What is Bitcoin?

Bitcoin is a  digital currency created in January 2009. It follows the ideas set out in a  whitepaper by the mysterious and pseudonymous developer Satoshi Nakamoto, whose true identity has yet to be verified. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.

There are no physical bitcoins, only balances kept on a public ledger in the cloud, that – along with all Bitcoin transactions – is verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin charts high on popularity, and has triggered the launch of hundreds of other virtual currencies collectively referred to as  Altcoins.

Understanding Bitcoin
Bitcoin is a type of cryptocurrency. Balances of Bitcoin tokens are kept using public and private "keys," which are long strings of numbers and letters linked through the mathematical encryption algorithm that was used to create them. The public key (comparable to a bank account number) serves as the address which is published to the world and to which others may send bitcoins. The private key (comparable to an ATM PIN) is meant to be a guarded secret and only used to authorize Bitcoin transmissions. Bitcoin keys should not be confused with a Bitcoin wallet, which is a physical or digital device that facilitates the trading of Bitcoin and allows users to track ownership of coins. The term "wallet" is a bit misleading, as Bitcoin's decentralized nature means that it is never stored "in" a wallet, but rather decentrally on a  blockchain.

Style notes: according to the official Bitcoin Foundation, the word "Bitcoin" is capitalized in the context of referring to the entity or concept, whereas "bitcoin" is written in the lower case when referring to a quantity of the currency (e.g. "I traded 20 bitcoin") or the units themselves. The plural form can be either "bitcoin" or "bitcoins." Bitcoin is also commonly abbreviated as "BTC."

How Bitcoin Works
Bitcoin is one of the first digital currencies to use peer-to-peer technology to facilitate instant payments. The independent individuals and companies who own the governing computing power and participate in the Bitcoin network, also known as "miners," are motivated by rewards (the release of new bitcoin) and transaction fees paid in bitcoin. These miners can be thought of as the decentralized authority enforcing the credibility of the Bitcoin network. New bitcoin is being released to the miners at a fixed, but periodically declining rate, such that the total supply of bitcoins approaches 21 million. Currently, there are roughly 3 million bitcoins that have yet to be mined. In this way, Bitcoin (and any cryptocurrency generated through a similar process) operates differently from fiat currency; in centralized banking systems, currency is released at a rate matching the growth in goods in an attempt to maintain price stability, while a decentralized system like Bitcoin sets the release rate ahead of time and according to an algorithm.

Bitcoin mining is the process by which bitcoins are released into circulation. Generally, mining requires the solving of computationally difficult puzzles in order to discover a new block, which is added to the blockchain. In contributing to the blockchain, mining adds and verifies transaction records across the network. For adding blocks to the blockchain, miners receive a reward in the form of a few bitcoins; the reward is halved every 210,000 blocks. The block reward was 50 new bitcoins in 2009 and is currently 12.5. As more and more bitcoins are created, the difficulty of the mining process – that is, the amount of computing power involved – increases. The mining difficulty began at 1.0 with Bitcoin's debut back in 2009; at the end of the year, it was only 1.18. As of October 2019, the mining difficulty is over 12 trillion. Once, an ordinary desktop computer sufficed for the mining process; now, to combat the difficulty level, miners must use expensive, complex hardware like Application-Specific Integrated Circuits (ASIC) and more advanced processing units like Graphic Processing Units (GPUs). These elaborate mining processors are known as "mining rigs."

One bitcoin is divisible to eight decimal places (100 millionths of one bitcoin), and this smallest unit is referred to as a Satoshi. If necessary, and if the participating miners accept the change, Bitcoin could eventually be made divisible to even more decimal places.

What's a Bitcoin Worth?
In 2017 alone, the price of Bitcoin rose from a little under $1,000 at the beginning of the year to close to $19,000, ending the year more than 1,400% higher. More recently, the cryptocurrency has declined in value and more-or-less plateaued, save for a few periods of relatively lower price figures (the early portion of 2019, when prices hovered around $3500) and relatively higher ones (June and July of 2019, when prices briefly peaked at over $13,000). As of October 2019, Bitcoin seems to have found a new price point in the range of $8,000 to $9,000.

Bitcoin's price is quite dependent on the size of its mining network since the larger the network is, the more difficult – and thus more costly – it is to produce new bitcoins. As a result, the price of bitcoin has to increase as its cost of production also rises. The Bitcoin mining network's aggregate processing power is known as the "hash rate," referring to the number of times per second the network can attempt to complete a hashing puzzle necessary before a block can be added to the blockchain. As of October 23, 2019, the network reached a record high of 114 quintillion hashes per second.

How Bitcoin Began
Aug. 18, 2008: The domain name bitcoin.org is registered. Today, at least, this domain is "WhoisGuard Protected," meaning the identity of the person who registered it is not public information.

Oct. 31, 2008: Someone using the name Satoshi Nakamoto makes an announcement on The Cryptography Mailing list at metzdowd.com: "I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. The paper is available at http://www.bitcoin.org/bitcoin.pdf." This link leads to the now-famous whitepaper published on bitcoin.org entitled "Bitcoin: A Peer-to-Peer Electronic Cash System." This paper would become the Magna Carta for how Bitcoin operates today.

Jan. 3, 2009: The first Bitcoin block is mined, Block 0. This is also known as the "genesis block" and contains the text: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," perhaps as proof that the block was mined on or after that date, and perhaps also as relevant political commentary.

Jan. 8, 2009: The first version of the Bitcoin software is announced on The Cryptography Mailing list.

Jan. 9, 2009: Block 1 is mined, and Bitcoin mining commences in earnest.

Who Invented Bitcoin?
No one knows who invented Bitcoin, or at least not conclusively. Satoshi Nakamoto is the name associated with the person or group of people who released the original Bitcoin white paper in 2008 and worked on the original Bitcoin software that was released in 2009. The Bitcoin protocol requires users to enter a birthday upon signup, and we know that an individual named Satoshi Nakamoto registered and put down April 5 as a birth date. In the years since that time, many individuals have either claimed to be or have been suggested as the real-life people behind the pseudonym, but as of October 2019, the true identity (or identities) behind Satoshi remains obscured.

Before Satoshi
Though it is tempting to believe the media's spin that Satoshi Nakamoto is a solitary, quixotic genius who created Bitcoin out of thin air, such innovations do not typically happen in a vacuum. All major scientific discoveries, no matter how original-seeming, were built on previously existing research. There are precursors to Bitcoin: Adam Back’s Hashcash, invented in 1997, and subsequently Wei Dai’s b-money, Nick Szabo’s bit-gold and Hal Finney’s Reusable Proof of Work. The Bitcoin whitepaper itself cites Hashcash and b-money, as well as various other works spanning several research fields. Perhaps unsurprisingly, many of the individuals behind the other projects named above have been speculated to have also had a part in creating Bitcoin.

Why Is Satoshi Anonymous?
There are two primary motivations for keeping Bitcoin's inventor keeping his or her or their identity secret. One is privacy. As Bitcoin has gained in popularity – becoming something of a worldwide phenomenon – Satoshi Nakamoto would likely garner a lot of attention from the media and from governments.

The other reason is safety. Looking at 2009 alone, 32,489 blocks were mined; at the then-reward rate of 50 BTC per block, the total payout in 2009 was 1,624,500 BTC, which is worth $13.9 billion as of October 25, 2019. One may conclude that only Satoshi and perhaps a few other people were mining through 2009 and that they possess a majority of that stash of BTC. Someone in possession of that much Bitcoin could become a target of criminals, especially since bitcoins are less like stocks and more like cash, where the private keys needed to authorize spending could be printed out and literally kept under a mattress. While it's likely the inventor of Bitcoin would take precautions to make any extortion-induced transfers traceable, remaining anonymous is a good way for Satoshi to limit exposure.

The Suspects
Major media outlets, cryptocurrency experts and other enthusiasts have ventured guesses as to the individual or group behind the persona of Satoshi Nakamoto. On Oct. 10, 2011, The New Yorker published an article speculating that Nakamoto might be Irish cryptography student Michael Clear or economic sociologist Vili Lehdonvirta. A day later, Fast Company suggested that Nakamoto could be a group of three people – Neal King, Vladimir Oksman and Charles Bry – who together appear on a patent related to secure communications that were filed two months before bitcoin.org was registered. A Vice article published in May 2013 added more suspects to the list, including Gavin Andresen, the Bitcoin project’s lead developer; Jed McCaleb, co-founder of now-defunct Bitcoin exchange Mt. Gox; and famed Japanese mathematician Shinichi Mochizuki. 

In December 2013, Techcrunch published an interview with researcher Skye Grey who claimed textual analysis of published writings shows a link between Satoshi and bit-gold creator Nick Szabo. And perhaps most famously, in March 2014, Newsweek ran a cover article claiming that Satoshi is actually an individual named Satoshi Nakamoto – a 64-year-old Japanese-American engineer living in California. More recently, Australian computer scientist and cryptocurrency proponent Craig Wright has claimed to be Satoshi Nakamoto – although Wright also has claimed that Nakamoto plagiarized his 2008 thesis on the topic of cryptocurrencies.

After a decade of Bitcoin, the world still does not know who is behind the world's top digital currency, and it's possible that the mystery will never be solved.

Can Satoshi's Identity Be Proven?
It would seem even early collaborators on the project don’t have verifiable proof of Satoshi’s identity. To reveal conclusively who Satoshi Nakamoto is, a definitive link would need to be made between his/her activity with Bitcoin and his/her identity. That could come in the form of linking the party behind the domain registration of bitcoin.org, email and forum accounts used by Satoshi Nakamoto, or ownership of some portion of the earliest mined bitcoins. Even though the bitcoins Satoshi likely possesses are traceable on the blockchain, it seems he/she has yet to cash them out in a way that reveals his/her identity. If Satoshi were to move his/her bitcoins to an exchange today, this might attract attention, but it seems unlikely that a well-funded and successful exchange would betray a customer's privacy.

Receiving Bitcoins As Payment
Bitcoins can be accepted as a means of payment for products sold or services provided. If you have a brick and mortar store, just display a sign saying “Bitcoin Accepted Here” and many of your customers may well take you up on it; the transactions can be handled with the requisite hardware terminal or wallet address through QR codes and touch screen apps. An online business can easily accept bitcoins by just adding this payment option to the others it offers, like credit cards, PayPal, etc. Online payments will require a Bitcoin merchant tool (an external processor like Coinbase or BitPay). 

Bitcoins From Gambling

It’s possible to play at casinos that cater to Bitcoin aficionados, with options like online lotteries, jackpots, spread betting, and other games. Of course, the pros and cons and risks that apply to any sort of gambling and betting endeavors are in force here too.

Investing in Bitcoins
There are many Bitcoin supporters who believe that digital currency is the future. Many of those who endorse Bitcoin believe that it facilitates a much faster, no-fee payment system for transactions across the globe. Although it is not backed by any government or central bank, bitcoin can be exchanged for traditional currencies; in fact, its exchange rate against the dollar attracts potential investors and traders interested in currency plays. Indeed, one of the primary reasons for the growth of digital currencies like Bitcoin is that they can act as an alternative to national fiat money and traditional commodities like gold.

In March 2014, the IRS stated that all virtual currencies, including bitcoins, would be taxed as property rather than currency. Gains or losses from bitcoins held as capital will be realized as capital gains or losses, while bitcoins held as inventory will incur ordinary gains or losses. The sale of bitcoins that you mined or purchased from another party, or the use of bitcoins to pay for goods or services are examples of transactions that can be taxed.

Like any other asset, the principle of buying low and selling high applies to bitcoins. The most popular way of amassing the currency is through buying on a Bitcoin exchange, but there are many other ways to earn and own bitcoins.

Risks of Bitcoin Investing
Though Bitcoin was not designed as a normal equity investment (no shares have been issued), some speculative investors were drawn to the digital money after it appreciated rapidly in May 2011 and again in November 2013. Thus, many people purchase bitcoin for its investment value rather than as a medium of exchange.

However, their lack of guaranteed value and digital nature means the purchase and use of bitcoins carries several inherent risks. Many investor alerts have been issued by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Consumer Financial Protection Bureau (CFPB), and other agencies.

The concept of a virtual currency is still novel and, compared to traditional investments, Bitcoin doesn't have much of a long-term track record or history of credibility to back it. With their increasing popularity, bitcoins are becoming less experimental every day; still, after 10 years, they (like all digital currencies) remain in a development phase and are consistently evolving. "It is pretty much the highest-risk, highest-return investment that you can possibly make,” says Barry Silbert, CEO of Digital Currency Group, which builds and invests in Bitcoin and blockchain companies.

Bitcoin Regulatory Risk
Investing money into Bitcoin in any of its many guises is not for the risk-averse. Bitcoins are a rival to government currency and may be used for black market transactions, money laundering, illegal activities or tax evasion. As a result, governments may seek to regulate, restrict or ban the use and sale of bitcoins, and some already have. Others are coming up with various rules. For example, in 2015, the New York State Department of Financial Services finalized regulations that would require companies dealing with the buy, sell, transfer or storage of bitcoins to record the identity of customers, have a compliance officer and maintain capital reserves. The transactions worth $10,000 or more will have to be recorded and reported.

The lack of uniform regulations about bitcoins (and other virtual currency) raises questions over their longevity, liquidity, and universality.

Security Risk of Bitcoins
Most individuals who own and use Bitcoin have not acquired their tokens through mining operations. Rather, they buy and sell Bitcoin and other digital currencies on any of a number of popular online markets known as Bitcoin exchanges. Bitcoin exchanges are entirely digital and, as with any virtual system, are at risk from hackers, malware and operational glitches. If a thief gains access to a Bitcoin owner's computer hard drive and steals his private encryption key, he could transfer the stolen Bitcoins to another account. (Users can prevent this only if bitcoins are stored on a computer which is not connected to the internet, or else by choosing to use a paper wallet – printing out the Bitcoin private keys and addresses, and not keeping them on a computer at all.) Hackers can also target Bitcoin exchanges, gaining access to thousands of accounts and digital wallets where bitcoins are stored. One especially notorious hacking incident took place in 2014, when Mt. Gox, a Bitcoin exchange in Japan, was forced to close down after millions of dollars worth of bitcoins were stolen.

This is particularly problematic once you remember that all Bitcoin transactions are permanent and irreversible. It's like dealing with cash: Any transaction carried out with bitcoins can only be reversed if the person who has received them refunds them. There is no third party or a payment processor, as in the case of a debit or credit card – hence, no source of protection or appeal if there is a problem.

Insurance Risk
Some investments are insured through the Securities Investor Protection Corporation. Normal bank accounts are insured through the Federal Deposit Insurance Corporation (FDIC) up to a certain amount depending on the jurisdiction. Generally speaking, Bitcoin exchanges and Bitcoin accounts are not insured by any type of federal or government program. In 2019, prime dealer and trading platform SFOX announced it would be able to provide Bitcoin investors with FDIC insurance, but only for the portion of transactions involving cash.

Risk of Bitcoin Fraud

Date : 03 Nov 2019 07:03 AM

What is Blockchain?

If this technology is so complex, why call it “blockchain?” At its most basic level, blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).

“Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts:

Blocks store information about transactions like the date, time, and dollar amount of your most recent purchase from Amazon. (NOTE: This Amazon example is for illustrative purchases; Amazon retail does not work on a blockchain principle)

Blocks store information about who is participating in transactions. A block for your splurge purchase from Amazon would record your name along with Amazon.com, Inc. Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.

Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Let’s say you made your splurge purchase on Amazon, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart because of their unique codes.

While the block in the example above is being used to store a single purchase from Amazon, the reality is a little different. A single block on the blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions under one roof.

How Blockchain Works

When a block stores new data it is added to the blockchain. Blockchain, as its name suggests, consists of multiple blocks strung together. In order for a block to be added to the blockchain, however, four things must happen:

A transaction must occur. Let’s continue with the example of your impulsive Amazon purchase. After hastily clicking through multiple checkout prompt, you go against your better judgment and make a purchase.

That transaction must be verified. After making that purchase, your transaction must be verified. With other public records of information, like the Securities Exchange Commission, Wikipedia, or your local library, there’s someone in charge of vetting new data entries. With blockchain, however, that job is left up to a network of computers. When you make your purchase from Amazon, that network of computers rushes to check that your transaction happened in the way you said it did. That is, they confirm the details of the purchase, including the transaction’s time, dollar amount, and participants. (More on how this happens in a second.)


That transaction must be stored in a block. After your transaction has been verified as accurate, it gets the green light. The transaction’s dollar amount, your digital signature, and Amazon’s digital signature are all stored in a block. There, the transaction will likely join hundreds, or thousands, of others like it.

That block must be given a hash. Not unlike an angel earning its wings, once all of a block’s transactions have been verified, it must be given a unique, identifying code called a hash. The block is also given the hash of the most recent block added to the blockchain. Once hashed, the block can be added to the blockchain.

When that new block is added to the blockchain, it becomes publicly available for anyone to view—even you. If you take a look at Bitcoin’s blockchain, you will see that you have access to transaction data, along with information about when (“Time”), where (“Height”), and by who (“Relayed By”) the block was added to the blockchain.

Is Blockchain Private?

Anyone can view the contents of the blockchain, but users can also opt to connect their computers to the blockchain network. In doing so, their computer receives a copy of the blockchain that is updated automatically whenever a new block is added, sort of like a Facebook News Feed that gives a live update whenever a new status is posted.

Each computer in the blockchain network has its own copy of the blockchain, which means that there are thousands, or in the case of Bitcoin, millions of copies of the same blockchain. Although each copy of the blockchain is identical, spreading that information across a network of computers makes the information more difficult to manipulate. With blockchain, there isn’t a single, definitive account of events that can be manipulated. Instead, a hacker would need to manipulate every copy of the blockchain on the network.

Looking over the Bitcoin blockchain, however, you will notice that you do not have access to identifying information about the users making transactions. Although transactions on the blockchain are not completely anonymous, personal information about users is limited to their digital signature or username.

This raises an important question: if you cannot know who is adding blocks to the blockchain, how can you trust blockchain or the network of computers upholding it?

Is Blockchain Secure?

Blockchain technology accounts for the issues of security and trust in several ways. First, new blocks are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. If you take a look at Bitcoin’s blockchain, you’ll see that each block has a position on the chain, called a “height.” As of Feb. 2019, the block’s height had topped 562,000.

After a block has been added to the end of the blockchain, it is very difficult to go back and alter the contents of the block. That’s because each block contains its own hash, along with the hash of the block before it. Hash codes are created by a math function that turns digital information into a string of numbers and letters. If that information is edited in any way, the hash code changes as well.

Here’s why that’s important to security. Let’s say a hacker attempts to edit your transaction from Amazon so that you actually have to pay for your purchase twice. As soon as they edit the dollar amount of your transaction, the block’s hash will change. The next block in the chain will still contain the old hash, and the hacker would need to update that block in order to cover their tracks. However, doing so would change that block’s hash. And the next, and so on.

In order to change a single block, then, a hacker would need to change every single block after it on the blockchain. Recalculating all those hashes would take an enormous and improbable amount of computing power. In other words, once a block is added to the blockchain it becomes very difficult to edit and impossible to delete.

To address the issue of trust, blockchain networks have implemented tests for computers that want to join and add blocks to the chain. The tests, called “consensus models,” require users to “prove” themselves before they can participate in a blockchain network. One of the most common examples employed by Bitcoin is called “proof of work.”

In the proof of work system, computers must “prove” that they have done “work” by solving a complex computational math problem. If a computer solves one of these problems, they become eligible to add a block to the blockchain. But the process of adding blocks to the blockchain, what the cryptocurrency world calls “mining,” is not easy. In fact, according to the blockchain news site BlockExplorer, the odds of solving one of these problems on the Bitcoin network were about one in 5.8 trillion in Feb. 2019. To solve complex math problems at those odds, computers must run programs that cost them significant amounts of power and energy 

Proof of work does not make attacks by hackers impossible, but it does make them somewhat useless. If a hacker wanted to coordinate an attack on the blockchain, they would need to solve complex computational math problems at 1 in 5.8 trillion odds just like everyone else. The cost of organizing such an attack would almost certainly outweigh the benefits.

Blockchain vs. Bitcoin

The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. That concept can be difficult to wrap our heads around without seeing the technology in action, so let’s take a look at how the earliest application of blockchain technology actually works.

Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with. But it wasn’t until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.

The Bitcoin protocol is built on the blockchain. In a research paper introducing the digital currency, Bitcoin’s pseudonymous creator Satoshi Nakamoto referred to it as “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”

Here’s how it works.

You have all these people, all over the world, who have Bitcoin. According to a 2017 study by the Cambridge Centre for Alternative Finance, the number may be as many as 5.9 million. Let’s say one of those 5.9 million people wants to spend their Bitcoin on groceries. This is where the blockchain comes in.

When it comes to printed money, the use of printed currency is regulated and verified by a central authority, usually a bank or government—but Bitcoin is not controlled by anyone. Instead, transactions made in Bitcoin are verified by a network of computers.

When one person pays another for goods using Bitcoin, computers on the Bitcoin network race to verify the transaction. In order to do so, users run a program on their computers and try to solve a complex mathematical problem, called a “hash.” When a computer solves the problem by “hashing” a block, its algorithmic work will have also verified the block’s transactions. The completed transaction is publicly recorded and stored as a block on the blockchain, at which point it becomes unalterable. In the case of Bitcoin, and most other blockchains, computers that successfully verify blocks are rewarded for their labor with cryptocurrency.

Although transactions are publicly recorded on the blockchain, user data is not—or, at least not in full. In order to conduct transactions on the Bitcoin network, participants must run a program called a “wallet.” Each wallet consists of two unique and distinct cryptographic keys: a public key and a private key. The public key is the location where transactions are deposited to and withdrawn from. This is also the key that appears on the blockchain ledger as the user’s digital signature.

Even if a user receives a payment in Bitcoins to their public key, they will not be able to withdraw them with the private counterpart. A user’s public key is a shortened version of their private key, created through a complicated mathematical algorithm. However, due to the complexity of this equation, it is almost impossible to reverse the process and generate a private key from a public key. For this reason, blockchain technology is considered confidential.

Public and Private Key Basics

Here’s the ELI5—“Explain it Like I’m 5”—version. You can think of a public key as a school locker and the private key as the locker combination. Teachers, students, and even your crush can insert letters and notes through the opening in your locker. However, the only person that can retrieve the contents of the mailbox is the one that has the unique key. It should be noted, however, that while school locker combinations are kept in the principal’s office, there is no central database that keeps track of a blockchain network’s private keys. If a user misplaces their private key, they will lose access to their Bitcoin wallet, as was the case with this man who made national headlines in December of 2017.

A Single Public Chain

In the Bitcoin network, the blockchain is not only shared and maintained by a public network of users—but it is also agreed upon. When users join the network, their connected computer receives a copy of the blockchain that is updated whenever a new block of transactions is added. But what if, through human error or the efforts of a hacker, one user’s copy of the blockchain manipulated to be different from every other copy of the blockchain?

The blockchain protocol discourages the existence of multiple blockchains through a process called “consensus.” In the presence of multiple, differing copies of the blockchain, the consensus protocol will adopt the longest chain available. More users on a blockchain mean that blocks can be added to the end of the chain quicker. By that logic, the blockchain of record will always be the one that most users trust. The consensus protocol is one of blockchain technology’s greatest strengths but also allows for one of its greatest weaknesses.

Theoretically, Hacker-Proof

Theoretically, it is possible for a hacker to take advantage of the majority rule in what is referred to as a 51% attack. Here’s how it would happen. Let’s say that there are five million computers on the Bitcoin network, a gross understatement for sure but an easy enough number to divide. In order to achieve a majority on the network, a hacker would need to control at least 2.5 million and one of those computers. In doing so, an attacker or group of attackers could interfere with the process of recording new transactions. They could send a transaction—and then reverse it, making it appear as though they still had the coin they just spent. This vulnerability, known as double-spending, is the digital equivalent of a perfect counterfeit and would enable users to spend their Bitcoins twice.

Such an attack is extremely difficult to execute for a blockchain of Bitcoin’s scale, as it would require an attacker to gain control of millions of computers. When Bitcoin was first founded in 2009 and its users numbered in the dozens, it would have been easier for an attacker to control a majority of computational power in the network. This defining characteristic of blockchain has been flagged as one weakness for fledgling cryptocurrencies.

User fear of 51% attacks can actually limit monopolies from forming on the blockchain. In “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money,” New York Times journalist Nathaniel Popper writes of how a group of users, called “Bitfury,” pooled thousands of high-powered computers together to gain a competitive edge on the blockchain. Their goal was to mine as many blocks as possible and earn bitcoin, which at the time were valued at approximately $700 each.

Harnessing Bitfury

By March 2014, however, Bitfury was positioned to exceed 50% of the blockchain network’s total computational power. Instead of continuing to increase its hold over the network, the group elected to self-regulate itself and vowed never to go above 40%. Bitfury knew that if they chose to continue increasing their control over the network, bitcoin’s value would fall as users sold off their coins in preparation for the possibility of a 51% attack. In other words, if users lose their faith in the blockchain network, the information on that network risks becoming completely worthless. Blockchain users, then, can only increase their computational power to a point before they begin to lose money.

Blockchain's Practical Application

Blocks on the blockchain store data about monetary transactions—we’ve got that out of the way. But it turns out that blockchain is actually a pretty reliable way of storing data about other types of transactions, as well. In fact, blockchain technology can be used to store data about property exchanges, stops in a supply chain, and even votes for a candidate.

Professional services network Deloitte recently surveyed 1,000 companies across seven countries about integrating blockchain into their business operations. Their survey found that 34% already had a blockchain system in production today, while another 41% expected to deploy a blockchain application within the next 12 months. In addition, nearly 40% of the surveyed companies reported they would invest $5 million or more in blockchain in the coming year. Here are some of the most popular applications of blockchain being explored today.

Bank Use

Perhaps no industry stands to benefit from integrating blockchain into its business operations more than banking. Financial institutions only operate during business hours, five days a week. That means if you try to deposit a check on Friday at 6 p.m., you likely will have to wait until Monday morning to see that money hit your account. Even if you do make your deposit during business hours, the transaction can still take one to three days to verify due to the sheer volume of transactions that banks need to settle. Blockchain, on the other hand, never sleeps.

By integrating blockchain into banks, consumers can see their transactions processed in as little as 10 minutes, basically the time it takes to add a block to the blockchain, regardless of the time or day of the week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely. In the stock trading business, for example, the settlement and clearing process can take up to three days (or longer, if banks are trading internationally), meaning that the money and shares are frozen for that time.

Given the size of the sums involved, even the few days that the money is in transit can carry significant costs and risks for banks. Santander, a European bank, put the potential savings at $20 billion a year. Capgemini, a French consultancy, estimates that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications.

Use in Cryptocurrency

Blockchain forms the bedrock for cryptocurrencies like Bitcoin. As we explored earlier, currencies like the U.S. dollar are regulated and verified by a central authority, usually a bank or government. Under the central authority system, a user’s data and currency are technically at the whim of their bank or government. If a user’s bank collapses or they live in a country with an unstable government, the value of their currency may be at risk. These are the worries out of which Bitcoin was borne.

By spreading its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies to operate without the need for a central authority. This not only reduces risk but also eliminates many of the processing and transaction fees. It also gives those in countries with unstable currencies a more stable currency with more applications and a wider network of individuals and institutions they can do business with, both domestically and internationally (at least, this is the goal.)

Healthcare Uses

Health care providers can leverage blockchain to securely store their patients’ medical records. When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be changed. These personal health records could be encoded and stored on the blockchain with a private key, so that they are only accessible by certain individuals, thereby ensuring privacy

Property Records Use

If you have ever spent time in your local Recorder’s Office, you will know that the process of recording property rights is both burdensome and inefficient. Today, a physical deed must be delivered to a government employee at the local recording office, where is it manually entered into the county’s central database and public index. In the case of a property dispute, claims to the property must be reconciled with the public index.

This process is not just costly and time-consuming—it is also riddled with human error, where each inaccuracy makes tracking property ownership less efficient. Blockchain has the potential to eliminate the need for scanning documents and tracking down physical files in a local recording office. If property ownership is stored and verified on the blockchain, owners can trust that their deed is accurate and permanent.

Use in Smart Contracts

A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions that users agree to. When those conditions are met, the terms of the agreement are automatically carried out.

Say, for example, I’m renting you my apartment using a smart contract. I agree to give you the door code to the apartment as soon as you pay me your security deposit. Both of us would send our portion of the deal to the smart contract, which would hold onto and automatically exchange my door code for your security deposit on the date of the rental. If I don’t supply the door code by the rental date, the smart contract refunds your security deposit. This eliminates the fees that typically accompany using a notary or third-party mediator.

Supply Chain Use 

Suppliers can use blockchain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of their products, along with health and ethics labels like “Organic,” “Local,” and “Fair Trade.”

As reported by Forbes the food industry is moving into the use of blockchain to increasingly track the path and safety of food throughout the farm-to-user journey.

Uses in Voting 

Voting with blockchain carries the potential to eliminate election fraud and boost voter turnout, as was tested in the Nov. 2018 midterm elections in West Virginia. Each vote would be stored as a block on the blockchain, making them nearly impossible to tamper with. The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and provide officials with instant results.

Advantages and Disadvantages of Blockchain

For all its complexity, blockchain’s potential as a decentralized form of record-keeping is almost without limit. From greater user privacy and heightened security to lower processing fees and fewer errors, blockchain technology may very well see applications beyond those outlined above.


Date : 04 Nov 2019 08:48 AM

How International Trade Works

A product that is sold to the global market is called an export, and a product that is bought from the global market is an import. Imports and exports are accounted for in a country's current account in the balance of payments.

Comparative Advantage: Increased Efficiency of Trading Globally

Global trade allows wealthy countries to use their resources—whether labor, technology or capital—more efficiently. Because countries are endowed with different assets and natural resources (land, labor, capital, and technology), some countries may produce the same good more efficiently and therefore sell it more cheaply than other countries. If a country cannot efficiently produce an item, it can obtain the it by trading with another country that can. This is known as specialization in international trade.

Let's take a simple example. Country A and Country B both produce cotton sweaters and wine. Country A produces ten sweaters and six bottles of wine a year while Country B produces six sweaters and ten bottles of wine a year. Both can produce a total of 16 units. Country A, however, takes three hours to produce the ten sweaters and two hours to produce the six bottles of wine (total of five hours). Country B, on the other hand, takes one hour to produce ten sweaters and three hours to produce six bottles of wine (a total of four hours).

But these two countries realize that they could produce more by focusing on those products with which they have a comparative advantage. Country A then begins to produce only wine, and Country B produces only cotton sweaters. Each country can now create a specialized output of 20 units per year and trade equal proportions of both products. As such, each country now has access to 20 units of both products.

We can see then that for both countries, the opportunity cost of producing both products is greater than the cost of specializing. More specifically, for each country, the opportunity cost of producing 16 units of both sweaters and wine is 20 units of both products (after trading). Specialization reduces their opportunity cost and therefore maximizes their efficiency in acquiring the goods they need. With the greater supply, the price of each product would decrease, thus giving an advantage to the end consumer as well.

Note that, in the example above, Country B could produce both wine and cotton more efficiently than Country A (less time). This is called an absolute advantage, and Country B may have it because of a higher level of technology.

Origins of Comparative Advantage

The law of comparative advantage is popularly attributed to English political economist David Ricardo. It's discussed in his book “On the Principles of Political Economy and Taxation” published in 1817, although it has been suggested that Ricardo's mentor, James Mill, likely originated the analysis.

David Ricardo famously showed how England and Portugal both benefit by specializing and trading according to their comparative advantages. In this case, Portugal was able to make wine at a low cost, while England was able to cheaply manufacture cloth. Ricardo predicted that each country would eventually recognize these facts and stop attempting to make the product that was more costly to generate.

Indeed, as time went on, England stopped producing wine, and Portugal stopped manufacturing cloth. Both countries saw that it was to their advantage to stop their efforts at producing these items at home and, instead, to trade with each other.

A contemporary example is China’s comparative advantage with the United States in the form of cheap labor. Chinese workers produce simple consumer goods at a much lower opportunity cost. The United States’ comparative advantage is in specialized, capital-intensive labor. American workers produce sophisticated goods or investment opportunities at lower opportunity costs. Specializing and trading along these lines benefits each.

The theory of comparative advantage helps to explain why protectionism has been traditionally unsuccessful. If a country removes itself from an international trade agreement, or if a government imposes tariffs, it may produce an immediate local benefit in the form of new jobs and industry. However, this is often not a long-term solution to a trade problem. Eventually, that country will grow to be at a disadvantage relative to its neighbors: countries that were already better able to produce these items at a lower opportunity cost.

Criticisms of Comparative Advantage

Why doesn't the world have open trading between countries? When there is free trade, why do some countries remain poor at the expense of others? There are many reasons, but the most influential is something that economists call rent-seeking. Rent-seeking occurs when one group organizes and lobbies the government to protect its interests.

Say, for example, the producers of American shoes understand and agree with the free-trade argument—but they also know that their narrow interests would be negatively impacted by cheaper foreign shoes. Even if laborers would be most productive by switching from making shoes to making computers, nobody in the shoe industry wants to lose his or her job or see profits decrease in the short run.

This desire could lead the shoemakers to lobby for special tax breaks for their products and/or extra duties (or even outright bans) on foreign footwear. Appeals to save American jobs and preserve a time-honored American craft abound—even though, in the long run, American laborers would be made relatively less productive and American consumers relatively poorer by such protectionist tactics.

Other Possible Benefits of Trading Globally 

International trade not only results in increased efficiency but also allows countries to participate in a global economy, encouraging the opportunity for foreign direct investment (FDI), which is the amount of money that individuals invest into foreign companies and assets. In theory, economies can therefore grow more efficiently and can more easily become competitive economic participants.

For the receiving government, FDI is a means by which foreign currency and expertise can enter the country. It raises employment levels, and theoretically, leads to a growth in gross domestic product. For the investor, FDI offers company expansion and growth, which means higher revenues.

Free Trade Vs. Protectionism

As with all theories, there are opposing views. International trade has two contrasting views regarding the level of control placed on trade: free trade and protectionism. Free trade is the simpler of the two theories: a laissez-faire approach, with no restrictions on trade. The main idea is that supply and demand factors, operating on a global scale, will ensure that production happens efficiently. Therefore, nothing needs to be done to protect or promote trade and growth, because market forces will do so automatically.

In contrast, protectionism holds that regulation of international trade is important to ensure that markets function properly. Advocates of this theory believe that market inefficiencies may hamper the benefits of international trade, and they aim to guide the market accordingly. Protectionism exists in many different forms, but the most common are tariffssubsidies, and quotas. These strategies attempt to correct any inefficiency in the international market.

As it opens up the opportunity for specialization, and therefore more efficient use of resources, international trade has the potential to maximize a country's capacity to produce and acquire goods. Opponents of global free trade have argued, however, that international trade still allows for inefficiencies that leave developing nations compromised. What is certain is that the global economy is in a state of continual change, and, as it develops, so too must its participants.


Date : 04 Nov 2019 08:49 AM

On trade wars China is playing a careful game, but it holds more cards than Trump.

At the beginning of September, Chinese president Xi Jinping incensed Donald Trump by imposing a flurry of new import duties on US goods, including semiconductor chips and mobile phones.


It was a retaliation too far for the US president, especially when the stock market reaction was to send shares in America’s second most valuable company at the time, Apple, tumbling by almost 5%. For many observers it was just another skirmish in the tit-for-tat trade war that had rumbled on for 20 months. But in Washington it came as a shock, and was the driving force behind Trump’s premature announcement the following month of an interim deal – one that after much wrangling finally came to fruition, or at least appeared to, last week.


Trump said his administration would cancel a new round of 15% tariffs on Chinese goods including toys, phones and clothing that was set to take effect this weekend. In tweets, he added that the White House would halve duties already in place on $120bn (£90bn) of Chinese imports to 7.5%, while leaving 25% tariffs on $250bn of goods imposed earlier this year.


Trump probably expected US stock markets to soar as investors thanked him for calming the rhetoric on trade and appearing to move towards a more comprehensive deal next year. That simply didn’t happen, and for two very good reasons. The first lay in the response of vice-minister of finance Liao Min, whose main, underwhelming, concession was that he would buy $50bn of US agricultural produce and consider cancelling retaliatory tariffs also set for this weekend.


Then there was what Trump’s hardline anti-China constituency, which is large and cuts across Republican and Democrat party lines, see as the real prize. This involves extracting commitments from Xi to open up China’s financial services sector, crack down on intellectual property theft and block demands from Chinese companies for technology transfers as the price of new contracts. There was not much evidence of this.


Robert Lighthizer, Trump’s chief trade negotiator, said in a statement: “President Trump has focused on concluding a phase one agreement that achieves meaningful, fully enforceable structural changes and begins rebalancing the US-China trade relationship.”


Except that sentence was pretty much all that was said about a crucial aspect of the talks. Some Republicans, including Senator Marco Rubio, have criticised Trump for potentially winding down import tariffs before the Chinese had agreed to any meaningful structural changes. Without a commensurate sweep of tariff cuts from the Chinese and a lack of commitment from Beijing to tackle domestic governance abuses, the markets were left to ask the obvious question: are we any further forward?



The answer must be yes, but it could be that it’s actually the Chinese who can claim to be further forward, and the reason goes back to the US economy and the New York stock market. Beijing knows that Trump faces an election next year, and that to win he must lay claim to a buoyant economy and, to his mind, a soaring stock market.


Trump’s problem is that the tariff war has hurt US businesses by raising their costs, and materially harmed US farmers, who have found themselves shut out of Chinese agricultural markets.


These developments have played a big part in the halving of US economic growth over the past year. It has also severely dented China’s growth rate – though by how much it is hard to tell, thanks to the smokescreen of state-published financial data.


Beijing, though, doesn’t need to worry about elections and is playing a careful game. However, the world must hope Xi offers some real concessions and that the battle of the past two years calms further.


The US/China trade war has proved to be the biggest drag on global growth. It has limited the income growth of billions of people, and that is something most countries can ill afford.


The vote was kind to the water industry. So Ofwat must be tough

The threat of nationalisation disappeared with the Labour party’s election defeat, but here comes a more familiar foe for the English water companies: regulator Ofwat, which on Monday will unveil its pricing regime for the next five years.


“Foe” hasn’t always been an apt description of Ofwat over the years. The regulator stands accused of twiddling its thumbs while the water industry loaded up with debt, paid billions to shareholders in dividends and failed to prevent pollution and leaks.


That lenient regulatory stance is about to change, or so we’re told. The early drafts of the new regime demanded that household bills be cut by an average of £50 in real terms over five years and that targets on leaks, pollution and flooding become more demanding. Ofwat says it wants a “step-up” in efficiency.


We wait to see if this bolder rhetoric and the tougher draft proposals will be carried into the final determination. The indications suggest it will. Ofwat officials themselves, in a semi-acknowledgment that life was too easy in the past, have described this review as “not business as usual” and called for an end to “financial game playing”.


For a few companies – those at the top of performance league table – none of this will sound threatening. The interesting part is how the laggards will react if a demand for higher standards implies substantially lower financial returns for owners. Some have muttered about Ofwat having become “politicised” but Monday is the day when they’ll either have to accept Ofwat’s rulings or appeal to the Competition and Markets Authority.


It’s their choice, but a series of CMA investigations might be a very good thing if Ofwat were to prevail. It could finally close an era in which it was too easy for investors to get rich on the back of bill-payers. In that analysis, Labour was essentially correct.


US regulators face a long haul to regain trust after Boeing crashes

Risk is always a numbers game. A one in a million chance of disaster might sound reasonable; until the calculation that, for example, with 5,000 planes taking off twice a day, only a few months will elapse until one crashes.Risk is always a numbers game. Given the aviation industry’s mantra that safety is its top priority, it was startling to hear that US regulators had worked through some chilling calculations with the Boeing 737 Max in the wake of its first fatal crash in October 2018. Their analysis found that, without intervention, the plane would suffer a fatal crash every two or three years – but they let it continue flying nonetheless.


Given that one such plane had crashed in Indonesia just a month earlier, killing 189 people, perhaps the Federal Aviation Administration thought time was on its side.


The FAA’s inaction was followed in March this year by the Ethiopian Airlines disaster, which killed 157 people. Revelations in last week’s House committee hearings in Washington have further eroded trust in the regulator’s determination to do its primary job of cutting risk, rather than looking to preserve Boeing’s licence to fly its new, bestselling plane.


The head of the FAA, Stephen Dickson, is pledging reform, as critics damn its relations with the manufacturing giant as classic regulatory capture. The way Boeing was allowed to “self-certify” some safety requirements, and the FAA’s reluctance to join the world in grounding the Max after the Ethiopian crash, will not quickly be forgotten.


Boeing has stepped up its efforts to convince the world that its reprogrammed 737 Max is safe, but it will be for regulators to decide. However eager airlines are to see the cheaper model return to the skies, this process should not be rushed.


If Canadian, European or Chinese regulators disagree with the FAA’s assessment, there should be no question of bringing back the Max into local service. Safety cannot be partial or geographic. The reciprocal faith regulators have hitherto shown in each other’s judgment – and the trust that engenders in the global flying public – will in the long term prove far more valuable than the tens of billions invested in the Max.


Date : 18 Dec 2019 03:25 PM

Governments should turn back the clock over trade policy.

The “bicycle theory” used to be a metaphor for international trade policy. Just as standing still on a bicycle is not an option – one must keep moving forward or else fall over – so it was said that trade negotiators must engage in successive rounds of liberalisation. Otherwise, global openness would gradually succumb to protectionist interests.


I don’t know whether the theory was right. In fact, had governments stood still on trade policy over the last three years, the world would be a lot better off than it is now. Trade is faltering – global volumes are down a remarkable 1.1% over the last 12 months – as inept bikers collide chaotically with one another.


Once competent riders are again in charge, they could do worse than return to the post-second world war formula of negotiating the reciprocal elimination of tariffs. The suggestion sounds old-fashioned. After all, another familiar truism is that “shallow integration” – removing obvious trade barriers such as tariffs and quotas – is largely complete and that further progress now requires “deep integration”, or mutually agreed rules for regulating the business environment. But that agenda, despite its potential merits, now appears too ambitious.


A classic example of deep integration was the decision by the member states of the European Common Market to go beyond free trade and pursue a full European Union and even a common currency. That was evidently an overreach politically, at least for the Brexit-plagued UK.


A current attempt at deep integration is the US government’s demand that China stop requiring American companies to share their proprietary technology as a condition for entering joint ventures with local firms.


Many American economists support this demand but argue that the US president, Donald Trump, has gone about it all wrong. The sensible strategy would have been for the US to make common cause with other major governments to put pressure on China, preferably via multilateral institutions such as the World Trade Organization. German carmakers, of course, have as much at stake in China as American firms do.


Yet, even a future US president who took a better approach probably would not succeed. For one thing, regulating technology transfer would be very tricky in the best of worlds. Typically, there is no explicit quid pro quo initiated by the Chinese firm, much less by the Chinese government. Often, the foreign corporation is the one that offers to share technology, to make itself attractive to a local firm as a joint-venture partner. How could a government regulate such a subtle process?


The answer may be for the Chinese government to eliminate the requirement that foreign firms doing business in China must have a local partner. In fact, the authorities have recently taken steps in this direction in the financial and automotive sectors.


Simpler yet would have been for China to remove its long-standing tariffs on automobile imports, so that US and German carmakers could have exported directly to the Chinese market as an alternative to setting up production facilities there. Not only would this outcome have been simpler; it also would have benefited American and German workers directly.


So, let’s go back to good old tariff negotiations. The US should remove all the tariffs it has imposed over the last few years on washing machines, solar panels, steel, aluminum, automobiles and myriad other products. In return, China should of course rescind its own retaliatory measures, for example, against US exports of soybeans, pork and other farm products.


Turning the clock back to January 2017 would be a big improvement. But we should not stop there. The earlier conventional wisdom always overestimated the extent of shallow integration. Governments should move toward free trade in motor vehicles and as many other sectors as possible. A sector especially suited for liberalisation is solar panels, turbines, and other renewable-energy inputs. Ironically, many governments that purport to care about the environment maintain trade barriers that increase the cost of protecting it. The EU, China and the US are leading offenders.


A damaging Trump policy that will need to be reversed is his abuse of the national-security exception to justify protectionist trade measures. The international trade system had previously allowed each government to interpret this exception as they saw fit. Most applied it judiciously, knowing that abuse would encourage others to behave similarly. But under Trump, any sector of the economy, from automobiles to peanut butter, apparently qualifies as essential to national security. New international negotiations should clarify exactly what qualifies.

Date : 18 Dec 2019 03:33 PM

How global cities are changing international trade.

The geographic diversification of international trade and investment has become a public policy goal of many countries, including Canada.


Increasingly, policy-makers are raising concerns regarding the risks, largely political, that arise when there’s too much concentration of trade and investment on a small number of trading partners.


Trade in services, however, may offer better opportunities for trade diversification. But facilitating trade in services requires supportive regulation and strong global cities like Toronto and London to serve as hubs.


In recent years Canada has expressed interest in reducing its dependence on the United States, particularly after last year’s difficult NAFTA renegotiations.


Reflecting that priority, Canada now has a minister of international trade diversification, Jim Carr. Canada has also pursued trade agreements with more distant partners via the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with 10 other countries in the Asia-Pacific region.


In fact, the various countries that have ratified the CPTPP have stated as one objective the ambition to develop diverse and more distant trade and investment partners in the face of the rise of China due to the possibility of becoming overly dependent on the Chinese market.


The implicit assumption is that distance is less important to trade now because technology has lowered transportation and communications costs, and trade deals can overcome the remaining costs of distance.


Proximity versus distance

But is this entirely true? Can nations move away from their traditional trading partnerships — typically based on geographic proximity — in favour of new nations located further afield? Our research grappled with these considerations of proximity and distance in matters of trade, particularly as they pertain to Canada and the United Kingdom.


Our Canada-U.K. collaboration — comprising researchers from the London School of Economics, Western University’s Ivey Business School and Simon Fraser University’s Beedie School of Business — surveyed recent academic and practitioner data and publications on trade and what are known as foreign direct investment (FDI) flows in order to assess the role of distance.


We conclude that if you are trading in goods, physical distance still matters. The evidence also suggests that trade agreements between distant countries may not be able to overcome the costs of distance.


But that’s not true for all forms of distant trade. Our research findings show a very different result for trade in services. Services trade include direct activities like professional business services, education and tourism, but also includes indirect services such as research and design that are embedded in final products or are traded within companies.


Indirect trade in services has increased over time, as global value chains have become more geographically dispersed.


Global value chains allow the stages of production to be distributed around the world. One example is the global dispersion of research activities by multinational firms. A case in point: When Google creates a tech hub in Toronto, it effectively exports that knowledge to other Google subsidiaries around the world.


Distance matters less for the global movement of these services, particularly when they are knowledge-intensive and digital. It’s therefore not surprising that evidence suggests trade in services, direct and indirect, is growing faster than trade in goods.


But even though trade in services is seems less affected by geographic distance, there’s evidence that other measures of distance have an impact.


Cultural differences are a type of distance

International business scholars have identified a series of more general distance measures, including cultural and regulatory distance, between countries. These are sometimes referred to as CAGE distance, meaning cultural, administrative and economic differences between trading nations in addition to geographic distance.


Commonalities in several of these areas have facilitated trade and investment flows of various types among Commonwealth countries, despite the vast geographic distances that separate them.


However, in general, because trade in services involves the movement of people along with knowledge and capital, these social, political and economic dimensions take on a heightened role and can inhibit trade in services.


Trade agreements now seek to minimize these costs by including specific clauses with respect to trade in services. For example, the CPTPP includes clauses regarding financial services and investment protection. Yet more comprehensive service sector liberalization, such as public sector procurement or recognition of certifications, are difficult to negotiate because they require a higher degree of regulatory alignment, which can be politically controversial.


And so the evidence suggests that the impact of distance on trade depends on the nature of what is being traded (goods or services), and how one measures distance.


We then asked whether it matters where distance is measured from. This seems an obvious question, since when we talk about trade, we mostly think of countries. However, we found that the majority of trade in services, particularly knowledge-intensive services, in fact originates in, and is traded with, a relatively small number of international metropolitan regions, sometimes referred to as global cities.


Most trade in services, it turns out, happens between cities rather than between countries.


While there is no one particular definition of a global city, it’s clear that in order to understand the nature of trade in services and the policies that might encourage them, one must understand what global cities do and how they do it.


Cultural differences & global cities

It turns out that global cities essentially limit the impact of the aforementioned CAGE distance. Cities provide sophisticated communication, education and transportation infrastructures, and the cosmopolitan values that attract and retain talent.


That’s why it’s generally easier to move people and services between global hubs like London, Toronto, New York and Hong Kong. However, the decentralized nature of global value chains means that it’s not only the world’s largest cities that are global. Smaller cities can establish specific niches as global centres for research and design, such as Cambridge in the U.K. for biotechnology.


Global cities not only attract knowledge-intensive service firms, they have the capacity to spawn the kinds of companies that will become global exporters of services.


The important lesson to be drawn from cities is that they illustrate the links between innovative activity and international integration while at the same time blurring the distinctions between innovation and trade policy. Policies that promote innovation, in other words, are not entirely separate from those that promote diversified trade. When countries help their global cities to foster knowledge-based activities, they will also also promote diversified trade in services.


At the same time, cities themselves undertake trade and promotion activities that, in principle, complement those of the national government. In talking to city-based investment and trade promotion agencies, we learned that cities have developed sophisticated strategies to identify and promote trade and investment opportunities, typically with other cities around the globe.


However, these activities are not always co-ordinated with national diversification strategies. Canada has created Invest in Canada, in part to fill this role, but its mandate is focused primarily on investment attraction.


Cities have not been central to public policy discussions on trade growth and diversification, which have centred in large measure on trade agreements between countries. We suggest that while trade agreements between countries are important, the role of cities in driving trade in services should be fully explored.


Date : 19 Dec 2019 01:22 PM

UK's post-Brexit trade at risk as WTO's top court shuts down

The UK is at risk of being left at the mercy of the EU in its trading relationship in a year’s time after Donald Trump engineered the shutdown of the World Trade Organization’s top court.


The US president’s refusal to approve the appointment or reappointment of any judges on the appellate body has left it unable to function.


From midnight on Wednesday, the WTO court will no longer adjudicate on trade disputes, putting the world at risk of a free trade free-for-all in which the largest blocs have greater freedom to use their economic weight to do as they wish.


Countries or trade blocs who have not negotiated bilateral trade deals containing dispute resolution mechanisms will have no independent means for resolving their problems with each other.


If the UK leaves the EU on 31 January, Johnson has said he will not extend an 11-month transition period in which he wants to negotiate a comprehensive free trade deal with the bloc.


A failure to complete those complex talks by the end of that period would result in the UK trading with the EU entirely on WTO terms, including the imposition of tariffs and quotas, from 1 January 2021.


Under the terms of the transition period, the UK is to remain in the single market and EU customs union temporarily.


Should the UK, once outside of those structures, come to believe that the EU is imposing vexatious barriers to trade, there would be no recourse to legal redress for the British government.


WTO members are still be expected to comply with their international obligations. The EU would be expected to sincerely follow the terms to which they have signed up along with the 164 other members of the trade organisation. The WTO appellate body deals with the most extreme trade disputes.


But the CBI has said the shutdown of the WTO court will leave global trade “like a football match without referee” and the UK’s lack of free trade agreements post-Brexit would leave the country’s economy vulnerable.


André Sapir, a senior fellow at the Brussels-based thinktank Bruegel, said the UK would be left in “legal limbo”. “It is in the UK’s interests for a solution to be found,” he said.


“Relying on WTO rules doesn’t look so great this morning,” one EU official said. “The WTO buccaneering Brexiteer alternative looks like hubris.”


A number of senior Conservatives, including the former cabinet minister John Redwood, have previously championed leaving the EU without a trade deal.


The EU is looking at building a shadow arbitration system as an interim solution but there is no agreement as yet within the bloc or internationally.


The WTO was established in 1995 to deal with trade disputes. The UK will become an independent member if it leaves the EU.


Phil Hogan, the European commissioner for trade, who will oversee the EU’s negotiations with the UK, said: “With the appellate body removed from the equation, we have lost an enforceable dispute settlement system that has been an independent guarantor – for large and small economies alike – that the WTO’s rules are applied impartially.”



Date : 21 Dec 2019 09:58 AM

Easing trade tensions fuel pre-Christmas shares rally.

A pre-Christmas rally fuelled by hopes of waning trade tensions have pushed share prices to a fresh high and on course for their biggest rise in a decade.


Donald Trump’s promise that a US-China trade pact would be signed “very shortly” sent the MSCI gauge of stock markets around the world to new record levels.


The boost to share prices was led by Wall Street where both the S&P 500 – a measure of the performance of the US’s leading companies – and the technology-rich Nasdaq both traded at unprecedented levels.


MSCI’s all-country world index has risen nearly 3% this month amid optimism that 2020 will see a de-escalation of the protectionist stand-off between the world’s two biggest economies and that Britain would avoid a chaotic exit from the European Union. The index is up 23% in 2019, set for its best year since 2009.


Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said sentiment in stock markets was driven by developments in the trade war.


“It’s a rally being based upon momentum buying now. Stocks are being marked up, and it will continue right up until year end,” he said.


The scene had been set for an upbeat day of trading after China announced it was to cut tariffs on more than 850 goods from 1 January in order to boost its flagging economy.


In a move designed to draw a contrast with Donald Trump’s confrontational approach, Beijing said there would be a temporary cut in duties on products ranging from frozen pork to semiconductors.


An outbreak of swine flu prompted the reduction in tariffs on imported pork but China’s willingness to cut the cost of other goods coming into the country reflected concern at the slowest growth rate in 30 years.


China’s finance ministry said in a statement that the changes were made to “increase imports of products facing a relative domestic shortage, or foreign speciality goods for everyday consumption”.


Calculations by Bloomberg showed that the tariff cuts will affect almost $400bn (£309bn) of foreign goods sold to China annually, out of a total import bill of $2tn. Last year Beijing announced a temporary cut in duties on 706 products.


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The move comes amid expectations that Beijing and Washington are about to sign a phase one trade agreement under which the US will cut tariffs on Chinese goods in exchange for greater market access for American farm products.


Agathe Demarais, global forecasting director at the Economist Intelligence Unit, said Beijing’s decision to lower import tariffs was a positive step towards a de-escalation of global trade tensions.


“It also represents a positive signal ahead of the expected conclusion of a first-phase trade deal between the US and China.


“By slashing tariffs, China seeks to boost slowing economic growth through a reduction in business and consumers’ costs. It also seeks to boost pork imports as African swine fever has decimated local production. Finally, China also reaffirms its free-trade stance, in sharp contrast with US protectionist rhetoric.”


The list of products on which duties will be cut reflects the way in which China’s rapid growth has led to a range of problems from pollution to obesity. Tariffs for some asthma and diabetes medications will be set at zero, the ministry said, noting that the increased purchases of foreign goods would be in line with the growing needs of the Chinese people.


China will also lower temporary import tariffs for ferroniobium – used as an additive to high-strength low-alloy steel and stainless steel for oil and gas pipelines, cars and trucks – from 1% to zero in 2020 to support its hi-tech development.


Date : 24 Dec 2019 09:02 AM

Shoppers expected to spend more than £4bn on Boxing Day.

Shoppers are expected to spend more than £4bn in the Boxing Day sales on Thursday, but the annual discount extravaganza is likely to be dampened after a month of price cuts.


Sales in stores are expected to be down by just over 12% to £3.2bn, according to VoucherCodes and the Centre for Retail Research, while bank holiday queues are expected to be up to 2% shorter than they used to be as the post-Christmas sales have been eclipsed by November’s Black Friday promotional stint.


“Boxing Day has been slipping down the hierarchy of shopping days for a number of years,” said Diane Wehrle, an insight director at the shopper monitoring firm Springboard. “Last year the volume of shoppers was 30% bigger on Black Friday.”


She said the rise of more complex families, with ex-partners and more in-laws to visit, meant more people used the bank holiday to visit relatives, with 27 and 28 December now much busier shopping days.


Four consecutive years of decline in shopper numbers mean there will be at least 11% fewer people visiting high streets, shopping centres and retail parks than on Boxing Day 2015.


Richard Lim, the chief executive of the consultancy Retail Economics, said Black Friday sucked forward spending, making things tougher for retailers at the end of the year.


“An element of discount fatigue creeps into consumers’ mindsets by the time Boxing Day sales come about,” he said. “Perhaps the one exception is around furniture and flooring, where consumers wait for the highly anticipated sales period for big-ticket purchases.”


Discounting has been particularly heavy this November and December as retailers have tried to tempt out shoppers who were reluctant to spend given the uncertainty around Brexit and the 12 December general election. Relatively warm and wet weather has also hit clothing sales with the number of shoppers out and about on Christmas Eve down by about 8% compared to 2018.


Clearance sales before the planned closure of more than 20 Debenhams stores in January, and troubles at chains including House of Fraser, Bonmarché and Mothercare, have made it easy to find a bargain.


While many still enjoy an excuse to get out of the house after a day of relatives and too much food, the rise of online shopping has also hit the Boxing Day sales. Official figures out last week showed that nearly a fifth of all retail sales were made online. The Centre for Retail Research is predicting £1.1bn will be spent online on Boxing Day this year, up more than 10% on 2018.


What is more, many retailers such as John Lewis and Marks & Spencer begin offering discounts online on Christmas Eve, leading to a rise in shopping on Christmas Day itself, which lessens the draw of Boxing Day price cuts in stores. More than £1bn is likely to be spent digitally on Christmas Day according to the Centre for Retail Research.


IMRG, the online retailers’ body, said Christmas Day was not only about picking up bargains using vouchers and cash received as a gift. “Gifting companies say there is a massive spike in buying an experience, like a hotel break or driving a car, on Christmas morning as people forget to buy a present for people and those gifts are instant.”


But for some, Boxing Day remains an opportunity to treat themselves after the hectic buildup is over. “It is like an oasis after the mayhem and pressure of buying presents for other people,” said Wehrle. “You can go shopping for a few hours and have something to eat or go to the cinema. I think it’s less about standing in a queue waiting for a department store to open so you can grab a bargain.”


While many retailers have been offering discounts for months, household names such as Next, John Lewis, Harrods and Selfridges tend to hold back until Boxing Day or the 27th, creating events that can still draw a crowd.


The property firm Intu said it expected more than 1 million people to flock to its shopping centres, which include Lakeside in Essex and the Metrocentre in Gateshead, on Boxing Day.


Its commercial director, Trevor Pereira, said: “We expect it to be one of our busiest shopping days of the year. Going shopping on Boxing Day is a yearly tradition for many and people come to our centres to enjoy a great experience that cannot be matched online.”


Date : 25 Dec 2019 01:09 PM

The Tricks Of Trade.

5 regions and countries that merit serious thought by any company doing business globally.


Never has trade held such a prominent place in the minds of corporate leaders. The economic and supply impacts of tariff and non-tariff barriers pose a credible threat to corporate success; they also might push some small to mid-sized enterprises to the brink of failure. The trade wars and other protectionist actions led by the United States and followed by many other countries are not going away soon.


Five regions/countries merit serious thought by any company doing business globally: the United States, Canada and Mexico, the United Kingdom, Russia, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries.


United States: Tariffs and Trade Wars


President Trump has implemented some protectionist policies that may backfire against some U.S. companies. For example, Section 201 tariffs on washers and solar panels; Section 232 tariffs on steel, aluminum, and uranium; and Section 301 tariffs on Chinese Intellectual Property represent $32 billion worth of new taxes on American business.


If the increases originally scheduled for March 2, 2019, are eventually implemented, the total impact rises to $129 billion. If the administration moves ahead with imposing additional tariffs, long-run Gross Domestic Product (GDP) would fall by 0.38 percent ($94.4 billion) and wages by 0.24 percent.


Additionally, 292,600 full-time equivalent jobs would be eliminated, according to the Tax Foundation Taxes and Growth Model, April 2018.


Global trade has gotten even more complicated now that countries including China, the European Union, India, Turkey, Russia, Canada, and Mexico are imposing $29.1 billion in retaliatory tariffs on many goods that are essential to the U.S. economy. American farmers shut out of foreign markets due to the retaliatory tariffs have been promised a $12-billion bailout program but had received only $838 million as of November 2018.


And while the "truce" between China and the United States allowed China to buy U.S. soybeans for the first time since July 2018, it's still a fraction of what's imported during a typical year.


As a result, many companies are reviewing their supply chains and looking to move manufacturing operations from China to countries not subject to these tariffs. Companies that cannot quickly or cost-effectively move their manufacturing are looking at engineering design changes to avoid the tariffs. Some companies are scrambling to request exclusions from these tariffs, however less than 25 percent of such requests have been approved.


The bill that averted the government shutdown in February 2019 included $4.5 million for "contractor support to implement the product exclusion process for articles covered by actions taken under Section 232," according to bill text posted by the House Appropriations Committee.


Canada and Mexico: Free Trade Agreement?


On December 1, 2018, U.S., Mexican, and Canadian leaders signed the United States-Mexico-Canada Agreement (USMCA) at this year's G-20 meeting after NAFTA had been renegotiated. It still needs to be ratified by each country's legislature, which will be a lengthy process. Estimates are that the agreement won't go into effect before 2020.


The bitter reality is that any progress on Canada or Mexico ratifying USMCA will be stalled until the United States removes the tariffs on aluminum and steel. Equally troubling is the likelihood that the U.S. House of Representatives will be reluctant to hand President Trump any type of political victory. Unfortunately, a USMCA implementation bill has yet to be introduced to Congress.


There is fear that Congress' failure to ratify USMCA would result in President Trump withdrawing from NAFTA, forcing some companies to pay duties and taxes on items that have been free for the past 25 years. Increasing the cost of goods traded between the North America countries could cripple all three economies.


United Kingdom: Deal or No Deal?


The United Kingdom is due to leave the European Union (EU) on March 29, 2019, unless the UK somehow changes its own laws. As of this publication date, it is looking less likely that any trade deal will be settled between the EU and the UK and there will be no deal on March 29th.


As we wait for news of deal or no deal, companies should be preparing for all eventualities of Brexit, whether deal, no deal, or the least-likely no Brexit. What should companies be considering? We recommend analyzing it from an organizational perspective.


The trade compliance department should consider how each scenario impacts the export license requirements for dual-use items from the UK to the EU, and vice versa. Companies should have inventories of all existing export licenses issued in the UK. They should classify and value goods correctly for import, export, and customs documentation for the UK supply chain when Brexit happens.


Tax and finance departments should consider the value-added tax (VAT) impact of the various scenarios and identify deferment options and budget for customs duty expenses on imports in and out of the UK.


Deal Brexit may result in new preferential trade agreements and No Deal Brexit will apply the World Trade Organization's most-favored-nation duty rate, which will have significant fiscal impact. Companies should register for an Economic Operator Registration and Identification (EORI) number for shipments in/out of the UK to the EU, a requirement for any party intending to import to, or export from, the EU.


The movement of goods between countries within the EU is described as "arrivals and dispatches" while goods moving across EU borders are "imports and exports." If the UK separates from the EU, movement of goods in and out of the UK will require an EORI for shipments to the EU.


Contracts and product compliance departments should review contracts for Incoterms (standard commercial terms). They should update contracts and commercial invoices to reflect "importer" and "exporter" language, as well as specific product compliance language. And companies should determine whether their products require declaration of compliance with EU safety legislation.


Human resource departments should review all EU nationals in the UK, and UK nationals in the EU, because there may be visa considerations.


The IT department must consider GDPR compliance and the reality that they cannot store customer data in the UK. They will need to move UK servers to a server in an EU country.


Russia: It's Complicated


In recent years, the United States has implemented economic sanctions on Russian people or entities, including banks, oligarchs, cyber contractors, business tycoons, and a shipping agent. Treasury Department Office of Foreign Assets Control sanctions were put in place following Russia's military intervention in the Ukraine and annexation of Crimea.


The sanctions added a significant administrative burden to U.S. companies doing business with Russia, requiring them to determine if one or more blocked person owns 50 percent or more in the aggregate of an entity. Companies have to secure ownership details that may not be publicly available or may be difficult to obtain and validate.


For many years Russia has enacted tariff and non-tariff barriers on U.S. companies, including technical regulations and product testing and certification requirements that pose significant barriers because only entities registered and residing in Russia can apply for these product certifications. Importing alcohol products requires all customs duties, excise taxes, and VAT be paid in advance using a bank guarantee and deposit.


A myriad of Russian government agencies administer licenses that add complexity that companies do not face in other countries. Almost all U.S. food and agricultural exports have been banned since 2014, when the United States imposed sanctions on Russia.


Russia has specifically enacted laws that give priority to Russian software. Russian government agencies can buy foreign software only when similar software is not available on the Russian Communications Ministry software registry. The Russian Federal Service for Supervision of the Sphere of Telecom Information Technologies and Mass Communications can fine Russian citizens who store personal data on servers physically located outside of Russia.


And Russia, like many countries, has imposed retaliatory tariffs of 25 to 40 percent on U.S.-origin products in response to U.S. Section 232 tariffs on steel and aluminum. There are Russian-made substitutes for all these products, such as road construction equipment, oil and gas equipment, tools for metal processing and rock drilling, and fiber optics.


In December 2018, the World Trade Organization Dispute Settlement Body approved the United States' second request for formation of a dispute panel to review the legality of Russia's tariffs in response to U.S. Section 232 tariffs on steel and aluminum.


CPTPP Countries: Something To Hope For


When the United State withdrew from the Trans-Pacific Partnership (TPP) Agreement, the 11 remaining TPP nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) moved forward and negotiated a new trade agreement—the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as the TPP11 or TPP-11. The combined economies of these 11 countries equal 13.4 percent of the U.S. GDP.


These 11 countries, a majority of which have centers of manufacturing excellence, are worth watching in the coming years. They didn't slow down when the United States withdrew from the TPP; instead they recrafted a deal that will lower tariffs among their countries


The signatories are also keen to dampen Chinese influence in the region by reducing their dependence on Chinese trade. This is something that the U.S. administration should welcome and salute. Had the United States remained in the agreement, a biproduct was that all the signatories would be brought closer to the United States.


Companies will benefit by doing business in these countries now that the CPTPP entered into force on December 30, 2018. The agreement will generate significant economic benefits for Canada by providing access to Japan and other fast-growing markets, including Malaysia and Vietnam.


The expectation is that these benefits will also extend to new members. CPTPP members will gain a predictable trading environment that will give manufacturers and exporters an advantage in new markets.


The CPTPP also includes annexes that address specific challenges faced by exporters of pharmaceuticals, medical devices, information and communications technology, and cosmetics. And there will be a phased tariff elimination for vehicles and automotive parts.


There are several potential members to this new agreement: South Korea, Taiwan, the Philippines, Colombia, Thailand, Laos, Indonesia, Cambodia, Bangladesh, and India. One striking reality of the CPTPP is that prospective members would have to strike existing protectionist trade policies in order to join the agreement, benefiting all.




Date : 28 Dec 2019 03:46 AM

Banks set for biggest job cull since 2015 as Morgan Stanley cuts.

Banks around the world are unveiling the biggest round of job cuts in four years as they slash costs to weather a slowing economy and adapt to digital technology.


This year, more than 50 lenders have announced plans to cut a combined 77,780 jobs, the most since 91,448 in 2015, according to filings by the companies and labor unions. Banks in Europe, which face the added burden of negative interest rates for years to come, account for almost 82% of the total.


The 2019 cuts bring the total for the last six years to more than 425,000. In fact, the actual amount is probably higher because many banks eliminate staff without disclosing their plans. Morgan Stanley is the latest firm to make a year-end efficiency push, cutting about 1,500 jobs, according to people familiar with the matter. Chief Executive Officer James Gorman has said the cuts account for about 2% of the bank’s workforce.


This year’s figures also underscore the weakness of European banks as the region’s export-oriented economy confronts international trade disputes while negative interest rates eat further into lending revenue. Unlike in the U.S., where government programs and rising rates helped lenders rebound quickly after the financial crisis, banks in Europe are still struggling to regain their footing. Many are firing staff and selling businesses to shore up profitability.


Banks will probably continue to announce further staff reduction plans next year. Swiss wealth manager Julius Baer Group Ltd. is considering cuts to reduce costs because of rising competition and tighter margins, people with knowledge of the matter said earlier this month. Spain’s Banco Bilbao Vizcaya Argentaria SA plans to cut jobs in its client solutions business and may extend that to its wider business, according to a newspaper report.



Date : 31 Dec 2019 09:44 AM

US trade deficit falls to three-year low in wake of China standoff

The gap between US imports and exports shrank to its lowest level in three years in November following a 15% decline in the country’s annual trade deficit with China.


A boost to US exports also improved the trade balance, fuelling concerns that Donald Trump will expand his campaign to squeeze the US trade deficit, which has so far focused on China, to include the EU and the UK.


The trade gap closed by 8.2% to $43.1bn (£32.9bn) in November, the Commerce Department said, down from $46.9bn in the previous month to register the lowest monthly deficit since October 2016.


US exports rose 0.7% during the month, while imports dropped 1%, helped by a slump in imports from China.


The US president is poised to sign a first stage trade deal with China next week, but will leave many tariffs in place to limit the supply of Chinese goods to the US market.


James Knightley, the chief international economist at ING bank, said Trump could be tempted to expand his tariff war to include the EU, which is expected to see its surplus with the US hit an all-time high for the whole of 2019.


“The EU [deficit] is on course to increase by $8bn,” he said. “Consequently, the EU is likely to remain nervous that President Trump could focus more of his attention on perceived European trade indiscretions in 2020.”


However, Andrew Hunter, a US economist at Capital Economics, said it was premature for Trump to declare victory because the narrowing of the trade gap could prove to be temporary. He said a decline in consumer goods imports was likely driven by US retailers selling stockpiled Chinese electronics purchased ahead of tariffs imposed in September. Once the stockpiles are exhausted, imports are expected to climb again.


A rupture to the Keystone oil pipeline, which caused a sharp yet short-lived fall in crude oil imports from Canada, also played a part in improving the November trade figures.


The annual trade deficit is also expected to be only marginally smaller than 2018’s total of $627.7bn, which had been a 14.1% jump over 2017, leaving the deficit over the US president’s first term much higher than the one he inherited from his predecessor.


Trade flows between the world’s two biggest economies have been disrupted over the past two years by the tit-for-tat trade war as both nations have first threatened and then pushed ahead with tariffs on the other nation’s products.


While the US trade deficit with China shrank, the deficit with Japan rose to $5.4bn in November while the deficit with the EU declined to $13.1bn.




Date : 09 Jan 2020 02:32 PM

Trump administration drops labelling China as a currency manipulator

Administration drops charges as the two superpowers move closer to a trade deal

The Trump administration has withdrawn its designation of China as currency manipulator, as the two economic superpowers move closer to a trade deal.


The decision to drop the designation comes ahead of the announcement of a trade deal between the two sides, expected on Wednesday. The trade dispute has rocked US manufacturing and caused an economic slowdown in China.


The treasury department made the move in its currency report on Monday afternoon, its first public analysis since the US labeled Beijing a “currency manipulator” last August.


That designation, the first the US had made against China since 1994, escalated the long-running trade dispute between the two countries with Beijing accusing the US of “deliberately destroying international order” and undermining world stability.


Senior Chinese officials arrived in Washington on Monday to finalize the “phase one” trade agreement, which will be signed at the White House.


Last month, the US and China agreed to a partial trade deal with Beijing pledging to purchase up to $200bn of American products over the next two years, including agricultural goods from the US’s hard-hit farmers.


Donald Trump has long argued that China undervalues its currency in order to game international trade, charging the country was perpetrating one of the “greatest thefts in the history of the world”.


But the dispute has hurt both sides. On Monday the car giant Ford said its China sales had fallen for the third year in a row in 2019, dropping to less than half of what it sold at its peak in 2016.


Wednesday’s agreement is expected to contain a promise from both sides that they will not use their currency to unfair advantage.




Date : 14 Jan 2020 03:36 PM

IMF: US sanctions threat will limit global economic recovery

Lender estimates 3.3% growth in 2020, down from a previous forecast of 3.4%

The International Monetary Fund has warned that the world economy is increasingly vulnerable to the impact of the climate emergency as the Washington-based organisation downgraded its 2020 and 2021 growth forecasts.


Urging governments to make greater strides to reduce carbon emissions and build green infrastructure, the IMF said one of the main risk to its forecasts came from the growing costs of the climate crisis and the harm caused by protectionist trade policies.


It also cited political wrangling between the US and Iran, and the potential for social unrest to spread across the Middle East as further threats to the global economic outlook.


In its half-yearly health check on the global economy, the IMF said: “Weather-related disasters such as tropical storms, floods, heatwaves, droughts, and wildfires have imposed severe humanitarian costs and livelihood loss across multiple regions in recent years.


“Climate change, the driver of the increased frequency and intensity of weather-related disasters, already endangers health and economic outcomes, and not only in the directly affected regions.


“It could pose challenges to other areas that may not yet feel the direct effects, including by contributing to cross-border migration or financial stress (for instance, in the insurance sector). A continuation of the trends could inflict even bigger losses across more countries.”


Speaking in Davos at the World Economic Forum, IMF chief economist Gita Gopinath added “the climate risk is near and present” and “it is a major issue that demands governments step up”.


The report also cited the possible breakdown in US/China relations following a first phase deal last week, further trade sanctions by the US on Europe and the spread of social unrest as putting in jeopardy the recovery over the next two years.


While a long manufacturing recession in China, the US and much of Europe appeared to be coming to an end, or at least not deteriorating further, the downbeat report said a recovery would be weak, especially in the usually buoyant emerging market economies.


The UK is expected to grow only modestly and in line with the IMF’s previous forecast at 1.3% last year, 1.4% this year and 1.5% next year. This is based on an orderly exit from the EU later this year and a smooth transition to a new trading relationship from 2021.


Gopinath said that since the UK election result last month the IMF had downgraded the threat from a no-deal Brexit, offsetting trade tensions in other parts of the world. Reductions in interest rates by 49 central banks last year had added around o.5 percentage points to global growth. The first phase trade deal between the US and China had reduced the negative impact of protectionist policies built into the forecast by 0.3 percentage points, she added.


However, the global economy will grow by an estimated 3.3% in 2020, down from a previous forecast of 3.4%, and is expected to be 0.2 percentage points lower in 2021 at 3.4%.


The escalating tit-for-tat tariff war between the US and China last year was mostly to blame for a 0.1 percentage point cut in the estimate for growth for 2019 to 2.9%.


As recently as 2017, the global economy grew by 3.8%. Before the financial crisis in 2006, it expanded at the much faster rate of 5.5%.


In reports published earlier this month, the UN and the World Bank signalled weaker growth this year, citing ongoing trade protectionism and growing debt crisis for creating uncertainty and limiting business investment.


The IMF said the downward revision in the near term reflected “negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.”


South Africa, Mexico and India were among countries suffering significantly from the uncertainty that dominated trading relationships in 2019.


It said the prospects for a durable resolution to trade and technology tensions between the US and China remained elusive, despite sporadic favourable news on ongoing negotiations.


It added: “Further deterioration in economic relations between the US and its trading partners (seen, for example, in frictions between the United States and the European Union), or in trade ties involving other countries, could undermine the nascent bottoming out of global manufacturing and trade, leading global growth to fall short of the baseline.”




Date : 20 Jan 2020 06:21 PM

IMF: climate crisis threatens global economic recovery

The International Monetary Fund has warned that the world economy is increasingly vulnerable to the impact of the climate emergency as the Washington-based organisation downgraded its forecasts for 2020 and 2021.


Urging governments to make greater strides to reduce carbon emissions and build green infrastructure, the IMF said one of the main risks to its forecasts came from the growing costs of the climate crisis and the harm caused by protectionist trade policies.


It also cited political wrangling between the US and Iran, and the potential for social unrest to spread across the Middle East as further threats to the global economic outlook.


In its half-yearly health check on the global economy, the IMF said: “Weather-related disasters such as tropical storms, floods, heatwaves, droughts and wildfires have imposed severe humanitarian costs and livelihood loss across multiple regions in recent years.


“Climate change, the driver of the increased frequency and intensity of weather-related disasters, already endangers health and economic outcomes, and not only in the directly affected regions.


“It could pose challenges to other areas that may not yet feel the direct effects, including by contributing to cross-border migration or financial stress (for instance, in the insurance sector). A continuation of the trends could inflict even bigger losses across more countries.”


Speaking in Davos at the World Economic Forum, the IMF’s chief economist, Gita Gopinath, said the climate risk was near and present and a major issue that demands that governments step up.


The warning came as the IMF said the global economy would grow by an estimated 3.3% in 2020, down from a previous forecast of 3.4%. Growth in 2021 is expected to be 0.2 percentage points lower than originally forecast at 3.4%.


The escalating tit-for-tat tariff war between the US and China last year was mostly to blame for a 0.1 percentage point cut in the estimate for growth for 2019 to 2.9%.


As recently as 2017, the global economy grew by 3.8%. Before the financial crisis in 2006, it was expanding at the much faster rate of 5.5%.


The UK is expected to grow only modestly and in line with the IMF’s previous forecast at 1.3% last year, 1.4% this year and 1.5% next year. This is based on an orderly exit from the EU later this year and a smooth transition to a new trading relationship from 2021.


Citing other downside threats to its forecast, the report referred to the possible breakdown in US/China relations following a first-phase deal last week, further trade sanctions by the US on Europe, and the spread of social unrest. All of these factors could put in jeopardy the recovery from last year’s weak growth over the next two years, the IMF said.


Gopinath said that since the UK election result last month, the IMF had downgraded the threat from a no-deal Brexit, offsetting trade tensions in other parts of the world. Reductions in interest rates by 49 central banks last year had added around 0.5 percentage points to global growth.


The first-phase trade deal between the US and China had reduced the negative impact of protectionist policies built into the forecast by 0.3 percentage points, she added.


While a long manufacturing recession in China, the US and much of Europe appeared to be coming to an end, or at least not deteriorating further, the downbeat report said a recovery would be weak, especially in the usually buoyant emerging market economies.


In reports published earlier this month, the UN and the World Bank signalled weaker growth this year, citing ongoing trade protectionism and a growing debt crisis for creating uncertainty and limiting business investment.


The IMF said the downward revision in the near term reflected “negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.”


South Africa, Mexico and India were among countries suffering significantly from the uncertainty that dominated trading relationships in 2019.


It said the prospects for a durable resolution to trade and technology tensions between the US and China remained elusive, despite sporadic favourable news on ongoing negotiations.


It added: “Further deterioration in economic relations between the US and its trading partners (seen, for example, in frictions between the United States and the European Union), or in trade ties involving other countries, could undermine the nascent bottoming-out of global manufacturing and trade, leading global growth to fall short of the baseline.”




Date : 24 Jan 2020 07:20 PM

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Date : 27 Jan 2020 01:18 PM

Britain’s tax on tech titans may be the key to cutting them down to size

When US treasury secretary Steven Mnuchin threatens to impose tariffs on a country’s car industry if it taxes American tech giants, you are inclined to believe that he means it. “If people want to just arbitrarily put taxes on our digital companies,” he said, “we will consider arbitrarily putting taxes on car companies.”


A trigger-happy White House, steeped in trade disputes with various economic competitors, needs little excuse for retaliation. So the British government’s plan to impose a 2% sales tax on the largest digital companies – ensnaring the likes of Google, Amazon, Facebook and Apple – provides all the excuse President Donald Trump needs.


With Trump fresh from a bloody fight with the Chinese over import tariffs that had escalated to the point of plunging US manufacturing into recession, it is understandable that many trade economists believe his appetite is satiated, at least for the moment. But this may be to underestimate Trump on the issue of the tech giants, even if an America First view of trade often means clobbering one’s own side as much as the opposition.

US soya growers and livestock farmers suffered steep declines in export sales after they were effectively locked out of China. A moratorium last year was only partially observed, and Trump was forced to pour much of the money earned from import tariffs into Treasury coffers for compensation payments in the agricultural sector.


An import tariff is effectively a tax on goods entering the country and is supposed to give a boost to domestic firms, whose goods become relatively cheaper. But the tariff is paid by the importer, so increases costs for domestic manufacturers that use foreign-made parts.


Mnuchin has been Trump’s loyal lieutenant through all these battles. The former Goldman Sachs partner and Yale University graduate knows the art of the deal, probably better than his boss. It was Mnuchin who traveled to Beijing in 2017 with trade negotiator Robert Lighthizer to kick off the battle with China’s president, Xi Jinping, starting with a 30% tariff on Chinese solar panels imported into the US.

Mnuchin is understood to have been the one who reined in Lighthizer’s demands that Beijing open its markets wider to the west and crack down further on state subsidies. He could see how much US firms that relied on imports from China were hurting.


Yet it was only this month that the administration agreed to ease off and work on a phase one peace deal, and this happened only after some tangible concessions from the other side had been agreed.


British firms are already paying punitive US tariffs following a spat between the US and Brussels over subsidies for aeroplane maker Airbus. A scattergun approach by the White House in the wake of the Airbus ruling saw the Scotch whisky industry punished last year with a 25% import tariff on bottles of single malt.


In threatening to slap tariffs on the UK car industry, Mnuchin is well aware that it is in a difficult bind, with Brexit threatening exports and the need for hefty investment in electric and hybrid vehicles. The US accounts for around £8bn a year of the UK’s automotive exports.


There is honour in not being bullied by the US. But when the French have told Mnuchin they are prepared to delay a similar digital tax, the argument for the UK to delay begins to strengthen.


Mnuchin has conceded that the US should fall into line with the Paris-based Organisation for Economic Co-operation and Development when it puts forward proposals for a global digital tax. If the US honours this promise, a delay in imposing a UK tax will seem wise. If the US backtracks on backing the OECD plan, then, as the French have also threatened, the UK can revive the tax and backdate it.


One way or another, the tax avoidance techniques of the major digital firms need to be tackled. If the threat of going it alone will help spur the US into accepting the OECD tax, then all the better.


Why does a stint at Boots seem to make bosses hot retail recruits?

You have to go back many years to find anything to admire about Boots, the high street chemist founded by Nottingham industrialist Jesse Boot. So it’s surprising that today it is still regarded as a hotbed of management talent.


Last week Sainsbury’s said chief executive Mike Coupe – whose reputation was tarnished by last year’s failed merger with Asda – would pass the baton to retail and operations director Simon Roberts in the summer. Before joining Sainsbury’s in 2017, Roberts spent 15 years at M&S, then 13 years at Boots.


And Roberts is not the only Boots person taking the helm of a British supermarket this year: Boots lifer Ken Murphy is replacing Dave Lewis at Tesco. Both men started working in shops as teenagers, so are no strangers to the sharp end of retail.


But why are the CVs of executives schooled in the 170-year-old Boots chain, now part of US conglomerate Walgreens Boots Alliance, apparently so attractive? On the surface, anyway, the business’s coping tactics, as brutal forces reshape the retail industry on both sides of the Atlantic, look no better than those of established rivals.


Both Roberts and Murphy, who are said to know each other well, face big strategic decisions as their discount rivals Aldi and Lidl continue to grow in stature.


Lewis has stabilised Tesco, but where does it go from here? Its UK market share is still drifting downwards and its international business has largely been dismantled. Coupe’s disastrous attempt to combine Sainsbury’s with Asda tested the competition watchdog’s appetite for mega-mergers, so Roberts, who is already credited with improving the supermarkets’ performance, will need something else up his sleeve.


If Boots has access to a secret retail tonic, its health benefits have been well hidden.


Trump’s switch into campaign mode offers a lull in the storm

The coming year will lack the economic fireworks of 2019. There will be ups and downs provided by the UK-EU Brexit negotiations, but with a US president more concerned about getting himself re-elected than fighting a trade war with China, the general picture looks much more settled.


All the economies worst hit by last year’s almost monthly tit-for-tat hikes in import tariffs between Beijing and Washington have begun to recover. Britain, Germany and France all put in a strong performance this month as their manufacturing sectors stabilised and their service sectors broke out of a trot into a canter.


Britain is a feather in every chill wind that blows around the global economy, and a degree of calm will help settle the nerves of the Bank of England’s policymakers, who had looked poised to cut rates this week.


Speech after speech by the finest minds in Threadneedle Street had revealed a degree of worry about the economy not seen since the aftermath of the Brexit vote. Earlier this month, the odds on an interest rate cut had shortened to the point where it seemed highly likely.


A shocking collapse in retail spending in the run-up to Christmas prompted Bank governor Mark Carney to join the ranks of gloom-mongers ready to reduce borrowing costs in the hope of reviving not just the high street but all areas of a flagging economy.


A first-stage agreement between the US and China on trade, combined with the cumulative impact of interest rate cuts over the past 12 months by 49 other central banks, have served to turn things around and save the Bank from taking any action itself.


Donald Trump has the capacity to wreck even his own good work. Yet that seems unlikely as he moves into campaign mode. For that reason alone, the outlook for UK interest rates remains as it was: ultra-low for the next year with only small rises possible if there should be, in defiance of Brexit, spectacular growth.


Date : 28 Jan 2020 10:59 AM

How has Brexit vote affected UK economy?

Brexit risks remain for sterling

The pound has erased the gains made after Boris Johnson’s Conservatives won the biggest majority in more than 30 years at the general election, amid concern that Britain could end the Brexit transition period in December without an EU deal. Sterling had soared by about five cents against the US dollar on the foreign exchanges to above $1.35 after Johnson’s landslide victory. However, it has slumped back down to $1.30 over the past month after Johnson warned he will not extend the time for trade talks and could diverge from EU rules – causing disruption for businesses.

The pound remains more than 10% down on its level before the Brexit vote almost four years ago.


Coronavirus outbreak drags down markets

Financial markets around the world have been rattled by the coronavirus outbreak in China on the back of fears that quarantine measures could drag down growth in the world’s second largest economy, with a knock-on impact elsewhere around the world. Stock markets had begun 2020 close to record highs against a background of cooling tensions between the US and China in the long-running trade war between the two countries. The FTSE 100 soared to a high of 7,684 after Donald Trump signed phase one of a trade deal with Beijing in mid January. However, stocks have slumped over the past week, with the FTSE 100 dropping to below 7,500.


Inflation drops as retailers offer discounts

Inflation unexpectedly dropped to its lowest level for more than three years in December, fuelled by struggling retailers offering a wider range of discounts to tempt consumers during the pivotal Christmas shopping period. According to the Office for National Statistics, the annual rate on the consumer price index (CPI) dipped to 1.3% in December, from 1.5% in November, the weakest since November 2016. High street discounting and the price of a hotel room dragged down inflation, with steep reductions in the price of women’s clothing. City economists had been expecting the inflation rate to remain steady at 1.5%.


Imports slump after Brexit stockpiling

Britain’s trade balance, measuring the gap between imports and exports, jumped to a record surplus of £4bn in November, from a deficit of £1.3bn in October, as companies reduced their imports of goods in the month after the Halloween Brexit deadline. City economists had been expecting a deficit of about £2.6bn. According to the ONS, imports slumped by 7.8% on the month, while exports rose, suggesting that UK firms rushed to stockpile goods before the 31 October deadline and then made fewer orders in November.


Business activity recovers but remains weak

Britain’s dominant service sector, which accounts for about 80% of the economy, recovered in December amid a rise in new work, according to closely watched surveys of business activity. The reading on the IHS Markit and the Chartered Institute of Procurement and Supply services purchasing managers index (PMI) rose to 50.0, up from 49.3 during November, to signal stabilisation in the sector that includes hotels, restaurants and the City. The reading was better than expected on a scale where 50.0 separates growth from decline. However, taken together with PMI readings for the construction industry and manufacturing sector, economists said the economy probably failed to grow in the fourth quarter because of Brexit and political uncertainty.


Jobs growth eases pressure on Bank of England


Britain’s jobs market staged a stronger than expected recovery in the three months to November, according to the ONS, easing pressure on the Bank of England policymakers to cut interest rates. Despite intense Brexit uncertainty towards the end of last year, the number of people in employment jumped by 208,000 to a joint record high of 32.9m, nearly double the 110,000 increase forecast by economists. Unemployment remained at a 45-year low of 3.8%. Growth in average weekly earnings, excluding bonuses, stagnated at 3.2%, unchanged from the previous period. Pay including one-off awards dropped to 3.4% from 3.5%.

Retail sales slump over key Christmas period

High street sales in Britain slumped in December as consumers reined in their spending over the pivotal Christmas shopping period. Retail sales failed to rise for a record fifth month in a row – the longest period since 1996 – as household spending plunged by 0.6% on the month, below all estimates made by City economists. In a reflection of the difficult trading conditions facing retailers – after a series of disappointing trading updates for the festive period from firms including John Lewis and Marks & Spencer – consumer spending over the final three months of the year fell by 1% from the previous quarter. Sales growth for the year as a whole slowed to 0.9%.

Public borrowing falls despite corporate tax slump

The government borrowed less than expected in December despite a signal that the economy’s weakness at the end of last year hit corporate tax receipts. The ONS said the budget deficit – which measures the shortfall between public spending and tax income – stood at £4.8bn in December, down slightly from the same month a year ago. City economists had forecast borrowing of £5.3bn. However, borrowing for the first nine months of the 2019 financial year stood at £54.6bn, about 8% higher than it was for the same period in 2018. Corporate tax receipts for the year to date were down by 3.4%, the sharpest annual drop since 2012-13, in a signal that weaker economic growth has dragged down tax receipts.

Political clarity boosts housing market

Britain’s housing market showed signs of recovering in December, as agreed home sales rose for the first time since May and expectations of future sales jumped after the election. The gauge from the Royal Institution of Chartered Surveyors – which shows the difference between its members reporting price rises and falls – picked up to -2 in December from -11 a month earlier, beating the forecasts of City economists. Growth in UK house prices has eased since the Brexit vote, with prices falling on an annual basis in London and some surrounding areas. Prices have continued to rise in the Midlands and the north of England. Separate figures showed the number of mortgages approved by high street banks jumped to the highest level for almost five years in December.

And another thing we’ve learned this month … Business optimism rebounds after Johnson landslide
The unequivocal election result in December prompted the highest surge in confidence for 11 years, as hopes rise in the City that Boris Johnson’s unexpectedly decisive victory could lift some of the intense political uncertainty holding back the British economy. According to the accountancy firm Deloitte’s survey of company finance bosses, one of the first early warning indicators since the election, which is closely watched by the Bank and the Treasury, found that 53% of respondents were more optimistic than three months earlier about the outlook. This was up from only 9% in the last survey conducted in October. Uncertainty over Brexit and the election had led many companies to pause their investment plan. While there are hopes of a bounce in economic activity at the start of the year, analysts warn the improvement could be short-lived if the country appears to be heading for a disruptive no-deal scenario at the end of 2020.




Date : 01 Feb 2020 11:50 AM

Australian iron ore, gas and lamb exports to be hit hard as coronavirus crisis continues

Australian exporters heavily dependent on China are braced for the full impact of the coronavirus on Australian exports, from iron ore and LNG, to lobster and lamb, and bionic ear technology.


The global death toll from the virus outbreak has passed 1,000, and more than 40,000 people have been infected, 99% of those in mainland China. Vast swathes of China’s massive economy remain in lockdown.


While China’s senior medical adviser Zhong Nanshan has forecast that the outbreak may have peaked and could be over by April, the director of the World Health Organisation said a vaccine could be 18 months away, and warned of the potential economic and social consequences if the virus outbreak is not brought under control.


“To be honest, a virus is more powerful in creating political, economic and social upheaval than any terrorist attack,” WHO director Tedros Adhanom Ghebreyesus said.

There are concerns Chinese importers of copper and gas could use force majeure clauses in their contracts that will allow them to suspend deliveries of the key commodities.


Force majeure clauses refer to unforeseeable external circumstances that prevent a party from fulfilling a contract, usually dramatic events such as natural disasters, strikes or terrorist attacks.


China and Australia are intensely interdependent on liquefied natural gas (LNG). Australia supplies about 40% of China’s LNG, while about 40% of Australia’s LNG exports are to China.


China’s largest importer of LNG, China National Offshore Oil Corporation (CNOOC), reportedly invoked force majeure to suspend contracts with Total and Shell last week, but the claim was dismissed by the suppliers. Shell’s Queensland Curtis LNG project is CNOOC’s biggest Australian supplier.

The price of Australia’s most important export to China, iron ore, fell 11% in January due to the virus outbreak, ratings agency Moody’s said.


Australia exports more than $60bn a year worth of iron ore to China, and the industry is a major source of tax revenue. A fall in volumes and price will hurt Australia’s budget bottom line.


According to Moody’s, mining magnate Andrew “Twiggy” Forrest’s Fortescue Metals is the Australianmining company most exposed to a downturn in China: making 93% of its sales there.


But the two big Anglo-Australian miners, BHP and Rio Tinto, are also heavily exposed, selling 55% and 45% respectively to China.


NAB’s Forward View said commodity prices remain in retreat in response to the coronavirus, and warned “the scale and duration of the outbreak is highly uncertain”.


“Markets are concerned that containment measures implemented by Chinese authorities will negatively impact demand for commodities from the manufacturing and construction sectors – placing downward pressure on prices.”


Ben Jarman, senior economist at JP Morgan, said growth forecasts for China had been significantly downgraded as a result of the coronavirus and continuing uncertainty over its impacts.


“The forecast short-run hit to industry in China is very large, and it may be difficult for affected users of raw commodity inputs to ‘look through’ to the other side of the shock.”


Reports that force majeure may be declared on some of China’s LNG imports, suggest “a quite persistent shock to demand”.


Australia’s largest meat-processing cooperative, Northern Cooperative Meat Company, has had product stuck at Chinese ports awaiting dock workers to return to work, while China’s ban on seafood imports has left Australian producers with millions of dollars worth of unsold fish and shellfish.


Economists at UBS say Australia’s economy will shrink by 0.1% this quarter thanks to the coronavirus outbreak, and have warned that it could be even worse.


This is UBS’s weakest forecast for Australia since the global financial crisis and warn that the recessionary impact could even be as great as a 0.5% contraction.


The calculations are based on an expectation of a 30% slump in China’s total outbound travel in 2020, with the first quarter contraction the most severe. Millions of Chinese tourists visit Australia every year and are the biggest spenders when they get there.


“This wipes A$6bn from GDP, or 0.9% off annual growth, a plausible downside risk scenario ... we now think Q1 GDP growth is likely to be negative, even with arguably still optimistic assumptions,” UBS analysts said in a note.


Australia’s shipping routes have not yet been particularly affected by the government’s travel restrictions, according to the CEO of Ports Australia, Mike Gallacher.


He said both maritime imports and exports were continuing as usual.


The government’s travel ban, announced on 1 February, requires any person who passes through mainland China to spend at least 14 days outside of China before entering Australia. But many cargo ships from China to Australia already take 13 or 14 days to arrive, creating only negligible delays.


“We can fortunately say there have been no reported major disturbances to the supply chain,” Gallacher told Guardian Australia.


“As an island nation with 98% of its trade coming through our ports, imports and exports must and will continue with the addition of extra safety measures.”


Australian and New Zealand firms heavily exposed to China are also demonstrating support for the country by sending significant donations to help fight the virus.


The a2 Milk Company has donated NZ$1m ($961,100) to two universities working to develop a vaccine for the coronavirus, as well as more than $2m ($1.9m) in cash and milk products to the Chinese Red Cross.

“We believe that in addition to providing support on the ground for Chinese families through product donations and financial support for the local Red Cross, the most effective way for us to assist the Chinese people and the global community is to provide funds that will help independent scientific researchers develop an effective vaccine for this virus,” managing director Geoff Babidge said.


Rio Tinto and Fortescue have also donated $1m each to Chinese NGOs and charities to help the country fight the coronavirus outbreak.


Australian hearing implant maker Cochlear Ltd cut its full-year profit forecast on Tuesday, blaming the coronavirus outbreak as hospitals in China delayed surgeries to limit further spreading of the infection.


Hospitals across China, Hong Kong and Taiwan have been deferring surgeries, including cochlear implants, as part of a host of measures to stem the spread of the virus and prevent panic.


“It has become clear that the coronavirus will impact the number of cochlear implant surgeries in Greater China, a top-five market for Cochlear,” Cochlear chief executive Dig Howitt said in a statement.


Date : 12 Feb 2020 05:17 PM

Trump's 'America first' policy offers Beijing and Brussels a chance to lead

Donald Trump’s “America first” policies are widely regarded as an abdication of global leadership, sounding the death knell of the post-second world war multilateral order that the US shaped and sustained.


There is much truth to this view. At the same time, this troubling turn represents a reversion to longstanding US values. Acknowledging that the second half of the 20th century was an anomaly, rather than the norm, raises troubling questions about the nature of US leadership and the fate of multilateralism after Trump.


As a resource-rich continental economy separated from Europe and Asia by vast Atlantic and Pacific Oceans, the US has always been tempted by isolationism. Thomas Jefferson famously spoke of no entangling alliances. The Monroe doctrine, from 1823, was not just an assertion of US dominance in the western hemisphere but also an effort to keep the US out of European wars.


In the 20th century, the US entered the world wars several years late, long after the stakes were clear, and only after being directly provoked by German U-boat attacks and the Japanese raid on Pearl Harbor.

Moreover, the US long sought to advance its interests abroad unilaterally rather than through multilateral engagement. The Monroe doctrine is a case in point. The US’s refusal after the first world war to join the League of Nations is another.


Equally important, domestic business has long held inordinate sway over US economic and foreign policies. This historical pattern reflects the fact that it was the first country of continental scope to industrialise. Its immense internal market supported the efforts of US entrepreneurs to pioneer the large multidivisional corporation in the second half of the 19th century.


This was the age of the robber barons, who held sway over not just the US economy but also its politics. For example, the “big four” California railway tycoons (Leland Stanford, Collis Huntington, Mark Hopkins, and Charles Crocker) controlled not just freight rates but also the state legislature. Viewed from this perspective, the Trump administration’s willingness to cater to domestic corporations’ every regulatory whim is firmly in step with US history.

Americans’ deep, abiding and historically rooted distrust of government also reinforces isolationism. The view that government only creates problems is not just a product of Fox News. The US’s founders were profoundly suspicious of overweening government, from which they suffered under British colonialism.


After independence from Britain, the fact and then the legacy of slavery

created deep-seated opposition to federal interference with local social arrangements and states’ rights. Rallies of gun-rights advocates at state capitols and the occupation of federal land by western ranchers are peculiarly American aberrations, but they are also modern-day manifestations of the long-held view that government cannot be trusted and that the best government is one that governs least. Trump and his policies stand squarely in this tradition.

The existential threat of the second world war was enough to shock the US out of its isolationist, anti-government tendencies, at least temporarily. Possessing the single strongest economy, along with politicians, including presidents, with personal experience of war, the postwar US was able to provide the leadership needed to construct an open, multilateral order.


But it was naive to think that this was “the end of history” – that the US would continue to exercise this kind of international leadership indefinitely. In the event, growing economic insecurity, together with the rise of identity politics (reflecting the inability of the once-dominant white majority to adjust to the reality of greater socioeconomic diversity), was enough to cause the American body politic to revert to its unilateral, isolationist mindset.



The next US president – whoever she or he may be – is unlikely to be as committed to free trade, alliance building, and multilateral institutions and rules as the presidents of the second half of the 20th century. But it is still possible to imagine multilateralism without the US. Climate change illustrates the point: Trump’s withdrawal from the 2015 Paris climate agreement has not weakened the commitment of other countries to its targets, nor should it.


Another example is how the European Union, China and 15 other countries reacted to Trump’s efforts to paralyse the World Trade Organisation by leaving its appellate body inquorate with too few judges. In response, they set up their own ad hoc, shadow appellate body to maintain WTO standards and procedures.

As this last case demonstrates, the successor to US global leadership must be collective global leadership, with the two largest economies, the EU and China, at its fore. Unlike the US, the EU is making every effort to work with China. Given the inevitable geopolitical tensions, cooperation won’t be easy. But, as the US once understood, it is the only way.


Date : 13 Feb 2020 09:48 AM

From batteries to shutters: Australian firms eye potential coronavirus shortages

With the coronavirus outbreak in China affecting the import and export trade, Australian retailers and suppliers are concerned that consumers will soon start experiencing shortages of products ranging from iPhones to batteries. There are widespread factory shutdowns in China as millions of people remain in lockdown and subject to strict travel restrictions and quarantine measures.


While some retailers say it is too soon to see a noticeable impact on stock, with many shipyard and factory workers taking time off for lunar new year anyway, they are preparing for shortages in coming weeks.


China is Australia’s largest trading partner, with major exports including clothing, toys and electronics. Items like blinds and plantation shutters are also in short supply at some companies, with consumers waiting an extra four weeks on orders.

Travel

Qantas on Thursday announced a major reduction in services, cutting flights to Asia by 16% for at least three months, with flights to Shanghai suspended and those to Hong Kong and Singapore reduced.


Its low-cost brand, Jetstar, will likewise reduce its Asia flights by 14% until the end of May, impacting routes to Japan, Thailand and mainland China.


Retail

Vicinity Centres, landlord for shopping centres throughout the country including DFO Brisbane, the Strand Arcade in Sydney and Chadstone in Melbourne, has downgraded its earning forecast.


CEO Grant Kelley said: “At Vicinity, we have seen a material decline in foot traffic at some of our key centres since late January 2020, particularly where there is a high proportion of international visitors, which in turn is impacting sales. As a result, we are forecasting modest reductions in percentage rent, ancillary income and hotel bookings.”


A spokeswoman for supermarket giant Coles said stores were working with suppliers and transport partners to minimise the impact on product availability. But logistics remain challenging, especially through some major ports in Shanghai and Tianjin.


“Like most retailers, we have been impacted by the extension of Chinese New Year, which saw factories closed for longer than planned and delays in production due to staff requiring government permits to return to work,” the spokeswoman said.

“Products such as antibacterial hand washes and hand sanitiser products are already low in stock and there are shortages forecast for non-food items like stationery, clothing, and electrical goods.”

Coles had also experienced delays in refrigeration equipment being shipped out of China for store renewals. Meat that Coles would usually sell to the Chinese market has been diverted to the other Asian countries that they export to, of which there are around 40.


A Woolworths spokesman said there had not been any disruptions to supply or procurement at this stage. A spokeswoman for clothing and stationery brand Cotton On Group, Australia’s largest global retailer, refused to comment.

Smartphones

Apple said there would be a shortage of products, including iPhones, due to factory closures in China.

“Worldwide iPhone supply will be temporarily constrained,” a statement from the company said. “While our iPhone manufacturing partner sites are located outside the Hubei province – and while all of these facilities have reopened – they are ramping up more slowly than we had anticipated.


“The health and wellbeing of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this continues. These iPhone supply shortages will temporarily affect revenues worldwide.”


Hospitality

Australian Retail Association head of public affairs Yale Stephens said while he had not received any reports of supply chain disruptions, the industry was suffering from reduced patronage.

“We are only a month in so whether [supplies chains] change depends how long this crisis goes for and how badly it affects Chinese companies selling to Australian retailers,” he said. “But the hospitality trade is being particularly severely hit, particularly Chinese restaurants, so we are just encouraging people to support those businesses.


“There are livelihoods at stake here: those of the hardworking mums and dads who’ve put everything on the line to open a business, and those of the staff they employ whose jobs are in real danger of being lost.


“If we lose iconic local retailers, or tourist operators offering unique experiences, or loved restaurants and cafes that are forced to close, we won’t get them back – and that compounds the potential loss here.”


Seafood

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Mark Boulter, executive officer of Safe Sustainable Seafood Australia, said he was not aware of any seafood import shortages to date, but said if the coronavirus event continued for months it would impact on imports from China.


“We are currently organising a round of member meetings and this question will be on the agenda,” he said. “What we are currently highly aware of is the impact this situation is having on the domestic seafood sector, both those who are export focused mostly to China and the sectors of the domestic trade that are focused on Asian communities’ desirable species, such as live mud crabs and rock lobsters, and raw prawns.”


He said a combination of a low-key summer due to the bushfires and subdued Lunar New Year festivities due to the virus had depressed the demand for seafood over the past few months.


“We have not yet been able to determine the extent of this with our members,” he said.


Electronics

Gerry Harvey, chief executive of the electrical and household goods retail chain Harvey Norman, refused to comment on whether electronics supplies had been affected.


Sony Australia said it was difficult to assess the impact that the health crisis would have on its business.


“We will continue to gather information, and assess the situation closely, taking action to minimise impact wherever possible,” a spokesperson said.


Stationery and electronics goods supplier Officeworks would not comment. A Kmart group spokeswoman said so far, supply chain disruptions had been minimal.


“Our absolute priority remains ensuring our team are safe and as a precaution, we have suspended all business travel in and out of China and Hong Kong until further notice,” she said.


Guardian Australia has also contacted JB Hi-Fi for comment.

Medical


While products such as hand sanitiser and face masks are in short supply, this is due to significant consumer demand rather than any interruption to supply chains. However, masks are not essential to protect against the virus, which is so far well contained in Australia.


On Tuesday evening the president of the Australian Medical Association, Dr Tony Bartone, met with health officials. He said that said apart from sporadic mask shortages there had been no reports of supplies of pharmaceuticals and devices to hospitals being disrupted.

Pharmaceutical companies GSK, Janssen, and Pfizer and Johnson & Johnson Medical said there had been no supply impacts as a result of the virus and subsequent business closures in China. A GSK spokeswoman said it was an evolving situation.


“We have supply chain planning in place for our products, which includes measures to secure reliable supply, such as holding strategic stock and dual sourcing,” she said. “At this time, we have adequate stock in place, however this is an evolving situation which we will keep under review.”


In a statement, drug company Astra Zeneca said it was working closely with global health authorities. “We have in place contingency plans to support our operations,” the statement said. “In order to protect employees, we have taken a decision at this time to restrict all non-business critical travel to and from China, including Hong Kong.”


Medical device and pharmaceutical company Bayer said it was in regular contact with suppliers in China.

“Currently we do not have an impact on production and market supply,” a spokeswoman said.

Industrial

The world’s biggest miner, BHP, warned demand for resources could be affected. A BHP investor report issued on Tuesday said the disease outbreak, trade policy and geopolitics were key uncertainties for the sector.


“If the viral outbreak is not demonstrably well contained within the March quarter, we expect to revise our expectations for economic and commodity demand growth downwards,” the report said.

“This caveat applies, to varying degrees, across our portfolio and we will continue to monitor. In this regard, we highlight the distinction between a permanent loss of demand in oil due to foregone transport services; and temporary demand losses with the opportunity to be reclaimed, as in steel and copper end-use. We anticipate a net demand loss due to the 2019 coronavirus disease outbreak in the near term.”


With battery cell shortages also predicted, Guardian Australia has contacted Battery Specialties Australia, which supplies household, industrial, automotive and solar batteries, and Solar Juice, a wholesaler of solar panels and components.


Solar Juice co-founder and head of supply, Rami Fedda, said in a message on LinkedIn that he was working with two large manufacturers unable book a vessel until later in February or early March. Stock that was ready for shipment prior to Chinese New Year won’t get to the Solar Juice warehouse until March, while the company would be lucky to receive any new stock before April, he said.


The next gap in the market could be raw material, where even non-Chinese manufacturers have been warning of delays. “My best guess if there is an impact it will happen around May for non-Chinese panels.”


Date : 23 Feb 2020 10:21 AM

FTSE loses another £35bn as coronavirus rattles global markets

Mounting fears over the spread of the coronavirus led to another global market sell-off on Tuesday, with investor panic wiping nearly £100bn off the value of Britain’s biggest companies in the past two days.


The FTSE 100 index closed at its lowest level in a year, down 1.9% at 7,018, lowering the value of Britain’s blue-chip companies by about £35bn. It followed a major sell-off on Monday, when £62bn was wiped off the value of the index.


Travel companies have been among the worst hit by the market turmoil. The cruise operator Carnival, whose Diamond Princess ship was the scene of a major outbreak, was the biggest faller on Tuesday, down 5.9%.


Markets across Europe suffered heavy losses and Wall Street was sharply lower as investors digested the implications of the apparent acceleration in the number of new cases in Europe and the Middle East, after it initially spread from the Chinese city of Wuhan throughout Asia.

Italy is the worst-affected country in Europe, and Austria, Croatia, mainland Spain and Switzerland all reported their first confirmed cases on Tuesday. Those reports added to concerns that the outbreak will cause significant disruption across the European economy, with financial services, travel, tourism and consumer goods demand all expected to take a hit.


The outbreak is expected to cause a decline in the personal luxury market of between €30bn and €40bn (£25bn-£33bn), as sales have come to a virtual standstill in China and are suffering in Asia and Europe from the fall in Chinese travellers, according to a report by the asset manager AllianceBernstein and Boston Consulting Group.


Travel companiesare already counting the cost of measures to contain the disease, as well as a slump in demand for travel to affected areas that is expected to push down demand for air travel in the Asia-Pacific region by about 8% this year, according to the International Air Transport Association.


Qatar Airways on Tuesday switched to smaller planes for its flights to South Korea and Iran, both of which are in the grip of serious outbreaks. Qatar had previously cancelled all flights to major Chinese cities until the end of March. United Airlines, the world’s fourth-largest airline by revenue, withdrew its financial forecasts for the year because of the impact on demand for air travel.

The investment banks Goldman Sachs and Deutsche Bank both restricted business travel by their employees to South Korea and the affected areas in northern Italy, as well as advising against non-essential travel.

JP Morgan, Citigroup and Credit Suisse were also among the investment banks which curbed trips to northern Italy.


Mastercard warned late on Monday that the impact on cross-border travel and business could cut two or three percentage points off its revenue growth forecasts for the first quarter, implying a hit of between $78m and $117m (£60m-£90m).


However, Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, a consultancy, said the UK economy could be less vulnerable than most if British people opted for “staycations” over spending their cash abroad.


The US Centers for Disease Control and Prevention said on Tuesday that it wanted companies, hospitals, communities and schools to begin preparing to respond to the virus. The world’s largest economy has so far been relatively unaffected by the outbreak, with 53 cases now confirmed, but the health agency warned that the disease could cause “severe disruption”.


However, businesses and economists still have little clue about how long it will take for the virus’s spread to come under control. Simon Powell, an economist at Jefferies, a US investment bank, warned that a serious spread of the virus to the US would be difficult to contain. He added that Donald Trump’s administration would be unlikely to impose quarantine measures if they threatened economic growth.


“Given the flow of Chinese, Korean and Iranian nationals into North America, a large USA community-based outbreak is increasingly likely,” Powell said in a note. “If not managed correctly, this could significantly rattle markets.”


Larry Kudlow, the US National Economic Council director, told the Washington Post: “The coronavirus will not last forever. The US looks well-contained and the economy is fundamentally sound.


“If you’re a long-term investor, you should seriously consider buying these dips.”

Date : 27 Feb 2020 09:04 PM

US-UK trade deal: PM eyes three-course meal, but may end up with packet of crisps

It was supposed to be one of the biggest Brexit dividends. According to Liz Truss, an “ambitious and comprehensive” trade agreement with Donald Trump would reflect Britain’s unique relationship with the US, cutting red tape and tariffs to help British businesses and the economy grow.


The value to the nation: at most, an economy 0.16% bigger after 15 years. In the cold language of economic benefits, such a small number is almost a rounding error. The gains in cash terms are roughly £3.4bn under the best-case scenario, an amount worth less than the current annual contribution of Brentwood or Bury.


Set in the context of the potential costs from erecting tough trade barriers with the EU, or leaving the bloc on World Trade Organization terms (an Australia-style trade agreement, in the language of government), the numbers are even more stark.

Compared with the plan to add a small town’s worth of economic output to Britain over 15 years, failure to strike an EU trade deal would result in an economy 7.6% smaller than under current arrangements, over the same timeframe. That’s according to the most recent official economic impact assessment published by the government, late in 2018, when Theresa May was forced to reveal official forecasts.


At the time, the report also suggested that a Canada-style deal – of the type sought by Boris Johnson – would still leave the UK about 4.9% worse off.


To repurpose a comment made two years ago by Sir Martin Donnelly, once the most senior civil servant at the department under Liam Fox, as he assessed the prospects for British trade outside the EU: such a plan is akin to swapping a three-course meal for a packet of crisps.

Of course this is not the government’s stated intention. Free trade deals are wanted with the US, the EU and other nations – keep the three-course meal, crisps, and eat the lot. But carrying out negotiations in parallel may eventually force Johnson’s hand towards making tough choices.

Any deal with the US could influence any deal with the EU. It will be imperative for both to know what Britain wants, putting Johnson in a bind, even should he aim to play one off against the other.


One perhaps surprising point about the latest government analysis is the seemingly frank assessment of the limited benefits. This suggests the trade department was either not leant on, or refused to be cajoled into producing trumped-up estimates, according to Dr Peter Holmes, an academic at the UK Trade Policy Observatory at Sussex University.


“They are in line with the standard results,” he says, adding that such small gains probably reflect the relatively low tariff barriers between the US and the UK at present. The trade department estimates US tariffs on UK exports are worth about £493m, out of a relationship worth a total £220.9bn.


It could also reflect that non-tariff barriers – the red tape that Truss says she would like ripped apart – can be particularly tough to get rid off, especially should Britain refuse to bend to every demand made by Trump, and vice versa.


Truss warns that any deal must protect the NHS (the health service is firmly “not on the table” in Monday’s document) and also uphold the UK’s “very high standards on food safety and animal welfare”.


The clock though is ticking. Johnson has set a deadline of the end of 2020 for an agreement with the EU, do or die. Trump will undoubtedly want to show progress before the US elections in the autumn. Tougher and more detailed decisions over Britain’s post-Brexit trade priorities will soon need to be made.


Date : 03 Mar 2020 03:07 PM

UK faces 'catastrophe' if Tories continue with 'no checks in Irish Sea' claim

The UK will have a “catastrophe” on its hands unless Boris Johnson and cabinet ministers stop repeatedly claiming that there will be no checks in the Irish Sea as part of the special Brexit arrangements, manufacturing leaders and local politicians have warned.


“If they don’t there is going to a horrible crash at the end of this year, and if not, then in four years,” said Stephen Kelly, the chief executive of the business group Manufacturing Northern Ireland.


Speaking at a debate on Northern Ireland protocol at the Institute for Government thinktank in London on Wednesday, he added: “We are potentially facing some pretty catastrophic outcomes if we don’t get this right.”

Under the withdrawal agreement, special trading arrangements will apply in Northern Ireland from 1 January whether Johnson strikes a trade deal with the EU or not.


They are part of the agreement to prevent a hard border returning to the island of Ireland and involve checks, customs declarations and tariffs on goods going between Great Britain and Northern Ireland.


Stephen Farry, the MP for North Down and deputy leader of the Alliance party, said it was a fiction to think that a wide-ranging free-trade agreement with the EU would wash the checks away.


“There is this wishful thinking that a free trade agreement is going to fully eliminate the need for some degree of checks. Even the most far reaching deal you can imagine isn’t going to fully address that,” he said.

If Johnson reneged on the deal he would have a “cowboy economy” and a “no man’s land” in which neither British nor EU rules would be enforced, warned Farry.


The conference heard that the software needed to manage the new arrangements would not be ready within 10 months and that Johnson’s apparent “tearing up” of the Northern Ireland arrangements, one month after signing them, would fuel mistrust of Britain when it came to negotiating trade deals around the world.


Johnson and a succession of cabinet ministers have insisted the Northern Ireland protocol can be applied without physical checks or extra paperwork.


The EU has rubbished this assertion as a misleading representation of the protocol, warning that not implementing the new rules would be a formal breach of an international treaty.


Local businesses say that while the EU is correct, its position is unhelpful and will just delay the breach of the Brexit deal until it is too late.


Kelly said the EU would face a recurring nightmare if the bloc did not get this right because the Stormont assembly has a vote on the arrangements every four years.


But the EU is also facing warnings from local businesses that it must do better to head off a disaster for the region.


“The EU are waiting for No 10 to come forward to say this is how it [the Northern Ireland protocol] will work. But they have a responsibility as well, they need to show as much flexibility … towards Northern Ireland,” Kelly said.


Date : 05 Mar 2020 09:49 AM

How to Create a PerfectMoney Account?

There are a lot of virtual money operating systems online today that make receiving and sending money across local and international borders an easy exercise, like PayPal, Payoneer and a host of others. In this article, I would like to talk about one of the best payment processors specially used to transfer and receive payment. Most freelancing has been using the processor which started functioning since 2007. So we are going to consider PerfectMoney in the light a trusted processor in this article.


It is a common processor to find in different pages to earn money, especially in those that require prior investment, so we will try to explain in this post by considering the listed nuggets here:


• How to create an account.


• How to verify the account.


• How to load your account.


• How to withdraw your balance from her.


With the above points made and understood correctly we can start trading with our PerfectMoney account without any problem, so let's do it.


To begin your register, you must first enter the web. Then you can start the process of creating an account.


How to Create a PerfectMoney Account

The first thing we have to do to create an account is to visit www.PerfectMoney.is and click on “Register” to start creating your account. There you will open a window like the one you will see next. All the data that you are going to put in must be real.

Once you have put the data correctly, you accept and they will send you an email to the account that in put your real details. In that email, they will send you a code comes: See sample:


Your personal Member ID: 1234567


Now what you are going to do is enter your account by clicking on Login or Enter. Just as in all pages you have to enter your username and password. In the user part, you have to put the code that was sent to your email. You also have to include the password that you have configured before, on the box provided for it.


As you can see, in just two minutes you have your PerfectMoney account. Then you will have to go to the verification process.


How To Verify Your PerfectMoney Account

In principle, you can start using your PerfectMoney account without checking, but as you know I always recommend that you verify it because without verification you are limited to the much you can do. Though you can send and receive money, but it also has a limit. However, with a verified account, you are going to obtain these advantages:


Reduced rates. (Without verifying commissions of 1.99% verified 0.50%).

Additional security options.

Greater confidence in your account by other customers.

Easy restoration of the account if you lose your passport or can not access it for any reason.

Now, let's see what the verification process looks like:


To verify it you must go to your “Member Area” or “My Account,” where you have to click on “Change Options."

Once inside there if you go down a little on the screen that comes out you will see that it puts you in blue color — “Verification of The Account”. You have to click on “Verification Management."

Finally you only have to upload your documents, in this case, we have to upload:

Your Identity Document, Passport or Driver's License. Anyone of the three that you prefer the most.


A bill of electricity, water, telephone or any complaint that you have out there or a letter from your bank, etc... Any valid document that shows your name and address.


For a correct verification, it is very important that the data that we put when enrolling in PerfectMoney along with the documents that you are going to upload are correct and agree in all its aspects (Name and Address).


Well, with this you already have your PerfectMoney account created and verified. Now you are going to see how to load our PerfectMoney account.


How To Load Your PerfectMoney Account

You can load your PerfectMoney purse in the following ways:


Wire transfer: The minimum to charge your account by this method is €300. It does not entail commissions.


It has a commission between 0 and 0.05%, (I advise to ask your bank if they charge you commission).


They usually take about four days to make the transactions. The recommendation depends on the commissions of your bank.


E-Voucher: It is a similar system to the Ukash recharge cards, but in this case, you are the users who created them. That is, a user who has money in PerfectMoney can create an activation code that will send the person who owns it. For example, A user has €100 in his account and creates 10 codes of €10 each, then he gets in touch with one of you and sells you one of those codes for a slightly higher amount, with that code that you send them you can put money in your PerfectMoney account and the other user will have earned a bit with the commission that you have charged.


Associated Change Points: It is the typical E-changer of a lifetime if we press we leave a lot of pages where we can buy PerfectMoney balance with different processors. Recommended


Bitcoin: It is an electronic currency that goes up and down in value like foam, personally I do not like it very much.


Change of Credit: In this option, the users can leave balance between them, in which they will charge you some interest.


Charging of the pages: To collect from the pages with which you work, you must put one of the following codes of your account, depending on whether you want to charge in Euros or Dollars.


How To Withdraw Your PerfectMoney Account Balance

For the withdrawal of your balance, there are the same possibilities as for charging our account:


Wire transfer: (Commission of 2% plus the costs of your bank) Not recommended.

E-Voucher: (Commission 0.5%). Recommended.

Points of associated change: Recommended.

Bitcoin.

Change of credit.

Request a bank transfer and the commissions were very high, so I do not recommend it, I would like it if someone else has used it, tell me how it went. Thank you.


As you can see the options for withdrawing and entering your balance in PerfectMoney are not many, but we do have the associated exchange points that for a small commission we exchange the balance of PerfectMoney to the processor that we select. Also, if you know any who usually do E-Voucher and is trusted you can always reach an agreement and make a good price.


NOTE: It is better that you do not have much money accumulated in any processor, just enough for daily needs.


This is all about Perfect Money, I hope it helps you when you create your free account and without maintenance costs as this way users all over the world can use all the pages that allow them to use this processor.


We use them with all the normality of the world.



Date : 05 Mar 2020 11:29 AM

FTSE loses another £35bn as coronavirus rattles global markets

Mounting fears over the spread of the coronavirus led to another global market sell-off on Tuesday, with investor panic wiping nearly £100bn off the value of Britain’s biggest companies in the past two days.


The FTSE 100 index closed at its lowest level in a year, down 1.9% at 7,018, lowering the value of Britain’s blue-chip companies by about £35bn. It followed a major sell-off on Monday, when £62bn was wiped off the value of the index.


Travel companies have been among the worst hit by the market turmoil. The cruise operator Carnival, whose Diamond Princess ship was the scene of a major outbreak, was the biggest faller on Tuesday, down 5.9%.


Markets across Europe suffered heavy losses and Wall Street was sharply lower as investors digested the implications of the apparent acceleration in the number of new cases in Europe and the Middle East, after it initially spread from the Chinese city of Wuhan throughout Asia.

Italy is the worst-affected country in Europe, and Austria, Croatia, mainland Spain and Switzerland all reported their first confirmed cases on Tuesday. Those reports added to concerns that the outbreak will cause significant disruption across the European economy, with financial services, travel, tourism and consumer goods demand all expected to take a hit.


The outbreak is expected to cause a decline in the personal luxury market of between €30bn and €40bn (£25bn-£33bn), as sales have come to a virtual standstill in China and are suffering in Asia and Europe from the fall in Chinese travellers, according to a report by the asset manager AllianceBernstein and Boston Consulting Group.


Travel companiesare already counting the cost of measures to contain the disease, as well as a slump in demand for travel to affected areas that is expected to push down demand for air travel in the Asia-Pacific region by about 8% this year, according to the International Air Transport Association.


Qatar Airways on Tuesday switched to smaller planes for its flights to South Korea and Iran, both of which are in the grip of serious outbreaks. Qatar had previously cancelled all flights to major Chinese cities until the end of March. United Airlines, the world’s fourth-largest airline by revenue, withdrew its financial forecasts for the year because of the impact on demand for air travel.

The investment banks Goldman Sachs and Deutsche Bank both restricted business travel by their employees to South Korea and the affected areas in northern Italy, as well as advising against non-essential travel.

JP Morgan, Citigroup and Credit Suisse were also among the investment banks which curbed trips to northern Italy.


Mastercard warned late on Monday that the impact on cross-border travel and business could cut two or three percentage points off its revenue growth forecasts for the first quarter, implying a hit of between $78m and $117m (£60m-£90m).


However, Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, a consultancy, said the UK economy could be less vulnerable than most if British people opted for “staycations” over spending their cash abroad.


The US Centers for Disease Control and Prevention said on Tuesday that it wanted companies, hospitals, communities and schools to begin preparing to respond to the virus. The world’s largest economy has so far been relatively unaffected by the outbreak, with 53 cases now confirmed, but the health agency warned that the disease could cause “severe disruption”.


However, businesses and economists still have little clue about how long it will take for the virus’s spread to come under control. Simon Powell, an economist at Jefferies, a US investment bank, warned that a serious spread of the virus to the US would be difficult to contain. He added that Donald Trump’s administration would be unlikely to impose quarantine measures if they threatened economic growth.


“Given the flow of Chinese, Korean and Iranian nationals into North America, a large USA community-based outbreak is increasingly likely,” Powell said in a note. “If not managed correctly, this could significantly rattle markets.”


Larry Kudlow, the US National Economic Council director, told the Washington Post: “The coronavirus will not last forever. The US looks well-contained and the economy is fundamentally sound.


“If you’re a long-term investor, you should seriously consider buying these dips.”


Date : 12 Mar 2020 07:56 AM

FTSE 100 closes at lowest since 2016 as coronavirus fears hit markets

Stock markets around the world fell sharply on Friday, while Germany’s flagship airline said it would cut up to half its flights and oil prices plunged.


As a rising numbers of companies sound the alarm on the hit to profits, impose travel bans and put in place contingency plans to protect staff, the FTSE 100 plunged by 3.5% amid steep losses on stock markets elsewhere across Europe.

The leading index of UK company shares dropped by 234 points to 6,471, the lowest point since late June 2016 immediately after the EU referendum, with airlines and travel firms among the hardest hit as heavy selling pressure returned to markets around the world.

Lufthansa said it planned to cut as many as half of its flights in the coming weeks because of the fallout from coronavirus, just days after announcing a 20% reduction. The plan includes potentially grounding the carrier’s entire fleet of A380 superjumbos.


“In recent days, the Lufthansa Group has been exposed to drastic declines in bookings and numerous flight cancellations due to the spread of the Covid-19 virus. All traffic areas are now affected,” it said in a statement.


The airline industry has warned it faces revenue losses of $113bn (£87bn) in the event of a prolonged outbreak. Shares in budget airline Norwegian also plunged on concerns over its finances.

Wall Street was also hit with the Dow Jones Industrial Average falling by 256.23 points, or 0.98%, to 25,865.05 on Friday. However, the index closed the week higher for the first time in three weeks, and saw the biggest weekly percentage gain for four.


The world’s largest economy reported a boom in jobs growth in February. Although usually a reflection of economic strength, the jobs figures were compiled in the middle of last month, before US companies and investors had begun to really worry about the coronavirus outbreak’s impact on the US economy.


As investors offloaded shares in riskier assets, surging demand for safe havens pushed the yield on benchmark government bonds to new record lows – where a lower yield means a higher price. The UK 10-year gilt yield fell as low as 0.206% in afternoon trading, having started the day at 0.33%.


The price of oil plunged by about 8% to $46 a barrel after the Opec group of oil-rich nations failed to reach an agreement to cut production, seen as vital to support the price as global energy demand slides. In a reflection of the growing pressure on the world economy, factory closures and weaker trade volumes have sapped demand.


Chris Iggo of the fund manager Axa Investment Managers said: “The retrenchment of normal business activity is creating victims as well as generating extreme moves in financial markets. We probably won’t quickly return to business as usual.”

Markets had rallied earlier this week as finance ministers and central bankers in the G7 group of rich nations promised a coordinated response to the outbreak, while the US Federal Reserve issued an emergency interest rate cut to support households and firms through the worst of the disruption.


However, analysts have warned that central banks lack adequate firepower to respond to the economic fallout triggered by efforts to contain the disease, with interest rates in most advanced nations remain close to the lowest levels on record following a slow decade of economic recovery since the financial crisis.


Escalation of quarantine measures are expected to hit retail, with travel and tourism firms also reporting weaker bookings.


Companies around the world have also started to take tougher steps to contain the spread of the disease, against a backdrop of rising global concern as the number of infections passed 100,000.


Facebook closed its London offices and told staff to work from home after an employee was diagnosed with Covid-19, Sky News reported. The staff member is normally based in Singapore but visited the London office from 24-26 February.


Jaguar Land Rover warned it had suffered an 85% drop in sales in China last month as the coronavirus kept buyers indoors and most dealerships shut.


Date : 15 Mar 2020 03:00 PM

As the coronavirus spreads, a drug that once raised the world’s hopes is given a second shot

a decade ago, a group of chemists cooked up a compound they simply called 3a and that, in lab experiments, fought off a number of different viruses. One was a type of coronavirus.


Now, the descendant of that molecule — Gilead Sciences’ remdesivir — is being rushed to patients with infections from the novel coronavirus in hopes that it can reduce the intensity and duration of Covid-19 and ease the burden of the pandemic on health systems.


Remdesivir, in the spotlight as scientists and governments scramble to find a treatment for the disease, took a circuitous route to center stage. Born as a general antiviral candidate, researchers threw it at an array of viruses and saw where it stuck. It bounced along from Gilead’s labs to academic centers, nudged by both federal taxpayer dollars and support from the company. It kept turning up whiffs of potential in cells and animals infected by other coronaviruses like SARS and MERS, but these bugs weren’t causing sustained global crises. For years, Gilead was primarily focused on ushering remdesivir into trials and toward approval for a different kind of infection: Ebola.

But there’s nothing like a pandemic to break the emergency glass on all possible options.


Remdesivir is now being tested in five Covid-19 clinical trials that have been set up at breakneck speed. It’s been delivered through a compassionate use program to some patients, including the first case in the United States. The first trial results are expected next month, though some analysts have already raised concerns about the prospects based on the drips of data emerging from a small number of patients.


Others’ hopes are high for the drug. As of now, there are no approved therapies for any coronavirus infection, and remdesivir is the farthest along in the development process of any candidate.


“There’s only one drug right now that we think may have real efficacy,” Bruce Aylward of the World Health Organization said last month. “And that’s remdesivir.”

Remdesivir’s odyssey illuminates the complicated trajectory drugs can take as they are forged, refined, scrutinized, and moved into human studies. But its long, meandering path also underscores why drugs need to demonstrate their efficacy in these studies. The drug similarly had lofty expectations as an Ebola treatment, and strong data from animal studies to boot. But in a landmark trial that compared four experimental therapies and was published last year, two other treatments were shown to dramatically reduce deaths from the infection, while remdesivir faltered, producing less impressive survival benefits.


“Drug discovery and development is usually a very long and tedious process and you could have many failures on the path to an approved product,” Tomas Cihlar, Gilead’s vice president of virology, said in an interview with STAT.


As for remdesivir’s chances in Covid-19, Cihlar said:  “It would be wonderful if it works. But it needs to be proven.”

When the patient with the first known U.S. case of Covid-19 was admitted to Providence Regional Medical Center in Everett, Wash., on Jan. 20, he wasn’t all that sick.


The 35-year-old man had the respiratory infection’s most common symptoms of fever and cough, but had no trouble breathing and no evidence of pneumonia — inflammation of the lungs’ air sacs. But around that time, his doctors saw a report from China that detailed that some patients there developed more severe symptoms several days into their illnesses.


“That perked our ears to the worsening of this disease,” said George Diaz, the infectious disease section chief at the hospital.


Within a few days, the man — who had visited family in Wuhan, China, where the outbreak is believed to have started, and returned home to Washington Jan. 15 — started experiencing shortness of breath and requiring oxygen. An X-ray revealed pneumonia.


Diaz informed officials at the Centers for Disease Control and Prevention, with whom he had been conferring daily, that the patient was taking a turn for the worse. The CDC suggested trying an experimental drug, and mentioned Gilead’s remdesivir.


Hospital officials got in touch with Gilead about providing the drug, and then got the approval from the Food and Drug Administration to treat the patient through a compassionate use program, which allows unapproved drugs to be given under select circumstances outside of clinical trials. Gilead overnighted the drug to the hospital.


“Treatment with intravenous remdesivir was initiated on the evening of day 7, and no adverse events were observed,” the medical team wrote in a case report in the New England Journal of Medicine. The man started feeling better the following day.


“We were aware that he was the first patient on the planet getting the drug for this infection, so we were super interested to see, hopefully, if he would improve,” Diaz recalled.


The apparent success in one patient does not prove the drug is effective. That is where the large trials that will compare remdesivir to placebos come in.


Remdesivir has been able to advance into clinical studies so quickly for two key reasons. For one, thanks to its use in Ebola, it was known to be generally safe in humans. And two, it had a large body of preclinical evidence — that is, data from studies in cells in lab experiments and in infected animals — that indicated it could temper coronavirus infections. One study published just last month by researchers from Gilead and the National Institute of Allergy and Infectious Diseases showed remdesivir inhibited the replication of MERS, a related coronavirus, in infected monkeys.


Much of this preclinical research has been conducted through collaboration among the National Institutes of Health, academic labs, and Gilead, steered by the Antiviral Drug Discovery and Development Center, or AD3C. The center is an NIH-funded program run out of the University of Alabama at Birmingham that, since 2014, has been on the hunt for new treatments for emerging viruses.


Since drug screens revealed that remdesivir had potential as a coronavirus fighter, it was routed into the arm of AD3C focused on this family, a project led by Mark Denison at Vanderbilt University and Ralph Baric at University of North Carolina. Starting in about 2015 and with the backing of Gilead, they and scientists in their labs have pulled back the curtain on how exactly remdesivir curtails coronaviruses and demonstrated that it can block the viruses from multiplying in infected animals.

The researchers got an additional NIH grant to ready remdesivir for clinical trials, and thought the target could be MERS, which has caused 858 deaths and nearly 2,500 cases, mostly in Saudi Arabia, since it started infecting people in 2012. But even with that focus, they were also thinking about how the drugs they were studying could be used for the next spillover — when a virus jumps from animals to people.


“We’ve always thought that coronaviruses were a family on the move,” said Tim Sheahan, a UNC coronavirus expert.


Even with that expectation, though, the researchers who have toiled away for years on these projects without much fanfare find themselves caught off guard now.


“People like me, people doing basic science, oftentimes the work that we’re doing has no obvious direct translation to improving human health,” Sheahan said. “It’s hard to imagine that the work we’ve done in a lab in North Carolina could be saving people’s lives around the world. It’s incredibly gratifying, but it’s surprising and unusual for someone like me to experience this.”


But if remdesivir had hopes as an Ebola treatment, how can it also work against coronaviruses? Their viral families are so different, “it’s like saying a giraffe versus an elephant,” said Gene Olinger, a former U.S. Army Ebola researcher, who is now the scientific advisor at MRI Global, a nonprofit research organization.


The trick is that remdesivir does not go after the virus directly. Instead, it targets the system the virus uses to replicate itself, hijacking it like you would your office’s copy machine as part of a company-wide prank.


These viruses have a genome that consists of a strand of RNA. To make copies of themselves, they rely on a molecule called a polymerase to string together the individual building blocks of the viral genome. These are like the “letters” that we think of composing DNA.

Remdesivir is an “analog,” designed to mimic the appearance of one of the RNA letters, adenosine. It looks so similar that the polymerase can unknowingly pick it up instead of the real adenosine and insert it into the strand of viral genome that’s being constructed, like bringing home the wrong twin from summer camp. Once in place, the analog acts as a cap, preventing any additional pieces from being strung on. This leaves the strand short of the full genome. The virus can’t go on to replicate or infect other cells.


“The polymerase grabs it almost accidentally and uses it in place of adenosine,” said Maria Agostini, a postdoctoral researcher in Denison’s Vanderbilt lab. “The polymerase can kind of get it mixed up sometimes.”


The drug can inhibit coronaviruses as well as Ebola because their polymerases are similar enough that its cloak-and-dagger operation fools them all. (Remdesivir does not appear to work on other viruses with more unrelated forms of polymerase.)


Like a bad song clears out a dance floor, remdesivir can clear the viral levels in a person, as long as it can interrupt enough replication. The key, researchers say, is that it has to be delivered somewhat early in an infection, as the virus is still proliferating. In patients who develop severe disease, it’s not the virus that’s always the main problem. The body’s own immune system can react by heading into overdrive and causing secondary complications like organ damage. An antiviral can’t head that off once it’s begun.


“If you wait to treat someone until they’re in the ICU on a ventilator, it’s too late, you’re not going to do a darn thing,” said Richard Whitley, an infectious disease expert at UAB who coordinates the antiviral consortium.

When remdesivir stumbled in the Ebola trials last year, it was a disappointment, Gilead’s Cihlar acknowledged. But he argued it refocused the company’s attention to other targets for the drug.


They didn’t have to wait long.


In December, reports popped up from Wuhan of mysterious pneumonia cases. In early January, word came of a new coronavirus. “At that point, we started getting ready,” Cihlar said.


And when Chinese scientists published the virus’ genome, Gilead zeroed in on the portion that contained the recipe for the replication machinery — the polymerase. They saw it was nearly identical to the version in SARS — evidence that remdesivir might work against this virus as well. “That was a really strong signal for us,” he said.


There are now five clinical trials of remdesivir in Covid-19: two run by Chinese scientists, one looking at severe infections, and one at mild and moderate infections; one sponsored by NIAID; and two sponsored by Gilead in countries around the world with a large number of cases, looking at different disease severities and dosing regimens.

Date : 16 Mar 2020 06:27 PM

Coronavirus pandemic has delivered the fastest, deepest economic shock in history

The shock to the global economy from Covid-19 has been faster and more severe than the 2008 global financial crisisand even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10% and GDP contracted at an annualised rate of 10% or more. But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialised in three weeks.


Earlier this month, it took only 15 days for the US stock market to plummet into bear territory (a 20% decline from its peak) – the fastest such decline ever. Now, markets are down 35%, credit markets have seized up and credit spreads (like those for junk bonds) have spiked to 2008 levels. Even mainstream financial firms such as Goldman Sachs, JP Morgan and Morgan Stanley expect US GDP to fall by an annualised rate of 6% in the first quarter and by 24% to 30% in the second. The US Treasury secretary, Steve Mnuchin, has warned that the unemployment rate could skyrocket to above 20% (twice the peak level during the financial crisis).

In other words, every component of aggregate demand – consumption, capital spending, exports – is in unprecedented freefall. While most self-serving commentators have been anticipating a V-shaped downturn – with output falling sharply for one quarter and then rapidly recovering the next – it should now be clear that the Covid-19 crisis is something else entirely. The contraction that is now under way looks to be neither V- nor U- nor L-shaped (a sharp downturn followed by stagnation). Rather, it looks like an I: a vertical line representing financial markets and the real economy plummeting.

Not even during the Great Depression and the second world war did the bulk of economic activity literally shut down, as it has in China, the US and Europe today. The best-case scenario would be a downturn that is more severe than the financial crisis (in terms of reduced cumulative global output) but shorter-lived, allowing for a return to positive growth by the fourth quarter of this year. In that case, markets would start to recover when the light at the end of the tunnel appears.


But the best-case scenario assumes several conditions. First, the US, Europe and other heavily affected economies would need to roll out widespread Covid-19 testing, tracing, and treatment measures, enforced quarantines, and a full-scale lockdown of the type that China has implemented. And, because it could take 18 months for a vaccine to be developed and produced at scale, antivirals and other therapeutics will need to be deployed on a massive scale.

Second, monetary policymakers – who have already done in less than a month what took them three years to do after the financial crisis – must continue to throw the kitchen sink of unconventional measures at the crisis. That means zero or negative interest rates; enhanced forward guidance; quantitative easing; and credit easing (the purchase of private assets) to backstop banks, non-banks, money market funds, and even large corporations (commercial paper and corporate bond facilities). The US Federal Reserve has expanded its cross-border swap lines to address the massive dollar liquidity shortage in global markets but we now need more facilities to encourage banks to lend to illiquid but still-solvent small and medium-size enterprises.


Third, governments need to deploy massive fiscal stimulus, including through “helicopter drops” of direct cash disbursements to households. Given the size of the economic shock, fiscal deficits in advanced economies will need to increase from 2-3% of GDP to about 10% or more. Only central governments have balance sheets large and strong enough to prevent the private sector’s collapse.


But these deficit-financed interventions must be fully monetised. If they are financed through standard government debt, interest rates would rise sharply, and the recovery would be smothered in its cradle. Given the circumstances, interventions long proposed by leftists of the Modern Monetary Theory school, including helicopter drops, have become mainstream.


Unfortunately for the best-case scenario, the public-health response in advanced economies has fallen far short of what is needed to contain the pandemic and the fiscal-policy package currently being debated is neither large nor rapid enough to create the conditions for a timely recovery. As such, the risk of a new Great Depression, worse than the original – a Greater Depression – is rising by the day.


Unless the pandemic is stopped, economies and markets around the world will continue their freefall. But even if the pandemic is more or less contained, overall growth still may not return by the end of 2020. After all, by then, another virus season is very likely to start with new mutations; therapeutic interventions that many are counting on may turn out to be less effective than hoped. So, economies will contract again and markets will crash again.


Moreover, the fiscal response could hit a wall if the monetisation of massive deficits starts to produce high inflation, especially if a series of virus-related negative supply shocks reduces potential growth. And many countries simply cannot undertake such borrowing in their own currency. Who will bail out governments, corporations, banks, and households in emerging markets?

In any case, even if the pandemic and the economic fallout were brought under control, the global economy could still be subject to a number of “white swan” tail risks. With the US presidential election approaching, the Covid-19 crisis will give way to renewed conflicts between the west and at least four revisionist powers: China, Russia, Iran, and North Korea, all of which are already using asymmetric cyberwarfare to undermine the US from within. The inevitable cyber attacks on the US election process may lead to a contested final result, with charges of “rigging” and the possibility of outright violence and civil disorder.


Date : 28 Mar 2020 01:57 PM

Important Update from KINGPAYMENTS.NET CEO

I felt it was important to let you know about the crucial steps KINGPAYMENTS.NET has taken to ensure our employees’ 

continued safety throughout the COVID-19 (Coronavirus) pandemic, and reassure you there is no change to your service.

It's important for everyone to do their bit in tackling this global emergency, which is why all KINGPAYMENTS.NET offices have been closed indefinitely, all our physical projects closed and we work with more focus on 

Online trades and our employees are now operating from the safety of their homes. We are also providing our teams with the most up-to-date information on the ever-changing situation. 

Thanks to the flexibility and dedication of our customer support teams, we are able to keep on offering our customer support, 24/7, so your service experience will remain unchanged. Likewise, there will be no disruption 

to your usual  KINGPAYMENTS.NET services.


“ALL PAYMENTS WILL PROCESS INSTANTLY LIKE EVER”


We also understand some of our customers will find themselves in a tough spot financially as a result of COVID-19, please open a support ticket with us, and our team will see what we can do to help. I urge you not to abuse this offer, 

please allow it to be used by those who need it most.


In these difficult times it's always important to look out for each other and lend a helping hand where we can. I wish you and your family good health as we navigate the road ahead.


Gratefully Yours,


Dr. Frank Kaminski

KINGPAYMENTS.NET


Date : 01 Apr 2020 03:38 AM