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Economic crisis in Zimbabwe
October 18, 2018 | Expert Insights
After enduring through hyperinflation and economic crisis in 2008, Zimbabwe is yet again facing the fear of another round of hyperinflation as people ration basic necessities like bottled water and even beers.
Background
Zimbabwe is a landlocked country located in southern Africa, between the Zambezi and Limpopo Rivers, bordered by South Africa, Botswana, Zambia and Mozambique. The capital and largest city are Harare. A country of roughly 16 million people, it is classified as a middle-income country, with a low HDI score and high-income disparity.
The Zimbabwean economy has been shrinking from the year 2000. The country has since been a desperate situation due to widespread poverty and massive unemployment. The country’s participation in 1998 to 2002 in the war in the Democratic Republic of the Congo led to the economy’s deterioration. The war drained hundreds of millions of dollars that eventually resulted in hyperinflation in the country.
Hyperinflation was a significant problem from about 2003 to April 2009, when the country suspended its own currency. Zimbabwe faced 231 million per cent peak hyperinflation in 2008. A combination of the abandonment of the Zimbabwe dollar and a government of national unity in 2009 also resulted in a period of positive economic growth for the first time in a decade.
During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe's peak month of inflation is estimated at 79.6 billion per cent in mid-November 2008.
In 2009, Zimbabwe stopped printing its currency, with currencies from other countries being used. In mid-2015, Zimbabwe announced plans to completely switch to the United States dollar by the end of 2015.
Analysis
The economic crisis in Zimbabwe has shifted from bad to worse. The currency has collapsed, the unemployment rate has reached 90 per cent, and shops shelves have been stripped bare due to panic-buying.
The new crisis began when Mthuli Ncube, Zimbabwe’s finance minister, said he was dividing bank accounts into two types. One that contains “good” and “bad” dollars. The “good” accounts are those backed by real flows of dollars, remitted by millions of Zimbabweans in the diaspora. On the other, the “bad” accounts represent those holding electronic money, known as RTGS, or real-time.
Post the hyperinflation meltdown in the country over a decade ago, Zimbabwe has been dollarized. However, the people of the country have lost faith in the two surrogate currencies. In reality, neither of the two currencies trade at anything like parity. In the previous week, bond notes were worth as little as 20 cents on the dollar.
The newly elected government’s measures have resulted in the present economic spiral in the country. The country is facing foreign-exchange shortages and austerity measures that have left consumers facing long queues for everything from fuel to bread, sugar and cooking oil. Many shops are under pressure from the government as they are restricting customers’ purchases to prevent hoarding and ensure everyone gets something. Others have gone further: Yum! Brands temporarily shut some of its KFC outlets this week, saying it couldn’t find enough dollars to pay suppliers. The government also introduced new measures last week that has imposed a tax increase on money transfers. As a result, it triggered a rise in primary commodity prices, fuelling fears of an inflationary spiral and also long queues at gas stations.
John Robertson, a local economist, said the Zimbabwean state had wiped out savings before, a reference to the hyperinflation of 2007 and 2008. “This cost people so much that trust in government pronouncements no longer exists.”
Tendai Biti, an opposition leader, told the BBC that the new finance minister would not be able to fix an economic crisis born of years of reckless mismanagement. “You can rig an election, but you cannot rig an economy,” he said.
Counterpoint
Finance Minister Mthuli Ncube had previously stated that “Bold decisions need to be taken on the reforms front to stimulate growth and sustainable development.” He also stated that reforms in the nation are inevitable, and so are its consequences. “The liberalisation of the economy has its pains, and this is one of the pains that we are going to go through,” he said.
Besides, though the government was lauded for finding the root cause of the financial problem in the nation, the ministry’s attempts to end parallel currency system has triggered rumours that the administration is preparing to wipe out savings through devaluation.
Assessment
Our assessment is that contradictory statements about how the government plans to navigate the currency crisis, a new two per cent tax on electronic transactions and heavy-handed approach to managing the fallout have bred suspicion and a fundamental lack of confidence in the government.
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Africa Business & Economics
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KEY POINTS
- Owning a car can be expensive, but if you're in it for the long haul, financing is the way to go.
- If you buy a car, you can use it for whatever you want, and even customize it to make it your own.
- You can save money on an auto loan by shopping around, boosting your down payment, and considering a used car.
Earlier this year, I took a trip to the U.K. For most of my trip, my host and I got around via public transportation. As an American who lives in an area with subpar public transit options, I was envious. It's far too likely to be the case that if you live in the U.S., you need to own a vehicle of your own.
Owning a car isn't cheap. In addition to purchasing the car itself, you'll have to pay for maintenance and repairs, auto insurance, and registration/taxes owed to your state. And whether your car is electric or gas-powered, you'll have to pay for fuel (be it by buying gas or the electricity that comes from a charging station).
1. You'll end up owning the car outright
Despite the many costs that come with owning a car, it's actually a pretty sweet deal. You build equity in the car as you make payments, and speaking from experience, it's very exciting to make that final payment. The car becomes yours free and clear, and you can do whatever you want with it. Want to drive for a ride-share service? You can take on that side hustle if you're financing a car, but may not be able to if you're leasing one.
If you want to sell it later down the road, you'll get cash for it -- or you could trade it in toward a new vehicle purchase. Want to paint it or otherwise add custom features? Go for it. Leasing a car still has you making monthly payments for it, but you'll never own it outright, and when you turn it in to the dealer at the end of your lease, you could end up owing surprise fees, or extra money if the car isn't in pristine condition.
2. You can drive as much as you want
When you lease a car, you'll get a mileage limit. These can vary, but often range from 10,000-15,000 miles per year. If you exceed your mileage, you'll be charged perhaps $0.15 to $0.40 per mile. This can add up fast. Buying a car is a better choice if you prefer to be free and unrestricted in how much you can drive. Buying is also a good idea if you don't know what your future usage of a car will be -- perhaps you move often, and may end up farther away from work, adding more miles onto your commute.
3. Buying saves you money over the long term
The best reason to buy a car is if you intend to keep it for a long time, because those higher costs upfront will pay off. I'm still driving the car I bought in 2009. These days, my car spends a lot of time parked in front of my apartment because I work from home and don't use it daily. But it fits the bill for trips to the grocery store or to hang out with friends locally -- and it performed beautifully on the international road trip I took in May.
I haven't had a car payment in nine years, and my insurance premiums on it are quite reasonable. Because it is so old, weird things have broken on it (for example, the trunk hinges are shot, and you have to be extremely careful to put the trunk all the way open, lest it slam shut on your fingers). But at this point, the car's idiosyncrasies are part of its charm -- and I love not having a car payment.
A few ways to save money on a car purchase
If I've convinced you that buying a car is the way to go, here are a few tips to cut your costs:
- Buying a used car could save you money, but only if you buy one that is in sound mechanical condition. Get a vehicle history report of any used vehicle you're considering.
- Shop around for an auto loan, rather than accepting whatever financing a dealership will offer you. A bank or other financial institution you already do business with likely offers loans, or you can check out our list of the best personal loans.
- Take on the shortest loan you can afford. Borrowing over a longer period of time means lower payments, but it also could mean you end up owing more on the car than it's worth.
- Make a substantial down payment to bring your monthly payments down.
- Stay up to date on maintenance -- this is one of the ways I've been able to keep my car for so long.
- Keep the car for as long as you can. You'll have to work out your own priorities here, but I've heard enough people complain about their car's key fob, touchscreen, or Bluetooth connection to be thrilled that my elderly car has none of these bells and whistles.
It's likely that you need a vehicle to get to work, run errands, and complete other perfectly mundane everyday tasks. If you're torn between financing a car and leasing one, check your own needs and wants against this list -- and I know you'll make the right decision for you.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2023 The Ascent. All rights reserved.
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Personal Finance & Financial Education
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The UK is losing out on economic growth worth up to £38bn every year because of unsuitable childcare, exclusive figures reveal.
A report from the thinktank Centre for Progressive Policy (CPP), shown to Sky News, shows the lost economic output is between £27bn and £38bn, the equivalent of 1% of GDP.
Their figures are translated from the survey results of 2,545 mothers which found that 27% said they would like to work more hours if they had access to suitable childcare.
If those hours were realised it would result in at least £9.4bn in additional earnings per year, with an estimated economic output the equivalent of 1% of GDP.
The CPP described the figures as a "conservative" estimate and are calling for childcare to be viewed as physical infrastructure.
Ben Franklin, director of research and policy, described it as "a big economic prize".
"At the moment, the government can borrow to invest in hard physical infrastructure, so railways and roads," he said, "but we think there's a strong economic case for treating childcare in the same way.
"The gains to be made from supporting mums and employment are substantial.
"And the gains over a child's life, developing their own ability in terms of education and the future human capital of the country.
"So we think that childcare should be treated the same as other forms of hardhat infrastructure, that are often seen as more sexier within the corridors of power."
Based on the survey results, CPP also estimate that an additional 540,000 mothers have been prevented from getting paid work.
It also found that 880,000 have cut down their hours, and 470,000 have quit their jobs.
Cherry Fitzsimmons is a paediatric occupational therapist in London - an understaffed sector in the NHS - who had twins last year.
She describes the "madness" of a "flawed system" that has forced her to take an extra six months of unpaid leave because of childcare costs.
"In my area (at work) we're looking at overseas recruitment and paying for visas from our budget," she said.
"It just feels ironic that my team are paying for visas for people to come from other countries to help fill the gaps, but then I can't work because I can't afford to because of this childcare system."
She says by the time her three children go to school she would have spent around £100,000 on nursery fees.
"I think the government know that it's not working," she said, "and this feels like negligence, when they're just not doing anything about it."
Three and four-year-olds in England are eligible for either 15 or 30 free hours a week depending on whether their parents work.
The funding, however, given to nurseries to cover this is often not sufficient.
Kate Wright, who runs Little Buddies preschool in Lowestoft, has had to take on extra work as a cleaner to help pay staff wages.
"I get more money cleaning toilets than I do working and owning a business," she tells Sky News.
The living wage is set to rise in April and she says she is "starting to get really worried".
"That's going up by 92 pence per hour, bear in mind we've got six members of staff doing six hours a day 38 weeks of the year, and the funding isn't going up in accordance with that." she said.
"The ratios for two year olds is one to four, and the two year old funding is only going up 17 pence per hour, which is only 68 pence - so where is the deficit of the 24 pence coming from to pay for the members of staff?"
Figures from the Early Years Alliance show that over a third of childcare settings say it is likely that rising costs will force them to close this year.
Claire Richmond, who runs Little Goslings in Coventry, says she has had three members of staff who have left to go and work in Sainsbury's.
"People are exiting the sector and getting a job at Sainsbury's on more per hour," she said.
"Because the accountability and the responsibility that's put on us is massive. Those things rightly should be in place, we're very happy to carry out those things.
"But we just need to have a fair amount coming in to fund amazing staff… the numbers just don't stack up."
She says her nursery is only just breaking even and is calling for business rates to be scrapped for childcare settings as a financial aid.
'On the brink of collapse'
Joeli Brearley, from campaign group, Pregnant Then Screwed, describes the childcare sector as "on the brink of collapse".
She says the system is also exacerbating gender inequality with "a big exodus of women from the labour market".
"We have a skills shortage in the UK and yet we know we have hundreds of thousands of women who are now stay at home mums, who desperately want to work but they can't afford to do so," she said.
A Department for Education spokesperson said: "We recognise that families and early years providers across the country are facing financial pressures. That's why we have spent more than £20bn over the past five years to support families with the cost of childcare.
"This government has doubled the entitlement for working parents of three and four-year-olds to 30 hours and introduced 15 free hours a week for disadvantaged two-year-olds.
"On top of this, working parents on Universal Credit may be eligible for help with up to 85% of their childcare costs through Universal Credit to support with the costs of childcare."
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United Kingdom Business & Economics
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Michael Cohen Testifies That Trump Tasked Him to ‘Reverse Engineer’ His Assets with His ‘Arbitrarily’ Inflated Number
The former president and his former lawyer haven't been in the same room for roughly five years — until Tuesday
Five years after their last time sharing a room, Donald Trump's ex-attorney and fixer Michael Cohen unceremoniously entered a New York courtroom on Tuesday afternoon to deliver testimony that could threaten his former boss's business empire.
Trump and Cohen did not lock eyes as Cohen quietly entered the ceremonial courtroom and slowly ascended to the witness stand. But Cohen's testimony before the lunch recess ended on a decidedly dramatic note.
"I was tasked by Mr. Trump to increase the total assets based upon a number that he arbitrarily elected," Cohen said. "And my responsibility, along with Allen Weisselberg, predominantly, was the reverse-engineer the various asset classes — increase those assets to achieve the number that Mr. Trump asked us."
Asked which number, Cohen responded: "Whatever Mr. Trump told us to."
Cohen's testimony began with biographical details about his education, as a Cooley Law graduate, and his half-decade old convictions, some of which were tied to his work for the former president.
He did not hesitate to mention those connections, noting that he pleaded guilty to federal campaign violations and misleading congressional testimony "at the direction of, in concert with, and for the benefit of, Mr. Trump."
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The ex-fixer said he lied to protect Trump, but he added that others were involved in creating the statement, including Ivanka Trump, Jared Kushner, Alan Garten, and attorney Abbe Lowell.
That line drew an emphatic objection by Trump's attorney Christopher Kise.
"I don't know if that's from a book that he's writing," Kise snapped, referring to Cohen's two popular memoirs criticizing the former president.
Manhattan Supreme Court Justice Arthur Engoron overruled the objection, finding Cohen's answers about his convictions responsive to the state's questioning.
Trump's attorneys are widely expected to use those admitted lies under oath to undermine Cohen's testimony.
In late February 2019, Cohen detailed allegations against the Trump Organization and its financial mismanagement to the Democrat-led House Oversight Committee. His testimony sparked the criminal and civil investigations that led to the fraud trial now playing out in Manhattan Supreme Court.
New York Attorney General Letitia James quietly began her probe days later, which became public in the summer of 2020.
Before Cohen took the witness stand, the court heard from Bill Kelly, the general counsel of Trump's former accounting firm, Mazars. In February 2022, Kelly had signed a letter disavowing a decade's worth of Trump's statements of financial condition, writing that they "should no longer be relied upon."
Trump stands accused of inflating his net worth by billions in financial statements to banks and insurers. Engoron already has found Trump, his sons Eric and Donald Trump Jr., and ex-Trump Organization executives Allen Weisselberg and Jeffrey McConney liable for fraud in a blistering ruling before the trial began. The judge's ruling is now on hold pending Trump's appeal.
Cohen's testimony in the civil fraud trial comes on the same day one of Trump's other former lawyers pleaded guilty in Fulton County, Georgia, to a single felony count of aiding and abetting false statements and writings in connection with the 2020 presidential election.
Jenna Ellis' guilty plea is the third from a former legal advisor to Trump — Sidney Powell and Kenneth Chesebro reached their own agreements last week — in connection with the Georgia probe. No trial date has been set yet for Trump and his 15 other remaining co-defendants, including former New York Mayor Rudy Giuliani and former White House Chief of Staff Mark Meadows. They have all pleaded not guilty.
This is a developing story and will be updated.
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Banking & Finance
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The home of a top fundraiser for New York City Mayor Eric Adams was raided by the FBI on Thursday morning with various electronic devices and paperwork confiscated in relation to a corruption investigation, according to The New York Times.
The federal agency searched the Brooklyn home of Brianna Suggs -- a 25-year-old campaign consultant for Adams – and seized three iPhones and two laptop computers, along with papers and other evidence.
Investigators also took something agents identified as a "manila folder labeled Eric Adams," as well as seven "contribution card binders" and other materials, the New York Times reported, citing a search warrant the publication had obtained.
The raid was part of an inquiry into whether foreign money was funneled into his mayoral campaign, the publication reported, although it is understood that Adams is not being directly investigated.
Fox News Digital reached out to the FBI for comment but had not received a response at the time of publication.
Thursday’s raid in the Crown Heights neighborhood of Brooklyn thrust Adams into the national spotlight since he was on his way to a meeting with President Biden and other mayors to discuss the illegal migrant crisis – only to turn around and make a dash back to the Big Apple. Adams had earlier in the day posted a video clip of him sitting in a D.C. bound plane before news of the raid broke.
Adams addressed the issue Thursday night at Gracie Mansion, the mayor’s residence, saying his administration would fully co-operate with any probe.
"I hold my campaign to the highest ethical standards," Adams said. "Any inquiry that is done we're going to fully participate and make sure that it's done correctly."
"I have not been contacted by anyone from any law enforcement agency, and that's why I came back from the D.C., to be here, to be on the ground and look at this inquiry as it was made."
Suggs, whose LinkedIn profile lists her as "Fundraiser and Director of Logistics" of Adams' 2021 mayoral campaign, raised $18.4 million for Adams’ successful election two years ago and has overseen the amassing of more than $2.7 million in contributions for his 2025 reelection campaign, according to campaign finance disclosures cited by Reuters.
Thursday’s raid forms part of a broad public corruption investigation into whether Adams’s 2021 election campaign conspired with the Turkish government to receive illegal foreign donations, The New York Times reported citing the warrant.
Investigators are also probing about the potential involvement of a Brooklyn construction company with ties to Turkey, as well as a small university in Washington, D.C., that also has ties to the country and to Adams.
It is not the first time people in Adams orbit have come under financial scrutiny.
In September, Eric Ulrich, Adams’ ex-buildings department commissioner, was charged with doling out political favors in return for more than $150,000 in bribes, according to the New York Post.
And in July, six people were charged in a scheme to raise money through straw donations for Adams' 2021 campaign.
A straw donation is when someone makes a political contribution in another person or entity's name, only to be later reimbursed by another. Such donations are often used to avoid limits on campaign contributions.
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Nonprofit, Charities, & Fundraising
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A posh wine store in Chelsea is facing off against panicked customers who claim that the shop’s storage service is dodging their calls and emails as they desperately seek the return of their prized vintages, The Post has learned.
In a fermenting crisis that has sparked litigation including eviction proceedings, Chelsea Wine Storage, owned by the proprietors of the acclaimed Chelsea Wine Co. store, has been impossible to reach since the beginning of November, sources said.
The 25-year-old business has stonewalled numerous panicked customers who have been trying to get their wines out of the unfinished basement of a shuttered TGI Friday’s off Times Square at 777 Seventh Ave., according to sources.
Hundreds of cardboard boxes have been stacked up inside the 10,000-square-foot cellar, filled with wines that in some cases are rare, pricey labels including white Burgundys like 2011 Coche-Dury Meursault, which goes for $1,200 a bottle, and Faiveley Batard Montrachet, which sells for $490 a bottle, according to inventory lists viewed by The Post.
The high-dollar booze has been sitting on wooden pallets for months, according to a source who has been inside the space and shared photos with The Post.
Desperate clients “have even knocked on the door and tried to get in” at the street-level entrance, which shows a barely visible address above the door, a source familiar with the situation told The Post.
Some fear the worst following the high-profile implosion of Sherry-Lehmann, the venerable Manhattan wine store that hasn’t returned hundreds of thousands of dollars worth of expensive wine belonging to the retailer’s storage customers and which is being investigated by the FBI.
“With no response, I am afraid my wines in storage are gone for good,” a CWS customer posted on Yelp on Oct. 23.
Others shared their concerns in recent weeks on wineberserkers.com: “Been a customer for 18 years, now they have gone silent…”
Another posted, “I cannot get them to answer emails or phone calls, and I am extremely worried about my collection…some of my most prized bottles somehow no longer appear in my inventory.”
Until last year, the wine store — formerly called Chelsea Wine Vault — and its storage space were located in the Chelsea Market for more than two decades.
They were founded in the 1990s by Daniel Barteluce, an architect who designed luxury retail stores around the world including Chanel and Cartier, and Donald Kurt, a TV producer who worked on the FX series “Justified.”
CWS also has stored wine for some of the city’s elite restaurants — including Gotham Bar and Grill, the River Cafe and Craft — and allowed customers to retrieve their collections from personal lockers below the store whenever they wanted.
Kurt and Barteluce’s partnership ended in litigation in 2015 when Kurt accused Barteluce of trying to swindle him out of a $330,000 loan to the business.
Kurt also claimed the companies had been “mismanaged” by Barteluce’s daughter, Amelia Gancarz, according to court documents.
Barteluce could not be reached for comment. Kurt did not return calls and emails.
The lawsuit was settled.
Last year the storage business decamped to Midtown while the store moved across the street from the market to 60 Ninth Ave. — but both businesses fell into rent arrears, according to court documents.
Amelia and her husband, Michael Gancarz, are the “sole owners” of the two businesses, according to another lawsuit filed on Nov. 14 in Manhattan federal court by Grand Cru Liquid Assets, a fine wine brokerage firm.
The latter alleges that it bought $349,000 worth of Burgundy from the Gancarzes and their businesses in May and never received the wine.
The Gancarzes refunded Grand Cru $165,000, saying they never had possession of the Burgundy.
They still owe the broker $184,000 plus 12% interest, according to the complaint.
The Gancarzes’ landlord at both locations is Delshah Capital, which sued the businesses this month for months of unpaid rent, including a basement space below the wine store in Chelsea that the Gancarzes recently converted into a lounge, according to court documents.
The lounge, which has a DJ booth and a separate entrance from the store, is lacking critical permits, an employee for the landlord said, including “construction permits, a legal certificate of occupancy, and an inspection and sign-off from FDNY for a fire alarm inspection.”
“Their irresponsibility is hurting a lot of people including employees who haven’t been paid, customers and their landlord,” said Michael Shah, head of Delshah Capital. “I think they are undercapitalized and completely disorganized.”
The Gancarzes did not return calls and emails for comment, but their lawyer Louis Chisari said the couple blame “staff shortages” for the lack of communication with their storage customers.
He also said the complaints over unpaid rent “are being dealt with between the attorney(s)” and disputed that the lounge is missing city permits.
Among customers’ fears is that their wine has been sold, misplaced and held at the wrong temperature, sources told The Post.
Chelsea Wine Storage was sued by at least two customers in 2018 and 2019 who allege the company confiscated their collections over credit card billing errors involving their storage fees, according to court documents.
Elisa Kwon de Alvarez alleged that CWS seized 65 cases of her wine over a credit-card mishap that resulted in her CWS account being $5,000 in arrears, according to reports at the time.
The case was settled, according to court documents. Alvarez did not respond to queries for comment.
Another customer accused CWS of selling his wine at the company’s Chelsea store after a billing error resulted in him owing CWS more than $6,000 for storage fees, according to the 2018 complaint in New York state court.
The customer, Michael Moriarity, alleged that his wine collection was worth up to $200,000 and started showing up on shelves at Chelsea Wine Vault for sale.
CWS’ customer contract allows it to “dispose” of customers’ wine if they don’t pay their storage fees, according to court filings.
But Moriarity repeatedly tried to pay the fees when he became aware of the non-payment problem and was “rebuffed” by CWS, his suit claims.
His wine “was not, in fact, disposed of, but instead is on the shelves of Chelsea Wine Vault for sale,” the suit claims, citing a store employee who confirmed that some bottles at the store came from “a storage customer.”
At a hearing, the judge said he was “confused” as to why CWS would sell more wine than it was owed in storage fees.
“I don’t understand how you could sell it,” New York Judge Franc Perry said at a hearing, according to a transcript. “If it was worth $100,000 and your bill was only for $6,000, sell the amount of wine or dispose the amount of wine for $6,000 and give him his wine back.”
That case was also settled in August 2019.
“Michael and Amelia take the position that they never did anything inappropriate with people’s wine,” Chisari told The Post, adding that both cases were “resolved.”
Meanwhile, as word spread about customers’ problems, other storage companies, including Manhattan Wine Co. and River Valley Wine Cellars, seized an opportunity.
“We’ve not been able to reach anyone at CWS since the end of October,” Michael Mahle, general manager of River Valley Wine Cellars, told The Post.
A customer who did not want to be identified and who enlisted Mahle’s help to get his collection out of the Seventh Avenue basement is also questioning CWS’s erratic billing.
“Somewhere along the way, my monthly storage locker fee skyrocketed from $77/month initially (in 2015) to $277/month plus there have been massive one-time payments of thousands of dollars on top of that,” including an inexplicable charge for $2,498, the customer wrote in an email to CWS viewed by The Post.
The customer received no response to this query, he said.
Meanwhile, rival storage firm Manhattan Wine obtained 1,200 bottles in late October from Chelsea Wine Storage on behalf of a customer — but 240 bottles turned out not to belong to the customer, Joel Rubins, director of operations, told The Post.
CWS picked up the wrong bottles, but the client is still missing 240 bottles, Rubins said.
Over the Thanksgiving weekend, River Valley Wine and Manhattan Wine got emails from CWS saying customers’ collections could be picked up — after The Post reached out to ownership multiple times.
The CWS email, signed by the “Storage Team,” also said, “I apologize for the delay. Our storage manager is no longer with the company for this reason of lack of communication with customers.”
On Saturday, Michael Gancarz got into an altercation with another tenant at the Seventh Avenue storage facility who claimed he boarded up “common space” that all the tenants share including access to an elevator and emergency exit, a retail tenant who did not want to be identified told The Post.
The tenant called the NYPD after Gancarz became aggressive with one of his employees, the tenant claimed in an interview with The Post.
“Michael believes that the common space to the elevator was exclusively his,” his lawyer told The Post. “It is our position that Michael misunderstood” the terms of his lease.
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Consumer & Retail
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Former Top MilkBasket Executives Raise $5 Million For Grocery Startup
Sorted is headed by Anant Goel, former CEO of MilkBasket Ltd., which was sold off to Reliance Retail Ventures Ltd. in 2021.
BFCD Technologies Pvt. has raised over $5 million, or approximately Rs 41 crore, for their fruits and vegetables delivery platform, Sorted, in an ongoing seed round.
Investors in the round included Beenext Capital Management Ltd., White Venture Capital VCC and NB Ventures Ltd.
"Sorted is not attempting to change the way India buys fruits and vegetables; it's plugging the inefficiencies that plague the existing supply chains. We have undertaken multiple proofs of concept over the last nine months to solve the known industry issues, especially wastage, while also answering for growth and profitability,” said Anant Goel, chief executive officer at Sorted.
Goel is the former CEO of MilkBasket Ltd., a micro-delivery service for groceries and daily essentials, which was sold off to Reliance Retail Ventures Ltd. in 2021. Sorted's co-founders include former MilkBasket Head of Product and Engineering Nitin Gupta and Head of Growth Sahil Madan.
The grocery models on the market "are created and optimised for selling FMCGs", Goel said.
"FMCGs are man-made, prepacked products with a known shelf life that sell in fixed quantities through a static catalogue—none of which is true for fruits and vegetables. It just has to be solved differently and distinctly. If and when done, this can be the fastest, profitable decacorn in the making," he said.
Sorted claims to be the country's first omnichannel platform for fruits and vegetables. The startup's platform allows customers to order fresh vegetables and fruits and either pick them up from their neighbourhood mom-and-pop store or get it delivered to their homes.
According to the founders, it runs a tech-heavy, full-stack national supply chain, specifically created to handle fruits and vegetables, that will supply fresh produce from farmers to the stores.
Sorted is currently operational in Gurugram and is seeking to expand to other locations in the future.
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India Business & Economics
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IMF Advises Pakistan Not To Create A Preferred Investors’ Group And To Ensure Transparency
Deputy Chairman Planning Commission Dr Jehanzeb Khan told economists and journalists that the visiting International Monetary Fund mission had raised questions as to the need for the creation of another institution like SIFC and whether this would lead to the distressed sale of assets and advised against preferred investors.
The IMF has advised cash-strapped Pakistan against creating a group of preferred investors or distortions in the country under the Special Investment Facilitation Council (SIFC) and to ensure transparency and accountability in its business deals, according to a media report on Wednesday.
Deputy Chairman Planning Commission Dr Jehanzeb Khan told economists and journalists that the visiting International Monetary Fund mission had raised questions as to the need for the creation of another institution like SIFC and whether this would lead to the distressed sale of assets and advised against preferred investors.
They want “transparency and accountability should be above board” in these matters, Khan was quoted as saying by the Dawn newspaper.
The two sides are reported to have had back-and-forth clarifications on Tuesday on finalisation of the Memorandum of Economic and Financial Policies (MEFP) and were expecting to conclude the talks on a positive note on Wednesday.
The IMF staff mission would then present Pakistan’s case to the executive board for approval of the successful conclusion of the first quarterly review under the nine-month $3 billion Standby Arrangement signed in July. This would enable Pakistan to receive the $710 million second tranche early next month.
Separately, The News International reported that IMF Managing Director Kristalina Georgieva said that she was hopeful of reaching a deal with Pakistan soon on the first review of the $3 billion stand-by arrangement.
According to the Dawn newspaper, Khan said the implementation of the IMF programme was in the interest of the country and there was now no difficulty with IMF advice for improved taxation on the rich because the people had already absorbed the full burden of the programme and the backlog and should now only lead towards ease from here onwards.
Khan said the problem in the past was because of delays or partial implementation of the needed adjustments and added that the IMF team was satisfied with the SIFC briefing and explanations.
Responding to a question, he said administrative measures against hoarding of foreign exchange and speculative pricing because of cross-border movement had helped a great deal in finding the real value of the rupee given the imperfect markets. However, he said there had been no interference in the exchange rate.
Informed sources said the IMF and the Pakistan authorities had covered most of the areas during policy-level discussions and there was a problem area left out, the report said.
On the sidelines, the federal cabinet in its meeting today (Wednesday) is expected to impose a windfall tax on banks on the basis of their unprecedented earnings on account of volatile foreign exchange business last year, according to Dawn.
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Asia Business & Economics
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House Oversight Committee chair James Comer (R-KY) on Wednesday subpoenaed President Joe Biden’s brother, James Biden, who Comer has implicated in unsubstantiated allegations of “shady business practices” in the Biden family.
Comer has in particular been trying to make hay out of two personal loan repayments from James Biden to his brother, for $40,000 and $200,000—with all transactions occurring in 2017 and 2018, when Joe Biden was neither in office nor a candidate.
But if Comer genuinely believes these transactions clear the “shady business practices” bar, he might want to consider a parallel inquiry into his own family.
According to Kentucky property records, Comer and his own brother have engaged in land swaps related to their family farming business. In one deal—also involving $200,000, as well as a shell company—the more powerful and influential Comer channeled extra money to his brother, seemingly from nothing. Other recent land swaps were quickly followed with new applications for special tax breaks, state records show. All of this, perplexingly, related to the dealings of a family company that appears to have never existed on paper.
But unlike with the Bidens, Comer’s own history actually borders a conflict of interest between his official government role and his private family business—and it’s been going on for decades.
While Comer and House GOP allies have tried to cast the Biden transactions as evidence of unsavory and possibly impeachable offenses, multiple news organizations—including CNN, The Wall Street Journal, FactCheck.org, and the conservative-leaning Washington Examiner—have all thrown cold water on the notion that the payments are evidence of anything other than a brother helping a brother.
That hasn’t stopped Comer. But hypocrisy hasn’t stopped Comer before, either.
Earlier this year, The Daily Beast reported that Comer’s probe into the “weaponization” of government resources resounded with echoes of Comer’s own investigation-meddling scandal. The Daily Beast also reported that Comer’s first blockbuster oversight hearing this year—into abuse of the COVID loan program—also happened to invoke Comer, as well as his brother.
This time, the irony is even richer.
“Even if this was a personal loan repayment, it’s still troubling that Joe Biden’s ability to be paid back by his brother depended on the success of his family’s shady financial dealings,” Comer said in a press release last month.
But Comer’s investigative efforts have so far failed to show that Joe Biden’s loans have any connection to family business dealings—let alone to actions while holding elected office. Comer, however, exercised government influence directly over his family’s industry for nearly 20 years.
Comer has held important positions in agriculture oversight since 2003, while running a family farming business, and those roles overlapped in 2019, the year of the land swaps. He only stepped back from an agriculture oversight role recently, in 2020—one year after the family business pivoted away from farming.
Delaney Marsco, senior counsel for ethics at nonpartisan watchdog Campaign Legal Center, told The Daily Beast that Comer’s overlapping public and private roles raise concerns about whether he may be trying to “game a personal business advantage.”
“Conflicts of interest can occur when members serve on committees overseeing industries in which they are heavily invested or in which their business interests are intertwined,” Marsco said. “Voters have a right to know that lawmakers are using their considerable power in the interest of the public, not to game a personal business advantage.”
A Comer spokesperson did not return The Daily Beast’s comment request.
Comer’s official positions afforded him both insight and power in the agriculture industry, and he held them while he and his family ran a multimillion-dollar farming business.
For instance, in 2018, Comer—a member of the House Agriculture Committee—was selected to negotiate the Farm Bill. He was the first representative from Kentucky to do so in 30 years, according to an office press release at the time.
The press release characterized the position as “an important role in shaping America’s agriculture and nutrition policy,” with Comer calling the bill “the most impactful legislation signed into law this year.”
Comer had held a seat on that committee since he was first elected to Congress in 2016. Prior to that, Comer was the Kentucky Agriculture Commissioner, and before attaining that office he sat on the state legislature’s agriculture committee for eight years. The whole time, Comer, his brother, and his father were running a farming business, with Comer valuing his third of the company between $1 million and $5 million by the time he got to Congress.
But Comer’s family company also has its own curiosities. For instance, it doesn’t appear to exist on paper.
For years, the company Comer ran with his brother and father has been identified in news reports, official statements, Comer’s financial disclosures, and livestock sale bulletins as “Comer Land & Cattle.” But there is no record of an entity by that name in business filings with the commonwealth of Kentucky—or apparently with any other jurisdiction. A statewide search for business officers only associates Comer with three defunct entities—an insurance outfit, “Four Dips, Inc,” and “CFB Foods, Inc”—and the still-active Tompkinsville-Monroe County Chamber of Commerce, where he was a founding member but has since been removed.
Comer has also claimed to run his own personal agriculture company, “James Comer Jr. Farms”—described in a 2012 Kentucky agriculture commission press release as “a 950-acre beef cattle, timber and hay farming operation in his native Monroe County”—but The Daily Beast couldn’t find any official records of an entity by that name, either. His brother and father also don’t appear in filings.
After Comer’s father died in early 2019, Comer appears to have changed his business focus. He went from farming the land to leasing it, a move he touted in a podcast interview last month as the way he “accumulated wealth.” The next year, Comer left the House Agriculture Committee, with his official website no longer listing the committee by August. (He currently serves on the Education and Labor Committee, in addition to leading Oversight.)
The land swaps between Comer and his brother, Chad Comer, went down months after they lost their father, in January 2019. Comer’s father—also named James Comer—died without leaving a will, according to deed records in Monroe County, Kentucky. That left his two sons—who were also his business partners—as the legal heirs to his land, and, without the dictates of a will, they set about divvying up the inheritance.
But some of those transactions aren’t so transparent.
For instance, on July 8, Chad Comer bought out his brother’s half of a piece of inherited Kentucky property, paying $100,000, according to deed records in Monroe County. Five months later, James and his wife Tamara “TJ” Comer, bought the property out in full, this time paying Chad Comer $218,000. The buyout netted Chad Comer an unexplained $18,000 above the total value in July.
That purchase, however, had a third party in addition to James and TJ—their own shell company, “Farm Team Properties, LLC.” Comer’s financial disclosure that year describes Farm Team Properties, LLC, as a “land management and real estate speculation company” with a range of value between $200,000 and $500,000. In two years, its value had increased to the $500,000 to $1 million range.
In another swap—this one in April, 2019—James Comer gifted his brother, via a $1 transaction, his share of two inherited tracts in Clay County, Tennessee, with a share value being $175,000, according to the deed of sale. The value of James Comer’s share matches the value of the full property in 1994, when the brothers and their father first acquired it for $175,000, according to the deed.
It’s not immediately clear why James Comer listed that same specific dollar amount for his share—either to match what was already on the books, or to reflect a neatly coincidental increase in value. But in September, Chad Comer applied for a special Tennessee agricultural tax break on that property, according to Clay County records. The tax break, called a “Greenbelt Assessment,” assesses property taxes at its “use value” instead of fair market value as long as the land generates a certain amount of annual agricultural income. (James Comer made that move this year after buying a $10,000 parcel from his brother, tax records show.)
The same day that James Comer gave his brother that land, Chad Comer reciprocated with an apparently more valuable piece of property in Macon County, Tennessee—except James Comer didn’t disclose that value in the sale.
Instead, Comer appears to have whited that number out, writing “exempt” in its place on the deed, then signing below. However, the land’s value can still be ascertained from the deed history in Macon County, where records show that their father had originally purchased the tract for $203,000 in 2015. That means that, while Comer appears to have netted a value of roughly $30,000 in the swap, he did not put that in the public record.
While the amount of money involved in these transactions is not even in the millions, they’re comparable to the Biden loans. And the largest of those two loans, $200,000, is less than the 2015 value of Comer’s “exempt” purchase.
“Did he know that the same day James Biden wrote him a check for $200,000, James Biden had just received a loan for the exact same amount from business dealings with a company that was in financial distress and failing?” Comer wondered in a press release last month.
It’s unclear how Comer first came into the family business. Land records from the 1990s list his name alongside his brother and father as property buyers. And the Comer brothers have bought property together as far back as 1993, when they paid a combined $16,500 for a Macon County parcel.
What is clearer, however, is that the family business has changed.
Comer Land & Cattle appears in a Lancaster Farming article from 1988, when a bull that the company co-owned, named “CLC High Card 7111,” won second place at the Indiana State Fair. News reports throughout Comer’s political career identified him as running the company with his father and brother, a farming and livestock operation he recalled last month in a podcast interview with former Rep. Jason Chaffetz (R-UT), a former chairman of the Oversight Committee himself.
“I was actually a senior in college when I bought my first farm, in 1993. I paid $350 an acre for that,” Comer said, a possible reference to the $16,500 purchase. He then breezed through the shift from active farming to real estate speculation, saying he sold timber off the farm, raised cattle and crops there, and eventually took a “tobacco buyout” from the government.
What Comer didn’t mention is that he had a government role related to that tobacco buyout. From 2005 to 2011, Comer served on the state legislature’s Tobacco Settlement Agreement Fund Oversight Committee. Comer was apparently quite hands-on in this role, according to press interviews from the time, placing an emphasis on weeding out federal buyout farming recipients who didn’t demonstrate profitability. Comer later brought that experience to bear when he wore down Sen. Mitch McConnell (R-KY), convincing him to get behind hemp farming.
However, Comer’s business focus has since shifted to real estate.
“Now I lease it. I lease the hunting,” he told Chaffetz, noting that “the key to me accumulating what I have was through the real estate.”
Comer’s financial disclosures reflect that move.
In 2018, the Oversight Chairman reported a 33 percent stake in “Comer Land & Cattle,” a business he’d run for years with his father and his brother, Chad. His disclosures valued that stake between $1 million and $5 million, describing the company as “a family farming operation engaged in beef cattle, corn, soybeans, mixed hay, & timber farming.” But in 2019, Comer Land & Cattle disappeared from his disclosures, with multiple new joint operations appearing to take its place, and while those entities all had “farm” in their name—many also including “Comer”—their income was from rent.
“That first farm was a very good investment. It’s cash-flowed really well,” Comer told Chaffetz, pegging the farm’s appreciated value at $5,000 an acre. He said he “did what every business guy does: I started borrowing money and buying land and leveraging that. And I really accumulated a lot of land.”
Comer claimed that today he’s “one of the bigger land-owners in my home area,” but he said he acquired his assets the “old-fashioned way” and “didn’t really inherit that much.”
While that may be true in the sense that Comer started out small, he also started out with the support of his father and his brother. He then rose to a position of considerable power and influence over his own industry, and—contrary to his own statement—he does appear to have inherited a great deal.
Comer also claimed he still carries “a lot of liability,” with “a lot of farm debt and stuff.” He currently has two liabilities: a farm mortgage from 1996 between $500,000 and $1 million, and a line of credit of the same value from last year. He took out the line of credit from South Central Bank, where Comer was on the board of directors for 12 years.
“You read those real estate books, ‘How To Get Rich In Real Estate.’ I kind of—I’m not rich, but I accumulated wealth kind of that way,” he said.
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Agriculture
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Ashraf Khalil, Associated Press
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WASHINGTON (AP) — An estimated 17 million households reported problems finding enough food in 2022 — a sharp jump from 2021 when boosted government aid helped ease the pandemic-induced economic shutdown.
A new Department of Agriculture report, released Wednesday, paints a sobering picture of post-pandemic hardship with “statistically significant” increases in food insecurity across multiple categories. Using a representative survey sample of roughly 32,000 American households the report said 12.8 percent (17 million households) reported occasional problems affording enough food — up from 10.2 percent (13.5 million households) in 2021 and 10.5 percent (13.8 million households) in 2020. This is up from 10.2 percent (13.5 million households) in 2021 and 10.5 percent (13.8 million households) in 2020.
Analysts and food security professionals point to the dual impact last year of high inflation and the gradual expiration of multiple pandemic-era government assistance measures.
“This underscores how the unwinding of the pandemic interventions and the rising costs of food has taken hold,” said Geri Henchy, director of nutrition policy for the Food Research and Action Center. “It’s like a horrible storm for families.”
WATCH: How climate change is disrupting the global food supply
The number of households reporting more serious forms of economic hardship also increased. Wednesday’s report by the USDA’s Economic Research Service also tracks families with “very low food security” — a condition it defines as families having to ration food consumption and where “normal eating patterns were disrupted at times during the year because of limited resources.”
Households experiencing this level of hardship in 2022 rose to 5.1 percent (6.8 million households), up from 3.8 percent (5.1 million households) in 2021 and 3.9 percent (5.1 million households) in 2020.
Increased benefits and more relaxed enrollment rules for SNAP — the foundational government assistance program commonly known as food stamps — didn’t end until early this year. But a host of other federal and state-level pandemic aid initiatives wound down last year. One key national change that Henchy highlighted was the end of universal free school lunches for all students, a policy that ended over the summer of 2022.
“These were healthy, nutritious meals because the schools had good standards,” she said. “It was great for the kids. It was stigma-free, and it was huge for people’s budgets.”
These findings broadly mirror real-time anecdotes from late last year, when multiple food banks and charitable groups reported being surprised by the higher-than-expected levels of need entering the 2022 holiday season. In several cases last year, food banks and charities made educated estimates of how much food they would need to distribute, only to find that those predictions were far too low.
Agriculture Secretary Tom Vilsack called the survey results “unacceptable” and said the rising level of need “should be a wake-up call to those wanting to further roll back our anti-poverty and anti-hunger programs.”
Vilsack highlighted the increased fruit and vegetable benefits for recipients of WIC — an aid program that specifically targets mothers and young children. The increased WIC benefits package is one of the few pandemic policies that’s continuing, although there have been proposals in Congress to bring those benefits down to pre-pandemic levels.
“The experience of the pandemic showed us that when government invests in meaningful support for families, we can make a positive impact on food security, even during challenging economic times,” Vilsack said in a statement Wednesday. “No child should go hungry in America. The report is a stark reminder of the consequences of shrinking our proven safety net.”
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Oct 19
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Consumer & Retail
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When Tina Bhartwas was elected two years ago at the age of 19, she was the youngest ever councillor on Hertfordshire County Council.
But despite sitting on the board of a local charity, and her experience of campaigning for free school meals, she still had doubts about whether the role was for her.
"Growing up, I hadn't really seen anyone who looked like me on the council," she says.
"During my campaigns with the Labour Party, I made a lot of effort to try to engage women, people of colour and younger people and it was really difficult.
"So I felt that if I was trying to encourage those people, then I should actually be [standing] myself."
People can run for their local council at 18, but few do. Across England, the average age of councillors is around 60 - a figure that has barely changed in the last decade - and only 16% are under 45, according to the Local Government Association (LGA).
Tina, who is in her final year at university, believes this is partly because many children are not taught about politics at school, let alone what councils do. She admits she didn't even know councillors were elected until she joined the Labour Party at 17.
But she argues young people are interested in political issues and engaged on things like climate change.
She says councils need to do more to show how decisions made at a local level affect them. The 21-year-old believes young people can bring a different perspective but lived experience is not valued as much as it should be in politics.
Growing up in poverty and estranged from her family, she says she understands how councils can better support young people like her, through things like free bus passes and school meals.
"My ward is one of the most deprived in the county and it's important to me that other people don't go through what I've had to go through."
Representing the interests of young people in his area was also what persuaded 21-year-old Andrew Rushton to run for his local council.
He's standing for the first time for the Liberal Democrats in Lichfield, which is one of 230 areas in England with local elections on 4 May.
Andrew says he's had a mostly positive reaction from voters but as one of the youngest candidates in his area he found the experience nerve-wracking at first.
"I feel like the impression people get [is that] you're not cut out for the job, people question your experience," he says.
"But I actually think it's really important that young voices are heard because a lot of the things the council does affects young people."
He highlights areas like bus services and housing as key issues for his age group where councils can have an impact.
Andrew is currently in his final year at university and says it has been a challenge juggling campaigning with writing his dissertation and applying for graduate jobs.
With his weekends and evenings now spent delivering leaflets and speaking to voters, his social life has taken a backseat.
He admits being a little nervous about the prospect of starting a career alongside being a councillor if he's elected. But he says his friends have been supportive and he's confident he can manage the competing demands.
Councillors spend an average of 22 hours a week on their role, according to an LGA survey last year, which can potentially make it more difficult for young people who have children or are working or studying full-time.
The figures suggest only 20% of councillors work full-time alongside their council duties, while about 40% are retired.
Joe Porter, who was elected to Staffordshire Moorlands District Council in 2019, is also a full-time emergency service worker.
The 26-year-old Conservative says managing shift work with his council responsibilities hasn't always been easy. In the past he's had to use his holiday and lunch breaks to fit in council meetings, as well as holding twice-monthly surgeries and being on-call to residents.
Despite the amount of time many councillors devote to the role, they are not paid a salary. Instead they get an allowance, which is set by each council and varies significantly across England.
On average, it is about £7,000 a year, according to research by the TaxPayers' Alliance from 2020, although councillors with extra responsibilities - such as chairing committees or leading on a specific policy area - get more.
Joe doesn't believe he should get a full-time salary since being a councillor isn't a full-time role, but he does think pay should be looked at to encourage more young people to stand.
"Otherwise, you're restricting the pool of people to just those who can afford to do it."
He adds: "You don't do it for the money, you do it because you care about the community. But sometimes [money] can be a barrier."
Amy Heley, a Green Party councillor in Brighton, agrees. The 27-year-old says her allowance only covered her rent and bills once she got an additional payment for chairing a committee.
"It is much easier for older councillors, who typically own their homes and have retired or can afford to reduce their hours."
During her four years as a councillor, she's also done part-time jobs, completed a master's degree and now works full-time for a charity.
"It hasn't been easy and fitting so much in has impacted my mental health," she adds.
Amy argues that paying councillors more would allow people from all backgrounds to put themselves forward. However, she acknowledges that the strain on council budgets means, in practice, this would be "near impossible".
As a young councillor, she has faced other challenges. On two occasions, fellow councillors made disparaging comments about her age and were made to apologise after going through the council's standards procedures.
She also wants to see more support for tackling other challenges, like online abuse.
"Criticism about decisions or votes can very quickly become an all-consuming personal attack across social media and in the local press," she says, adding that at times she has felt "physically unsafe".
"The toxic culture and vitriol around politicians also plays a big part in stopping young people from putting themselves forward."
A survey of councillors and candidates by the LGA last year found 88% had experienced abuse or intimidation in relation to their role, most commonly via social media.
Amy is standing down as a councillor in May for a number of reasons, including a desire to progress her career and "the awful budgetary situation facing local government". But she feels she's learned a huge amount and more young people should get the opportunity to do the same.
"We should be part of the decisions that impact us," she says. "From preventing the worst of climate change, to dealing with the housing crisis, we need a seat at the table."
Photos by Emma Lynch
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United Kingdom Business & Economics
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A Manhattan federal jury found FTX co-founder Sam Bankman-Fried guilty of defrauding his customers, investors and lenders, concluding a dramatic fall for a 31-year-old entrepreneur who presided over the largest crypto collapse in history.
Jury members deliberated for a period of hours after Bankman-Fried's criminal trial wrapped up Thursday. They concluded he was guilty on all seven criminal charges, ranging from wire fraud to money laundering.
His sentencing is scheduled for March 28; the counts carry a maximum sentence of 110 years.
Bankman-Fried was stoic while his verdict was read in the courtroom, and he didn’t look back at his parents. His father dipped his head, and his mother took off her glasses and rubbed her eyes.
Bankman-Fried faces even more potential legal jeopardy in the year ahead. He is scheduled to face a separate set of criminal charges that allege he committed bank fraud and bribed Chinese officials in another trial due to begin in March.
Prosecutors argued that Bankman-Fried deliberately stole $14 billion in customer deposits from his cryptocurrency exchange in a scheme that he carried out with three of his top executives: Alameda CEO Caroline Ellison, FTX co-founder Gary Wang and FTX engineering director Nishad Singh.
All three pleaded guilty to fraud charges after FTX’s collapse and testified against Bankman-Fried under plea agreements with the government.
The group, prosecutors claimed, allowed Bankman-Fried’s sister crypto trading firm Alameda Research "secret" backdoor access to FTX’s customer deposits, then spent the money on investments, loan repayments, political donations, and real estate.
"He spent his customers' money and he lied to them about it," prosecutor Nicolas Roos said in the government’s closing argument.
"Where did the money go? The money went to pay for investments, to repay loans, to cover expenses, to purchase property, and to make political donations."
Bankman-Fried testified that poor business decisions and management screwups — and not fraud — were to blame for the undoing of his cryptocurrency exchange.
"Did you defraud anyone?" Bankman-Fried’s lawyer asked him during his risky gamble to take the stand in his own defense.
"No, I did not," Bankman-Fried answered.
"Did you take customer funds?" Cohen clarified.
"No," he said.
'Borrows'
At the heart of the charges against Bankman-Fried were accusations that he and FTX falsely represented that customer deposits were safely in the exchange’s custody. Prosecutors said this happened in public Tweets, on FTX’s website, and in private communications with customers, lenders, and investors.
In FTX’s terms of service, the government pointed out, account holders were told that their funds were owned by them and available to withdraw.
Bankman-Fried argued those same terms of service instead supported his position that Alameda, as a customer on the exchange, could borrow from FTX deposits so long as the funds were held in accounts that opted into FTX's margin-trading program.
"At FTX, the way it was set up, margin customers could use the funds they borrowed from the exchange for any purpose," Bankman-Fried’s attorney Mark Cohen said in his closing argument.
"At the time, no one thought this was a problem because the customers who borrowed funds on margin had to post collateral to support their borrowing. And if a customer's position lost money, which means risk of going down, the collateral could be used to liquidate their position before it went under water."
But prosecutors said what Bankman-Fried and his deputies did secretly was tinker with FTX’s computer code to let Alameda access billions in customer funds characterized as "borrows," or loans from FTX.
Alameda was also allowed special privileges not available to other accounts, they said. Loans made to Alameda were exempt from any collateral requirements, and from liquidation, and could carry negative balances on the exchange.
Bankman-Fried testified that it was his deputies that created this computer code. And Alameda's privileges, he told the jury, also had legitimate purposes so that Alameda could function as a market maker, a payment processor, and a backstop liquidity provider for FTX.
He also said it wasn’t until October 2022 that he knew that FTX was facing what he called a liquidity crisis. FTX filed for bankruptcy just one month later, in November 2022.
Prosecutors contested that timeline, saying that Bankman-Fried and his three executives knew as early as June of that year. That's when they all worked on a project that revealed that Alameda had an $8 billion deficit owed to FTX.
One of the most dramatic moments in the trial came near the end when Assistant US Attorney Danielle Sassoon asked Bankman-Fried to explain what he did in 2022 when it became clear FTX customer funds had been used to pay off Alameda loans and trading debts.
"Did you fire anyone for spending $8 billion of customer deposits?" Sassoon asked.
"No," Bankman-Fried said.
Read the latest news about Sam Bankman-Fried and the FTX fraud trial:
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Crypto Trading & Speculation
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Cora Lewis, Associated Press
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NEW YORK (AP) — About 2 in 3 Americans say their household expenses have risen over the last year, but only about 1 in 4 say their income has increased in the same period, according to a new poll from The Associated Press-NORC Center for Public Affairs Research.
As household expenses outpace earnings, many are expressing concern about their financial futures. What’s more, for most Americans, household debt has either risen in the last year or has not gone away.
Steve Shapiro, 61, who works as an audio engineer in Pittsburgh, said he’d been spending about $100 a week on groceries prior to this past year, but that he’s now shelling out closer to $200.
READ MORE: U.S. economy grows 4.9 percent, shrugging off interest rates and defying recession forecasts
“My income has stayed the same,” he said. “The economy is good on paper, but I’m not doing great.”
About 8 in 10 Americans say their overall household debt is higher or about the same as it was a year ago. About half say they currently have credit card debt, 4 in 10 are dealing with auto loans, and about 1 in 4 have medical debt. Just 15 percent say their household savings have increased over the last year.
Tracy Gonzales, 36, who works as a sub-contractor in construction in San Antonio, Texas, has several thousand dollars of medical debt from an emergency room visit for what she thought was a bad headache but turned out to be a tooth infection.
“They’ll treat you, but the bills are crazy,” she said. Gonzales said she’s tried to avoid seeking medical treatment because of the costs.
Relatively few Americans say they’re very or extremely confident that they could pay an unexpected medical expense (26 percent) or have enough money for retirement (18 percent\). Only about one-third are extremely or very confident their current financial situation will allow them to keep up with expenses, though an additional 42 percent say they’re somewhat confident.
READ MORE: Americans aren’t giving Biden much credit for his popular Medicare drug price negotiations, AP-NORC poll says
“I’ve been looking forward to retirement my entire life. Recently I realized it’s just not going to happen,” said Shapiro, of Pittsburgh, adding that his wife’s $30,000 or so of student debt is a financial factor for his household. The couple had hoped to sell their house and move this past year, but decided instead to hold on to their mortgage rate of 3.4 percent, rather than facing a higher rate. ( The current average long-term mortgage rate reached 7.79 percent this month. )
About 3 in 10 Americans say they’ve foregone a major purchase because of higher interest rates in the last year. Nearly 1 in 4 U.S. adults have student debt, with the pandemic-era payment pause on federal loans ending this month, contributing to the crunch.
Will Clouse, 77, of Westlake, Ohio, said inflation is his biggest concern, as he lives on a fixed income in his retirement.
“A box of movie candy — Sno-Caps — that used to cost 99 cents is now a dollar fifty at the grocery store,” he said. “That’s a 50-percent increase in price. Somebody’s taking advantage of somebody.”
Americans are generally split on whether the Republicans (29 percent) or the Democrats (25 percent) are better suited to handle the issue of inflation in the U.S. Three in 10 say they trust neither party to address it.
Geri Putnam, 85, of Thomson, Georgia, said she’s been following the ongoing auto workers strikes with sympathy for the workers’ asks.
READ MORE: U.S. may need slower economic growth to beat inflation, Fed chair says
“I don’t think it’s out of line, what they’re asking for, when you see what CEOs are making,” she said. “I think things have gotten out of control. When you can walk into a store and see the next day, across the board, a dollar increase — that’s a little strange. I understand supply and demand, the cost of shipping, et cetera. But it seems to me everyone’s looking at their bottom lines.”
Putnam also said she sees her six children struggling financially more than her generation did.
“They all have jobs and have never been without them,” she said. “They’re achievers, but I think at least two or three of them will never be able to buy a home.”
A slight majority of all Americans polled (54 percent) describe their household’s financial situation as good, which is about the same as it’s been for the last year but down from 63 percent in March of 2022. Older Americans are much more confident in their current finances than younger Americans. Just 39 percent of 18- to 29-year-olds describe their household finances as good, compared to a majority (58 percent) of those who are 30 and older. People with higher levels of education or higher household incomes are more likely than Americans overall to evaluate their finances as solid.
About three-quarters of Americans describe the nation’s economy as poor, which is in line with measurements from early last year.
Among those who are retired, 3 in 10 say they are highly confident that there’s enough saved for their retirement, about 4 in 10 are somewhat confident, and 31 percent are not very confident or not confident at all.
Clouse, of Ohio, said the majority of his money had gone towards caring for his wife for the past several years, as she’d been ill. When she passed away this past year, his household lost her Social Security and pension contributions. He sees the political turmoil between Republicans and Democrats as harming the economy, but remains most frustrated by higher prices at the supermarket.
“Grocery products going up by 20, 30, 40 percent. There’s no call for that, other than the grocery market people making more money,” he said. “They’re ripping off the consumer. I wish Mr. Biden would do something about that.”
About 4 in 10 Americans (38 percent) approve of how Biden is handling the presidency, while 61 percent disapprove. His overall approval numbers have remained at a steady low for the last several years. Most Americans generally disapprove of how he’s handling the federal budget (68 percent disapprove), the economy (67 percent), and student debt (58 percent).
The poll of 1,163 adults was conducted Oct. 5-9, 2023, using a sample drawn from NORC’s probability-based AmeriSpeak Panel, designed to represent the U.S. population. The margin of sampling error for all respondents is plus or minus 3.9 percentage points.
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Inflation
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Interest rates are expected to rise again after figures revealed inflation remained at a stubbornly high level.
Inflation, which measures the pace prices rise at, was 8.7% in the year to May, the same rate it was in April.
Prices for flights and second-hand cars rising led to the unexpected figure, but the cost of food and energy is already hitting household budgets hard.
Interest rates are widely expected to rise by 0.25% to 4.75% on Thursday but some suggest they could now rise to 5%.
The Bank is tasked with keeping inflation at 2% but the current inflation rate is four times higher than this.
The Bank of England has been steadily raising interest rates since the end of 2021. This makes it more expensive to borrow money and theoretically encourages people to borrow less and spend less, meaning price rises should ease.
This has led to concerns over loans, particularly mortgages, with homeowners - a third of adults in the UK - facing large increases in repayments when fixed-term deals come to an end. First-time buyers are also at risk of being priced out of the market as lending conditions become tighter.
The average two-year fixed rate mortgage on Wednesday hit 6.15%, while five-year deals were 5.79%.
On Thursday, chancellor Jeremy Hunt appeared to back further interest rate rises saying it would not "hesitate in our resolve to support the Bank of England as it seeks to squeeze inflation out of our economy."
Labour's Shadow Chancellor Rachel Reeves blamed the Conservative government for failing to "get a grip" of inflation.
Danni Hewson, head of financial analysis at AJ Bell, said the latest inflation figure would have sent "send something of shiver through even the hardiest" economy spectator.
"Inflation had been expected to fall - at least a bit - but it hasn't obliged, remaining stubbornly sticky and cementing the prospect of a rate rise," she said.
'Bank needs to create a recession'
Karen Ward, a member of Mr Hunt's economic advisory council and chief market strategist at JP Morgan Asset Management, said the Bank needed "create a recession" to curb soaring prices, arguing that it had "been too hesitant" in its interest rate rises so far.
Ms Ward said there were signs that wage rises were helping to force prices up.
She said it was necessary for the Bank to "create uncertainty and frailty" in the economy to stop prices rising as fast.
"It's only when companies feel nervous about the future that they will think 'Well, maybe I won't put through that price rise', or workers, when they're a little bit less confident about their job, think 'Oh, I won't push my boss for that higher pay,'" she told the BBC's Today programme.
But Andrew Selley, chief executive of Bidfood UK, a wholesale food supplier said increasing interest rates was "not the right thing to do".
"It's stifling the economy. They need to look at other ways to support businesses so they can weather the storm," he said.
Pay rise worry
A key figure the Bank analyses when deciding on interest rates is so-called "core" inflation, which strips out direct energy and food prices, along with alcohol and tobacco.
Core inflation hit it 7.1% in the 12 months to May, a jump from 6.8% in April, and is now at the highest level since March 1992.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), which produces figures on the UK economy, said the increase was being driven by rising service prices in cafes, restaurants and hotels.
"That's probably driven, at least in part, by the increase we've seen in wages," he added.
Yael Selfin, chief economist at KPMG UK, also said rising core inflation suggested firms might be passing on rising costs from higher wage bills to consumers," she said.
UK wages have risen at their fastest rate in 20 years, excluding the pandemic, but are still lagging behind the rate of inflation.
This is a grim number. Inflation isn't just stubborn, or sticky. It is, on the latest numbers, stuck. These figures should be falling by now, and they are in other countries such as the US and Germany.
My inbox was deluged with instant takes at 7am ranging from "unfortunate" to "challenging" to "disaster".
Wednesday's number shows that the already tricky balancing act between inflation and recession is getting worse. It may require more than just the Bank of England to do the heavy lifting.
Pay failing to keep up with price rises has led to many households come under financial pressure in recent months.
Food price inflation, which is the rate at which prices for groceries have risen compared to the year before, was 18.3% in May, down slightly from 19% in April.
Sergio Ronga, who owns Nanninella Pizzeria in Brighton, said he had to put his prices up as a result of higher costs.
He said costs had soared for his ingredients with tomatoes almost doubling in price, as well as flour rising by 60% and cheese jumping by 50%.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said while food price inflation had eased, it was still at a level that "causes agony at the tills".
"Costs have risen so far and so fast that we're not going to see prices drop back to the level we were used to. In many cases we won't actually see them fall at all: they'll just get more expensive at a slower rate," she said.
Separately, figures also released on Wednesday revealed that national debt was greater than the UK's economic output for the first time since 1961.
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Inflation
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SACRAMENTO, Calif. -- California won't be giving unemployment checks to workers on strike, with Democratic Gov. Gavin Newsom vetoing a bill Saturday that had been inspired by high-profile work stoppages in Hollywood and the hotel industry.
Newsom, a Democrat, says he supports workers and often benefits from campaign contributions from labor unions. But he said he vetoed this bill because the fund the state uses to pay unemployment benefits will be nearly $20 billion in debt by the end of the year.
“Now is not the time to increase costs or incur this sizable debt,” Newsom wrote in a veto message.
The fund the state uses to pay unemployment benefits is already more than $18 billion in debt. That’s because the fund ran out of money and had to borrow from the federal government during the pandemic, when Newsom ordered most businesses to close and caused a massive spike in unemployment. The fund was also beset by massive amounts of fraud that cost the state billions of dollars.
Plus, labor unions said unemployment benefits are good for the economy, allowing workers on strike to still spend money and support local businesses.
“That money is going to corner stores, to restaurants, to caterers, to nail salons, to the small businesses that are also struggling along with workers who are on strike,” Sarah Flocks, legislative and strategic campaign director for the California Labor Federation, told lawmakers during a public hearing earlier this month.
The bill would have let workers who were on strike for at least two weeks receive unemployment checks from the state, which can be as much as $450 per week. Normally, only workers who lost their job through no fault of their own are eligible for those benefits.
Labor unions had argued the amount of workers on strike for more than two weeks is so small it would not have had a significant impact on the state’s unemployment trust fund. Of the 56 strikes in California over the past decade, only two lasted longer than two weeks, according to Democratic state Sen. Anthony Portantino, the author of the bill.
The legislation was an attempt by Democratic state lawmakers to support Southern California hotel workers and Hollywood actors and writers who have been on strike for much of this year. The writers strike ended Sept. 26, but the other two are ongoing — meaning many workers have gone months without pay.
Beyond the debt, the Newsom administration has said the fund is not collecting enough money to pay all of the benefits owed. The money comes from a tax businesses must pay on each worker. But that tax only applies to the first $7,000 of workers' wages, a figure that has not changed since 1984 and is the lowest amount allowed under federal law.
Meanwhile, unemployment benefits have increased. The Newsom administration has predicted benefit payments will exceed tax collections by $1.1 billion this year. It’s the first time this has happened during a period of job growth, according to the nonpartisan Legislative Analyst’s Office.
Lawmakers could attempt to pass the law anyway, but it’s been decades since a governor’s veto was overruled in California.
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Workforce / Labor
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SACRAMENTO, Calif. (KABC) -- A proposed law that that is making its way through the California Legislature could give workers additional guaranteed sick days.
Senate Bill 616 would raise the number of paid sick leave from three days to seven days per year.
It would also expand how sick days are accrued and used. The total number of eligible sick days would be 14 per year. It would also allow seven sick days to roll over to the following year.
California state Sen. Lena Gonzales authored the bill, noting that it's been a decade since paid sick day laws have been updated in the state.
"More than a handful of states outside of California already have expanded paid sick leave," Gonzales said.
California became the second state in the country to adopt a sick paid leave policy in 2014. According to the California Budget and Policy Center, California provides less paid sick leave than 15 other states.
Opponents of the proposed bill include the California Chamber of Commerce. The organization believes the bill would impose new costs on small business employers that are already struggling.
The bill is currently being reviewed by the state Assembly's Appropriations Committee, and they have until Sept. 1 until it moves on to the Assembly floor.
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Workforce / Labor
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Cello World Shares List At 28% Premium Over IPO Price On Market Debut
Shares debuted at Rs 831 apiece on the Bombay stock Exchange, a premium of 28.24% over their IPO price of Rs 648.
Shares of Cello World Ltd. debuted at Rs 831 apiece on the Bombay stock Exchange, a premium of 28.24% over their IPO price of Rs 648 apiece.
On the BSE, the stock debuted at Rs 829 apiece, a 27.93% premium.
The Rs 1,900-crore IPO was subscribed 38.90 times on its final day, led by institutional investors (108.57 times), non-institutional investors (24.42 times), retail investors (3.06 times), and a portion reserved for employees (2.60 times).
Cello World Ltd. has raised Rs 567 crore from anchor investors ahead of its initial public offering next week.
The consumer housewares company allotted 87.5 lakh shares at Rs 648 apiece to 39 anchor investors.
The marquee investors include ICICI Prudential Life Insurance Co., SBI Life Insurance Co., HDFC Mutual Fund, Aditya Birla Sun Life Insurance Co., BNP Paribas Arbitrage, Morgan Stanley, Nomura, Motilal Oswal, Edelweiss and Goldman Sachs, among others.
Eight domestic mutual funds have applied through a total of 11 schemes, the company said in an exchange filing. They have collectively netted 27.9% of the anchor portion of Rs 158 crore.
ICICI Prudential, Aditya Birla Sun Life, and Motilal Oswal have secured an allocation of 5.26% each.
Business
Cello World primarily deals in three categories: stationery and writing instruments, molded furniture, consumer housewares, and associated goods.
Company own/lease and operate 13 manufacturing facilities across five locations in India, as of June 30, and is currently establishing a glassware manufacturing facility in Rajasthan. Company's manufacturing capabilities allow it to manufacture a diverse range of products in-house
Product Categories
Consumer Houseware
Writing Instruments and Stationery
Moulded Furniture and Allied Products
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India Business & Economics
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Twitter isn't the only social media platform setting fire to it's third-party app ecosystem in an attempt to monetize its API.
Christian Selig, the developer of the popular Reddit client Apollo, announced on Wednesday that he may soon have to shut down the app because of Reddit's new API pricing structure.
In a post on Reddit(opens in a new tab), Selig explained that he's been talking with the company since it announced its plan to start charging for API access to its platform. Selig says that in his discussion, Reddit said it would charge a whopping $12,000 per 50 million API requests.
What does this mean for Apollo? The app may very well have to shut down. Selig says that Apollo made 7 billion API requests last month, which would result in a $1.7 million bill just for that 30 day period. He further explained that even if he cut out all free users and went strictly with a subscription-only model, he'd still be in the red financially with Reddit's new API pricing.
"For Apollo, the average user uses 344 requests daily, or 10.6K monthly," he said, further breaking down that each user would cost him around $2.50 per month. Apollo's premium subscription tier, Apollo Ultra(opens in a new tab), currently only costs $1.49 per month or $12.99 per year. There's also a $50 lifetime plan, which very likely would no longer be feasible to say the least.
Reddit first announced(opens in a new tab) its plans to start charging for API access back in April, shortly after Elon Musk's Twitter began doing the same. At the time, Reddit seemed to state that these API changes were mostly being implemented to stop tech companies from scraping data to train their AI language models without any real benefit to Reddit and its users. Based on what Reddit previously said, developers that were specifically using the API to enhance the Reddit experience, like Selig does with Apollo, weren't going to see any real changes.
That appears to no longer be the case as Reddit roles out its new API prices.
The move to monetize its API may feel like déjà vu to developers who also just dealt with similar API pricing issues with Twitter. For Reddit, the need to monetize its API may be a case of a company looking for additional revenue streams just as its about to announce an IPO later this year.
Redditors have not taken kindly to the actions of the company, however. Selig's Reddit post about the yearly $20 million fee that would likely kill Apollo has been the top post on the website for hours now. Users have been stating that they would simply stop visiting Reddit altogether if it killed Apollo and the rest of its third-party app ecosystem with this new API pricing structure.
As of publishing, Selig's post has more than 124,000 upvotes and 11,300 comments.
"Bye Bye Reddit then," wrote one Redditor with a top upvoted comment. "Without third party apps, I'll abandon Reddit like I abandoned Twitter."
"It’s been a good run folks," replied another.
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Consumer & Retail
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Insuring your home or other property against major disasters may become more expensive this year as the price insurance companies pay for their own coverage continues to climb.
Reinsurers, or the companies that cover policies for insurers, have upped the price they charge insurance companies by as much as 50% for catastrophe loss coverage so far this year, according to reinsurance broker Gallagher Re. Those hikes could trickle down to end customers, homeowners and businesses.
At the state level, one of the steepest reinsurance rate hikes was in Florida, where prices grew between 30% and 40% between January 1 and July 1, Gallagher Re said. However, those increases likely won't persist into the rest of the year, the broker said.
The state has seen "meaningful price increases now compounding over multiple years" but the "general sentiment is that current pricing levels are more than adequate," the report said.
Companies like Markel and Reinsurance Group offer insurance policies to insurance providers so that companies like Nationwide and Geico can lessen their own financial losses when customers file hefty claims.
Climate impact on insurance policies
Some insurance companies have come under scrutiny in recent months forcoverage to new customers in California. Allstate and State Farm have said it's too pricey to underwrite policies in the state, which has seen record-setting wildfires and other natural disasters in recent years.
California isn't the only state where insurers are growing more cautious. Florida and Louisiana have struggled to keep insurers from leaving the state following extensive damage from hurricanes. Premiums are rising in Colorado amid wildfire threats, and an Oregon effort to map wildfire risk was rejected last year because of fears it would cause premiums to skyrocket.
Allstate, Geico, State Farm and Nationwide didn't immediately respond to a request for comment Monday.
To be sure, insurance companies in many states cannot increase customer premiums without notifying state regulators. Half of U.S. states must get prior approval before increasing rates, according to the National Association of Insurance Commissioners.
Still, possible rate increases for customers would come at a time when homeowners are already seeing elevated prices.
The cost of home insurance is projected to climb 7% nationally this year, with Florida seeing a 40% rise and Louisiana prices growing 63%, according to S&P Global Market Intelligence. Auto insurance rates have climbed compared to last year as well.
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Real Estate & Housing
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Deepak Nitrite Q2 Results Review - Decent Performance In A Challenging Macro Environment: Motilal Oswal
Beat led by lower-than-expected raw material costs and other expenses
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Deepak Nitrite Ltd. aims to become the largest player in solvents, with a play on import substitution. It has already announced its foray into MIBK (40 kilo tonnes per annum), Methyl Isobutyl Carbinol (8 ktpa), and polycarbonate compounding. These projects are taking shape and would be commissioned as per the plan.
Deepak Nitrite is aggressively pursuing both backward and forward integration projects in order to de-risk its business model and expand its product portfolio. However, its entire product portfolio consists of commodities. The current valuation appears expensive.
The stock trades at ~24x FY25E earnings per share of Rs 85.2 and at ~17 times FY25E enterprise value/Ebitda.
We reiterate our 'Neutral' rating, valuing the stock at 25x FY25E EPS to arrive at a target price of Rs 2,130.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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India Business & Economics
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Stocks To Watch: ICICI Bank, Nykaa, Thomas Cook, Ultratech Cement, Jupiter Wagons, Dalmia Bharat, PCBL, Zomato
Here are the stocks to watch before going into trade today.
FSN E-Commerce Ventures Ltd., Thomas Cook (India) Ltd., Metro Brands Ltd., and Zomato Ltd. will be among the major stocks to watch in Thursday's trading session.
FSN E-Commerce Ventures signed a long-term licensing agreement with Metro Brands and Nykaa Fashion on Wednesday.
Fairbridge Capital (Mauritius) Ltd., a promoter entity of Thomas Cook India, will sell up to 3.2 crore shares, or 6.8%, via an offer for sale.
Chinese payments group Alipay has offloaded 29.60 crore shares, or 3.44% stake, in food aggregator Zomato Ltd. for Rs 112.7 per share.
India's benchmark stock indices extended gains for the second consecutive day to end at over two-month high on Wednesday, led by gains in HDFC Bank Ltd, Axis Bank Ltd, and ICICI Bank Ltd.
The NSE Nifty 50 ended 206.9 points, or 1.04% higher, at 20,096.60, the highest level since Sept. 15; while the S&P BSE Sensex gained 727.71 points, or 1.1%, to close at 66,901.91, the highest level since Sept. 18.
Overseas investors stayed net buyers for the fourth consecutive session on Wednesday. Foreign portfolio investors bought stocks worth Rs 71.9 crore, and domestic institutional investors continued as buyers and purchased stocks worth Rs 2,360.8 crore, the NSE data showed.
The Indian rupee closed flat at 83.33 against the U.S. dollar on Wednesday.
The rally that’s driving global bonds to their best month since 2008 gained further traction, with treasuries climbing on bets the Federal Reserve will be able to start cutting rates in the first half of 2024, Bloomberg reported.
The S&P 500 index and Nasdaq 100 rose by 0.27% and 0.25%, respectively, as on 1:01 p.m. New York time. The Dow Jones Industrial Average gained 0.33%.
Brent crude was trading 1.29% higher at $82.73 a barrel. Gold gained 0.23% to $2,045.62 an ounce.
Stocks To Watch
Metro Brands: The company has signed trademark license agreement with Foot Locker Retail, Inc. granting exclusive rights for opening and operating athletic and casual footwear and apparel stores under the brand names “Foot Locker” and “Kids Foot Locker” through brick and-mortar stores in India.
ICICI Bank: The board approved the draft scheme of arrangement for the delisting of equity shares of ICICI Securities, thereby making ICICI Securities a wholly-owned subsidiary of the bank.
FSN E-Commerce Ventures: Foot Locker announced the signing of a long-term licensing agreement with Metro Brands Ltd. and Nykaa Fashion. Nykaa Fashion will serve as the exclusive e-commerce partner and operate Foot Locker's India website.
Thomas Cook (India): Company's promoter, Fairbridge Capital (Mauritius) Ltd., proposed an offer for sale to sell up to 32 lakh equity shares, representing 6.8% of the total paid-up equity share capital of the company. In case of oversubscription, an additional 80 lakh shares representing a 1.7% stake will be available. The floor price of the offer is set at Rs 125 per equity share.
Shivalik Bimetal Controls: The company signed a MoU with Metalor Technologies International SA (Metalor) to explore the feasibility of setting up a joint venture in India to produce electrical contacts.
Dixon Technologies (India): ICRA Ltd. reaffirmed the company's ratings and revised the outlook on the long-term rating from stable to positive.
Man Infraconstruction: The company approved Rs 550 crore fund raise through a preferential issue. The funds will be raised through the issue and allotment of up to 3.55 crore warrants, each warrant convertible into one equity share of the face value of Rs 2 each on preferential basis at an issue price of Rs 155 including premium of Rs 153 per warrant.
Max Estates: Max Estates Gurgaon Ltd., a 100% wholly owned subsidiary of Max Estates Ltd., proposed to develop a group housing project on the land admeasuring 11.80 acres in Gurugram, Haryana.
Rajoo Engineers: The company's board approved Rs 19.79 crore buyback at Rs 210 per share.
Southern Petrochemical: The company shut its plants on Nov. 29 due to plant maintenance. It expects to line up production by Dec. 2.
Ultratech Cement: The cement manufacturer acquired 0.54 MTPA cement grinding assets of Burnpur Cement for Rs 170 crore.
Karur Vysya Bank: The Karur headquartered bank opened three new branches in Tamil Nadu and one in Karnataka.
Ramco Systems: Ramco System Korea Company Ltd. was incorporated in South Korea as a wholly owned subsidiary of the company.
Dalmia Bharat Sugar And Industries: The company's resolution plan for the revival of Baghauli Sugar and Distillery under the corporate insolvency resolution process in terms of Insolvency and Bankruptcy Code, 2016 was approved by Allahabad Bench of Hon'ble National Company Law Tribunal.
L&T Finance: The company approved the allotment of 13.07 lakh equity shares under L&T FHL employee stock option dcheme – 2013.
JSL Overseas Holding: The company released pledge on the shares of Jindal Stainless.
Welspun Speciality Solutions: It bagged orders for aggregative amount of Rs 15.87 crore from a domestic, unrelated customer for supply of duplex drade seamless tubes. The order is expected to be executed by March 2024.
PCBL: The company formed a 51-49 joint venture with Kinaltek for battery manufacturing facility. It will invest $16 million in JV, and infuse up to $28 million in stages.
Jupiter Wagons: The company has launched its qualified institutional placement to raise up to Rs 700 crore.The board authorised the opening of the issue and set the floor price at Rs 331.34 per share.
One 97 Communications: Payments platform Paytm said its mobile application is facing a "technical issue" as users complained of a service outage on Wednesday.
Zee Entertainment Enterprises: The company called reports indicating risks to its merger plan with Sony as "factually incorrect".
JSW Infrastructure: The company has issued a corporate guarantee of $126 million in favour of Axis Trustee Services Ltd. Its subsidiary company, Masad Infra Services Pvt., has entered into a concession agreement with the Karnataka Maritime Board to develop a greenfield port.
New Listings
Tata Technologies: The company's shares will debut on the stock exchanges on Thursday at an issue price of Rs 500 apiece. The Rs 3,042.51 crore IPO was subscribed 69.43 times on its third and final day. The bids were led by institutional investors (203.41 times), non-institutional investors (62.11 times), retail investors (16.50 Times), employee reserved (3.7 times) reservation portion shareholder (29.2 times).
FedBank Financial Services: The company's shares will debut on the stock exchanges on Thursday at an issue price of Rs 140 apiece. The Rs 1,092.26 crore IPO was subscribed 2.20 times on its third and final day. The bids were led by institutional investors (3.51 times), non-institutional investors (1.45 times), retail investors (1.82 Times), and employee reserved (1.34 times).
Gandhar Oil Refinery: The company's shares will debut on the stock exchanges on Thursday at an issue price of Rs 169 per share. The Rs 500.69 crore IPO was subscribed 64.07 times on its third and final day. The bids were led by institutional investors (129 times), non-institutional investors (62.23 times), and retail investors (28.95 Times).
Block Deals
Zomato: Alipay has offloaded 29.60 crore shares, or 3.44% stake for Rs 112.7 per share. Morgan Stanley bought 4.4 crore shares, or 0.5% stake, at Rs 112.7 per share, and Societe Generale bought 3.54 crore shares (0.41%) at Rs 112.7 apiece, among others.
WPIL: V N Enterprises sold 0.63 lakh shares (0.64%) at Rs 3,111 apiece, while Hindusthan Udyog bought 0.63 lakh shares (0.64%) at Rs 3111 apiece.
AGM Meetings
Proctor & Gamble Health
Who’s Meeting Whom
Arvind: To meet investors and analysts on Dec. 04.
Datamatics Global Services: To meet investors and analysts on Dec. 04.
Hindware Home Innovation: To meet investors and analysts on Nov. 30.
E.I.D- Parry (India): To meet investors and analysts on Dec. 01.
Star Health and Allied Insurance Company: To meet investors and analysts on Dec. 07.
Bharat Forge: To meet investors and analysts on Dec. 04.
Shalby: To meet investors and analysts on Dec. 04.
Angel One: To meet investors and analysts on Dec. 04 to 07 and Dec. 12
HDFC Life Insurance Company: To meet investors and analysts on Dec. 04.
Deepak Fertilisers and Petrochemicals Corporation: To meet investors and analysts on Dec .05.
UPL: To meet investors and analysts on Dec. 04.
Can Fin Homes: To meet investors and analysts on Dec. 05.
Welspun Enterprises: To meet investors and analysts on Dec. 04.
F&O Cues
Nifty November futures rose 1.03% to 20,143 at a discount of 46.4 points.
Nifty November futures open interest fell by 25.87% by 42,308 shares.
Nifty Bank November futures rose by 1.67% to 44,717.95 at a premium of 151.5 points.
Nifty Bank November futures open interest fell by 26% by 29,483 shares.
Nifty Options Nov 30 Expiry: Maximum call open interest at 20200 and maximum put open interest at 20000.
Bank Nifty Options Nov 30 Expiry: Maximum Call Open Interest at 45000 and Maximum put open interest at 43,000.
Securities in the ban period: Hindustan Copper, Manappuram Finance
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India Business & Economics
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Discover more from J.C.’s Substack
There's Something Foul with Fines: Rethinking Penalties in a World of Economic Disparity
Prohibited by Fine Means Legal for a Fee
Ever wondered why a speeding ticket feels like a mere annoyance to some, but like a financial nightmare to others? Welcome to the world of fines — a system where legality comes with a price tag. This article unravels why fines often miss the mark of justice, exploring their disproportionate impact, the inefficiency of flat-rate penalties, and the glaring loopholes the wealthy exploit. Plus, we'll delve into alternative models that could reshape the way we think about penalties.
Fines are Essentially a Scam
Have you ever seen graffiti claiming that 'Skateboarding is not a crime'? In many places, this is actually a legal truth. Skating in prohibited areas is typically considered an administrative violation, not a criminal act. But the fines for such violations are part of a broader issue affecting justice and equity.
Administrative violations, like ignoring skateboarding bans, jaywalking, or noise disturbances, are offenses not severe enough for criminal sentencing but can result in fines. These fines are part of a broader system designed to enforce rules and regulations through monetary penalties, affecting a wide spectrum of activities deemed non-criminal but still requiring some form of legal control.
Most fines, particularly for administrative violations, are levied at a flat rate. This one-size-fits-all approach fails to account for the varying financial situations of violators. For someone driving a $2 million car, a $200 speeding ticket is insignificant. Conversely, for a person driving a $150 car, the same fine can be a substantial burden. This disparity in impact highlights a fundamental flaw in the justice system: fines, intended as a deterrent, lose their punitive effectiveness for the wealthy while excessively penalizing the poor.
Small Fines Cause Big Trouble
The burden of fines disproportionately falls on low-income individuals. For many, paying even seemingly small fines can be challenging. A study involving 980 residents in Alabama revealed startling figures: 83% sacrificed essentials like food and rent to pay court debt, 50% faced jail for failing to pay, and 44% resorted to payday loans. This situation not only perpetuates poverty but questions the fairness of a system where financial status determines the extent of punishment.
The consequence of unpaid fines can be alarmingly severe, leading to incarceration even for those who have committed no crime. This harsh reality not only disrupts the lives of individuals, often threatening their entire existence, but also imposes a significant burden on taxpayers. For instance, certain counties spend $1.17 for every dollar collected from fines, essentially making it a loss-making endeavor. And with approximately 4 million people in the U.S. being arrested for victimless crimes each year, and most states spending between $25,000 to $30,000 per prisoner per year, the horrid costs of incarceration underscore the need for a reevaluation of the practices surrounding the enforcement of fines for non-criminal offenses.
Moreover, in at least 26 states failing to pay certain fines results in mandatory driver's license suspension. This can trigger a domino effect: without a license, many lose their jobs and find it hard to meet financial obligations. One study in New Jersey found that almost 45% of people with suspended licenses lost their jobs, unable to secure new employment while their license remained suspended.
How the Rich Use Fines to Circumvent the Law
The dynamics of wealth and power often play a critical role in how the law is interpreted and applied, particularly concerning fines. This phenomenon is starkly illustrated by the example of the aristocratic Habsburg family, once at the helm of the Austrian-Hungarian Empire. Following the empire's dissolution, the Austrian Nobility Abolition Act of 1919 stripped them of their noble titles. Despite losing their official status, the Habsburgs continue to be an extraordinarily wealthy dynasty and use their title in international circles, maintaining ties with other European aristocracies.
Karl Habsburg-Lothringen, the grandson of Karl I, the last emperor of Austria, notably resumed using "von Habsburg" in Austria. This act of defiance has led to an ongoing legal dispute. However, the fines associated with violating the Nobility Abolition Act, which amount to 20,000 Austro-Hungarian Crowns (or approximately €290), seem trivial to a multimillionaire. This is evidenced by the continued online presence of his website, karvonhabsburg.at, a subtle yet clear disregard for the legal stipulation. The negligible impact of this fine on Habsburg-Lothringen exemplifies how the wealthy can, in effect, sidestep laws through financial means, turning what should be a deterrent into a minor inconvenience.
This instance with Karl Habsburg-Lothringen is not an isolated one, it exemplifies a broader trend where the ultra-wealthy can render laws irrelevant — sometimes not just for themselves, but for everyone. Consider the example of Algerian businessman Rachid Nekkaz. An outspoken critic of France's burka bans — a law introduced in the country that once colonized Algeria — Nekkaz took a unique approach to protest. He committed to paying all fines incurred by individuals for violating the burka ban. This act effectively neutralized the law's intended deterrent effect. By covering the financial penalties for those who chose to wear burkas, he transformed what was intended to be a punitive measure into a mere bureaucratic formality. Between 2011 and 2016, Nekkaz's actions led to approximately $278,000 being contributed to the French treasury, a sum that, while substantial, did little to reinforce the law's intended impact.
Are Income-Based Fines a Solution?
In contrast to the traditional flat-rate fine system, some countries have adopted an innovative approach to ensure fines are equitable across different income levels. Finland serves as a prime example of this model, where fines are calibrated based on the violator's daily net income. This method aims to ensure that the financial impact of the fine is felt equally, regardless of the individual's wealth.
A notable case in Finland involved one of the country's wealthiest individuals, Andres Wiklöf. When caught driving 32 km/h over the speed limit, he faced a staggering fine of $130,000. This fine was calculated based on his substantial income, reflecting the income-based fine system's attempt to impose a penalty that would be meaningful to someone of his financial status.
However, this income-based approach is not without its complications. This is because the wealthy don't always have a high income. Most filthy-rich individuals have their wealth tied up in assets, investments, or inheritances, rather than in a regular income stream. For instance, an heir to a real estate empire might feel no need to draw a conventional salary attached to a 9-5 job, but still possess considerable wealth. This situation can lead to disparities in how fines impact different segments of society, as the income-based system may not accurately reflect an individual's true financial capability.
On a related note, the distribution of social benefits and subsidies across society often reveals ironic contradictions. In many countries, wealthy individuals receive benefits such as child support payments or umbrella money intended to support economic growth, just like everyone else. But this is just the tip of the iceberg when compared to the substantial cost of government subsidies. Subsidies represent a form of wealth redistribution bottom to top and are therefore largely BS as well, but that's a story for another day. Ironically, however, this situation seldom is highlighted in mainstream discourse, which often focuses more on social benefits for marginalized groups like food stamp recipients or asylum seekers.
Why Not a Net-Worth-Approach to Fines?
In the quest for a fairer system of imposing fines, it's worth considering the limitations of both flat-rate and income-based fines. While many fines, in my view, are a byproduct of excessive regulation and could be eliminated, I understand how there remains a need for some form of financial penalty in certain situations. This brings us to an intriguing alternative: a net-worth approach to fines.
Imagine a system where fines are a percentage of an individual's total net worth. For example, a minor traffic violation could incur a fine of 1% of the violator's net worth. Under such a system, an average person with no property and $3,000 in the bank would pay a $30 fine. In stark contrast, a billionaire like Elon Musk would face a fine in the billions. This approach ensures that the financial impact of the fine is felt equally, regardless of the individual's wealth, addressing the issue of fairness that plagues flat-rate fines.
However, this method is not without its challenges. For those with little to no net worth, 1% of zero is still zero. In such cases, a minimum fine could once again disproportionately impact those who are struggling financially, potentially leading them down a path towards incarceration for non-payment – an outcome we've already established as both unfair and costly. Additionally, accurately assessing an individual's net worth can be complex, especially when considering assets, debts, and other financial obligations.
Therefore, the most equitable solution might involve a more nuanced approach: examining cases individually rather than relying on automated, one-size-fits-all fines. This would require a system capable of assessing each case on its own merits, considering the violator's financial circumstances, ability to pay, and the nature of the violation. Such an approach might demand more resources, but it could lead to a more just and effective fining system, one that balances the need for penalties with the principles of fairness and proportionality.
Big Fines, Bigger Context
Before we conclude our exploration of the world of fines, it's essential to highlight the impact of substantial penalties imposed on large corporations. A prime example is the hefty €1.2 billion fine levied against Meta in May for non-compliance with the European GDPR. Such fines serve as powerful indicators of Europe's commitment to protecting private data and enforcing regulations on even the most formidable tech giants. However, when put into perspective, Meta's fine pales in comparison to its €23 billion turnover in Europe in 2022. Moreover, tech giants such as Facebook, Google, and Amazon, often face criticism for their minimal tax contributions. In this light, the fines they incur can be seen as a partial counterbalance to their otherwise limited financial obligations to the treasury.
This illustrates that the world of fines is far from black and white. While fines can sometimes serve as effective tools for regulation and enforcement, they often fall short in terms of equity and justice. As society continues to evolve, so too must our approach to penalizing wrongdoing. The goal should always be a system that upholds the principles of fairness and proportionality, ensuring that penalties serve their intended purpose without exacerbating existing inequalities.
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Inflation
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Government projections suggest wind and solar are on track to become orders of magnitude cheaper than gas power over the coming decade
The solar industry has hailed new government figures that highlight how solar farms provide the cheapest form of power in Britain as a "wake up call" for opponents of green policies.
Late last week, the Department for Energy Security and Net Zero (DESNZ) published revised estimates of levelised costs of electricity (LCOE) from the UK's most common energy sources, outlining the average cost per megawatt-hour generated over the lifetime of solar, wind, and fossil gas power plants.
The report, the first update to official government energy cost predictions in three years, forecasts that wind and solar are set to become several times cheaper than fossil gas over the course of this decade.
It predicts that by 2025, the LCOE of large-scale solar will be £41 per MWh, while the cost of both offshore and onshore wind is expected to hit £44 per MWh.
In contrast, the cost of generating electricity from combined-cycle gas turbines (CCGTs) in 2025 is forecast to reach £114 per MWh - making it nearly three times more expensive than new solar projects.
The gap is only expected to widen over the years that follow, according to the government analysis. It predicts that solar costs could fall to £30 per MWh in 2040 under a 'central estimate', and could reach as low as £26 per MWh. Gas generation, meanwhile, is expected to rise to a staggering £165 per MWh by 2040, driven in large part by higher carbon prices.
"This is yet another ringing endorsement of solar energy in the UK and further justification for the government's target to reach 70GW of capacity by 2035," said Chris Hewett, chief executive of Solar Energy UK. "In Britain, power generated by the sun is now a third of the cost of power made from burning gas and it will only get cheaper. The fastest way to permanently drive down energy bills is to build more renewables."
The government has also lowered its estimates of renewables costs, with its prediction for the cost of large scale solar in 2025 now 57 per cent lower than it was in its 2013 report. Its estimate for offshore wind, meanwhile, is 71 per cent lower than previous estimates.
Solar Energy UK said the true levelised costs of solar energy were likely to be even lower than government estimates because the calculations did not take into account the benefits of sharing grid connections with battery energy storage systems, an increasingly common aspect of modern solar farms.
The figures are published during a tumultuous period for the UK's green policy landscape following the Conservatives' narrow victory in the Uxbridge by-election at the end of July. The win, which saw the Conservatives majority whittled down from 7,120 to 495, was widely attributed to the government's opposition to the expansion of the Ultra Low Emission Zone (ULEZ) into the outer London borough. It has subsequently prompted the government to cast doubt over the future of a number of green policies, as it seeks to create a clear dividing line with Labour on a raft of environmental policy issues.
Solar Energy UK said it hoped the new figures would help cut through with those MPs and factions in the media arguing net zero policies come at too high a cost for the taxpayer. "The government's confirmation that solar farms are the cheapest way to power the nation is a wake-up call for opponents of net zero," the trade body said.
Critics of the government's net zero plans have questioned the government's projections, arguing LCOE estimates fail to account for the increased grid costs associated with an increased reliance on intermittent renewable energy generation and warning that predicted cost reductions could be quickly derailed by rising costs for renewables developers. A number of leading offshore wind developers have recently warned costs could prove higher than expected for the next wave of projects, as a result of increased material and labour costs.
However, previous analysis from the CCC and others have suggested grid balancing costs would only add £10 to £20MWh to renewables costs, meaning they would still enjoy a significant cost advantage over gas fired power plants. Meanwhile, renewable energy developers remain confident that if an effective policy environment can be maintained they should be able to continue to push down costs in the longer term as inflationary pressures ease.
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Renewable Energy
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Chancellor Jeremy Hunt has announced cuts to National Insurance and a rise for the minimum wage in his Autumn Statement.
The government says changes to National Insurance will save the average self-employed person £542 a year, without affecting their NI contributions record or benefits entitlement.
After a tricky few years of battling high energy bills, rising food prices and other challenges during the cost-of-living crisis, self-employed workers have been particularly badly hit by the pandemic fallout.
As of March 2022, there were around 4.2 million self-employed workers in the UK - a sharp drop of a million since 2019 - with the number of women in self-employment at its lowest since 2016.
This is what some of Wednesday's announcements mean for them.
Stretched finances
Claire, who owns a hairdressing business in Truro, Cornwall, employs 10 people in her salon and says a rise in the National Living Wage (minimum wage) from £10.42 to £11.44 an hour is a concern.
"We really need to sit down and think how we're going to make it work," she says. "At the end of the day, we do need to find that money."
The hike is going to cause a rise in costs throughout her business, she told BBC Radio 5 Live, as her very experienced staff will want to earn more than their colleagues who are newer to the job. She also warns that the need to pay higher wages could put some employers off hiring more people.
With expensive energy bills, Claire says her finances are already stretched. Eighteen months ago, she was paying £1,200 a month but this has now come down to around £700 - "and we don't use a lot of heating because we have hairdryers".
'My plan is to expand'
In Great Yarmouth, Camden, a 24-year-old barber with his own shop, is positive about the future of his business.
Camden opened his shop in January after previously paying over £250 a week to rent a chair at a barbers in nearby Norwich. He praises cuts to business rates announced on Wednesday, and says rates have been "extortionate" in his area.
"My plan is to expand and it would help me buy the bigger parts, barber chairs - even just furniture," he told BBC Radio 1 Newsbeat.
Craig Brothers, owner of design agency Affari and Six Degrees Associates, who is also a board member of the Chamber of Commerce, says the statement had "snippets of positivity".
"A National Insurance cut is helpful from an employer point of view," he said. "We constantly hear that recruitment filling is a challenge, and there were a couple of initiatives that could help."
Nathalie Selvon-Bruce, who owns Buttercup Bus Vintage Campers in Croydon, says the last few years have been a struggle and this latest announcement is overwhelming as a small business owner.
Rising costs are already stretching her finances and eating into profits, she says, despite business booming again after Covid.
Nathalie hires a lot of her vehicles out to wedding couples and says she often gives initial quotes 18 months in advance. She's worried she won't be able to stick to these costs when changes from the Autumn Statement come into force.
"The stark reality is I will need to put prices up to find funds to increase wages," she says. "I'm already absorbing the impacts on fuel and electricity rises - we're looking at seriously running at a loss in the year ahead to match quotes."
She says fuel is a "big challenge" for vehicles but also for powering freezers in her company's ice cream vans.
"The cost is astronomical. In the winter, it's cheaper to get rid of ice cream stock and shut the freezer than to keep it."
Nathalie agrees with Claire about the pressure to increase wages to make sure experienced staff feel valued.
'Done nothing for my family'
Mark Johns, a self-employed decorator from Manchester, says he is "devastated" by Mr Hunt's plans, saying the chancellor has "done nothing for my family".
The 59-year-old says he has had to reduce his rates by as much as 30% just to get work, as the cost-of-living crisis means people do not have the disposable income for home improvements.
"I'm probably earning less than I did seven years ago," he says, adding that changes to National Insurance will not help him as they only help those whose earnings reach the threshold to pay the tax.
He says he saved £50,000 over the last 30 years ready for his retirement but says this is all gone just to keep afloat in the last four years.
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United Kingdom Business & Economics
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KKR Earnings Beat Estimates Despite PE Deal Drought
KKR & Co. reported third-quarter results that beat Wall Street estimates as growth in its insurance business mitigated a decline in private equity asset sales.
(Bloomberg) -- KKR & Co. reported growth in its insurance unit that eased a decline in private equity asset sales in the third quarter, as alternative-asset managers rely on other businesses amid an industrywide deal slowdown.
The New York firm’s distributable earnings fell 6.6% from a year earlier, a smaller decline than expected that was helped by a 24% jump in earnings from its insurance unit. That offset carried interest at its private equity division dropping by more than a third.
KKR shares rose 3.7% to $61.56 at 9:53 a.m. in New York.
Investing giants including Carlyle Group Inc. and Apollo Global Management Inc. are leaning on resilient performance from the non-deals sides of their businesses such as credit and insurance. KKR has been tapping investor demand for direct lending strategies, raising $24 billion of organic new capital in its credit segment in the first nine months of the year — six times what it has raised in private equity.
“Our results demonstrate the durability, diversity and growth in our business,” KKR Co-Chief Executive Officers Joseph Bae and Scott Nuttall said in a statement Tuesday. “We are raising and deploying capital across all our businesses and regions.”
Fee-related earnings rose 2.9% to $558 million on higher management fees, short of the $570 million that analysts predicted.
KKR raised $14 billion for the three months ended Sept. 30, helping boost total assets under management to $528 billion, an increase of 6.5% since the end of last year’s third quarter.The firm held final closes for its Next Generation Technology III and Global Impact II funds during the current quarter.
Operating earnings for KKR’s asset-management arm declined 9.3% during the quarter to $869 million due to fewer asset sales, while operating earnings for Global Atlantic, the insurance company in which KKR controls a majority stake, rose 24% to $210 million.
Shares of KKR have gained 28% this year, slightly trailing larger competitors Blackstone Inc. and Apollo Global Management Inc.
Other third-quarter highlights:
- KKR’s traditional private equity portfolio gained 5%
- The leveraged credit and alternative credit portfolios each gained 3%
- The firm had $99 billion of capital available to invest at quarter-end
--With assistance from Erin Fuchs.
(Adds shares in third paragraph)
©2023 Bloomberg L.P.
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Banking & Finance
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The Sphere in Las Vegas reported an operating loss of $98.4 million for the fiscal quarter ending Sept. 30, Sphere Entertainment Co. said this morning on an earnings call.
Additionally, the company lost its chief financial officer, as Gautam Ranji has resigned, according to a Securities and Exchange Commission filing.
Ranji’s exit was “not a result of any disagreement with the company’s independent auditors or any member of management on any matter of accounting principles or practices, financial statement disclosure or internal controls,” the company said in the filing.
The New York Post reported Tuesday that Ranji suddenly quit after a bout of yelling and screaming from CEO James Dolan.
Ranji, who had been on the job for 11 months, will be replaced on an interim basis by Greg Brunner, the company’s senior vice president, according to the filing.
Sphere, the $2.3 billion venue near the Strip that opened Sept. 29 with the start of U2’s multimonth residency, “represented a significant milestone, generating worldwide attention and marking the beginning of a new chapter for our company,” Dolan said in a statement.
That attention includes brand campaigns on the exosphere, such as the promotion of YouTube’s NFL Sunday Ticket and campaigns for other global brands, the company noted in the filing.
Next week, there will be a multiday takeover of the Sphere for the inaugural Las Vegas Grand Prix, Sphere officials said.
Revenue for the quarter included $4.1 million in event revenue — those two sold out U2 shows — and $2.6 million from suite licensing and advertising on the Sphere exosphere.
“We are building positive momentum across Sphere and remain confident that we are well positioned to drive long-term value for shareholders,” Dolan said.
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Consumer & Retail
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GST Council Meet Live Updates: Online Gaming, Bank Guarantees, Millets On The Agenda; Here's What To Expect
Catch all the 52nd GST meeting updates here.
KEY HIGHLIGHTS
- Oldest First
Delhi Will Seek Withdrawal Of Tax Notices On Online Gaming Companies: Delhi Finance Minister Atishi
"In the meeting today, I am going to take up this issue and ask the GST council to make sure that these notices are withdrawn", says Delhi finance minister Atishi.
Atishi emphasized that more than 50,000 young individuals work in this sector, and it has also received foreign investments totaling Rs 17,000 crore. Therefore, it is crucial to withdraw the notices in order to safeguard the industry.
(With inputs from PTI)
#WATCH | Delhi minister Atishi says "Today is the 52nd GST Council meeting. Despite the Delhi Govt's opposition, a 28% tax was imposed on the online gaming industry. Even before this tax was implemented, GST council sent tax evasion notices for the last six years worth Rs 1.5⦠pic.twitter.com/ih8NUmXN8P— ANI (@ANI) October 7, 2023
Likely Agenda
Millet-based foods in powdered form are likely to get an exemption, according to the official.
Currently taxed at 18%, millets have been promoted under India's G20 presidency. The year 2023 was also declared the International Year of Millets by the United Nations General Assembly in 2021.
A series of demands over an alleged tax shortfall, extending from the gaming industry to the insurance and auto sectors, have been issued by GST authorities recently.
52nd Meeting Of The Goods and Services Tax
The 52nd meeting of the Goods and Services Tax Council could take up technical matters like offering clarity on the slew of demand notices and a possible rate exemption on millet-based foods, according to an official.
The fitment committee report has maintained the status quo on many issues that were raised by the industry over time, the official with knowledge of the matter told BQ Prime on the condition of anonymity.
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India Business & Economics
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NEW YORK -- With the help of technology, scammers are tricking Americans out of more money than ever before. But there are steps you can take to keep your money and information safe.
In 2022, reported consumer losses to fraud totaled $8.8 billion — a 30 percent increase from 2021, according to the most recent data from the Federal Trade Commission. The biggest losses were to investment scams, including cryptocurrency schemes, which cost people more than $3.8 billion, double the amount in 2021.
Younger adults ages 20-29 reported losing money more often than older adults ages 70-79, the FTC found. But when older adults did lose money, they lost more. Many retirees have assets like savings, pensions, life insurance policies or property for scammers to target.
With the rise of the digital economy, scammers now reach targets by social media and text, as well as phone and email. Online payment platforms, apps, and marketplaces have also increased opportunities. Still, many of their tactics and strategies are similar.
“The first thing they'll do is get you into a heightened emotional state, because we can’t access clear thinking when we’re in that state," said Kathy Stokes, director of fraud prevention for the AARP’s Fraud Watch Network. "It could be fear, panic, or excitement — ‘I just won a million dollars from Publishers Clearing House.'”
Once the sense of urgency is established, the target's defenses are down.
“When approached with urgency, give it an extra three-second pause,” said Amanda Clayman, a financial therapist who works with digital payment network Zelle around issues of fraud. “When someone is trying to get us to take action quickly, that’s usually a red flag indicating we should do the opposite."
Here's what else to know to keep your money and information safe:
WHAT ARE SOME COMMON SCAMS?
Simply being aware of typical scams can help, experts say. Robocalls in particular frequently target vulnerable individuals like seniors, people with disabilities, and people with debt.
“If you get a robocall out of the blue paying a recorded message trying to get you to buy something, just hang up,” aid James Lee, chief operating officer at the Identity Theft Resource Center. “Same goes for texts — anytime you get them from a number you don’t know asking you to pay, wire, or click on something suspicious.”
Lee urges consumers to hang up and call the company or institution in question at an official number.
Scammers will also often imitate someone in authority, such as a tax or debt collector. They might pretend to be a loved one calling to request immediate financial assistance for bail, legal help, or a hospital bill.
ROMANCE SCAMS
So-called “romance scams” often target lonely and isolated individuals, according to Will Maxson, assistant director of the Division of Marketing Practices at the FTC. These scams can take place over longer periods of time -- even years.
Kate Kleinart, 70, who lost tens of thousands to a romance scam over several months, said to be vigilant if a new Facebook friend is exceptionally good-looking, asks you to download WhatsApp to communicate, attempts to isolate you from friends and family, and/or gets romantic very quickly.
“If you’re seeing that picture of a very handsome person, ask someone younger in your life — a child, a grandchild, a niece or a nephew — to help you reverse-image search or identify the photo," she said.
She said the man in pictures she received was a plastic surgeon from Spain whose photos have been stolen and used by scammers.
Kleinart had also been living under lockdown during the early pandemic when she got the initial friend request, and the companionship and communication meant a lot to her while she was cut off from family. When the scam fell apart, she missed the relationship even more than the savings.
“Losing the love was worse than losing the money," she said.
WHAT SHOULD I DO ABOUT TEXT AND EMAIL SCAMS?
“I think anyone who has participated in the digital economy has received multiple attempts daily that have some sort of scheme, whether that’s, ‘Your account has been locked’ or ‘Your package delivery is delayed,’” Lee said. “Again — just take a breath — and verify."
Lee urges people never to click an unusual link in a text or email, and instead go to the site in question directly, or call the number listed on the official site.
“It’ll take 30 or 40 seconds longer, but go ahead and do that because it could save you a lot of money every time,” he said.
Some indications to be extra wary could include an unrecognized sender, unusual wording, or a tell-tale misspelling.
In 2022, consumers lost more than $326 million from scam texts alone, according to the Federal Trade Commission.
WHAT ARE OTHER COMMON RED FLAGS?
Gift cards. Both Maxson and Lee said any mention of payment with gift cards should be a blaring warning alarm.
Kleinart, who experienced the romance scam, was also initially asked to send money via gift cards, with varied explanations.
“Just don’t pay people with gift cards,” Maxson said. “No legitimate company or individual is going to ask you to buy large quantities of gift cards and then read the numbers off the cards. That is exclusively a payment method of fraudsters.”
“Let me tell you, the IRS does not accept gift cards,” Lee said. “But you’d be surprised by the number of people who fall for people calling from ‘fill in the blank agency’ or ‘fill in the blank company’ and who send $500 worth of gift cards.”
WHAT ABOUT SOCIAL MEDIA SCAMS?
In addition to romance scams like the one Kleinart fell victim to, here's what to know about other common social media scams:
INVESTMENT SCAMS
According to Lois Greisman, an associate director of marketing practices at the FTC, an investment scam constitutes any get-rich-quick scheme that lures targets via social media accounts or online ads.
Investment scammers typically add different forms of “testimony," such as from other social media accounts, to support that the "investment" works. Many of these also involve cryptocurrency. To avoid falling for these frauds, the FTC recommends independently researching the company — especially by searching the company's name along with terms like “review” or “scam.”
QUIZ SCAMS
When you're using Facebook or scrolling Google results, be aware of quiz scams, which typically appear innocuous and ask about topics you might be interested in, such as your car or favorite TV show. They may also ask you to take a personality test.
Despite these benign-seeming questions, scammers can then use the personal information you share to respond to security questions from your accounts or hack your social media to send malware links to your contacts.
To protect your personal information, the FTC simply recommends steering clear of online quizzes. The commission also advises consumers to use random answers for security questions.
“Asked to enter your mother’s maiden name? Say it’s something else: Parmesan or another word you’ll remember,” advises Terri Miller, consumer education specialist at the FTC. “This way, scammers won’t be able to use information they find to steal your identity.”
MARKETPLACE SCAMS
When buying or selling products on Instagram or Facebook Marketplace, keep in mind that not everyone that reaches out to you has the best intentions.
To avoid being scammed when selling via an online platform, the FTC recommends checking buyers' profiles, not sharing any codes sent to your phone or email, and avoiding accepting online payments from unknown persons.
Likewise, when buying something from an online marketplace, make sure to diligently research the seller. Take a look at whether the profile is verified, what kind of reviews they have, and the terms and conditions of the purchase.
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
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Personal Finance & Financial Education
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The Labour Party significantly outspent the Conservatives last year, financial accounts released by the Electoral Commission show.
Labour's spending totalled £44.45m, with the party's income up 3.5% on 2021, despite lower membership numbers.
Meanwhile, the Conservatives' spending was £33.06m, with income down 3.3%, and money from donors to the party falling by £2.4m.
The Liberal Democrats spent £6.7m, while SNP expenditure totalled £5.05m.
The Commission is an independent body which oversees elections and regulates political finance across the UK. It has published the accounts of parties with income or spending above £250,000, which numbered 18 in 2022.
Labour recorded a £2.7m surplus, raising £47.2m, even as it lost nearly 25,000 more members, the Commission's figures show. In 2021, Sir Keir Starmer's party recorded a £5.2m deficit.
A report from party general secretary David Evans said "difficult decisions" on reducing costs had contributed to returning Labour to surplus, while membership income "exceeded targets" thanks to new members and "an improved rate of retention".
Staff costs fell by around £6m as a number of people were made redundant.
By the end of 2022, Labour had 407,445 members, down from 432,213 in 2021, and nearly 125,000 down on its recent peak in 2019 when it was led by Jeremy Corbyn.
The Conservatives lost £2.3m in 2022 during what the party's annual accounts described as a "turbulent year". Boris Johnson resigned as prime minister in July, to be succeeded by Liz Truss, who herself stepped down in October.
The party raised £30.7m in income, but saw money from donors falling compared with 2021. A report from the party treasurer blamed this partly on "donor pledges moving into 2023".
The Tories do not publish membership figures, but after last year's leadership election, they said 172,000 people had been eligible to vote.
Their income from membership fees fell slightly from £1.99m to £1.97m.
Northern Ireland spending
The Liberal Democrats recorded a £754,000 deficit, including a £186,000 loss caused by having to cancel the party's annual conference following the death of Queen Elizabeth II.
But they did see a slight increase in membership from 94,706 to 97,493.
The Green Party of England and Wales raised £3.15m and spent £3.23m.
Plaid Cymru had income of £970,000 and expenditure of £942,000.
In Northern Ireland, Sinn Fein outspent the Democratic Unionists with expenditure of £1.19m and income of £1.53m. The DUP spent £488,000 and raised £426,000, less than the Alliance Party of Northern Ireland's £522,000.
Reform UK, led by Richard Tice and formerly the Brexit Party, spent £949,000, 37% more than the £692,000 it brought in.
Louise Edwards, director of regulation and digital transformation at the Commission, said: "We are committed to making sure political funding is transparent.
"Larger parties spend and receive considerable sums of money so it's important that information on their finances is accessible to the public. Publishing their accounts allows voters to see how parties are funded and choose to spend their money."
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United Kingdom Business & Economics
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LONDON, Sept 30 (Reuters) - Britain's finance minister Jeremy Hunt ruled out near-term tax cuts ahead of a mid-year fiscal statement due on Nov. 22, but said in a newspaper interview he wanted to avoid "a vicious circle of ever-rising taxes".
Many lawmakers in Britain's ruling Conservatives want Hunt to deliver tax cuts before the next election, as their party heavily trails the opposition Labour Party in opinion polls.
"We're not in a position to talk about tax cuts at all," Hunt said in an interview with The Times newspaper, ahead of his Conservative Party's annual conference, which starts on Sunday.
Throughout this year, Hunt has said his priority is to support Prime Minister Rishi Sunak's goal to halve inflation, rather than lower taxes, and in a Bloomberg TV interview earlier this month he said tax cuts were "unlikely".
"The question we have to answer for the British people is: what are you doing to get yourself in a position where you can credibly lower taxes?", Hunt told The Times.
On Friday, the Institute for Fiscal Studies, a non-partisan think tank, said tax revenue was likely to represent 37% of annual economic output at the time of the next election expected in 2024, up from 33% in 2019 when the Conservatives last won an election, under then-Prime Minister Boris Johnson.
This would be Britain's highest tax rate since at least the 1950s, although below most other similar European economies.
Liz Truss, another former Prime Minister, was among a number of Conservative lawmakers who pledged on Saturday they would not support "any new taxes that increase the overall tax burden".
Promises of lower taxes, which are popular with ordinary Conservative Party members, helped Truss defeat Sunak in a party leadership contest during July to September 2022.
She resigned in October 2022 after just 44 days in office, when her plans to reverse tax rises and spend more on energy subsidies led to a surge in government borrowing costs, forcing an intervention by the Bank of England.
Hunt said there needed to be greater technology investment in public services to boost the output of existing staff, rather than the more popular approach of focusing on staff numbers.
"We need to find a formula that doesn't mean that we're on a vicious circle of ever-rising taxes," he said.
Finance ministry estimates suggested the annual growth rate in public-sector productivity needed to be 0.5 percentage points higher to stabilise Britain's tax burden, he added.
Reporting by David Milliken; Editing by Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.
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United Kingdom Business & Economics
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With a government shutdown looming and a federal deficit that continues to climb, the bond rating firm Moody’s on Friday lowered its outlook for U.S. Treasury debt to “negative” from “stable.”
The change is a signal that Moody’s, the only one of the three major credit ratings agencies that still considers U.S. debt worthy of its top rating, may soon apply a downgrade.
The ratings firm confirmed that for now, its current top rating of Aaa still applies, and that the U.S. economy retains many advantages and strengths. However, in a gloomy assessment of the federal government’s capacity to address looming fiscal problems, the company warned of troubles to come.
“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody's expects that the U.S.'s fiscal deficits will remain very large, significantly weakening debt affordability,” the company said in a statement accompanying the announcement. “Continued political polarization within [the] U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”
The news is likely to increase the volume of calls for the federal government to establish a “fiscal commission” of experts who would have the task of assembling a plan to adjust federal spending and the tax code to meet the country’s current needs.
Interest rate changes
The change by Moody’s reflects, in part, the reality that the era of near-zero interest rates, which allowed the government to borrow relatively painlessly, is now over, and that the relative cost of continued deficit spending — in which the U.S. borrows to pay for annual spending that exceeds revenues — is rising sharply.
Under its current projections, the company said, by 2033 the interest payments alone on U.S. debt will be equal to 26% of federal revenues, up from 9.7% in 2022.
Moody’s growing pessimism about the future sustainability of the United States’ nearly $34 trillion in outstanding debt echoes that of other ratings firms.
Until recently, Standard & Poor’s had been the outlier among ratings firms. S&P downgraded the U.S. from AAA to AA+ during a fiscal crisis in 2011 and has maintained that level since. In August, the Fitch Ratings agency joined S&P, downgrading U.S. debt from its top rating of AAA to AA+.
“Moody’s downgrade was entirely predictable considering the nation’s fiscal condition and budgetary mismanagement,” Stephen Ellis, president of the watchdog group Taxpayers for Common Sense, told VOA in an email exchange. “When you’re paying nearly $660 billion a year to service $33.7 trillion in debt, lurching from budgetary crisis to budgetary crisis is policymaker malpractice. Once again, the country is veering toward another government shutdown that is entirely preventable.”
Inflection point
While the rate of growth of the government’s debt has not changed dramatically, some observers wonder if Moody’s announcement, combined with the increased likelihood that interest rates are likely to remain elevated above recent levels for an extended period of time, could mark a turning point for the country.
“There's a chance that a couple of years from now, we'll look back on this period as when the debt and the deficit again became a political concern, which it hasn't been for some time,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.
“There seems to be a lot more angst about it, in part because long-term yields have gone up so much,” Wessel told VOA. “And in that environment, every warning from a rating agency or surprising poll finding or some unexpected comment by a dovish economist, tends to get more attention — and for good reason.”
Fiscal commission pondered
The Moody’s announcement has some deficit watchdogs renewing calls for the creation of a “fiscal commission” empowered to come up with a plan to address the nation’s revenues and spending.
In September, a bipartisan group of lawmakers in Washington introduced legislation that would create such a body. It would be made up of 16 members, including six members each from the House of Representatives and the Senate, divided evenly between the parties. The remaining four members would be outside experts, two appointed by Democrats and two by Republicans.
The commission’s mandate would be to develop a plan to stabilize the country’s debt-to-GDP ratio at or below 100% within 10 years, to recommend changes to keep federal programs like Medicare and Social Security solvent, and to consider changes to federal spending and revenue collections necessary to reach those goals.
Under the proposal, if a bipartisan majority of the committee’s members approve a set of final recommendations, the plan would be guaranteed an up-or-down vote in both houses of Congress, with no possibility of amendment.
Best chance
“A fiscal commission is absolutely the best chance we have of getting anything done right now,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Because it gives politicians a chance to build relationships and trust with each other and really study the issue, and understand how difficult it is instead of the kind of free lunch storylines they tell themselves.”
There is some precedent for the creation of such a commission.
In 2010, then-President Barack Obama created the National Commission on Fiscal Responsibility and Reform to undertake a similar task. More popularly known as the Simpson-Bowles Commission for its co-chairs Alan Simpson and Erskine Bowles, the group formulated a comprehensive overhaul of U.S. spending, including entitlement programs, as well as the tax code.
However, the commission was unable to achieve a two-thirds supermajority among its members, and the plan was therefore never officially endorsed. A bill largely based on the plan was introduced in the House of Representatives, where it was soundly defeated.
MacGuineas told VOA that a commission “has a good shot” at success, even though it would face an even tougher task than Simpson-Bowles did.
“Today, the fiscal situation is worse, and the political situation is worse,” MacGuineas said.
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Interest Rates
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All About America explores American culture, politics, trends, history, ideals and places of interest.
Alaska workers are the happiest in the nation, thanks in part to higher wages and shorter workweeks, according to a new report from SelectSoftware Reviews, a human resource platform.
Researchers looked at several factors to come up with their list, including wages, quit rates, commute times, work hours, injuries and paid time off.
Alaska employees enjoy average workweeks of 31.3 hours, average annual salaries of $52,000 and an overall job satisfaction score of 69.96 out of 100.
Job satisfaction is critical to happiness, according to Miriam Liss, professor of psychology at the University of Mary Washington in Fredericksburg, Virginia.
“A meaningful job allows you to feel competence and ability, able to do the tasks that are meaningful to you,” Liss says. “If you're having a more meaningful, purposeful life, you are going to experience pleasure.”
Other states with the happiest workers include Rhode Island, North Dakota, Colorado and Minnesota, according to the report.
Second place Rhode Island has a low quit rate, and the lowest injury rate of any state. North Dakota, which came in third, has an annual wage of $47,400 and an average commute of just 17.6 minutes.
The unhappiest workers are in Georgia, Texas, Florida, South Carolina and New York.
Georgia has the lowest job satisfaction, with an overall score of 29.62. Texas has the second-longest average workweek of 43.6 hours. In Florida, the average worker earns $18 per hour compared with Alaskans, who earn $32 per hour. Meanwhile, South Carolina workers make $13,000 less in annual salary than people in Alaska.
“Experiencing poverty definitely can make you unhappy,” Liss says, “because your basic needs aren't met ... and you don't have the ability to have a lifestyle that gives you some autonomy, allows you to make choices.”
New York, which has the longest commute time of any state, came in fifth on the list of unhappiest workers.
“These results demonstrate the considerable impact a location can have on how workers feel about their job, whether that is due to state laws, commute times, or wages,” the report said. “It emphasizes the importance for employers to create environments where employees find genuine fulfillment and can thrive.”
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Workforce / Labor
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A shipment of British goods - including signed Beano comics - are to be sent to Australia and New Zealand to mark the start of two new post-Brexit trade deals.
The agreements between the UK and Australia, and the UK and New Zealand, came into force at midnight.
Business and Trade Secretary, Kemi Badenoch, described the starting of the deals - the first negotiated post-Brexit to come into force - as a "historic moment".
"Businesses up and down the country will now be able to reap the rewards of our status as an independent trading nation and seize new opportunities, driving economic growth, innovation and higher wages," she said.
The deals mean all tariffs on UK goods exports to Australia and New Zealand will be removed, while the government says red tape has also been slashed for digital trade and work visas.
Alongside the new trade deals, ministers say young Britons will benefit from opportunities to travel to Australia with the expansion of the shared Youth Mobility and Working Holiday Maker visa schemes.
The government previously said it expects its deal with Australia to add £2.3bn to the UK economy, and a further £800m added from the trade deal with New Zealand.
However, fears have been raised over the impact on the UK's farming sector, with the National Farmers' Union previously warning it could cost the industry up to £150m.
Plaid Cymru MP Ben Lake, the party's agriculture spokesman in Westminster, said the trade deals marked the "beginning of a worrying chapter" for Welsh farming - with Australia and New Zealand both among the world's biggest producers of lamb.
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Ministers have previously described anxieties over the deal as "misplaced" and said that much of New Zealand's lamb is exported to China.
To mark the starting of the deals, international trade minister Nigel Huddleston will on Wednesday tour DHL's Southern Distribution Centre near Heathrow to see off two hand-picked consignments of British goods.
They include Beano comics signed by the comic's editor John Anderson, Penderyn single malt Welsh whisky, Brighton Gin, The Cambridge Satchel Co. bags and Fever-Tree mixers.
The packages, which include an England cricket top signed by James Anderson and Emma Lamb and a Welsh rugby shirt signed by the men's team, will be sent from the government to the Australian and New Zealand trade ministers.
"Australia and New Zealand are two of our closest friends and like-minded partners and our trade deals secure favourable terms for British exporters, removing tariffs on all UK goods and slashing red tape," he said.
In July, the age limit for UK applicants going to Australia will go from 30 to 35 years old.
From July next year, Britons will also be able to stay in Australia for up to three years without having to meet specified work requirements.
It comes after Rishi Sunak announced last month that the UK will benefit from almost £18bn of extra private investment from Japan.
Mr Sunak also said he envisioned even greater ties will come after the UK joined the CPTPP Pacific trading bloc, saying the "sky's the limit".
Earlier this year it was announced that the UK would join the bloc, which consists of countries including Australia, New Zealand, Canada, Chile and Japan.
The UK has struck more than 70 trade deals since leaving the EU - but agreements with major players such as China and the US have remained elusive so far.
Trade with the EU also declined following the end of the UK's post-referendum transition period, while the latest data published in a House of Commons report this month warned that UK exports to the EU remain below 2019 levels.
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United Kingdom Business & Economics
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Good morning. The tax cuts in Jeremy Hunt’s autumn statement yesterday were larger than expected and, unusually, the national insurance cut will take effect from January, not April, when tax cuts or tax rises are normally implemented. Inevitably, that prompted speculation at Westminster that Hunt was preparing for an early election.
But in an interview this morning Hunt claimed it was “silly” to view his tax cuts as a pre-election giveaway. He told Sky News:
We haven’t chosen the most populist tax cuts. I think it’s silly to think about this in terms of the timing of the next election.
We’re trying to make the right decisions for the long-term growth of the British economy.
Hunt also claimed he had not even discussed election timing with the PM. He told LBC:
I can confirm regarding the date of the election that I’ve had absolutely no discussions with the prime minister.
Those are some of the lines from Hunt’s morning interview round. I will post a full summary shortly.
Here is the agenda for the day.
9.30am: The ONS publishes its latest migration figures.
9.30am: Prof Dame Angela McLean, the government’s chief scientific adviser, gives evidence to the Covid inquiry. At 2pm Kemi Badenoch is due to give evidence as minister for women and equalities.
10.30am: The Institute for Fiscal Studies publishes its assessment of the autumn statement.
Morning: Jeremy Hunt is on a visit in Wrexham.
Morning: Keir Starmer and Rachel Reeves, the shadow chancellor, are on a visit in Essex.
11.30am: Downing Street holds a lobby briefing.
12.30pm: Richard Hughes, chair of the Office for Budget Responsibility, speaks at an Institute for Government event.
Afternoon: Rishi Sunak is on a visit in Yorkshire.
If you want to contact me, do try the “send us a message” feature. You’ll see it just below the byline – on the left of the screen, if you are reading on a laptop or a desktop. This is for people who want to message me directly. I find it very useful when people message to point out errors (even typos – no mistake is too small to correct). Often I find your questions very interesting, too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either in the comments below the line; privately (if you leave an email address and that seems more appropriate); or in the main blog, if I think it is a topic of wide interest.
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United Kingdom Business & Economics
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- The national average credit score hit a fresh high of 718, according to a new report from FICO.
- Credit scores improved year over year despite the high cost of living, which has caused more consumers to fall deeper in debt.
- As of April, the average credit card utilization was 34%, up from 31% a year earlier.
Consumers are increasingly relying on credit cards to make ends meet, but their credit rating hasn't suffered.
Even as credit card balances for Americans surpassed $1 trillion for the first time ever, the national average credit score rose two points from a year ago to reach a new high of 718, according to a report from FICO, developer of one of the scores most widely used by lenders. FICO scores range between 300 and 850.
"Consumer credit health remains solid," said Ethan Dornhelm, FICO's vice president of scores and predictive analytics.
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As of April, the average credit card utilization was 34%, up from 31% a year earlier.
Your utilization rate, the ratio of debt to total credit, is one of the factors that can influence your score. Credit experts generally advise borrowers to keep revolving debt below 30% of their available credit to limit the effect that high balances can have.
Still, delinquency rates are low by historical standards, said Ted Rossman, senior industry analyst at Bankrate. "People are working and keeping up with their bills.
"Even if they are not saving more, they are keeping up, for the most part."
A strong labor market and cooling inflation have helped offset high interest rates and consumer prices, FICO found, and so has the removal of certain medical collections data from consumer credit files.
However, "FICO scores are a lagging, not a leading, indicator," Dornhelm said. The possibility of a recession coupled with rising unemployment could weigh on scores going forward, he added.
Experts also expect the resumption of student loan payments to take a bite out of household budgets, while elevated gas prices and geopolitical tensions are hitting confidence levels.
Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan. You're more likely to be approved, and if you're approved, you can qualify for a lower interest rate.
A good score generally is above 670, a very good score is over 740 and anything above 800 is considered exceptional.
An average score of 718 by FICO measurements means most lenders will consider your creditworthiness "good" and are more likely to extend lower rates.
Average nationwide credit scores bottomed out at 686 during the housing crisis more than a decade ago, when there was a sharp increase in foreclosures. They steadily ticked higher until the Covid-19 pandemic, when government stimulus programs and a spike in household saving helped scores jump to a historical high.
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Personal Finance & Financial Education
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NEWYou can now listen to Fox News articles! After downplaying concerns about the economy in the last year, some media outlets are now panicking that high gas prices and inflation will tank Democrats in the midterm elections, with some pundits even scolding voters for making it a priority.Washington Post columnist Catherine Rampell told readers that it was a "wild fantasy" to believe the GOP could lower gas prices, as she warned voters to "think carefully about what they’ll get if they cast their ballot based on gas prices," in a Sunday opinion piece."The president does not have some super-secret special dial on his desk that can adjust gas prices, but many voters believe otherwise," she wrote. Fuel prices at a Chevron station in Menlo Park, California, on June 9, 2022. (David Paul Morris/Bloomberg via Getty Images)BACKLASH ENSUES AS PRESIDENT BIDEN SUGGESTS INFLATION A ‘CHANCE’ TO MAKE ‘FUNDAMENTAL TURN’ TO CLEAN ENERGY"They’re counting on voters to project their hopes and dreams — including their wildest fantasies about cheaper gas — onto Republican challengers," her analysis continued.But Rampell claimed that neither party had "serious" solutions to dealing with gas prices or inflation and there were "relatively few tools" that President Biden or Congress could use to "help boost oil production or moderate inflation." So, she advised voters to ignore the gas price problem at the voting booth.Quoting colleague E.J. Dionne, she cautioned that if Republicans win in November that could lead to "far more radical and sinister forces" trying to "undermine democracy."On MSNBC's "Morning Joe," branding guru Donny Deutsch fretted that pocketbook issues would win out with voters this year and in 2024 as more important to them than America's democracy being "in peril.""I'm concerned and everything in my gut tells me… unfortunately, the gas prices and bread is going to be more compelling," he said Thursday.Polling bears that out, with surveys consistently showing inflation is the most significant issue to Americans right now. A recent Fox News poll found 41 percent of voters say inflation will be an important factor in their midterm decisions, well above issues like guns (12 percent) and abortion (10 percent). Another poll from ABC News earlier this month found 71% of Americans disapprove of Biden on inflation.MSNBC host Joy Reid and political analyst Matthew Dowd characterized a red wave as a "threat" the media needed to warn voters against on Monday.MEDIA, DEMOCRATS DOWNPLAYED INFLATION AND GAS PRICES, GOT FORECASTS WRONG: ‘WINNING ECONOMY’"We have to tell the voters what the threat is just like we do, Joy, we tell them about inflation, and we tell them about job growth, and we tell them about a hurricane, and we tell them about tornadoes, and we tell them about wildfire, we have to treat this assault just like we have to tell them about the assault on democracy," Dowd said. People shop in a supermarket in Los Angeles, California, June 13, 2022. (Reuters/Lucy Nicholson)Fellow MSNBC host Tiffany Cross took the same approach on her show Saturday, complaining that inflation was more of a concern for voters than the Jan. 6 committee hearings."Come this November, will voters be more concerned with saving money than saving democracy?" the "Cross Connection" host asked.GAS PRICES FUELING COMING DEMOCRATIC BLOODBATH IN MIDTERMS, REPUBLICANS SAYCross griped that inflation and "high prices" dominated media coverage, which led Americans to be less interested in the "compelling testimonies and evidence" in the Jan. 6 committee hearings. Condition of Economy Poll (Fox News)"This constant storyline of inflation, and people are feeling it at the grocery store. So it is challenging when, come November, when it's time to cast a ballot," she began, adding that she wondered "how seriously" voters took the threat of Republicans winning in November."The View" host Joy Behar absolved Biden of any responsibility for the energy crisis and said Republicans just wanted to make Biden "look bad.""And by the way, inflation is a worldwide problem, he's getting blamed for that. The gasoline is a worldwide problem, yes its $5, $6 here, it's like $11, $12 in Europe. So you cannot blame the president for every single thing," Behar continued on the June 6 show.CNN ECONOMIC ANALYST SAYS IN ORDER TO HAVE A ‘KINDER’ ECONOMY, INFLATION NEEDS TO OCCURResponding to the media defense of Biden, PRICE Futures Group senior market analyst Phil Flynn said Biden administration policies like drilling moratoriums and killing the Keystone Pipeline are driving down investment in oil and gas, hurting supply and raising prices."I think out of every president in recent history, if you can blame a president for rising gasoline prices, President Biden owns this gasoline price hike," Flynn told Fox News Digital. "Why? Because every policy he has put into place has raised the cost of gasoline." Joy Behar shut down the notion that a "red wave" was coming in November on "The View" last week. (Screenshot/ABC/TheView)Behar and her liberal peers also shot down the idea that a red wave was coming in November, largely as a result of voters blaming Democrats in power for high inflation. "You don't know that," she told co-host Alyssa Farah Griffin.Associate Professor of Business and Economics at The King’s College and Fox News contributor Brian Brenberg criticized the media’s messaging as "a desperate attempt to deal with a problem they know is going to be pinned" on Democrats."By pleading with voters to not let inflation affect their vote, the media is essentially asking people to ‘please ignore everything that affects your life on a daily basis,’" he said, citing the high costs of groceries, travel, gas and electricity impacted by inflation and energy policies.The economics expert said media pundits who won't acknowledge that President Biden's anti-oil rhetoric and promises to end fossil fuels have negatively affected energy costs are engaging in a "willful denial of reality."NPR ARGUES ECONOMY IS ‘STURDIER THAN IT LOOKS’ AMID SHRINKING REPORTFlynn said the media shouldn't be flippant about so-called "kitchen table issues.""America always votes their pocketbook," Flynn said. "At the end of the day, you know, what they disparagingly call kitchen table issues are real issues to American because it affects their daily lives. Listen, people elect leaders so their life improves, not so it can get worse… The American people are smart. They see this as a facade. They see, you know, the media trying to make excuses for this administration."Some liberal media outlets and Democrats have defended Biden energy policies and tried to sell the public in recent months that there was hope on the horizon for the economy. President Joe Biden speaks at the Royal Castle in Warsaw, Poland, March 26, 2022. (Reuters)In December, CNN host Don Lemon and reporter Matt Egan hyped a government forecast that suggested gas prices would fall below $3 in 2022, touting how Americans were going to get "some relief" at the pump.Pundits moved on to minimizing voter concerns about the economy, Biden's energy policies and rampant federal spending, while parroting the White House's messaging that a "Putin price hike" was to blame for soaring inflation, in the spring.Brenberg said that polls showed voters weren't buying the media's messaging and had "made up their own minds" on who to blame for the country's economic woes."The media should be holding the administration’s feet to the fire on that with data, not with an ideological agenda but on data, on the facts. They’re not doing that," he blasted.CLICK HERE TO GET THE FOX NEWS APP"So voters therefore have made up their own minds. They have determined what cause and effect is going on here, and you’re seeing that in the polls," he said.Fox News' David Rutz contributed to this report. Kristine Parks is an associate editor for Fox News Digital. Story tips can be sent to kristine.parks@fox.com.
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Inflation
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- Consumers spent $5.6 billion online on Thanksgiving Day, a jump of 5.5% year over year, according to Adobe Analytics.
- The uptick reflects that holiday shoppers are buying more of their gifts online and responding to discounts.
- Hot sellers included Barbie items, gaming consoles and Bluetooth speakers, Adobe found.
Online spending on Thanksgiving Day jumped 5.5% compared to a year ago, according to Adobe Analytics, a reflection of holiday shoppers who are buying more of their gifts online and responding to discounts.
E-commerce sales totaled $5.6 billion on the holiday. That's nearly twice as much as the $2.87 billion that consumers spent on Thanksgiving in 2017, according to the company's analysis.
For Black Friday, online spending is expected to climb even higher and bring in an expected $9.6 billion, up 5.7% year over year.
Still, it's too soon to say if the pop will be enough to propel a strong season overall.
Holiday shoppers are expected to spend 3% to 4% more year over year in November and December, according to the National Retail Federation's forecast. That would be a significant slowing from the holiday sales growth seen during the pandemic and a return to more typical growth levels prior to the Covid crisis.
Adobe's data covers more than one trillion visits to U.S. retail websites, 100 million unique items and 18 total product categories. It does not cover in-store purchases, where the majority of U.S. holiday purchases still take place. Last year, about 70% of total holiday sales took place in physical retail locations, according to the NRF.
As retailers face slowing sales, companies have dangled sharp promotions in October and in recent weeks issued cautious outlooks for the holiday quarter. And to motivate shoppers, retailers like Target, Macy's and Best Buy are pulling out all the stops, from Disney- or toy-themed experiences to limited-time discounts on hot consumer electronics.
So far, shoppers have seen big discounts in major gifting categories. On Thanksgiving Day, toys were up to 28% off, electronics were up to 27% off and computers were up to 22% off, according to Adobe.
And shoppers responded: Online purchases of toys shot up 182% compared to average daily sales in October. Jewelry sales rose 126%, apparel rose 124% and personal care products rose 67%.
On Thanksgiving, some of the best sellers were Barbie items, Marvel superhero action figures, gaming consoles including Playstation5 and videogames like Super Mario Bros. Wonder. Some consumer electronics, such as robot vacuums, Bluetooth speakers and tablets, have been popular, too, Adobe found.
Shoppers are also browsing and buying more on their smartphones. Mobile shopping played a big role in Thanksgiving sales, with nearly 60% of sales coming through a mobile device — an all-time record for Thanksgiving, Adobe said.
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Consumer & Retail
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Since the first NFT was minted in 2014, digital artists and collectors have praised blockchain technology for its usefulness in tracking provenance, the origin and history of a particular artwork. Never before had artists seen a tool that could do it all like the blockchain, an immutable digital ledger that records transactions without the aid of galleries or other centralized institutions.
In theory, “minting” a piece of digital art on blockchain serves multiple purposes: It documents the date an artwork is made, stores on-chain metadata descriptions, and links to the crypto wallets of both the artist and buyer, thus tracking sales history somewhat automatically and making it easier to estimate a piece’s valuation.
As is common with the advent of any new technology, people embraced this narrative enthusiastically. Finally, it seemed, artists working in digital mediums had a digitally native method for doing what they’d previously relied on paper certificates and gallery spreadsheets to do for them.
Blockchain certainly presents a new way of linking provenance to someone’s digital identity, but the art community isn’t abandoning its tried-and-true archival methods just yet. Regina Harsanyi, a time-based media specialist and a Curator of Media Arts at The Museum of the Moving Image, recommends that artists and collectors familiarize themselves with the whole array of tools —including NFTs — used by galleries, museums, appraisers, and buyers to document an artwork’s story.
Checksums: The birth of digital provenance
Digital art provenance goes all the way back to a cryptographic function known as a checksum, a string of numbers and letters used to detect inconsistencies in a digital file. Checksums use an algorithm to scan the pixels of a digital file and generate a hash function, which results in a string of numbers and letters.
“[A checksum] allows you to essentially use your own computer to create a fingerprint for a digital asset,” said Harsanyi, who added that she utilizes checksums regularly in her work as a digital art conservator. “This is a very old technology that’s been used in encryption for decades.”
Any changes to the file’s pixels will result in a different series of characters, thereby confirming if a file is the same as the original.
Hardware solutions
Digital artists have also used various hardware solutions as both storage systems and provenance verification tools. Over the years, these devices have ranged from floppy discs, cassette tapes, and CD ROMs to USB and external hard drives — and even the computers on which the artist created their pieces.
“On really early personal computers — especially the Commodore or the Texas Instrument — you used to be able to back up your data with a cassette player,” explains American artist Siebren Versteeg, who has been working in digital mediums since 1999. “You would hit ‘record,’ send the image or the data of the file to the cassette player, it would make it sound not unlike that classic AOL noise, and you could play it back into the computer later.”
Nathaniel Stern, an American interdisciplinary artist and scholar who has minted NFT artworks on Quantum, SuperRare and other marketplaces, says he has built his own circuit boards when creating multimedia exhibitions. He recalls a 2004 installation he sold to the Johannesburg Art Gallery, which ran on a custom selection of hardware. His installation included a two-sided screen, cameras, and projection equipment running software that Stern coded. Stern sold every piece of physical equipment to the gallery. The sale price also included the gallery’s rights to loan out the installation to other institutions and receive complimentary software upgrades as needed.
“To make it feel special, I wound up selling a custom wooden USB stick,” Stern recalls. “I put the files on the USB stick, signed the USB stick with Sharpie, and put it in a decorative box.”
Today, an artist might need to sell only the NFT linked to the video as a means to authenticate ownership and bestow intellectual property (IP) rights. However, artists may still choose to sell their work in the form of a hardware device — particularly when a file requires a machine with custom specifications.
Paper solutions
Stern says he also included a paper certificate of authenticity in his 2004 sale. Certificates of authenticity are still commonly used by traditional and digital artists alike. They can be issued by the artist, their agent, a gallery, or a museum. “Anything that was ephemeral was usually tracked with a simple certificate,” said Versteeg. “I’ve issued many of them, and I still do whenever I issue a digital piece.”
However, as Elena Zavelev, CEO and co-founder of the art education organization CADAF, points out, just because certificates of authenticity are standard practice does not mean they themselves are standardized. “The problem with certificates, as with any other aspect of the art world, is that there are really no regulations. It’s a highly unregulated market,” she says.
Nonetheless, Zavelev says paper certificates have always worked fine, especially since they usually accompany a hardware device containing metadata about the artwork’s origin. But when digital art moves to the even more unregulated terrain of the internet, she says, provenance starts to get truly slippery.
“With the internet, people can just start copying things, screenshotting, and video recording from the screen,” Zavelev explained. “They can present [the artwork] in any way they want. And then it is really hard for the artist to prove that actually, the work is by them.”
Gallery solutions
Along with certificates of authenticity, art appraisers and historians recognize gallery-issued documents as acceptable forms of provenance. These documents may include invoices, labels or stickers, sales ledgers, and curatorial spreadsheets.
“We as appraisers do a bit of detective work,” said Muriel Quancard, a New York-based fine art appraiser and consultant with 27 years of experience in transdisciplinary, technology-driven art practices. Quancard explained that she frequently looks for labels, emails, gallery receipts, or invoices to prove an artwork’s history.
Galleries may also create private databases and ledgers to keep a record of their sales. “These private database solutions are on a case-by-case basis with certain studios,” said Harsanyi.
Oral provenance
Given the contemporary nature of digital art, most creators are still alive and can therefore provide oral histories of their work. This fact helps appraisers and collectors verify information and provides a buffer against digital art theft, explained Zavalev.
“You can just call this artist and say, ‘Did you produce this artwork at this time? And is this your artwork?’ I think that’s the beauty of working with the living artists.”
Appraisers themselves also, in some ways, act as a living ledger. However, Quancard adds that one appraiser cannot individually hold enough information in their brain to accurately keep track of the “massive amount of works that have been produced.”
Why is provenance such a big deal?
Each of the artists included in this article acknowledged that provenance is important, though historically, it has been more of a concern among collectors, appraisers, and institutions than for the artists themselves. But today, blockchain has changed the narrative around provenance in both exciting and questionable ways.
“For me, the provenance of an artwork was the story behind it,” said Stern. “But now it’s about who owned it, who transferred it. […] People, when they mean provenance, mean buying [the art] on chain and tracking every transfer.”
The question is, who does provenance benefit? Artists or speculators? And does the data recorded on the blockchain satisfy traditional guidelines for appraising an artwork’s value?
Quancard argues that, while helpful, the blockchain’s data is incomplete. For one thing, traditional appraisals take into account if an artwork was ever owned by a notable figure. In Web3, many NFT collectors prefer to stay anonymous, and just because the public can track the activity of crypto wallet’s art purchases does not mean we know the identity of the collector behind it.
In addition, formal appraisals must take into account guidelines from the Internal Revenue Service, insurance companies, and professional standards such as the Uniform Standards of Professional Appraisal Practice. It’s impossible to gain an accurate understanding of an NFT’s valuation by looking at blockchain metrics alone.
“Appraising is based on a methodology,” said Quancard. “Provenance is a big part of that,” she added but cautioned collectors against assuming that financial metrics like floor price and trading volume provide enough information.
Interestingly, the culture of speculation among NFT collectors has also increased the speed and frequency of digital art sales to never-before-seen levels, added Harsanyi. Spurred by the most recent crypto bull run, speculation has run wild in the past two years, resulting in an environment of constant trading. Digital art used to be relatively niche, Harsanyi explained — if a notable artist sold a work, it wouldn’t sell again for years or even decades.
“Now, the same work sells, like, 20 times within a two-year period,” Harsanyi said. There’s been nothing like that ever before in the history of artwork, period.”
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Crypto Trading & Speculation
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Father-of-two on £30,000 a year asks Martin Lewis if he would be better off quitting his job and going on benefits instead
- Michael was concerned about the impact of his £3,000 a month childcare bills
- The Money Saving Expert advised the father of support he could seek out
A father of two who earns £30,000 a year asked Martin Lewis if he would be better off quitting his job and claiming benefits.
The struggling father told the Money Saving Expert on the Martin Lewis Money Show of the thousands of pounds costs his family are facing whilst he earns £30,000 a year.
As a result of the rising cost of living, he and his partner are having to consider if they would simply be better off claiming benefits and quitting their jobs as opposed to one of them going back to work.
He spoke of how for five days of childcare per week, the cost would amount to £3,000 a month.
The distraught father, named Michael, asked Martin Lewis: 'We have eight-month-old twins and simply can't afford to go back to work.
A father of two who earns £30,000 a year asked the Money Saving Expert on the Martin Lewis Money Show if he would be better off quitting his job and claiming benefits
'I earn £30k per year but this is not enough to support our family.
'Is there any help available to us or are we, I hate to say it, better off quitting our jobs and going on benefits?'
Michael did not mention what he did for work nor did he specify whether it is he or his partner that has stopped working at the minute, or whether he has already quit his job.
In response to the father's queries, Lewis said: 'I know it is a debate across different parties of government and within different parties of government,
'And - of course - we want people in our economy to be able to go out to work and have their children looked after.'
Although the Money Saving Expert was not aware of the specific details regarding Michael's situation and could not say what childcare support he qualifies for, he advised aid is available for families.
Lewis said that currently, around 800,000 parents living in Britain are missing out on childcare support.
He went on to say how three and four-year-olds can get up to 30 hours of childcare for free at a nursery - the precise number would be contingent on your household income, how many partners are working, and where you live.
The television show host spoke of how the ongoing difficulties surrounding the cost of childcare certainly need looking at
He added that families that earn less than £40,000 can also do a benefits calculation to see if they are entitled to Universal Credit benefits.
Parents who are already on Universal Credit may be eligible for 85 per cent of their childcare costs, or 70 per cent if they are on Tax Credits.
Presently, the maximum sum a parent can receive for one child is £646 per month or £1,108 per month for two children under 16.
He finished off by explaining that the UK government provides a Tax-Free Childcare Scheme, which – if eligible – allows for £500 tax-free childcare every three months - which would amount to £2,000 per year for each child.
These numbers would be expected to double if the child is disabled.
Martin added: 'To get this, you must be working an average of 16 hours or more per week, you can be self-employed, and if you're a couple, you must both be working 16 hours or more and the maximum you can both earn is £100,000.'
If parents believe they are eligible, then the next step is to set up an account on the government website.
The television show host spoke of how the ongoing difficulties surrounding the cost of childcare certainly need to be looked at as thousands of other families up and down the country are also facing large bills.
Coming to the end of his advice on the matter, Martin said to the father-of-two: 'Michael I hope some of that works for you, I can't promise that it will but it's worth exploring all these options.'
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United Kingdom Business & Economics
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Colombian pop star Shakira has reached a deal with Spanish prosecutors to settle a tax fraud case, just as her trial was about to begin.
The Hips Don't Lie singer was due to face tax fraud allegations amounting to â¬14.5m (£12.9m) in a Barcelona court.
Spanish prosecutors had wanted to jail her for eight years and fine the singer â¬23.8m if she was found guilty.
Shakira, who has repeatedly denied any wrongdoing, settled "with the best interest of my kids at heart".
She added they "do not want to see their mom sacrifice her personal well-being in this fight".
The performer had previously rejected a deal offered by prosecutors, instead opting to go to trial.
Her statement in full read:
"Throughout my career, I have always strived to do what's right and set a positive example for others. That often means taking the extra step in business and personal financial decisions to procure the absolute best counsel, including seeking the advice of the world's preeminent tax authorities PricewaterhouseCoopers International Limited and Ernst & Young Global Limited who have been my advisors during this whole process.
"Unfortunately, and despite these efforts, tax authorities in Spain pursued a case against me as they have against many professional athletes and other high-profile individuals, draining those people's energy, time, and tranquillity for years at a time.
"While I was determined to defend my innocence in a trial that my lawyers were confident would have ruled in my favour, I have made the decision to finally resolve this matter with the best interest of my kids at heart who do not want to see their mom sacrifice her personal well-being in this fight.
"I need to move past the stress and emotional toll of the last several years and focus on the things I love - my kids and all the opportunities to come in my career, including my upcoming world tour and my new album, both of which I am extremely excited about.
"I admire tremendously those who have fought these injustices to the end, but for me, today, winning is getting my time back for my kids and my career."
Dispute over residency
At the centre of this row is Shakira's residency status between 2012 and 2014, when prosecutors alleged that she was living in Spain but listing her official residence elsewhere.
Under Spanish law, people who spend more than six months in the country are considered residents for tax purposes. But Shakira says Spain was not where she was mainly living at the time.
In July, prosecutors issued a document which claimed that she bought a house in Barcelona in 2012, which became a family home for her and her then-partner, Barcelona footballer Gerard Piqué.
Her lawyers have said that up until 2014 most of her income came from international tours and she spent long chunks of time outside of Spain.
"The Spanish tax authorities saw that I was dating a Spanish citizen and started to salivate. It's clear they wanted to go after that money no matter what", she told Elle magazine.
Shakira declared Spain to be her place of residence for tax purposes in 2015. She said she has paid â¬17.2m in tax and has no outstanding debts.
In a separate case in 2019, Mr Piqué was fined â¬2.1m by the Spanish national court for evading tax between 2008 and 2010.
The couple announced in early June that they had split up after 11 years. They have two sons together, aged seven and nine.
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Europe Business & Economics
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Nearly all independent retailers who traded with Europe have seen profit losses due to Brexit, an industry boss has said, with the impact of the withdrawal continuing to hit UK businesses three years on.
Brexit saw new red tape and costs for British firms trading with EU countries, with a leading business group saying owners have been left “banging their heads against a brick wall”.
Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA) which has more than 6,000 members across different retail sectors, said that the additional costs due to red tape meant EU-facing retailers had to “sacrifice” profit to stay in business.
“If you’re facing a 15 per cent tariffs on goods, you either have to put your products up 15 per cent to consumers or you accept a lower margin,” he said.
“At the time, we were still in the throes of Covid and uncertain about the impact of lockdowns, and it was difficult for businesses to find the right way of approaching it. I think they nearly all sacrificed some margin. There was no easy solution to having additional costs; it was not possible to add it all on to consumer, so the only resort is to see a reduced margin.”
The business leader said that many retailers were priced out by competitors as Brexit costs hit consumers.
“If you were importing from Europe previously you must have been impacted and affected by it. Some people were exporting to Europe and suddenly became uncompetitive because customers were having to pay delivery or VAT on receipt of goods,” Mr Goodacre said.
“The impact depended on where they’re importing from. If your main supplier is the far east, like a lot of our hardware shops, they were largely unaffected because they had tariffs anyway. It was those businesses importing from Europe: a lot of fashion, giftware, furniture, homeware: it’s those sectors which felt the brunt of it.”
Additional admin and paperwork for EU trading is continuing to affect independent retailers, Mr Goodacre said, with the new requirements providing “pretty horrible” for small businesses to navigate.
“Previously, they hadn’t needed to worry about importing from Europe at all. VAT, sorting out reports, delivery costs, the paperwork required: it was pretty horrible if you’re running a small business. You don’t have a lot of resources to begin with, so all that was difficult. There was support available, it wasn’t as if they were left alone completely, from us and the Government. People did what they could to ease the problem but it was difficult,” he said.
“Now, people have normalised it. But whether they’re happy with it, I don’t know. Do they have more work to do now, more costs? The answer has to be yes, because I can’t think of any situation where they wouldn’t have had that. If members voted for Brexit, they’re likely to say they don’t regret it, it was just badly implemented. But if they didn’t vote for Brexit, they just think it was a bad idea. But they’ve all, irrespective of what their vote was, experienced problems they didn’t anticipate. Now they’ve got used to it and found ways to deal with it, but could they do with less administration and bureaucracy? Absolutely.”
Research from the Federation of Small Businesses found that 13 per cent of its members had stopped trading temporarily or permanently with the EU since the UK’s exit.
The organisation found that “relatively few businesses have pivoted to new markets since the end of the transition period”, with just six per cent of EU exporters and five per cent of EU importers turning to other markets.
Nearly one in ten had stopped importing or exporting overall over the past five years due to the volume of paperwork (56 per cent), overall costs (49 per cent) and supply chain or logistical issues (29 per cent).
One business owner told i that her net profit margins had dropped to zero following Brexit and that she had suspended all trade with Europe for more than two years due to red tape.
Another said she had decided to pivot her business away from the EU market, investing instead in places like the Middle East and Australia, since the UK left.
A cross-party group of MPs, the UK Trade and Business Commission, has been set up to scrutinise the UK’s post-Brexit trade deals and make recommendations to improve the trade climate in the Britain.
The group has published 114 recommendations for the Government, including calls for a UK Board of Trade to independently assess trade policy – like the OBR for the Treasury – and for greater alignment with EU regulation to ease red tape.
A Department of Business and Trade spokesperson said: “Latest figures show trade with the EU was worth £772bn last year, soaring £181bn (31 per cent) in current prices compared to 2021, and £97bn (14 per cent) higher in current prices than before the pandemic.
“We have a package of support tailored to exporters of all sizes. This includes our Export Support Service, International Trade Advisors and UK Export Finance, all targeted at getting businesses across the UK economy exporting more.”
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United Kingdom Business & Economics
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Former Conservative chancellor Ken Clarke has backed Labour’s Rachel Reeves, labelling her “reassuring” and “responsible”.
Lord Clarke, who served as chancellor under John Major from 1993-1997, revealed to the i’s new podcast, “Labour’s Plan for Power”, that he has been impressed by Labour’s shadow chancellor.
Since the 1970s, Clarke has served in the governments of Ted Heath, Margaret Thatcher, John Major and David Cameron.
Aside from helming the Treasury under Major, Clarke’s esteemed CV includes the posts of home secretary, health secretary, education secretary, justice secretary and paymaster general.
He now sits in the House of Lords as a Conservative.
Speaking to the i, he said he supported Reeves’ “uncompromising” approach to her economy brief, which has included spearheading the decision to water down Labour’s flagship £28 billion green prosperity plan.
At the time, Reeves justified watering down Labour’s green spending commitment by saying such pledges must be consistent with the party’s “fiscal rules”.
Clarke also suggested that Reeves and chancellor Jeremy Hunt represented the same view of how to run the Treasury. He said the shadow chancellor’s macroeconomic policy “matches” Hunt’s.
Clarke told the i: “It’s her party that worries me. Well, it’s almost true in both cases, actually. But if it was Jeremy Hunt and Rachel Reeves, then I don’t think either of the parties would worry me very much.
“I don’t think they disagree on very much. They do, of course, politically, I do myself disagree with some of Rachel’s political views, I’m sure.
He added: “But her actual approach, a responsible approach to macroeconomic policy, matches the responsible approach to macroeconomic policy that Jeremy Hunt has, which is in the present shambles of British and international politics and the dangers of it I find rather reassuring — about the only thing I do find reassuring about this election that’s coming up.”
Clarke also offered his support to Jeremy Hunt amid rumours the chancellor could be reshuffled out of the Treasury in the coming weeks.
He said: “I think we’ve got a perfectly good Chancellor. I would certainly keep Jeremy there. And I don’t think Rishi disagrees. I’m sure occasionally there’s always strain between the Prime Minister and the Chancellor and sometimes rows.
“But Rishi and Jeremy I think are probably more quite close on economic policy. A perfectly good Chancellor, let him get on with it.”
“I think the demand for a reshuffle is almost as daft as the demand for tax cuts and neither of them will do any good in the sense of winning votes”, he added.
Politics.co.uk is the UK’s leading digital-only political website, providing comprehensive coverage of UK politics. Subscribe to our daily newsletter here.
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United Kingdom Business & Economics
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A campaign to get more people to donate stem cells is taking place across England this weekend, as charities say there is an urgent need to increase the register in the UK.
A network of mothers have teamed up with the blood cancer charity DKMS to raise awareness and encourage more people to register to donate their stem cells at drive-in events on 17 September.
Sarah Cripps, whose son Teddy was diagnosed with acute myeloid leukaemia – an aggressive form of blood cancer – when he was 18 months old, organised the Swab to Save a Child campaign to “give other children the chance to a life”.
After filling out a short questionnaire to check eligibility, people between the ages of 17 and 55 are asked to swab their cheeks using a cotton bud. “It’s one minute per swab, and with a drying time of two minutes,” said Cripps, who has spearheaded the movement. “You will pop them back into your packet, seal it, scan it to link your application with your swab and drive away, knowing that you’re a lifesaver in waiting.”
Teddy was given a 13% prognosis and needed a bone marrow transplant to survive, which required a donor. His twin brother was not a match, and his parents were unable to donate, so they had to rely on a donor from the stem cell registry.
After an agonising six-week wait on the donor list, Teddy was found a match. He is now almost three, it is a year since his transplant with 97% probability of cure, and he started nursery earlier this month.
“For the first time, it felt like we could plan for a future,” Cripps said. “As a mother, being able to think about his first day of school with his twin, there are no words … it’s because he had an amazing donor.”
Not all people are as fortunate as Teddy. There are about 2,000 people in the UK waiting for a stem cell transplant, but only 3% of the population are registered as donors.
DKMS’s donor recruitment team lead, Hannah Tarrant, said this was because a lot of people did not know that stem cell donation was possible or what it involved.
There are two ways stem cells can be collected. “The first one is a bit like giving blood, and used in 90% of cases. It’s called peripheral blood stem cell collection. You have two needles, one in each arm, and your blood is extracted,” Tarrant said. It then goes through a machine, where the stem cells are separated off, and then the blood is put back in the other arm.
For five days leading up to donation, people are injected with G-CSF, a glycoprotein that occurs naturally in the body and stimulates the bone marrow to make more stem cells. The procedure itself takes between four and six hours on average, and people can usually go back to work the next day.
The second is a “minimally invasive procedure”, where bone marrow is extracted from the pelvic bone under general anaesthetic. “Within a week, at the longest, you’re feeling much better and sort of back to normal,” Tarrant said.
About 1.3m cases of blood cancer were diagnosed globally in 2020, according to the charity Worldwide Cancer Research. It is the most common type of childhood cancer.
People from minority ethnic backgrounds have a 37% chance of finding a matching donor, compared with 72% for white European backgrounds, so it is important that people from minority ethnic backgrounds donate to diversify the register, Tarrant said.
The events will take place in Basingstoke, Burton, Caddington, Colchester, Crawley, Corby, Crowborough, Croydon, Dunstable, Horsham, Medway, Liverpool, Saffron Walden, Sheffield and Uxbridge.
Cripps said she hoped the campaign would at the very least start conversations about stem cell donation. “It’s a mission of mine to not only get people on the drive, but also to get more people talking over their dinner tables, or in pubs about it.
“I hope one day, doctors say when it comes to blood cancers or bone marrow failures, ‘you need a bone marrow transplant, but don’t worry. In the UK, we’ve got one of the best registers and there’s a 90% chance we’ll find you a match’, regardless of your ethnicity or background.”
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United Kingdom Business & Economics
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Market Cap Of Four Of Top 10 Most-Valued Firms Rise Rs 65,671 Crore; Reliance Biggest Winner
The combined market valuation of four of the top-10 most-valued firms climbed Rs 65,671.35 crore last week
The combined market valuation of four of the top-10 most-valued firms climbed Rs 65,671.35 crore last week, with Reliance Industries emerging as the biggest gainer.
Last week, the BSE benchmark climbed 175.31 points, or 0.26 per cent.
While Reliance Industries, HDFC Bank, ICICI Bank, and Bharti Airtel were the gainers, Tata Consultancy Services (TCS), Infosys, Hindustan Unilever, ITC, State Bank of India, and Bajaj Finance faced erosion in valuation.
The market valuation of Reliance Industries jumped Rs 26,014.36 crore to reach Rs 16,19,907.39 crore.
HDFC Bank added Rs 20,490.9 crore, taking its valuation to Rs 11,62,706.71 crore.
The market valuation of Bharti Airtel rose Rs 14,135.21 crore to Rs 5,46,720.84 crore , while that of ICICI Bank gained Rs 5,030.88 crore to Rs 6,51,285.29 crore.
However, the market capitalisation (mcap) of TCS eroded by Rs 16,484.03 crore to Rs 12,65,153.60 crore. The valuation of Bajaj Finance declined Rs 12,202.87 crore to Rs 4,33,966.53 crore.
The mcap of Hindustan Unilever fell Rs 3,406.91 crore to Rs 5,90,910.45 crore and that of State Bank of India declined Rs 2,543.51 crore to Rs 5,00,046.01 crore.
The market valuation of ITC was down Rs 1,808.36 crore to Rs 5,46,000.07 crore, while that of Infosys dipped Rs 290.53 crore to Rs 5,96,391.22 crore.
Reliance Industries continued to hold the title of the most-valued firm followed by TCS, HDFC Bank, ICICI Bank, Infosys, Hindustan Unilever, Bharti Airtel, ITC, State Bank of India, and Bajaj Finance.
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India Business & Economics
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In recent years, there’s been no shortage of startups offering credit lines to the underbanked. Most talk about their mission to help people establish credit, which is noble, but they’re also extending credit because — let’s face it — lending out money is lucrative.
Now, a startup founded by Stanford grad James Savoldelli has found a new wedge into the same industry, and it’s through pawn shops.
Called Pesto, the idea is creative — and savvy. For those in dire financial straits, pawn shops are a bank of last resort. An individual doesn’t have to have a credit line or a bank account or even income. A customer with a government ID can simply leave behind something of value — jewelry, electronics — and receive a secured loan in return for a percentage of the value of that item, plus interest. If he or she pays off the loan, that person can retrieve the item; otherwise, it’s forfeited and sold.
But such loans can be egregiously expensive, depending on where a pawn shop is located. While in California, shops can charge just 2.5% interest on the principal amount each month, in Florida, Georgia and Alabama, a customer can pay 25% interest per month (or a stunning 300% per year). Little wonder that in the U.S., there are 12,000 pawnshops contributing to a market sized at around $14 billion, according to the National Pawnbrokers Association.
Pesto hopes to capture some of those individuals online before they start down that path, in part by offering them a secured MasterCard that features up to a 29.99% APR — and zero interest if someone pays back their loan in full on time.
We talked with Savoldelli yesterday about Pesto’s strategy, which he formulated after being offered a high-interest loan as a college student and later logging time at a variety of pawn shops to better understand customer behavior. Investors are clearly intrigued with what he’s building, too. The startup — which passed through the Y Combinator accelerator in 2021 — just attracted $11 million in Series A funding from Activant Capital, Plural, and others. More follows, edited for length:
During Covid, you lived with a classmate in L.A. and began working at a pawn shop. What happened?
I took a job at Los Angeles’s largest pawn shop; it was considered an essential service. So I’m there every day with my mask on, helping this customer base, and what I saw fascinated me. Customers were getting a loan, and then paying it back, then getting another loan and paying it back, and doing this again and again and again. But it was never helping them build credit. It was never helping them graduate to something better than what they had just finished paying off. So they were stuck in this cycle. That’s what got me thinking: what if we could build a product that actually does reward people for paying back something? And the more I learned about credit, I [saw] the opportunity to build an asset-backed credit card where we give people access to what is, at the outset, much, much cheaper credit and get [them] out of this world of payday loans, pawn shops, [and] title loans and into mainstream financial products.
It’s amazing that certain states allow pawn shops to charge so much interest. Why are the laws around these businesses so loose and awful?
How long have you got?
[Laughs.] I don’t think enough people honestly know about it, or are, frankly, working on it. But it is a horrifying proposition end to end.
How does Pesto work exactly? How — where — do you take possession of these valuables against which you are providing credit?
Customers go online, they find our website. They go through a quick appraisal by entering in details about their asset and we give them an estimate for what their credit line could be. Then we give them a QR code that allows them to walk into any UPS store across the country, where it will be packed and shipped, fully insured, directly to us.
Once we receive the asset, we open it up under video, inspect the asset, and we give them a final offer of credit. From there, we spin up a card digitally, and the physical card arrives a couple of days later in the mail. The item is then stored in a temperature-controlled vault for the time being, and when they graduate to an unsecured card or close their account, we send them their item back.
Do you worry about illicit goods?
We’re a horrible way to fence an item. Our customers go through a full KYC.
Pawn shops loans typically give people 30 to 120 days to pay them. Is there no timeline with Pesto’s offering? Do you even care about the assets or are you mostly focused on the interest from the loans you provide?
You can use [your card] for as long as it’s convenient for the customer. Our goal is to make money as much as possible off of the transaction spent. One of the reasons we have so much lower interest rates is we make money when the customer spends money, but we’re not charging the customer for it, just like any standard credit card. We absolutely want customers to get their assets back.
Who are you partnered with on the back end?
We partnered directly with MasterCard. We have an issuing bank that we work with directly: Continental Bank out of Utah. We work with a credit card processor called ITC. In building a credit card, you take those pieces and put all of them together to build your experience.
Is this demographic part of an opening gambit? Over time, will your credit card company target another population or sector?
We have a lot of ideas for where we could go with this [after] spending the last two years building a modern credit platform. We have tons of things on the drawing board.
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Banking & Finance
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Yvette Cooper has this morning insisted Labour must be “clear about what we can fund” as a row grips the party over Sir Keir Starmer’s updated position on the two-child benefit cap.
The Labour leader confirmed yesterday that a Labour government would keep the controversial policy, introduced under the Conservatives.
The two-child limit prevents parents from claiming child tax credit or universal credit for any third or subsequent child born after April 2017.
Sir Keir said on Sunday that he was “not changing that policy”, when asked if he would scrap it if Labour wins the next election.
Speaking this morning, the shadow home secretary said: “The last Labour government cut child poverty and we are also saying again we’ve got to keep saying how it is we’ll pay for things”.
She pointed to a 40 per cent increase in child poverty under the Conservatives and insisted it was something the opposition wanted to fix.
“Because we have to address child poverty. That’s why the breakfast clubs are so important… and Jonathan Ashworth has also talked about the importance of reforming Universal Credit and having a proper long-term plan”, she told Sky News.
But pushed multiple times on whether she supports keeping the cap, Ms Cooper evaded the question, insisting that any policy changes need to be fully funded.
Ms Cooper said: “We’ve just been really clear. We can only fund it… We’ve got to be clear about what we can fund and that’s why Keir Starmer’s set out the position. Because we’ve got to make sure that any policy that we propose, anything that we might want to change, anything we might not like that the Tories have done, we’ve still got to say how we’d fund it”.
A long-serving Labour MP, she noted that the party opposed it when it was introduced, and has consistently pointed out the negative effects on it, but added: “We’ve also been really clear that anything that we say has got to be funded”.
In an interview for the Mirror newspaper last month, shadow work and pensions secretary Jonathan Ashworth called the cap “heinous”.
He said at the time: “We are very, very aware that this is one of the single most heinous elements of the system which is pushing children and families into poverty today,” he said.
He added that “the idea that this policy helps move people into work is completely offensive nonsense”.
Deputy Labour leader Angela Rayner tweeted in 2020 that the “obscene and inhumane two child cap must go”, linking to research which said it was a key factor contributing to women’s decisions to have abortions
Sir Keir’s confirmation that he would keep the policy has spilled into a row in the Labour party.
Labour MP Meg Hillier told the BBC’s Westminster Hour programme: “Well, I was never comfortable about having the child benefit cap come in … personally, I’d be lobbying for a lifting of that”.
Labour chair of the work and pensions committee, Stephen Timms told the i newspaper that “it only really makes sense if you think that families should not have more than two children … as time goes on, the case for the two-child limit will be increasingly hard to make”.
The decision to keep the policy also comes as a major academic study into the effects of the two-child cap concluded the policy it has had a “poverty-producing” impact over the past six years.
The research, published on Monday morning by academics from the Universities of York, Oxford and LSE concluded the two-child limit had no positive incentive effect on employment, nor produced a reduction in fertility among poorer families.
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United Kingdom Business & Economics
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Nicola Sturgeon's shock resignation as SNP leader cost her beloved party about £160k which plunged the nationalists into even more financial disarray. The 2022 accounts for the SNP were published last week and revealed that they were £800k in debt amid plummeting membership figures.
And now a leaked agenda from the party's National Council meeting in Perth on Sunday has shown that the costs of the leadership contest to replace Ms Sturgeon ran up a huge bill for an already struggling political entity. Humza Yousaf, Kate Forbes and Ash Regan toured Scotland to battle it out to be the next First Minister.
Wings Over Scotland reported that SNP Treasurer Stuart McDonald revealed the eye-watering sum which was spent on the battle, with £160k being utilised from the creaking nationalist coffers. He wrote: "The first half of 2023 was not without challenges. The overall cost of the leadership election was around £160k, none of which was budgeted for."
Ms Sturgeon quit unexpectedly as First Minister as she claimed that she wanted to return to a normal life and that no current pressure had led to her leaving. However, just two months later her husband Peter Murrell was arrested in connection with Operation Branchform, with her arrest following later in June.
He also admitted that income for the year had been affected by the plunging membership numbers with 30,000 Scexit supporters abandoning the SNP in the last year and a half. The position on June 29 was 73,936 which is a huge drop on 103,884 at the end of 2021.
Mr McDonald added: "Membership income has been hit by the overall fall in membership numbers (73,936 as at 29th June), while the cost of living crisis has also impacted on the level of membership payments. However, looking ahead, the position is significantly more positive.
"There will continue to be concerted action to raise money to back Katy Loudon to win Rutherglen and Hamilton West. And of course, the second half of the year includes the St Andrew’s draw and dinner, as well as conference income.
"While making predictions is not always wise, I remain confident our 2023 accounts will show a surplus as we build towards what will be a crucial general election year. We still have much work to do to ensure we put the party on the soundest financial footing possible."
Other revelations from the leaked agenda included the fact the SNP are looking to recruit a part-time accountant to help them "rebuild trust in the processes and procedures that are in place to ensure proper financial management of our party." Mr Yousaf promised to reset governance in the party after the Ms Sturgeon and Peter Murrell reign which saw a police probe launched into misuse of funds.
Operation Branchform is still ongoing as cops probe an allegedly missing £660k of ring-fenced independence referendum funds which the party allegedly spent on other things. This was also missing from their latest set of accounts.
The SNP's accounts showed that they recorded back-to-back deficits for the first time since 2014's Scexit vote as they ended up £732,072 in the red in 2021 and £804,278 in 2022. Membership income slumped from £2,516,854 in 2021 to £2,286,944 in 2022, while reportable donations fell from £695,351 to £368,538. And the party dug into its accumulated reserves which fell from £584,649 to minus £219,629.
The SNP have been approached for comment.
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United Kingdom Business & Economics
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Irdai Sets Up Panel To Simplify Wording Of Insurance Polices
The panel has been asked to examine the existing insurance policy wording and suggest 'simple and plain' wording that is legally correct and enforceable.
Regulator Insurance Regulatory and Development Authority of India on Thursday set up a committee to simplify the wording of insurance policies to help people make an informed decision before buying cover.
The eight-member committee has been asked to submit its recommendations within 8-10 weeks.
In a circular, the Irdai said policyholders often find it difficult to comprehend the terms and conditions in insurance policy contracts because of the complexity of the language used.
This causes confusion among policyholders while purchasing an insurance policy, Irdai said in an office order on 'Committee for Plain Language for Policy Wordings'.
"Irdai is committed to insurance for all 2047 to attain this objective, efforts are being made towards creating a progressive, supportive, facilitative and forward-looking regulatory architecture to foster a conducive and competitive environment leading to wider choice, accessibility and affordability to policyholders," it said.
The panel has been asked to examine the existing insurance policy wording and suggest 'simple and plain' wording that is legally correct and enforceable.
"Suggest simple policy wordings that clearly specify obligations and responsibilities of each of the parties to the contract" is also one of the terms of reference given to the panel.
It has also been asked to suggest specifications like typefaces for written material and presentation thereof, for both print/electronic records that are easily readable and comprehendible.
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India Business & Economics
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(Bloomberg) -- Cathie Wood’s flagship fund on Monday sold Roku Inc., which recently became its biggest holding, for the first time since August.
Most Read from Bloomberg
Wood’s Ark Innovation ETF sold 171,268 shares of the streaming-video platform company on Monday, marking its first sale of the stock since Aug. 10, Ark Investment Management LLC data compiled by Bloomberg show. Ark funds bought Roku shares several times in October.
The sales came after the stock jumped 42% over two sessions at the end of last week, as the company reported better-than-expected third-quarter results and gave an upbeat outlook. That bounce catapulted Roku past cryptocurrency exchange operator Coinbase Global Inc. and electric vehicle bellwether Tesla Inc. to become Ark Innovation ETF’s top holding on Thursday. Shares fell 1.7% on Monday.
Ark is the second largest shareholder in Roku, holding 8.35% of its outstanding shares as of September, according to data compiled by Bloomberg.
Wood’s flagship fund has risen 27% this year, compared with a gain of 39% for the Nasdaq 100 Index and a 14% advance for the S&P 500 Index. The Ark Innovation ETF slumped 67% last year.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
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Stocks Trading & Speculation
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SNP ministers have been warned their council tax bombshell will hammer 85,000 low-income households living in homes graded Band E or above.
The Scottish Government and local government body Cosla is consulting on plans to hike council tax on more valuable properties on a sliding scale rising from 7.5 per cent to 22.5 per cent.
But Scottish Labour said the government’s own poverty analysis showed that 13.7 per cent of the country’s poorest families live in homes in Bands E-H.
This is equivalent to 108,200 households, with separate figures showing that only 23,000 homes in Bands E-H are in receipt of Council Tax Reduction.
Scottish Labour local government spokesman Mark Griffin said: "The SNP's council tax bombshell is a tax rise on 80,000 of the poorest households during a cost-of-living crisis - it is an attack on working people that would make Rishi Sunak proud.
"Years of brutal cuts by the SNP have left local councils at breaking point, and now the government wants to plug the gaps with eye-watering council tax hikes on some of the poorest Scots while many wealthy families would pay nothing. It is a scandal that the Scots earning the least are once again being asked to pay more while getting less in return.
"Families struggling with rising housing costs should be getting support from their government - but instead they are being asked to foot the bill for the SNP's failure. Labour will stand up for people struggling with soaring living costs and fight for a fair deal for working people."
The plans are a repeat of a previous tax hike introduced in 2017. They would see council tax increase by 7.5 per cent, 12.5 per cent, 17.5 per cent and 22.5 per cent for properties in valuation Bands E, F, G and H
Leader of the Scottish Labour group on Cosla, Cllr David Ross said: "Under the SNP, our councils have been cut to the bone. The SNP-Green government now want council taxpayers , some of whom are the poorest in Scotland, to make up for their failure to properly fund vital local services."
By contrast, some 38 per cent of Scottish households in the highest income group live in homes graded in Bands A-D and will therefore escape the tax grab. The consultation is due to close on September 20.
Public finance minister Tom Arthur said: "We have listened to calls for the council tax system to be made fairer. The potential changes would only affect around a quarter of properties and even after they are taken into account, average council tax in Scotland would still be less than anywhere else in the UK.
"We know that many people are struggling with their finances and our council tax reduction scheme is there to ensure nobody has to pay a council tax bill they cannot be expected to afford, regardless of what band they are in.
"I would encourage anyone who has views on these proposals to complete our consultation before it closes on September 20 to help us determine if they should be taken forward."
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United Kingdom Business & Economics
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“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
The Mega Millions jackpot climbed to $1.25 billion after no ticket had all six of the winning numbers on Tuesday. That means there’s still a chance — 1 in nearly 303 million — that someone could take home the grand prize after the next drawing, on Friday night.
Even though a person is more likely to get eaten by a shark than win the lottery, it hasn’t deterred Americans from spending more than a few dollars in hopes of becoming rich overnight. In 2021, Americans spent over $105 billion on lottery tickets. In 2019, the average U.S. adult spent about $320 a year on them.
While lottery systems vary by state, a percentage of the revenue generated from lottery ticket sales is used to fund public programs, like schools, senior centers or infrastructure projects. It’s worth noting that five states — Alabama, Alaska, Hawaii, Nevada and Utah — don’t have lotteries due to a mix of concerns over the impact on low-income families, gambling addiction or competition with existing gaming operations.
Why there’s debate
People who buy a lottery ticket may see it as a low-risk investment for a chance to win hundreds of millions of dollars, which can be life-changing — if the right steps are taken.
Whether winning will change your life for the better, however, is the subject of fierce debate. Lottery skeptics note that, depending on the state, taxes and mandatory federal withholdings can chip away significantly at one’s total winnings.
There’s also a laundry list of horror stories about big lottery winners whose golden tickets led to strained family relationships, bankruptcy, prison or even murder.
But research indicates that such anecdotes about the dark side of winning the lottery are the exception, not the rule.
In 2018, researchers at the National Bureau of Economic Research who surveyed a large sample of lottery winners in Sweden reported that they “found little evidence in support of the hypothesis that winners often consume frivolously following a win.” In fact, the study found that “large-prize winners appear to enjoy sustained improvement in economic conditions that are robustly detectable for well over a decade after the windfall.”
Another study by the Swedish Institute for Social Research at Stockholm University found that more than a decade later, winners of large lottery prizes were typically more satisfied with their lives than non-winners or those who had won smaller amounts. The same study notes that life satisfaction is not the same as happiness, and that the difference in happiness reported by large-prize winners and the other groups was not statistically significant.
These findings echo those produced in 1978 by one of the first studies on lottery winners, which compared happiness levels among winners, non-winners and paralyzed accident victims and found no significant difference.
What’s next
After a California player took home the $1.08 billion Powerball jackpot in July, lotto enthusiasts nationwide are now looking ahead to Friday night’s Mega Millions drawing, which could result in a winner of the sixth-largest jackpot in lottery history, including Power Ball.
Perspectives
The lottery will ruin your life
“Winning the lottery is probably one of the quickest, most surefire ways to ruin your life — we’re serious. Not to mention your odds of winning the lottery are slim to none. … If you’re looking for financial peace, you’re not going to find it in winning the lottery.” — Dave Ramsey, Ramsey Solutions
Money won’t buy happiness
“If you weren't happy yesterday you won’t be happy tomorrow. It’s money. It’s not happiness.” — American businessman Mark Cuban to Dallas Morning News
Winner beware: Be disciplined or lose the money
“I know a lot of people who won the lottery and are broke today. If you’re not disciplined, you will go broke. I don’t care how much money you have.” — Sandra Hayes, a Powerball jackpot winner who split the winnings with co-workers, to Associated Press
Hey, big spender … have a financial plan in place
“We like to say it doesn’t cost you to dream. But it does if your fantasizing about instant wealth robs you of a realistic plan to create financial stability for yourself and your family.” — Michelle Singletary, Washington Post
Financial stability can be achieved without winning the lottery
“Daydream how the win would make your life better, and then figure out how you can create this change in your life even if you don’t win. I’ve spent nearly the last two decades working with sudden wealth recipients — people who have come into a windfall overnight. Sudden wealth can radically improve a person’s life, but it’s certainly not a requirement.” — Robert Pagliarini, Forbes
Money can buy happiness, sort of
“Having more money makes people less stressed and more satisfied with their life. Money might not buy happiness, but it buys a lot of things that make the pursuit of happiness easier.” — Kelsey Piper, Vox
Actually, being rich is pretty awesome
“I’ve been rich and I’ve been poor, and I like rich a whole lot better. We’ve lived in big, fancy houses. I drive a Jaguar. We’ve gone on cruises. I can’t complain.” — Richard Lustig, a seven-time grand-prize lottery winner, to Time
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Consumer & Retail
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Protean eGov Technologies IPO: All You Need To Know
The company plans to raise Rs 490 crore through an offer for sale only.
Protean eGov Technologies Ltd.'s initial public offering will open on Nov. 6, and close on Nov. 8.
The IT-enabled solutions provider is offering 61.9 lakh shares via an offer for sale only.
The selling shareholders comprise 360 One Special Opportunities Fund, HDFC Bank Ltd., Axis Bank Ltd., Deutsche Bank AG, Union Bank of India, NSE Investments and Unit Trust of India.
IPO Details
Issue opens: Nov. 6.
Issue closes: Nov. 8.
Fresh issue size: Not applicable.
Offer for sale size: Rs 72.3 crore.
Total issue size: Rs 490 crore.
Price band: Rs 752-792 per share.
Lot size: 18 shares.
Face value: Rs 10 per share.
Listing: BSE.
The company has not undertaken any pre-IPO placement.
The shareholding pattern does not change for the company after the offer.
Business
Protean eGov Technologies was originally set up as a depository in 1995 and created a systemically important national infrastructure for capital markets. The company operates in the e-governance sector and has so far managed 19 projects across seven ministries, to establish public digital infrastructure.
Some of their key interventions include modernising digital tax infrastructure with PAN issuance, and projects like Tax Information Networking and Online Tax Accounting Systems. They also created tech infrastructure as a Central Recordkeeping Agency for the Atal Pension Yojana.
The company has also supported open digital building blocks, such as Open Network for Digital Commerce, for use cases across e-commerce, mobility, healthcare, agriculture, and education.
Use Of Proceeds
The company will not receive any proceeds from the offer for sale.
All the funds raised will be received by the selling shareholders, in proportion to the shares sold by them.
Risk Factors
Protean is substantially dependent on projects awarded by government agencies. In fiscal 2023, revenue from contracts sourced by government bodies were at Rs 538 crore, or 72.5% of their operations.
Their operations are solely dependent on providing IT services, which could be at risk if they don't provide solutions that meet client expectations.
Their reliance on technology systems and third-party networks could impair their ability to deliver on products and services.
Their client contracts can typically be terminated without cause, which could impact their revenue and profitability.
Amount of trade receivables in the quarter ended June 2023 were representing 99.62% of their revenue from operations. Any delay in collection of their dues can have an adverse impact on cash flows.
The company may not meet the selection criteria for high value contracts, and has not been awarded any orders for the first quarter of the current fiscal.
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India Business & Economics
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Tory food minister Mark Spencer’s farm shop shows there’s plenty on the shelf if you have the wealth.
While supermarkets were stripped bare as the fruit and veg shortage gripped tight, Mr Spencer’s family store was a land of plenty.
Green crates at the Spring Lane Farm Shop outside Nottingham were bulging with ripe tomatoes, plump peppers and juicy cucumbers.
Ironically it had no turnips, the veg his boss Therese Coffey suggested as a home-grown alternative to scarce imported produce.
Mr Spencer’s shop was doing a brisk trade –despite charging double supermarket prices.
Tomatoes were £3.99 per kg, cucumbers £1.89 each, iceberg lettuces £1.75 a piece, peppers £6.49 per kg. A kilo of broccoli cost £4.49 and giant Spanish onions £1.79.
One customer said: “It is a bit pricey but the quality of produce is excellent. I’m a bit surprised there is so much fresh fruit and veg available given the horror stories which have come out this week.”
It was a different picture at the Sainsbury’s Local just 500 yards down the road.
There were no tomatoes, peppers, cucumbers or lettuce. A pack of three regular onions cost £1 and there was one piece of broccoli left.
Speaking in March last year, as concern grew about the impact of the war in Ukraine on food supplies Mr Spencer, 53, said there was “no prospect of food shortages at any point in the future”.
Big supermarkets have faced shortages for several days and shoppers are limited on purchases.
Suppliers in Morocco and Spain, which meet most UK winter needs, have faced cold temperatures, heavy rain, and flooding over the past three to four weeks.
Environment Secretary Ms Coffey warned the situation would “last about another two to four weeks”.
She also said that British consumers should “cherish” home-grown produce, and eat more turnips instead of imported food.
Mr Spencer and the Department of Food were approached for a comment.
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United Kingdom Business & Economics
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"So, are we getting a pay rise, then?"
The question from the policeman on the gates of Downing Street as I arrived for the prime minister's news conference could have been asked by more than a million public sector workers.
The answer, I told him an hour later as I left, was yes - 7%.
The big question now is what police officers and others make of what they have been offered.
The government has decided to accept the recommendations of the pay review bodies, the groups that recommend how much of a pay rise various parts of the public sector should get.
At the core of all of this are choices: gnarly choices, tricky trade-offs.
The prime minister doesn't want to borrow money to fund the pay rises.
Borrowing and debt are already high, and more borrowing, he fears, would fuel inflation, which is also high.
And he doesn't want to put up taxes either. Yes, they are high by historic standards too.
So how is this being paid for?
Ministers have been scrabbling about looking for money within existing budgets. The additional cost of these plans is around £2bn.
About half of that, they hope, will be raised by cranking up the cost of visas and the surcharge that migrants have to pay to use the NHS.
What about the other half, the best part of a billion pounds?
This is the chunk being looked for by what are described by those in government as "underspends and reallocations."
They are not keen on using the word cuts.
Whatever the word you use, what this amounts to is money that had been allocated to one pot, being taken out of it and put into the pay pots.
The government, just like the rest of us, can't spend the same pound twice.
And so, the priority has still to be decided. So, what won't be happening because of these pay rises that might otherwise have happened?
Officials haven't given many examples, even though the process of moving money around has been completed.
Two of the examples offered are a freeze on civil servant recruitment in the Ministry of Defence and offering fewer traineeships in the civil service.
And where are Labour in all this?
It is striking that Keir Starmer did not directly criticise the government's announcement. They are offers for workers and unions to consider and he had little to add, he said.
The big question now is what difference will these pay offers make? Will they stop the strikes?
The leadership of the teaching unions have welcomed the settlement they have been offered.
So much so that Mary Bousted, the joint general secretary of the National Education Union, put her name to a joint statement with the prime minister.
The Sunak-Bousted double act is not something many would have imagined a few months back.
But, as ever, it will be up to union members to decide whether they accept these suggestions.
And some are lukewarm at best.
The doctors' union the BMA and Unite, a huge trade union, are both sounding very sceptical.
It is a reminder than in an era of high taxes, high government spending, high inflation and stagnant growth, there are few easy answers for any of us: workers, unions, opposition parties or the government.
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United Kingdom Business & Economics
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- As the world of crypto becomes more connected to the broader financial market, the appetite for tokenizing real-world assets is growing even among crypto natives.
- Maria Shen, a general partner at Electric Capital, told CNBC that there are retail users who can use RWAs for remittances and savings, businesses that use stablecoins to pay suppliers and in-chain institutions like MakerDAO that try to access yield through tokenized Treasurys.
- Kraken Ventures' Stuti Pandey said RWAs have benefited from changes in economics, technology and credibility.
Tokenizing real-world assets on a blockchain is one of the buzziest topics of the year, and this time it isn't just coming from financial incumbents like Citi, JPMorgan and Northern Trust, it's coming from crypto native players, too.
The initial hype around tokenization using blockchains began around 2015 among banks who said they could never embrace bitcoin or cryptocurrencies, but that their underlying ledger technology could potentially be a game changer by making way for 24/7 settlement, guaranteed execution and lower transaction fees. As the world of crypto becomes more connected to the broader financial market, the appetite for tokenizing real-world assets, or RWA, is coming from smaller participants as well.
"When RWA first started trending we looked at institutions like high net worth individuals, family offices, pension funds [and] university endowments – and that's still true but there has been the emergence of what I would think of as on-chain institutions," Maria Shen, a general partner at Electric Capital, told CNBC.
For example, the DeFi protocol MakerDAO.
"MakerDAO works with institutions that borrow dai, which is the stablecoin, and effectively tokenize T-bills that MakerDAO then uses in its ecosystem," Shen said. "That's been a really interesting shift that's never happened before."
She broke it down into retail users who can use RWAs for remittances and savings, businesses that use stablecoins to pay suppliers and in-chain institutions like MakerDAO that try to access yield through tokenized Treasurys.
Kraken Ventures' Stuti Pandey said since tokenization's last hype cycle, RWAs have benefited from changes in economics, technology and credibility.
"Over the past few years, interest rates have been very depressed and that has favored very high growth, high risk assets," she said. "In decentralized finance, you had synthetic yields between 80% and 200%, so RWAs didn't really have a chance to thrive. Now that rates are down, it's actually these real-world assets that have interesting yield."
They can also benefit from better tokenization infrastructure and get mindshare this time around, she added.
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Crypto Trading & Speculation
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- Sen. Bernie Sanders, alongside other progressives, is again trying to raise the federal minimum wage.
- He's introducing legislation to bring the federal minimum to $17 by 2028; currently, it's $7.25.
- However, past attempts to raise the minimum wage have been stymied by Republicans and moderate Democrats.
Sen. Bernie Sanders is once again pushing for a higher minimum wage.
Sanders, alongside 29 senators and nearly 150 House representatives, introduced new legislation to bring up the federal minimum rate for the first time since 2009.
"It was the movie Wall Street where Michael Douglas played the character Gordon Gekko, who famously uttered the words 'greed is good,'" Rep. Hakeem Jeffries, the House Democratic leader, said during a Tuesday afternoon event to unveil the legislation. "We want to make clear that greed is not good. Greed is not good for the American worker."
Under the latest version of the Raise the Wage Act, the federal minimum would climb to $17 by 2028. It's an effort that's most likely dead on arrival, as previous attempts to push through a hike — even in a House and Senate both previously controlled by Democrats — have failed to pass.
A federal hike took a backseat during the economy's robust pandemic recovery, as many firms began raising pay of their own volition to try and lure in new workers. But as the labor market cools, and wages begin to moderate, progressives say it's time to once again turn an eye towards raising the nationwide standard.
"In the year 2023 a job should lift you out of poverty, not keep you in it. At a time of massive income and wealth inequality and record-breaking corporate profits, we can no longer tolerate millions of workers being unable to feed their families because they are working for totally inadequate wages," Sanders said in a press release. "Congress can no longer ignore the needs of the working class of this country. The time to act is now."
The left-leaning Economic Policy Institute has found that 21 million workers make below $15 an hour. EPI estimates the hike to $17 would give nearly 28 million workers a boost, impacting 19% of the workforce. Workers would get, on average, a raise of $3,100.
Many states have taken matters into their own hands and raised local wages, especially with grassroots efforts like the Fight for 15 gathering steam over the last decade. States enacting higher minimums have led to $87.6 billion more in economic output since 2012, according to a report from the National Employment Law Project, with those hikes and increased output supporting 452,000 jobs annually.
Rep. Pramila Jayapal, the chair of the Congressional Progressive Caucus, argued that raising the minimum wage will spark a "virtuous economic cycle" in which both workers and businesses do better.
"Workers get a higher wage, they have more money to spend, they spend in the community, it lifts up businesses, those businesses do well, they hire more people and that cycle continues," Jayapal said at the event on Tuesday.
The NELP report found that, while higher state minimum wages helped slash Black-white wealth gaps, those gaps grew in states that left their minimums untouched. Oxfam America has found that nearly a third of America's workforce make below $15 an hour, and workers of color are disproportionately more likely to make below $15.
Frances Holmes, who works a minimum wage job at Busch Stadium in St Louis, Missouri, said she can't afford her rent after it was raised to $720.
"Workers like me, we need your help," Holmes said. "I know what corporations do. What they do is we make the money, they get rich. They get rich, we get poor."
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Workforce / Labor
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Three Things To Prevent A Treasury Market Meltdown
(Bloomberg Opinion) -- The market for US Treasury securities is arguably the world’s most important: a haven for investors in turbulent times, and a benchmark for virtually all other assets. Yet it’s facing increasing strains, as the government’s unsustainable borrowing and the Federal Reserve’s quantitative tightening flood it with trillions of dollars of debt.
To ensure the Treasury market doesn’t become a source of instability, US authorities need to make some adjustments. Quickly.
Treasuries are popular in part because they’re typically extremely liquid, meaning they’re easy to buy and sell without causing big price swings. This feature depends, in part, on a small group of big banks, known as primary dealers, standing ready to trade and to hold large quantities of securities on their balance sheets. In recent years, though, the sheer volume of outstanding government debt, together with more stringent capital requirements, has rendered dealers less able to play their traditional role, particularly when there are sudden surges in activity and increased price volatility.
Other participants also now play a bigger role, and that has added to the fragility. Algorithmic trading firms provide illusory liquidity, holding securities for mere microseconds and withdrawing precisely at the volatile moments when their presence is most needed to make markets. Meanwhile, hedge funds employ vast leverage to exploit small discrepancies between Treasury prices in cash and futures markets. This “basis trade” makes the market more efficient, but also entails a big risk that, in volatile times, the funds will have to sell large quantities of Treasuries to meet collateral calls on their borrowings. Such forced selling could be destabilizing, given the size and concentration of the positions.
What to do? I see three ways to mitigate the risks.
First, someone with a highly expandable balance sheet must provide real, reliable liquidity. To that end, the Fed should allow all holders of Treasuries to access its standing repo facility, where it lends money against the collateral of government securities. This would allow hedge funds and others to raise cash quickly without needing to sell en masse. To ensure it would be used only as a backstop, the Fed should charge a slightly higher interest rate than what normally prevails in repo markets. Instead of trying to interact directly with the broader set of market participants, the Fed could employ primary dealers as agents, without burdening their balance sheets.
Second, the government should require that all Treasury transactions be routed through a central clearinghouse, which stands between counterparties and ensures that adequate collateral is collected. This makes it easier for a broader group of participants to trade directly, without worrying about one another’s creditworthiness. It also consolidates a complex web of bilateral obligations into a much smaller net exposure to the central counterparty, reducing the overall risk in the system.
Third, set initial collateral requirements for leveraged Treasury positions high enough so that they needn’t be increased during bouts of volatility. This would limit the potential for excessive hedge fund leverage and reduce the risk of vicious cycles in which rising collateral demands and forced selling compound one another. The right level would depend on how much regulators want to reduce the probability of distress. If my recommendations on standing repo and central clearing were adopted, the requirements presumably could be less stringent.
Ideally, the government would do its part by getting its fiscal policy in order. Unfortunately, Congress appears unlikely to do so anytime soon — unless the bond market vigilantes return in enough force to compel a constructive response. All the more reason to address the market’s vulnerabilities before trouble arises. The Fed’s involvement, together with the other fixes I’ve suggested, should calm nerves and reduce the risk of a market meltdown.
More from Bloomberg Opinion:
- Social Security Is Lurching Toward a Real Crisis: Editorial
- The Fed Pivot Turbulent Treasuries Need: Mohamed A. El-Erian
- Bill and Bill's Big Adventure in Treasuries Land: John Authers
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Bill Dudley, a Bloomberg Opinion columnist, served as president of the Federal Reserve Bank of New York from 2009 to 2018. He is the chair of the Bretton Woods Committee, and has been a nonexecutive director at Swiss bank UBS since 2019.
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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- "The scammers fraudulently claim to represent our Shenzhen office and solicit money from individuals on the premise of paying them back with commissions," Temasek said.
- "This is a scam and is not associated with Temasek in any way. Temasek does not directly sell any investment products or financial instruments in China. We have not authorized any third party to do so on our behalf," the Singapore investment company added.
- The Singapore state investor has three offices in mainland China in Beijing, Shanghai and Shenzhen.
Singapore's Temasek Holdings warned that scammers are allegedly trying to sell financial investment products or instruments to unsuspecting individuals while posing as agents of the firm's office in Shenzhen, China.
"We have been alerted to a scam in China that involves the impersonation of Temasek in Shenzhen, using our registered office name 'Temasek Holdings Advisors (Shenzhen) Co., Ltd.' / '淡马锡投资咨询 (深圳) 有限公司'," Temasek said in a statement Wednesday.
With a net portfolio value of 382 billion Singapore dollars ($284.5 billion) as of March 31, Temasek Holdings is one of two Singapore state-owned investment companies, along with the more traditional sovereign wealth fund GIC. It is an active investor and shareholder with three offices in mainland China in Beijing, Shanghai and Shenzhen. Temasek maintains a total of 13 offices in nine countries outside of Singapore.
"The scammers fraudulently claim to represent our Shenzhen office and solicit money from individuals on the premise of paying them back with commissions," Temasek said.
"This is a scam and is not associated with Temasek in any way. Temasek does not directly sell any investment products or financial instruments in China. We have not authorized any third party to do so on our behalf," the Singapore investment company added.
"We reserve all rights to pursue legal action and remedies against any person or company that impersonates Temasek and/or infringes our intellectual property," Temasek said.
From fake Apple and Ikea stores and knock-off Disneylands to counterfeit milk powder, medicine and food, China struggles with counterfeits which have in recent years led to adverse health effects or swindled victims out of huge sums of money.
Chinese state news agency Xinhua reported Tuesday that Myanmar has transferred a total of 31,000 suspects to Chinese authorities to date in a crackdown on phone fraud originating from northern Myanmar that targeted mainland Chinese.
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Asia Business & Economics
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By Pete Schroeder
WASHINGTON (Reuters) - Big U.S. lenders are expected to show they have ample capital to weather any fresh turmoil in the banking sector during this week's Federal Reserve health checks, although resulting investor payouts are likely to dip slightly, analysts said.
The central bank on Wednesday will release the results of its bank "stress tests" which assess how much capital banks would need to withstand a severe economic downturn.
The annual exercise, introduced following the 2007-2009 financial crisis, is integral to banks' capital planning, dictating how much cash they can return to shareholders via dividends and share buybacks.
The 2023 tests come in the wake of this year's banking crisis in which Silicon Valley Bank and two other lenders failed. They found themselves on the wrong end of Fed interest rate hikes, suffering large unrealized losses on their U.S. Treasury bond holdings which spooked uninsured depositors.
Wall Street lenders including Citigroup Inc, Bank of America , JPMorgan Chase, Goldman Sachs Group, Wells Fargo, and Morgan Stanley usually attract the most attention. But with continued investor jitters over the sector, smaller lenders including Capital One, U.S. Bancorp, and Citizens are likely to be in the spotlight too.
Despite the turmoil, and the exam being the hardest in years, bank analysts and executives expect the 23 lenders being tested will show capital in excess of regulatory minimums.
"The 2023 Fed Stress Test throws the kitchen sink at banks and allows them to show that the largest banks can handle one of the toughest tests yet," Wells Fargo analysts wrote on Thursday.
"Dividends should be secure, and banks should have excess capital to return to shareholders under most circumstances, even if at a slower pace than in the past."
The industry has performed well in recent years, although the Fed has faced criticism after the spring bank failures for not probing bank weaknesses for rising rates in prior tests.
Last year, the Fed found banks would suffer a combined $612 billion in losses in a severe economic downturn, but that would still leave them roughly twice the capital required under Fed rules.
This year's test is even tougher. The Fed's "severely adverse" scenario envisages the unemployment rate jumping 6.5 percentage points, compared with 5.8 percentage points in 2022. That's because the test gets harder as the real economy grows stronger, and the real U.S. jobless rate is lower in 2023.
The test will also envisage a 40% slump in the prices of commercial real estate, an area of greater concern this year as lingering pandemic-era office vacancies stress borrowers.
How well a bank performs dictates the size of its "stress capital buffer" - an extra cushion of capital the Fed requires for banks to weather the hypothetical economic downturn, on top of regulatory minimums required to support daily business. The larger the losses under the test, the larger the buffer.
The Bank Policy Institute, a Washington bank lobby group, said on Thursday it anticipates banks' hypothetical losses will be slightly higher this year. Average capital levels will fall by 3.2% in 2023, up slightly from 3% in 2022, it predicted.
RBC analysts predicted earlier this month that hypothetical credit losses will be largely driven by commercial real estate exposure, and that some banks would face higher buffers.
That, combined with impending new capital hikes and uncertainty over the economic outlook, will make banks slightly more conservative about payouts this year, said analysts.
"Capital return expectations continue to get ratcheted down given looming headwinds," said Jefferies analysts this month.
Last year's test was relatively straightforward partly because the Fed did not have a Vice Chair for Supervision since Randal Quarles stepped down in 2021. This year, the tests are being overseen by his successor Michael Barr, who has said he wants to make them more dynamic by applying multiple scenarios.
This year, for example, also includes an "exploratory market shock" for the eight largest and most complex banks. While that will not affect capital, it will be used to assess potentially employing multiple scenarios in future stress test exercises.
"In an environment of ever-changing risks, stress tests can quickly lose their relevance if their assumptions and scenarios remain static," said Barr in December.
(Reporting by Pete Schroeder; editing by Michelle Price and Deepa Babington)
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Banking & Finance
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The crypto landscape has seen better days. Vitalik Buterin, the inventor of Ethereum, was apparently the subject of a hack that targeted his Twitter account and promoted a less-than-authentic scheme to drain people’s crypto wallets.
“To celebrate the Proto-Darksharding coming to Ethereum, @Consensys is marking the moment with a commemorative NFT. ‘Proto honors the work of the devs who made this possible. The collection is free for the next 24 hours,” the alleged hackers posted on Buterin’s account, followed by a link to a webpage where users were encouraged to claim the NFT.
The hack was reported by Web 3 Is Going Great, a blog dedicated to chronicling all the ways that the future of tech is imploding. Buterin’s account was hacked, and the tweet was posted and subsequently removed all over the course of 20 minutes. A limited edition NFT was seemingly too good to pass up for crypto bros across the internet, and according to Web 3 Is Going Great, the attached link would actually take you to a wallet drainer, effectively offering the hackers the chance to crypto-bankrupt you. The outlet says that the scheme actually worked, and roughly $650,000 worth of NFTs were stolen from unsuspecting victims.
Proto-danksharding is an upcoming update to Ethereum’s digital infrastructure, which developer Mario Havel told Decrypt was in its last stages of development before release, seemingly in the next few months. The new update will use so-called “data blobs,” allowing the Ethereum network to expand and handle up to 100,000 daily transactions.
Buterin’s hack is par for the course in the digital-only currency world. A report last fall found that hackers stole the equivalent of $718 million in crypto from January to October 2022. This past June, the Department of Justice announced that it identified the two hackers that targeted the Mt. Gox crypto exchange in 2011, making off with around 647,000 bitcoins along the way.
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Crypto Trading & Speculation
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Reddit's most popular third-party app, Apollo, will shut down due to new API fees
Reddit's recent decision to charge third-party developers exorbitant fees for API access just killed off it's biggest, most popular app.
Apollo for Reddit will shut down for good at the end of the month, according to developer Christian Selig.
"In order to avoid incurring charges I will delete Apollo's API token on the evening of June 30th PST," Selig wrote in a long Reddit post(opens in a new tab) detailing the decision to shut down Apollo. "Until that point, Apollo should continue to operate as it has, but after that date attempts to connect to the Reddit API will fail."
Tweet may have been deleted (opens in a new tab)
Apollo is a third-party Reddit client that has become extremely popular with the platform's usebase over the years due to its streamlined design and easy accessibility. Some Redditors have shared that they would actually refrain from using Reddit entirely if they couldn't experience the platform via Apollo. Selig told TechCrunch(opens in a new tab) last month that Apollo has 900,000 daily active users. Mobile app analytics firm Data.ai(opens in a new tab) tells Mashable that Apollo for Reddit has been downloaded an estimated 5 million times globally.
Selig went public last week with the issues he was having with Reddit regarding the company's choice to start charging third-party developers for API access. According to Selig, after numerous back-and-forths with Reddit, it became clear that the new API model would cost the solo developer $20 million per year just to run Apollo.
According to Selig, the API cost per user would come out to more than what Apollo for Reddit users pay for the premium plan on his freemium app. While Reddit's API subscription plan is based on a pay-per-use model, Selig shared that the 30 day timeframe the company had given before switching to the paid plans would further limit his ability to make changes to the app to find a feasible way forward.
Selig, along with many other developers, weren't originally concerned when Reddit shared it was looking to start charging earlier this year. The company had hinted that the decision to move to a paid API model was to curb AI language training and other uses that weighed heavily on Reddit's systems without improving Reddit users' experiences. However, this turned out not to be the case as even third-party apps, like Apollo, which enhance Reddit users' experience and encourage more use of the platform, are being affected.
Reddit API policy draws a line in the sand
However, one of the more unusual events that unfolded around this saga between Reddit and Apollo is the hostility the company appears to have shown its most popular third-party developer.
Shortly after Selig went public with the situation at the beginning of the month, a Reddit employee publicly criticized Apollo, claiming that the app was "inefficient" with its API requests, which is why it would cost Selig so much. Selig and even other third-party Reddit developers came to the Apollo-creators' defense and disputed the "inefficient" claim.
But then in Selig's post announcing the shut down, he shared the most bizarre allegation about Reddit: Employees, including Reddit CEO Steve Huffman, had claimed Selig tried to "blackmail" the company by "threatening" he'd go public with the API issues if they didn't pay him $10 million.
Selig said he happened to record the call where this conversation went down and shared the purported transcript(opens in a new tab) and call recording on Thursday. It's clear from both that Selig was jokingly offering to sell his app to Reddit for half what the company claimed Apollo was costing them in API requests. In fact, on this May 31 phone call, Selig immediately received an apology from Reddit for misinterpreting what Selig was saying. Nevertheless, according to Selig, Reddit moderators shared a transcript of a call Reddit's CEO had with them where the company is still claiming Selig tried to "blackmail" them to "stay quiet."
According to The Verge(opens in a new tab), Reddit is planning its own response regarding the API changes in the coming days, including an AMA with Reddit CEO Huffman on Friday.
To add to everything, this is all going down the same week where Apollo for Reddit was a featured app during Apple's big WWDC 2023 event – and even received a mention from Apple's Craig Federighi. Apollo for Reddit was also shown as one of the apps currently compatible with Apple Vision Pro, a product that won't be released to the public until after Apollo shuts down.
"I'm sorry I won't be able to see that happen," Selig said regarding the Apollo's compatibility with Vision Pro.
While Apollo may be shutting down, Redditors aren't giving up. The broad Reddit community is planning to protest Reddit's API changes with subreddits planning to "go dark" and temporarily shut down for a 48-hour period starting June 12. There are currently more than 3,100 subreddit communities planning to take part in the protest including some of the platform's largest such as r/aww, r/gaming, r/Music, r/Pics, and r/todayilearned.
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Consumer & Retail
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- The market may contract along with the economy in a possible recession, but there are two ways retirees can protect the invested savings they're living off of, says Christine Benz, director of personal finance and retirement planning at Morningstar.
- One of those defenses is changing the source of withdrawals — for example, pulling from cash or bonds instead of stocks.
- The second defense is to reduce the overall dollar amount retirees withdraw from their investments.
The federal debt-ceiling standoff and the specter of a possible recession on the horizon may mean turbulent times ahead for the stock market — and that's especially worrisome for retirees who rely on their investment portfolios for income.
Retirees are generally advised to hold some stocks as part of their nest egg. Stocks serve as a long-term growth engine, helping to beat inflation's negative impact over decades of retirement in a way that cash and bonds generally can't.
But pulling too much money from stocks during periods of sustained losses can be dangerous for retirees. The risk is particularly acute for people who've recently retired.
Fortunately, there are ways retirees can cut that risk.
"You really have two defenses if you're retired and are pulling from your portfolio for your living expenses," said Christine Benz, director of personal finance and retirement planning at Morningstar.
One of those defenses is changing the source of withdrawals — for example, pulling from cash or bonds instead of stocks. Ideally, retirees would pull from an asset type that hasn't been declining in value, Benz said.
That's sometimes a tough proposition: 2022 was a rare case when stocks and bonds both suffered steep losses.
The second defense is to reduce the overall dollar amount retirees withdraw from their investments, Benz said.
Here's the crux of the issue: When the stock market pulls back, investors must sell more of their stocks to generate the same level of income. When the market eventually stabilizes and swings positive, the portfolio has less of a runway for growth.
If retirees aren't careful, this dynamic may cause them to run out of money sooner than expected in their later years.
Here's one way to think about it: Retirees often peg the amount of their annual withdrawal to a percentage of their portfolio, perhaps somewhere in the range of 3% to 5%.
If a retiree continues to pull the same dollar amount from that portfolio after stocks suffer a prolonged decline, that share could jump to 7% or 8%, for example — a perhaps-unsustainable amount that inadvertently hobbles the portfolio, said David Blanchett, head of retirement research at PGIM, the investment management arm of Prudential Financial.
The key is flexibility, to the extent retirees have wiggle room, he said.
There are many caveats here.
For one, a stock-market pullback isn't guaranteed in the near term. U.S. lawmakers may reach a debt-ceiling deal by early June and avert likely financial chaos.
And while Federal Reserve economists expect the U.S. to tilt into a mild recession later this year, it's not guaranteed. Neither is a stock-market pullback if an economic downturn does materialize; while stocks frequently contract during recessions, there are instances (like in the early 1980s and 1990s) when that didn't happen, according to a Morningstar analysis.
Further, adjusting withdrawal behavior is more important for younger retirees — especially healthier ones expecting to tap their nest egg for decades.
Consider this illustration of risk from Charles Schwab, which examines two newly retired individuals with $1 million portfolios and $50,000 annual withdrawals (adjusted for inflation).
The only difference between them is when each experiences a 15% portfolio loss. One suffers a 15% decline in the first two years of retirement, and a 6% gain each year thereafter. The other has a 6% annual gain for the first nine years, a negative 15% return in years 10 and 11, and a 6% annual gain thereafter.
Here's the kicker: The first investor would run out of money after 18 years, while the second would have about $400,000 left.
It may also be easier for certain retirees to be flexible than others.
For example, some may cover all or the majority or all of their necessities (like food and housing costs) from guaranteed income sources like Social Security, a pension or an annuity. They may more easily be able to throttle back spending from stocks or a broader investment portfolio, if it's largely being tapped just for discretionary purchases like vacations and entertainment.
There are several approaches retirees can take to be flexible with withdrawals, such as a "guardrail" strategy or forgoing inflation adjustments in down years.
Here's one easy rule of thumb: Using your personal life expectancy to determine if you're withdrawing a safe amount of money from year to year, Blanchett said.
(There are many online calculators that estimate how long you'll live — and therefore how long you must make your retirement savings last. Blanchett recommends the Actuaries Longevity Illustrator from the American Academy of Actuaries and Society of Actuaries.)
The calculation is simple: Divide 1 by your life expectancy, which will yield a reasonable starting point (in percentage terms) for a safe portfolio withdrawal.
For example, if a retiree determines their longevity to be 20 years, they'd use this calculation: 1/20 X 100. That yields a 5% withdrawal rate.
"It's really important to take the temperature of the withdrawal rate on an ongoing basis," Blanchett said.
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Personal Finance & Financial Education
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The Conservatives face a "real risk" they will lose a generation of voters over a lack of house building, according to one of their own former housing ministers.
Speaking to the Politics Hub with Sophy Ridge, Sir Brandon Lewis explained why he is using his time as a backbencher to encourage the building of more homes.
He served as housing minister between 2014 and 2016, and was a cabinet minister under Boris Johnson before leaving government when Mr Johnson's ministry collapsed.
Sir Brandon was asked by Ridge if the Conservative Party is at risk of "losing a generation of voters" if they do not build more houses.
He said: "I think there is a real risk, because why would a young person look to the Conservative Party? What is the economic offer?
"When I was young, you wanted to grow up and own your own home - we know for a fact the majority of people in this country want to own their own home if they don't already.
"So I think we've always been the party of homeownership - I think we should be the party of homeownership.
"That means we need to build houses.
"And I would argue of all tenures, affordable, social, private, rented, and that creates more ability for people to then own their own home as well."
He said his views were backed up by polling commissioned by the Adam Smith Institute thinktank, which suggested 77% of people think there is a housing crisis. Younger people were more likely to think there was a crisis, the research found.
The polling was carried out by JL Partners, who spoke to 1,001 members of the public and 1,000 mortgage holders between 4 August and 11 August.
Sir Brandon said he has been "very open" about calling for more housing, telling Ridge that his party needs "to do more".
Read more:
Average house price predicted to be £45,000 higher by 2028
House price growth returns due to 'constrained supply' of properties
The issue is a battleground between the government and the Conservative Party itself - nationally, the government wants houses, but plans struggle to get approved by councillors and MPs often oppose building in their area - groups sometimes called "not in my back yard" or NIMBYs.
Last year, Housing Secretary Michael Gove watered down the government's 300,000 homes-per-year target following pressure from backbench Conservative MPs.
And earlier this year, Rishi Sunak was accused of ditching his party's national housebuilding targets to please party members.
Mr Gove announced plans to ease developments on brownfield sites over the summer - but it is not clear if this will get the government to meet another target of building a million homes between 2019 and the next election.
Sir Brandon told Ridge that, having served as a councillor, he knows the "most impactful thing" a politician can get from a constituent is a planning application "people don't like".
He argued that the government needs to create "a planning system that's efficient and effective, gives local people a voice, but also is able to engage with local people about the advantages and the necessity of housing".
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He also argued that, when he was housing minister, he was told of the economic benefits of building more houses.
"100,000 homes build is worth at least 1% of GDP, depending on how you calculate supply lines - maybe 3%, you could argue - of GDP," he said.
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Real Estate & Housing
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NEW YORK -- Stamps prices are on the rise, again — one of several changes the U.S. Postal Service is rolling out this month.
Starting Sunday, the cost of the first-class “forever” stamps will jump from 63 to 66 cents. The latest price comes just months after forever stamps climbed from 60 to 63 cents in January, following a series of similar increases in recent years.
When announcing its intention to raise forever stamp prices to 66 cents earlier this year, the USPS cited rising “operating expenses fueled by inflation” and the impacts of “a previously defective pricing model” — noting that changes to mail service costs “are needed to provide the Postal Service with much needed revenue.”
Beyond forever stamps, a handful of other mail services will also see price increases starting Sunday. The cost of sending a first-class one-ounce metered letter, for example, will rise to 63 cents and domestic postcards will jump to 51 cents. International postcards and one-ounce letters are both set to move to $1.50.
The Postal Service will also launch a new package shipping service, USPS Ground Advantage, on Sunday to replace and combine previous plans. Ground Advantage pricing will reflect a 3.2% decline in retail prices and a 0.7% drop for commercial, the Postal Service says.
The Postal Regulatory Commission approved both the price changes and the implementation of Ground Advantage ahead of this month's changes. The price changes had also been approved by the Governors of the U.S. Postal Service as of the Postal Service's April notice.
Sunday marks the fifth jump in forever stamp prices seen since the start of 2019, when the postage cost 50 cents apiece. When adjusted for inflation, 50 cents in January 2019 equates to about 60 cents in the spring of 2023, according to the Bureau of Labor Statistics’ CPI inflation calculator.
For the first quarter of 2023, the Postal Service’s operating revenue was $21.5 billion — an increase of $206 million, even though volume declined by 1.7 billion pieces, or 4.8%, compared with the same period last year. All told, the Postal Service reported a net loss of $1 billion for the first quarter, but that was a $519 million improvement over the $1.5 billion net loss during the same period last year.
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Inflation
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Greenpeace activists have climbed on the roof of Rishi Sunak’s North Yorkshire mansion and draped it in oily-black fabric to “drive home the dangerous consequences of a new drilling frenzy”.
The climbers managed to get on top of Sunak’s constituency home in Kirby Sigston, near Northallerton, on Thursday morning, as the prime minister flew to California on holiday.
After reaching the top of Kirby Sigston Manor using ladders and climbing ropes, they unfolded 200 sq metres of oil-black fabric to cover a whole side of the property. At the same time, two other activists unfurled a banner stating: “Rishi Sunak - Oil Profits or Our Future?” across the grass in front of the house.
This week the prime minister pledged to “max out” the UK’s oil and gas reserves as he announced more than 100 new licences for North Sea drilling, which experts said could be catastrophic for the climate.
Greenpeace said the protest aimed to stop Sunak from approving Rosebank, the biggest undeveloped oil and gas field in the North Sea, the operations of which would be enough to exceed the UK’s carbon budgets.
A No 10 source told PA Media that police were at the property. “We make no apology for taking the right approach to ensure our energy security, using the resources we have here at home so we are never reliant on aggressors like [Vladimir] Putin for our energy,” the source said. “We are also investing in renewables and our approach supports 1000s of British jobs.”
Philip Evans, Greenpeace UK’s climate campaigner, said: “We desperately need our prime minister to be a climate leader, not a climate arsonist. Just as wildfires and floods wreck homes and lives around the world, Sunak is committing to a massive expansion of oil and gas drilling.
“He seems quite happy to hold a blowtorch to the planet if he can score a few political points by sowing division around climate in this country. This is cynical beyond belief.
“Sunak is even willing to peddle the old myth about new oil and gas helping ordinary people struggling with energy bills when he knows full well it’s not true. More North Sea drilling will only benefit oil giants who stand to make even more billions from it, partly thanks to a giant loophole in Sunak’s own windfall tax.
“The experts are clear - we can’t afford any new oil and gas, and the fossil fuel industry certainly doesn’t need another helping hand in destroying the climate. What we need is a clean, affordable energy system fit for the 21st century. It’s time for Sunak to choose between big oil’s profits or our future on a habitable planet.”
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United Kingdom Business & Economics
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EXCLUSIVE — The National Republican Congressional Committee is hitting out against Rep. Marcy Kaptur (D-OH), sending the congresswoman a detailed memo explaining a law that blocks insider trading on the stock market, despite the Ohio Democrat voting in favor of the bill over a decade ago.
The NRCC distributed the memo, “How To Not Violate The Law You Voted For,” to Kaptur’s office in Washington, D.C., on Wednesday afternoon. The two-page handout details the parameters of the STOCK Act, which Kaptur had violated earlier this year, according to the NRCC.
“After spending 40 years in Congress hiding from constituents, it’s clear Marcy Kaptur cannot be trusted to meet even the most basic levels of transparency,” NRCC spokesman Chris Gustafson told the Washington Examiner. “The NRCC is happy to provide Kaptur with this guide on how to be a lawmaker, not a lawbreaker, and remind voters that Kaptur’s time in office is coming to an end.”
Filings show Kaptur sold $1,280 worth of stock in Andersons in October but failed to report the transaction until May 15, reportedly violating the 45-day deadline to disclose periodic transaction reports that was implemented in the STOCK Act. Kaptur was later fined $200 for the violation.
The memo, exclusively obtained by the Washington Examiner, details when the reports are required to be filed, as well as step-by-step instructions on how to do so. The letter includes a number of tongue-in-cheek remarks throughout the page.
“This memo introduces the reporting requirements for the STOCK Act (FYI, you voted for it),” the introduction reads.
“If you personally conduct a transaction, you need to report it on a PTR within 30 days of the transaction (NOT 205),” the memo later states. “Even if you did not conduct or direct a transaction, you may still be required to report it (You are). Transactions must be reported within 30 days of being made aware of the transaction, but no later than 45 days from the date of transaction (Again, not 205).”
Kaptur's office defended her conduct, noting the congresswoman has never personally purchased or traded stocks. Rather, her office said she inherited the stocks after her brother's death in 2021, later moving the proceeds to a certificate of deposit, announcing she would not trade or sell them.
“In 2022, it became clear that as a result of redistricting Congresswoman Kaptur would represent the Ohio agribusiness whose stock she had inherited. To avoid even the appearance of any conflict with her official work, Congresswoman Kaptur promptly sold all of her shares in the stock — a total of $1,280.03," a spokesperson for Kaptur said. “Upon discovering the $1,280.03 transaction exceeded the reporting limit of $1,000, she filed the required report and a $200 fee for the delay in recognizing the oversight."
The latest attack comes after the NRCC designated Kaptur’s seat as one of its top targets in the 2024 cycle, deeming the 21-term congresswoman one of the most vulnerable incumbents next year. Kaptur’s seat is expected to be one of the more competitive races, with the nonpartisan Cook Political Report rating it as “lean Democratic.”
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Stocks Trading & Speculation
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Impact Of Increase In Risk Weights On Consumer Credit/Loans To NBFCs: Nirmal Bang
Loans included/excluded as per this Reserve Bank of India circular on increase of risk weights on consumer credit/loans to NBFCs.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Nirmal Bang Report
As indicated earlier by the Reserve Bank India with respect to its concern for high growth in certain components of consumer credit (mainly small ticket unsecured loans, which includes borrowers who have taken more than one loan at a time) and increased dependency of Nonbank financial companies on bank borrowings, the regulator has introduced the following measures to control any major asset quality risks that may arise for lenders in future –
Risk weights on consumer credit exposure (outstanding and new) of commercial banks, (which mainly includes personal loans and excludes housing loans, education loans, vehicle loans and gold loans) have been increased from 100% to 125%.
Risk-weighted asset on consumer credit of NBFCs (largely personal loans and excludes most secured assets/micro finance Institutions loans) has been increased from 100% to 125%.
RWA on credit card exposures of banks/NBFCs increased from 125%/100% to 150%/125%.
RWA on bank loans to NBFCs to see 25% increase, in case of loans rated A and above where the RWAs are below 100%
Top up loans on movable assets to be treated as unsecured credit.
Our View
While we expect banks to see some slowdown in growth in profit and loss /Cards/NBFC segments, the impact will vary across lenders, depending on their capital position, exposure to consumer credit/NBFC segment and the credit filters that they have in place.
As per our rough calculations on the impact of an increase in risk weights on personal loans and loans to NBFCs, we see a decline of 22-96 basis points in the CET-1 of 15 banks under our coverage.
However, considering that most private banks have excess CET-1 capital ratio of 5.3-13.5% and have seen an improvement in asset quality, they may not need to raise equity capital immediately to fund their growth plans. In the case of public sector unit banks, where the capital buffers are relatively lower than private sector banks, the decrease in CET-1 is estimated at 45-74bps.
The negative impact of these guidelines will be felt more in the NBFC/fintech space in the form of a slowdown in consumer credit growth and increased cost of funds due to expectation of the banks to cut down lending to the NBFC space, leading to the latter borrowing more from debt markets.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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India Business & Economics
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The former transport secretary has said it would be "crazy" not to review plans for the HS2 rail link as costs have soared.
Grant Shapps told the BBC that the Ukraine war and a spike in inflation mean any government would need to make "serious decisions" on affordability.
The BBC understands a definitive decision on HS2 could be made as soon as this week.
The government has so far refused to commit to the current plans.
HS2 is intended to link London, the Midlands and the north of England - the first part, between west London and Birmingham, is in mid-construction.
But the scheme as a whole has already faced delays, cost increases and cuts - including to the planned eastern leg between Birmingham and Leeds.
The last official estimate on HS2 costs, excluding the cancelled eastern section, added up to about £71bn.
This was in 2019 prices so it does not account for the spike in costs for materials and wages, for example, in recent months.
Speaking to Victoria Derbyshire on the BBC's Laura Kuenssberg programme, Mr Shapps said that no decision on the project's future had been taken as of yet.
"We do have to respond to the budgets," he said.
"We've not only been hit by the coronavirus, but the war in Ukraine... any responsible government has to ask whether that sequencing still stacks up for what the country requires."
He added that when previous commitments had been made: "No-one knew we'd be in a war in Europe right now with all of the consequences, all of the costs, and all of the inflation."And any government that doesn't go back and then look at it is crazy."
The prime minister and the chancellor have been discussing the future of the Birmingham to Manchester leg of the project against the backdrop of spiralling prices.
Chancellor Jeremy Hunt said last week that costs were getting "totally out of control".
Many in Westminster believe that almost all of the planned line from Birmingham to Manchester is likely to be axed, potentially ahead of the Conservatives' party conference in the city on 1 October.
Former prime minister Boris Johnson has warned, however, against "mutilating" the project in a letter to Rishi Sunak.
It was under Mr Johnson's government that HS2 was given the green light to start construction in 2020.
Cabinet minister Grant Shapps said on Sunday it would be "irresponsible" to carry on pumping money in because of cost increases and delays.
He said there was a "perfectly legitimate question" about the "sequencing" of the high-speed rail line.
Mr Shapps also suggested that HS2 was not the "be all and end all" for rail connectivity and said the government had spent £22bn on transport in the north of England since 2010.
However, he would not comment on whether or not separate plans for the Northern Powerhouse rail scheme between Leeds, Manchester and Liverpool would still go ahead if the northern section of HS2 is scrapped.
Labour has so far refused to confirm it would fund the HS2 line to Manchester if the Conservatives axe it, despite pressure from local mayors such as Andy Burnham.
On Sunday, Darren Jones, new shadow chief secretary for the Treasury, said the Labour party would "love to build the HS2", but said little "proper" information had been made available by the government.
"We're only responding to leaks from the Tory party", he said, adding that the party could not make infrastructure commitments worth tens of billions of pounds without seeing all the figures.
More than 80 companies and business leaders also sought clarity over the commitment to HS2 on Saturday.
The bosses of dozens of businesses and business groups - including Manchester Airports Group, British Land, Virgin Money, and the Northern Powerhouse - all signed a letter to the government urging renewed commitment to HS2, saying that repeated mixed signals are damaging the UK's reputation and the wider supply chain.
In the letter, they expressed "deep concern" over "the constant uncertainty" that "plagues" the project.
HS2 is meant to create more capacity and speed up journey times.
The government has previously argued it would have economic benefits too, but critics think it is far too expensive and the money could be better used in other ways.
In March, Transport Secretary Mark Harper said there would be a two-year delay on the Birmingham to Crewe leg. Work on Euston was also paused while an "affordable" design was worked on.
However, a government spokesperson said on Friday that "our focus remains on delivering" HS2.
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United Kingdom Business & Economics
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Proposed rule would improve responsible stewardship of America’s lands, better protect cultural and natural resources, and implement changes directed by Congress
Date: Thursday, July 20, 2023
Contact: Interior_Press@ios.doi.gov
WASHINGTON — The Department of the Interior today announced new steps to revise the Bureau of Land Management’s oil and gas leasing regulations, which would ensure a balanced approach to development, provide a fair return to taxpayers and ensure that drilling does not conflict with protection of important wildlife habitat or cultural sites.
The proposed rule would revise outdated fiscal terms of the onshore federal oil and gas leasing program – including for bonding requirements, royalty rates, and minimum bids – which would increase returns to the public and disincentive speculators or less responsible actors.
“The Interior Department has taken several steps over the last two years to ensure the federal oil and gas program provides a fair return to taxpayers, adequately accounts for environmental harms, and discourages speculation by oil and gas companies. This new proposed rule will help fully codify those goals and lead to more responsible leasing and development processes,” said Principal Deputy Assistant Secretary for Land and Minerals Management Laura Daniel-Davis. “The Department is committed to creating a more transparent, inclusive and just approach to leasing and permitting that serves the public interest while protecting natural and cultural resources on our public lands.”
“This proposal to update BLM’s oil and gas program aims to ensure fairness to the taxpayer and balanced, responsible development as we continue to transition to a clean energy economy,” said BLM Director Tracy Stone-Manning. “It includes common sense and needed fiscal revisions to BLM’s program, many directed by Congress.”
Modernizing the fiscal terms of the leasing program is central to this proposed rule. Federal onshore oil and gas royalty rates are historically consistently lower than on state-issued leases and federal offshore leases; in fact, onshore royalty rates hadn’t been raised in over 100 years prior to the Biden-Harris Administration taking office. Likewise, bonding levels have not been raised for 60 years, while minimum bids and rents remained the same for over 30 years.
The proposed rule would specifically codify provisions made by Congress in the Inflation Reduction Act and the Bipartisan Infrastructure Law, as well as recommendations from the Department of the Interior’s Report on the Federal Oil and Gas Leasing Program, issued in November 2021. The proposed rule is also consistent with Executive Order 14008, Tackling the Climate Crisis at Home and Abroad.
Key elements of the proposed rule include:
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Energy & Natural Resources
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Justin Sun, the founder of TRON and an advisor to Huobi, is a slippery one. He continues to launch copycat platforms and manipulate the market, most recently by taking $815 million of TUSD, a stablecoin which he effectively accomplished a recent hostile takeover, out of circulation.
Next, he turned around and used $865 million to print more stUSDT (or staked Tether), over which he exercises near total control, and finally, he deposited them in a lending protocol named after himself. It looked like a blatant trick to cause a massive spike in its market cap.
Sun has been cagey about what he’s up to. He has responded to inquiries laconically, telling Dylan LeClair that the TUSD reserves were being used to buy “t-bills.” He also told Blockworks that the transactions were personal and had nothing to do with Huobi.
The moves, accomplished over a total of 16 transactions, doubled Sun’s position on JustLend, which now stands at $1.5 billion. This comes on the heels of a confusing array of sketchy product launches and controversial acquisitions, but there’s a strategy behind these seemingly disconnected events.
An Insecure Platform Run by a Confidence Man
A few days after this mysterious event, Huobi suffered a $8 million hack, which is peanuts compared to the $2.8 billion in assets held on Huobi, the sixth largest among crypto exchanges. Sun stated that Huobi’s “multi-backup, multi-signature cold wallet system ensures 100% security.”
However, on the heels of a July data breach that exposed two years’ worth of customer data, it’s pretty clear that Huobi’s security is not up to snuff.
Perhaps, most intriguingly, he didn’t say anything at all on Chinese social media. It’s especially odd because Sun has carefully tried to maintain high-level contacts in Chinese society in hopes that he could tap that market again if the law changes. Sun sought out a well-regarded and influential mentor connected to the Communist Party and issued obsequious statements about his allegiance to China. All for naught, it would seem.
Time for a Re-Brand!
And so it was that Sun decided to rebrand Huobi as HTX, which was probably the worst branding decision in history, just below Musk’s ill-conceived decision to chuck the Twitter brand. As such, the stigma of Sam Bankman-Fried (SBF) and FTX hovers over Sun and his projects like a poltergeist. However, it’s as if Justin Sun doesn’t understand that FTX is a tainted brand.
Bloomberg wrote that there are echoes “beyond the name.” FTX was disproportionately dependent on its native token, using it for some loans and large chunks of its books. Huobi relies on its native token, Huobi Token (HT), so it’s especially strange that Justin Sun continues to plug his involvement in propping up the HT, telling Bloomberg News, “I would see myself as one of the biggest [HT] holders.”
Justin Sun allegedly owns around 60% of HTX reserves, which are held in three cryptocurrencies “associated with Justin Sun.”
That is actually less than SBF’s ownership of FTX, which is not to say that HTX is more stable than FTX was before the crash. HTX is extremely top-heavy and concentrated in a way that led to FTX’s collapse.
Sun the Salesman
Not to be deterred, Sun has been making the rounds in crypto conferences and making media appearances to tout his brand and pump the growing “comprehensive” ecosystem for trading, including JustLend DAO, WinkLink, SunSwap, and SunIO, as well as TronDAO.
Notice two of those platforms actually carry Sun’s name, a sign of just how grandiose his image of himself is.
In a recent commercial, Sun is shown drinking tea in a spaceship, until he receives notice that “hackers are shorting crypto.” At that point, Sun becomes a digital hero who delivers an airborne punch to defeat a hooded character flooding the world with purple coins, representing FUD, I suppose.
Sun posted the video on the platform formerly known as Twitter, writing “Defending the crypto frontier with unwavering determination.” Sun was then depicted with blue starry sunglasses as the hero of crypto.
The level of BS was alarming, and users quickly labeled the video “cringe.” What seems clear is that Sun views himself as a messianic figure.
Sun Launches stUSDT on Huobi Earn
Sometimes, it seems like the walls are closing in and Justin Sun is sure to be arrested. That is when he turns over the table and pitches a new product. And say what you will about Justin Sun, but he is a shrewd salesman. He is cool under pressure and his English doesn’t falter during his frequent media appearances. For a native Chinese speaker, that cannot be easy.
Sun most recently launched staked Tether (stUSDT), and from July to mid-September, he amassed $1.8 billion in investment on Huobi Earn, leaving competing DeFi platforms in the dust.
Users deposit their stablecoins on the platform, choosing between an array of coins and real-world assets, in which Huobi Earn can in turn choose to invest those funds.
It sounds a lot like the relationship between FTX and Alameda, except that Huobi Earn is more explicit about what it might do with the funds. Huobi Earn guarantees that holders of the stUSDT can withdraw their funds at 1-to-1 at any time.
Data provided by DefiLlama and HTX reserves shows that about $400 million of Huobi Earn users’ funds have been converted from Tether into the staked product since July. HTX’s stockpiles indicate the changing composition of customer assets, so stUSDT now accounts for about 14% of the total. Whether clients converted their stablecoin into stUSDT or if HTX Earn did so on their behalf is unknown, and a bit worrying.
The huge shift in the holdings is concerning because HTX depends on its Tether reserves, but Huobi Earn is sucking away those reserves as users choose to stake their Tethers. HTX’s stockpile of Tether has declined by 75%, from $584 million to $146 million.
One might assume that Tether and staked Tether are associated. Not so!
In fact, a Tether spokesperson told CryptoSlate that stUSDT, is “an independent project and is not affiliated with Tether.”
It’s a similar situation with TUSD, the stablecoin launched by Archblock, which is now suing Justin Sun.
DON’T JUMP ON THE BANDWAGON!
For those who pay attention to Justin Sun’s projects, this is not surprising. He often seeks to emulate the success of others without substantial innovation on their products. He just launches a copycat product or platform, or just buys it outright. Then, he tries to claim credit for it and build his image as a crypto superhero.
For those who invest in Sun’s house of cards, the bill will eventually come due. There’s a reason why he is facing various lawsuits and the authorities in various jurisdictions are waiting to arrest him on fraud charges. At #DisruptionBanking, we already chronicled Sun’s storied past in a lengthy post that you can check out.
Consider: No other major exchange has its fortunes so closely linked to a DeFi project, according to Jonathan Reiter, the CEO of ChainArgos, which tracks digital asset flows. If Huobi Earn prospers, so does HTX, but conversely, if there’s a run on Huobi Earn, HTX or Justin Sun will be obliged to prop it up, which already happened on August 8 with a $200 million infusion to HTX from a wallet supposedly tied to Justin Sun, although he denies it.
A Method to the Madness?
Justin Sun seems to be attempting a piecemeal takeover of the stablecoin ecosystem. In 2017, he started with a shitcoin (by his own admission), TRON, and has been scheming since then to construct an ecosystem that parallels the vibrant innovation of Ether. It will not end well, and as usual, many media outlets are sitting on their hands instead of reading the writing on the wall.
Observe: Bloomberg said that Justin Sun’s actions since taking over Huobi were “at times courting controversy along the way.” Ya think? Bloomberg is great, but c’mon. Tell the people what they need to know: DON’T JUMP ON THE BANDWAGON!
Blockworks said that the exploit with $800 million TUSD “raised eyebrows.” That’s all?
Protos went the furthest, writing, that Sun has been “on a streak of questionable decisions” and that “his brazenness seemingly become out of control” with the minting of $800 million worth of “his own stablecoin TUSD.” Wait, the creator of TUSD is suing Sun who is not the owner.
Since most media outlets are afraid of telling the truth, we are left to read between the lines. As usual.
Author: Tim Tolka, writer, journalist, and BI researcher
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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Crypto Trading & Speculation
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There is an easy way for Americans to grow their wealth with just a few clicks of a button, but few are aware of this risk-free money move.
A majority of middle-class Americans are leaving money on the table by not stashing cash in a high-yield savings account amid higher interest rates. As a result, they could collectively be missing out on earning billions of dollars in interest on their savings without lifting a finger.
Since early 2022, 68% of middle-income Americans have not moved deposits into high-yield accounts to benefit from higher interest rates, despite mounting concerns around inflation affecting their financial well-being, according to research from Santander Bank.
A March survey from Bankrate found that only 22% of savers earn 3% or more on their accounts, despite 75% of online accounts offering higher rates. The average annual percentage yield on 63 savings and money market deposit accounts surveyed by Bankrate is 3.33%.
What's more, 16% of savers don't earn any interest on money in their accounts, according to the same survey.
Some savers aren't aware of how much they could earn by opening a high-yield savings account. Others are loathe to make any changes to their banking routines, or think the process of opening a new account would be too time-consuming.
"An opportunity to get free money"
"When I bring up high-yield accounts to clients, most people have done nothing with their cash. Most of them keep it in a traditional bank account. But it is a good idea in this environment," said Jaime Eckels, a wealth manager at Plante Moran Financial Advisors. "There's not a whole lot of downside to using them, so it makes sense if you're going to get 10 times what you'll receive from a traditional savings account."
Other customers are just creatures of habit.
"The average customer sticks with the same checking or savings account for about 17 years," Ted Rossman, senior industry analyst at Bankrate, told CBS MoneyWatch.
But taking 10 minutes or so to open a high-yield savings account is well worth the effort.
"It's a good automation strategy that could really pay off overtime. You make a good decision once and it gets repeated every month when the interest rolls in," he said. Some banks offer savings accounts that yield as much as 5% interest annually.
"It's an opportunity to get free money," Rossman said.
Take a saver with $10,000 in a savings account that earns 5% interest every year. That account holder will earn an extra $500 in a year.
"That's pretty solid for a risk-free account that's just sitting there," Rossman said.
On the other hand, the same sum stashed in a big bank would only yield a few bucks. "You're talking hundreds back every year just for keeping your money aside at an online or neo bank," said Lily Liu, a financial expert and CEO of Pinata, a credit building program for renters.
Competing on rates
Online banks compete for clients by offering attractive interest rates on savings accounts, versus spending millions of dollars on advertising at sports stadiums, for example, like big banks do. And because they're online, they don't have big branch networks to staff, allowing them to keep costs low.
Big banks, on the other hand, offer savings accounts that yield next to nothing.
"You don't make any money off of your savings at them," said Adam Taggart, founder and CEO of Wealthion, a financial advisory.
Another alternative to high-yield savings accounts are money market funds, a type of mutual fund available from brokerages that can also earn savers decent returns on their money.
"All of a sudden, more people are waking up saying, 'I can take cash from one account earning nothing at a commercial bank that pay insultingly low returns and move it to a money market fund with a rate of 5.25% with couple clicks of mouse. There is no reason not to do it," Taggart said.
"If you're able to put your money into savings vehicles like this yielding decent return with low risk you're putting the geometric force of interest compounding at your back," he added.
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Interest Rates
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Three of Rishi Sunak's five pledges relate to the economy and, of them, one is looking hardest of all - leading to some worried conversations across government.
The government's debt pile remains eye-wateringly big. Our national debt is now equivalent to more than 100% of our GDP. Mr Sunak will be worrying that failure to act could limit his ability to offer pre-election tax giveaways, that so many in his party desperately want.
So, what can the government do? Inside the Treasury, there are conversations about potential spending cuts. And it seems inevitable that the welfare bill will be part of that - not least given much of it will uprate next April in line with a lagged (and therefore higher) measure of inflation.
With worries that summer inflation figures could be worse than expected, that is focusing minds on this area of spending, with chancellor Jeremy Hunt and work and pensions secretary, Mel Stride, discussing what can be done.
According to the Office for Budget Responsibility (OBR), every 1% uprating of benefits costs £1.6 billion. And according to the Institute for Fiscal Studies (IFS), some benefits have seen a big increase in claimant numbers. There are now 2.7 million getting Personal Independence Payments (PIP) - 25% more than in April 2019.
That's money to some of the most vulnerable in society - and just keeping payments stable in real terms.
On the other hand, benefits to pensioners are universal - so go to the richest as well - but are also very expensive (and are due to rise from £137 billion to £169 billion).
But will a Conservative government so far behind in the polls really target pensioners?
There is a lot of pressure to do so - by means testing benefits, for example. And there are reports today that the triple lock (that protects the rate pensions rise by, by opting for the highest of inflation, earnings and 2.5%) could be looked at because of concerns about the impact of earnings rising more than expected because of public sector pay awards.
But we know the prime minister is keen to protect pensioners, which is why Treasury sources insist it won’t change. (And if there are any changes I suspect they will be tweaks).
Meanwhile, there is another pressure - the welfare cap that limits spending on many benefits but not pensions. The OBR said this spring that it was on track to be exceeded by £4.1 billion.
That's why sources in the disability sector tell me they are worried that benefits - and there are concerns that PIP in particular - could be the next target for the government because of the big rise in claimants.
Another big spend is the work capability assessment, which will be abolished in the future but not yet. Tightening eligibility for out of work and disability benefits would save money.
And would make sense - give the mood music.
Cutting these benefits could well be popular with the right of his party - especially if it appears to make way for tax cuts. But it could also be controversial. In 2016, Iain Duncan Smith resigned as work and pension secretary when David Cameron tried to cut PIP at the same time as protecting benefits for wealthy pensioners.
And it would cause great upset among some charities.
"Robbing disabled people of being able to have basic living standards"
Director of Strategy at the disability charity Scope, James Taylor, told me: “Any proposals to reduce Personal Independence Payment (PIP), make it harder to claim or introducing means testing would be catastrophic for disabled people.
"PIP is designed to help offset the financial penalty of disability. Everyday life costs more when you’re disabled such as needing home adaptations, paying for care costs and higher energy bills."
He highlighted analysis by Scope suggesting life costs £975 more a month, if you are disabled, and you are disproportionately impacted by the cost of living crisis as well.
"Introducing quick fix, headline grabbing ideas to save money on the benefits bill will be devastating, robbing disabled people of being able to have basic living standards," he added.
But the choice facing the government now seems a stark one - particularly given the huge rise in the number of people economically inactive during Covid (a rise the government is desperate to tackle).
Tom Waters, an associate director at the IFS, said: “A number of indicators seem to suggest that population health is getting worse. One consequence of that is that many more people are applying for disability benefits than they did in the past.
"This leaves the government in an unenviable position: they can either clamp down on the disability benefit system, thereby reducing support for many who are unwell, or they can do nothing and see disability spending continue to rise.”
Some in government think the time has come to ease some protections on pensioners to spread the burden of any cost cutting. But that's unlikely to be tempting to a Tory prime minister.
With Rishi Sunak's apparent shift to the right on asylum and climate policies - could benefits be next?
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United Kingdom Business & Economics
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The Biden administration on Tuesday officially launched a new income-driven student loan repayment program, just months after the Supreme Court struck down its student loan forgiveness initiative. The White House is billing it as the “most affordable student loan plan ever.”
The Saving on a Valuable Education plan allows for millions of borrowers to have their monthly payments reduced based on income and family size, caps interest accrual, and forgives leftover balances after a number of years.
Many borrowers, such as a single person who earns less than $32,800 a year or a family of four earning $67,500 or less per year, could even qualify for $0 monthly payments.
“This will allow them to focus on food, rent, and other basic needs instead of loan payments,” the White House said in a statement.
“Borrowers will see their total payments per dollar borrowed fall by 40%. Borrowers with the lowest projected lifetime earnings will see payments per dollar borrowed fall by 83%, while those in the top would only see a 5% reduction,” the White House added.
A four-year public university graduate can save up to $2,000 per year, according to White House estimates.
The program does not deliver student loan forgiveness at once, as Biden initially sought in his initial plan. The hope for the new repayment program is that some student loan debt can be forgiven more slowly but without interest getting out of hand.
Borrowers can enroll now on StudentAid.gov/SAVE. More benefits of the program are to be launched in July 2024.
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Personal Finance & Financial Education
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Aug 15 (Reuters) - The top U.S. agency for consumer financial protection will announce plans at the White House on Tuesday to regulate companies that track and sell people's personal data, part of the Biden administration's widening scrutiny of that industry's privacy practices, officials said.
Data brokers' conduct can be "particularly worrisome" because the sensitive data driving the use of artificial intelligence can be collected from military personnel, people experiencing dementia, and others, according to Rohit Chopra, director of the U.S. Consumer Financial Protection Bureau.
"The CFPB will be taking steps to ensure that modern-day data brokers in the surveillance industry know that they cannot engage in illegal collection and sharing of our data," he said in a statement.
President Joe Biden last year called on the U.S. Federal Trade Commission (FTC) to help protect the data privacy of women seeking reproductive healthcare who may face law enforcement action in some states. The FTC has also sued an Idaho company for selling mobile phone geolocation data, saying it could be traced to places like abortion clinics, churches and addiction treatment centers.
In advance of Tuesday's announcement, CFPB officials said the proposal would expand the number of companies currently subject to the Fair Credit Reporting Act -- a 1970 law governing the privacy of consumer data provided to lenders -- to cover the use of data derived from payment histories, personal income and criminal records.
Of particular concern, officials said, was the disclosure of "credit header data," or personal data such as names, addresses and social security numbers that the top three credit bureaus, Experian (EXPN.L), TransUnion (TRU.N) and Equifax (EFX.N), share for people, some of whom may be seeking to avoid contact, such as domestic violence victims.
The CFPB in March opened a public inquiry into the conduct of companies like credit bureaus and background screening firms.
According to agency officials, the results indicated data brokers reported consumers in financial distress to companies who then targeted them with predatory debt products, among other findings that pointed to the need for greater privacy protections.
Our Standards: The Thomson Reuters Trust Principles.
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Personal Finance & Financial Education
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Annuities are a form of hybrid financial product. Part investment and part contract, they’re primarily sold by insurance companies as a way to save for retirement. While in recent years they have come under criticism for below-market returns, many retirees like them for the sense of certainty that these products offer. If you’re saving for retirement, purchasing a large annuity can be a good way to secure a highly safe stream of income in your later years. Here’s what you need to know.
A financial advisor could help you figure out if an annuity is a good fit for your retirement plan.
What Is an Annuity?
An annuity is a form of contract that you make with a financial institution, typically an insurance company. On your end, you promise to make either a single lump-sum payment up front or a series of payments over time. On their end, they promise to make a fixed series of payments to you at a certain date in the future.
There are two main types of annuities. A fixed-period annuity, otherwise known as a “term” or “period certain” annuity, is one in which you receive guaranteed payments for a specific amount of time. For example, you may buy an annuity that promises to pay you $500 per month for 10 years. The contract will specify when the payments start and when they end, a period known as the “annuitization period” or “annuitization phase.”
A lifetime annuity is more common, particularly for retirement savers. With lifetime annuities you receive a guaranteed payment that begins when you retire or otherwise reach a certain age. These payments then continue for the rest of your life. The “annuitization phase” covers your whole retirement. As with fixed-period annuities, lifetime annuities generally make payments on a monthly basis. For example, you may buy an annuity that promises to pay you $500 per month for the rest of your life once you turn 70.
With both fixed period and lifetime annuities, the amount you collect increases based on how much you spend up front. The more money you spend on the annuity and the earlier you spend it, the more your annuity will pay out over time. For example if you buy an annuity 20 years before the annuitization phase begins, it will pay you more per month than if you bought the same product 10 years in advance. This is because the company which sells you the annuity treats it like a loan. They take your money and use it for their own investments, then pay your money back with interest at a later date.
In all cases an annuity is structured so that you receive back the full amount that you put in plus an additional percentage. With lifetime annuities, the company will reimburse your heirs if you die before collecting payments worth at least the amount that you spent on the contract. It’s this certainty that makes annuities appealing for many retirees. With an annuity there’s no danger of completely outliving your retirement savings because, unless the bank or insurance company goes out of business, you will have a minimum guaranteed income for life.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
What Does an Annuity Pay?
It’s very difficult to state a clear average for annuity payments. This is because the rate of payment from annuities depends on several different factors, most significantly:
Lump sum vs. structured payments. Your annuity will generally pay more if you buy it in one lump sum vs. if you pay that same amount of money over time.
Date of purchase. The farther in advance you purchase your annuity, generally the higher your return.
Amount of payment. Annuities tend to have a higher rate of return when you spend more on them.
Lifetime vs. fixed period. Fixed-period annuities tend to have different rates of return compared with lifetime annuities because these are guaranteed products, while lifetime annuities are speculative based on how long your retirement lasts.
Length of annuity. If you buy a fixed-period annuity, the longer the term of your contract the better the rate you will receive. You will get less money per month, but you will receive more over the lifetime of the contract.
Company involved. Finally, different companies will offer you different products. The exact return that you can receive depends entirely on who you buy your annuity from and what they’re willing to offer, because there is no one set of rates that everyone adheres to.
Even within these categories there is more detail because annuities can have three different structures for their returns: fixed rate, variable and indexed.
A fixed-interest annuity is one in which the return rate is set in advance. The company promises a specific payment over a specific period of time. A variable interest annuity is one in which the return is based on outside forces such as investments and market rates. The company specifies what the annuity’s return will be based on, and then makes payments depending on those outside factors. Finally, an indexed annuity is one in which the annuity’s return is pegged to some third-party index like the S&P 500. The company specifies what index your return will be based on and then makes payments as appropriate.
The result is that it’s extremely difficult to calculate a clear, average rate for annuity payments.
However, there is some data out there. Term certain annuities with a fixed rate of payment are the easiest to assess because these have specific numbers involved. With those products, studies have found that they currently offer rates of return ranging between 1% and 5.5%, with the average coming in around 3.2%. But you should take even those numbers with a grain of salt, since they will change based on factors ranging from how long your contract lasts to when you buy it.
How Much Would a $1.5 Million Annuity Pay?
So, with all of that said, how much should you expect out of a $1.5 million annuity?
For most people saving for retirement, this is the critical question. They want to know how much this product will pay them once they retire so they can add that to their financial planning. And the good news is that you can, indeed, know that figure. It depends on the details of the product that you plan on buying, but when you look at investing in a specific annuity you will see the exact monthly rate that you will get for any given set of circumstances.
For example, say you buy an annuity for $1.5 million from Schwab with the following details:
Payment: Lump sum up front
Date of purchase: 30 years in advance of annuitization
Structure: Lifetime annuity
Return: Fixed return
So you buy an annuity 30 years before you plan on collecting. You pay the whole price up front and you buy a retirement product that will make regular monthly payments for the rest of your life once in retirement. Based on those factors, some annuity contracts will pay you $29,624 per month for the rest of your life once you begin collecting on that contract.
Or, say you change the factors slightly:
Payment: Lump sum up front
Date of purchase: 30 years in advance of annuitization
Structure: Period certain for 20 years
Return: Fixed return
In this case you have, again, bought the annuity 30 years in advance while paying the whole purchase price up front. However, this time you won’t collect the annuity payments for life. You will collect monthly payments for 20 years after which the contract will expire. In that case you might receive $35,373 per month for the duration of the contract, eventually receiving a total of $8.5 million. The annuity will pay more because of the certainty involved with a term contract rather than the open-ended nature of a lifetime product.
These numbers are generous not only because of the $1.5 million investment but also because of the long lead time. With 30 years, Schwab can make a lot of money off of your initial investment, so they can afford to pay a lot of it back.
Bottom Line
Annuities are insurance products that you buy up front, and then you are paid a fixed amount over time. They are popular retirement products given the degree of certainty they offer, but how much an annuity will pay depends entirely on the exact product you purchase.
Tips for Retirement Savers
A financial advisor help you create a financial plan for your retirement savings goals. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Annuities have their upsides, most importantly the certainty they can offer for retirement savers. But critics suggest that they can cost you far more than if you had spent the same amount of time invested in a simple index fund. Learn here about the pros and cons.
Photo credit: ©iStock.com/shapecharge, ©iStock.com/PeopleImages, ©iStock.com/mapodile
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Personal Finance & Financial Education
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UK mortgage payers grappling with the most expensive home loans in 15 years have been warned by the International Monetary Fund to brace themselves for still higher borrowing costs over the coming months.
With pay growth registering its fastest growth since modern records began more than two decades ago, the IMF used its annual health check on the economy to back the Bank of England in whatever tough action it deemed necessary to bring inflation under control.
The IMF issued its warning on a day when two-year fixed mortgage rates hit their highest level since the global financial crisis in 2008 – and MPs on the Treasury committee were told by mortgage lenders that more borrowers were likely to face financial stress over the coming months.
Since December 2021, Threadneedle Street’s monetary policy committee has raised interest rates from 0.1% to 5% in 13 successive upward moves, with some in the City predicting a further 0.5 point rise in August, after official figures showing annual regular pay growth of 7.3%.
“Should inflationary pressures show signs of further persistence, the [Bank of England’s] policy rate may have to be raised further and would need to remain higher for longer to durably lower inflation and keep inflation expectations anchored,” the IMF said.
The Bank’s governor, Andrew Bailey, fuelled speculation in the City that official interest rates may eventually rise above 6% – a move that would push mortgage rates well over 7% – when he used a speech on Monday to warn that wage and price increases at their current levels were not consistent with hitting the government’s 2% inflation target.
According to the data provider Moneyfacts, mortgage rates have already climbed above the levels temporarily reached after Liz Truss’s badly received mini-budget last September, and while mortgage lenders said they had not yet seen a surge in customers falling behind on their monthly payments, that trend could reverse if interest rates continued to rise. The typical two-year fixed mortgage rate was priced at 6.66% on Tuesday, up from 6.63% on Monday.
“What I expect to see over the next six months is that we will see more customers with financial stress,” Skipton Building Society’s interim chief executive, Charlotte Harrison, told the cross-party Treasury committee.
Any fresh increases in interest rates would mean further financial pain for about 1.4 million mortgage customers, who are expected to come off their existing mortgage deals and sign on to new contracts at a higher rate this year. It would also intensify downward pressure on house prices – which peaked last summer – and increase the risks of recent borrowers owing more than the current value of their homes.
Henry Jordan, a director for Nationwide’s home loan division, said that on average, mortgage payments have gone up a third for the building society’s borrowers, who were paying £235 more a month after signing on to a new deal.
“That said, we haven’t really seen any real material movement in arrears performance, certainly within our prime residential portfolio,” Jordan said, referring to the fact that high street lenders have been more cautious and tested whether customers could afford to pay off their debts even at higher interest rates before approving home loans.
However, bank executives said some customers were nearing those tested thresholds. Bradley Fordham, Santander UK’s mortgage director, said: “We’ve affordability stress-tested at a higher interest rate … at about 6% … at the time of application. We’ve understood that customers can bear a higher interest rate and that seems to be bearing out at this moment in time.”
Dozens of UK banks, including HSBC, Lloyds Banking Group, NatWest, Santander and Nationwide, recently signed the chancellor’s mortgage charter, agreeing to more readily offer forbearance options such as mortgage term extensions and interest-only payment periods to support struggling borrowers.
But Jordan said interest-only payment plans would no longer provide much relief for borrowers if rates pushed beyond 6%.
He said extending the term of a mortgage – referring to the number of years over which a customer repays their debt – would mean Nationwide’s customers would see their monthly payments increase by £134 rather than £250. “It takes about £100 off the increase,” Jordan said. Converting to interest-only payments would also be beneficial for some borrowers and “would more than offset that increase”.
“And that remains true until you get to [interest rates] somewhere between 6.25% and 6.5% – so that might be a kind of tipping point at which options like interest-only won’t be sufficient to offset the increase in payments,” Jordan added.
While it was not immediately clear how much strain that could put on borrowers, lenders were widely expected to start putting aside more money in the second quarter to protect themselves against potential defaults.
“Currently, we would expect provisions to rise very slightly in line with arrears as customers move into different stage,” Santander’s Fordham said.
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United Kingdom Business & Economics
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Americans believe they will need $1.27 million to retire comfortably, according to the latest set of findings from Northwestern Mutual's 2023 Planning & Progress Study. That number continues to increase, up from $1.25 million reported last year. High-net-worth individuals – those with more than $1 million in investable assets – believe they'll need $3 million to retire comfortably.
Consider working with a financial advisor as you plan your retirement.
Most workers have got a ways to go with their savings, the report finds. On average, Americans have set aside $89,300 of the $1.27 million they think they'll need. That average ranges from slightly less than $36,000 in retirement savings for those in their 20s, to nearly $114,000 for people in their 70s – leaving them far off from their required savings goals.
A Positive Development
However, even in the face of a 20% loss in stocks during 2022 and soaring inflation, workers still managed to increase the average retirement savings balance by 3% from the 2022 average of $86,869.
"The good news is that they are saving and investing more for tomorrow, even in this time of high inflation and market volatility," said Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. "That is a step in the right direction and a reverse of what we saw last year when the gap widened rather than narrowed. The challenging news is that there continues to be a big disparity between what they think they'll need to retire and what they've saved to date."
The study found that people in their 20s had saved an average of $35,800 for retirement. To hit the $1.27 million goal, someone 25 years old with that starting balance would need to invest about $306 per month for the next 40 years at an annual return of 7%. Someone 35, with the average current balance of $67,400 would need to save about $668 a month for the 30 years until they near retirement.
A 45-year-old with the average $77,400 in savings, with just 20 years to save, requires monthly savings of $1,973 per month. At 55, with a current retirement asset balance of $110,900 and 10 years until they near retirement, a worker would need to sock away the unlikely total of $6,344 per month.
Expectations as Retirement Nears
On average, the study found that 52% of people say they expect to be financially prepared for retirement when the time comes, with Gen Z coming in the most optimistic, at 65%. Gen Xers are the least optimistic, with just 45% saying they expect to be ready. Millennials are right in the middle at 54%, while 52% of Baby Boomers who have yet to retire think they'll be financially set to retire.
The study also found that, on average, Americans expect to work a bit longer before they can call it quits than they did in previous surveys. Currently, they expect to work until age 65, up from 64 last year and 62.6 in 2021. The full retirement age for Social Security benefits is 67 years old for anyone born in or after 1960.
When it comes to feeling ready for retirement, the study found that creating a well thought-out financial plan brought a real boost of confidence. Survey respondents who described themselves as disciplined financial planners knocked two years off their retirement age, expecting to quit at 63, while people who described their planning as informal or having no plan figured they'd be retiring at age 67.
Bottom Line
Finding the answer to the question, "What's your number?" is an essential piece of financial planning, so that investors can understand the amount of appropriate risk necessary to meet their investment and retirement goals. Typically, experts recommend saving 10% or 15% of salary for the bulk of your working years. Workers also can consult their own Social Security estimate to get a full picture of their potential retirement income.
Tips on Retirement
While many investors obsess about trying to "beat the market," smart investors understand that they simply need to meet their own periodic goals to "make their number" – their desired total retirement assets before they leave work. One way to get help figuring out your number is to work with a financial advisor who can help you answer all your questions about retirement options. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
Fidelity recommends that you have 10 times your annual income saved for retirement by age 67. To find out if you're on track, try SmartAsset's retirement calculator. This free tool will estimate how much you'll have when the time comes to retire.
Photo credit: ©iStock.com/adamkaz, ©iStock.com/, ©iStock.com/Tom Merton
The post Americans' Magic Number for Retirement Rises to $1.27 Million appeared first on SmartAsset Blog.
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Personal Finance & Financial Education
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The boss of the upmarket department store Harvey Nichols has called on Rishi Sunak to urgently reconsider his VAT raid on foreign shoppers before businesses “lose another summer”.
In an interview with The Telegraph, Manju Malhotra, chief executive, said: “I would urge the Government to really prioritise it before an election.
“We all benefit from international businesses coming to the UK. The high street, restaurants, museums, they all rely on visitors coming to the UK.
“We don’t want to lose another summer.”
She warned that the withdrawal of VAT refunds for tourists meant that foreign shoppers were getting “into the habit” of buying designer goods in Paris and Milan over London.
Ms Malhotra said: “Tourists are spending less time and less money in the UK. There is talk of a change being considered as part of a review of tax policy but the timing is not clear.”
It comes after figures from tax refund company Global Blue revealed that spending in France by international tourists bounced back to 2019 levels, whereas in the UK, it is only running at 64pc of pre-pandemic levels. Britain withdrew its VAT-free shopping scheme after it left the EU at the start of 2020.
In a survey of Chinese tourists, the UK was named the least favoured destination among large European countries for a 2023 trip.
Meanwhile, British shoppers have also moved to take advantage of the tax-free shopping rules, by visiting EU cities for their designer purchases rather than buying closer to home. Global Blue found that UK residents spent around €500m (£434m) on goods where they claimed tax back in Continental Europe in 2022, a 200pc increase on 2021 levels.
Ms Malhotra, who oversees Harvey Nichols’ eight stores in the UK and Ireland, as well as its overseas branches, praised France for being “really clever” in taking steps to lure more foreign shoppers to Paris.
These have included installing booths at Gare du Nord station, where shoppers can easily claim their VAT back before returning back to their home country.
The Treasury has publicly rejected calls for changes to the “tourist tax”, introduced when Mr Sunak was chancellor. It has claimed that reintroducing tax-free shopping for visitors would cost British taxpayers “around £1.4bn a year, meaning taxes would need to go up to pay for it at a time when we’ve already taken difficult decisions to get debt falling”.
MPs are due to debate the policy in September in parliament.
Ms Malhotra backed suggestions by Burberry that the Government should consider alternatives, such as offering overseas shoppers vouchers as compensation for not receiving the VAT back.
Whatever scheme is adopted “needs to be practical”, she warned.
Currently, for example, shoppers can buy in store and have items shipped back to their home country to claim back VAT. But, “they don’t want to do that, they want to wear their new dress or their new bag now,” Ms Malhortra said.
“Any tax-free equivalent must ultimately be simple and easy to use. Because if it isn’t, well then customers just won’t use it.”
The anger in the luxury industry about apparent stonewalling from ministers has been palpable. Ms Malhotra said that Labour has “taken more concrete steps to engage with business”. She suggested a change in the governing party “might be welcome”, although added she would support whichever party was more responsive to business.
Ms Malhotra took charge at Harvey Nichols just 10 days before the pandemic hit. The business has deep roots, having been founded as a linen shop in London in 1831, before later taking central positions in cities including Leeds, Manchester, Edinburgh and Birmingham. It now also has a store in Riyadh, one in Dubai, two in Hong Kong and one in Kuwait.
She said no retailer has escaped cost-of-living pressures, but its customers “still want to give themselves a treat” or choose Harvey Nichols for gifts. “It says a lot about you as a gift giver or as a host if you have that Harvey Nichols box of biscuits,” she said.
Despite the relative wealth of its customers, pricing remains a difficult balancing act when it comes to Harvey Nichols’ own-brand food and wines, or at the restaurants and bars.
Its customers are no less sensitive to increases than those at supermarkets or casual dining restaurants, even if they are in response to cost rises. “After all, there’s a limit to how much people will pay for a glass of champagne,” Ms Malhotra said.
Navigating this has been at the top of her to-do-list, as she attempts to steer Harvey Nichols back towards profit.
Coming out of the pandemic, the department store recorded losses before tax of around £40m for the year to the end of March 2021, widened from £16m a year earlier.
Company accounts, expected to be published imminently, are set to show that Harvey Nichols has since taken steps back in the right direction. Its pre-tax loss is expected to come in at £30m for the year to April 2, 2022. On an earnings before interest, tax, depreciation and amortisation level, its losses slimmed to £3.15m.
That relative resilience sets Harvey Nichols apart from some of the other mass-market department stores which have retreated from city centres in recent years.
Stores including House of Fraser and Debenhams have been shuttered across high streets, while John Lewis is undergoing a dramatic overhaul of the space it has, and has also closed sites.
Ms Malhotra says rising costs of utilities, rents, staffing can all be seen to blame. But, at the same time, retailers in city centres are facing yet more pressure from attempts to stop people driving into cities, with policies such as Ulez and the congestion charge. Cities have also made parking both more difficult and more expensive.
Ms Malhotra said: “People are much more likely to go to out-of-town shopping malls which seem to be doing better, but which maybe don’t add to the fabric of the community in the same way.” She said the rail strikes last Christmas was a further blow, and “meant we saw more people couldn’t make their bookings”.
“The success of the high street relies on the ability of people to commute into them.”
For now, despite the pressures, Harvey Nichols is comfortable with its footprint on the UK’s high streets, which Ms Malhortra says are spread out enough that most UK shoppers can visit if they want to.
More openings, if anywhere, will likely be overseas. “There may well be the right opportunity,” Ms Malhotra said.
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United Kingdom Business & Economics
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The average weight of Britain's favourite berry has soared by 60 per cent in the past 12 years, it has been reported.
Strawberries have risen from 13.6g in 2011 to 21.5g this year, S&A Group, the UK's largest independent supplier, said.
The average diameter has also boomed, from 23mm-25mm in 2011 to 27mm-41mm in 2023.
Reflecting customer demand, other berries have followed the trend, with typical raspberry sizes doubling in the past two decades and British blueberries trebling in size over the same period, The Times reported.
The increases come as agronomists cultivate 'more desirable varieties', according to the industry body British Berry Growers.
And those who bought British strawberries and raspberries this summer might have found them more flavoursome than usual, reportedly because of slower ripening in this year's cool spring.
Peter Judge, group managing director of S&A Group, told the paper: 'UK retailers believe bigger berries are what the consumers want, but it is fair to say they don't always deliver flavour.
'We have a variety called Lady Isla, which is actually a small berry but is our best-flavoured strawberry. It's not always the case that big berry equals big flavour.'
The commercial pressure to grow larger fruit came from UK consumers and was at odds with preferences on the Continent, the S&A Group said.
But supermarkets ask that suppliers do not pack punnets with strawberries more than 45mm across because customers want value for money.
Nick Marston, the chairman of British Berry Growers, added: 'This size spec increase is about allowing customers to waste less fruit when hulling the strawberries and giving nicer-sized pieces if the berries are cut up.
'It is also about visual appeal - good-size 'bold' fruit does appeal to consumers more than a pack of a very large number of very small berries.'
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United Kingdom Business & Economics
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A cancer charity has said patients are increasingly worried about how they are going to feed themselves due to the financial threat faced while having treatment.
Rodrigo Fenick, from Macmillan, said he was witnessing people going through hardship on a scale he had not seen in his 25-year career.
The charity's benefits case worker said some were really panicking about money.
"Their heating bill will go up tremendously," he said.
"We are not talking about a couple of hundred, but over a couple of hundred pounds."
Other unexpected costs include wigs or post-surgery clothing.
He added: "I've never seen the amount of concern from people in terms of 'how am I going to survive? How am I going to feed myself? How am I going to feed my kids?'
"Then there's the priority, 'do I keep the heating on or do I put the heating off? Do I buy enough basic food to go through the week? What do I go without?'"
'Freezing all the time'
Debbie Potts, 55 from west London, has had cancer twice since being first diagnosed with ovarian cancer in 2021.
A self-employed virtual assistant, she stopped working for eight months while having chemotherapy while her partner went part-time to look after her. This left them with a quarter of their normal income.
"We made a choice that we will go without and just look after me beating this awful disease," she said.
She said they made the choice to not turn the heating on.
"I had four or five months of chemo. I was freezing all the time and I said to Dan (her partner) 'don't turn the heating on because it's one expense we can do without - just give me blankets, I'll be fine'" she said.
Another cost Ms Potts had to take on was cabs; a weakened immune system meant she was advised to avoid public transport so she ended up spending about £50 a week going to and from the Royal Marsden Hospital.
"I tried to cycle but I was so weak," she said adding that some days she managed the journey on her bike, but at other times she could not.
After several months of resisting asking for help, she contacted Macmillan who helped with transport costs and gave her a cost of living grant that helped her pay her heating bill for the winter.
"It was a godsend," she said.
Macmillan said it gave away more than £1.2m to London cancer patients in 2021, an increase of 21% on 2020. It expects demand to increase this year.
Mr Fenick said there were benefits available and that energy companies offered schemes for people, but many did not know what was available to them.
But Ms Potts said the benefits system could be too bureaucratic to navigate when undergoing cancer treatment.
'We just want a helping hand'
"When you are in the middle of having chemo and you have to emotionally process what you are going through, you don't want to fill out a 32-page form and then it takes another 18 weeks before you even get a yes or a no," she said.
"We are not asking for support for the rest of our lives.
"We just want that little help, from when we are diagnosed, through the treatment, little into the recovery because we want to get back to work and do the things we love doing, we just want a helping hand, we are not saying give us millions."
A spokesperson for the Department of Work and Pensions said it was "committed to getting people the support they're entitled to as quickly as possible, and we will backdate awards to ensure no one misses out".
They said they were also opening up assessments by phone and video, and clearance times had greatly improved, returning to pre-pandemic levels.
"We are also protecting the most vulnerable households across the UK - saving households around £1,300 on energy bills this winter and providing a further £12bn of direct support in 2023-24, including £900 worth of cost of living help for those on means-tested benefits."
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Nonprofit, Charities, & Fundraising
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Adani Firms Double Net Profit In First Half, Add Rs 1.6 Lakh Crore Market Cap
Cumulative profit for nine companies rose by 106% with ACC Ltd. leading the pack, reporting five-fold growth.
Net profit for listed Adani Group companies rose to over twice their value during the first half of fiscal 2024, when compared to the same period last year.
Cumulative profit for nine companies rose by 106%, with ACC Ltd. leading the pack, reporting five-fold growth during the half-yearly period. The cement maker reported a sales growth of 15.7%.
Ambuja Cements Ltd. acquired a majority stake in Sanghvi Movers Ltd. in an all-cash deal, valuing it at an enterprise value of Rs 5,000 crore.
New Delhi Television Ltd. has not been included in the above list, as the acquisition of a majority stake in the company was still underway till March 2023.
Cumulative market capitalisation for the 10 group companies also rose over the period.
The companies added Rs 1.67 lakh crore over the course of the current fiscal, which was at Rs 10.78 lakh crore at the end of the second quarter.
The first quarter saw an addition in market cap of over Rs 95,000 crore, with nearly Rs 72,000 crore added in the second quarter.
Total market capitalisation for the group stood at Rs 10.2 lakh crore on Friday.
Adani Enterprises Ltd. recorded the highest contribution to the addition in market cap in the half-yearly period, adding Rs 75,000 crore, while Adani Power Ltd. made the second greatest addition by Rs 71,600 crore.
Disclaimer: AMG Media Networks Ltd. (AMNL) currently owns a 49% stake in Quintillion Business Media Ltd. (QBML), the owner of BQ Prime Brand. AMNL has entered into an MOU to acquire the balance 51% stake in QBML. Post acquisition, QBML will become a wholly owned subsidiary of AMNL.
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India Business & Economics
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If you’ve looked at the investment options in your workplace 401(k) retirement plan, chances are you’ll see mutual funds that put your money into stocks, bonds or cash and cash equivalents. Those have been the options available ever since 401(k) plans were introduced in 1978. Now, a new study from the Center for Retirement Initiatives at Georgetown University finds that adding alternative investments to the mix would boost 401(k) returns by 8% in the long run. Here’s what you need to know.
A financial advisor can help you create a financial plan for your retirement needs and goals.
The study from the Center for Retirement Initiatives at Georgetown University says that the improved diversification offered by including alternative assets in the portfolios of 401(k)s and similar defined-contribution retirement plans could deliver greater returns and improved retirement income for millions of U.S. workers.
Alternative investments include a range of options from hedge funds and commodities to collectibles and structured financial products, such as credit default swaps and collateralized debt obligations.
In this case, the Georgetown study focuses on three alternatives: real estate, private equity funds and private credit. And it examined how adding these alternative assets to target date funds (TDFs) could boost your retirement savings significantly.
“The Expanded TDF, which includes allocations to private equity, real assets, and private credit, further improves long-term retirement income expectations and worst-case results by 8% and 6%, respectively,” the study concluded.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Why More 401(k)s Are Investing in TDFs
Target date funds are a type of mutual fund that adjusts the asset mix and risk profile of the fund as time passes from a more volatile stock-heavy mix in early years to a more stable portfolio as the fund’s target date approaches.
This investment typically focuses on a specific year when an investor is expected to start withdrawing money in retirement, such as the Vanguard Target Retirement 2035 Fund.
Ever since the Pension Protection Act of 2006 was signed, employers have been allowed to automatically enroll workers into workplace 401(k) retirement accounts, with that money going into a Qualified Default Investment Alternative, which typically uses target date funds. The result has been a surge in the use of these funds.
According to the report, at the end of 2021, “64% of Vanguard plan participants were solely invested in a default investment program compared with 7% at the end of 2004. Of the plans with automatic enrollment … 98% chose a target date fund as the default.”
Target date funds will see even more activity now that the recently signed Secure 2.0 Act has been signed. Starting in 2025, companies that add a new 401(k) and 403(b) plan will be required to automatically enroll their workers, with a minimum contribution rate of 3% to 10%. The minimum contribution amount will increase 1% each year up to 15%.
Benefits of Adding Alternative Investments to Your TDF
The study points out that alternative investments can have many benefits, from higher returns to inflation protection and reducing portfolio risk.
Real estate, for example, can provide high inflation-sensitive income and capital appreciation. Private equity, comparatively, could offer higher long-term returns because those investments are in fast-growing small and mid-sized private companies. And private credit, like bonds and securitized loans, could offer investors higher yields with lower overall risk.
And while TDFs are growing in popularity, the study also acknowledges that the design of DC plan investments need to continue evolving to support growth, smooth risks and enhance retirement income outcomes for workers.
“DC plans are still not harnessing their full potential because the investment of the contributions is allocated almost exclusively to public stocks, investment-grade bonds and cash,” the study says. “Because plan participants fully absorb the gains and losses of their accounts, market events can drastically affect their ability to retire.”
Bottom Line
A new study from the Center for Retirement Initiatives at Georgetown University finds that adding alternative assets to 401(k) portfolios and other defined-contribution retirement plans could deliver greater returns and improved retirement income for millions of U.S. workers. But there is still additional room to support growth and minimize risk for retirement investors.
Retirement Planning Tips
A financial advisor can help you create a comprehensive financial plan to help you pay for retirement. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re looking for different ways to invest for retirement, here are 13 financial investment and examples to consider in 2023.
Photo credit: ©iStock.com/simon2579, ©iStock.com/Eva-Katalin, ©iStock.com/AsiaVision
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Personal Finance & Financial Education
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States Lack Power To Amend VAT Acts Post-GST Implementation, Supreme Court Says
The top court said that the law required changes to be made to existing taxation laws, before the GST Act was enacted.
After the Goods and Services Tax came into effect in 2017, the states were stripped of their powers to make amendments to their respective Value Added Tax Acts, the Supreme Court said.
It said so in a batch of appeals filed against amendments brought out by the states of Telangana, Gujarat and Maharashtra to their respective VAT Acts.
The top court was dealing with the interpretation of Section 19 of the Constitution (One Hundred and First Amendment) Act, which came into force in September 2016.
The provision said that the states had the power to amend or repeal all the earlier legislation that dealt with the taxation of goods and services so as to bring them in line with the upcoming GST regime.
It also said that if the requisite changes are not brought in, these laws would automatically expire after the new law is enacted, or after the expiry of one year, whichever date comes earlier.
The GST Act was subsequently enacted in July 2017.
Thereafter, amendments were brought into the VAT Acts by the states of Telangana, Gujarat and Maharashtra.
These amendments were challenged in their respective high courts.
While the high courts of Telangana and Gujarat struck down the amendments due to a lack of legislative competence on the part of the legislature, the high court of Bombay upheld the amendments.
The apex court explained that the aim of Section 19 was to preserve existing fiscal and taxation laws prevailing in various statutes for a limited duration of one year or until they were amended or repealed.
If there was no transitional provision, such as the one contained in Section 19, and the states were not allowed to cure the defects of the existing laws, the results could have been catastrophic, the court said.
However, it was observed that amendments to all the VAT Acts in question came after the enactment of the GST Act. Therefore, the top court agreed with the fact that these amendments lacked legislative competence and were overruled.
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India Business & Economics
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An anonymous reader quotes a report from TechCrunch: The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers in as many as 13 states, the agency announced today. Direct File, as the service is called, is a shot across the bows of Turbotax, H&R Block, and other paid tax prep services, whose owners have resisted free and simple tax filing for decades. "This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS," said IRS Commissioner Danny Werfel in a press release announcing the news.
Over the last year and a half, the IRS has been building out the pilot program, which it characterizes as being "one more potential option" on the continuum from self-managed Free File, to commercial products like Turbotax, to a tax prep professional. The IRS describes Direct File as "a mobile-friendly, interview-based service" available in English and Spanish, intended for people with simpler tax situations like W-2s and common income credits and deductions. Whether the interviews are with actual people or some kind of automated or semi-automated process is unclear. But this, like many of its specifics, will likely change as the agency receives feedback from this limited scale pilot.
Arizona, California, Massachusetts, and New York are the four states that are integrating with Direct File for 2024 (i.e. the 2023 tax year); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming "may also be eligible," due to not having state income tax, but it is not final. Every state was given the opportunity to participate in the Direct File program, but not all were "in a position to join." Among the residents of these states, a limited number of individuals with "relatively simple returns" will have the opportunity to try Direct File. This will in turn "allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers." In software terms, we'd probably call this an alpha.
Over the last year and a half, the IRS has been building out the pilot program, which it characterizes as being "one more potential option" on the continuum from self-managed Free File, to commercial products like Turbotax, to a tax prep professional. The IRS describes Direct File as "a mobile-friendly, interview-based service" available in English and Spanish, intended for people with simpler tax situations like W-2s and common income credits and deductions. Whether the interviews are with actual people or some kind of automated or semi-automated process is unclear. But this, like many of its specifics, will likely change as the agency receives feedback from this limited scale pilot.
Arizona, California, Massachusetts, and New York are the four states that are integrating with Direct File for 2024 (i.e. the 2023 tax year); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming "may also be eligible," due to not having state income tax, but it is not final. Every state was given the opportunity to participate in the Direct File program, but not all were "in a position to join." Among the residents of these states, a limited number of individuals with "relatively simple returns" will have the opportunity to try Direct File. This will in turn "allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers." In software terms, we'd probably call this an alpha.
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Personal Finance & Financial Education
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Food price caps are likely to backfire – as price caps always do
SUGGESTED
At best, the scheme will prove to be a harmless gimmick. The proposed cap would be voluntary and the prices of many staples, including bread and milk, are now falling anyway. But the evidence base for state intervention on food prices is remarkably weak.
There is a great deal of hype about ‘profiteering’ and specifically about ‘greedflation’. This term can cover a multitude of sins, but generally describes a situation where a company uses the cover of bad news about inflation to raise their own prices by more than could be justified by higher costs or strong demand.
However, there is no real evidence of this in the UK supermarket sector, which is highly competitive. The major retailers aggressively match prices in a race to the bottom and still work on tiny profit margins (estimated at about three percent).
There is not much evidence of ‘greedflation’ in the UK economy as a whole either. The latest ONS data on corporate profitability show that that there has been little change in the net rate of return, which is a measure profits relative to the capital required to generate them.
It makes more sense to focus on the real reasons why food prices are so high to begin with. The last two years have seen large increases in the costs of agricultural commodities, energy, transport and labour, as well as the burdens of tax and regulation.
Some of these pipeline pressures are now fading. In particular, the UN FAO index, which tracks the global price of a basket of food commodities, peaked about a year ago. The UK measure of producer price inflation in the food sector peaked about six months ago.
This has prompted some to claim that UK retailers have been slow to pass these cost savings on. But retailers typically base their prices on contracts which are set three, six or even 12 months in advance. These lags mean that shop prices should be falling about now – which indeed they are.
The proposal for food price caps therefore fails to address the underlying problem – which is soaring costs – and could be just be a pointless distraction. But there are also at least three ways in which this proposal could backfire.
First, supermarkets may attempt to offset the impact on their revenues elsewhere. They might be willing to treat a wider range of basic foods as ‘loss leaders’ in order to gain market share (corner shops will be unable to match them) or to generate some good publicity. But they could also compensate by reducing the quantity or quality of the goods whose prices are capped, or by raising the prices of ‘uncapped’ goods.
Second, it is not even certain that the prices of capped goods would end up lower than if there were no cap. Supermarkets may simply ‘price to the cap’ – making it a target rather than a ceiling – and not cut prices further even if falling costs allowed them to do so. Of course, strong competition should prevent this, but then why the need for price caps at all?
Third, this could be the thin end of the wedge. The government may hope that this voluntary scheme would be enough to show that it is ‘doing something’ about food inflation (and perhaps claim credit for price falls that would have happened anyway). But it could just encourage calls for more intervention, including making the caps mandatory, like the energy price cap, and extending the idea to other sectors, such as rent controls in the housing market. (For a longer discussion on the follies of price controls, try this 2015 paper from the IEA.)
There are plenty of practical problems with the latest proposal too. Exactly which food products would have their prices capped? At what levels would prices be capped? (The complexity of the calculations behind Ofgem’s energy price cap are a warning here.) And what are the implications for competition policy if participating supermarkets are allowed to collude on prices, even in a ‘good cause’?
Finally, of course, it is the Bank of England’s job to control the overall level of inflation. Government tinkering with some prices may simply cause inflation pressures to pop up elsewhere.
This does not necessarily mean that the government should do nothing. The main focus should be on tackling the reasons why food prices are so high to begin with, such as the UK’s relatively high energy costs. There may also still be a case for providing some extra help to poorer households who spend a larger proportion of their budgets on essentials like food. But the best to do that is to use the tax and benefit system to top up their incomes and incentivise work, rather than clumsy attempts to fix prices.
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Inflation
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The government has demanded answers from Amazon after its recent policy change led to hundreds of sellers unable to access their money.
In a letter seen by the BBC, small business minister Kevin Hollinrake asks the tech giant to explain how it will "mitigate" the impact on sellers.
One seller, Daniel Moore, who sells ink cartridges, says he has £263,000 locked and cannot pay his VAT bill.
Amazon said the policy change had affected a small number of sellers.
The letter from Mr Hollinrake was sent after the BBC spoke to several businesses who say the recent policy change leaves them unable to restock or pay staff and bills.
Amazon's recently amended policy is to hold back some money from sellers in case buyers demand a refund.
That leads to sellers not having access to their takings for around two weeks.
This was implemented on 3 August across the UK and EU for sellers registered before August 2016.
But its email about the change was not seen by many EU and UK sellers, and in many cases was automatically sent to their junk folder.
The BBC has seen several complaints on Amazon's online seller forums saying the email was "not clear" that the withdrawals from their account that they are used to making on a daily basis would be blocked.
Sellers have complained that the temporary withholding of their funds is bringing their businesses close to collapse.
Mr Hollinrake took this issue up in his letter to John Boumphrey, the country manager for Amazon UK, as he wrote: "Given these complaints, I would be grateful if you could explain how Amazon intends to help mitigate the impact on its sellers of this change, as this is a challenging time for many small businesses who are already struggling with cashflow issues."
Marios Katz sells CDs and vinyl on Amazon and said he doubted that Mr Boumphrey would respond to the minister's letter. He told the BBC he was "shaken and panicked" by not having access to his takings.
He is concerned he will not be able to feed his family, as he is used to withdrawing money from his account as soon as he has earned it.
"They [Amazon] are a billionaire company - maybe they don't care, or maybe they don't know what is really happening," Mr Katzadded.
Mr Hollinrake wrote in his letter to Mr Boumphrey: "I am sure you will share my desire to ensure the livelihood of small businesses are not being jeopardised by Amazon's approach."
Daniel Moore, 48, has a business called Ink Jungle that sells ink cartridges and the reserve amount is increasing by £40,000 a day, he said.
"The value they will be holding from us is disproportionately high versus the potential refunds processed by customer returns or non-delivery," says Mr Moore.
He called Amazon's approach to its policy "dreadful", but called Mr Hollinrake's letter "a help" - although Daniel added he was "not expecting miracles".
A Cheltenham business that has been selling pet products for more than 10 years on Amazon told the BBC the company was holding £16,000 of its takings.
The business owner, who asked to remain anonymous, said of Mr Hollinrake's intervention: "I certainly welcome that news and I wait in anticipation to see what Amazon's response to this will be.
"Things were already tough enough with the cost-of-living crisis which not only affects costs at home but also in the workplace, with a host of price rises ranging from electricity to postage."
Online retail expert Martyn James said Amazon's policy shift shows the need for consumer law to "evolve and be updated" to prevent "dramatic impacts on people's lives with little to no consultation".
"The fact remains that we have strong laws in the UK that cover the rights of both buyers and sellers of goods and services - but only if you buy or sell goods directly", said Mr James.
He called for a single regulator for the entire retail industry, as well as a free ombudsman service that people can turn to if things go wrong.
'No clarity'
Libby Pearson, 42, from Kent says many sellers did not know what was happening when their money was locked. She sells nutritional supplements and has been on Amazon since 2009.
She says Amazon has locked £700 of her money - and that every day more is being added to that amount, as sales continue.
She was used to withdrawing amounts daily from her Amazon account for the day-to-day running of the business, but says that is now totally disrupted.
"There was no clarity on which order is being held or when it will be released? I had to to ring HMRC saying I can't pay my VAT bill on time," Libby said.
An Amazon spokesperson said the policy change affected a "small number of sellers".
"We are listening to sellers' concerns and are in contact with those who have experienced a one-time cash flow disruption", the spokesperson added.
The issues are similar to those faced by Etsy sellers after that marketplace began withholding 75% of sellers' funds for around 45 days. Hundreds of sellers complained it was undermining their businesses.
Following a BBC report into the problem, Etsy reduced the amount it was withholding.
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Consumer & Retail
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Retirement is a big milestone for many, and planning for retirement can constitute a large financial goal that takes years to reach. In fact, data from the Federal Reserve indicates that the majority of Americans only have $65,000 saved for retirement–far less than most experts recommend.
Investment giant T. Rowe Price has released an updated guide for retirement savers based on income level. Another well-known investment firm Fidelity Investments also has its own retirement savings guide, only with different numbers. So what do you do when the advice conflicts? Which benchmark guide should you follow?
A financial advisor could help you plan for retirement and select investments that align with your financial goals. Speak to a qualified advisor today.
T. Rowe Price Estimates Retirement Savings By Income Group
Planning for retirement can be intimidating, whether you’ve just begun working or you’re already approaching retirement. Given the power of compounding interest, saving as much as possible early on allows you to save even more over time. Yet with so many competing priorities in the present, sometimes retirement saving becomes less important and you may find yourself wondering if you’ve fallen behind.
T. Rowe Price calculates that the amount of money needed by age 65 depends heavily on your income. Thought Leadership Director Roger Young says that “higher earners will get a smaller portion of their income in retirement from Social Security, [so] they generally need more assets in relation to their income.”
As a result, most people looking to retire around age 65 should aim to save between seven and 13.5 times their pre-retirement gross income. The chart below shows how that breaks down by age group:
However, the range widens significantly as savers approach retirement. A married couple with two earners making $75,000 gross a year should have approximately five times their income saved for retirement by age 55, whereas a couple making $250,000 a year should save seven times their income by the same age. According to T. Rowe Price, this multiple factors in estimated government benefits that varies depending on income.
On the other hand, Fidelity recommends saving more at a younger age and catching up less as savers age. At age 30, the company advises earners to have one times their salary saved, two times by age 35, four times by 45 and reach seven times their salary by age 55. Fidelity assumes a relatively low real wage growth, at only 1.5% per year, so front-loading retirement savings would allow retirement savers to earn more through compounding returns.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
How Retirement Savers Can Take Advantage
For the average American, T. Rowe Price and Fidelity both arrive at a multiple of seven times your salary saved by age 55. But they rely on different assumptions that impact their retirement savings calculations.
T. Rowe Price assumes that, early on in a career, younger earners tend to save 6% of their paychecks for retirement, ramping up by 1% per year until they reach 15%. Fidelity assumes you’ll save 15% right from the start. The appropriate amount for you will depend on your level of disposable income and how much you can reasonably expect to save.
In fact, Federal Reserve data indicates that the average individual in the age 55-64 cohort has saved approximately $408,420 for retirement. However, the median savings for that age group is only $134,000. So while retirement savings goals are important for the future, some workers simply can’t afford to put away so much of their income.
If you’ve begun saving late or you’ve had to tap your retirement savings for unexpected expenses, it might even seem like seven times your salary is an unattainable goal. The 2020 Economic Well-Being of U.S. Households Survey found that 42% of non-retirees laid off in 2019 had no self-directed retirement savings, but it’s never too late to work on your financial goals.
Both T. Rowe Price and Fidelity find that 15% of income per year (including any employer contribution matches) is an ideal savings level for many people. Higher earners who will likely receive less in Social Security benefits should aim beyond 15%. A financial advisor could help you formulate a plan to reach your retirement goals faster if you need help.
Bottom Line
Investment firms T. Rowe Price and Fidelity Investments have released updated retirement savings benchmarks by income level. While both companies estimate that the average American should save seven times the annual salary by age 55, the actual amount saved will depend heavily on income and savings patterns. In general, experts recommend that retirement savers aim to save 15% of income per year over their working years in order to save enough for a comfortable retirement.
Retirement Planning Tips
Not sure what investments or strategies will set you up for a smooth retirement? For a solid, long-term financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Photo credit: ©iStock.com/whyframestudio, SmartAsset, ©iStock.com/tagstock1
The post Approaching Retirement? T. Rowe Price Says You Need This Much Saved Based on Your Income appeared first on SmartAsset Blog.
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Personal Finance & Financial Education
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Bitcoin Pares Gains After BlackRock Says SEC Still Reviewing ETF
Bitcoin reversed an earlier gain of as much as 10% after BlackRock said that its application for an exchange-traded fund that invests directly in the cryptocurrency is still under review.
(Bloomberg) -- Bitcoin reversed an earlier gain of as much as 10% after BlackRock said that its application for an exchange-traded fund that invests directly in the cryptocurrency is still under review.
“The iShares Spot Bitcoin ETF application is still under review by the SEC,” a spokesperson said. Bitcoin was up about 3% to $28,000 as of 10:12 a.m. in New York on Monday after briefly jumping to $30,000.
Speculation swirled on social media that BlackRock, which in June submitted an application for a spot-Bitcoin ETF, received a green-light from the US Securities and Exchange Commission to launch the first such product in the US. That spurred the surge in the largest coin, though Bitcoin quickly reversed the majority of those gains after the rumor was debunked.
Still, the episode suggests that there remains a lot of excitement and hope for a spot-Bitcoin product in the US, which regulators have in the past refused to allow. They’ve previously cited market manipulation, among other reasons, for not granting an endorsement. However, the incident also serves as a reminder that Bitcoin’s price can easily be moved by gossip or hearsay.
There are currently more than 10 filings for spot-Bitcoin ETFs, with industry heavyweights like BlackRock and Invesco being part of the race — which has some analysts guessing that the odds for approval may be greater this time around given their participation in the race.
Another factor influencing analyst predictions on whether a spot-Bitcoin fund will soon be allowed to launch is Grayscale’s win against the SEC as the crypto-asset-manager tries to convert its $16.7 billion Bitcoin Trust — known as GBTC — into an ETF. On Friday, the US Securities and Exchange Commission declined to appeal on earlier positive court ruling for Grayscale, which in the eyes of many analysts served as yet another positive step toward the approval process.
“That was a good 30 minutes of fun and games,” Teong Hng, CEO of crypto investment firm Satori Research, said of Monday’s roundabout.
--With assistance from David Pan.
(Adds additional information from BlackRock, Bitcoin paring gains.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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- The Swiss lender last week began selling the bonds — which were at the heart of controversy during its emergency rescue of Credit Suisse earlier this year — for the first time since the takeover.
- The wipeout of $17 billion of Credit Suisse AT1 bonds in March, as part of the rescue deal brokered by Swiss authorities, caused uproar among bondholders and continues to saddle the Swiss government and regulator with legal challenges.
UBS Group CEO Sergio Ermotti says the "incredible" market demand for the bank's recent issuance of AT1 (additional tier one) bonds is a "signal to the Swiss banking system."
Ermotti told CNBC on Wednesday that he was "more than encouraged" by the massive oversubscription received for last week's return to the market.
"The AT1 demand was incredible — 36 billion euros ($39.1 billion) of demand for what happened to be 3.5 billion [euros] of placements — and in my point of view, it was probably the highlight in a sense of the confidence is restoring not only for UBS, I would say also it is a signal to the Swiss financial system," Ermotti said.
The wipeout of $17 billion of Credit Suisse AT1 bonds in March, which was part of the rescue deal brokered by Swiss authorities, caused uproar among bondholders and continues to saddle the Swiss government and regulator with legal challenges. Some commentators suggested that it had undermined confidence in the traditionally stable and reliable Swiss banking system.
"The first reactions were based on emotions or people that were very loud because they had their own interest, but I think that, as time went by, people had enough chances to really look at the idiosyncratic situation, and also probably look more carefully into the prospectus of what is written," Ermotti told CNBC's Joumanna Bercetche on the sidelines of the UBS Conference in London.
"Those bonds were designed to be there for those kind of situations so I think that people over time, or the vast majority of the people, are coming down to a more balanced way of looking at matters," he added.
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Bonds Trading & Speculation
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A dad with "a heart of gold" died suddenly on a weekend trip to Butlins, his grieving family has said.
Jonathan Gelling visited the Somerset resort with partner Caroline Conway and friends for a weekend away to watch the UK Open darts tournament earlier this month.
But while staying at the family destination, 41-year-old Jonathan tragically died overnight in his bed.
Caroline told how darts fan Jonathan had watched the first round of a match on Friday, March 3, before having a meal and heading to bed.
The dad, from Kirby, Merseyside, was found the following morning and Caroline desperately tried to revive him with CPR, the Liverpool ECHO reports.
Tragically her efforts were to no avail, and medics pronounced Jonathan dead at the scene.
Tributes have since been paid to the "lovely" dad, who was described as a "top lad" who would "do anything for anybody".
Jonathan had recently started a new job working at a bread factory weeks before his death earlier this month, friends said.
Friends Lisa and Vicki Jackson set up a Gofundme page to support nurse Caroline with the cost of Jonathan's funeral.
Lisa Donoghue, 49, said they would also like to thank the security staff at Butlins Minehead who couldn't do enough to help them throughout the ordeal.
Paying tribute on Caroline's behalf, Lisa said Jonathan was "such a friendly, friendly person."
She described him as a "happy" man who "would do anything for anybody", adding: "he was such a lovely, genuine guy. He'd been in a new job for three weeks. He had a lot of friends, especially from school."
A message on the Gofundme page reads: "We are fundraising on behalf of our lovely friend and colleague Caroline Conway, who is a nurse at Aintree Hospital.
"Her loving partner Jonathan Gelling suddenly passed away on Saturday, March 4, 2023 at the age of 41.
"His passing was completely unexpected and has devastated all those that knew Jon.
"He was a loving, caring person that had a heart of gold and had an amazing sense of humour.
"Jon had just begun a new job and had no life insurance or funeral plan. Caroline will now have to find the funds to pay for his funeral.
"We are hoping that with the help of all of our friends, family, colleagues and any well wishers that we can help Caroline in any way possible.
"Any contribution would be greatly appreciated."
Close pal John Sheridan described Jonathan as "one of my best mates", saying he would be "missed by many", while Laura Joan Hill added he was "a lovely man".
A Butlin’s spokesperson said: “Our heartfelt condolences go out to Jonathan’s family and friends at this incredibly sad time.”
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Nonprofit, Charities, & Fundraising
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- A range of companies are pulling back on perks as they chase higher margins.
- From airport lounges to free shipping and birthday treats, consumers are seeing fewer freebies as businesses rethink how they want to inspire loyalty.
- The shift has come with a change in spending habits.
It's not your imagination: Companies are getting stingier with customer rewards.
Airlines are making it harder to earn elite status. Retailers have tightened return windows and tacked on fees. Dunkin' and Sephora are even cracking down on birthday treats.
related investing news
The shift shows companies are rethinking how to attract, retain and reward customers after the Covid pandemic as consumers change their spending priorities and businesses face pressure to control costs while increasing sales.
Companies have to be careful. If they slash benefits too severely, they risk losing customers, but being too generous comes with a cost.
"It's not a simple math exercise to say letting few people into a particular group or offering fewer people a promotion just translates to a change in sales volume," said David Garfield, global head of industries at consulting firm AlixPartners. "It also can change the way people feel about the company and influence others."
Some of the biggest shifts in customer perks have come in the airline industry.
During the pandemic, airlines allowed frequent flyers to hold on to their elite statuses. They ended that perk as travel rebounded, and customers racked up loyalty points on co-branded credit cards. Carriers including American Airlines, Delta Air Lines and United Airlines also have raised the number of miles customers need to earn elite status as the ranks of those with the benefits swelled.
"When you have that many customers in the so-called premium tiers, it doesn't feel that special anymore," said Yuping Liu-Thompkins, a professor of marketing at Old Dominion University's Strome School of Business who researches loyalty programs.
Delta has taken steps to try to reduce crowding at its popular airport lounges. It has largely barred staff when they're flying standby and raised membership fees and entry requirements. In February, American Express Centurion Lounges started charging members $50 to bring in an adult guest and $30 for children between the ages of 2 and 17 for American Express Platinum cardholders. Previously, members could bring two guests for free. The fees are waived if a cardholder spends $75,000 on the card in a year.
Those changes come as airlines see a new trend: Many travelers are willing to pay more to sit in business class or for other roomier seats to make flying more comfortable.
United, Delta and American executives said on earnings calls last month that premium-seat revenue has increased , outpacing growth from the main cabin. Airlines are racing to add roomier seats to cater to those free-spending travelers.
While the airline industry has turned profitable during the post-pandemic travel boom, retailers have faced a host of new challenges.
Inflation has squeezed consumer spending, said Marshal Cohen, chief retail advisor for Circana, the market researcher formerly known as IRI and The NPD Group. As shoppers buy fewer discretionary and big ticket items, companies have taken a harder look at expenses, he said. If they can't boost sales, they can try to impress investors with better margins.
"We are now living in an environment where growth isn't going to happen by selling more product so easily and when you sell more product, it's easier to cover the cost of getting those sales," he said. "Retailers and brands have had to step back and look at all of their components of their business and decide which ones are working, which ones are not."
When travel and events were limited during lockdowns, retailers saw a windfall. Now, they are also cracking down as higher costs for essentials and increased travel possibilities force consumers to get more selective with their dollars.
At many retailers, customers must now pay a return fee if they want to ship back unwanted clothing, shoes or other items. Urban Outfitters, the company's chain Anthropologie, Abercrombie & Fitch and J.Crew are among the businesses that charge for sending back a return. Nordstrom's off-price chain, Nordstrom Rack, also added a $9.95 fee to ship back products earlier this year.
Even Amazon, the retail giant that pressured the rest of the industry to offer free shipping, has attached more strings. Starting this spring, customers must pay a $1 fee if they return a package at a UPS store, instead of at an Amazon-related store. The fee applies if the package's delivery address is near a Whole Foods, Amazon Fresh or Kohl's. Amazon owns Whole Foods and has a partnership with Kohl's for receiving returns.
Yet all of those retailers allow shoppers to return items for free at a company store rather than in the mail — a move that not only can reduce shipping costs but increase the chance that a shopper may buy something else. The extra step may also make a customer think twice and decide to keep the item instead.
Some retailers have tightened return policies, too. In March, Macy's shortened its return window from 90 days to 30 days. By making the change, the company said it can get products back on shelves more quickly when they're still in season. The move also reduces the odds that merchandise winds up on the clearance rack.
Amit Sharma, CEO of returns technology company Narvar, said retailers have started to retrain customers on how to return items, much like grocery stores have gradually taught shoppers to employ reusable bags. He added that after the pandemic created supply chain headaches, shoppers have a clearer understanding that shipping and returns come at a price.
"To drive that online demand, free shipping and free returns were put in place, but now we all know it costs significant money," he said.
In some cases, retailers are calling return fees "restocking fees" to refer to the extra labor involved in processing the item, said Heidi Isern, the head of Narvar's design and research.
In other cases, retailers are offering customers more choice, she said. For example, Levi Strauss, Ann Taylor, Crocs and Brooks Brothers have a home pickup program in some cities, powered by Narvar, where customers can pay about $5 to $9 for a delivery person to retrieve a package.
As retailers make shoppers think twice about returns, Netflix and Costco have also cracked down. Both companies aim to make sure membership isn't shared with people who aren't paying, particularly as the companies chase new avenues of growth.
For Netflix, subscriber growth has stagnated as customers spend less time on the couch and more time out in the world. The streaming service responded by reining in password sharing and introducing a lower priced, ad-supported option.
Costco also noticed a trend of people using membership cards that belong to someone else. It is now checking photo IDs, even in self-checkout lanes, to verify cardholders.
For both companies, the moves could nudge freeloading customers to become paying ones — or create a sense of fairness for members.
Airlines and retailers alike have taken a harder look at the customers they will try hardest to keep.
Simeon Siegel, a retail analyst for BMO Capital Markets, said the sudden halt in sales for discretionary retailers when the Covid pandemic hit, then the stimulus-fueled spending, gave companies a moment to rethink how they cater to shoppers — and if they're giving away dollars for little loyalty in return.
That led some companies to take a new approach to markdowns. Certain businesses also became confident that they could tack on a fee without losing their most valuable shoppers.
"It does seem like the companies are doing this because they're able to, not because they have to," Siegel said. "From 2008 to 2020, consumers felt they were entitled to whatever they wanted and corporations would wait on them hand and foot and that changed during the pandemic."
More companies from Target to Walmart and Best Buy have decided to push loyalty programs and offer the best perks only to the customers who shell out. The members can skirt delivery and return fees — or earn extra privileges.
For example, Macy's announced this week that it would charge shoppers at its namesake store $9.99 for shipping back returns. But it will waive that fee for members of Star Rewards, its free loyalty program.
At Best Buy, shoppers only have 15 days to return most products. But if they pay a subscription for the company's membership program, they get a longer return window of 60 days. Best Buy rolled out the three-tiered membership program in late June.
Even birthday gifts now sometimes have caveats to cater to shoppers who are bigger spenders or more frequent customers. Dunkin' got rid of its free birthday drink last fall and instead, it gives customers triple the loyalty points for purchases during their birthday. Sephora customers not only have to be in the company's loyalty program, but also must now spend at least $25 online if they want to get a birthday treat. (The giveaway is available in store without a minimum.)
Sephora and Dunkin' did not respond to requests asking for the reasoning behind the changes.
Garfield of AlixPartners said perks sometimes inspire a drive-by purchase rather than lasting customer loyalty. He said some shoppers take advantage of benefits like freebies but ultimately prove unprofitable for the companies.
It's a delicate balance.
"If the company loses the customer entirely as a result of this switch it may not be worth it," Garfield said. "The flip side of that coin is that clever companies actually fire some of their customers deliberately."
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Consumer & Retail
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Food Prices Approach Record Highs, Threatening the World’s Poorest
Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.
The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertiliser and fuel, and pandemic-related labour shortages and supply chain disruptions that make it difficult to get products to market.
A global index released Thursday by the United Nations Food and Agriculture Organization showed that food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya. The price of meat, dairy and cereals trended upward from December, while the price of oil reached the highest level since the index’s tracking began in 1990.
Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50% or 60% of their income on food.
He said that it was not “much of an exaggeration” to say the world was approaching a global food crisis and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created “a perfect storm of adverse circumstances.”
“There’s a lot of cause for worry about social unrest on a widespread scale,” he added.
Even before the pandemic, global food prices had been trending upward as disease wiped out much of China’s pig herd and the US-China trade war resulted in Chinese tariffs on US agricultural goods.
But as the pandemic began in early 2020, the world experienced seismic shifts in demand for food. Restaurants, cafeterias and slaughterhouses shuttered, and more people switched to cooking and eating at home. Some American farmers who could not get their products into the hands of consumers were forced to dump milk in their fields and cull their herds.
Two years later, global demand for food remains strong, but higher fuel prices and shipping costs, along with other supply chain bottlenecks like a shortage of truck drivers and shipping containers, continue to push up prices, said Christian Bogmans, an economist at the IMF.
Drought and bad weather in major agricultural producing countries like Brazil, Argentina, the United States, Russia and Ukraine have worsened the situation.
The IMF’s data shows that average food inflation across the world reached 6.85% on an annualised basis in December, the highest level since its series started in 2014. Between April 2020 and December 2021, the price of soybeans soared 52%, and corn and wheat both grew 80%, the fund’s data showed, while the price of coffee rose 70%, due largely to droughts and frost in Brazil.
While food prices appear set to stabilise, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Bogmans said.
The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.
Countries like Russia, Brazil, Turkey and Argentina have also suffered as their currencies lost value against the dollar, which is used internationally to pay for most food commodities, Bogmans said.
In Africa, pandemic restrictions and conflicts in Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices, while bad weather and economic mismanagement have also taken a toll.
Joseph Siegle, director of research at National Defense University’s Africa Center for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.
“Africa is facing record levels of insecurity,” he said.
The overall effect has been less severe in the United States, where food accounts for less than one-seventh of household spending on average, and inflation has become broad-based, spilling into energy, used cars, dishwashers, services and rents as price increases reach a 40-year high.
Yet US food prices have still risen sharply, putting a disproportionate burden on the poorest households, which spend more of their overall budget on food. In the United States, food prices rose 6.3% in December compared with a year ago, while the price of restaurant meals rose 6.0% and the price of meat, poultry, fish and eggs jumped 12.5%, according to the Bureau of Labor Statistics.
The Biden administration has tried to restrain some of these price increases, including by beginning an effort to combat consolidation in the meatpacking business, which it says is a source of higher prices, by providing $1 billion in funding to support smaller meat processors.
On Monday, the Department of Agriculture announced that it was partnering with the Port of Oakland in California to set up a 25-acre “pop-up” site where agricultural companies could fill empty shipping containers with commodities to try to speed their shipment out of the country.
But economists and agricultural experts say that while these efforts help at the margin, there may be little the government can do to combat a phenomenon that is complex and global.
The high cost of energy remains a particularly challenging problem, said Obstfeld, since it increases transport costs for food; drives up the price of fertilisers, which require a lot of energy to produce; and diverts grain into biofuel production, away from people’s diets.
Rock-bottom interest rates had also likely fuelled speculation in the commodities market, driving up prices, he added.
Maria Zieba, assistant vice president of international affairs at the National Pork Producers Council, said pork farmers were confronting a variety of challenges, including shipping container prices that are on average 170% higher than a year ago, last-minute cancellations of their shipments, and a lack of trucks and cold storage facilities to transfer and store their meat.
The prices that farms pay for fertiliser, nutrients and plastic packaging have increased, as has the cost of labour, she said. And Chinese lockdowns aimed at stamping out the coronavirus have also made it difficult for ships to unload products going into China, a major purchaser of US pork.
“These are all the things that are adding to the price that you’re seeing at the grocery store,” Zieba said.
Chris Edgington, a corn farmer in northern Iowa who is president of the National Corn Growers Association, said farmers were also struggling with rising costs for fertiliser, crop insurance, chemicals and shipping.
Edgington farms alongside his family, raising cattle and growing soybeans and corn. Much of that corn is processed into ethanol, leaving a byproduct called distillers grains that is commonly used as animal feed.
Those grains from Edgington’s farms are typically loaded into a container in Chicago, where they are shipped by rail to the port of Los Angeles, then on to Vietnam or other countries to feed fish, chickens and pigs.
But lately there has been a shortage of containers in Chicago to carry the distillers grains. Overloaded shipping companies have been refusing to send their steel boxes to the Midwest to pick up agricultural products, instead preferring to ship them back to Asia to carry more lucrative cargo.
With their costs and their sales prices increasing, many farmers are making similar margins to what they earned before, Edgington said. But “huge swings” in the price of corn, soybeans and fertiliser were still putting their finances at risk.
“The whole overall scenario has been very fluid for the last 12 months and actually sometimes pretty volatile,” he said.
“Farmers are going to handle a lot more dollars and have a lot more risk for basically no different return than what we had a few years ago,” he added.
©2022 The New York Times Company
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Inflation
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For those of us who entered the world of work at around the time of the financial crash and the coalition government coming to power, next year’s election could offer us the first opportunity in our working lives to not be living under Tory rule. The prospect of a Labour government should be a time for celebration, relief, getting ready to roll up our sleeves and getting stuck into making progressive change. But as the Labour conference gets under way in Liverpool, we see the leadership telling us to have no hope.
Our working lives have seen two deep recessions caused by the crash, a global pandemic, huge cuts to public services, Brexit, high inflation and the cost of living scandal. Student debt has gone up, and the housing crisis has deepened, with rents continuing to increase as the Bank of England tries to induce a recession and drive down wages through hiking rates. The UK has had the hottest temperatures on record and rising numbers of wildfires. It becomes difficult to ignore the glaringly obvious: that systemic change is required.
At the same time we’ve had the rise of incredible movements including Black Lives Matter, the youth climate movement and the resurgence of the trade unions. In the aftermath of the financial crash, organisations such as the one I run, Positive Money, were set up to counter the power of big finance and mainstream economics. For those of us in the progressive movement over the past decade, our political education has been built on intersections: how the multiple crises, from economic breakdown to the climate crisis and racial injustice, are inseparable.
But Keir Starmer and the Labour leadership team have little to say on these issues, leaving many of us who want to fight for change politically homeless. Rachel Reeves, the shadow chancellor, talks a lot about economic stability but says nothing about reining in big finance. Nationalisation of water and rail have been ruled out at a time when such policies would be incredibly popular. On the climate, investment has been delayed and the party has refused to cancel development of the Rosebank oilfield. This is all against a backdrop of the Tories moving to full-blown Trumpian politics and a shocking number of false statements at last week’s conference.
Labour continually limits its offer, by minimising the UK’s problems and shrinking the conversation. If the party comes to power next year with no coherent narrative for the future of the UK and timid policies, it is unlikely to counter the erosion of democracy through the rise of the far right and polarisation.
What this demands instead is courage, integrity and hope – things that have been in limited supply or even rejected by Starmer and co so far. His lurch to the right is in part due to the pressure of being the leader of the opposition. If he can’t hold firm to his values now, then with the added pressure of being the leader of the nation, he could buckle further.
At the same time, there are plenty of brilliant young leaders committed to the struggle for a progressive UK, and to building a new economy, tackling racial injustice and adapting and mitigating against climate breakdown. But they are not being heard by Labour right now, and are unlikely to be when the party takes power.
Do we want Labour elected in 2024? Of course. But do we also feel unsure about the route towards a progressive UK? Definitely.
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United Kingdom Business & Economics
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Mabel Stephens can't believe she's had to leave her family in Australia for a more affordable life in South America.
The 65-year-old Gold Coast grandmother, who has lived in Australia for more than three decades, said the cost of living crisis and an incredibly tight rental market forced her to leave the country.
"The whole world is upside down," Ms Stephens says, speaking to the ABC from her new home in Chile.
She moved back to the country of her birth in 2021 — the country she migrated to Australia from in 1978 — and doesn't know if she'll be able to return.
"It's something that is unbelievable," she said.
"You know, I've lived long enough — probably not long, long, but long enough — to see [that] these changes are so incredible.
"And it's not just here because you think some South American [countries], OK, they are not stable countries politically, but then you think with Australia — how did we get here?"
She said she faced homelessness in Australia and living with friends in Valdivia, a small city in southern Chile, was her best option.
Searching for accommodation was making her sick
Ms Stephens said she left Australia before she had to contemplate living in her car.
She had been sharing a one-bedroom apartment with her youngest son Simon on the Gold Coast with some help through the Rental Affordability Scheme.
"It is really tough to get something," Ms Stephens said, adding she counted herself lucky to have been able to have anywhere to live.
That's because the Gold Coast remains one of the toughest rental markets in the country.
Just before Ms Stephens left the city vacancy rates hovered just above zero, with 0.6 per cent of properties available to rent.
The rental market has barely eased since then, with rates currently sitting at 0.7 per cent, according to Real Estate Institute of Queensland.
Across Australian capital cities vacancy rates remain below 2 per cent.
"My son was going to live in his car but I left before that happened," she said.
Ms Stephens said she decided to leave when her son moved in with his partner.
"I couldn't stop his life," she said.
She said she could have toughed it out in Australia, but the process of finding accommodation was making her sick.
And at her stage in life she was not interested in joining a share house.
"I couldn't take it anymore. I was getting sick. Ill, very ill. And I lost a lot of weight. I was being taken to emergency all the time because of the stress," she said.
"I wasn't going to live sharing with other people, like young people, in a share house or an apartment. I couldn't do that."
Finding a job felt 'impossible'
Ms Stephens trained in bookkeeping when she arrived in Perth in the 1970s.
It's a career she's held ever since, including with Gold Coast theme parks, medical facilities, and aged care businesses.
But from about 2018, roughly the time she turned 60, she began to find it harder to get work.
She said she felt that the younger hiring managers thought she was too old.
"It was impossible because of my age. When they interview me, when I say 'oh well, I'm 64', people look at you," she said.
Her three sons Claudio, Joaquín, and Simon found it hard to understand why no one would hire her.
"That's what my sons couldn't believe. My three boys, they say 'you have all these qualifications'," she said.
"I can cut grass, I can clean, I managed a building where I had to do everything in that building. And then couldn't get a job. They couldn't believe it."
She retrained as a disability care worker in 2018 and despite the high demand for disability workers had no success.
"It's not that I didn't try. I tried hard because I'm the person that like to work and be active in getting my own money," Ms Stephens said.
Difficult to get a pension
Housing affordability aside, the move back to Chile has made it harder for Ms Stephens to qualify for a pension.
She should qualify for the aged pension when she turns 67 in two years.
But she now can't qualify for the pension as she's not lived in Australia for two consecutive years.
It's something that has made her goal of eventually moving back to Australia more difficult.
"How would you live with the unemployment benefit, renting?" the permanent resident of Australia said.
"How I could support myself in Australia for two years? I cannot live with my sons as they have to live their own lives. I will have to live on benefits and be a burden for the government anyway."
She still hopes to return to the country she considers home.
"I hold hopes to return to Australia one day soon, to be around my sons and grandsons, my family, where home is. Australia is my country," Ms Stephens said.
"I will move back any time if the right circumstances came up."
She hopes sharing her story will help people in a similar situation.
Older workers still valuable
Ms Stephen's eldest son, Claudio Lance, said he and his brothers were able to support their mother, but understood that she didn't want to feel like she was a burden.
"Unless you have a certain type of profession it's that kind of city I guess, the Gold Coast," Mr Lance said.
"In my case I'm a nurse, I've got secure work."
He said being unable to find work had worn his mother down.
"It became so unsustainable for her. Myself and my other brother were trying to help her out," he said.
"She was kind of embarrassed too, to be asking for help.
"So she thought it would be best if she moved back to Chile where she had better prospects. It's much cheaper to live there and the standard of living isn't too bad.
"She has her extended family there too."
But it's her three sons and two grandkids, all still in Australia, who Ms Stephens misses most.
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Australia Business & Economics
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- Shares of Cigna fell after a report that the company is in talks with Humana about a merger between the two health care giants.
- Spokespeople for Cigna and Humana did not immediately respond to requests for comment on the report from the Wall Street Journal, which cited people familiar with the matter.
Spokespeople for Cigna and Humana did not immediately respond to requests for comment on the report from the Wall Street Journal, which cited people familiar with the matter.
The companies are discussing a stock-and-cash deal that could be finalized by the end of this year, the people told the Journal.
A merger would be a mega deal. Cigna's market value sat at roughly $80 billion on Wednesday and Humana's was around $63 billion, making them two of the nation's largest health insurers.
Shares of Cigna fell more than 5% on Wednesday, while Humana's stock was relatively flat.
The rumored deal comes after reports earlier this month that Cigna was exploring a sale of its Medicare Advantage business, which manages government health insurance for people aged 65 and older. A Cigna spokesperson at the time said the company does not comment on "rumors or speculation."
Some analysts have suggested that a potential combination with Humana could be a reason for Cigna to offload its Medicare Advantage business. Doing away with that business could potentially temper antitrust concerns for such a merger, Scott Fidel, health care stock analyst at Stephens, wrote in a note earlier this month, according to STAT News.
"We would see this action being one component of a potential pursuit of Humana as an acquisition target, with the divestiture being a proactive move to reduce antitrust risk," Fidel said.
This is breaking news. Please check back for updates.
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Stocks Trading & Speculation
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NEW YORK -- The Supreme Court has ruled the Biden administration overstepped its authority in trying to cancel or reduce student loan debt, effectively killing the $400 billion plan, which would have canceled up to $20,000 in federal student loans for 43 million people. Of those, 20 million would have had their remaining student debt erased completely.
The court's decision means, barring an act of Congress, those Americans are on the hook for payments starting in October.
Still, borrowers who are worried about their budgets do have options. For instance, the government has other loan forgiveness programs that are still in effect, even if Biden's plan was struck down.
Here's what to know about how the decision will affect you:
WHEN WILL STUDENT LOAN PAYMENTS RESUME?
Student loan payments that have been frozen for the last three years because of the pandemic are set to restart in October. That was going to happen no matter what the Supreme Court decided. Interest will start accruing Sept. 1.
HOW SHOULD I PREPARE?
Betsy Mayotte, president of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.
“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said.
Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.
Katherine Welbeck of the Student Borrower Protection Center recommends logging on to your account and making sure you know the name of your servicer, your due date and whether you’re enrolled in the best income-driven repayment plan.
WHAT IF I CAN’T OR DON'T WANT TO PAY?
If your budget doesn’t allow you to resume payments, it’s important to know how to navigate the possibility of default and delinquency on a student loan. Both can hurt your credit rating, which would make you ineligible for additional aid.
If you’re in a short-term financial bind you may qualify for deferment or forbearance — allowing you to temporarily suspend payment.
To determine whether deferment or forbearance are good options for you, you can contact your loan servicer. One thing to note: interest still accrues during deferment or forbearance. Both can also impact potential loan forgiveness options. Depending on the conditions of your deferment or forbearance, it may make sense to continue paying the interest during the payment suspension.
ARE THERE ANY OTHER PROGRAMS THAT CAN HELP WITH STUDENT LOAN DEBT?
If you’ve worked for a government agency or a nonprofit, the Public Service Loan Forgiveness program offers cancellation after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower’s debt after 20 to 25 years.
Borrowers should make sure they’re signed up for the best possible income-driven repayment plan to qualify for these programs.
Borrowers who have been defrauded by for-profit colleges may also apply for borrower defense and receive relief.
These programs aren’t be affected by the Supreme Court ruling.
WHAT’S AN INCOME-DRIVEN REPAYMENT PLAN?
An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. It takes into account different expenses in your budget, and most federal student loans are eligible for at least one of these types of plans.
Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. If your income is low enough, your payment could be as low as $0 per month.
If you’d like to repay your federal student loans under an income-driven plan, the first step is to fill out an application through the Federal Student Aid website.
HOW CAN I REDUCE COSTS WHEN PAYING OFF MY STUDENT LOANS?
— If you sign up for automatic payments, the servicer takes a quarter of a percent off your interest rate, Mayotte says.
— Income-driven repayment plans aren’t right for everyone. That said, if you know you will eventually qualify for forgiveness under the Public Service Loan Forgiveness program, it makes sense to make the lowest monthly payments possible, as the remainder of your debt will be cancelled once that decade of payments is complete.
— Reevaluate your monthly student loan repayment during tax season, when you already have all your financial information in front of you. “Can you afford to increase it? Or do you need to decrease it?” Mayotte said.
— Break up payments into whatever ways work best for you. You could consider two installments per month, instead of one large monthly sum.
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
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Personal Finance & Financial Education
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NEW YORK -- If you’re heading to college or starting to think about where you’d like to apply, you’re probably considering options for funding your education. If you need to borrow money to pursue your dreams, you are far from alone.
According to the Federal Reserve, 30% of all U.S. adults said they incurred at least some debt for their education. Borrowers owe a collective $1.77 trillion in student loan debt, including federal and private loans.
“Borrowing is almost at the point where it’s a requirement,” said Dana Kelly, from the National Association of Student Financial Aid Administrators.
If you're a high school senior or a college student, you'll want to apply for federal student loans through the Free Application for Federal Student Aid, also known as FAFSA, in December for the 2024-2025 school year. For private student loans, you can apply whenever you need the loan.
When you take out student loans, it's beneficial have to have an idea of what professional field you want to pursue, calculate how much you need to borrow, and understand the basics of loan interest. If this sound like a lot, don’t worry — we'll break it down for you. Here’s what you need to know.
WHERE DO I START?
The first step is to fill out the FAFSA. You will have to answer questions about your family’s financial contribution, along with other questions that will help determine if you qualify for federal or state financial aid and which loans you can apply for. You'll fill out the application each year.
Cathy Mueller, executive director of Mapping Your Future, a non-profit that helps people navigate higher education, recommends exhausting every possible funding option to reduce the amount you need to borrow.
If you’re looking to apply for scholarships to fund your college education, you can check out the College Board’s scholarship search directory.
As you fill out the FAFSA, Mueller recommends that you estimate the amount you will need to borrow for your entire college career, but also be realistic about what you will be able to pay back.
A tool that can help is the Debt/Salary wizard from Mapping Your Future, an interactive calculator that helps determine how much you can borrow based on your estimated future earnings.
WHAT ARE THE MOST IMPORTANT DATES TO KNOW?
In previous years, the FAFSA opened on Oct. 1. This year, the government is making big changes and the application will be available in December, but the date has not yet been announced. The FAFSA application usually closes the following June.
Once the application is open, you need to check your state's deadline to apply for state financial aid. Since financial aid is first-come, first-served, you'll want to apply as soon as you can to qualify for both federal and state grants.
For private student loans, the timeline looks different. Private lenders require you to have proof of enrollment, so experts recommend you apply a couple of months before your tuition is due.
WHAT IS THE DIFFERENCE BETWEEN FEDERAL STUDENT LOANS AND PRIVATE LOANS?
Federal student loans are backed by the government and private loans come from banks, credit unions or other private institutions.
In general, federal student loans offer lower interest rates and more opportunities for affordable repayment plans, such as the Public Service Forgiveness Plan or the various income-driven repayment plans.
Kelly recommends that students try to only use federal student loans, though there are borrowing limits.
“More than likely, private loans are going to cost a student more over the life of the loan,” Kelly said.
Private loans come with a different set of requisites and application process.
WHAT IF I RECEIVE MORE MONEY THAN I NEED?
It's recommended that you calculate the amount that you will need to cover your education before you accept a student loan. You might get offered a bigger loan than you need. If this happens to you, Mueller recommends that you return the money you don't need, since it's a loan at the end of the day and you will have to pay back that amount with interest.
If you find out that you'll want to return student loan money, contact your school's financial aid office to begin the process.
WHAT ARE SUBSIDIZED AND UNSUBSIDIZED STUDENT LOANS?
There are several different federal student loan options: direct subsidized loans, direct unsubsidized loans, direct PLUS loans and direct consolidation loans. But the most common are direct subsidized and unsubsidized loans, which are taken by the person who is completing the college degree.
Subsidized loans have their interest covered by the government and are granted to students with demonstrated financial need. Subsidized loans have their interest covered while you're in school at least half-time, for six months after you graduate and if you qualify for deferment, which allows you to stop making payments temporarily. Unsubsidized loans are available to most students, but they are responsible for paying the interest.
WHAT SHOULD I KNOW ABOUT STUDENT LOAN INTEREST RATES?
Student loans must be paid back with interest, which is additional money that you pay for borrowing. The interest on your student loan depends on your type of loan and when your loan was made available for you to use for the first time.
If your loan is disbursed on or after July 1, 2023, but before July 1, 2024, you will have a fixed interest rate of 5.5%.
WHAT SHOULD I DO BEFORE I SIGN MY STUDENT LOAN AGREEMENT?
Before you accept your student loan offer, regardless if it's federal or private, you want to make sure you understand the details, said Betsy Mayotte, president of The Institute of Student Loan Advisors. Those include when interest accrues, if interest is capitalized and if there are any late fees.
If reading the details on your own feels daunting, Mayotte recommends speaking with a financial aid counselor, either at your university or elsewhere.
If you meet with a counselor, it's good practice to come with prepared questions about repayment programs for when you need to start paying back your loan.
Good questions to ask yourself or a counselor, according to Kelly, include:
1. If I get this amount of a loan as a freshman, is that rate going to be flat over my four years? Or do you anticipate that I’m going to need to borrow more each year?
2. Does my opportunity for scholarships go up so the amount I need to borrow can come down?
If you are taking out federal student loans, it's a requirement that you complete an entrance counseling course. Kelly recommends that you pay extra attention to this process and not rush through it.
WHAT IF I HAVE QUESTIONS ABOUT MY STUDENT LOAN?
If you have specific questions about your student loans, there are many resources available. You can visit the Federal Student Aid website or reach out to your college's financial aid office or community or non-profit organizations such as Mapping Your Future.
WHAT ARE SOME RECOMMENDATIONS TO MANAGE MY STUDENT LOANS?
Mueller recommends that you keep track of how much you are borrowing each year so you have an idea of how much you will owe by the end of your college career and how much your monthly payments will be.
Mueller also recommends that, if you are working during college, you consider paying some of the interest that accumulates each year.
“You’re not required to make those interest-only payments. But if you do, you’re saving yourself money in the long run,” Mueller said.
Interest payments while you are still in college are generally low, but they get capitalized once you've graduated or left school, which means your loan gets larger and you would be paying interest on the interest, said Mueller.
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
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Personal Finance & Financial Education
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Divisive Tory backbencher Brendan Clarke-Smith has been handed a frontline role as the party desperately tries to reset ahead of the next election.
New Conservative Party Chairman Richard Holden unveiled a string of new deputies at the weekend, including the Bassetlaw MP, who has often found himself in the headlines. Mr Clarke-Smith will help with the party's campaigning efforts - an unenviable job as the Tories languish 16 points behind Labour in the polls.
But putting him on the frontline at a time could be a gamble for Rishi Sunak, as he tries to unite his warring party and win over disillusioned voters.
To mark his promotion, the Mirror has gathered together some of Mr Clarke' Smith's most controversial moments since becoming an MP in 2019.
Defending Tory MP who was convicted of racism
Mr Clarke-Smith this year launched a fundraising drive for racism row MP Bob Stewart. He set up a crowdfunding page to cover Mr Stewart's fine and legal costs, who was convicted of a racially aggravated public order offence.
Mr Stewart was fined £600 and ordered to pay a further £835 in legal costs by Westminster Magistrates Court earlier this month following the heated exchange row with campaigner Sayed Ahmed Alwadaei last December. He told the activist to "go back to Bahrain" and "you're taking money off my country, go away!" The Beckenham MP surrendered the Tory whip after his conviction and won't seek re-election next year.
A fundraiser set up by Mr Clarke Smith to cover Mr Stewart's fine and legal costs, has already raised more £19,000. The website states: "It is a disgrace to see a case such as this going to court, let alone for a decorated military hero and veteran, such as Colonel Stewart. Many will be appalled at the subsequent conviction for what was simply a polite request for somebody to go away and conduct their protest somewhere else where it would be more appropriate."
Food banks are a 'political weapon'
At an election hustings in 2019, Mr Clarke-Smith said food banks were being used a "top up" and a "political weapon". In a vile attack on the poorest in society, he said: "If you keep saying to people that you’re going to give stuff away, then you’re going to have an increase I’m afraid."
The Tory faced shouts of "shame on you!" as he tried to deflect blame from Tory welfare cuts. Challenged on his comments by the Mirror at the time, he stood by the remarks - claiming the shouts at the hustings were "staged outrage".
He ranted that it was "simply not true" that "people can't afford to buy food on a regular basis". And despite official figures showing poverty had risen, Mr Clarke-Smith insisted he didn't believe that was the case.
Quoting controversial Brexit newspaper frontpage
Earlier this month, Mr Clarke-Smith reacted to the Supreme Court's blocking of the Government's plan to send refugees to Rwanda by posting a picture on social media of a notorious 2016 Daily Mail headline branding top judges “enemies of the people” over a ruling on Brexit.
The newspaper frontpage featured photos of three judges who ruled the UK Government must get the consent of Parliament before it fired the starting gun on leaving the EU. It sparked a huge backlash at the time for politicising and questioning the independence of the judiciary.
After backlash to his tweet, Mr Clarke-Smith was forced to publish a clarification. "To be clear for context, this isn’t an attack on judges, but a reminder that the people of this country have felt their democratic choices haven’t been implemented. Like we did then with Brexit, we solved the problem in Parliament and it’s my intention to make this happen again," he said.
Telling firefighters using foodbanks to learn how to budget
Mr Clarke-Smith found himself in the spotlight again earlier this year for his comments on foodbanks. This time, he was targeting hard-pressed emergency workers who rely on the extra support.
Mr Clarke-Smith quoted a tweet from the Fire Brigades Union, which said: "Freedom of Information requests reveal that Chief Fire Officers are on average on £148,000 - whilst many ordinary firefighters, on £32,244, are forced to foodbanks."
In a comment alongside it, the Tory MP said: “I respect the profession, but £32,244 and using a food bank? Never heard such a ridiculous thing in my life. I earned a lot less than that for most of my teaching career, and so do many of my constituents. If true, which is unlikely, I suggest learning how to budget and prioritise.”
Attempting to undermine Partygate probe
Mr Clarke-Smith was named and shamed as one of eight allies of disgraced Boris Johnson who made "sustained" attempts to undermine the Privileges Committee's Partygate probe. A scathing report named the Tory MP alongside Sir Jacob Rees-Mogg, Nadine Dorries and Dame Priti Patel.
It said that "pressure" was applied to committee members investigating Mr Johnson's Partygate lies.
Mr Clarke-Smith called the probe a "witch-hunt which would put a banana republic to shame". The damning report ruled his and others' behaviour had a "significant personal impact" on those carrying out the probe, raising "significant security concerns".
The committee - made up of four Tories, two Labour and one SNP MP - recommended a massive 90-day suspension after finding Mr Johnson had committed five contempts of Parliament - but he quit before the punishment could be imposed.
'Personal view' supporting death penalty
Mr Clarke-Smith expressed his support for the death penalty "in principle" following the trial of Lucy Letby. He said he believes the "ship has sailed" in terms of capital punishment's return in the UK, but said he has always personally supported the concept.
After the trail of the killer nurse, he shared a video on social media following in which Margaret Thatcher discusses her support for capital punishment, saying: "When some criminals go out and do such hideous, cruel crimes, and in particular when they do such terrible things to children, I think they've forfeited their own right to life."
Mr Clarke-Smith wrote: "Nowadays I recognise this is only a philosophical debate, but this is my personal view. It has always been my personal view and it is one I make no apologies for."
Hard-pressed Brits should buy value baked beans
In May this year, Mr Clarke-Smith told hard-pressed Brits to buy value baked beans if they're struggling with soaring supermarket prices. During a debate on LBC on whether supermarkets had been profiteering by hiking prices, he said: "Heinz Baked Beans, say the price has shot up on that and people say, 'oh this tin has gone up by 50% or whatever'. Well, buy the Tesco Value one."
At the time, Shadow Environment Secretary Jim McMahon said: “It’s clear Tory MPs don’t take food security seriously. Brendan Clark-Smith MP telling hard-pressed British families in a cost of living crisis to ‘just eat value beans’ is out of touch and offensive. Tory MPs should focus on tackling the cost of living crisis rather than lecturing hardworking families on what food to put on their table."
Sarcastic comment ridiculing mental health
In June, a woman was targeted by Mr Clarke-Smith on social media after posting about her mental health. Tan Smith, 38, was stunned when Mr Clarke-Smith sarcastically said he was "playing the world's smallest violin" after she praised the Samaritans on Twitter.
It came after she thanked a "kind" volunteer at Glastonbury for helping her when she was struggling with her mental health at the Glastonbury Festival.
She called for him to be suspended after the party failed to condemn him. At the time, Mr Clarke-Smith himself declined to comment, but did send screenshots of offensive messages and images posted by the blogger and political commentator in the past.
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United Kingdom Business & Economics
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Here’s how retailers are responding to retail crime
(NewsNation) — As American retailers continue to grapple with theft, some are integrating new security technology while others are relying on more tried-and-true methods to address crime.
According to the National Retail Federation (NRF), retailers lost close to $95 billion in 2021 due to “shrink” — which accounts for various inventory losses but is primarily driven by external theft. Retailers reported a 26.5% increase in organized retail crime from the year prior, NRF found.
Some of those incidents have been brazen “smash and grab” robberies in the nation’s largest cities.
In New York City, there were more than 63,000 shoplifting complaints last year — a 45% jump from 2021, according to a recent New York Post analysis.
In response, some local retailers started using facial recognition software to identify repeat offenders. But that technology has also received pushback from various city council members who are concerned about privacy and racial bias.
Other businesses have opted for more traditional security measures, placing merchandise in locked cases and adding guards.
Locked up merchandise
Across the country, businesses are putting items under lock and key to deter theft. It’s not a new strategy, but recent comments suggest it may become more common.
“We’re looking at literally putting everything behind showcases to ensure the product’s there for customers who want to buy it,” Rite Aid’s chief retail officer Andre Persaud said on a September earnings call.
Last month, Ulta’s Chief Operating Officer Kecia Steelman said the beauty retailer plans to have locked cabinets in 70% of its stores to protect fragrances, which are often targeted by thieves.
Other companies are testing store concepts where most products are kept out of sight entirely.
Earlier this month, Walgreens opened a redesigned store in Chicago with just two aisles of touchable merchandise, as reported by CWBChicago. For the majority of items, customers order at a kiosk and pick them up at the counter.
Walgreens has pushed back against the idea that the store’s design is meant to deter theft. Instead, the company has said the new concept — which allows people to order ahead online, among other changes — provides “enhanced convenience” for customers and streamlines the shopping experience.
Locking up merchandise can make it more difficult to steal but the security approach also comes with limitations. Retailers risk turning off customers, who may feel inconvenienced or surveilled.
Joe Budano, CEO of Indyme, a technology company that sells retailers security devices, recently told the Associated Press that locking up items reduces sales by 15% to 25%.
More money for guards
Shoppers may be noticing more security guards at stores. About one-third of NRF survey respondents last year said they were increasing their budget for guards.
That response comes amid more retail theft but also an increase in violent attacks. Nearly 80% of retailers surveyed by NRF said guest-on-associate violence was up over the past five years.
In some cases, the increased security presence isn’t human.
In February, Lowe’s began testing security robots at four stores across Philadelphia, according to the Philadelphia Inquirer. The 5-foot-tall egg-shaped bots reportedly use an array of microphones, sensors, and cameras to detect anomalies which are then reported to Lowe’s central monitoring team in real time.
After increasing their presence in recent years, some retailers are pulling back on specific types of security guards.
“We’re putting in more law enforcement as opposed to security companies,” Walgreens CFO James Kehoe said on an earnings call in January. “The security companies are proven to be largely ineffective.”
At least one state lawmaker wants retailers to be required to use armed security.
Earlier this year, a Democratic state representative in Illinois introduced a bill that would mandate grocery stores and gas stations in Chicago to hire their own armed security during hours they are open. So far, that bill hasn’t advanced in the state legislature.
Calls for legislation
Industry groups like the NRF are calling for federal legislation to help crack down on organized retail crime. The bipartisan Combating Organized Retail Crime Act, which has been introduced in the House and Senate, would establish a new investigative unit within the Department of Homeland Security to help combat retail crime.
If passed, the bill would follow other legislative efforts at the state and local levels.
In April, New Mexico Governor Lujan Grisham signed a law aimed at curtailing theft at retail stores. The law allows prosecutors to impose stricter penalties and they can charge criminals with a new crime: “Aggravated shoplifting.”
Last year, Illinois Governor J.B. Pritzker also signed legislation imposing stricter penalties for people who commit retail crimes, including smash-and-grab burglaries.
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Consumer & Retail
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Congressman George Santos has become infamous for his seemingly endless string of absurd — and easily debunked — lies, but his latest alleged falsehood may be the one that brings with it the heftiest consequence.
In May, Mr Santos was charged with 13 felony charges stemming from a trio of unrelated financial schemes. He has pleaded not guilty to all of his charges and has denied any wrongdoing.
Details from her case have now revealed that a $500,000 loan that Mr Santos lent to his campaign reportedly does not exist.
Mr Santos has not been charged with falsifying the loan or with any other campaign finance violations, but his proximity to Ms Marks's case — both cases are being brought by the same US attorneys and adjudicated by the same judge — opens him up to possible additional charges.
Court documents relating to Ms Marks's case show prosecutors believe Mr Santos wanted to qualify for a Republican campaign programme that provides candidates with logistical, political, and financial support during their runs. However, in order to qualify for it, a candidate must raise at least $250,000 in donations in a single quarter.
They portrayed Mr Santos as "lost and desperate" at the end of 2021, and claimed that when he was short of the needed $250,000 to qualify for the programme, he lied about his financing.
The prosecutors cited text messages and emails that reportedly show that Mr Santos and Ms Marks filed reports claiming the campaign had raised the necessary money. Those reports include references to fake contributions made by relatives who, in reality, never donated.
The fake donations totalled $50,000, which allowed Mr Santos to qualify for the program.
Three months later, Mr Santos allegedly lied again while he was seeking funding from the national party committee.
In a pitch to the Republican national party committee, Mr DeSantos said that a "key factor" of his success was the "personal and political capital that will allow for a fully funded operation."
In April 2022, Mr Santos filed a campaign finance report that said he lent his campaign half-a-million dollars. However, prosecutors say that money was never deposited, and Ms Marks reportedly admitted to investigators that the loan was completely made up.
The alleged ruse appears to have worked, allowing Mr Santos to portray himself as a well-backed, serious candidate for national political office.
The allegedly fictional loan also set Mr Santos up for a potential pay-day; as a congressman, Mr Santos could reimburse himself the $500,000 if he managed to raise enough from donations to cover his personal investment in his campaign. That would have allowed him to skate with $500,000, assuming he could muster the donations.
The mystery half-a-million is not the only curious loan in Mr Santos' campaign ledgers. During his initial run for office, Mr Santos reportedly loaned himself $80,000, despite only pulling a salary of $55,000 at the time.
In 2022, he apparently came into more money; he claimed to have made $750,000 from his salary and more than a million each year in dividends from the Devolder Organisation — his company — despite the business having no website or visible service offerings. Mr Santos previously said the company managed his family's assets, which he estimated to be approximately $80m.
Mr Santos's next court appearance is on 27 October. He has not commented publicly on Ms Marks's guilty plea or the alleged fake loans.
The Independent has reached out for comment.
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Banking & Finance
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