Panic Buying in U.K. Creates Shortages at Gas Stations

     U.K.’s departure from the European Union have impacted the U.K. in multiple ways. Recently, shortage of tanker drivers to transport the fuel tankers across the country has created panic among the consumers, and now the British government is looking for more tanker drivers to deliver the fuel to gas stations. As a result of panic, many gas stations closed after their supplies depleted and the government kept soldiers on standby to deliver the fuel. However, the government official stated that there’s plenty of fuel in the U.K., but it needs to be delivered to gas stations. U.K. is helping this situation by easing their visa restriction (temporarily) for truck drivers which will allow up to 5000 truck drivers from across the EU to drive the fuel tankers and help to solve the gas shortage issue. For the moment, the oil companies are asked to suspend competition and help the government identify the areas for fuel shortages so that they can focus on them and help resolve the issue. According to the Petrol Retailers Association, existing supplies are being given priority to highway gas stations to avoid tailbacks. The main reason because the U.K. left the EU which revoked the right of EU citizens to live and work in the country and it also implemented a strict immigration system which meant that lower-paid and lower-skilled workers had to meet a strict set of criteria to enter and work in the country. The government defended this by that this would force the local businesses to train local employees and pay them higher wages. Furthermore, the pandemic worsened this problem. Significant number of truck drivers changed their job because wage raises were nowhere to be seen. The government is also trying to reach out to drivers who have truck driving licenses and are currently not working, requesting them to return. It is possible for the government to train new truck drivers but not feasible because it takes 18 months to train a driver and the government requires drivers now to resolve the shortage. If the government is not successful to solve this shortage, gas stations that have supplies of fuel will charge a higher amount and they can make huge profits.

The Taliban are asking airlines to resume flights to Afghanistan

 As of Sunday, the Taliban requested that airlines resume travel to Afghanistan. The Kabul airport has been closed since the suicide bombing killing 13 American soldiers and resulting in damages to the airport. The Taliban have come to recognize that citizens of the country have became stranded in other countries since the shut down of international flights. This has also impacted other citizens in not being able to travel for business or studies.  Teams from Qatar and Turkey have aided in their efforts of reopening the airport for use again. The call for international flights to resume from the Taliban is aimed at the Taliban trying to gain legitimacy and recognition on the national stage. Some flights have already resumed but given the minimal amount of flights prices have double or tripled for flights. It will be interesting to see as this situation evolves, how it will continue to effect prices for flights. In addition what impact will this have on the Afghanistan economy as it looks the rebound since being taken over by the Taliban. It will also be interesting to see how the Taliban plan to regulate this and keep citizens from fleeing the country. 

A failed state

Household net worth rises above $141 trillion, but debt up sharply as well

 The Federal Reserve reported on September 23 that American households had a big jump in net worth, but it was accompanied by a big increase in debt and credit. “Thanks in good part to a big surge in stock market earnings, total household net worth rose to $141.7 trillion through the second quarter of 2021”, this is a little above 4% better than the previous quarter and about 19% better year to date. A big reason this can be attributed to is the massive increase in the stock market.  As I said previously debt also rose significantly “Household debt mirrored that of the federal government, which ended the quarter owing $28.5 trillion after a 9.6% increase”. It is good that households are seeing an increase in net worth, but at what cost? It is not good for our debt to rise simultaneously alongside net worth. Despite the positive of net worth increasing this past quarter, there is little evidence to suggest that this big increase in net worth will continue to occur. About 60% of the net worth increase is attributed to the rise in the stock market, the stock market performing as good as it has been cannot be the sole evidence to support a constant increase in net worth because of how inconsistent stocks can be.

source:

https://www.cnbc.com/2021/09/23/household-net-worth-rises-above-141-trillion-but-debt-up-sharply-as-well.html

Should the U.S. economy stop their emergency funds now?

With COVID -19 wave's erupting, the U.S. economy has become a victim of inflation, high unemployment rates, and low economic growth. However, as we come close to the end of the second year of COVID-19 there is a sense of optimism in the government. According to the Forbes article, the Central Bank has reported that job marketing is slowly improving. Due to this, they will now stop their emergency funds to the economy. A date has not been set for when the funds will stop. In August, fewer jobs were put up as the Delta variant was spreading. Current inflation rates are also at 5.3% which is the highest it has been in 13 years! Currently, the fed's have two goals  for the economy: 

1) Keep the U.S. inflation at 2% 

2) Reach maximum employment - which means everyone who needs a job has one. 

During the pandemic, the government supported the economy by slashing interest rates to historic lows and pumping billions of dollars into the financial system by buying government and corporate bonds. After the emergency funds will stop the interest rates will go back up. 

With COVID-19 still being a sensitive issue will this help the economy start functioning on its own again or will this hurt the economy even more? If the government doesn't pull out now then is there a better time? 

https://www.bbc.com/news/business-58659476

Japan approaching end of COVID-19 emergency in most areas - health minister

     Japan has been seen as one of the best countries in terms of both economy and one of the best places to visit in the world, but due to Japan being located in East Asia, right next to China, it has had its fair share of Covid-19 cases. 

    Despite Japan being one of the most developed countries in the world, they struggled severely with cases due to several socio-political problems. The first being that Japan has the biggest metropolitan area in the world and it doesn't help that it is also very densely populated so the Covid-19 cases can spread very easily and quickly. Japan also has a very young population, combine this with having lots of night life in the worlds biggest metro area and this is a recipe for disaster. The final and most significant reason for the Covid-19 Cases being so rampant is the lack of Covid-19 Vaccines, and the Japanese people not wanting to get vaccinated as they do not trust the Western medicine and they don't have access to it.

Due to the severity of the Covid-19 cases, the Japanese government implemented a strict travel ban and several state of emergencies. No foreigners were allowed entrance or allowed to leave the country, only Japanese citizens could come back and you needed government documentation. The Covid-19 state of emergencies were pretty simple as well,  you had to wear masks, and businesses had to close and were compensated by the government. When cases declined there was more of a soft lock and you could do more things and go places, the state of emergencies were national at first but then only applied to certain prefectures with the most cases. 

Since the state of emergencies, Covid-19 cases have declined, more than half the population of Japan is vaccinated, 80% of all Covid-19 cases are from people who did not take the vaccine. Due the drop in Covid-19 cases, the government is thinking of lifting the state of emergencies placed in certain prefectures, but this isn't without concern. The government does agree that if they do see a more sudden rise in cases, it could overwhelm the healthcare system and put it into a crisis; but as of now it seems things are once again  getting back to normal and Japan is getting ready to open its borders.

SOURCES:

https://www.reuters.com/world/asia-pacific/japan-approaching-end-covid-19-emergency-most-areas-health-minister-2021-09-24/

https://apnews.com/article/pandemics-tokyo-coronavirus-pandemic-asia-japan-8049258656473799e491604fefe44e79

https://apnews.com/article/business-health-japan-coronavirus-pandemic-4b409cf1a663759d6a434fe1faf0cc2d

Should Digital Currencies be regulated?

 Bitcoin emerged a decade ago as a viable alternative to money, and has since then (especially recently) gained major traction. However, the the world's 2 biggest economies are not too happy with it. And while both the US and China have begun to implement regulations of cryptocurrencies, they are also in the process of developing their own digital currencies centrally as well.

Cryptocurrencies are traded online, away from the control of governments, central banks and institutions of the global financial system. For this reason, China has banned all use of it, claiming that it used by criminals. The US also claims that it is important that the Fed is able to deliver a stable and trustworthy currency to its people, and bitcoin acts as a barrier in that. They also claim that while innovation is very important, where the public is concerned the government has to step in and enforce some sort of regulation.

However, some countries are embracing the cryptocurrency. El Salvador declared Bitcoin as a legal currency, and Ukraine followed suit. Cuba, Malta, Singapore and Switzerland are all also becoming more open to the idea of a virtual currency, and trying to create a business environment where crypto is able to grow.

U.S. Debt Ceiling - Does it matter?

Recently, congress has been facing a deadline to raise the debt ceiling in order to prevent a default on the national debt. Congress has until mid-October, to reach a deal to raise the debt ceiling (or federal borrowing limit) before the government runs out of money to pay its bills. 

But what does the debt ceiling do? Does it even matter?

The debt ceiling was introduced during the 20th century wars before Congress had to approve each specific borrowing instance. The ceiling was needed to accrue more overall debt. Since its introduction, the debt ceiling has been raised 98 times due to the U.S. routine of spending more money than it raises in revenue. When the U.S. spends more than it raises in revenue, a deficit is created. To cover these deficits, the Treasury Department issues government securities. These securities are similar to a loan, as investors give the government money with the promise of getting their money back with added interest. This security loan is then added to the national debt. The debt ceiling therefore is the Congress passed limit that the U.S. can borrow. Raising the debt ceiling doesn’t mean that spending will increase, instead it hints that the Treasury can issue more securities to cover spending that Congress has previously authorized. Once the ceiling is ready again, no more debt can be issued until lawmakers vote to raise the ceiling. The Treasury does have cash reserves to pay the governments bills, but those will be inadequate and eventually run out. 

If the ceiling is not passed and the government runs out of cash, it will therefore miss payments on its bills. These bills include monthly Social Security and veterans benefits, or paychecks to federal employees and members of the military. As estimated by Goldman Sachs, the U.S. Treasury would need to halt more than 40% of payments if the ceiling is not raised. Those halted payments would include ones to U.S. households. If the ceiling is not raised, additional disruptions would affect individuals and businesses who’s loan rates are tied to the yields of Treasury securities. 

Therefore, the ceiling is very important. 

If Congress doesn’t vote to raise the ceiling, major economic impacts will follow. Treasury Secretary Janet Yellen has said the government will run out of money mid-October without a ceiling raise. This would crush financial markets and raise borrowing cost. Article Link

Do We Need to Shrink the Economy to Stop Climate Change?

    There is a debate going on in the economic and political world on how to solve climate change. One side believes that the global economy can both continue growing and reduce the threat of climate change through rapid, market led environmental action and technological innovation. However, another side argues that humanity simply does not have the capacity to phase out fossil fuels and meet the ever-growing demand of economic growth. Therefore, consumption has to be limited.

    For the case of degrowth, economic anthropologist, Jason Hickel, defines the argument "a planned reduction of energy and resource use designed to bring the economy back into balance with the living world in a way that reduces inequality and improves human well-being." Hickel's view is to reduce resource and energy consumption, which will make it easier to rapidly transition to renewable energy. This economy would be one that could improve people's livelihoods despite a reduction in activity. Degrowth seeks to scale down ecologically destructive and less necessary production like S.U.V.s and beef while expanding more important sectors like health care and education. Also, the economy would enact policies like shortening the workweek and shifting workers out of declining industries.

    Critics of degrowth wonder whether it offers the correct prescription of reaching carbon neutrality on a shorter timetable. It is important for the degrowth movement to not portray to rich countries that the climate movement can only be achievable if they stop eating meat or driving nice cars because the movement will collapse. New York magazine's Eric Levitz agrees that nothing short of a dictatorship could affect this massive transformation. Even though degrowth has no mass appeal, it allows us to wonder if G.D.P growth is the best indicator of human progress.

    If this issue is either all or nothing for the politicians or the economists, "doughnut economics" could be an alternative. This view says that 21st century economies should abandon growth and make it their to reach the sweet spot- or the doughnut- between the "social foundation," where everyone has what they need to have a good life. Amsterdam's city government imposed this type of economy during the first wave of the pandemic last year to prioritize its residents' welfare and happiness over G.D.P. growth. Even though the U.S. has never embraced any type of degrowth policy, policies like universal basic services and shorter working hours could help solve the problem of America's addiction to fossil fuels.

Article link- Do We Need to Shrink the Economy to Stop Climate Change?: Spencer Bokat-Lindell - New York Times - ProQuest

The Taliban and Russia

The Taliban requested Russia to help stop drug trafficking in Afghanistan. The Kremlin has now said that it would further monitor the group’s activities and wait for the structure of the Afghan government to be finalized. The Russian foreign ministry and the Taliban are now negotiating whether a delegation from Kabul can visit Moscow for further discussions. The Taliban spokesperson in an interview, had said in order for the Taliban to put an end to Afghanistan’s drug trafficking problem the regime would require assistance from other countries, particularly Russia. The Kremlin spokesperson responded that “We are closely monitoring what the Taliban are doing in Afghanistan, what the final structure of the government will be like and how promises will be implemented. We are watching it all together. Russia, China, and Pakistan actively engage with the Taliban regime. However, none of these countries have officially recognized the Taliban. Taliban heavily depend on drug traffic. Can this request just be a trick in order to pretend that the Taliban are willing to stop its drug business?