The World Economy And The Reaction To Tariffs

 

The United States of America has imposed tariffs on multiple countries. This impacted the stock market causing a degree of alarm. The trade war with China never ended. The Biden administration did not make an attempt to reverse Trump's economic policies from 2017. Mexico, Canada, and the European Union countries are going to see an increase in tariffs on their products coming into the United States. The response from France, the United Kingdom, and Germany was to impose tariffs of their own in retaliation. What the Trump administration is trying to do is exploit economically counties of Europe, Africa, Asia, and South America. The funds that come from tariffs those believe will enable the government to increase revenue without federal income tax. The problem is that the United States does not have the manufacturing base. To an extent the country has been deindustrialized from globalization. Inflation is not under control and higher prices on goods causes more challenges for the public. Developing nations are going to be disproportionately effected. Consumers might begin to panic buy various items. The corporate elite are not going to face any hardship. Tariffs can indirectly benefit the wealthiest business owners. Foreign products are going to disadvantaged to favor American goods. Consumers around the world are going to pay more for food, clothing, cars, and other services. The new wave of tariffs causes concerns about a coming economic crisis.    

Zimbabwe's New Currency

 

Zimbabwe has introduced a new currency. The Zimbabwe Gold was introduced on April 5th. The motivation is to stop inflation and move away from the US dollar. This also is a way to circumvent sanctions imposed by the European Union and the United States of America. Zimbabwe's condition would improve if there were no attempts at economic warfare. The ZiG as it is known was not the first attempt at a new currency. Six attempts have been made since 2008. The gold currency might have a better chance of survival. Gold is still valuable and having a currency backed by it could  generate trust in the public. The majority of transactions continue to be done in US dollars. The difference now is that Zimbabwe according to its central bank has 2,1 tons of gold. Zimbabwe also contains diamonds. Natural resources are the key to economic stability and development. Getting membership to the New Development Bank could provide further solutions to economic challenges. Further changes have to be made if the multi-currency system is to be discarded. The 2019 ban on foreign currencies as legal tender was designed to challenge foreign influence in Zimbabwe's economic policy. Global market inflation forced Zimbabwe to reverse the policy in 2022. Zimbabwe has been under US sanctions since 2003. The European Council has renewed restrictive measures against Zimbabwe. the claim is that it is a mere arms embargo, but most EU countries do not want to do business with Zimbabwe. The direct development cooperation ceased and that directly effects the people of Zimbabwe. When a country is blacklisted by sanctions this makes other countries hesitant to invest. They fear retaliation from other powers. The world is gradually moving into an era of de-dollarization and Zimbabwe sees this as an opportunity. If the Zimbabwe Gold is successful other African nations might try to replicate a similar economy policy. 

Ibrahim Traore Explains The Importance of The Youth

 

President Ibrahim Traore recognizes the importance of Burkina Faso's youth. Having them employed and developing future leaders will ensure the country's survival. The youth of Africa might be disillusioned with unresponsive governments and unstable societies. The threats posed by neo-colonial imperialism and terrorist organizations are obstacles. Burkina Faso is a major exporter of gold. This should make  the country prosperous, but years after the death of Thomas Sankara left its economy in disarray. President Ibrahim Traore wants to reverse this and  the youth have to be the driving force. What this means is challenging France's exploitation of  Burkina Faso's resources. This is not a change for one African country. President Ibrahim Traore wants to see African economies become more powerful. Burkina Faso might be seeing a revolutionary  change in political thought. The youth should not seek to go to Europe. Developing Burkina Faso to what it should be is what President Traore desires the most. Modernization and more technology will make Burkina Faso economically secure and preserve its independence. 

A Major Goal of The New Development Bank

 

The New Development Bank has outlined major objectives in the coming years. The focus will be on Africa. The NDB founded by BRICS wants to see changes in the global economy. The New Development Bank will finance infrastructure and digital projects. Investments will also be made in education. Such a policy makes sense considering the jobs of the future will require more skills and knowledge. A fourth industrial revolution is coming and the Global South should not be left behind. The African continent has large amounts of natural resources. This means it is a significant force in the world market. NDB President Dilma Rousseff  noted that direct foreign investment in Africa went from 4.9% in 2010 to 8.8 % in 2021. Rousseff described African nations as  quality partners. The challenges that remain are related to expanding payment mechanisms Rousseff added. Cooperation, stability of the continent, and banking procedures remain persistent obstacles. Economic growth is not slowing down in Africa. The result of this is that the New Development Bank's importance will be elevated. 

The Collapse of Silicon Valley Bank

 

The collapse of Silicon Valley Bank represents a negative turn in the economy. One of the top US banks had its assets confiscated by regulators. These actions and bank failures seem very familiar to the 2008 global financial crisis. The collapse of  Silicon Valley Bank is one of the biggest bank failures in US history. The bank mostly provided services to workers in tech and and start-up companies. Some longtime tech companies also had investments in the bank. The assertion that this was just one case and should not be deemed disturbing is misguided. The banking sector is becoming unstable under the lack of regulation and mismanagement. The assets of Silicon Valley Bank are being transferred to  a newly created institution. The Deposit Insurance Bank of Santa Clara will pay for insured deposits. SVB had an estimated $209 billion in assets. The violation according to the FDIC was that accounts exceeded the $250,000 limit. The technology sector will be negatively impacted by the collapse of SVB. A combination of CEO avarice and layoffs have made the situation worse. Simultaneously, the Federal Reserve has failed to counter inflation. The Silicon Valley Bank has been active since 1983, but after 39 years it could not survive. The government has made a promise to ensure that depositors would get their money back. SVB demonstrates a combination of corruption and the hardship that start-up companies face. Large corporations can survive and new businesses are at a disadvantage.  

The IMF World Economic Outlook

The International Monetary Fund has predicted a very challenging global economy. There has been a sharp decline in economic growth. Such a dramatic change has not been seen since the Great Depression. The world economy suffered a major collapse in 2008 causing unemployment and a decline in living standards. Conditions are so poor that the UK may have to delay leaving the European Union once more. Some economists believe that this is only a minor recession and should stabilize once lock downs and quarantines end. This may not be the case for people who become unemployed when the public health crisis occurred. A depression may have happened regardless of the COVID-19 pandemic. Neoliberal capitalism and supply side economics has created an erratic global market. The poorest countries will be effected the most. Many are still in debt to the IMF with little benefits coming from loans. The US and EU countries will not be entirely spared. Fiscal austerity measures and structural adjustment could be used to ensure the system remains intact, It will come at the expense of the working public. The decline in social services, adequate pay, or a banking panic would result in civil unrest. At some point new solutions will be require to prevent complete breakdown of the global economy.    

The Bundesbank Warns of Recession

Germany may be facing a possible recession according to warnings from the Bundesbank. The global market may still be vulnerable with the on going trade war between the United States and China. The gross domestic product contracted in Germany three months until June at 0.1 %. Recessions happen when decreases in economic growth happen over a number of  following quarters. Chancellor Angela Merkel had assured the public that no stimulus was required to help the economy, but there are indicators that a possible crisis is on the horizon. Germany is not the only country at risk for recession. Italy, the UK, Mexico,China, the US,  and Brazil  may see economic down turns. This only becomes more complicated with Britain's exit from the European Union. The world's major economies could be seeing another global financial meltdown similar to that of 2008. Many have not recovered from downturn with chances of  stable employment and secure retirement out of reach. Germany faces a dilemma with being an exporter of goods to China and still maintaining  business relations with Russia. The United States has gradually let relations with these countries decline causing a level of turbulence in global markets. The Trump administration had added more tariffs, but made an exception for certain goods for fear it would harm US consumers during the holiday season. German automakers have trepidation about Brexit and sales have dramatically declined. Industrial output fell to 5% compared to the previous year according to German government data. Germany may be facing the worst  economic situation since the early 1920s. While it would be an exaggeration to say there will be another Great Depression, the economy will deteriorate without immediate intervention.    

Facebook Will Launch a New Cryptocurrency

Facebook has become a social media phenomenon. It continues to define the standard of internet communication, with other imitators following. Now the company wants to get involved in cryptocurrency. From a point of business this makes logical sense. Getting involved in digital currency early may secure more profits and higher value for Facebook in the future. Facebook has given a name to its proposed cryptocurrency known as the libra. There are concerns about it development. Facebook has done a poor job at protecting user data. Privacy may not be guaranteed to users of the social media network. Facebook also found itself  answering questions about fake accounts connected to Russia attempting to influence elections in the United States. The spread of false information has also become a concern with a public that has limited media literacy. The fear about the use of the libra is that may enable massive financial fraud. When digital assets are traded it is done under a strong system of cryptography and firewall protection to ensure security. Facebook has difficulty or lacks the ability to protect user data, which makes the exchange of libra a risk. Other detractors have a concern that is not about Facebook in particular, rather they want to preserve private central banking. Beside the few nations that have national banks, cryptocurrency make to a serious threat. At the moment a large portion of the public is not doing financial exchanges in cryptocurrency. It may take some time before this type of money becomes available to most of the global population.    

US Imposes More Tariffs on China

Trade negotiations collapsed between the US and China. It appears that the trade war that was started by the Trump administration may not be ending soon. Failure to reach an agreement will have a negative impact on the stock market. Investors become nervous at the prospect of uncertainty. The US public may also see increasing prices on goods from China. The retaliation from China has been to go after the agricultural sector. This could harm the base that elected Donald Trump to office. Farmers have felt the effects of trade war, however the Trump administration has sought to counter this. China is the world's second largest economy and trying to have a trade war would be deleterious to America's economic health. President Donald Trump has constantly blamed China for some of America's economic challenges during the 2016 election and has continued to show open hostility. If a trade war continues it may evolve into some form of economic warfare. Disputes over intellectual property theft and tariffs must be addressed by the two nations. President Xi Jingping has expressed that China will not accept  any agreement that undermines China's economic interest.Economic competition can also influence relations between other Asian nations. North Korea may be used to harass China, which has substantial investments in that country. Attempts at diplomacy have failed and in an indirect way are related to the US-China trade war. The United States may get more aggressive with North Korea as a means to harass China. The total estimate of US tariffs on Chinese imports is $200 billion. The measure will soon go into effect and there is a level of uncertainty how drastically this will effect global markets.