up of the numbers, Indians are the top immigrant group to take up residence in Canada this year.

In 2021, nearly 100,000 Indians became permanent residents of Canada as the country admitted a record 405,000 new immigrants in its history.

During 2021-2022, over 210,000 permanent residents also acquired Canadian citizenship.

As per figures released by Immigration, Refugees and Citizenship Canada (IRCC), it also issued 450,000 study permit applications.

As per figures released by Immigration, Refugees and Citizenship Canada (IRCC), it also issued 450,000 study permit applications. As of December 31, 2021, of the approximately 622,000 foreign students in Canada, Indians number as high as 217,410.

The Indian Parliament was informed that as of March 20, this year, a total of 1,33,135 Indian students have already gone abroad for higher studies. There are over 622,000 foreign students in Canada, with Indians numbering 217,410 as of December 31, 2021.

Canada is steadily becoming a popular destination among Indians looking to migrate abroad, for studying or work. According to a study by the National Foundation for American Policy (NFAP), the number of Indians who became permanent residents of Canada increased by 115% in the last four to five years.

In fact, NFAP data shows that America is no longer the dream destination for most Indians, Canada is taking its place. The number of Indian students doing post-graduation in science and engineering studies at US universities declined by nearly 40% between the 2016-17 and 2019-20 academic years, while it increased by nearly 182% in Canada between 2016 and 2019.

In Canada, it is easier for international students to obtain temporary visas and permanent residence after graduating than it is in the United States. Canada’s post-graduation work permit (PGWP) is commonly seen as the first major step towards obtaining permanent resident status.

Open Work Permit is another immigration pathway that lets one go to Canada without a Labour Market Impact Assessment (LMIA) or an offer letter from an employer who has paid the compliance fee. The permit allows one to work for any organisation in Canada as long as it has not been marked ineligible by the government.

Canada’s acute labour shortage became a serious concern during the pandemic after which it announced major plans to overcome the problem by setting a target of admitting more than 1.3 million immigrants over three years.

“Common Prosperity” By President XI A Defining Theme Of Chinese Politics

Introduced by Chinese President Xi Jinping at the beginning of 2021, “common prosperity” has become a defining theme of Chinese politics today, serving to set critical priorities for Beijing across economic, environmental, and social policy, at both the national and local levels. Focused largely on alleviating systemic inequalities, the common prosperity campaign has been described as a transformational new path for China’s development. Despite the central importance of common prosperity to the direction of Chinese policymaking, clarity on the concept remains limited outside of China.

What exactly does common prosperity mean in practice, and what are the intentions and motivations of the political campaign being waged in its name? Where is the campaign headed, and will it be able to accomplish its goals? And, in particular, what will common prosperity mean for international non-profits and philanthropic organizations working in or with China on those areas central to the campaign?

China’s Common Prosperity Program: Causes, Challenges, and Implications,” a new paper by Asia Society Policy Institute (ASPI) Senior Fellow Guoguang Wu, examines these questions in detail. The paper finds that common prosperity is derived from a complex number of motivations, including reducing pressing inequalities, but also key political goals of interest to the Chinese party-state.

Global Jobs Attract Indian Students To Foreign Varsities

Foreign universities, technical institutes and B-schools not only provide world class education to students, but also prepare them for high-paying global jobs which the Indian youth see as an easy way to fast-tract their career growth.

While countries like Russia, China and Australia are a popular choice for technical courses among the Indian students, a large number of them have also turned to universities in the US, the UK and Canada for programmes that will fetch them work permit for global technical jobs.

According to Canada’s Immigration Refugee and Citizenship data, the number of Indian students studying in the country has increased by a whopping 350 per cent between the 2015-16 and 2019-20 academic years.

As per data by the UK’s Higher Education Statistics Agency (HESA), the number of Indian students enrolling to universities every year has increased by 220 per cent. However, the percentage of Indian students in the US has declined by 9 per cent between 2015-16 and 2019-20.

Canada’s Post-Graduation Work Permit Program (PGWPP), America’s Optional Training Program (OPT) and Britain’s New Graduate Pathway (GR) offer opportunities for good placements after postgraduation which are a major attraction among Indian students to advance their career.

Notably, Indian applicants have an excellent track record in approval rates for work permits abroad. In Canada, there has been an approval rate of over 95 per cent for the PGWPP in the past five years.

International education expert Karunn Kandoi told IANS that the US, the UK and Canada are the most popular destinations for Indian students for studying Science, Technology, Engineering and Mathematics (STEM) or business management programmes.

“While 44 per cent of Indian students in the UK and 37 per cent in Canada have opted for business studies, the US is the first choice to study STEM courses. In 2020-21, 78 per cent of Indians studied STEM programmes in the US. It was the third highest rate among the top 25 countries to study,” he said.

According to a former professor of Delhi University, D. Sharma, universities in the US, Canada and Australia are not only providing modern education and global culture to its students but also excellent employment opportunities.

He also pointed out: “India has been leading the way in global talent development over the past 10 years and the trend of studying abroad remains more relevant than ever in the past two years, despite the constraints caused by the pandemic.”

An Indian student from a reputed B-school in Canada, Bhaskar Sharma, said: “Getting a permanent residency here is also a big goal for many Indian students after admission to an international university. Students sometimes also find it easier to achieve their goals abroad on the basis of their merit, especially when there is a need for special kind of technical knowledge in one field.

“For example, Canada’s health sciences and skilled trades are facing a significant labour shortage, while in the UK, the information and communications sector has the highest vacancy rate at 5.5 per cent.”

Indian students are also now turning to foreign countries to study medicine. However recently, due to the Russia-Ukraine war, around 18,000 students had to return to the country before the completion of their course.

Pawan Chaudhary, President of India’s Medical Technology Association, said: “Due to the Russia-Ukraine war, Indian students will find options to complete MBBS in any other countries such as Bangladesh, Nepal, Spain, Germany, Kyrgyzstan and the UK, where the cost of the course is low.”

The Impact Of Economic War On Putin Led Russia How Sanctions On Russia Will Upend The Global Order

The Russian-Ukrainian war of 2022 is not just a major geopolitical event but also a geoeconomic turning point. Western sanctions are the toughest measures ever imposed against a state of Russia’s size and power.

In the space of less than three weeks, the United States and its allies have cut major Russian banks off from the global financial system; blocked the export of high-tech components in unison with Asian allies; seized the overseas assets of hundreds of wealthy oligarchs; revoked trade treaties with Moscow; banned Russian airlines from North Atlantic airspace: restricted Russian oil sales to the United States and United Kingdom; blocked all foreign investment in the Russian economy from their jurisdiction; and frozen $403 billion out of the $630 billion in foreign assets of the Central Bank of Russia.

The overall effect has been unprecedented, and a few weeks ago would have seemed unimaginable even to most experts: in all but its most vital products, the world’s eleventh-largest economy has now been decoupled from twenty-first-century globalization.

How will these historic measures play out? Economic sanctions rarely succeed at achieving their goals. Western policymakers frequently assume that failures stem from weaknesses in sanctions design.

Indeed, sanctions can be plagued by loopholes, lack of political will to implement them, or insufficient diplomatic agreement concerning enforcement. The implicit assumption is that stronger sanctions stand a better chance of succeeding.

Yet the Western economic containment of Russia is different. This is an unprecedented campaign to isolate a G-20 economy with a large hydrocarbon sector, a sophisticated military-industrial complex, and a diversified basket of commodity exports. As a result, Western sanctions face a different kind of problem.

The sanctions, in this case, could fail not because of their weakness but because of their great and unpredictable strength. Having grown accustomed to using sanctions against smaller countries at low cost, Western policymakers have only limited experience and understanding of the effects of truly severe measures against a major, globally connected economy. Existing fragilities in the world’s economic and financial structure mean that such sanctions have the potential to cause grave political and material fallout.

THE REAL SHOCK AND AWE

Just how severe the current sanctions against Russia are can be seen from their effects across the world. The immediate shock to the Russian economy is the most obvious. Economists expect Russian GDP to contract by at least 9–15 percent this year, but the damage could well become much more severe.

The ruble has fallen more than a third since the beginning of January. An exodus of skilled Russian professionals is underway, while the capacity to import consumer goods and valuable technology has fallen drastically. As Russian political scientist Ilya Matveev has put it, “30 years of economic development thrown into the bin.”

The ramifications of the Western sanctions go far beyond these effects on Russia itself. There are at least four different kinds of broader effects: spillover effects into adjacent countries and markets; multiplier effects through private-sector divestment; escalation effects in the form of Russian responses; and systemic effects on the global economy.

Spillover effects have already caused turmoil in international commodities markets. A generalized panic erupted among traders after the second Western sanctions package—including the SWIFT cutoff and the freezing of central bank reserves—was announced on February 26.

Prices of crude oil, natural gas, wheat, copper, nickel, aluminum, fertilizers, and gold have soared. Because the war has closed Ukrainian ports and international firms are shunning Russian commodity exports, a grain and metals shortage now looms over the global economy.

Although oil prices have since dropped in anticipation of additional output from Gulf producers, the price shock to energy and commodities across the board will push global inflation higher. African and Asian countries reliant on food and energy imports are already experiencing difficulties.

Economists expect Russian GDP to contract by at least 9 to 15 percent this year.

Central Asia’s economies are also caught up in the sanctions shock. These former Soviet states are strongly connected to the Russian economy through trade and outward labor migration. The collapse of the ruble has caused serious financial distress in the region.

Kazakhstan has imposed exchange controls after the tenge, its currency, fell by 20 percent in the wake of the Western sanctions against Moscow; Tajikistan’s somoni has undergone a similarly steep depreciation. Russia’s impending impoverishment will force millions of Central Asian migrant workers to seek employment elsewhere and dry up the flow of remittances to their home countries.

The impact of the sanctions goes beyond decisions taken by G-7 and EU governments. The official sanctions packages have had a catalyzing effect on international businesses operating in Russia. Virtually overnight, Russia’s impending isolation has set in motion a massive corporate flight.

In what amounts to a vast private sector boycott, hundreds of major Western firms in the technology, oil and gas, aerospace, car, manufacturing, consumer goods, food and beverage, accounting and financial, and transport industries are pulling out of the country.

It is noteworthy that these departures are in many cases not required by sanctions. Instead, they are driven by moral condemnation, reputational concerns, and outright panic. As a result, the business retreat is deepening the economic shock to Russia by multiplying the negative economic effects of official state sanctions.

The Russian government has responded to the sanctions in several ways. It has undertaken emergency stabilization policies to protect foreign exchange earnings and shore up the ruble. Foreign portfolio capital is being locked into the country.

While the stock market has remained closed, the assets of many Western firms that have departed may soon face confiscation. The Ministry of Economic Development has prepared a law that grants the Russian state six months to take over businesses in case of an “ungrounded” liquidation or bankruptcy.

The potential nationalization of Western capital is not the only escalatory effect of the sanctions. On March 9, Putin signed an order restricting Russian commodity exports. Although the full array of items to be withheld under the ban is not yet clear, the threat of its use will continue to hang over international trade.

Russian restrictions on fertilizer exports imposed in early February have already put pressure on global food production. Russia could retaliate by restricting exports of important minerals such as nickel, palladium, and industrial sapphires. These are crucial inputs for the production of electrical batteries, catalytic converters, phones, ball bearings, light tubes, and microchips.

In the globalized assemblage system, even small changes in materials prices can massively raise the production costs faced by final users downstream in the production chain. A Russian embargo or large export reduction of palladium, nickel, or sapphires would hit car and semiconductor manufacturers, a $3.4 trillion global industry.

If the economic war between the West and Russia continues further into 2022 at this intensity, it is very possible that the world will slide into a sanctions-induced recession.

MANAGING THE FALLOUT

The combination of spillover effects, negative multiplier effects, and escalation effects means that the sanctions against Russia will have an effect on the world economy like few previous sanctions regimes in history. Why was this great upheaval not anticipated?

One reason is that over the last few decades, U.S. policymakers have usually deployed sanctions against economies that were sufficiently modest in size for any significant adverse effects to be contained. The degree of integration into the world economy of North Korea, Syria, Venezuela, Myanmar, and Belarus was relatively modest and one-dimensional. Only the rollout of U.S. sanctions against Iran required special care to avoid upsetting the oil market.

In general, however, the assumption held that sanctions use was economically almost costless to the United States. This has meant that the macroeconomic and macrofinancial consequences of global sanctions are insufficiently understood.

To better grasp the choices to be made in the current economic sanctions against Russia, it is instructive to examine sanctions use in the 1930s, when democracies similarly attempted to use them to stop the aggression of large-sized autocratic economies such as Fascist Italy, imperial Japan, and Nazi Germany.

The crucial backdrop to these efforts was the Great Depression, which had weakened economies and inflamed nationalism around the world. When Italian dictator Benito Mussolini invaded Ethiopia in October 1935, the League of Nations implemented an international sanctions regime enforced by 52 countries. It was an impressive united response, similar to that on display in reaction to Russia’s invasion of Ukraine.

But the league sanctions came with real tradeoffs. Economic containment of Fascist Italy limited democracies’ ability to use sanctions against an aggressor who was more threatening still: Adolf Hitler.

As a major engine of export demand for smaller European economies, Germany was too large an economy to be isolated without severe commercial loss to the whole of Europe. Amid the fragile recovery from the Depression, simultaneously placing sanctions on both Italy and Germany—then the fourth- and seventh-largest economies in the world—was too costly for most democracies.

Hitler exploited this fear of overstretch and the international focus on Ethiopia by moving German troops into the demilitarized Rhineland in March 1936, advancing further toward war. German officials were aware of their commercial power, which they used to maneuver central European and Balkan economies into their political orbit.

The result was the creation of a continental, river-based bloc of vassal economies whose trade with Germany was harder for Western states to block with sanctions or a naval blockade.

The sanctions dilemmas of the 1930s show that aggressors should be confronted when they disrupt the international order. But it equally drives home the fact that the viability of sanctions, and the chances of their success, are always dependent on the global economic situation.

In unstable commercial and financial conditions, it will be necessary to prioritize among competing objectives and prepare thoroughly for unintended effects of all kinds. Using sanctions against very large economies will simply not be possible without compensatory policies that support the sanctioners’ economies and the rest of the world.

More intensive sanctions will inflict further damage to the world economy.

The Biden administration is aware of this problem, but its actions so far are inadequate to the scale of the problem. Washington has attempted to reduce strains in the oil market by a partial reconciliation with Iran and Venezuela.

Countering the spillover effects of sanctions against one leading petrostate may now require lifting sanctions on two smaller petrostates. But this oil diplomacy is insufficient to meet the challenge posed by the Russia sanctions, the effects of which are aggravating preexisting economic woes.

Supply chain issues and pandemic-era bottlenecks in global transport and production networks predated the war in Ukraine. The unprecedented use of sanctions in these already troubled conditions has made an already difficult situation worse.

The problem of managing the fallout of economic war is greater still in Europe. This is not only because the European Union has much stronger trade and energy links with Russia. It is also the result of the political economy of the eurozone as it has taken shape over the last two decades: with the exception of France, most of its economies follow a heavily trade-reliant, export-focused growth strategy.

This economic model requires foreign demand for exports while repressing wages and domestic demand. It is a structure that is very ill suited to the prolonged imposition of trade-reducing sanctions. Increasing EU-wide renewable energy investment and expanding public control in the energy sector, as French President Emmanuel Macron has announced, is one way to absorb this shock.

But there is also a need for income-boosting measures for consumer goods and price-dampening interventions in producer goods markets, from strategic reserve management to the excess profits taxes that are being rolled out in Spain and Italy.

Then there are the consequences of sanctions cause for the world economy at large, especially in the “global South.” Addressing these problems will pose a major macroeconomic challenge. It is therefore imperative for the G-7, the European Union, and the United States’ Asian partners to launch bold and coordinated action to stabilize global markets.

This can be done through targeted investment to clear up supply bottlenecks, generous international grants and loans to developing countries struggling to secure adequate food and energy supplies, and large-scale government funding for renewable energy capacity.

It will also have to involve subsidies, and perhaps even rationing and price controls, to protect the poorest from the destructive effects of surging food, energy, and commodity prices.

Such state intervention is the price to be paid for engaging in economic war. Inflicting material damage at the scale levelled against Russia simply cannot be pursued without an international policymaking shift that extends economic support to those affected by sanctions. Unless the material well-being of households is protected, political support for sanctions will crumble over time.

THE NEW INTERVENTIONISTS

Western policymakers thus face a serious decision. They must decide whether to uphold sanctions against Russia at their current strength or to impose further economic punishment on Putin. If the goal of the sanctions is to exert maximum pressure on Russia with minimal disruption to their own economies—and thus a manageable risk of domestic political backlash—then current levels of pressure may be the most that is politically feasible now.

At the moment, simply maintaining existing sanctions will require active compensatory policies. For Europe especially, neither laissez-faire economic policies nor fiscal fragmentation will be sustainable if the economic war persists. But if the West decides to step up the economic pressure on Russia further still, far-reaching economic interventions will become an absolute necessity.

More intensive sanctions will inflict further damage, not just to the sanctioners themselves but to the world economy at large. No matter how strong and justified the West’s resolve to stop Putin’s aggression is, policymakers must accept the material reality that an all-out economic offensive will introduce considerable new strains into the world economy.

An intensification of sanctions will cause a cascade of material shocks that will demand far-reaching stabilization efforts.And even with such rescue measures, the economic damage may well be serious, and the risks of strategic escalation willremain high.

For all these reasons, it remains vital to pursue diplomatic and economic paths that can end the conflict. Whatever the results of the war, the economic offensive against Russia has already exposed one important new reality: the era of costless, risk-free, and predictable sanctions is well and truly over.

Elon Musk Could Become World’s First Trillionaire In 2024

Tesla and SpaceX CEO Elon Musk could become the first person to ever accumulate a $1 trillion net worth, and it could happen as soon as 2024, says a new report.

Musk is currently said to be the richest person in the world, overtaking former Amazon CEO Jeff Bezos last year to claim the title, reports Teslarati.

While Musk has stated many times that material possessions are not a concern of his, eventually selling nearly all of his personal properties as proof, a new study from Tipalti Approve suggests he could become the first person to ever accumulate a $1 trillion net worth.

Musk’s net worth, according to Forbes’ Real Time Billionaires list, sits at over $260 billion, nearly $70 billion more than Bezos’ current estimation of about $190 billion.

His wealth skyrocketed over the past few years thanks to his majority ownership of Tesla, which increased in value substantially since 2020. SpaceX also has helped Musk’s net worth skyrocket and could catalyze even more growth in the next two years.

“Since 2017, Musk’s fortune has shown an annual average increase of 129 per cent, which could potentially see him enter the trillion-dollar club in just two short years, achieving a net worth of $1.38 trillion by 2024 at age 52,” Tipalti Approve, who conducted the study, said in their report.

“SpaceX generates massive incomes by charging governmental and commercial clients to send various things into space, including satellites, ISS supplies, and people,” it added.

Other billionaires are also expected to hit the trillion-dollar range, but not before Musk, the report said.

Zhang Yiming, TikTok’s founder, is projected to reach a $1 trillion net worth by 2026 at 42 years old, making him the youngest trillionaire. Bezos may not hit the threshold until 2030. Bezos broke ground in the net worth realm by reaching $100 billion before any other entrepreneur in the world.

Ukraine Incursion, World Stagflation

Finger pointing in the blame game over Russia’s Ukraine incursion obscures the damage it is doing on many fronts. Meanwhile, billions struggle to cope with worsening living standards, exacerbated by the pandemic and more.

Losing sight in the fog of war

US Secretary of State Anthony Blinken insists, “the Russian people will suffer the consequences of their leaders’ choices”. Western leaders and media seem to believe their unprecedentedcrushing sanctions” will have a “chilling effect” on Russia.

With sanctions intended to strangle Russia’s economy, the US and its allies somehow hope to increase domestic pressure on Russian President Vladimir Putin to retreat from Ukraine. The West wants to choke Russia by cutting its revenue streams, e.g., from oil and gas sales to Europe.

Already, the rouble has been hammered by preventing Russia’s central bank from accessing its US$643bn in foreign currency reserves, and barring Russian banks from using the US-run global payments transfer system, SWIFT.

Withdrawal of major Western transnational companies – such as Shell, McDonald’s and Apple – will undoubtedly hurt many Russians – not only oligarchs, their ostensible target.

Thus, Blinken’s claim that “The economic costs that we’ve been forced to impose on Russia are not aimed at you [ordinary Russians]” may well ring hollow to them. They will get little comfort from knowing, “They are aimed at compelling your government to stop its actions, to stop its aggression”.

As The New York Times notes, “sanctions have a poor record of persuading governments to change their behavior”. US sanctions against Cuba over six decades have undoubtedly hurt its economy and people.

But – as in Iran, North Korea, Syria and Venezuela – it has failed to achieve its supposed objectives. Clearly, “If the goal of sanctions is to compel Mr. Putin to halt his war, then the end point seems far-off.”

Russia, major commodity exporter

Undoubtedly, Russia no longer has the industrial and technological edges it once had. Following Yeltsin era reforms in the early 1990s, its economy shrank by half – lowering Russian life expectancy more than anywhere else in the last six millennia!

Russia has become a major primary commodity producer – not unlike many developing countries and the former settler colonies of North America and Australasia. It is now a major exporter of crude oil and natural gas.

It is also the largest exporter of palladium and wheat, and among the world’s biggest suppliers of fertilizers using potash and nitrogen. On 4 March, Moscow suspended fertilizer exports, citing “sabotage” by “foreign logistics companies”.

Farmers and consumers will suffer as yields drop by up to half. Sudden massive supply disruptions will thus have serious ramifications for the world economy – now more interdependent than ever, due to earlier globalization.

Sanctions’ inflation boomerang

International Monetary Fund Managing Director Kristalina Georgieva has ominously warned of the Ukraine crisis’ economic fallouts. She cautions wide-ranging sanctions on Russia will worsen inflation and further slow growth.

No country is immune, including those imposing sanctions. But the worst hit are poor countries, particularly in Africa, already struggling with rising fuel and food prices.

For Georgieva, more inflation – due to Russian sanctions – is the greatest threat to the world economy. “The surging prices for energy and other commodities – corn, metals, inputs for fertilizers, semiconductors – coming on top of already high inflation” are of grave concern to the world.

Russia and Ukraine export more than a quarter of the world’s wheat while Ukraine is also a major corn exporter. Supply chain shocks and disruptions could add between 0.2% to 0.4% to ‘headline inflation’ – which includes both food and fuel prices – in developed economies over the coming months.

US petrol prices jumped to a 17-year high in the first week of March. The costs of other necessities, especially food, are rising as well. US Treasury Secretary Janet Yellen has acknowledged that the sanctions are worsening US inflation.

The European Union (EU) gets 40% of its natural gas from Russia. Finding alternative supplies will be neither easy nor cheap. The EU is Russia’s largest trading partner, accounting for 37% of global trade in 2020. Thus, sanctions may well hurt Europe more than Russia – like cutting one’s nose to spite one’s face.

The European Central Bank now expects stagflation – economic stagnation with inflation, and presumably, rising unemployment. It has already slashed its growth forecast for 2022 from 4.2% to 3.7%. Inflation is expected to hit a record 5.1% – way above its previous 3.2% forecast!

Developing countries worse victims
Global food prices are already at record highs, with the Food Price Index (FPI) of the Food and Agricultural Organization up more than 40% over the past two years.

The FPI hit an all-time high in February – largely due to bad weather and rising energy and fertilizer costs. By February 2022, the Agricultural Commodity Price Index was 35% higher, while maize and wheat prices were 26% and 23% more than in January 2021.

Besides shortages and rising production costs – due to surging fuel and fertilizer prices – speculation may also push food prices up – as in 2007-2008.

Signs of such speculation are already visible. Chicago Board of Trade wheat future prices rose 40% in early March – its largest weekly increase since 1959!

Rising food prices impact people in low- and middle-income countries more as they spend much larger shares of their incomes on food than in high-income countries. The main food insecurity measure has doubled in the past two years, with 45 million people close to starvation, even before the Ukraine crisis.

Countries in Africa and Asia rely much more on Russian and Ukrainian grain. The World Bank has warned, “There will be important ramifications for the Middle East, for Africa, North Africa and sub-Saharan Africa, in particular”, where many were already food insecure before the incursion.

The Ukraine crisis will be devastating for countries struggling to cope with the pandemic. Unable to access enough vaccines or mount adequate responses, they already lag behind rich countries. The latest food and fuel price hikes will also worsen balance-of-payments problems and domestic inflationary pressures.

No to war!

The African proverb, “When two elephants fight, all grass gets trampled”, sums up the world situation well. The US and its allies seem intent to ‘strangle Russia’ at all costs, regardless of the massive collateral damage to others.

This international crisis comes after multilateralism has been undermined for decades. Hopes for reduced international hostilities, after President Biden’s election, have evaporated as US foreign policy double standards become more apparent.

Russia has little support for its aggressive violation of international law and norms. Despite decades of deliberate NATO provocations, even after the Soviet Union ended, Putin has lost international sympathy with his aggression in Ukraine.

But there is no widespread support for NATO or the West. Following the vaccine apartheid and climate finance fiascos, the poorer, ‘darker nations’ have become more cynical of Western hypocrisy as its racism becomes more brazen.

59 Percent Of Indian Billionaires Are Self-Made

Fifty-nine percent of Indian billionaires are self-made, according to a new report.

“We are happy to be associated with Hurun India for the launch of the M3M Hurun Global Rich List 2022, curated with an in-depth market research which demonstrates that Indian businesses are one of the fastest value creators,” said Pankaj Bansal, Director, M3M India, on the M3M Hurun Global Rich List 2022.

Over the last few years, wealth creation by India Inc. has catapulted the economic growth in the country.

Interestingly, 59 per cent of the country’s billionaires are self-made, thus indicating that the new-generation entrepreneurs are financially-wise, asset-rich and investment-vibrant. Also, gender inclusivity and equality has been a noticeable theme with women outranking men across industries, said Bansal.

“Having said this, it is also true that the rich have invested in philanthropy and have played a significant role in the social and economic growth in India, particularly focusing on nutrition, education and women empowerment,” he said.

As Andrew Carnegie, one of the greatest philanthropists, said, “Ninety per cent of all millionaires become so through owning real-estate.”

“The real estate sector is ranked third amongst major sector in India and is also the second largest in terms of employment generation, and it particularly delivers in short-term and long-term employment creation. This sector is also looking forward to contribute 13 per cent in India’s GDP by 2025 and reach a market size of $1 trillion by 2030.

“No wonder, it contributed 8.1 per cent to the overall list of billionaires and possesses a concentration of 275 billionaires, which I am certain will see a significant jump in the next 5 years owing to unmet housing demands generated by urbanisation and modernisation of towns,” Bansal said.

“We are hopeful that the year 2022 will ignite the economic buoyancy in the country and will enable us to match steps with our global counterparts. Particularly, when India is gaining momentum in startups and unicorns, and has become 3rd largest ecosystem in the world, only after US and China,” he added.

Inflation, War Push Stress To Alarming Levels At Two-Year COVID-19 Anniversary

Newswise — Two years after the World Health Organization declared COVID-19 a global pandemic, inflation, money issues and the war in Ukraine have pushed U.S. stress to alarming levels, according to polls conducted for the American Psychological Association.

A late-breaking poll, fielded March 1–3 by The Harris Poll on behalf of APA, revealed striking findings, with more adults rating inflation and issues related to the invasion of Ukraine as stressors than any other issue asked about in the 15-year history of the Stress in AmericaTM poll. This comes on top of money stress at the highest recorded level since 2015, according to a broader Stress in America poll fielded last month.

Top sources of stress were the rise in prices of everyday items due to inflation (e.g., gas prices, energy bills, grocery costs, etc.) (cited by 87%), followed by supply chain issues (81%), global uncertainty (81%), Russia’s invasion of Ukraine (80%) and potential retaliation from Russia (e.g., in the form of cyberattacks or nuclear threats) (80%).

These stressors are coming at a time when the nation is still struggling to deal with the prolonged pandemic and its effects on our daily lives, with close to two-thirds of adults (63%) saying their life has been forever changed by the COVID-19 pandemic. While a majority (51%) reported this change as neither positive nor negative — simply different — the long-lasting implications of the pandemic are clear. The survey also revealed continued hardships for vulnerable populations, concerns for children’s development among parents and entrenched, unhealthy coping habits.

“The number of people who say they’re significantly stressed about these most recent events is stunning relative to what we’ve seen since we began the survey in 2007,” said Arthur C. Evans Jr., PhD, APA’s chief executive officer. “Americans have been doing their best to persevere over these past two tumultuous years, but these data suggest that we’re now reaching unprecedented levels of stress that will challenge our ability to cope.”

A year ago, APA’s first pandemic anniversary survey found COVID-19-related stress was associated with unhealthy weight changes and increased drinking. The most recent survey confirmed that these unhealthy behaviors have persisted, suggesting that coping mechanisms have become entrenched — and that mental and physical health may be on a continuing decline for many as a result. Close to half of adults (47%) said they have been less active than they wanted to be since the pandemic started, and close to three in five (58%) reported experiencing undesired weight changes.

Among those who gained more weight than they wanted, the average amount of weight gained was 26 pounds, with a median of 15 pounds. On the other hand, the average amount of weight lost among those who lost more than they wanted to was 27 pounds, with a median of 15 pounds. More than one in five Americans (23%) said they have been drinking more alcohol during the COVID-19 pandemic, with those who have been drinking more consuming an average of 10 drinks per week (and a median of six drinks per week) compared with an average of two drinks (and a median of one drink) per week among those who did not report drinking more.

Adults also reported separation and conflict as causes for straining and/or ending of relationships. Half of adults (51%, particularly essential workers at 61%) said they have loved ones they have not been able to see in person in the past two years as a result of the COVID-19 pandemic. Strikingly, more than half of all U.S. adults (58%) reported experiencing a relationship strain or end as a result of conflicts related to the COVID-19 pandemic, including canceling events or gatherings due to COVID-19 concerns (29%); difference of opinion over some aspect of vaccines (25%); different views of the pandemic overall (25%); and difference of opinion over mask-wearing (24%).

Strained social relationships and reduced social support during the pandemic make coping with stress more difficult. In fact, more than half of respondents (56%) said that they could have used more emotional support than they received since the pandemic started. “We know from decades of research that healthy and supportive relationships are key to promoting resilience and building people’s mental wellness,” said Evans. “Particularly during periods of prolonged stress, it’s important that we facilitate opportunities for social connection and support.”

The majority of parents reported concerns regarding child(ren)’s development, including social life or development (73%), academic development (71%) and emotional health or development (71%). More than two-thirds of parents reported concern about the pandemic’s impact on their child’s cognitive development (68%) and their physical health/development (68%).

“Living through historic threats like these often has a lasting, traumatic impact on generations,” said Evans. “As a society, it’s important that we ensure access to evidence-based treatments and that we provide help to everyone who needs it. This means not only connecting those in distress with effective and efficient clinical care, but also mitigating risk for those more likely to experience challenges and engaging in prevention for those who are relatively healthy.”

More information on the findings and how to handle stress and trauma related to Ukraine is available at www.stressinamerica.org. APA psychologists are available for media interviews to discuss these findings and provide science-based recommendations on how to address this mental health crisis.

METHODOLOGY

The 2022 Pandemic Anniversary Survey was conducted online within the United States by The Harris Poll on behalf of the American Psychological Association between Feb. 7–14, 2022, among 3,012 adults age 18+ who reside in the U.S. Interviews were conducted in English and Spanish. Data were weighted to reflect proportions in the population based on the 2021 Current Population Survey (CPS) by the U.S. Census Bureau.

Weighting variables included age by gender, race/ethnicity, education, region, household income, and time spent online. Latino adults were also weighted for acculturation, taking into account respondents’ household language as well as their ability to read and speak in English and Spanish. Country of origin (U.S./non-U.S.) was also included for Latino and Asian subgroups.

Weighting variables for Gen Z adults (ages 18 to 25) included education, age by gender, race/ethnicity, region, household income, and size of household, based on the 2021 CPS. Propensity score weighting was used to adjust for respondents’ propensity to be online. Respondents for this survey were selected from among those who have agreed to participate in Harris’ surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 2.9 percentage points using a 95% confidence level.

This credible interval will be wider among subsets of the surveyed population of interest. All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error, which are most often not possible to quantify or estimate, including but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.

The March late-breaking survey was conducted online within the United States between March 1–3, 2022, among 2,051 adults (age 18 and over) by The Harris Poll on behalf of the American Psychological Association via its Harris On Demand omnibus product. Data were weighted where necessary by age, gender, race/ethnicity, region, education, marital status, household size, household income, and propensity to be online, to bring them in line with their actual proportions in the population. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 2.8 percentage points using a 95% confidence level.

US Economy Adds 678,000 Jobs In February, Unemployment Dips To 3.8%

The U.S. added 678,000 jobs and the unemployment rate dropped to 3.8 percent in February, according to data released Friday by the Labor Department.

Unprecedented demand for workers and resilient consumer spending helped power another strong month of job growth in February. Economists expected the U.S. to add roughly 400,000 jobs last month, far less than the actual haul in the February jobs report, and push the jobless rate to 3.9 percent.

“If we see more numbers like this moving forward, we can be optimistic about this year. Employment is growing at a strong rate and joblessness is getting closer and closer to pre-pandemic levels,” said Nick Bunker, economic research director at Indeed.

“In these uncertain times, we cannot take anything for granted. But if the recovery can keep up its current tempo, several key indicators of labor market health will hit pre-pandemic levels this summer,” he said.

The Bureau of Labor Statistics (BLS) said the U.S. saw “widespread” job growth in February led by a surge in service sector hiring — a promising sign for industries still recovering from the onset of the pandemic.

Leisure and hospitality employment rose by 179,000 jobs in February, led by a gain of 124,000 jobs in restaurants and bars. Professional and business services added 95,000 jobs, the health care sector added 64,000 jobs and construction employment rose by 60,000 after staying flat in January.

Transportation and warehousing employment rose by 48,000 in February, and retail trade employment rose by 37,000.

The BLS also revised the December and January job gains up by a combined 92,000 jobs.

While the labor force participation rate stayed flat, the February jobs report showed other signals of labor shortages easing and more Americans returning to the workforce.

Average hourly earnings rose 5.1 percent over the past 12 months, down from 5.7 percent in January. Wages have risen sharply as employers struggled to fill a record number of job openings from a smaller pool of workers than before the pandemic.

The number of Americans who said they could not look for a job because of the pandemic — who are not counted as unemployed — fell from 1.8 million in January to 1.2 million last month. The number of people who lost hours at work because of a pandemic-related shutdown also sunk from 6 million in January to 4.2 million in February.

“With the Omicron wave receding rapidly, the labor market has unlocked faster jobs growth. Additionally, employer demand for workers exceeds labor supply significantly, which is likely to keep jobs growth healthy even if demand slows amid disruptions from the war in Ukraine and rising interest rates in coming months,” said Daniel Zhao, senior economist at Glassdoor.

While the U.S. labor market held strong in February, economists are concerned about the potential fallout of the war in Ukraine and the sanctions imposed on Russia in response. A surge in oil prices, steep drop in economic activity or retaliation from Russia could dent the U.S. economy and risk stoking inflation even higher after hitting the highest annual rate in 40 years.

The jobs report will keep the Federal Reserve on track to raise interest rates in March to help cool inflation and tame what Fed Chairman Jerome Powell on Thursday called an “overheated” labor market. Even so, Powell said the deep uncertainty driven by the war could still force the Fed to adjust the pace of future rate hikes.

“The war in Ukraine reemphasizes the risk of inflation in the economic recovery, especially as price increases are concentrated in areas that the Federal Reserve may not have much control over,” Zhao wrote.

“Ultimately, however, today’s jobs report helps build confidence in the resilience of the recovery and its ability to continue driving jobs growth despite unanticipated headwinds.”

U.S. National Debt Skyrockets Past $30 TRILLION

The U.S. national debt has surpassed $30 trillion, the highest it’s ever been, as borrowing surged during the COVID-19 pandemic, according to data published by the Treasury Department on Tuesday.

National debt skyrocketed pandemic, but the nation reached the milestone much earlier than projected as a result of the trillions in federal spending being used to combat the pandemic, the New York Times reported.

‘Hitting the $30 trillion mark is clearly an important milestone in our dangerous fiscal trajectory,’ Michael Peterson, head of the Peter G. Peterson Foundation, told the Times.

‘For many years before Covid, America had an unsustainable structural fiscal path because the programs we’ve designed are not sufficiently funded by the revenue we take in,’ he added.

In January 2020, the Congressional Budget Office projected that the national debt would reach $30 trillion by the end of 2025. But it was reached much sooner due to the pandemic.

The $5 trillion used to combat the pandemic, which was used to fund jobless benefits, financial support for small businesses and stimulus payments, was financed with borrowed money, the Times reported.

The federal government now owes almost $8 trillion to foreign investors, led by Japan and China, which must be repaid with interest, according to CNN.

‘That means American taxpayers will be paying for the retirement of the people in China and Japan, who are our creditors,’ David Kelly, chief global strategist at JPMorgan Asset Management, explained to CNN Business.

The national debt has been skyrocketing since the Great Recession when the debt was $9.2 trillion in December 2007,  according to Treasury data.

But by the time, former President Donald Trump took office, the national debt stood at nearly $20 trillion, CNN reported.

‘Covid exacerbated the problem. We had an emergency situation that required trillions in spending,’ said Michael Peterson, CEO of the Peterson Foundation. ‘But the structural problems we face fiscally existed long before the pandemic.

The U.S. Is Considering A Radical Rethinking Of The Dollar For Today’s Digital World

Since its establishment as the country’s national currency, the dollar has undergone many updates and changes, but nothing compares to the proposal being debated today.

The U.S. is gingerly considering whether to adopt a digital version of its currency, one better suited for today’s increasingly cashless world, ushering in what could be one of the dollar’s most fundamental transformations.

In that scenario, the U.S. would not only mint the coins and print paper bills but also issue digital cash, or a central bank digital currency (CBDC), that would be stored in apps or “digital wallets” on our smartphones.

We could then use them to pay for things, just like we do with Venmo or Apple Pay, and no physical money would change hands.

It’s a vision of a cashless future that other countries are already embracing. China, for example, has unveiled the digital yuan on a trial basis. India this week said it would create a digital rupee.

Now the U.S. is weighing whether it wants to get into the game.

Last month, the Federal Reserve released a much-anticipated paper, laying out the advantages and disadvantages of a digital currency.

The Fed says it’s a first step, meant to kick-start an important conversation among policymakers and to gather feedback from average people to some of the country’s largest financial institutions.

So, how would it actually work?

Policymakers stress these are early days yet, and there is a lot that needs to be hammered out. All in all, the transactions conducted with digital dollars probably wouldn’t seem too different from existing private alternatives that allow us to pay for things by bringing our smartphones next to digital readers.

China, for example, allows digital yuan payments in the cities in which the country is piloting its digital currency, allowing citizens to make payments via an app set up by the government.

Reducing or eliminating fees is one clear benefit.

When you make a contactless payment today, it may seem immediate, but according to Chris Giancarlo, the former chairman of the Commodity Futures Trading Commission, a lot happens behind the scenes.

“My mobile device tells his mobile device to inform a whole series of banks, to confirm who I am, how much money is in my bank, that there is enough money to move from my bank to his bank,” he says.

And at each step of the way, there are transaction fees. In 2020, they added up to more than $110 billion, which was generally shouldered by businesses.

With a digital dollar, you could in theory eliminate those middlemen. If you wanted to buy a sandwich, for instance, you could transfer money from a digital wallet directly to a cashier.

It wouldn’t necessarily entirely eliminate nongovernment players. In China, for example, users who want to use the digital yuan can go to banks to add money to their digital wallets.

But just having digital dollars in circulation could put pressure on credit card companies and payment processors to lower fees to be competitive. That is, if enough people start using the Fed-run version.

In China, adoption of the e-renminbi has been slow given that private providers such as WeChat or Alipay are already pretty popular and entrenched.

Another argument for creating a digital dollar is to open up digital transactions to Americans who don’t have bank accounts. According to the Fed, more than 5% of U.S. households are “unbanked.”

Providing them with a digital wallet would allow people to participate in our increasingly cashless financial system.

It would also make it easier for the federal government to distribute benefits.. For example, having a digital dollar in place during the pandemic could have allowed the government to transfer relief payments directly into digital wallets.

What are the challenges?

Without question, one of the biggest issues is privacy. Because the Fed would implement and oversee the project, the central bank could accrue a vast amount of data, potentially giving it a lot more visibility into everyone’s financial life.

That could be useful to regulators who want to combat money laundering, for example, but it would also raise serious privacy concerns.

That makes it critical to sort out how much information the Fed would have, according to Raghuram Rajan, a professor of finance at The University of Chicago Booth School of Business and a former governor of the Reserve Bank of India.

“There will be legitimate questions about how much the government knows about each individual, and also, how much it can act to restrain activities by individuals,” he says.

Cybersecurity is another critical issue, especially given the uptick in hacks and heists at cryptocurrency exchanges.

To implement a digital dollar, the U.S. government would need to modernize the country’s financial infrastructure to stave off attacks.

A digital version of the Chinese yuan is displayed during a trade fair in Beijing in September. China is among a handful of countries that are experimenting with national digital currencies.

So what’s next?

Fed Chair Jerome Powell and his colleagues are moving ahead cautiously and methodically.

The Fed is in the process of soliciting feedback from the public after releasing its paper last month. And last week, the Federal Reserve Bank of Boston released preliminary results of its ongoing research into the technological challenges associated with implementing a digital currency in the U.S.

It would take five to 10 years to introduce a digital currency in the U.S., several experts say, but they argue policymakers can’t sit idly by.

There is concern that by moving slowly, the U.S. is letting other countries shape standards for national digital currencies, and the popularity of the dollar could be diminished.

After all, for decades, it has been the world’s primary reserve currency, meaning many countries hold their reserves in U.S. dollars.

But Powell has made it clear he’s in no hurry. Last year, a reporter asked the central banker whether he was worried the U.S. was falling behind countries like China.

“I think it’s more important to do this right than to do it fast,” he replied.

Oil Prices Hit $90 A Barrel For The First Time Since 2014

US oil prices jumped above $90 a barrel last week for the first time in more than seven years. The latest rally comes just a day after OPEC and its allies declined to aggressively ramp up production to cool off red-hot energy prices.

Crude jumped 2.2% to $90.15 a barrel in afternoon trading. That marks the first time US oil prices surpassed the $90 threshold on an intraday basis since October 2014.

Oil has surged by 37% since closing at a recent low of $65.57 a barrel on December 1 amid Omicron fears and the fallout from the US-led intervention into energy markets.

Last week, Brent crude, the world benchmark, closed above $90 a barrel for the first time since October 2014.

OPEC+, led by Saudi Arabia and Russia, announced Wednesday it will stick to its previously telegraphed plan to increase production by 400,000 barrels per day. That’s despite the fact that some on Wall Street suggested OPEC+ could boost production more substantially to meet demand.

“OPEC+ opted to hold its shortest meeting on record and rubber-stamped the 400 kb/d monthly increase, sticking with a hands-off the wheel management approach despite global inflationary fears,” RBC Capital Markets strategists wrote in a note to clients Thursday.

Indian Union Budget Reveals Importance Of Cryptocurrency

At last, it is a piece of surprising news that Digital currency is also being introduced in the Indian fiduciary system as part of yet another dream project of Digital India. The Finance Minister Nirmala Sitaraman and the  Governor of the Central Bank of India had elaborated on this. We have heard earlier that the Indian Government was also making a move to ban foreign digital currencies in the country. The Central Bank is in the process of making an official announcement soon on its development model of digital currency (CBDC). Nirmala Sitharaman has said that the Indian Digital Rupee will be launched using blockchain technology in the financial year 2022-23.

Anyway, the Supreme Court made a favorable ruling in favor of lifting the Reserve Bank’s ban on crypto use. This ruling created a new wave among Indian investors and led to a rapid rise in retail. At the same time, investors are optimistic about the central bank and the emergence of digital currencies.

Union Finance Minister Nirmala Sitharaman had announced in her budget speech that the distribution of digital currency would begin. But there are widespread doubts about what a digital rupee is. The announcement comes at a time when the central Government is considering a strong policy to curb the misuse of cryptocurrencies. At the Republican Economic Summit in November 2021, Rajeev Chandrasekhar, Electronics & IT, hinted at the introduction of an official digital currency.

 What is Digital Rupee?

The digital currency of the Reserve Bank of India will be based on blockchain technology, the technology behind Bitcoin, and other popular cryptocurrencies. According to the Finance Minister, this will pave a more efficient and cost-effective currency management system. However, the future of Bitcoin and other cryptocurrencies is unclear.

The RBI has already been keenly watching the performance of major economies worldwide and their respective central banks for CBDC schemes. As a result, the central bank has almost decided on the issue of official digital currency. While the Reserve Bank mentions the need for central banking digital currency (CBDC), it also makes it clear that the government is concerned about the risks surrounding other cryptocurrencies. Why has the government not yet officially banned such currencies? Why did the Supreme Court overturn the ban on banks operating cryptocurrencies? The questions are numerous.

As economists fear that cryptocurrency is one of the most widely used dangerous currencies globally, without any government control. It can also be described as a private currency and minting huge profits sometimes. All of these operate with the support of some unknown sovereign guarantees. No country provides any security. For example, a Rs.500 Indian currency note!. The Reserve Bank Governor guarantees on  500 currency note. Even if it is paper, the RBI pays for it. But governments do not ensure the value of digital currencies like Bitcoin.

However, we know that the value of crypto like Bitcoin is supported by complex programming. No one or any government can change it individually, and it involves multiple checks at multiple computer servers worldwide, related to its value. Therefore, the easiest way to understand digital currency  is to use a digital currency that can only be transferred from one person to another via the Internet on platforms like Coinbase.

However, the RBI is not the first financial institution in the world to make such a drastic move. Reports indicate that India is far behind its technological  derivatives  in terms of crypto controls. We were hearing that China has been working on this for so many  years;  supported by the Chinese Central Bank and government approval. The Chinese widely use digital currency for e-commerce portals, offline shops, and other outlets through smartphones.

However, there is a difference between CBDC and cryptocurrency as the latter has some basic features. Those features cannot be copied to digital currencies. Cryptocurrencies, by nature, operate on the basic principle of anonymity. The exciting part is that the details of the seller and the buyer cannot be tracked. But beware,  in the case of a digital currency released by the central bank will have a whole tracking system, just like a standard currency. This is the kind of digital currency used in China. This ensures that transactions will take place under the supervision of the government. Go ahead Digital India!

The Evolution Of Global Poverty, 1990-2030

The last 30 years have seen dramatic reductions in global poverty, spurred by strong catch-up growth in developing countries, especially in Asia. By 2015, some 729 million people, 10% of the population, lived under the $1.90 a day poverty line, greatly exceeding the Millennium Development Goal target of halving poverty. From 2012 to 2013, at the peak of global poverty reduction, the global poverty headcount fell by 130 million poor people.

This success story was dominated by China and India. In December 2020, China declared it had eliminated extreme poverty completely. India represents a more recent success story. Strong economic growth drove poverty rates down to 77 million, or 6% of the population, in 2019. India will, however, experience a short-term spike in poverty due to COVID-19, before resuming a strong downward path. By 2030, India is likely to essentially eliminate extreme poverty, with less than 5 million people living below the $1.90 line. By 2030, the only Asian countries that are unlikely to meet the goal of ending extreme poverty are Afghanistan, Papua New Guinea, and North Korea.

In other parts of the world, poverty trends are disappointing. In Latin America, poverty fell rapidly at the beginning of this century but has been rising since 2015, with no substantial reductions forecast by the end of this decade. In Africa, poverty has been rising steadily, thanks to rapid population growth and stagnant economic growth. Exacerbated by a pandemic-induced rise in poverty of 11%, African poverty shows little signs of decline through 2030.

These trends point to the emergence of a very different poverty landscape. Whereas in 1990, poverty was concentrated in low-income, Asian countries, today’s (and tomorrow’s) poverty is largely found in sub-Saharan Africa and fragile and conflict-affected states. By 2030, sub-Saharan African countries will account for 9 of the top 10 countries by poverty headcount. Sixty percent of the global poor will live in fragile and conflict-affected states. Many of the top poverty destinations in the next decade will fall into both of these categories: Nigeria, Democratic Republic of the Congo, Mozambique and Somalia. Global efforts to achieve the SDGs by 2030, including eliminating extreme poverty, will be complicated by the concentration of poverty in these fragile and hard-to-reach contexts.

By 2030, poverty will be associated not just with countries, but with specific places within countries. Middle-income countries will be home to almost half of the global poor, a dramatic shift from just 40 years earlier. Nigeria is now the global face of poverty, overtaking India as the top poverty destination in 2019. (While India temporarily regained its title due to COVID-19, which pushed many vulnerable Indians back below the poverty line, Nigeria will reclaim the top spot by 2022.) In 2015, Nigeria was home to 80 million poor people, or 11% of global poverty; by 2030, this number could grow to 18%, or 107 million.

Poverty numbers and trends have traditionally been reported on a country-by-country basis. However, today we see that low-income countries have significant corridors of prosperity, while middle-income countries can have large pockets of poverty. With advances in geospatial and sub-national data, there is a growing push to move from country-wide metrics to sub-national data, in order to better identify and target these poverty “hotspots.”

As Inflation Soars, A Look At What’s Inside The Consumer Price Index

After many years of historically low inflation, consumer prices in the United States continued their steep ascent last month. The Consumer Price Index, the most widely followed inflation gauge, increased 7.0% from December 2020 to December 2021 – its highest rate in nearly 40 years.

The CPI – or, to give it its full name, the Consumer Price Index for All Urban Consumers (CPI-U) – isn’t the government’s only measure of inflation. For that matter, it isn’t even the only version of the CPI. Pew Research Center analyses typically use the CPI’s Retroactive Series, especially when adjusting prices or dollar values over several years or decades, because that series adjusts the CPI for previous years to reflect current methodology. There’s also the Chained CPI, which is meant to reflect how consumers alter their buying patterns in response to changes in relative prices – for example, buying more chicken when beef becomes more expensive. The Chained CPI often (but not always) comes in a bit below the “regular” CPI-U: It rose 6.9% between December 2020 and December 2021.

But the CPI-U is the most widely cited inflation metric, so it’s worth popping the hood and looking inside to see how it works.

The Bureau of Labor Statistics (BLS), which is responsible for the CPI, starts by collecting price data for hundreds of discrete goods and services – the so-called “market basket” – from around 8,000 housing units and 23,000 retailers, service providers and online outlets in 75 urban areas around the country. Data on rents is gathered from some 50,000 landlords and tenants. The items sampled, and their weights in the overall index, are determined by the Consumer Expenditure Survey, which is carried out for BLS by the Census Bureau.

The BLS reports index weights for dozens of categories, subcategories and specific items in the CPI’s basket of goods and services. The biggest category by far is shelter, which accounts for nearly a third of the index. The single weightiest item, at about 22.3%, is “owner’s equivalent rent of primary residence” – essentially how much homeowners would have to pay if they were renting their homes. (The idea is to separate out shelter, the service provided by a house, from whatever value the house might have as an investment.)

While shelter costs carry the most weight in the CPI, they’ve not risen nearly as much as the index as a whole. In December, owner’s equivalent rent was up 3.8% compared with December 2020, and regular rent of primary residence was just 3.3% higher. The one big exception among shelter costs was lodging away from home, a category that mostly tracks hotel and motel room rates, where prices were 27.6% higher than a year earlier. However, that subcategory accounts for less than 1% (0.849%, to be precise) of the CPI.

The next-biggest category, food, accounts for just under 14% of the index. Groceries, or “food at home,” makes up a bit more than half of that category. Grocery prices were 6.5% higher than a year ago, which will come as no surprise to anyone who’s been to a supermarket lately. Meats, especially beef and pork, led the way, with prices for beef roasts and steaks more than 20% higher than a year ago, bacon up 18.6% and chicken parts up 11.5%. (On the other hand, prices for hot dogs and cheese both are down 0.6%.)

Eating out has gotten more expensive too. Prices for full-service meals and snacks consumed away from home were up 6.6% from December 2020, and limited-service meals and snacks were up 8%. School breakfasts and lunches were down by nearly two-thirds, perhaps because the U.S. Department of Agriculture has authorized free meals for all children in public schools this academic year.

Besides at the supermarket, consumers also feel the effects of inflation acutely at the fuel pump. Gasoline accounts for just 4% of the overall CPI, but prices for it have risen more than any other good or service in the CPI basket over the past year. Regular unleaded gasoline, for instance, is up 50.8% since December 2020. It should be noted that gas prices fell sharply in 2020, as demand plunged because much of the U.S. economy was shut down. As the economy reopened and demand came back, so did gas prices, though they’ve since risen 20% or more above pre-pandemic levels.

Energy goods and services, a category of which gasoline is a major component, accounts for roughly 7.5% of the overall CPI. Prices for fuels used for home heating and cooking also are sharply higher than a year ago: Fuel oil is up 41%, propane, kerosene and firewood are up 33.8%, and piped natural gas is up 24.1%.

Aside from motor fuels, the vehicles that burn them also loom relatively large in the CPI. New vehicles account for nearly 3.9% of the index; prices for new cars rose 12% from December 2020 to December 2021, and new trucks prices almost as much (11.6%). But the real movement was for used vehicles: Prices for used cars and trucks, which make up about 3.4% of the index, have soared 37.3% over the past 12 months. Why? The pandemic has disrupted and depressed production of new vehicles, while low interest rates have increased demand for cars and trucks. Buyers who couldn’t find the new vehicles they wanted have moved over to the used lot, increasing demand at the same time as the flow of pre-owned cars and trucks dwindled.

Subscribe to Newsletter









Download TheUNN App today!

Click or Scan the QR Code

This will close in 0 seconds

-+=