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Thursday, December 3, 2020
WASHINGTON — President-elect Joseph R. Biden Jr. is expected to name top members of his economic team this week, including Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget, and Cecilia Rouse, a Princeton labor economist, to run the Council of Economic Advisers, according to people familiar with the matter.The announcement, which could come on Wednesday, will include Mr. Biden’s decision to name Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary, along with Adewale Adeyemo, who was President Barack Obama’s senior international economics adviser, as deputy Treasury secretary.Two of Mr. Biden’s top economic aides during his presidential campaign, Jared Bernstein and Heather Boushey, will join Ms. Rouse on the Council of Economic Advisers. Both Ms. Boushey and Mr. Bernstein come from a liberal, labor-oriented school of economics that views rising inequality as a threat to the economy and emphasizes government efforts to support and empower workers.Mr. Biden has also selected Brian Deese, a former Obama economic aide who helped lead that administration’s efforts to bail out the American automotive industry, to head the National Economic Council, according to three people with knowledge of the selection. Mr. Deese,
WASHINGTON — Nike and Coca-Cola are among the major companies and business groups lobbying Congress to weaken a bill that would ban imported goods made with forced labor in China’s Xinjiang region, according to congressional staff members and other people familiar with the matter, as well as lobbying records that show vast spending on the legislation.The bill, which would prohibit broad categories of certain goods made by persecuted Muslim minorities in an effort to crack down on human rights abuses, has gained bipartisan support, passing the House in September by a margin of 406 to 3. Congressional aides say it has the backing to pass the Senate, and could be signed into law by either the Trump administration or the incoming Biden administration.But the legislation, called the Uyghur Forced Labor Prevention Act, has become the target of multinational companies including Apple whose supply chains touch the far western Xinjiang region, as well as of business groups including the U.S. Chamber of Commerce. Lobbyists have fought to water down some of its provisions, arguing that while they strongly condemn forced labor and current atrocities in Xinjiang, the act’s ambitious requirements could wreak havoc on supply chains that are deeply embedded in
DEBT-COLLECTION videos have become a popular subgenre on Chinese clip-sharing platforms. Many feature young men deftly fielding phone calls from aggressive collectors. Some portray the abuses—hair pulling, slapping—that have come to define a business that has long gone largely unregulated in China. The result has been a Wild West for collections. Debt collectors sometimes impersonate police officers; the details of debtors’ friends and family are sold so that they can be harassed. A swift rise in personal debt, though, is forcing regulators to act. Between 2015 and 2019 the stock of household debt in China rose by about $4.6trn, close to the $5.1trn accrued by Americans over a similar period before the global financial crisis of 2007-09, according to data from Rhodium Group, a consulting firm. The outstanding balance of delinquent consumer receivables could reach nearly 3.3trn yuan ($500bn) next year, up from just 1trn yuan in 2015, reckons iResearch, another consultancy. In June the southern city of Shenzhen drafted the country’s first personal bankruptcy law. Courts routinely heard disputes between lenders and borrowers, but allowed only creditors to file suits. The new law, to be rolled out next year, will offer debtors more
AS COVID-19 spread across America, its fiscal and monetary tsars donned their masks, bumped elbows and presented a united front. Jerome Powell, the chairman of the Federal Reserve, slashed interest rates and bought Treasuries and mortgage debt. Steve Mnuchin, the treasury secretary, pushed through a stimulus package worth $2.2trn that increased the generosity of unemployment benefits and secured funding for the Fed to support firms and market participants in need. This partnership seemed to fracture on November 19th, when Mr Mnuchin wrote to Mr Powell to say that he would let several of the Fed’s emergency lending schemes expire on December 31st. He asked for Treasury funds that had been allocated to the Fed, as capital to support these programmes, to be returned. Mr Mnuchin’s decision earned a rare rebuke from the Fed, which said that it “would prefer that the full suite of emergency facilities...continue to serve their important role as a backstop for our still-strained and vulnerable economy”. Just a few weeks earlier Mr Powell had said the pair were working on an extension. On November 20th, though, he acquiesced to Mr Mnuchin’s request. The Treasury had allocated $195bn in capital to
PACKED TRADING floors are rare these days. An exception is the Shahzada currency-exchange market in Kabul. Seven days a week hundreds of men crowd into a modest courtyard. Each has a bundle of banknotes; some have piles several feet deep. Prices—for American dollars, Iranian rials and Pakistani rupees—ring out and deals are done, on the spot, in cash. In the small offices around the sides, money that is changed can then be transferred to almost anywhere in the world. Cash is handed over and WhatsApp messages fly. The money travels by hawala (from the Arabic for “transfer”), a centuries-old system. Transactions in opposite directions are matched against each other through a network of personal contacts. An Afghan in London sending remittances home might in turn finance a Kabuli merchant importing Chinese goods purchased in Britain. Banks may be used—but not formally. The sender is given a serial number, which they send (these days on WhatsApp) to the recipient, who then picks up the money from a contact of the hawala merchant. Hawala is the core of Afghanistan’s financial system. One in six adult Afghans has a bank account; there are just two branches for
CHRISTINE LAGARDE has been an outsider before. Speaking to The Economist, she relishes the memory of shaking up bureaucrats—“men in grey suits”—when she took over as France’s finance minister in 2007. She even installed a “psychedelic” carpet in her office, to get them to look up from the floor. Now Ms Lagarde, who then went on to run the IMF, is shaking up the idea of what it is to be a top central banker. The main prerequisite used to be a degree of nerdiness: just think of Janet Yellen, a former chairwoman of the Federal Reserve and Joe Biden’s choice for treasury secretary (see article); Ben Bernanke, her predecessor at the Fed; or Mervyn King, a former governor of the Bank of England. All spent decades in academia. By contrast Ms Lagarde, who has been the head of the European Central Bank (ECB) for just over a year, is not an economist but a lawyer and a former executive and politician. She brings a glittering CV and a high public profile to the job, but is probably more comfortable rubbing shoulders with heads of state than participating in a research seminar. On the
IN 2005 BEN BERNANKE, then a governor of America’s Federal Reserve, noted a “remarkable reversal in the flows of credit” to several emerging economies, especially those in East Asia. These countries had begun to save more than they invested at home, becoming a “net supplier of funds” to the rest of the world. Their “saving glut”, as Mr Bernanke called it, was helping finance America’s widening current-account deficit, allowing the world’s richest country to buy more goods and services from others than it sold to them. Mr Bernanke wondered whether this arrangement could, or should, persist. Some economists later blamed the glut for America’s housing bubble. Similar concerns are resurfacing. In the second quarter of this year, America’s net national saving rate dipped below zero, as Stephen Roach of Yale University pointed out in the Financial Times last month. Lacking saving of its own, America instead borrowed “surplus saving from abroad”, he wrote. Its current-account deficit widened faster in the second quarter than ever before recorded. This sort of reasoning is quite common, not least in these pages. But a number of economists, including Michael Kumhof of the Bank of England, Phurichai Rungcharoenkitkul of
Finance, economics and psychology all come into it
Edward P. Lazear, a pioneering labor economist at Stanford University who advised President George W. Bush during the financial crisis, died on Monday. He was 72.The cause was pancreatic cancer, the university said. It did not say where he died.Professor Lazear may be best remembered as the founder of a field that has come to be known as personnel economics, which seeks to understand how businesses hire, retain and pay employees. He also founded the Journal of Labor Economics and the Society of Labor Economists.But perhaps his most critical job was as chairman of President Bush’s Council of Economic Advisers when the American financial system buckled after a housing and debt bubble had burst, forcing the federal government to spend hundreds of billions of dollars to bail out financial institutions and rescue a sinking economy.“Eddie Lazear was a rare combination — an extraordinary academic economist and a dedicated public servant who brought that intellect and skill to the solution of big policy problems,” said Condoleezza Rice, director of Stanford’s Hoover Institution, where Professor Lazear held a senior fellowship.In a statement, Mr. Bush called him “a trusted confidant” and “a beloved colleague.”Edward Paul Lazear was born in New York City on
They gather unloved in jars and under cushions, unearthed only when laundry needs doing. They rattle in coat pockets, music to some ears and a nuisance to others. They sink into fountains and lurk in wells, a fortune in wishes but a nightmare to sort and count.Coins are everywhere until they’re nowhere, and at the moment they’re hard to find. By upending normal habits, the pandemic has dropped them out of circulation and accelerated a trend toward cards, apps and other cashless payments that could eventually make coins obsolete.China has plans for a digital currency, and the U.S. Federal Reserve is doing “research and experimentation.” Facebook has a currency in the works, and Bitcoin’s evangelists are still preaching. Millions of Americans are skipping right over coins by paying with their phones — or shopping on them.“There’s a battle for the future of money going on,” said Alex Tapscott, a co-founder of the Blockchain Research Institute, a Canadian firm. Governments, banks, credit card companies and online communities are among the factions trying to change how people make payments, he said.“As for cash,” he added, “an elegy is in order.”How the coronavirus sidelined coinsA funeral for cash has not yet been scheduled,
IN THE FIRST instalment of the “Harry Potter” series, the protagonist stumbles across the Mirror of Erised. Anyone who looks into the mirror sees the “deepest, most desperate desire” of their hearts reflected back at them. There is a touch of Erised about President-elect Joe Biden’s decision to nominate Janet Yellen as America’s next treasury secretary, reported on November 23rd. No economist is more qualified than Ms Yellen, a former chair of the Federal Reserve and a respected academic, for the job. Perhaps more important, however, for what is a political role as much as an economic one, people from the progresive left to the conservative right can find something to like about her. In today’s political configuration, that matters. Mr Biden must bridge a split in the Democratic Party between run-of-the-mill centrists and tear-it-down millennial socialists. And before she becomes treasury secretary, Ms Yellen must be confirmed by the Senate, which Republicans currently control. That hurdle ruled out candidates such as Elizabeth Warren, a senator from Massachusetts whom many Republicans would never confirm because she is seen as too hostile to free markets and the financial industry. In the days before the announcement Washington
WASHINGTON — President-elect Joseph R. Biden Jr. is expected to nominate Janet L. Yellen, the first woman to lead the Federal Reserve, to be the next Treasury secretary, according to people familiar with the decision.If confirmed, Ms. Yellen would be the first woman to lead the Treasury in its 231-year history. She would also be at the forefront of navigating an economic crisis — while growth is recovering from pandemic-related lockdowns earlier in the year, coronavirus infections are climbing and local governments are restricting activity again, likely slowing that rebound. Ms. Yellen, 74, is likely to bring a long-held preference for government help for households that are struggling economically and for slightly tighter financial regulation with her to the Treasury. But unlike the independent Fed, Ms. Yellen would find herself in a much more political role — one that will likely require negotiating with a Republican-controlled Senate. With Mr. Biden expected to push for additional economic aid, Ms. Yellen will be thrust into trying to broker a stimulus deal in a politically divided Congress that has so far failed to agree on another round of economic aid.She may be well placed to do so, as one of the most recognizable