Aurelia Butler

The House of Representatives members said in a letter to Tai that her current proposal to re-launch exclusions for a limited number of Chinese imports subject to “Section 301″ is too narrow, and the tariffs paid since a broader exclusion programs lapsed a year ago have hurt American companies and workers.”These increased costs are undermining the competitiveness of American manufacturing workers whose inputs are now more expensive compared to those made by foreign competitors,” said the lawmakers, led by Democrats Ron Kind of Wisconsin and Suzan DelBene of Washington and Republicans Darin LaHood of Illinois and Jackie Walorski of Indiana.”Sadly, the Section 301 tariffs have broadly impacted U.S. businesses in the manufacturing, agriculture, fishing, retail, energy, technology, and services industries.”As part of Tai’s announcement of a new strategy to push China on trade commitments last October, USTR sought public comments on a narrow list of exclusions for 549 Chinese import categories, including industrial components, thermostats, medical supplies, bicycles and textiles.The lawmakers said this was too narrow, covering only 1% of original exclusion applications, and the lapse of previous exclusions have deepened challenges to businesses, especially small and medium-sized enterprises.”Given this, we strongly urge the USTR to expand its exclusion process as quickly as possible to give American workers, businesses, and families badly needed economic relief,” the lawmakers wrote, calling also for a longer period of retroactivity for the exclusions prior to Oct. 12, 2021.The letter comes amid increasing calls by business groups for the Biden administration to cut tariffs as a means to ease inflationary pressures. More

WASHINGTON (Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) will begin examining for-profit colleges’ in-house private loans program as it ramps up scrutiny of the student loan sector under its new Democratic leadership, the agency said on Thursday.CFPB examiners will review loan origination and servicing, focusing on colleges that improperly accelerate payments, fail to issue refunds, or which restrict class enrollment or withhold academic transcripts from students that owe debt, it said. The CFPB currently oversees private student loans from outside lenders, but the new policy would see it examine colleges’ in-house private loan programs for the first time. The new policy could expose colleges to potential enforcement action if the CFPB finds wrongdoing. It comes as President Joe Biden’s Democratic administration aims to get a grip on the country’s student loan crisis and ramp up scrutiny of private loan providers, as well as address inequities in Americans’ access to higher education.”Schools that offer students loans to attend their classes have a lot of power over their students’ education and financial future,” said CFPB Director Rohit Chopra. “It’s time to open up the books on institutional student lending to ensure all students with private student loans are not harmed by illegal practices.”Schools have not historically been subject to the same servicing and origination oversight as traditional lenders. The CFPB says its concerns are based on past abuses during the mid-2000s, where schools charged struggling students extortionate interest rates and later strong-armed them with debt collection practices, it added. More

Speaking in a virtual panel of the World Economic Forum, Tai cautioned against a backward-looking “return to normalcy” after two years of COVID-19-induced disruptions. “I think that it is time for us to acknowledge that our goal really shouldn’t be to try to go back to the way the world was, say in 2019, but to take lessons, very hard earned lessons, very painful lessons that we have experienced over the past two years and take this opportunity to build toward something that is different and better,” Tai said.Key to this will be to strengthen and diversify supply chains, she said.The chairman of ports giant DP World, Sultan Ahmed bin Sulayem told the forum it could take up to two years to return to normal once the pandemic ends. Intel Corp (NASDAQ:INTC) chairman Pat Gelsinger, addressing the same forum, said the pandemic showed a clear need for more resilient and diversified supply chains. This should include their stress-testing for critical components the way stress-testing of financial institutions improved after the 2008-2009 financial crisis.He said Intel was striving, with the help of U.S. and European incentives for re-shoring of chip manufacturing, for a “globally distributed, resilient supply chain where no market is uniquely dependent on any other supply, or any singular location, but there’s also always a duplicity of supply chains available across the globe.”World Trade Organization Director-General Ngozi Okonjo-Iweala told the forum current disruptions in the global economy presented an opportunity to diversify supply chains to developing countries that have not benefited from previous waves of globalization.”We see shifts to Vietnam, Laos, Cambodia, Bangladesh, Ethiopia and so on in our data and I call it a way of re- globalizing and using this globalization and supply chain to solve some of the inequality problems,” Okonjo-Iweala said. More

It’s tough to turn the nuances of monetary policy into personality-driven narrative. But Christopher Leonard has succeeded in doing just that with The Lords of Easy Money. In it, he follows Thomas Hoenig, the plain-spoken Kansas City banker who was, back in 2010, the single dissenting vote on the policy-setting Federal Open Market Committee to stand against the US central bank’s quantitative easing programme. He turns the unassuming economist into the protagonist of a compelling tale about how the Federal Reserve changed the entire nature of the American economy.Hoenig was in many ways born to be a central banker. A thoughtful, quiet, easy-tempered man who rose over years at the Fed to head its Kansas City branch, he’s a Midwesterner to his core: prudent, balanced and the opposite of attention-seeking. But after the financial crisis, he broke out of the traditional Fed consensus and risked public fury (not to mention massive criticism from his peers) to sound the alarm about how a radical experiment in monetary policy, which involved pumping unprecedented amounts of money into the US economy, would increase inequality and encourage ever more risky behaviour on Wall Street.

He was right, of course. We’re all speculators now, a point that Leonard drives home throughout the book by following not only the politics and macroeconomics that drove Fed decision-making, but also its real-world fallout. More than a decade on from the Fed’s fateful decision to turn the liquidity spigots on full-blast, ultimately increasing its balance sheet from $2.3tn in 2010 to a whopping $7tn by 2020, most investors and even plenty of average people are aware that the central bank has, in some profound way, manipulated the market. What kind of sensible investing is possible in a world in which teenagers talk about “buying the dip”, retail traders on the popular Robinhood app push meme stocks into the stratosphere, and pension funds desperate for yield pour money into cryptocurrencies? It’s all part of what Leonard calls “the age of ZIRP”, referring to the “zero-interest-rate policy” that has made price discovery in US markets in particular next to impossible. He unpacks all the obscure trader terminology and its meaning, weaving this into a 40-year history of the central bank and its main actors, frequently coming back to Hoenig and his warnings as a touchstone to tie it all together. Weaving together narrative non-fiction with big ideas can be difficult. One of the best things about this book is that through Hoenig, Leonard, a business journalist, is able to tell the whole, complicated half-century story of how we got to where we are now in a way that isn’t at all wonky. There are real people here, making real decisions about the real world. What’s more, this isn’t just about 10 years of easy money. It’s about a culture in which the Fed has over the past several decades taken over from government as the key economic actor in the country.

The central bank has always held a crucial but fraught position in the US political system. Americans need the Fed, but don’t like it being too powerful. It’s both a government agency but also a private bank. “It was controlled in Washington, DC, but also decentralized. It was given total control over the money supply, but didn’t replace the private banking system,” writes Leonard. “It was insulated from voters, but broadly accountable to politicians.”That strange middle ground enabled bankers like Alan Greenspan, Fed chair from 1987-2006, to exert ever more power relative to politicians, who were all too happy to hand over the decision-making baton to someone else. With low rates and other monetary tools, America’s central bankers created a kind of saccharine growth on Wall Street that was potent and yet divorced from the real story on the ground. The Fed-led “irrational exuberance” — to deploy Greenspan’s memorable phrase — was behind the dotcom bubble; the crash of 2008; the past few years’ troubles in the vital repo market that underpins billions of dollars in financial transactions; and to a large extent the outperformance of equities, even the most speculative ones, amid a global pandemic (we don’t get too much about that, since the narrative stops around 2020). Part of the root problem was that Greenspan and most of his successors worried more about price inflation than asset inflation, which was, after all, good for the investing class. That was convenient, given that Greenspan himself was quite invested in being a part of that class, as detailed in The Man Who Knew by Sebastian Mallaby. The more he did to keep markets propped up, the better it was for the business elite, and the less politicians had to do, creating a dysfunctional dance in which the fortunes of asset owners versus everyone else moved further and further apart.But Hoenig always cared more about Main Street. And he could see, over the past decade in particular, that while inflation (usually the bugaboo of those who worry about loose monetary policy) wasn’t rising, asset prices were, in ways that encouraged everything from our record corporate debt bubble to energy speculation to a wildly overleveraged commercial real estate market. Indeed, there’s now academic evidence to show that the Fed has for decades stretched out recovery cycles in artificial ways that have papered over big economic problems, creating bigger and more damaging bubbles.Many of us have worried for some time now about when this latest one will pop. Given the recent volatility following Fed chair Jay Powell’s admission that today’s inflation is no longer “transitory” and that both interest rates and balance sheets need to be normalised, it’s likely we’ll see some pain this year. What will happen when central bankers, “the only game in town” (to quote another Cassandra of easy money, Mohamed El-Erian), finally, by choice or by force, pull the plug?Nothing good. We’ve built “an entire economic system” around a “zero rate. Not only in the US but globally. It’s massive,” says Hoenig. “Now, think of the adjustment process to a new equilibrium at a higher rate. Do you think it’s costless? Do you think that no one will suffer? Do you think there won’t be winners and losers? No way.” Or, as Leonard himself puts it, the financial crash of 2008 never really ended. It just morphed into another crisis, the bills for which have yet to be paid. The Lords of Easy Money: How the Federal Reserve Broke the American Economy by Christopher Leonard Simon & Schuster, $30, 362 pagesRana Foroohar is the FT’s global business columnist More

When America’s Bureau of Labor Statistics released data this month showing that consumer price inflation had surged to 7 per cent, many investors were shocked. No wonder: this marks the fastest jump since 1982.But here is another number that should spark concern: 17 per cent. That was the annual inflation rate for overall trucking costs last month, according to a (deeply buried) section of the bureau’s data. For the long-haul trucking sector, the number was even scarier: 25 per cent.That is bad news for business — and consumers — given that almost three-quarters of freight in America is moved by trucks. Or to put it another way, if you want to understand what lies behind that scary 7 per cent inflation number, don’t just track raw material, energy or cross-border shipping costs; watch those oft-ignored truckers too. So is this price explosion just a “transitory” glitch, to cite the phrase employed by Federal Reserve officials last year? It would be nice to think so. After all, basic economics would suggest that a surge in trucking demand — of the sort seen in America as the economy rebounded from the pandemic slump — should prompt red-blooded capitalist businesses to increase supply (by finding more trucks and truckers), curbing inflation. Indeed, at the start of the pandemic, economists at the BLS released a lengthy study that argued the trucking market was a place where labour supply could indeed adjust to demand, just as free-market enthusiasts might expect.But these days it is proving strikingly hard to expand capacity, due to so many underlying structural impediments in the market. What the current economic boom has revealed, in other words, is a host of shortcomings around trucking that were previously either concealed — or ignored. And that makes trucking a potent symbol of America’s wider problems in its political economy. The problems revealed in the transit world are anything but “transitory”. To understand this, consider the issues behind that price surge. One is the rise in oil prices, and the fact that chaos in global supply chains has thrown domestic trucking cycles awry. But the bigger issue seems to be a lack of human truckers. Chris Spear, head of the American Trucking Associations, said this week that the sector (with around 3m hires overall) is currently short of 80,000-odd workers. Some of this shortfall reflects a Covid-linked delay in people returning to their jobs. However, Spear reckons this figure will double in the coming years.At first glance, that might seem odd. After all, a few years ago pundits were predicting that blue-collar trucking jobs would be wiped out by robot drivers. But in reality, any widespread switch to automation is unlikely to happen for many years, because of political opposition and regulatory constraints — voters and politicians are terrified of those robot truckers. Meanwhile, young workers seem to be shying away from the job; four out of five truckers today are over 45.That might be because of all the robot chatter. However, there are practical — short-term — reasons for the trend. On paper, truckers can earn around $100,000 a year, a high wage for blue-collar work. But entrants need state licences, both costly and time-consuming to acquire. Moreover, these days most drivers work as self-employed contractors, and “bear the burden of gas, insurance, and maintenance costs, which reduces their take home pay”, as a White House paper noted last month. Even in normal times, this makes the job precarious, particularly since “long-haul full-truckload drivers only spend an average of 6.5 hours per working day driving despite being allowed to drive a maximum of 11 hours” — and are not paid for their idle time. During the pandemic, however, the insecurity has become worse due to medical risks and unpredictable supply-chain delays. As a result, other blue-collar jobs — like construction — seem increasingly attractive. As trucker Omar Alvarez recently declared in an opinion piece: “The real shortage is a shortage of good, union jobs that fairly compensate workers and treat us with the dignity and respect we deserve.”Is there any fix? The White House is trying to use industrial policy tweaks: last month it pledged to reduce the minimum age for trucking to 18 from 21, target veterans, force states to simplify their licensing system and work with states to subsidise training. Trucking companies are trying to embrace innovation, using artificial intelligence platforms to manage schedules or Spanish-speaking recruiters to tap the Hispanic market for more workers. Companies are also paying more, causing take-home pay to jump by some 7-12 per cent this year, according to the White House. But this is unlikely to plug the driver gap soon; or not without even more dramatic rises in wages, a better driver safety net or a sudden decline in economic demand. The latter might emerge; December’s month-on-month trucking inflation data was lower than in November. Since the monthly series is not seasonally adjusted, however, it is dangerous to read this as a trend. Right now, the key point is this: those truckers are a potent sign of how hard it will be to halt inflation with monetary policy alone. Therein lies the dilemma for the Federal Reserve — and the White House. [email protected] More

The European Commission aims to conclude talks with the UK over Northern Ireland by the end of February, its chief negotiator has said, while giving a bleak assessment of progress so far.Maros Sefcovic told a private meeting of members of the European parliament on Thursday that both sides wanted a deal to avoid the issue dominating the campaign ahead of elections in Northern Ireland in May, according to those present.But he warned that the UK had not changed its demands despite an improved tone after Liz Truss, the foreign secretary, replaced Lord David Frost as Brexit negotiator. He added that London continues to insist on a fundamental rewrite of the Northern Ireland protocol, which it signed in 2019 and which governs post-Brexit trade in the region. Protestant unionist parties have condemned the protocol and are likely to campaign vociferously against it as they try to defend their majority in the Stormont assembly.The region remains tied to the EU single market rules for goods to avoid a trade border on the island of Ireland, which could undermine peace after decades of civil strife. This means goods travelling from Great Britain to Northern Ireland are subject to customs as well as food and animal health checks.Talks began in October after the EU claimed it was offering to cut up to 80 per cent of checks on animal and plant-based products, and halve the customs paperwork, but London says the offer would not deliver such reductions in practice. Sefcovic and Truss met for talks for the first time on January 13 and will convene again in Brussels on Monday. A joint statement after the last meeting underlined the warmer atmosphere between the two sides but Sefcovic said he was surprised that Truss continued to demand changes the EU has already ruled out.These include dropping customs requirements for goods the UK deems are destined only for Northern Ireland. Truss also wanted an arbitration mechanism to hear disputes before any referral to the European Court of Justice. And she wanted to remove the requirement for the EU to approve state aid, the subsidies given to companies. An ally of Truss said: “There hasn’t been any formal agreement between two sides on a timescale, although of course we’ve always stressed the urgency of finding solutions.“Of course it’s welcome if the EU recognises the problems of talks dragging on into the Northern Ireland election campaign.”Truss outlined her demands in an article in the Belfast Telegraph on Thursday. She said the EU was “treating Northern Ireland as if it was in the single market and part of the EU when we all know it is not”. An EU diplomat said Sefcovic told member states’ ambassadors on Thursday that Truss was adopting demands he thought Frost had abandoned. “We are going backwards in time,” the diplomat said.An EU official said Sefcovic was more likely to pause, rather than end, talks after February if there was no agreement. He has publicly called for more urgency in the process.Sefcovic also told MEPs that business and civil society in Northern Ireland backed the EU’s proposals and that more than 60 per cent of the population supported the protocol. He added that any changes to the protocol could be enacted swiftly once agreed.Additional reporting by Peter Foster in Brighton More