Бізнес

When a rotten egg smell rises from the mangrove swamps of southeast Mexico, something is going well. It means that this key coastal habitat for blunting hurricane impacts has recovered and is capturing carbon dioxide — the main ingredient of global warming.

While world leaders seek ways to stop the climate crisis at a United Nations conference in Scotland this month, one front in the battle to save the planet’s mangroves is thousands of kilometers away on Mexico’s Yucatan Peninsula.

Decades ago, mangroves lined these shores, but today there are only thin green bands of trees beside the sea, interrupted by urbanized areas and reddish segments killed by too much salt and by dead branches poking from the water.

A few dozen fishermen and women villagers have made building on what’s left of the mangroves part of their lives. Their work is supported by academics and donations to environmental groups, and government funds help train villagers to organize their efforts. 

The first time they came to the swamp for seasonal restoration work was more than a decade ago with Jorge Alfredo Herrera, a researcher at the Center for Research and Advanced Studies of the Mexican Polytechnic Institute in Yucatan. He told them the mangroves needed a network of interlaced canals where fresh and salt water would mingle.

To dig them was a hard work and paid only $4 a day. Men from Chelem, a fishing village of Progreso, turned down the job but a group of women took it on, believing they could accomplish a lot with little money.

Recently, after an intense rainy season, the women worked to finish the second part of the restoration process: planting young mangroves in a swamp near this port city. Under the sun, they chuckled, remembering the time they encountered a crocodile and barely managed to run away.

Then they placed 20-inch mangrove seedlings into mounds of mud held together by mesh, creating tiny islands about a yard (meter) square.

“The happiest day is when our plants take,” said 41-year-old Keila Vázquez, leader of the women who now are paid $15 a day and take pride in putting their “grain of sand” into the planet’s well-being. “They are like our children.”

GLOBAL THREAT TO MANGROVES

This mangrove restoration effort is similar to others around the globe, as scientists and community groups increasingly recognize the need to protect and bring back the forests to store carbon and buffer coastlines from climate-driven extreme weather, including more intense hurricanes and storm surges. Other restorations are underway in Indonesia, which contains the world’s largest tracts of mangrove habitat, Colombia and elsewhere.

“Mangroves represent a very important ecosystem to fight climate change,” said Octavio Aburto, a marine biologist at Scripps Institution of Oceanography in San Diego, California.

While the tropical trees only grow on less than 1% of the Earth’s land, he said, “on a per-hectare basis, mangroves are the ecosystem that sequesters the most carbon … They can bury around five times more carbon in the sediment than a tropical rain forest.”

Yet around the globe, mangroves are threatened.

From 1980 to 2005, 20% to 35% of the world’s mangrove forests were lost, according to the U.N. Food and Agriculture Organization.

From 2000 to 2016, the rate of loss declined as governments and environmental groups spotlighted the problem, but destruction continued — and about 2% of the world’s remaining mangrove forests disappeared, according to NASA satellite imagery.

In Mexico, as in much of the world, the largest threat to mangroves is development. The region near Cancun lost most of its historic mangroves to highways and hotels starting in the 1980s.

Tracts of mangroves on the country’s southern Pacific coast also have been cleared to make room for shrimp farming, while oil exploration and drilling in shallow waters off the Gulf of Mexico threatens mangroves there, said Aburto.

Mexico began to protect some of its mangroves only after the excessive tourism development of the 1980s. And although Mexico took steps to establish a climate action plan in 1998 and was one of the first developing countries to make voluntary commitments under the Paris Climate Accord, its commitment to the environment began to backslide in 2015, said Julia Carabias, a professor on the science faculty at the National Autonomous University of Mexico.

In the past six years, Mexico has cut resources for environmental conservation by 60%, according to Carabias.

And that, combined with increasing government support of fossil fuel energy and ongoing infrastructure and tourist projects in the region, is sounding alarms.

Despite the country’s monitoring system, local researchers say that for every hectare (2.5 acres) of mangrove restored in southeast Mexico, 10 hectares are degraded or lost.

EFFORTS TO SAVE SWAMPS

The halting efforts in Mexico to protect and restore mangroves, even as more are lost, mirror situations elsewhere. The U.N. Food and Agriculture Agency estimated in 2007 that 40% of Indonesia’s mangroves had been cut down for aquaculture projects and coastal development in the previous three decades.

But there have been restoration efforts as well.

In 2020, the Indonesia government set an ambitious target of planting mangroves on 600,000 hectares (1.5 million acres) of degrading coastline by 2024. Key ministries are involved in restoration efforts that include community outreach and education.

Yet there have been some setbacks. Precise mapping and data on mangroves is hard to come by, making it difficult for agencies to know where to concentrate. Newly planted mangroves have been swept out to sea by strong tides and waves. Community outreach and education have been slowed by the COVID-19 pandemic.

In Mexico, successes exist, even if they are slow in coming.

Manuel González, a 57-year-old fisherman known as Bechá, proudly shows off recovering mangroves in the seaside community of Dzilam de Bravo, about 60 miles (97 kilometers) east of Progreso. He walks through mud, avoiding the interlaced mangrove roots that burrow into it. Some trees are already 30 feet (9 meters) tall.

In 2002, Hurricane Isidoro devastated this area, but after a decade of work, 297 acres have been restored. The fisherman says that now storms don’t hit the community as hard. And the fish, migratory birds, deer, crocodiles and even jaguars have returned. 

But the mangroves face a new risk, as stumps scattered among the trees attest.

“In 10 years, you have a very nice mangrove for someone with a chainsaw to come and take it,” González said. “That’s something that hurts me a lot.”

Cutting mangroves has been a crime since 2005, but González says authorities shut down and fine projects, only to have them later reopen.

The Yucatan state government said it is aware of complaints of illegal logging yet the harvest has only grown.

While more funds are needed for protection and restoration, some communities prefer to think about how to make conservation a profitable activity.

José Inés Loría, head of operations at San Crisanto, an old salt harvesting community of about 500 between Progreso and Dzilam, thinks the way to make the local mangrove part “of the community’s business model” is using the new financial tools such as blue carbon credits.

Those instruments, already in use in Colombia and other countries, allow polluting businesses to compensate for emissions by paying others to store or sequester greenhouse gases.

Some in Mexico say credits are still not well regulated in the country and could invite fraud and scams. But Loria defends them. “If conservation doesn’t mean improving the quality of life of a community, it doesn’t work.”
…

The U.S. economy created 531,000 jobs in October, more than the 450,000 economists had forecast, according to the U.S. Department of Labor.

The unemployment rate also dropped slightly from 4.8% to 4.6%, the lowest since the pandemic hit. The unemployment rate in February of 2020 was 3.5%, an historic low.

Jobs numbers for August and September were also revised upward.

Celebrating the better-than-expected report, President Joe Biden called it “another great day for our economic recovery,” during comments Friday at the White House on the jobs report. 

Most of the employment gains were in the leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing sectors.

“Overall, it was a really positive jobs report but leaves some questions about the structure of the labor market for the Fed,” Megan Greene, the global chief economist at the advisory firm Kroll Institute and a senior fellow at the Harvard Kennedy School, told ABC News.

However, the jobs report was not all good news.

Labor participation, the number of people working or actively seeking a job, remained at a low 61.6%, and only 104,000 new people joined the workforce in October.

The disappointing labor participation rate has been fairly steady over the past year at the lowest levels seen since the early 1970s.

Businesses have tried to get workers back by raising wages or offering bonuses, but most of those gains have been offset by rising prices for food, gas and rent. 
…

The United Nations Food and Agriculture Organization has reported its Food Price Index, which tracks the international prices of a basket of food, found that in October, the cost of a basket of food was up 3% from September.

The FAO Cereal Price Index increased 3.2% in October from the previous month, while the price of wheat rose by 5% amid reduced harvests from major exporters of wheat that include Canada, Russia and the United States. The FAO also recorded the international prices of other major cereals have increased.

Meanwhile, the U.N. agency said the price of vegetable oil hit an “all-time high” increase of 9.6% in October, marking a fourth consecutive month of price hikes. The FAO said the rising vegetable oil price was “largely underpinned by persisting concerns over subdued output in Malaysia due to ongoing migrant labor shortages.”

Dairy prices rose by 2.5%, while the price of meat fell by 0.7%, “marking the third monthly decline.”

Some information from The Associated Press and Reuters was used in this report.
…

Congressional Democrats this week proposed an addition to U.S. President Joe Biden’s climate and social spending legislation that would allow Medicare, the federal government’s health care program for older Americans, to negotiate with drugmakers over the cost of certain prescription medications.

U.S. consumers pay higher prices for prescription medications than almost any of their peers in the developed world, a fact that generations of politicians and advocates have struggled in vain to change. If passed, the proposal working its way through Congress would make a dent, though a relatively small one, in that long-standing problem.

The plan being discussed would give Medicare officials the ability to negotiate pricing on a sliver of the thousands of prescription medications on the market in the United States, beginning with about 10 drugs and capped at 20. Liberal members of Congress at first had hoped to grant Medicare authority to negotiate the prices of up to 250 costly drugs every year.

Though small, the number of drugs that would be covered by the proposal represents a disproportionate amount of the annual “spend” on drugs by Medicare patients.

A study by the Kaiser Family Foundation released this year determined that the 10 top-selling drugs covered under Medicare Part D accounted for 16% of net total spending in 2019. The top 50 drugs — representing just 8.5% of all drugs covered under the program — accounted for 80% of spending.

The top 10 drugs, according to the Kaiser Family Foundation include “three cancer medications, four diabetes medications, two anticoagulants and one rheumatoid arthritis treatment.”

Confusing system 

Unlike many countries outside the U.S., where the government is able to negotiate drug prices and bring down the cost for a single national health care system, the landscape in the U.S. is highly fragmented. Most Americans with health insurance are covered by policies issued by for-profit companies in the private sector.

Americans 65 years and older are eligible for Medicare, which takes the place of a private insurer, but with some critical differences. For many years, Medicare did not offer prescription drug coverage, forcing Medicare patients to pay for medications out of pocket or seek third-party insurance coverage for their medications.

In 2003, Congress created Medicare Part D, under which private insurers offered medication coverage that met minimum requirements established by the federal government. While that program reduced costs for many seniors, cost-sharing provisions and design flaws mean that many recipients continue to face financially crippling bills for medication. A key reason is that each insurance provider must negotiate prices with drug companies individually, rather than using the bargaining power of the entire Medicare population to insist on lower costs.

‘Subsidizing R&D for the world’ 

For years, advocates for change have pointed out that drug companies set prices in the U.S. far above those in other countries in which they sell the same drugs. A study by the Rand Corporation this year comparing the U.S. with 32 other countries found that drugs cost on average 256% more in the U.S.

“American consumers are subsidizing the R&D for the world,” said Lovisa Gustafsson, vice president of the Controlling Health Care Costs program at the Commonwealth Fund, a think tank in Washington, D.C.

Compounding the problem is that Americans also shoulder a much greater share of the cost for their prescription medications.

“Patients in the U.S. face far higher cost-sharing than in a lot of other countries. So, just because they have insurance doesn’t mean that patients can actually afford the drugs that they need currently,” Gustafsson said. “There’s survey after survey showing that 20% to 25% of Americans can’t afford the drugs they’re prescribed by their physician, or split pills, or don’t get the prescription filled, because they just can’t afford it. And that’s even when they have insurance.”

Putting a lid on costs

An important element of the proposal before Congress is that it would place an annual cap of $2,000 on the co-payments that Medicare patients can be charged for their medications.

The prospect of a cap on out-of-pocket costs was well-received by many calling for reforms, such as AARP, a large advocacy group for older Americans.

“There’s no greater issue affecting the pocketbooks of seniors on Medicare than the ever-increasing costs of prescription drugs,” AARP CEO Jo Ann Jenkins said in a statement. “For decades, seniors have been at the mercy of Big Pharma. Allowing Medicare to finally negotiate drug prices is a big win for seniors. Preventing prices from rising faster than inflation and adding a hard out-of-pocket cap to Part D will provide real relief for seniors with the highest drug costs.”

Drug firms unhappy

PhRMA, a powerful trade group representing the pharmaceuticals industry, reacted unhappily to news of the proposal.

“If passed, it will upend the same innovative ecosystem that brought us lifesaving vaccines and therapies to combat COVID-19,” PhRMA President and CEO Stephen J. Ubl said in a statement. “Under the guise of ‘negotiation,’ it gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments.”

“While we’re pleased to see changes to Medicare that cap what seniors pay out of pocket for prescription drugs, the proposal lets insurers and middlemen like pharmacy benefit managers off the hook when it comes to lowering costs for patients at the pharmacy counter,” Ubl continued. “It threatens innovation and makes a broken health care system even worse.”

Industry claims exaggerated?

Numerous supporters of allowing the government to negotiate on drug prices claim that the industry’s insistence that it will stymie innovation is exaggerated.

One piece of evidence they point to is a study released by the Congressional Budget Office in August. The CBO created a model in which pharmaceutical companies were faced with the following scenario: A policy is put in place that reduces the return on their most profitable drugs by 15% to 25%.

The agency estimated that the impact would be a reduction of the number of new drugs coming onto the market by only one-half of 1% over the first 10 years of the new policy. That would increase to as much as an 8% reduction in the first three decades of the program.
…

Britain could revive domestic production of super strong magnets used in electric vehicles and wind turbines with government support, to cut its reliance on China and achieve vital cuts in carbon emissions, two sources with direct knowledge said. 

A government-funded feasibility study is due to be published on Friday, laying out the steps Britain must take to restart output of rare earth permanent magnets, the sources said. 

A magnet factory would help Britain, hosting the COP26 U.N. climate talks in Glasgow, Scotland, meet its goal of banning petrol and diesel cars by 2030 and slashing carbon emissions to net zero by 2050. 

British production of the magnets vanished in the 1990s when the industry found it could not compete with China. But with the huge growth in demand, the government is keen to secure enough supply. 

Last month, the government set out plans to achieve its net zero strategy, which includes spending $1.15 billion to support the roll out of electric vehicles (EVs) and their supply chains. 

The study outlines how a plant could be built by 2024 and eventually produce enough of the powerful magnets to supply 1 million EVs a year, the sources who have read the report said. 

“We’re looking to turn the tide of shipping all this kind of manufacturing to the Far East and resurrect U.K. manufacturing excellence,” one of the sources said. 

The government’s Department for Business declined to comment on details regarding a possible magnet factory because the report has not been released. 

“The government continues to work with investors through our Automotive Transformation Fund (ATF) to progress plans to build a globally competitive electric vehicle supply chain in the U.K.,” a spokesperson said in an email. 

EV ramp up 

British rare earth company Less Common Metals put together the feasibility study and is considering seeking partners to jointly build the factory, the sources said. 

LCM is one of the only companies outside of China that transforms rare earth raw materials into the special compounds needed to produce permanent magnets. 

Automakers will need the magnets as they ramp up EV output in Britain. Ford said last month it would invest up to $310 million in an English plant to produce around 250,000 EV power units a year from mid-2024. 

Rare earth magnets made of neodymium are used in 90% of EV motors because they are widely seen as the most efficient way to power them. 

Electric cars with these magnets require less battery power than those with ordinary magnets, so vehicles can travel longer distances before recharging. 

A race by automakers to ramp up EVs and countries to switch to wind energy is due to boost demand for permanent magnets in Europe as much as tenfold by 2050, according to the European Union. 

The sources said government support would be vital so Britain could compete with China, which produces 90% of supply. 

The strategy mirrors similar efforts by the EU and the United States to create domestic industries of raw materials, rare earth processing and permanent magnets. 

 
…

An Earth-flight giant contributes to NASA’s upcoming moon missions. Plus, words from the next crew to visit the International Space Station and grim news from NASA about the future of food on Earth. VOA’s Arash Arabasadi brings us the Week in Space.
…

New claims for jobless benefits in the U.S. dropped to a new pandemic low, the Labor Department reported Thursday, as the world’s biggest economy continues its recovery from the coronavirus pandemic.

A total of 269,000 out-of-work employees filed for unemployment compensation for the week ending October 30, down 14,000 from the week before, the agency said. The figure was the lowest total since mid-March 2020 when the pandemic first struck the U.S. economy, although still higher than the pre-coronavirus weekly average of 218,000 in 2019.

Since exceeding 900,000 in early January, weekly applications have generally declined as the job market recovers. During the last week of October, 2.1 million people in the U.S. received unemployment compensation, far lower than the 7.1 million in 2020 when the economy was suffering the worst effects of the pandemic.

In March and April of 2020, employers cut more 22 million jobs amid government-ordered lockdowns and consumers and employees staying home to avoid infection. Some 17 million of those jobs have returned. 

Government financial relief and vaccine rollouts led to more consumer spending and business re-openings, forcing companies to struggle to meet demand by re-hiring workers, particularly for low-wage jobs. 

The Biden administration’s vaccine mandate for federal government contractors and business with at least 100 employees could exacerbate worker shortages.

The unemployment report for October is due to be released on Friday.

Some information in this report came from the Associated Press and Reuters.
…

Thailand opened its borders to vaccinated visitors for the first time in 18 months this week, as the country struggles to boost an economy still languishing due to the pandemic.

Visitors from more than 60 countries considered “low risk” are now allowed to visit the Southeast Asian nation, with quarantine essentially scrapped. 

Tourism and Sports Minister Phiphat Ratchakitprakarn said Thailand had been preparing for the country’s reopening for tourism with the opening of travel lanes such as the Phuket Sandbox. He said opening the borders is to ensure Thailand remains in “competition” to draw tourists, adding that imposing quarantines will deter visitors elsewhere.

Thailand is heavily reliant on tourism, which before the pandemic accounted for around one-fifth of the country’s GDP and 20% of its overall employment, according to the International Monetary Fund (IMF).

But experts and business owners remain cautious about the reopening.

Pravit Rojanaphruk, a journalist who works for the Bangkok-based news website Khaosod English, said the reopening could create setbacks for advances made in Thailand’s battle against the pandemic.

The journalist noted that COVID test kits are not readily available, telling VOA that some visitors “will also likely disregard COVID-19 prevention measures such as social distancing and for foreign tourists the wearing of sanitary masks.” 

Also, Thailand’s reopening comes as anti-government protests continue in Bangkok. Protesters have been calling for reform, targeting the role of the monarchy and criticizing the government’s handling of the pandemic. Many have called for Prayuth Chan-o-cha, Thailand’s prime minister, to resign. He refuses to do so.

Demonstrations that initially erupted in August of last year sometimes led to violence and skirmishes between protesters and riot police. The current demonstrations, which are much smaller in size, often occur in the district of Din Daeng, the city’s second-largest slum community.

Vaccinations allow reopening

Health experts say Thailand initially did well in the fight against the spread of COVID-19 but that a surge of cases caught officials by surprise in April, prompting authorities to call for months of restrictions, lockdowns and curfews. During its third wave, Thailand was seeing more than 20,000 infections per day.

With a population of nearly 70 million, Thailand has vaccinated around 54% of its people, according to government figures. Overall, 1.9 million people have been infected, with nearly 20,000 deaths.

Although restrictions remain, the speed of the country’s vaccine rollout in recent months, sometimes exceeding 1 million per day, made it easier for the Thai government to reopen its borders.

Visitors must take a COVID-19 test upon arrival and wait for the results in a pre-booked hotel. If the results are negative, they are free to travel to a wide range of destinations throughout the country, authorities say. Unvaccinated visitors are still subjected to a seven-day quarantine in an approved hotel.

Forty-six nations were initially listed for November’s reopening, but at the last minute, more were added. Rojanaphruk says the decision was to attract more visitors to support the ailing economy.

“Many people [have been] severely affected by COVID-19’s impact on the economy, [and] will definitely be focused on how successful the reopening of Thailand would be and whether the benefits will trickle down to the working class,” he said.

“The government cannot choose to keep shutting the country from foreign tourists indefinitely as tourism income constitutes around 20% of the GDP. Adding more countries to the list in the last minute definitely has to do with attempts to get more foreign tourists,” he said.

Thani Thongphakdi, the permanent secretary of the Thailand Ministry of Foreign Affairs, signed the notification adding 17 more countries after “further consideration into the global situation of the spread of COVID-19 virus in parallel with health and socio-economic parameters.”

But the Rojanaphruk believes strict restrictions could be enforced once again if Thailand experiences a surge in cases.

“The government has alluded to the fact that if the situation gets out of control, they are willing to re-impose a lockdown and that the situation will be assessed on a weekly basis,” he said.

Rungrueng Kitphati, Thailand’s Minister of Public Health spokesman, said in August that herd immunity is not far away, because vaccines continue to be administered in large numbers each day, local media reported.

Thailand was used to seeing around 40 million international arrivals each year.  But it was reported that in 2020 alone, arrivals dropped by 83%.

The islands of Phuket and Koh Samui have already been open to visitors. The “Phuket Sandbox” was launched four months ago on July 1, while the “Samui Plus” scheme followed in August. Both schemes are initiatives started by the Tourism Authority of Thailand and have allowed fully vaccinated visitors to skip hotel quarantine.

More than 6,000 international arrivals entered Thailand Monday, while the Tourism Authority of Thailand, or TAT, forecast that 1 million foreign visitors would enter the country from now until March 2022, reported the Bangkok Post, the country’s English-language daily newspaper.

Some Thai businesses have been eager for foreign arrivals to return, but caution remains for others on life after the reopening.

Vons Sochi, an Australian expatriate who owns VonsFitness247 gym in Bangkok, says the pandemic has crippled a lot of businesses. He thinks it is understandable why people are cautious.

“It relies a lot on tourists. COVID-19 has taken away a lot of disposable income. Everyone is holding onto their money, in case of another lockdown,” he said.

Nicolas Ziade, owner of Mulligans Bar on Bangkok’s Khao San Road, voiced optimism about the reopening.

“I’m relieved. It’s going to take time probably around three months to see people walking Khao San Road during the day. I expect to see an increase in foreigners which will be great and will increase daytime trade.

“It has been very difficult. I lost my job and had no income for six months,” he added.

Pratchaya Julapun, marketing manager at the Bandara Group, which runs furnished apartments in Bangkok and Phuket, said there are concerns over future restrictions but believes the worst is over for Thailand.

“We are quite certain the situation will be better than last time. We believe it’s time to start travel again with a new normal life,” he told VOA.

 
…

Maintaining the unique environment of the Galápagos Islands and protecting the surrounding marine resources is testing Ecuador. China’s industrial fishing fleet threatens the islands, but China is a key trading partner. Jaime Moreno has this report.

Video: Nelson Abril
…

The U.S. Justice Department is seeking to block Penguin Random House, the world’s largest publisher, from acquiring rival publisher Simon & Schuster, the fourth largest in the United States. 

An antitrust lawsuit filed Tuesday in federal court warns that such an acquisition would hurt competition for top-selling manuscripts. A slimmer, more tightly controlled publishing industry would leave authors with fewer options and allow a newly consolidated Penguin Random House to get away with offering writers less for their work, according to the Justice Department.

“Authors are the lifeblood of book publishing. Without authors, there would be no stories; no poetry; no biographies; no written discourse on history, arts, culture, society, or politics,” the department’s complaint reads. “Penguin Random House’s proposed acquisition of Simon & Schuster would result in substantial harm to authors, particularly authors of anticipated top-selling books.” 

The pending acquisition is valued at nearly $2.2 billion.

Five publishers, known as the “Big Five,” dominate the publishing industry. They offer high advances and attractive marketing for highly anticipated manuscripts, and compete with one another for the next biggest deal.

The antitrust suit marks an unusually bold move in a highly consolidated industry. Publishing companies Penguin Group and Random House merged without problems in 2013.

“If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry,” U.S. Attorney General Merrick Garland said in a department statement. 

“American authors and consumers will pay the price of this anticompetitive merger – lower advances for authors and ultimately fewer books and less variety for consumers.” 

Jonathan Karp, Simon & Schuster’s president and chief executive officer, disagrees with the department’s complaint. In an internal memo sent to Simon & Schuster employees Tuesday, Karp wrote that his company and Penguin Random House see no basis for the lawsuit and that they plan to fight it. 

The New York Times reports that Penguin Random House has hired lawyer Daniel Petrocelli, who helped AT&T and Time Warner fight a Justice Department antitrust lawsuit. 

Penguin Random House did not respond to VOA’s request for comment.

 
…

Barclays chief executive Jes Staley is leaving the bank after a dispute with British financial regulators over how he described his ties with convicted sex offender Jeffrey Epstein.

Staley will be replaced as CEO by Barclays’ head of global markets C.S. Venkatakrishnan, who on Monday pledged to continue his predecessor’s strategy.

Staley’s shock departure comes after Barclays was informed on Friday of the unpublished findings of a report by Britain’s Financial Conduct Authority and the Prudential Regulatory Authority into Staley’s characterization of his relationship with Epstein, who killed himself in jail in August 2019 while awaiting trial on federal charges related to sex trafficking.

“In view of those conclusions, and Mr Staley’s intention to contest them, the Board and Mr Staley have agreed that he will step down from his role as Group Chief Executive and as a director of Barclays,” the bank said.

“It should be noted that the investigation makes no findings that Mr Staley saw, or was aware of, any of Mr Epstein’s alleged crimes, which was the central question underpinning Barclays’ support for Mr Staley following the arrest of Mr Epstein in the summer of 2019.” 

Barclays shares fell 2% following the announcement.

‘I thought I knew him well’

Staley dealt with Epstein during his long career at JPMorgan, where Epstein was a major private banking client until 2013.

A college dropout who styled himself as a brilliant financier, Epstein socialized in elite circles, including former and future U.S. presidents. In 2008, he was registered as a sex offender but continued to maintain ties with powerful players in business and finance.

The New York Times reported in 2019 that Epstein had referred “dozens” of wealthy clients to Staley. It also reported that Staley visited Epstein in prison when he was serving a sentence between 2008-09 for soliciting prostitution from a minor, while Bloomberg reported he visited Epstein’s private island in 2015.

Staley told reporters last February that his relationship with Epstein had “tapered off significantly” after he left JPMorgan in 2013, and that he had not seen the disgraced financier since taking over Barclays in 2015.

“I thought I knew him well, and I didn’t. I’m sure with hindsight of what we all know now, I deeply regret having had any relationship with Jeffrey Epstein,” he said at the time.

Epstein’s links with prominent men have come back to haunt some of them. Leon Black, the billionaire investor, stepped down from Apollo Global Management, the private equity firm he co-founded, earlier this year after an outside review found he had paid Epstein $158 million for tax and estate planning.

Britain’s Prince Andrew has quit royal duties over his associations with Epstein, andnMicrosoft co-founder Bill Gates has said it was a “huge mistake” to spend time with him.

The FCA and PRA said in a statement they could not comment further on the Epstein investigation, which was launched after JPMorgan provided the regulators with emails between Epstein and Staley from Staley’s time as head of JPMorgan’s private bank, the Financial Times reported last year.

Right strategy

Staley told staff in an internal memo seen by Reuters that he did not want his ‘personal response’ to the investigations to be a distraction.

“Although I will not be with you for the next chapter of Barclays’ story, know that I will be cheering your success from the sidelines,” he said.

Staley has 28 days to formally notify the FCA that he is contesting its findings, after which an independent committee inside the watchdog will uphold or reject its conclusions, a source familiar with the process told Reuters.

If upheld, the probe passes to an independent Upper Tribunal which again can back or reject the findings, the source said, a process that could take months.

Venkatakrishnan, who followed Staley to Barclays from JPMorgan and is known as Venkat, told staff on Monday the strategy put in place by his predecessor was “the right one,” according to a separate memo also seen by Reuters.

Venkat added that he would announce changes to the organization of the investment bank in the coming days, likely to mean filling his previous role and any other resulting vacancies, sources at the bank said.

Barclay’s share price has fallen 9% since Staley’s tenure began six years ago, a period not without controversy.

His greatest success, insiders and analysts said, was to fight off a campaign launched by activist investor Edward Bramson in 2018 to have Staley removed on the grounds that Barclays’ investment bank was underperforming and should be cut back.

Bramson sold his stake earlier this year, and the bank’s recent results have seen the investment bank perform strongly.

Also in 2018, Britain’s financial regulators and Barclays fined Staley a combined $1.50 million after he tried to identify a whistleblower who sent letters criticizing a Barclays employee.
…

G-20 leaders meeting in Rome have agreed to work to reach carbon neutrality “by around mid-century” and pledged to end financing for coal plants abroad by the end of this year.

The final communique was issued Sunday at the end of a two-day summit, ahead of talks at ahead of a broader U.N. climate change summit, COP26, this week in Glasgow, Scotland.

Leaders in Rome addressed efforts to reach the goal of limiting global warming to 1.5 degrees Celsius, in line with a global commitment made in 2015 at the Paris Climate Accord to keep global warming to “well below” 2 degrees Celsius above pre-industrial levels, and preferably to 1.5 degrees.

“We recognize that the impacts of climate change at 1.5°C are much lower than at 2°C. Keeping 1.5°C within reach will require meaningful and effective actions and commitment by all countries,” the communique said, according to Reuters.

The group of 19 countries and the European Union account for more than three-quarters of the world’s greenhouse gas emissions.

Two dozen countries this month have joined a U.S.- and EU-led effort to slash methane emissions by 30% from 2020 levels by 2030.

Coal, though, is a bigger point of contention. G-20 members China and India have resisted attempts to produce a declaration on phasing out domestic coal consumption.

Climate financing, namely pledges from wealthy nations to provide $100 billion a year in climate financing to support developing countries’ efforts to reduce emissions and mitigate the impacts of climate change, is another key concern. Indonesia, a large greenhouse gas emitter that will take over the G-20 presidency in December, is urging developed countries to fulfill their financing commitments both in Rome and in Glasgow.

Also on Sunday, the U.S. and EU announced an end to tariffs on EU steel imposed by the Trump administration, ending a dispute in which the EU imposed retaliatory tariffs on American products including whiskey and power boats.

“Together the United States and the European Union are ushering in a new era of transatlantic cooperation that’s going to benefit all of our people both now, and I believe, in the years to come,” Biden told reporters on the sidelines of the G-20 summit. 

Global supply chain 

Biden will hold a meeting at the summit’s sidelines to address the global supply chain crisis. The group of 20 countries in the summit account for more than 80% of world GDP and 75% of global trade. 

“The President will make announcements about what the United States itself will do, particularly in respect to stockpiles, to improving… the United States’ capacity to have modern and effective and capable and flexible stockpiles,” White House national security adviser Jake Sullivan told VOA aboard Air Force One en route to Rome, Thursday. “We are working towards agreement with the other participants on a set of principles and parameters around how we collectively manage and create resilient supply chains going forward.”

Addressing global commerce disruptions has been a key focus for the Biden administration, which is concerned that these bottlenecks will hamper post-pandemic economic recovery. To address the nation’s own supply chain issues, earlier this month the administration announced a plan to extend operations around the clock, seven days a week, at Los Angeles and Long Beach, two ports that account for 40% of sea freight entering the country. 

“Whether it’s you’re talking about medical equipment or supplies of consumer goods or other products, it’s a challenge for the global economy,” said Matthew Goodman, senior vice president for economics at the Center for Strategic and International Studies.

Some of the concrete measures to alleviate global supply chain pressure points may need to be longer term, such as shortening supply chains and rethinking dependencies, said Leslie Vinjamuri, director of the U.S. and the Americas program at Chatham House.

“Those are not quick fixes,” she said. “But the G-20 is historically set up really to be dealing with short-term crises. So, I think that there will be considerable effort made to really discuss and come to terms with that.” 

While global supply chain issues are a key concern for the leaders in Rome, Goodman said he doubts the meeting will result in tangible solutions. 

“It’s a very difficult group — the G-20 to get consensus to do very specific things. And this may be one area in which it’s going to be particularly difficult,” he added. 

President Xi Jinping of China, considered to be the “world’s factory,” is not attending the summit in person. In his virtual speech to G-20 leaders, Xi proposed holding an international forum on resilient and stable industrial and supply chains, and welcomed participation of G-20 members and relevant international organizations. 
…

The G-20 Summit hosted by Italy in Rome this weekend brought together leaders from the world’s major economies. White House Bureau Chief Patsy Widakuswara has this report from Rome.
…

Green energy is the new focus of China’s one-of-a-kind Belt and Road Initiative or BRI, that aims to build a series of infrastructure projects from Asia to Europe.

The eco-friendlier version of BRI has caught the attention of some 70 other countries that are getting new infrastructure from the Asian economic powerhouse in exchange for expanding trade.

The reset on China’s eight-year-old, $1.2 trillion effort comes after leaving a nagging layer of smog in parts of Eurasia, where those projects operate.

Now the county that’s already mindful of pollution at home is preparing a new BRI that will focus on greener projects, instead of pollution-generating coal-fired plants. It would still further China’s goal of widening trade routes in Eurasia through the initiative’s new ports, railways and power plants.

The Second Belt and Road announced in China on October 18, coincides with the 2021 United Nations Climate Change Conference, or COP26, which runs from Sunday through November 12 in Glasgow, Scotland. China could use the forum to detail its plans.

“China’s policy shift towards a more green BRI reflects China’s own commitment to reach net zero carbon emissions by 2060 and its efforts to implement a green transition within China’s domestic economy,” said Rajiv Biswas, Asia-Pacific chief economist with the market research firm IHS Markit.

“Furthermore, China’s policy shift…also reflects the increasing policy priority being given towards renewable energy and sustainable development policies by most of China’s BRI partner countries,” he said.

The Belt and Road helps lift the economies of developing countries from Kazakhstan to more modern ones, such as Portugal. BRI also unnerves China’s superpower rival, the United States, which has no comparable program.

History of focusing on fossil fuel

China has a history of putting billions of dollars in fossil fuel projects in other countries since 2013, the American research group Council on Foreign Relations says in a March 2021 study.

From 2014 to 2017, it says, about 90% of energy-sector loans by major Chinese banks to BRI countries were for fossil fuel projects and China was “involved in” 240 coal plants in just 2016. In 2018, the study adds, 40% of energy lending went to coal projects. Those investments, the group says, “promise to make climate change mitigation far more difficult.”

South and Southeast Asia are the main destinations for coal-fired projects at 80% of the total Belt and Road portfolio, the Beijing-based research center Global Environmental Institute says.

Global shift toward green energy

Chinese President Xi Jinping said last year China would try to peak its carbon dioxide emissions before 2030. The Second Belt and Road calls for working with partner countries on “energy transition” toward more wind, solar and biomass, the National Energy Administration and Shandong provincial government said in an October 18 statement. 

Some countries are pushing China to offer greener projects due to environmental pressure at home, though some foreign leaders prefer the faster, cheaper, more polluting options to prove achievements while in office, said Jonathan Hillman, economics program senior fellow at the Center for International & Strategic Studies research organization.

“There was a period in the first phase of the Belt and Road where projects were being shoveled out the door and with not enough attention to the quality of those projects,” he said.

Poorer countries are pressured now to balance providing people basic needs against environmental issues, said Song Seng Wun, an economist in the private banking unit of Malaysian bank CIMB. The basics still “take priority,” he said, and newer coal-fired plants help.

“Although I would say environmental issues (are) important, I think a lot of people don’t realize how much more efficient these more modern coal plants are, so I think we must have a balance,” Song said.

In the past few years however, cancellation rates of coal-fired projects have exceeded new approvals, Hillman said. “The action honestly has come more from participating countries,” he said. “They’ve decided that’s not the direction they want to go.”

In February, Chinese officials told the Bangladesh Ministry of Finance they would no longer consider coal mining and coal-fired power stations. Greece, Kenya, Pakistan and Serbia have asked China to dial back on polluting projects, Hillman said.

“The next decade will show to what extent the Belt and Road will drive green infrastructure,” London-based policy institute Chatham House says in a September 2021 report.

Belt-and-Road renewable energy investments reached a new high last year of 57% of its total for energy projects in 2020, according to IHS data.

New pledges at COP26?

COP26 is expected to showcase the environmental achievements of participating countries as they try to meet U.N. Paris Climate Change commitments, Biswas said.

China’s statements ahead of the conference so far differ little from past statements. But China’s energy administration said on October 18 that its second Belt and Road “emphasizes the necessity of increased support for developing countries” in terms of money, technology and ability to carry out green energy projects.

Chinese companies on BRI projects may eventually be required to reduce environmental risks, Biswas said. Those companies would in turn follow principles released in 2018 to ensure that their projects generate less carbon. A year later, as international criticism grew, Chinese President Xi added a slate of Belt and Road mini-initiatives, including some that touched on green projects.

But the 2019 plans were non-binding and untransparent, Hillman said. At COP26, he said, “I would take any big announcements with more than a grain of salt.”
…

Before the pandemic effectively closed Thailand off to the rest of the world in March of last year, Bangkok’s Kin & Koff Café was perfectly placed to catch the throngs of tourists traipsing past the city’s gilded Grand Palace and its orbit of opulent temples.

In the capital of one of the world’s most popular holiday getaways, the resplendent grounds of the former royal residence were a must-see for most first-time visitors. Then came COVID-19, lockdown and a hard freeze on foreign tourists, decimating a pillar of Thailand’s economy — and the core of Kin & Koff’s client base with it.

So, like many in the business of catering to those tourists, owner Siripong Sanomaiwong welcomed the news that Thailand will start lifting lengthy quarantine mandates for some fully vaccinated foreigners on Nov. 1. Prime Minister Prayut Chan-ocha announced the move Oct. 11 in a televised address.

“I think the government is [acting] the right way to open up because we cannot hide from the virus,” Siripong said on another slow day in his café opposite the palace walls.

“We must live together with the COVID; we must live together … in safety,” he added, reflecting the business community’s general mood of wary resolve.

Risk and reward

In his address, Prayut acknowledged the risks. He said daily COVID cases were “almost certain” to rise with new arrivals but insisted Thailand was prepared and had to cash in on the coming November-March high season having missed out on the last one.

“We will have to track the situation very carefully and see how to contain and live with that situation because I do not think that the many millions who depend on the income generated by the travel, leisure and entertainment sector can possibly afford the devastating blow of a second lost New Year holiday period,” he said.

The World Bank says tourism accounted for 20% of Thailand’s gross domestic product and more than 1 in 5 jobs in 2019, when some 40 million people visited the country. The government says Thailand will be lucky to see 100,000 visitors in 2021 and is aiming for 1 million through this high season.

The Tourism Council of Thailand, an industry body, says the lockdown has cost the country some 3 million tourist-linked jobs. Even so, most Thais may not be on board with the government’s timing.

In an online poll conducted by Thailand’s Suan Dusit Rajabhat University between Oct. 11 and Oct. 14, 60.1% of respondents said the country was not yet ready to reopen to tourists without quarantine mandates. They cited Thailand’s low vaccination rate as the main reason.

While Bangkok and the popular resort island of Phuket have fully vaccinated the large majority of locals, the fully vaccinated rate nationwide only recently topped 40%. New daily COVID cases peaked at nearly 22,000 in mid-August but have yet to dip below 7,000. Thailand has recorded about 1.88 million cases in all.

Thitinan Pongsudhirak, a professor of political science at Bangkok’s Chulalongkorn University, said local polls can be unreliable but believed Suan Dusit’s latest effort frankly mirrored the popular mood.

“The sentiment on the ground is that the infection numbers are still high and the government’s vaccine management has been inept … [that] lives are still at risk and reopening too soon is still not optimal,” he said.

Positive thinking

The government hopes to allay those fears by opening up to only 46 countries at first, including major markets such as the United States and China, much of Europe and some Asian neighbors.

In addition to showing proof of vaccination and a negative test result before departure, visitors must have health insurance covering COVID for up to $50,000, download a tracking application and wait one night in a government-approved hotel for the results of a second test on arrival. If cleared, they will be free to roam the country. If not, they will have to spend more time in a hospital or approved hotel.

Siripong hopes that will be enough for his café to claw back by March about 40% of the business it had before the pandemic, and he’s confident the authorities can keep the virus in check.

Katenaphas Muattong is not so sanguine.

She left her catering job to help her parents run their small restaurant by the palace after the pandemic hit and their two employees had their wages cut and then quit. Tapping into online delivery services helped them survive, but business is still less than a third of what it was.

Katenaphas worries the government may apply the entry rules in what she called “Thai style,” explaining that to mean a lax attitude toward enforcement.

“On one [hand] we should open because business is going down, down,” she said. “But if we don’t have a good plan, we should wait.”

Turning the thoughts over in her mind a moment, she finally sided with the government and said Thailand should take the risk.

Vali Villa owner Val Saopayana is more of an avowed optimist.

Three years ago, the professional artist turned her childhood home into a boutique mid-range hotel a few blocks from Bangkok’s Khaosan Road, another popular tourist haunt packed with bars and clubs that once throbbed with dance music into the early morning hours. With nary a customer in sight one recent Friday afternoon, most of the strip was closed or boarded up, a microcosm of Thailand’s tourist sector writ large.

With Thailand now reopening to foreigners, Val is hopeful about reclaiming at least half of her pre-pandemic business by the end of this season.

“I have a good feeling that we’re going to be able to do it and the whole economy of Thailand is going to be better because I believe in the medical system and they try to do their best,” she said.

“We just hope that it will be back to normal very soon,” she added. “We have to believe and we have to have positive energy, and people are going to come.”

Reality check

The Association of Thai Travel Agents, another industry body, says “normal” will take a few more years, as some major markets such as China still mandate weeks of quarantine for travelers on their return.

“When you have that amount of quarantine days, it’s going to be a real limit for us. So, I think the opening, while we’re making great progress, it will very much depend on the origin countries’ levels of restrictions and quarantine days as well,” said ATTA board member Pilomrat Isvarphornchai.

She said the association was being “realistic” about the coming high season and forecast a 20% return to pre-pandemic business for inbound travel agencies, at least for those still open. The ATTA’s last member survey found that roughly half of them had closed during the past 19 months of lockdown, some for good.

“In terms of the economy, we are at that point now where we’re going to have to learn how to live with the pandemic, not just in terms of tourism but even opening up domestically, for example with restaurants, with retail stores. It needs to happen now,” Pilomrat said. 

 
…

Wages jumped in the three months ending in September by the most on records dating back 20 years, a stark illustration of the growing ability of workers to demand higher pay from companies that are desperate to fill a near-record number of available jobs.

Pay increased 1.5% in the third quarter, the Labor Department said Friday. That’s up sharply from 0.9% in the previous quarter. The value of benefits rose 0.9% in the July-September quarter, more than double the preceding three months.

Workers have gained the upper hand in the job market for the first time in at least two decades, and they are commanding higher pay, more benefits and other perks like flexible work hours. With more jobs available than there are unemployed people, government data shows, businesses have been forced to work harder to attract staff.

Higher inflation is eating away at some of the wage increases, but in recent months overall pay has kept up with rising prices. The 1.5% increase in wages and salaries in the third quarter is ahead of the 1.2% increase in inflation during that period, economists said.

However, compared with a year ago, it’s a closer call. In the year ending in September, wages and salaries soared 4.2%, also a record gain. But the government also reported Friday that prices increased 4.4% in September from year earlier. Excluding the volatile food and energy categories, inflation was 3.6% in the past year.

Many experts expect inflation to slow

Jason Furman, a former top economic adviser to President Barack Obama, said Friday that inflation-adjusted wages still trail their pre-pandemic level, given the big price jumps that occurred over the spring and summer for new and used cars, furniture and airline tickets.

Whether inflation fades in the coming months will determine how much benefit workers get from higher pay.

Many economists expect inflation to slow a bit, while wages are likely to keep rising.

Pay is rising much faster in the recovery from the pandemic recession than in the recovery from the Great Recession of 2008-09, when wage growth kept slowing until a year after that downturn ended. That’s because of the different nature of the two recessions and the different policy responses.

There has been much more government stimulus during and after the pandemic recession compared with the previous one, including the $2 trillion financial support package signed by former President Donald Trump in March 2020 and the $1.9 trillion in aid approved by President Joe Biden this March. Both packages provided stimulus checks and enhanced unemployment benefits that fueled greater spending.

Lower-paid workers have seen the biggest gains, with pay rising for employees at restaurants, bars and hotels by 8.1% in the third quarter from a year earlier. For retail workers it’s jumped 5.9%.

The healthy increase for disadvantaged workers “is the result of specific policy choices to give workers a better bargaining hand and to ensure the economy recovered faster,” said Mike Konczal, a director at the left-leaning Roosevelt Institute. “The fact that it’s happening is pretty unique.”

The stimulus checks and an extra $300 a week in jobless benefits, which ended in early September, gave those out of work more leverage to demand higher pay, Konczal said. In addition, the Fed’s low-interest rate policies helped spur more spending, raising the demand for workers.

In August, there were 10.4 million jobs available, down from 11 million in July, which was the most in two decades.

Millions of Americans are responding to rising wages by quitting their jobs for better-paying positions. In August, nearly 3% of American workers quit their jobs, a record high. A higher number of quits also means companies have to raise pay to keep their employees.

Workers who switch jobs are seeing some of the sharpest income gains in decades. According to the Federal Reserve Bank of Atlanta, in September job-switchers saw their pay jump 5.4% compared with a year earlier. That’s up from just 3.4% in May and the biggest increase in nearly 20 years. For those who stayed in their jobs, pay rose 3.5%.

‘It was a no-brainer’

Esther Cano, 26, is one of those who found a new job that paid more in the July-September quarter. A recent college graduate who isn’t yet sure of her long-term career path, she left a job as a dispatcher at an HVAC firm in Fort Lauderdale, Florida, for a position at the job placement agency Robert Half. She started in July and got a raise of about 10%.

“What I was requesting was lower than what they were willing to pay,” Cano said. “It was a no-brainer on that end, plus the environment, the room for growth, the opportunity.”

Cano has already gotten a promotion to a team leader position, where she helps place temporary employees who work in finance and accounting.

Most economists expect solid wage gains to continue for the coming months. Data from the Indeed job listings website shows that employers are still posting huge numbers of available jobs.

Higher pay can fuel inflation, as companies raise prices to cover their increased costs. But that’s not the only way businesses can respond. Lydia Boussour, an economist at Oxford Economics, notes that corporate profits in the April-June quarter were at their highest level in nearly a decade. That suggests many companies can pay higher salaries without having to lift prices. 
…

Central bankers and government officials around the world are scrambling to convince both the financial markets and the general public that recent spikes in price inflation are temporary, and don’t signal a period of prolonged price hikes. But many are skeptical of their analysis.

Inflation is marked by the increase in prices across all sorts of different goods and services in an economy. While some inflation is normal, a high rate of inflation makes it difficult for people to afford essential things like cars, food, clothing and shelter.

Typically, people tend to blame the government for rising prices, which makes managing inflation an important task for politicians. In the U.S., for example, evidence of rising prices is currently being used by the Republican Party to criticize President Joe Biden, a Democrat, for his handling of the economy.

With the exception of much of Asia, most of the world has seen a significant surge in the cost of living since the coronavirus pandemic began in early 2020. The food price index maintained by the United Nations Food and Agriculture Organization is up 32.8% from last year. The cost of fuel of all sorts — gasoline, natural gas and coal — is on the rise globally. 

On Thursday, data was released showing that Spain is experiencing an annualized inflation rate of 5.5%, and Germany is seeing 4.6% inflation. On Friday, a report covering the entire euro zone will be released, and economists expect it to show a regional 3.7% rate of inflation, the highest since the global financial crisis in 2008. 

Across the globe, countries including Russia, Nigeria, Brazil and Turkey have reported inflation above — sometimes well above — 4%. In the United States, the Consumer Price Index maintained by the Bureau of Labor Statistics shows that overall prices increased by 5.4% in the 12 months ending in September. 

Europe stays the course 

Despite all this, most central bankers insist that the price spikes are a transitory reaction to the global economy opening up again after being largely shut down in the early stages of the pandemic. 

“Recovering demand related to the reopening of the economy is outpacing supply,” European Central Bank President Christine Lagarde said in a virtual press conference on Thursday. “While the current phase of higher inflation will last longer than originally expected, we expect it to decline in the course of next year.” 

She added, “We really looked and very deeply tested our analysis of the drivers of inflation, and we are confident that our anticipation and our analysis is actually correct.” 

Lagarde’s remarks came after the European Central Bank signaled that it will keep interest rates at their current very low levels through next year. 

That cuts against the advice of some high-profile economists, like former U.S. Treasury Secretary Larry Summers, who has called on the Federal Reserve and other central banks to begin tightening monetary policy, which was relaxed in response to the pandemic, in order to avoid a situation in which inflation gets out of control. Government bonds are currently trading at prices that suggest that markets believe interest rate hikes are inevitable. 

Higher interest rates make borrowing more expensive and inhibit economic activity, slowing demand for goods and services. With reduced demand, prices tend to fall or moderate. 

Bank of Japan unconcerned 

In Japan, where the inflation spike affecting other countries has not materialized, Bank of Japan head Haruhiko Kuroda said that he doesn’t expect that to change. “I believe that the sort of inflation acceleration risk that’s been a cause of concern abroad is extremely limited in Japan,” indicating that he also expects the bank’s efforts to stimulate the economy to continue indefinitely.

Not all central bankers are as calm about inflation risks, though. Early this month, New Zealand’s central bank raised interest rates for the first time in seven years. In the United Kingdom, the Bank of England has signaled it is about to raise rates in order to keep inflation in check. 

Around the world, bond markets are setting prices that suggest that market participants don’t believe most central banks will be able to stick to their promises that rates will remain at current low levels for a long time. 

The situation in the U.S.

Federal Reserve board Chairman Jerome Powell admitted last week that the factors driving inflation, and particularly a global supply chain crisis, have not subsided as quickly as the Fed had expected.

“The risks are clearly now to longer and more persistent bottlenecks and thus to higher inflation,” he said at a virtual event hosted by the South Africa Reserve Bank. “We now see higher inflation and the bottlenecks lasting well into next year.”

He said that while the Fed will begin “tapering” a bond-buying program that was designed to push more cash into the U.S. economy during the pandemic, he doesn’t anticipate raising interest rates any time soon.

“I would say our policy is well-positioned to manage a range of plausible outcomes,” he said. “I do think it’s time to taper and I don’t think it’s time to raise rates.”

Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, said that he thinks the Fed is right to keep interest rates where they are for the time being, and that people who are warning that the U.S. is headed toward 1970s-style out-of-control price increases need a history lesson.

“Everyone remembers the bad old ’70s, when no one had any idea what inflation was going to be and every time inflation stepped up, people expected more and it just got out of control,” he said.

However, he said, “If you look at what led to that, it took five years of the Fed never fully responding to inflation, not talking about inflation, not doing its job, before that happened. In other words, it was a gradual process that took many years. And the Fed is just not going to let that happen. If inflation doesn’t come down next year, they are going to raise rates.” 

 
…