Archive for Economics & Fundamentals – Page 148

D.B. Cooper, the changing nature of hijackings and the foundation for today’s airport security

By Janet Bednarek, University of Dayton 

Though many Americans may associate airport security with 9/11, it was a wave of hijackings in the late 1960s and early 1970s that laid the foundation for today’s airport security protocols.

During that period, a hijacking occurred, on average, once every five days globally. The U.S. dealt with its own spate of mile-high crimes, convincing reluctant government officials and airport executives to adopt the first important airport security protocols.

The subject of a new Netflix docuseries, hijacker D.B. Cooper emerged as something of a folk hero during this era. While other more violent hijackings might have played a bigger role in prompting early airport security measures, it was the saga of Cooper that captured the imagination of the American public – and helped transform the perception of the overall threat hijackings posed to U.S. air travel and national security.

Incidents become impossible to ignore

The first airplane hijacking happened in 1931 in Peru. Armed revolutionaries approached the grounded plane of pilot Byron Richards and demanded that he fly them over Lima so they could drop propaganda leaflets. Richards refused, and a 10-day standoff ensued before he was eventually released.

That remained a somewhat isolated incident until the late 1940s and 1950s, when several people hijacked airplanes to escape from Eastern Europe to the West. In the context of the Cold War, Western governments granted these hijackers political asylum. Importantly, none of the airplanes hijacked were flown by U.S. carriers.

Beginning in the early 1960s, however, hijackers began targeting U.S. airlines. Most of these individuals were Cubans living in the U.S. who, for one reason or another, wished to return to their native land and were otherwise blocked due to the U.S. embargo against Cuba.

U.S. officials responded by officially and specifically making hijacking a federal crime. Though the new law didn’t stop hijackings altogether, the crime remained relatively rare. When they did occur, they usually didn’t involve much violence.

Officials wanted to downplay hijackings as much as possible, and the best way to do this was to simply give the hijacker what they wanted to avert the loss of life. Above all, airline executives wanted to avoid deterring people from flying, so they resisted the implementation of anxiety-inducing security protocols.

That changed in 1968. On July 23 of that year, members of the Popular Front for the Liberation of Palestine hijacked an El Al flight from Rome to Tel Aviv. Though that 39-day ordeal ended without any loss of life, it ushered in a new era of more violent – often politically motivated – hijackings of international airlines.

From 1968 to 1974, U.S. airlines experienced 130 hijackings. Many fell into this new category of politically motivated hijackings, including what has become known as the Dawson’s Field hijackings. In September 1970, the Popular Front for the Liberation of Palestine hijacked four aircraft, including three belonging to U.S. carriers, and forced them to land at Dawson’s Field in Libya. No hostage lives were lost, but the hijackers used explosives to destroy all four aircraft.

Additionally, and more worrying to U.S. officials, two different groups of hijackers, one in 1971 and another in 1972, threatened to crash planes into nuclear power plants.

Cooper inspires copycats

Amid this dramatic rise in the number of hijackings, on Nov. 24, 1971, a man known to the American public as D.B. Cooper boarded a Northwest Orient 727 flight from Portland, Oregon, to Seattle. Shortly after takeoff, he showed a stewardess the contents of his briefcase, which he said was a bomb. He then instructed the stewardess to take a note to the cockpit. In it, he demanded US$200,000 in $20 bills and four parachutes.

Upon arrival in Seattle, Cooper allowed the other passengers to deplane in exchange for the money and the parachutes. Cooper then ordered the pilot to fly to Mexico but low and slowly – no higher than 10,000 feet (3,048 meters) and under 200 knots (230 mph, 370 kph). Somewhere between Seattle and a fuel stop in Reno, Nevada, Cooper and the loot disappeared out the back of the aircraft via the 727’s aft stairwell. No one knows for sure what happened to him, though some of the money was recovered in 1980.

Cooper wasn’t the first person to hijack an American airliner and demand money. That dubious honor belongs to Arthur Barkley. Frustrated with his inability to get government officials to take seriously his dispute with the IRS, on June 4, 1970, Barkley hijacked a TWA aircraft, demanding $100 million and a hearing before the U.S. Supreme Court. Barkley’s efforts failed, and he ended up confined to a mental institution.

The idea that Cooper might have succeeded, however, clearly inspired several imitators. While it remains uncertain whether Cooper lived to enjoy the fruits of his escapade, none of his imitators did. They included Richard McCoy, Jr., Martin J. McNally and Frederick Hahneman, all of whom successfully parachuted out of the aircraft once they received their ransom payments, only to be eventually caught and punished.

Tightening the screws

In response to the spate of more violent and costly hijackings, the U.S. government established the first anti-hijacking security protocols. Most of them aimed to prevent hijackers from getting on aircraft in the first place. The measures included a hijacker profile, metal detectors and X-ray machines. Specific to Cooper, airlines retrofitted aircraft with a devise known as a Cooper vane that made it impossible to open aft stairwells during flight.

The protocols put in place in the 1970s also laid the foundation for the expansive security measures taken after 9/11. A series of court cases upheld the constitutionality of these early measures. For example, United States v. Lopez, decided in 1971, upheld the use of the hijacker profile.

More importantly, in United States v. Epperson, a federal court ruled in 1972 that the government’s interest in preventing hijackings justified the requirement for passengers to pass through a magnetometer at the airport. And in 1973, the Ninth Circuit Court, in United States v. Davis, declared that the government’s need to protect passengers from hijackings rendered all searches of passengers for weapons and explosives as reasonable and legal.

These rulings upholding early anti-hijacking measures helped create the strong legal grounds for the rapid adoption of the more rigorous security protocols – including detailed identification checks, random pat-downs and full body scans – adopted after 9/11.

The mystery surrounding the fate of Cooper may have afforded him an outsized place in American popular culture, but his crime should also be remembered as one in a consequential wave of hijackings that finally forced the U.S. government, airline executives and airport officials to adopt the first versions of the security measures travelers take for granted today.The Conversation

About the Author:

Janet Bednarek, Professor of History, University of Dayton

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

The Sri Lankan president’s escape. Elon Musk wants to terminate his Twitter deal

By JustForex

The US Labor Department reported Friday that US employers added 372,000 jobs in June, about 100,000 more than economists had expected. Meanwhile, the unemployment rate remained at 3.6 percent for the third month. As the stock market closed Friday, the Dow Jones Index (US30) decreased by 0.15% (+1.95% for the week), and the S&P 500 Index (US500) lost 0.08% (+3.13% for the week). The Technology Index NASDAQ (US100) gained 0.12% on Friday (+5.71% for the week). All three indices ended the week in the black.

Economists believe the Fed has kept rates “too low” for too long, and its attempts to catch up now could derail the recovery from last year’s coronavirus pandemic.

The reporting season for the second quarter starts this week. Banks traditionally open the reporting season with their global view of economic activity. Analysts expect weaker reporting for the second quarter than for the first quarter. Also, strategists say the economic slowdown combined with weak corporate earnings could push the S&P 500 down at least another 10%, compounding the losses that have already sent the Benchmark Index down 18% since the beginning of the year. While the Fed has said it is confident of achieving a so-called “soft landing” by lowering inflation without disrupting the economy, some investors believe that the sharp drop in stocks this year indicates that some economic slowdown is already into asset prices.

Elon Musk filed a Form 13D/A announcing his intention to terminate his agreement to buy Twitter at $54.20 per share. The letter cites “material breach of several provisions” of the merger agreement and the potential for “material adverse effect”. Musk expressed concern that Twitter was underreporting the number of spam or bot accounts on the platform and Twitter’s decision to fire two members of management after the deal was completed.

Stock markets in Europe were mostly up on Friday. German DAX (DE30) gained 1.32% on Friday (+0.86% for the week), French CAC 40 (FR 40) gained 0.44% (+0.82% for the week), Spanish IBEX 35 (ES35) was 0.27% cheaper (-1.53% for the week), British FTSE 100 (UK100) was up by 0.10% (+0.38% for the week).

The weak euro and rising inflation are extremely worrisome before new data on consumer prices in European countries. Inflation in more than six Eurozone countries, including Spain, is already in double digits, and the core CPI is at its highest level in decades. Against high inflation, the region’s economic indicators have started to deteriorate rapidly, so the ECB needs to act more decisively, or else the EUR/USD exchange rate will fall below 1.

Russia continues to wage war with Ukraine with no sign of compromise or negotiation, leaving the possibility of a protracted conflict that could keep inflationary pressures alive. And the resignation of British Prime Minister Boris Johnson opens the door to more uncertainty in the UK as the battle for his replacement begins.

Oil closed last week in the negative, despite recovering on Thursday and Friday. But analysts note that futures have seen a decrease in short positions and an increase in long positions. Crude oil markets are still under pressure right now because of concerns about aggressive rate hikes by the Federal Reserve and the impact it could have on the US economy and its energy demand. But US gasoline prices are holding above $4.50 a gallon, with no sign of a drop in demand.

Asian markets traded higher last week. Japan’s Nikkei 225 (JP225) gained 1.65% over the week, Hong Kong’s Hang Seng (HK50) gained 0.16% over the week, and Australia’s S&P/ASX 200 (AU200) was up by 2.11% over the week.

Sri Lanka’s president fled the country after a crowd of protesters stormed the presidential palace in Colombo. Thousands of protesters stormed the president’s home and office, as well as the official residence of the prime minister, on Saturday, speaking out against their failure to address the devastating economic crisis. COVID-19 caused the first blow to the economy of Sri Lanka: tourism has plummeted, and economic indicators have begun to deteriorate rapidly. Rising national debt and high oil prices led to a ban on chemical fertilizer imports last year, damaging agriculture. Then the fuel crisis began, gasoline and gas became rationed, and people could not cook food, without mentioning of going to work, school, etc. The government asked people to work from home and closed schools to save fuel. Overall inflation in the country of 22 million people reached 54.6% last month, and the central bank warned that it could rise to 70% in the coming months. The parliament speaker said Sri Lanka’s president will formally resign on July 13. The prime minister has also said he will resign to allow an all-party interim government to take power.

The Chinese regulator fined Alibaba and Tencent for violating disclosure rules. Under antitrust law, the maximum possible fine in each case is 500,000 yuan ($74,688).

At the end of the week, futures on palladium (+11.86%), natural gas (+5.88%), wheat (+5.59%), sugar (+5.42%), lumber (+4.82%), and corn (+2.5%) showed the biggest gains on the commodities market. Gasoline futures (-6.47%), Brent oil (-4.01%), orange juice (-3.99%), gold (-3.36%), WTI oil (-3.35%) and copper (-2.33%) showed the biggest drop.

S&P 500 (F) (US500) 3,899.38 −3.24 (−0.08%)

Dow Jones (US30) 31,338.15 −46.40 (−0.15%)

DAX (DE40) 13,015.23 +172.01 (+1.34%)

FTSE 100 (UK100) 7,196.24 +7.16 (+0.10%)

USD Index 106.90 −0.24 (−0.22%)

Important events for today:
  • – Japan BoJ Gov Kuroda Speaks, tentative;
  • – UK BoE Gov Bailey Speaks at 17:15 (GMT+3);
  • – US FOMC Member Williams Speaks at 21:00 (GMT+3).

By JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Cotton breeders are using genetic insights to make this global crop more sustainable

By Serina Taluja, Texas A&M University 

Products derived from the cotton plant show up in many items that people use daily, including blue jeans, bedsheets, paper, candles and peanut butter. In the United States cotton is a US$7 billion annual crop grown in 17 states from Virginia to Southern California. Today, however, it’s at risk.

Cotton plants from fields in India, China and the U.S. – the world’s top three producers – all grow, flower and produce cotton fiber very similarly. That’s because they are genetically very similar.

This can be a good thing, since breeders select the best-performing plants and cross-breed them to produce better cotton every generation. If one variety produces the best-quality fiber that sells for the best price, growers will plant that type exclusively. But after many years of this cycle, cultivated cotton all starts to look the same: high-yielding and easy for farmers to harvest using machines, but wildly underprepared to fight disease, drought or insect-borne pathogens.

Breeding alone may not be enough to combat the low genetic diversity of the cultivated cotton genome, since breeding works with what exists, and what exists all looks the same. And genetic modification may not be a realistic option for creating cotton that is useful for farmers, because getting engineered crops approved is expensive and heavily regulated. My research focuses on possible solutions that lie at the intersection between these tools.

Mechanical harvesting and processing take cotton from field to baled fibers and seeds.

How to retool cotton

In a perfect world, scientists could change just a few key components of the cotton genome to make plants more resilient to stresses such as pests, bacteria, fungi and water limitations. And the plants would still produce high-quality cotton fiber.

This strategy isn’t new. Some 88% of the cotton grown in the U.S. has been genetically modified to resist caterpillar pests, which are expensive and hard to manage with traditional insecticides. But as new problems emerge, new solutions will be required that will demand more complex changes to the genome.

Recent advances in plant tissue culture and regeneration make it possible to develop a whole new plant from a few cells. Scientists can use good genes from other organisms to replace the defective ones in cotton, yielding cotton plants with all the resistance genes and all the agriculturally valuable genes.

The problem is that getting regulatory approval for a genetically modified crop to go to market is a long process, often eight to 10 years. And it’s usually expensive.

But genetic modification isn’t the only option. Researchers today have access to a gigantic amount of data about all living things. Scientists have sequenced the entire genomes of numerous organisms and have annotated many of these genomes to show where the genes and regulatory sequences are within them. Various sequence comparison tools allow scientists to line up one gene or genome against another and quickly determine where all the differences are.

Map showing U.S. states where cotton was harvested in 2017.
Cotton is grown in 13 states across the southern U.S. The western half of this belt has been in drought since 2000.
USDA

Plants have very large genomes with lots of repetitive sequences, which makes them very challenging to unpack. However, a team of researchers changed the game for cotton genetics in 2020 by releasing five updated and annotated genomes – two from cultivated species and three from wild species.

Having the wild genomes assembled makes it possible to start using their valuable genes to try to improve cultivated varieties of cotton by breeding them together and looking for those genes in the offspring. This approach combines traditional plant breeding with detailed insights into cotton’s genome.

We now know which genes we need to make cultivated cotton more resistant to disease and drought. And we also know where to avoid making changes to important agricultural genes.

Analyzing cotton hybrids

These genomes also make it possible to develop new screening tools to characterize interspecific hybrids – the offspring of two cotton plants from different species. Before this information was available, there were two primary forms of hybrid characterization. Both were based on single nucleotide polymorphisms, or SNPs – differences between species in a single base pair, the individual building blocks that make up DNA. Even plants with small genomes have millions of base pairs.

Bases are the parts of DNA that store information and give DNA the ability to encode an organism’s visible traits. There are four types of bases in DNA: adenine (A), cytosine (C), guanine (G) and thymine (T).
National Human Genome Research Institute, CC BY-ND

SNPs work well if you know exactly where they are located in the genome, if there are no mutations that change the SNPs, and if there are plenty of them. While cotton has SNPs that have been identified and verified in specific regions of the genome, they are few and far between. So characterizing cotton hybrids by focusing exclusively on SNPs would result in incomplete information about those hybrids’ genetic composition.

These new genomes open the door for developing sequencing-based screening of hybrids, which is something I’ve incorporated into my work. In this approach, scientists still use SNPs as a starting point, but they can also sequence the surrounding DNA. This helps to fill in gaps and sometimes discover new, previously undocumented SNPs.

Sequence-based screening helps scientists make more informed and robust maps of the genomes of hybrids. Determining which parts of the genome are from which parent can give breeders a better idea of which plants to cross together to subsequently create better, more productive cotton in every generation.

What cotton needs to thrive

As the world’s population rises toward a projected 9.8 billion by 2050, demand for all agricultural products will also rise. But making cotton plants more productive is not the only goal of genetic improvement.

Beyond the U.S., much of the world’s cotton is grown in low- and middle-income countries.

Climate change is raising average global temperatures, and some important cotton-producing regions like the U.S. Southwest are becoming drier. Cotton is already a crop accustomed to heat – our research plots can thrive in temperatures as high as 102 degrees Fahrenheit (39 C) – but one cotton plant requires about 10 gallons (38 liters) of water over the course of a four-month growing season to achieve its maximum yield potential.

Researchers have started to search for cultivated cotton that can tolerate drought at the seedling stage, and also in hybrid lines and genetically modified lines. Scientists are optimistic that they can develop plants that have higher drought resilience. Along with many other cotton breeders around the world, my goal is to create more sustainable and genetically diverse cotton so that this essential crop can thrive in a changing world.The Conversation

About the Author:

Serina Taluja, Ph.D. Candidate in Genetics and Genomics, Texas A&M University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

June jobs report suggests Fed could avoid a recession – but room for error is minuscule

By Christopher Decker, University of Nebraska Omaha 

The U.S. economy added more jobs than expected in June, signaling the labor market remains strong even as the Federal Reserve tries to weaken it to tame inflation. The July 8, 2022, jobs report also showed the unemployment rate remained at a 70-year low of 3.6%.

Does this mean the U.S. will avoid a Fed-induced recession?

We asked Christopher Decker, an economist at the University of Nebraska Omaha, to explain the numbers and what they mean for the Fed and the economy.

What did we learn in the June jobs report?

The report showed that the economy added 372,000 jobs in June. While this figure is down from a revised increase of 384,000 in May and is much lower than other recent gains, it’s still very good by historical standards.

Gains were across the board with all key sectors adding to the total increase in nonfarm payrolls.

Generally speaking, people continue to be pulled back into the labor force, largely by higher wages as well as the rising cost of living, which makes it harder for families to go without a steady income stream. For example, the number of people employed part time for economic reasons declined by 707,000 in June. This seems to suggest that there is increased desire for, and an ability to secure, a higher-paying, more stable full-time job.

The female labor force participation rate declined slightly to 56.8% – which is over a percentage point below what it was before the COVID-19 pandemic. This figure is worth watching closely and may be because women are hesitant to reenter the workforce or are struggling to find child care.

So does this mean there won’t be a recession?

That’s the big question.

June gains were strong, but the job market is clearly cooling off. And there’s evidence the broader economy is weakening – two signs the Fed’s recent aggressive efforts to reduce inflation by choking off growth are working.

The housing market is a case in point. Average 30-year mortgage rates shot up to a 13-year high of 5.8% in June after the Fed lifted rates by 0.75 percentage point, which has had a chilling effect on home purchases.

And now we’re seeing the effect in residential construction jobs, which declined for the first time in a year as higher borrowing costs dampened demand. This is a sector I like to look at closely to help determine if what the Fed is doing is taking root in the economy.

In addition, in May, retail sales unexpectedly declined and a forward-looking economic index fell for a second straight month – both signals of a slowing economy.

Can a recession be avoided?

It may seem strange that the U.S. central bank is trying to actually hurt economic growth, but that just shows how important policymakers think it is to fight soaring inflation, which is currently the highest in over 40 years.

The problem of rising prices is of major concern to the Fed, as it is a key component of its “dual mandate” to control inflation and maintain healthy job growth.

Runaway inflation is cancerous to any economy. When price growth outpaces that of income, consumers have to curb spending. Production declines and people lose their jobs. The Fed’s only means of reducing inflation is to curb demand by reducing the supply of money and increasing interest rates. This, however, also curbs economic growth. So the Fed is trying to manage a “soft landing” – which means reducing inflation without hurting growth so much that it causes a recession.

There are some early signs the Fed is succeeding. The economy is slowing, though June jobs show underlying strength in the labor market. At the same time, inflation appears to be easing as well, in part thanks to falling global demand for oil. U.S. gasoline prices – the most visible price consumers see every single day – has come down in recent weeks after peaking at a record US$5 in June.

But executing a soft landing is a delicate dance for the Fed. The central bank can reduce demand for things via interest rates, but it can’t do much about supply. The primary reason energy and food costs have been skyrocketing in recent months is not high demand but the war in Ukraine.

Sanctions on Russia, the world’s second-largest crude oil exporter, and reduced shipments from Russia to parts of Europe have disrupted energy markets and driven up global oil prices.

And Ukraine, a key producer of food and other agricultural goods, is struggling to export corn, wheat and other products because Russia is blockading key ports.

Continuing shortages of energy and food mean inflation could stay elevated no matter what the Fed does. And that could result in the Fed’s having to lift interest rates a lot and cut growth to the bone to have a meaningful effect on rising prices.

This makes the Fed’s current dance the most delicate it has attempted since the 1980s, and it must be executed flawlessly for it to succeed. The June jobs report is good news, but the economy isn’t out of the woods yet. Data in August and September will be crucial to knowing in which direction the economy is heading – toward recession or not.The Conversation

About the Author:

Christopher Decker, Professor of Economics, University of Nebraska Omaha

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Shooting of Shinzo Abe is a huge shock for Japan and the world

By Craig Mark, Kyoritsu Women’s University 

Japan is reeling from the assassination of its longest-serving former prime minister, Shinzo Abe. He was campaigning for the ruling Liberal Democratic Party for the Upper House elections due on Sunday, in the city of Nara in western Japan, when he was shot from behind with an apparently home-made sawn-off shotgun.

The alleged assailant, reportedly a 42-year old local man, was arrested at the scene. There is no known motive at this time, but there are reports the suspect is a former member of the Japanese Maritime Self-Defense Forces.

Abe was seen lying bleeding on the ground, before being taken by helicopter to a nearby hospital where he was later pronounced dead.

Political violence, and gun violence in general, is extremely rare in postwar Japan, so this incident has deeply shocked the Japanese public. Gun ownership is tightly regulated, and mostly restricted to registered hunters.

There have been occasional shootings by organised crime groups, typically targeting each other, but Japan has consistently had low rates of violent crime.

Far-right groups have been responsible for a few attacks on politicians in the postwar period: in 1990, the then mayor of Nagasaki, Hitoshi Motoshima, was shot and wounded; and in 1960 Inejirō Asanuma, leader of the opposition Japan Socialist Party, was stabbed and murdered.

In the pre-war era, democratic politicians found themselves subject to frequent attacks and intimidation by militarists. Prime Minister Inukai Tsuyoshi was murdered by Imperial Navy officers in an attempted coup on May 15 1932.

Abe’s political legacy

Abe, 67, is the grandson of former prime minister Nobusuke Kishi, and was a scion of the conservative Liberal Democratic Party, which has been in government for most of the postwar era. His first stint as prime minister lasted roughly a year, from 2006 to 2007, before he resigned due to ulcerative colitis following his party’s poor performance in the 2007 Upper House elections.

He made a remarkable political comeback in 2012, reclaiming the leadership of the Liberal Democratic Party and winning the general election that December. Abe won national elections in 2014 and 2017, entrenching his power over the weak and divided opposition parties.

He introduced his signature economic policy, “Abenomics”, based on massive deficit spending, quantitative easing and attempts at structural reform. However, twice raising the consumption tax undermined these attempts to lift the Japanese economy out of its decades-long stagnation.

A member of the ultranationalist lobby group Nippon Kaigi, Abe carried out a far-reaching transformation of Japanese foreign and defence policy, reinterpreting the pacifist Article 9 of the Constitution, to allow greater overseas deployment of the Self-Defense Forces.

His government increased defence spending annually, and in 2015 the Diet (the Japanese parliament) passed controversial security bills that allowed the Self-Defense Forces to participate in collective defence operations with allied countries, particularly the United States but potentially also Australia, India and the United Kingdom.

Abe originally raised the concept of the Quad security partnership between Japan, the US, Australia and India, and in 2016 formalised the phrase “free and open Indo-Pacific” as Japan’s main foreign policy goal to preserve the US-led rules-based liberal order in international relations.

His longevity in office saw him become one of the most experienced world leaders, and he used his foreign policy experience to steadily manage the US alliance, handling the erratic President Donald Trump through “golf diplomacy”.

Abe was able to maintain fairly stable relations with neighbouring China, Japan’s largest trading partner, despite the long-running territorial dispute over the Senkaku Islands (claimed as the Daioyus by China). Relations with South Korea remained poor, however, due to disputes over historical issues stemming from Japan’s colonial rule of Korea.

A member of the largest conservative faction in the Liberal Democratic Party, Abe’s dominance over the party and Japanese politics began to erode when the ruling coalition lost its two-thirds majority in the 2019 Upper House election. A long-running series of nepotism scandals also dented his public standing; investigations by public prosecutors led to charges against some of Abe’s associates and political staff, although Abe himself was never indicted.

While Japan coped fairly well with the COVID pandemic, largely due to cooperation with recommended health measures by the public, Abe’s government came under increasing criticism for a series of inept pandemic responses as the economy went into a sharp recession. Abe’s ill-health returned, and he resigned in August 2020, replaced the following month by his former chief cabinet secretary, Yoshihide Suga.

Abe remained in the Diet, and last year became the leader of the Hosoda faction, after backing his former foreign minister and current prime minister Fumio Kishida in the race to become the party’s leader.

Situation still developing

In response to this tragedy, the Liberal Democratic Party has requested that its candidates cease campaigning, and opposition party politicians have also announced they will suspend campaign activities.

Kishida has returned to the prime minister’s office to monitor the situation, but at the time of writing, there has been no announcement about voting arrangements for the Upper House election, due to proceed on Sunday July 10.

In pre-election polling, the Liberal Democratic Party was expected to win a comfortable majority, in partnership with its junior partner, the Komeito party.

The 2022 Upper House election will now remain under the shadow of one of the most disturbing events in Japan’s modern political history.The Conversation

About the Author:

Craig Mark, Professor, Faculty of International Studies, Kyoritsu Women’s University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Boris Johnson has resigned. Assassination attempt on former Japanese Prime Minister Shinzo Abe

By JustForex

The US Federal Reserve officials Bullard and Waller had nothing new to say yesterday. The labor market remains resilient, monetary tightening is already affecting the economy, and expectations for economic growth – that was said many times before. To summarize, the US Fed remains hawkish. The minutes of the Fed’s last meeting, released Wednesday, indicated another 75 basis point hike in July.

Initial US jobless claims rose to their highest level since January. Analysts continue to note that the labor market remains tight. The main focus of investors today will be Non-farm Payrolls data in the US. If the data is worse than expected, it could be a reason for the Fed to reconsider a rate hike down to 50 basis points in July.

US indices jumped yesterday thanks to a rebound in energy stocks on the back of rising oil prices. The Dow Jones (US30) added 1.12% at the close of trading, while the S&P 500 (US500) increased by 1.50%. The Technology Index NASDAQ (US100) gained 2.28% on Thursday. All three indices closed on the plus side at the end of the day.

Stock markets in Europe were mostly up yesterday. German DAX (DE30) gained 1.97%, French CAC 40 (FR40) jumped by 1.60%, Spanish IBEX 35 (ES35) gained 2.19%, British FTSE 100 (UK100) was up by 1.14%.

Deutsche Bank suggested that the euro could fall into the $0.95-0.97 range if Europe and the US are dragged into a deeper recession. The Eurozone’s single currency has been steadily declining as recession fears are heightened amid growing uncertainty over energy supplies as Russia threatens to cut gas supplies to Germany further and the continent as a whole.

Boris Johnson has announced that he is stepping down as British prime minister. Traders and investors had already expected this step after dozens of high-ranking ministers resigned in recent days in protest against Johnson’s leadership.

Hungary’s national bank raised its key weekly deposit rate by 200 basis points to 9.75%, the highest level in a decade, to stem a weakening currency exacerbating an increasingly acute inflation problem. Core consumer prices in the country rose more than 12% from the beginning of the year through May, while food prices rose by 20% a year earlier.

Natural gas futures continue to rise as the EIA reports a smaller-than-expected increase in US inventories. The government said total working gas inventories in storage are 2.311 trillion cubic feet, down 261 billion cubic feet from a year ago and 322 billion cubic feet below the five-year average.

Oil prices soared again yesterday, with WTI climbing sharply above $100 amid rumors of a power outage in Texas that could lead to capacity cuts. Meanwhile, crude oil inventories data unexpectedly rose by 8.2 million barrels while forecasting a decline of 2.8 million barrels. There is still a supply shortage, so analysts think traders should not expect oil prices to fall too much.

Asian markets closed yesterday with a growth. Japan’s Nikkei 225 (JP225) gained 1.47% yesterday, Hong Kong’s Hang Seng (HK50) gained 0.26% on the day, and Australia’s S&P/ASX 200 (AU200) was up by 0.81% on Thursday.

Terrible news came from Japan. During the speech of the former Japanese Prime Minister Shinzo Abe, there was an attack on the prime minister. According to preliminary information, Abe suffered a cardiac arrest from his injuries. Shinzo Abe is now in hospital, and his condition is unknown. There were also several other people. The suspect has been arrested.

S&P 500 (F) (US500) 3,902.62 +57.54 (+1.50%)

Dow Jones (US30) 31,384.55 +346.87 (+1.12%)

DAX (DE40) 12,843.22 +248.70 (+1.97%)

FTSE 100 (UK100) 7,189.08 +81.31 (+1.14%)

USD Index 107.09 0.00 (+0.00%)

Important events for today:
  • – Eurozone ECB President Lagarde Speaks at 14:55 (GMT+3);
  • – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
  • – US Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Williams Speaks at 18:00 (GMT+3).

By JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

The energy crisis is getting worse in Europe. Investors awaiting FOMC minutes

By JustForex

Yesterday, the dollar index showed an impressive rally and added almost 1.4% during the day, setting a 20-year record. Analysts attribute this growth to the fact that the FOMC minutes will be released today, indicating that the Fed will again raise the interest rate by 0.75% at its next meeting. Investors remain concerned about the recession caused by monetary tightening, despite possibly reducing some US tariffs on Chinese goods. The looming energy crisis in Europe amid Russia’s invasion of Ukraine and threats to corporate earnings are also at the forefront of investor concerns.

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.42%, and the S&P 500 Index (US500) added 0.16%. The NASDAQ Technology Index (US100) jumped by 1.75% on Tuesday.

Stock markets in Europe traded lower yesterday. German DAX (DE30) decreased by 2.91%, French CAC 40 (FR40) lost 2.68%, Spanish IBEX 35 (ES35) fell by 2.48%, British FTSE 100 (UK100) was down by 2.86%.

Joachim Nagel, head of Germany’s Bundesbank, lashed out at the ECB’s plans to protect heavily indebted countries from rising borrowing rates. It has really hurt investor sentiment ahead of next week’s ECB interest rate meeting. The risk of Europe and Britain sliding into recession has risen sharply since the 17% jump in natural gas prices in Europe, which looks set to cause even more inflation.

In addition to the economic crisis, a political crisis is brewing in Britain. Finance Minister Rishi Sunak resigned just minutes after the health minister resigned, saying he had lost confidence in Johnson’s ability to govern in the national interest.

Oil prices fell below $100 a barrel yesterday. Oil prices lost more than $10 a barrel in just one day. The dollar’s jump to a two-decade high on expectations of an aggressive Fed rate hike stimulated oil sales, which tend to attract less buying by non-US companies when the dollar value rises. Growing recession fears are weighing on the outlook for oil demand, despite concerns about supply constraints and the prospect of more US jobs in June.

Gold prices fell sharply yesterday. The US Treasury yields jumped to 2.8% amid a surge in the dollar index. Gold and silver are inversely correlated to government bond yields and currently have no fundamental support for gains.

Asian markets closed higher yesterday. Japan’s Nikkei 225 (JP225) gained 1.03%, Hong Kong’s Hang Seng (HK50) added 0.10%, and Australia’s S&P/ASX 200 (AU200) was up by 0.25% on Tuesday.

Shanghai has begun a massive COVID test in nine districts after cases were detected over the past two days, heightening fears of a new lockdown.

S&P 500 (F) (US500) 3,831.47 +6.14 (+0.16%)

Dow Jones (US30) 30,967.82 −129.44 (−0.42%)

DAX (DE40) 12,401.20 −372.18 (−2.91%)

FTSE 100 (UK100) 7,025.47 −207.18 (−2.86%)

USD Index 106.49 +1.36 (+1.29%)

Important events for today:
  • – UK Construction PMI (m/m) at 11:30 (GMT+3);
  • – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
  • – Eurozone EU Economic Forecasts (m/m) at 12:00 (GMT+3);
  • – US FOMC Member Williams Speaks at 16:00 (GMT+3);
  • – UK ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – US JOLTs Job Openings (m/m) at 17:00 (GMT+3);
  • – US FOMC Meeting Minutes at 21:00 (GMT+3).

By JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Misguided geopolitics is derailing decades of globalization

By Dan Steinbock

– Over the past decade, global economic prospects have been penalized by the fall of world trade, investment and migration, coupled with the unwarranted suffering of over 100 million globally displaced. It’s a prologue to an untenable future.

The postwar wave of globalization benefited mainly the advanced economies. It was only after 1980 that some large developing countries, particularly China, broke into world markets for manufactured goods and services, while also attracting foreign capital. This era of globalization eclipsed with the global recession in 2008.

As the G20 cooperation subsequently dimmed, so did global growth prospects, too.

Between November 2008 and 2016, global imbalances steadily worsened as a result of increasing trade discrimination. It was only in 2017 that there were some signs of trade recovery.

Yet, that historical opportunity was missed with the U.S. trade wars, followed by waves of COVID19 pandemic, the consequent global depression and nascent Cold Wars.

Global economic integration is often measured by world trade, investment and migration, although technology and finance could be added to the list.

The net effect of the past decade? Plunging trade and investment, slowing migration and explosion of global displacement.

Falling world trade

In particular, the fleeting gains of the U.S.-Sino trade truce were derailed by the global pandemic that caused both services and goods trade to contract by 30 percent in mid-2020. Subsequent gains have been penalized by new waves of pandemic variants and the worsening international economic landscape.

Last year, the World Trade Organization (WTO) anticipated global merchandise trade volume to grow by 10.8 percent, followed by a 4.7 percent rise in 2022. But these projections were unlikely to materialize even before the Ukrainian crisis.

Progress since the plunge of 2008 has been largely reversed. Trade as percentage of world GDP has fallen back to the level where it was over 15 years ago. Geopolitics derailed the potential for global recovery well before the pandemic, due to protectionism and new Cold Wars, compounded by the Russia sanctions.

Plunging world investment

Before the 2008 global crisis, world investment soared to almost $2 trillion. But the hoped-for rebound proved a pipe-dream, due to the tariff wars and the pandemic. High-income economies play a critical role in world inward investment flows. Yet, even before the Ukrainian crisis, world investment had plunged to a level which was first reached already in the late 1990s.

In 2020, global flows of FDI fell by one third to $1 trillion. That’s below the low of the 2008 crisis, and half of world investment in 2007.  Decades of progress have been reversed in just few years.

Globalization undermined

Sources: Difference Group and a. Trade as average of exports and imports; and as % of GDP (World Bank/OECD; b. FDI Inward Flows in $ billions (UNCTADSTAT). c. UN/IOM, d. UNCHR

In the process, the poorest economies have been hurt the most. And that pain is only about to begin.

Slower migration

Over the last two decades, the number of international migrants has climbed to 281 million people. Yet, global migration has been slowing since 2008, particularly in advanced economies. Due to the pandemic, the stock of international migrants has increased only by 2 million; a fourth less than expected by mid-2020.

Let’s put these figures in historical context.

Between 1870 and 1914, some 10 percent of the world population migrated in search for a better life. While the absolute number of international migrants has over tripled in the past half a century, their relative share stayed below 2 percent until 2010 and is today 3.6 percent of world population; a third of what it was a century ago.

Explosion of global displacement

And as migration flows decelerate or are being blocked, the number of globally displaced has exploded, compounded by the post-9/11 wars and external interventions since the Arab Spring, which the West initially saw as the prelude to “democratization” in the Middle East, a bit like the devastated Ukraine today.

As a net effect, the number of forcibly displaced has more than doubled in the past decade. The Ukraine crisis alone is projected to internally displace up to 6.7 million people and 4 million displaced abroad.

Despite COVID-19 mobility restrictions, the total figure exceeded 92 million at the year-end of 2021 and has recently soared over 100 million.

In other words, the number of the globally displaced is soon over twice as high as it was after two world wars, the Holocaust, and Hiroshima and Nagasaki in 1945.

If that’s the outcome of “peacetime conditions,” one shudders with horror the effect of wartime conditions in the early 21st century.

A prelude to darker futures?

In the past half a decade, the costs of missed opportunities amount to trillions of dollars. Given continuing policy mistakes, worse looms ahead.

Growth scenarios that still seemed likely in early 2022 will not materialize because they were projected in fall 2021, when

  • a truce subdued the U.S.-Sino trade war;
  • Ukraine’s proxy conflict had not yet erupted;
  • Sanctions targeting the world’s 11thlargest economy, the largest natural gas producer and third-largest oil producer, had not yet been launched.
  • And the Federal Reserve had not initiated its aggressive rate hikes and quantitative tightening, which will cause lost years in the West and lost decades in the Global South.

As long as current policies remain in place in the West, sanctions will undermine U.S. growth, destabilize the Russian economy, penalize the fragile Euro area and slow Chinese growth – all of which will have an adverse impact on economic prospects in South and Southeast Asia.

The Global South will pay much of the bill; in economic costs and human lives.

The longer the unwarranted stagnation will prevail, the greater the likelihood that current Cold Wars will turn into Hot Wars, at the cost of future generations, even our planet.

That’s something that none of us may want. But it is the net effect of shortsighted policies in the prosperous West.

About the Author:

Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net 

Versions of this commentary have been published by multiple major dailies around the world. It is based on a report recently published by the Austrian National Bank (OeNB) and the Austrian Federal Economic Chamber (WKÖ). See also https://www.differencegroup.net

 

Global water scarcity is ‘code red’ for humanity, the answer is private finance

By George Prior 

– Half the world is now facing droughts, floods and filthy water – and the problem urgently requires huge amounts of private finance, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The warning from deVere Group’s Nigel Green comes as Italy declares a state of emergency amid the worst drought in 70 years.

Elsewhere, Lake Mead, the largest reservoir in the United States, which provides water for tens of millions of people and countless acres of farmland in the southwest, is now just one-quarter full.

Meanwhile, once again Sydney is flooded as the impact of the climate crisis becomes the new normal for Australia’s most populous state.

Nigel Green says: “There’s no doubt that all around the world the fallout of the growing climate crisis is accelerating.

“The UN’s Intergovernmental Panel on Climate Change has warned in a report that more than half the world’s population faces water scarcity for at least one month every year, others will be hit by regular severe floods, previously only seen once-in-a-generation, while others have access to only dirty water.

“This is now being played out in real-time every time you look at the news.”

He continues: “A failure to get a grip on this emergency is going to produce catastrophic, irreversible consequences later.

“The response will require political and social determination on a global scale.

“But, critically, it will also require tens of trillions of dollars. As governments alone cannot afford this now, especially with slowing economic growth amongst other headwinds, the solutions demand private financing.”

As such, notes the deVere Group CEO, the financial sector needs now needs to become more proactive to “unleash and mobilize” the funds required.

He is calling for never-before-seen levels of cooperation between financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks, and auditors in the fight against climate change.

“Governments around the world have proven themselves to be slow – at best – at responding to the urgent ‘code red’ situation’ we’re facing.

“Therefore, the financial industry must step-up. If we don’t, the level of funding will not be available, nor at the pace necessary, to mitigate human-created global warming.”

Nigel Green concludes: “Climate change is the greatest risk multiplier to our planet, to our communities, and to our way of life.

“It will take huge amounts of private financing to halt its impact.

“The onus now falls on the financial sector to help mobilize and unlock the necessary funds through education and robust, impactful investment solutions.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

The RBA has aggressively raised the interest rate. A labor strike in Norway threatens to disrupt oil and gas production

By JustForex

Yesterday the US had a bank holiday due to Independence Day, and the stock market did not trade.

Stock markets in Europe traded without a single dynamic on Monday. Yesterday, German DAX (DE30) decreased by 0.31%, French CAC 40 (FR40) added 0.40%, Spanish IBEX 35 (ES35) lost 0.17%, British FTSE 100 (UK100) was up to 0.89%.

Annual inflation in Turkey soared to nearly 79%, reaching its highest level in 24 years. Consumer prices skyrocketed due to the Russian-Ukrainian war, high energy, and food prices, and a sharply devalued lira, the national currency. Turkey had experienced rapid growth in previous years. Still, President Recep Tayyip Erdoğan has refused to raise rates substantially in the past few years to reduce inflation, calling interest rates the “mother of all evils”. The result has been a sharp decline in the Turkish lira and much lower buying power. Erdogan has instructed the country’s Central Bank, which analysts say is independent of him, to cut borrowing rates repeatedly in 2020 and 2021, even as inflation continued to rise. Central Bank governors who disagreed with this course of action were fired. Turkey’s Central Bank had replaced four governors in two years.

Brent oil prices rose yesterday as a strike in Norway threatened to disrupt oil and gas production. The strike is expected to cut oil and gas production by 89,000 barrels per day, of which gas production will be 27,500 barrels per day. Overall, the demand outlook is also worrisome for investors amid tightening global financial conditions as the US Federal Reserve fights high inflation with rapid rate hikes.

Asian markets also traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.84%, Hong Kong’s Hang Seng (HK50) decreased by 0.13%, and Australia’s S&P/ASX 200 (AU200) added 1.11% on Monday.

Analysts think Asian stocks may get a boost on the back of positive economic data and hints of easing Sino-US tensions. The White House will announce some Chinese tariff cuts later this week to dampen rising inflation and help restore optimism to the markets. Service sector activity in China reached its fastest pace in nearly a year, which also lifted investor sentiment.

Analysts at Nomura Bank believe the EU, Britain, Japan, South Korea, Australia, Canada, and the United States are likely to fall into recession over the next 12 months as central banks try to regain control of inflation by tightening policy too much.

The Reserve Bank of Australia raised its interest rate from 0.5% to 1.35%. In his speech, RBA Governor Phillip Lowe said the war in Ukraine and the strong demand for manufacturing capacity are putting upward pressure on prices. Inflation in Australia is high but slightly lower compared to other leading economies. The RBA predicts inflation will peak at the end of this year and fall back into the 2-3% range next year.

S&P 500 (F) (US500) 3,825.33 0 (0%)

Dow Jones (US30) 31,097.26 0 (0%)

DAX (DE40) 12,773.38 −39.65 (−0.31%)

FTSE 100 (UK100) 7,232.65 +64.00 (+0.89%)

USD Index 105.19 +0.06 (+0.05%)

Important events for today:
  • – Japan Services PMI (m/m) at 03:30 (GMT+3);
  • – Australia Retail Sales (m/m) at 04:30 (GMT+3);
  • – China Caixin Services PMI (m/m) at 04:45 (GMT+3);
  • – Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
  • – Eurozone German Services PMI (m/m) at 10:55 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – UK BoE Financial Stability Report (m/m) at 12:30 (GMT+3);
  • – UK BoE Gov Bailey Speaks at 13:00 (GMT+3).

By JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.