2022 end of July Bloomberg selection

July 25

The contest to succeed Boris Johnson moves up a gear today with the first head-to-head debate between the two candidates vying to become Conservative Party leader and UK prime minister.

It’s unlikely to be pretty.

Key reading:

Foreign Secretary Liz Truss and Rishi Sunak, the former Chancellor of the Exchequer, will slug it out on BBC Television. But rather than the British public, it’s some 175,000 Tory party members who ultimately get to choose the winner — and that’s a problem.

Johnson remade the Tories in a similar way to Donald Trump’s takeover of the US Republican Party. Brexit was Johnson’s signature achievement, but he presided over a wholesale tack to the populist right that runs through the policies of his would-be successors.

So Truss and Sunak are competing to sound the toughest on immigration, while blaming France for traffic delays at Dover port.

Truss’s latest idea is to introduce low-tax, light-regulation investment zones, an extension of her economic plans that focus on cutting taxes and more government borrowing. Economists aren’t convinced, but she’s betting it’s popular with the party base.

 

Whether any of these proposals make it into law isn’t the point. The goal is to appear the true candidate of the ideological right that now dominates the party, and on that score Truss wins by a mile.

Sunak won each round of voting among Tory lawmakers; polls of party members give Truss a lead of some 24 percentage points.

Sunak needs to land an early blow if he is to have any chance of defeating Truss. That’s unlikely to make for edifying viewing.

Johnson may be on his way out. But it’s increasingly evident that his burn-it-down style of politics lives on. —  Alan Crawford

Truss and Sunak. Source: Getty Images/Getty Images Europe

Missing texts | The committee investigating the Jan. 6 insurrection intends to “get to the bottom” of missing US Secret Service texts from the days around the attack, Representative Liz Cheney said. It may also subpoena Virginia Thomas, the conservative activist whose husband is Supreme Court Justice Clarence Thomas, about pushing false narratives on the 2020 election.

  • Trump is returning to Washington to deliver a speech at the conservative America First Agenda Summit as lawmakers probe his culpability for the insurrection.
  • Former Vice President Mike Pence is getting a one-day head start on rallying the Republican base in Washington before his former boss returns to the US capital.

Reputation crisis | Hong Kong’s leaders sent at least 500 letters to media in almost 30 countries since China announced it would impose a national security law in May 2020 as part of a global battle to safeguard its reputation as a liberal financial hub. About half of the letters blasted critical coverage of the law, with the Financial Times, the Wall Street Journal and the Economist receiving the most. Bloomberg got seven.

  • Hong Kong plans to cut hotel quarantine for arrivals with the introduction of a two-color health code system, local media reported.

Property bust | China’s deepening property crisis is sending shock waves through its 400-million-strong middle class, upending the belief real estate is a surefire way to build wealth. As property developments stall across the country and house prices fall, many Chinese homeowners are slashing spending, postponing marriage and other life decisions, and, in a growing number of cases, withholding mortgage payments on unfinished homes.

China’s most educated generation was supposed to blaze a trail toward a more innovative and technologically advanced economy. Instead, an estimated 15 million young people are jobless, and many are lowering their ambitions. Unemployment among 16- to 24-year-old urbanites is a record 19.3%, more than twice the rate in the US — with the government’s hardline coronavirus strategy and a regulatory crackdown on certain industries hitting the private sector.

A job fair in Yichang, China, on July 8. Source: CFOTO/Future Publishing via Getty Images

Power ballot | Tunisians vote on a new constitution today that would enshrine in law President Kais Saied’s accumulation of sweeping powers a year after dissolving parliament, as rivals accuse him of extinguishing a rare democracy in the Arab world. With some opponents calling for a boycott and only Saied loyalists enthused by the referendum, the proposals are likely to pass.

July 26

Russian Foreign Minister Sergei Lavrov might have expected a rough ride on his tour of Africa this week. Instead he’s being welcomed with open arms.

The trip by President Vladimir Putin’s chief envoy takes in countries that are among the most vulnerable to disruptions to food imports as a result of Moscow’s invasion of Ukraine. But if there have been rebukes, they haven’t been made in public.

Key reading:

In Egypt, one of the world’s largest grain importers, Lavrov was met with warm worlds from President Abdel-Fattah El-Sisi, who singled out state-owned Rosatom’s construction of Egypt’s first nuclear plant as a prime example of bilateral cooperation.

The Russian diplomat meets with Ugandan President Yoweri Museveni today before heading on to Ethiopia — another large grain buyer — and a visit to the African Union headquarters.

Lavrov has made much of Russia’s longstanding economic and political ties to Africa, citing Moscow’s support for national liberation movements and casting western sanctions as the real cause of food insecurity.

It’s a message that resonates, and not just in Africa.

 

The reality is that despite US and European efforts to isolate the Kremlin for its aggression — including a blockade of Ukrainian ports and attacks on grain warehouses that have pinched the global food supply — Russia and its key ally, China, continue to have friends around the world.

The reasons are many and varied, from economic and educational ties to a sense of selective western intervention in global crises, fueling charges of hypocrisy.

Many governments in Asia, Latin America and Africa are hedging their bets and choosing to remain on good terms with both sides, shunning sanctions on Russia and sitting out the US-led rivalry with China.

The West might think it has right on its side. But that’s not necessarily how it looks to the Global South. —  Alan Crawford

Lavrov speaks at the United Nations General Assembly on Sept. 25, 2021. Photographer: Christopher Goodney/Bloomberg

China’s economic slowdown is spilling over to major exporting nations in Europe and East Asia through falling demand for manufactured goods. Elevated global commodity prices meant China’s official import growth of 1% in June from a year earlier hid a worse result for hi-tech, mechanical and electrical goods.

Angry workers | Britain’s next prime minister will inherit the worst relations with unions and workers since the 1970s, with millions of public sector employees angry their pay is slipping behind inflation. As Philip Aldrick writes, discord among government workers is likely to be the most immediate legacy for Boris Johnson’s successor as unions sound out members including teachers and nurses about walking off the job this autumn.

  • Liz Truss and Rishi Sunak attacked each other’s plans for the UK economy in their first head-to-head debate of the campaign to replace Johnson.

Power switch | South African President Cyril Ramaphosa turned to the private sector to end a 14-year-old electricity crisis that the government has failed to resolve. Companies will be allowed to build power plants of any size without a license to meet their own needs and to sell energy to the grid, the boldest move yet to end blackouts that have prompted stinging criticism of Ramaphosa and the ruling party.

The heat waves blasting Europe this summer have killed many people and forced thousands of others from their homes. They are also threatening an industry central to much of the continent’s way of life: wine. Vineyard owners worry that extreme weather including drought, frost and hail, and increasingly intense heat, may lower yields by 25% or more for some vintages, and signal conditions could become worse.

Smoke surges from vineyards in Pumarejo in northwest Spain on July 18. Photographer: Miguel Riopa/AFP/Getty Images

July 27

In the early days of the Russian invasion of Ukraine, there was a school of thought that, however the war panned out, it was unlikely to last long.

Kyiv’s allies talked about deploying a sweeping Marshall Plan to rebuild Ukraine’s industry, agriculture and businesses in the aftermath.

More than five months later, the fighting rages on, and Ukraine faces the reality that its economy is shattered.

Key reading:

As Marc Champion and Daryna Krasnolutska discovered in tracing a section of the Dnipro River, steel plants, factories and farms along the massive trade artery that snakes through the country can’t afford to wait for the war to end. They have to find a way to operate under fire.

 

That is crucial not just for Ukraine but for the world.

The conflict has shown how much other countries rely on the grains and fertilizers Ukraine produces, as its Black Sea ports remain largely blocked. Nations are battling inflation fueled by the shortages of food and energy the war has spawned. Benchmark European natural gas prices are more than 10 times higher than the usual levels for this time of the year.

The obstacles for Ukraine are enormous. Its businesses face risks from the fighting. Many are bleeding money to support the battle against Russia. Their costs for transport and materials have spiked.

With Europe facing the prospect of gas rationing into winter as Russia curtails supply, and as talk of a global recession grows, keeping the financial aid flowing into Ukraine and sustaining unity against Moscow will only become harder.

For Ukraine’s business owners, that highlights the imperative of doing all they can to get back to work now. “Ukraine itself has become a brand,” says Yuriy Sinitsa. “That’s an opportunity and we need to use it.” — Rosalind Mathieson

A resident in front of a destroyed bridge in Chernihiv, Ukraine, on July 4. Photographer: Andrew Kravchenko/Bloomberg

July 28

The eyes of the world are on today’s phone call between Joe Biden and Xi Jinping. It could be their most fraught exchange yet.

House Speaker Nancy Pelosi’s proposed trip to Taiwan is ratcheting up tensions before the first conversation between the US and Chinese leaders since March. A sitting speaker hasn’t been to the island since 1997, and Beijing has warned of repercussions if the visit goes forward.

Key reading:

It’s already a difficult juncture for US-China ties — a relationship that’s threatening to stray from strategic competition to open animosity. Xi’s cozy rapport with President Vladimir Putin despite Russia’s war on Ukraine is but one core point of concern for Washington.

Taiwan adds another layer of difficulty.

Xi needs to retain a revanchist stance toward Taipei, bolstering his nationalist agenda in the months before a leadership meeting where he’s expected to secure a third term in office. For their part, US lawmakers can’t be seen submitting to threats with November midterm elections approaching.

A public spat where policy and credibility are on the line is particularly unhelpful now, as both leaders acknowledge there’s a need for dialogue to diffuse the risk of conflict and build consensus — all the more so as the threat of a global economic recession grows.

But the spiral of great-power rivalry has its own momentum. What started as a trade war under Donald Trump has widened to become an ideological split that’s pulling the world’s two largest economies further apart.

China and the US are both seeking to reduce their mutual dependence by re-configuring supply chains, securing access to advanced technologies and shoring up energy security.

That’s a deepening gulf for Xi and Biden to overcome. And surely too much for a simple call to resolve. — Rebecca Choong Wilkins

Potential breakthrough | US Senator Joe Manchin and Majority Leader Chuck Schumer have struck a deal on a tax, energy and climate bill, breaking a deadlock on the Democrats’ long-sought legislation to enact major parts of Biden’s agenda. The plan would generate an estimated $739 billion in revenue, spend $433 billion and reduce deficits by $300 billion over a decade, much less than the administration planned before Manchin’s opposition.

  • The Senate passed legislation that includes $52 billion in grants and incentives for US semiconductor manufacturing, an industry that has steadily lost ground to foreign competitors in recent years.

Precarious position | Markets in Argentina are braced for more volatility after a report that President Alberto Fernandez is poised to name a new economy minister, the third person to hold the post in less than a month. If the report in the Clarin newspaper is confirmed, Sergio Massa will inherit the job as Argentina grapples with inflation forecast to hit 90% and fails to hit the targets it must meet to comply with a $44 billion IMF program.

July 29

As details of the tax, climate, and health-care pact agreed by Democrats in the US Senate emerge, one thing is clear: It’s a big deal.

If approved, it should cast doubt on the narrative of a Democratic Party too riven by ideological differences to govern. But with economic concerns grabbing the spotlight, the question is whether that will make any difference in November midterm election fight for control of Congress.

Key reading:

The $370 billion climate and energy spending package and $313 billion in corporate-tax increases would complement last year’s $1.2 trillion infrastructure law and a $52 billion bill to boost the US semiconductor industry.

It would lower eye-watering prices for drugs like insulin and envisions a 15% minimum tax on corporations and abolishing a workaround that billionaire fund managers use to avoid paying the same rates as average workers.

The bill would also put the US within striking distance of meeting President Joe Biden’s goal of cutting emissions by half by 2030, even if it may open the way to holding oil and gas lease sales that could undercut the climate-friendly focus.

Obstacles remain. Arizona Democratic Senator Kyrsten Sinema — a repeat spoiler of the party’s legislation — has long opposed closing the so-called “carried-interest” loophole that the bill targets. Her vote is vital.

And the Democrats still face economic challenges.

Despite roaring employment and consumer spending, the economy contracted for the second time in as many quarters from April to June. Inflation is the worst since the 1980s, the stock market is stumbling, and borrowing costs are rising.

Unfortunately for Democrats, when elections come, the bills voters are more likely to focus on are the ones they have to pay, rather than those hashed out in Congress. — Michael Winfrey

Workers install solar panels in Hayward, California, on Feb. 8. The deal agreed by Senate Democrats offers incentives to increase the production of energy from renewable sources. Photographer: David Paul Morris/Bloomberg
Lagging behind | Rishi Sunak conceded he was the underdog in the race to be the next Conservative Party leader and UK prime minister, and vowed to fight for every vote. The former Chancellor of the Exchequer admitted to party members at the first official hustings event his pledge not to cut personal taxes until inflation is under control was not popular. His rival, Foreign Secretary Liz Truss — who has vowed to cut taxes as soon as she takes office — seemed to enjoy a warmer reception at the gathering yesterday.
Party connections | The assassination of Japan’s former Prime Minister Shinzo Abe has thrown a spotlight on the little-known relationship between the country’s ruling party and the South Korea-based Unification Church. The man arrested for the shooting was quoted as saying he was motivated by a perceived connection between Abe and the church, which he blamed for his family’s financial ruin. A local tabloid published a list of over 30 senior lawmakers it said had links with it.

The UK’s heat wave this month fueled so many blazes in London that the city’s fire service was busier than any day since Nazi attacks in World War II, and more than 840 people may have died in England and Wales. As Eric Roston reports, a rapid scientific analysis of the event now concludes that without climate change those conditions would have been “extremely unlikely.”

A fire in Wennington, UK, on July 19.  Photographer: Leon Neal/Getty Images Europe

July 30

Senate Democrats reached a landmark agreement that, if it wins approval, will cut US carbon emissions, reduce the price of drugs such as insulin and make big corporations pay more tax.

But bad news on the economic front may neutralize any assistance the deal may provide the party before midterm elections in November.

US President Joe Biden and his Chinese counterpart Xi Jinping are planning a face-to-face meeting after speaking for the first time since March, a conversation their aides did not describe as “constructive.”

Ukraine’s efforts to beat back Russia’s invasion may be shifting gears after delivery of advanced weapons from western backers, but another fight remains to rebuild an economy that is trying to muddle through even as businesses face the everyday dangers of war.

Manchin-Schumer Shock Deal Began in Basement, Unfolded in Secret
A meeting in the basement of the US Capitol was the first in a series of secretive discussions that led to Democrats’ breakthrough agreement that could be their biggest victory in the Senate after two years of struggling to manage a 50-50 split. Laura Litvan takes a look at how it all went down.

Biden Faces Fresh Showdown With Xi Despite Talk of Summit
Biden and Xi ended their call Thursday with plans to hold their first face-to-face summit. But as Rebecca Choong Wilkins and Iain Marlow report, the US and China are unlikely to halt their bickering in the months before the two leaders finally meet.

Biden Loses Bragging Rights Against China With US Economy Fading
It was a great talking point for Biden while it lasted: a forecast for the US economy to grow faster than China’s for the first time since 1976. But as Christopher Anstey explains, data showing the economy shrank last quarter makes it unlikely the US will surpass China’s expansion this year.

Ukraine’s Fight to Rebuild in Face of Unrelenting War
Ukraine’s military has been remarkably successful in stopping a vastly more powerful foe from taking control of the country. But its economy needs to rebuild under fire if the leadership in Kyiv is to end the war on its own terms, Marc Champion and Daryna Krasnolutska report.

Long-Range Guns Given to Ukraine Open Door to New Phase of War
The war in Ukraine may be entering a new stage as long-range rockets supplied by the US disrupt Russia’s grinding advance in the eastern Donbas region. Marc Champion and Alberto Nardelli look at why reasons for the leadership in Kyiv to attempt a counteroffensive are rising.

For Boris Johnson’s Successors, Brexit Is Anything But Done
Former Prime Minister Boris Johnson began his resignation speech by proudly declaring that he got “Brexit done.” The lines of vehicles backed up at the Channel ports last week served as a reminder that many of the ramifications of leaving the European Union are only now beginning to be felt, Ellen Milligan writes.

Macron Tries To Push Back Against Russia Influence in Africa
French President Emmanuel Macron is ready to step up support to African countries facing food and security concerns in a bid to stem Russia’s growing sway in the region. Samy Adghirni reports how he visited the region just as Moscow’s top diplomat did the same.

Boom-to-Bust Past Inspires Push to Diversify Iceland’s Economy
Tired of repeated economic swings caused by individual sectors growing too big too fast, Iceland is pushing to diversify. Ragnhildur Sigurdardottir looks at some of the interesting businesses that have popped up under a drive to promote innovation.

Argentina’s ‘Super’ Economy Minister Faces Mounting Crisis Ahead
President Alberto Fernandez’s appointment of a “super minister” has raised expectations the government may implement at least some painful measures to tackle Argentina’s enormous political and economic problems. They include inflation estimated at 90% this year that’s threatening his administration, Patrick Gillespie and Scott Squires write.

Published by Guestspeaker

A joint effort of several authors who do find that nobody can keep standing at the side and that “Everyone" must care about what is going on in today’s world. We are a bunch of people who do not mind that somebody has a totally different idea but is willing to share the ideas with others and to be Active and willing to let others understand how "today’s decisions will influence the future”. Therefore we would love to see many others to "Act today".

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