January 23, 2022

Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy

It is the case that supply disruptions are leading to higher inflation in many places, including in large developing economies like India and Brazil and in developed ones like the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.

“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.

But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.

“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.

The difference, he said, comes because “the United States’ stimulus is in a category of its own.”

White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)

Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.

“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.

Article source: https://www.nytimes.com/2022/01/22/business/economy/inflation-biden-pandemic.html

Harvey G. Stack, Leading Dealer in Rare Coins, Dies at 93

“I had worked virtually every moment that I wasn’t in school,” he wrote in a history for the company.

The firm begun in the 19th century by his great-grandfather Maurice got into numismatics as a sideline, buying and selling collector coins and currency in addition to its primary function in foreign exchange. It later diversified into dealing in antiques and rare stamps.

In 1935, after converting the company to a rare coin dealership, Morton and Joseph Stack held their first public auction. In 1953, Stack’s moved to a gallery on 57th Street in Midtown Manhattan. (It is now on 38th Street and has galleries in other cities.)

In 2011, Stack’s merged with Bowers Merena to create Stack’s Bowers Galleries.

Mr. Stack was the president of the Professional Numismatists Guild for two years beginning in 1989. In 1993 he was given the Founder’s Award, the guild’s highest honor.

In addition to his son, he is survived by his wife, Harriet (Spellman) Stack; his daughter, Susan; two grandchildren; and five great-grandchildren. He lived on Long Island.

The Stack’s gallery was considered an inviting global clubhouse by many coin dealers and collectors. But Mr. Stack was not shy about promoting the company’s financial success.

“There are people who sell gold and silver bullion, and rolls and bags of coins, who call themselves coin dealers, and some of them probably do upward of $100 million business a year,” he told The New York Times in 1984. “When you say ‘rare coin dealers,’ though, and speak of firms that sell both directly and at auction, we’re the largest coin dealer in the United States.”

He drew a distinction between coin collectors, whom he courted assiduously, and investors.

“If a collector and an investor had to abandon a sinking ship, the collector would take with him the rarest and most aesthetically appealing pieces without regard to market value,” he told The Times in 1977. “The investor would try to take as much of his coins as possible, starting with the most valuable.”

Article source: https://www.nytimes.com/2022/01/22/business/harvey-g-stack-dead.html

Bitcoin drops 50% of its value

The world’s biggest digital asset, Bitcoin, fell as low as $34,042.78 on Saturday, marking a drop of 7.2%. It has recovered most of those losses, and was trading at $35,445 at 14:19 GMT. Other cryptocurrencies saw declines as well, with Ethereum down 12%. Solana and Cardano each dropped at least 17%, according to Coinbase.

“Margin positions being liquidated caused a wave of additional sell pressure, as assets that had been held as collateral were forcibly sold to pay for margin loans,” Hayden Hughes, chief executive officer at Alpha Impact in Singapore, told Bloomberg.

The expert expects the cryptocurrency to take some time for a bottom to form and for confidence to return, before projecting any sort of bullishness.

Russia set for complete ban on cryptocurrencies READ MORE: Russia set for complete ban on cryptocurrencies

Bitcoin’s downfall from its peak has erased some $600 billion from its market value, and more than $1 trillion has been reportedly lost from the aggregate crypto market. According to Bespoke Investment Group as quoted by the agency, this marks the second-largest-ever decline in dollar terms for both, while there have been much larger percentage drawdowns for both Bitcoin and the aggregate market.

The slump in both cryptocurrencies and stocks was caused by the latest move by the US Federal Reserve to tighten monetary policy at a faster pace than expected. In an effort to revive the economy, the Fed may increase key interest rates three times this year, according to Reuters polls.

The cryptocurrency market has also been rocked by China’s crackdown on virtual currencies, as well as Russian moves of a similar nature. Last year, Beijing prohibited cryptocurrency mining in the Sichuan Valley, triggering an adverse impact on the market.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/546846-bitcoin-drop-half-november-peak/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Telegram CEO assesses impact of Russia’s proposal to ban crypto

Pavel Durov, the executive director and founder of Telegram, one of the world’s most popular messaging apps, has said a proposal to ban cryptocurrency mining and crypto-related transactions via Russian financial services would lead to an inevitable outflow of IT specialists.

The ban, which has been touted by Russia’s central bank, would also destroy a number of sectors in the high-tech economy, the billionaire said, noting that no developed country has prohibited cryptocurrencies.

“Such a ban will inevitably slow down the development of blockchain technologies in general,” Durov said in the post shared on his Telegram channel and on VK, Russia’s most popular social media platform.

“These technologies improve the efficiency and safety of a wide range of human activities, from finance to the arts.”

Russia's ban on crypto: What it means in reality READ MORE: Russia’s ban on crypto: What it means in reality

Earlier this week, the Central Bank of Russia called for the issuance, circulation, exchange, and trade of cryptocurrencies and stablecoins to be prohibited, as well as banning the organization of these operations on Russian soil.

The 37-year-old billionaire highlighted that “Russia’s neighboring states, from Ukraine to Uzbekistan, are adopting advanced laws and regulations related to the blockchain sector, as they are not willing to be left behind technological and economic progress.”

According to Durov, Russia is one of the world’s leading nations when it comes to the number of high-end professionals working in the blockchain industry.

“Thoughtful regulation will allow the country to balance the distribution of forces in the international financial system and become one of the major players in the new economy,” he added.

The businessman admitted that regulatory drive is natural for state authorities when it comes to the circulation of cryptocurrencies, but a total ban on assets of this kind is throwing “the baby out with the bathwater.”

“The step could hardly stop unconscientious participants, but it will put an end to legal Russian projects in the area,” Durov said.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/546838-durov-assesses-crypto-ban-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

US looking for ways to get extra cash out of EU energy crisis – reports

US officials are reportedly negotiating opportunities for contingency steps to secure energy supplies to European nations if a possible conflict between Russia and Ukraine disrupts current deliveries.

“We’re looking at what can be done in preparation for an event, especially midwinter with very low [European natural gas] supplies in storage,” a senior US administration official said, as quoted by FT.

“We discussed what can be moved around the market, what can help… the things we can prepare now for deployment if and when there is an escalated crisis.”

The talks with Qatar and member states of the European Union are being held as the bloc is struggling with a severe energy crunch, which is sending prices for natural gas soaring to record highs. The crisis could become even more intense if the White House introduces new punitive measures against Russia should Moscow launch a military assault on Ukraine.

Crippling sanctions against Russia could boomerang back onto US  allies – reports READ MORE: Crippling sanctions against Russia could boomerang back onto US allies – reports

Speculation about an invasion was initiated by Ukrainian and US officials several months ago, and has been actively fueled by both government officials and Western media outlets. The Russian authorities made it clear that it has no plans of this kind.

Moreover, Western nations have accused Russia of squeezing gas supplies in the midst of the energy crunch. The allegations, repeatedly rejected by the Russian government, have been actively used by Washington in the longstanding debate with Berlin over the necessity of launching the Nord Stream 2 gas pipeline, the construction of which was led by Russian state-run energy giant Gazprom.

In an attempt to ramp up sales of liquified natural gas (LNG) to Europe markets, the US has regularly accused EU member states of heavy reliance on Russian gas supplies, persistently offering its LNG, the price of which is up to 40% higher than the piped gas, as an alternative source of fuel. 

US seeking ways to profit should Russia-Ukraine conflict break out – reports READ MORE: US seeking ways to profit should Russia-Ukraine conflict break out – reports

Potential sanctions over the Russia-Ukraine conflict may target major Russian commercial banks, Russia’s energy sector, blocking the state’s access to bond markets, cutting the country off from the SWIFT international payment system, and intensifying export control measures.

Europe will almost certainly face extremely high prices in the event of sanction-related supply disruptions, and co-ordinated government action will be required to source seaborne LNG cargoes, according to an unnamed energy industry executive, as quoted by the media. 

“They will effectively have to compete for all the supply in the market, taking cargoes away from Asia, and the likely end result is the taxpayer will pay,” the executive said.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/546831-us-qatar-lng-eu-energy/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Biden Looks to Intel’s U.S. Investment to Buoy His China Agenda

But the center of gravity for the global industry is still in East Asia. While the United States accounts for much cutting-edge research and design in the chip industry, it has gone from being the world’s largest producer of semiconductors several decades ago to mostly outsourcing production to Asian factories.

That has proved to be a vulnerability as pandemic-related shutdowns left companies around the world short of workers and raw materials, leading to shortages and spiraling prices for a variety of goods, especially semiconductors. Automakers in particular have been affected, with almost every major carmaker forced to curtail production last year.

Chip shortages have also become one of the largest single factors stoking inflation, now a key gripe among American voters as the midterm elections approach. Inflation hit a 40-year high in December, buoyed by a 37 percent increase in the price of used cars.

In an effort to ease the chip shortages, the Biden administration has convened gatherings with semiconductor executives, established a global alert system to identify shortages and requested vast amounts of information from chip companies on potential bottlenecks. The Commerce Department is expected to release some of that information publicly before the end of the month.

Gina Raimondo, the commerce secretary, said in a statement on Friday that Intel’s investment was a win for the company, for American manufacturing and for “American consumers who can look forward to lower prices as we bring home production of the semiconductors that keep our economy running.”

But analysts say the administration has little control over any short-term trends in the industry, given the long lead times necessary to build semiconductor facilities.

Mr. Neuffer said his industry applauded the attention the White House was giving to the sector, including encouraging companies to share more information. “But the reality is, there’s only so much government can do,” he said. “These are very complicated, deep global supply chains, and the market is just going to have to work through this.”

Catie Edmondson contributed reporting.

Article source: https://www.nytimes.com/2022/01/21/us/politics/biden-intel-semiconductors-china.html

Stock Markets Off to Worst Start Since 2016 as Fed Fights Inflation

What happens next comes from an established playbook. As William McChesney Martin, a former Fed chairman, said in 1955, the central bank finds itself acting as the adult in the room, “who has ordered the punch bowl removed just when the party was really warming up.”

The mood of the markets shifted on Jan. 5, Mr. Yardeni said, when Fed officials released the minutes of their December policymaking meeting, revealing that they were on the verge of embracing a much tighter monetary policy. A week later, new data showed inflation climbing to its highest level in 40 years.

Putting the two together, it seemed, the Fed would have no choice but to react to curb rapidly rising prices. Stocks began a disorderly decline.

Financial markets now expect the Fed to raise its key interest rate at least three times this year and to start to shrink its balance sheet as soon as this spring. It has reduced the level of its bond buying already. Fed policymakers will meet next week to decide on their next steps, and market strategists will be watching.

Low interest rates made certain sectors especially appealing, foremost among them tech stocks. The SP 500 information technology sector, which includes Apple and Microsoft, has risen 54 percent on an annualized basis since the market’s pandemic-induced trough in March 2020. One reason for this is that low interest rates amplify the value of the expected future returns of growth-oriented companies like these. If rates rise, this calculus can change abruptly.

The very prospect of higher interest rates has made technology the worst-performing sector in the SP 500 this year. Since its peak in late December, it has fallen more than 11 percent.

The SP’s three best-performing sectors in the early days of 2022, on the other hand, are energy, financial services and consumer staples.

Article source: https://www.nytimes.com/2022/01/21/business/economy/stock-markets-down-inflation.html

Intel to Invest at Least $20 Billion in New Chip Factories in Ohio

Legislation passed by the Senate with bipartisan support in June would provide $52 billion in subsidies for the chip industry, including grants to companies that build U.S. factories. The package has since become caught up in House bickering over the Biden administration’s priorities, though Mr. Gelsinger and others have said they are hopeful it will pass in the coming months.

In Europe, Mr. Gelsinger has also lobbied officials for a similar package of subsidies that could aid the construction of a big Intel factory there, with a projected price tag comparable to the U.S. expansion.

Ohio has not previously had a chip manufacturing presence. Moving to a state without existing chip factories presents challenges, such as obtaining permits and persuading suppliers of gases, chemicals and production machines to set up nearby offices, said Dan Hutcheson, an analyst at VLSI Research. On the other hand, having plants in more states provides lobbying leverage in Washington, he said.

Intel is not the only company expanding U.S. production. TSMC began construction last year on a $12 billion complex about 50 miles from Intel’s site near Phoenix. Samsung Electronics selected Taylor, Texas, for a $17 billion factory, with construction set to begin in 2022.

Mr. Gelsinger’s strategy is based partly on a bet that Intel can rival TSMC and Samsung in manufacturing chips to order for other companies. For most of its existence, Intel has built only the microprocessors and other chips it designs and sells itself.

The strategy is risky, as Intel has fallen behind its Asian rivals in packing more circuitry onto each slice of silicon, which increases the abilities of devices like smartphones and computers. Mr. Gelsinger has said Intel is on track to catch up over several years, but it won’t be easy, as those companies continue to make new developments of their own.

Intel “is catching up, but they have not caught up,” Mr. Hutcheson said.

Article source: https://www.nytimes.com/2022/01/21/technology/intel-chip-factories-ohio.html

How I Cut My Family’s Cable and Streaming Bill by $170

Next came deciding what streaming services to keep.

Mr. Willcox suggests making a list of the shows you and your family want to watch and then matching them with the appropriate streaming service. Set a limit on what you want to spend. “It’s a lot more work than it used to be,” he said.

To keep the total cost under a target of $250 a month (a savings of at least $150 from my current bill), I had $65 left.

I prefer advertising-free viewing, so I’m planning on paying a bit more than I would for ad-supported streaming options. Even so, my savings should cover the cost of monthly subscriptions to Netflix (currently $13.99 for a standard plan), Paramount+ ($9.99 for premium) and Amazon Prime video ($8.99; if you pay for a full Prime membership, video is included). I learned that we can keep Disney+ bundled with two more services free — Hulu (shows include “Only Murders in the Building,” with Steve Martin) and ESPN+ — as part of a promotion from Verizon, our mobile phone company. The Hulu option in the deal has ads, but I’ll take them — for now. Finally, we can add HBO Max ($11.99) and watch acclaimed shows like “Station Eleven.”

(Our Apple TV+ subscription is free for six more months; we’ll re-evaluate it when the promotion expires.)

Grand total for streaming and cable: $230.

With the overall savings (about $170 a month), maybe we can even buy other things (hopefully, more books).

Still, that’s a lot of television — and it’s probably unnecessary to pay for all of those subscriptions year round, Mr. Willcox said. You could instead pay for a month here and there because most streaming services currently allow customers to join and cancel at will. (Just remember to cancel.)

For instance, if you don’t care about watching a new show right away, he said, you can simply wait. When an entire season of a show that you want to watch becomes available, you can join the appropriate streaming service, watch it for a month, then cancel — and sign up again later if something else catches your fancy. (Some people even binge watch their selections during free trials.) It takes some planning but can save you money.

Article source: https://www.nytimes.com/2022/01/21/your-money/cable-streaming-bill.html

Effect from one of world’s few carbon-capturing plants measured

Shell’s multimillion-dollar project “Quest” in Alberta province in western Canada, built to trap and store carbon dioxide emissions, has been criticized as insufficient by an international NGO. In a report by Global Witness published on Thursday, the organization suggests the oil giant’s plant emits “more climate-wrecking gasses than it is capturing.”

According to the investigation, the carbon footprint left by the self-proclaimed “safe and effective” project exceeds the amount of greenhouse gas it has captured. While Shell says the plant’s carbon-capture system has stopped some five million tons of carbon dioxide from entering the atmosphere in less than five years, this “only tells one side of the story,” the report states. Over the same period of time, it released 7.5 million tons of polluting gasses. 

The climate damage caused by the plant’s annual carbon footprint is the equivalent of 1.2 million petrol cars, according to Global Witness.

Only a few similar projects exist worldwide, and the Shell-operated Canada plant is being largely subsidized by the government to reduce carbon emissions. However, according to the findings, the plant’s effectiveness has been significantly overstated.

“Just 48% of the plant’s carbon emissions are captured, we found, falling woefully short of the 90% carbon-capture rate promised by industry for fossil hydrogen projects,” the report says. It calls for a halt to support and investment in a technology “that is not only failing to deliver any effective action in tackling the climate crisis – but is in fact contributing to it.”

LEAKED documents reveal intense ‘lobby activism’ by fossil fuel players to ‘water down’ UN climate change report – media READ MORE: LEAKED documents reveal intense ‘lobby activism’ by fossil fuel players to ‘water down’ UN climate change report – media

Earlier this week, a large group of scientists and academics in Canada urged their country’s government not to sponsor companies using the technology. Tax credits should not become “a fossil fuel subsidy,” they said in a letter. 

Shell claims its carbon-capture technology “overall has met or exceeded our expectations,” according to Vice, quoting the company’s regional spokesperson. Apparently Quest doesn’t cover the whole facility.

“This analysis is simply wrong. Our Quest facility was designed some years ago as a demonstration project to prove the underlying… concept, while capturing around a third of CO2 emissions,” an unnamed Shell spokesperson said, according to Sky News. 

The expensive technology is promoted as a solution to make fossil fuels more environmentally friendly by trapping and storing emissions. A coalition of more than a dozen energy companies has been formed to support a major carbon-capture hub in Houston, US. Shell has recently joined in, supporting the carbon-capture and storage project, which is estimated to cost $100 billion. 

Article source: https://www.rt.com/business/546779-carbon-capture-shell-emissions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS