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Stock markets in Europe and the U.S. tumbled Wednesday as investors worried about the stability of global banking systems in the immediate aftermath of the collapse of two American banks.

Major stock indexes in London, Paris and Frankfurt all plunged by more than 3% while three key U.S. indexes — the Dow Jones Industrial Average of 30 key stocks, the broader S&P 500 index and the tech-heavy Nasdaq index — also dropped, although by 1% or less in late-day trading. Asian markets increased, mirroring Tuesday gains in the U.S.

The newest worries centered on Credit Suisse, with shares for the beleaguered Swiss lender falling more than 17% after its biggest shareholder, the Saudi National Bank, said it would not invest more money in it.

Problems at Credit Suisse, with outlets in major global financial centers, predated the U.S. government takeover of operations at Silicon Valley Bank and Signature Bank in the last week.

Credit Suisse said Tuesday that managers had identified “material weaknesses” in the bank’s internal controls on financial reporting as of the end of last year.

But on Wednesday, Credit Suisse chairman Axel Lehmann, speaking at a financial conference in the Saudi capital of Riyadh, defended the bank’s operations, saying, “We already took the medicine” to reduce risks. “We are regulated. We have strong capital ratios, very strong balance sheet. We are all hands on deck.”

But with the drop in the share price for Credit Suisse, bank stocks in Britain, France and Germany also fell sharply, although not by as much as for Credit Suisse.

S&P Global Ratings said on Tuesday that the failures at the two U.S. banks would have little effect on the fortunes of European banks. But the S&P analysts added, “That said, we are mindful that SVB’s failure has shaken confidence.”

Share prices of other U.S. regional banks like Silicon Valley have fallen sharply in recent days.

Some information for this report came from The Associated Press.
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Argentina’s annual inflation rate breached the 100% mark for the first time since 1991.

The government’s statistics agency said Tuesday the yearly inflation rate for February rose to 102.5%, making it one of the highest in the world. The agency said consumer prices rose 6.6% last month compared to the same period a year ago, and a combined 13.1% for the first two months of this year.

The sharp rise in the rate was due to an increase in the price for food and beverages, finishing up at 9.8% last month compared to January.

Reports say the surge in consumer prices has defied numerous attempts by the government of President Alberto Fernandez to tame inflation, including a cap on the price of food and other goods.

The soaring inflation rate has been blamed on a number of factors, including a flood of money into circulation by the central bank, along with a lingering heatwave and subsequent drought that has destroyed crops and impacted agricultural exports. The high inflation rate has further left the South American country mired in a lingering economic crisis.

The International Monetary Fund has approved a $44 billion financial aid package for Argentina.

Some information for this report came from Reuters.
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In the early days of the COVID-19 pandemic, nurses, truck drivers, grocery clerks and other essential workers were hailed as heroes.

“Now we are vilifying them … and this has long-term ramifications for our well-being,” said Manuela Tomei, International Labor Organization assistant director-general for governance, rights, and dialogue.

“The work that these persons perform is absolutely essential for families and societies to function,” she said, speaking Wednesday in Geneva. “So, the non-availability of their services would really result into a loss of well-being and the impossibility of ensuring safe lives to society at large.”

And yet a new study by the International Labor Organization (ILO) finds essential workers are undervalued, underpaid and laboring under poor working conditions, exposed to treatment that “exacerbates employee turnover and labor shortages, jeopardizing the provision of basic services.”

The U.N. agency’s report classifies key workers into eight main occupation groups covering health, food systems, retail, security, cleaning and sanitation, transport, manual, and technical and clerical occupations.

Data from 90 countries show that during the COVID-19 crisis key workers suffered higher mortality rates than non-key workers overall, with transport workers being at highest risk.

The report found 29% of key workers globally are low paid, earning on average 26% less than other employees. It reports they tend to work long, unpredictable hours under poor conditions.

Tomei said inaction in improving sub-standard conditions of work is having consequences today.

“In a number of countries, these sectors are facing some labor shortages because people are increasingly reluctant to engage in work which is not fairly valued by society and rewarded in terms of better pay and also improved working conditions.

“So, we are facing a crisis right now,” she added.

Richard Samans, director of the ILO research department, noted that a critical shortage of nurses in many countries is of particular concern.

“This affects the very life of people,” he said Wednesday. “Many people in countries are facing long delays in treatment. In the event of a shock — some sort of a major health disruption or natural disaster or otherwise — if the system is already strained, it cannot handle the major influx of demand for those nursing services.”

A new report by the World Health Organization warns the “widespread disruptions to health services” due to the COVID-19 pandemic “has resulted in a rapid acceleration in the international recruitment of health professionals,” mainly from poor to rich countries, exacerbating shortages of this vital workforce in developing countries.

The ILO reports that countries are still experiencing supply shortages three years after WHO declared COVID-19 a pandemic. ILO research director Richard Samans attributes this to a scarcity of truck drivers due to lack of training and bad working conditions.

“In the event of a shock that increases the demand for certain types of products and services, if the underlying logistical infrastructure is not fit for purpose, then that affects the daily livelihood of people and, in some cases, their health and well-being,” he said.

The ILO report also says key workers fare worse than non-key workers in both wealthy and poor countries, but ILO senior economist Janine Berg said the problems are worse in low-income countries.

“There are particularly severe problems, for example, in agricultural work in low-income countries, and the entire agricultural food chain is part of the key worker definition,” she said. “There are also very severe problems in lower-income countries with respect to very low coverage in social protection.”

The report urges nations to identify gaps in decent work and develop national strategies to address the problems facing key workers through strengthened policies and investment.

Among its recommendations, the report calls on governments to reinforce occupational health and safety systems, improve pay for essential workers, guarantee safe and predictable working hours through regulation, and increase access to training so that key workers can carry out their work effectively and safely.
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They are perhaps the two most feared words for regulators of the financial industry: Bank run.

And that is what happened last week when depositors, during a single day, withdrew $42 billion from California-based Silicon Valley Bank (SVB), leaving it with a negative cash balance of a billion dollars.

“This was the first Twitter-fueled bank run,” is how Republican Representative Patrick McHenry, chair of the House Financial Services Committee, described the tsunami of withdrawals.

Depositors and others began speculating on social media about the bank’s health after CEO Greg Becker sent a letter to shareholders on March 8, revealing a loss of $1.8 billion on the sales of U.S. treasuries [debt obligations issued by the government to raise cash] and mortgage-backed securities. Becker outlined his quest to find more than $2 billion to stabilize the bank.

The letter was the catalyst for the second-largest failure of a financial institution in U.S. history and the first such collapse since an economic recession in the country 15 years ago.

As SVB was sinking, regulators in the state of New York suddenly shut down Signature Bank, known as friendly to the unstable cryptocurrency industry, after panic withdrawals there totaling $10 billion brought it to the brink of insolvency.

Some of Signature Bank’s biggest customers were the top crypto exchanges, which individually had hundreds of millions of dollars in deposits.

The bank runs threatened to expand, with individuals across the country whose deposits were more typically in the thousands of dollars and not millions of dollars wondering if their money was safe. Regional banks were especially vulnerable as their stock prices plummeted.

“If the damage had spread across our financial system, the deposits and savings of tens of millions of families and small businesses could have been at serious risk,” Majority Leader Chuck Schumer said on the Senate floor Tuesday.

The government corporation Federal Deposit Insurance Corporation (FDIC) stepped in with unprecedented action.

Most bank customers know the FDIC from its logo displayed at branches with the written assurance: “Each depositor insured to at least $250,000.” Such a limit is likely to cover the potential losses of most individual depositors in America, but Silicon Valley Bank’s well-heeled customers were high-tech startups and entrepreneurs with far larger deposits.

The FDIC decided that the customers of SVB and Signature would be made whole, no matter how much money they had in either of those banks. This restored consumer confidence, and there have been no additional runs on American banks. But the decision was perceived by some as a bailout for the wealthy.

“No losses will be borne by the taxpayers,” President Joe Biden said on Monday.

That is technically correct, as the FDIC is cashing out depositors from a pool of money that all insured banks are required to pay into. But “it is most definitely a bailout,” said Thomas Hoenig, distinguished senior fellow at George Mason University’s Mercatus Center and a former vice chairman of the FDIC.

“This is where the market discipline breaks down,” Hoenig said.

On its website, the FDIC touts its track record: “No depositor has ever lost a penny of insured deposits since the FDIC was created in 1933.”

The FDIC was formed as an independent agency during the Great Depression after a wave of bank runs led to the failure of thousands of financial institutions in the early 1930s, wiping out the savings of many Americans at a time of high unemployment.

“The FDIC was considered pretty radical at the time,” Hoenig told VOA. He noted that even President Franklin D. Roosevelt initially was uneasy about setting up a deposit insurance fund because of concern “about the moral hazard issue that people would not pay attention to what a bank was doing.”

A sister organization, the Federal Savings and Loan Insurance Corporation, was set up to protect depositors at non-commercial banks. The FSLIC and its parent agency, the Federal Home Loan Bank Board, eventually went bankrupt and were dissolved in 1989. The FDIC now is available to ensure those smaller thrift institutions, while the government-backed National Credit Union Administration, a successor to the Bureau of Federal Credit Unions, was established in 1970 to exclusively protect those depositors.

An FDIC bankruptcy “is always a possibility,” according to Hoenig. But the FDIC effectively has a line of credit from the U.S. Treasury it could access if there were to be massive bank failures and it ran out of money.

Right now, Hoenig noted, the FDIC has $100 billion in its fund. But that is against about $20 trillion in banking deposits. Hoenig cautions, “You really don’t want to be bailing out everyone every time, or you might as well just make these institutions public utilities.”
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According to recent studies, working four days a week instead of five can improve people’s overall wellness. The challenge, however, is whether businesses can maintain the same level of productivity in shorter periods of time. VOA’s Veronica Balderas Iglesias spoke with those who have experimented with the formula.
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Facebook-parent Meta Platforms said on Tuesday it would cut 10,000 jobs, just four months after it let go 11,000 employees, the first Big Tech company to announce a second round of mass layoffs. 

“We expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven’t yet hired,” Chief Executive Officer Mark Zuckerberg said in a message to staff.  

The layoffs are part of a wider restructuring at Meta that will see the company flatten its organizational structure, cancel lower priority projects and reduce its hiring rates as part of the move. The news sent Meta’s shares up 2% in premarket trading. 

The move underscores Zuckerberg’s push to turn 2023 into the “Year of Efficiency” with promised cost cuts of $5 billion in expenses to between $89 billion and $95 billion. 

A deteriorating economy has brought about a series of mass job cuts across corporate America: from Wall Street banks such as Goldman Sachs and Morgan Stanley to Big Tech firms including Amazon.com  and Microsoft.  

The tech industry has laid off more than 280,000 workers since the start of 2022, with about 40% of them coming this year, according to layoffs tracking site layoffs.fyi.  

Meta, which is pouring billions of dollars to build the futuristic metaverse, has struggled with a post-pandemic slump in advertising spending from companies facing high inflation and rising interest rates.  

Meta’s move in November to slash headcount by 13% marked the first mass layoffs in its 18-year history. Its headcount stood at 86,482 at 2022-end, up 20% from a year ago. 
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Illegal fishing, a multibillion-dollar industry closely linked to organized crime, is set to pose a greater threat to global security as climate change warms the world’s oceans, according to a report by the Royal United Services Institute, a research organization based in London, in partnership with The Pew Charitable Trust.

Illegal, unreported and unregulated, or IUU, fishing is worth up to $36.4 billion annually, according to the report, representing up to a third of the total global catch.

Fish stocks

As climate change warms the world’s oceans, fish stocks are moving to cooler, deeper waters, and criminal operations are expected to follow.

“IUU actors and fishers in general will be chasing those fish stocks as they move. And there’s predictions, or obviously concern, that they will move in across existing maritime boundaries and IUU actors will pursue them across those boundaries,” report co-author Lauren Young told VOA.

RUSI said that global consumption of seafood has risen at more than twice the rate of population growth since the 1960s. At the same time, an increasing proportion of global fish stocks have been fished beyond biologically sustainable limits.

The report also highlights that fish play a key role in capturing carbon through feeding, so a decline in fish stocks itself could accelerate warming temperatures.

Crime nexus

“Climate change will impact in other ways, with impacts on coastal erosion as well, and that will have impacts on local small-scale fisheries. As their livelihoods become more vulnerable, they may begin engaging more in IUU practices like disruptive fishing practices or engaging in other type of criminal activity as well.”

“There is a nexus with other crime types as well, like narcotics, human trafficking and labor abuses,” Young added.

Many poorer countries do not have the capacity to police their waters. In parts of Africa and South America, foreign trawlers — including many vessels from China — have devastated fish stocks. Beijing denies its fleets conduct illegal fishing.

The United States Coast Guard said in 2021 that IUU fishing had replaced piracy as the leading global maritime security threat. “If IUU fishing continues unchecked, we can expect deterioration of fragile coastal states and increased tension among foreign-fishing nations, threatening geo-political stability around the world,” the document warned.

US response

The United States launched a sustainable fishing initiative in Peru and Ecuador in October. Project “Por la Pesca” is aimed at helping artisanal fishing in the face of depleted stocks caused by IUU fishing.

“It’s having a profound impact on stocks of fish, on the livelihoods of fisherpeople, on sustainability,” U.S. Secretary of State Antony Blinken said on a visit to Peru in October. “We have many countries around the world where fishing is at the heart of their economy and the heart of their culture as well, where illegal, unreported, unregulated fishing is a real and growing challenge.”

South China Sea

RUSI highlights the warming South China Sea as a flashpoint. Already, fishing grounds and maritime boundaries are hotly contested, with frequent armed confrontations.

“Many relate to China’s commitment to the nine-dash line, which is the country’s self-declared sort of maritime boundary,” said RUSI’s Young. “And they enforce that through armed fishing militia. So that obviously plays into it a lot as well. But those existing tensions there are likely to be exacerbated by climate change. And that is in line with predictions of climate change being this kind of threat multiplier.”

Enforcement

Earlier this month, United Nations member states agreed to the High Seas Treaty, aimed at protecting biodiversity by establishing vast marine protected areas.

“Whilst it’s a positive move with climate change that we’re looking to protect more of the world’s oceans, we need to improve our ability to actually monitor and enforce [the agreements] as well,” Young said.

The report authors call on governments and multinational bodies to tackle illegal fishing based on climate change predictions; enhanced vessel monitoring capabilities and tougher enforcement, with greater recognition on the role the industry plays in wider criminal networks.
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