Economy

In a bleak series of IMF and World Bank annual meetings in Washington this week, policymakers left reeling by the Covid pandemic, war in Ukraine and spiralling inflation were reminded by the IMF of yet another crisis: climate change.“The world has lived through shock after shock after shock,” said IMF managing director Kristalina Georgieva earlier this week. “And there is no pause button on the climate crisis while we deal with these other crises.”The point was not lost on David Malpass, the World Bank’s Donald Trump-appointed president, who has been under pressure to resign since refusing to say last month whether he believed in climate change caused by humanity. He insisted several times at the annual meetings this week that he did.Despite the overall gloom of a week dominated by talk of economic instability, ministers and climate advocates say they left with a sense of optimism that the global financial architecture that has been in place since the second world war could pivot to help tackle climate change.“I do think that we are moving towards some kind of moment,” said Avinash Persaud, special envoy for climate finance to the prime minister of Barbados. “There’s a recognition that the multilateral development banks need to do a lot more — especially the World Bank, but not just the World Bank — on climate finance”. Barbados has spearheaded the efforts by smaller, less wealthy nations to secure funds to help tackle the ravages of climate change, in part by pushing the IMF and World Bank, both founded in 1944, to change.Barbados’s prime minister Mia Mottley, who in a recent lecture said the lenders “no longer serve the purpose in the 21st century that they served in the 20th century”, has called on the lenders to expand their use of low-interest, long-term debt instruments to finance the energy transition, and to offer concessional funding for climate resilience projects. There were further signs that the so-called “Bridgetown Agenda” was gaining traction among leaders of wealthier countries.This week the US, Germany and G7 countries handed a written proposal to the World Bank, a leading provider of loans and grants to poorer nations, setting out a series of measures to be considered. These include offering concessional funding for climate projects, scaling up use of guarantees and lending to subsovereign entities, like green city initiatives, according to the proposals, which have been seen by the Financial Times. The existing multilateral development finance architecture “was not designed” to address “transboundary” challenges like climate change and pandemics, the paper said, and the world was experiencing “funding gaps”. It added: “The world is evolving, and the World Bank Group must evolve with it.”A German official said the World Bank’s management was “now more receptive” to exploring reform proposals linked to climate finance.

“The World Bank is always saying they are the biggest climate financier and that’s right — but they are the biggest animal in town,” said the official. “They need to do more on climate.”The paper echoed remarks made by US Treasury Secretary Janet Yellen earlier this month, in which she called for Malpass to produce “an evolution road map” by December. Yellen suggested that the development banks broadly should make greater use of concessional finance, including grants, to fund investments where the benefits are shared globally, and specifically to middle-income countries to help them shift their economies away from coal.Persaud agreed that the lenders would need to address “the middle income problem”. “It’s less sexy, but 70 per cent of the world’s poor live in these countries, and they rely on market debt,” said Persaud. “If you are climate vulnerable and not having access to funding and not being able to invest in resilience — it’s a problem.” Claire Healy, Washington director of E3G, a climate policy think-tank, said it was “exciting” to “see the shareholders acting like shareholders and being very clear about what they want to see from their equity”. “There is a political coalition forming with Barbados and other, larger countries like the US and Germany — to make change at these institutions there has to be a collective political coalition,” Healy said. Over the week, the IMF announced that its new Resilience and Sustainability Trust, a pot of money earmarked to help low-income and most middle-income countries deal with climate change, pandemics and “structural challenges”, was now operational after receiving initial pledges of $37bn.  More

LONDON (Reuters) -Britain’s new finance minister Jeremy Hunt said on Saturday some taxes would go up and tough spending decisions were needed, signalling further reversals from Prime Minister Liz Truss as she battles to keep her job just over a month into her term.In an attempt to appease financial markets that have been in turmoil for three weeks, Truss fired Kwasi Kwarteng as her chancellor of the exchequer on Friday and scrapped parts of their controversial economic package.With opinion poll ratings dire for both the ruling Conservative Party and the prime minister personally, and many of her own lawmakers asking, not if, but how Truss should be removed, she has turned to Hunt to help salvage her premiership less than 40 days after taking office.”We will have some very difficult decisions ahead,” Hunt said as he toured TV and radio studios to give a blunt assessment of the situation the country faced, saying Truss and Kwarteng had made mistakes.”The thing that people want, the markets want, the country needs now, is stability,” Hunt said. “No chancellor can control the markets. But what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions on both spending and tax.”Truss won the leadership contest to replace Boris Johnson on a platform of big tax cuts to stimulate growth, which Kwarteng duly announced last month. But the absence of any details of how the cuts would be funded sent the markets into meltdown.She has now ditched plans to cut tax for high earners, and said a levy on business would increase, abandoning her proposal to keep it at current levels. But it is not clear if that has gone far enough to satisfy investors. Hunt is due to announce the government’s medium-term budget plans on Oct. 31, in what will be a key test of its ability to show it can restore its economic policy credibility. He said further changes to Truss’s plans were possible. “Giving certainty over public finances, how we’re going to pay for every penny that we get through the tax and spending decisions we make, those are very, very important ways that I can give certainty and help create the stability,” he said.He cautioned spending would not rise by as much as people would like and all government departments were going to have to find more efficiencies than they were planning. “Some taxes will not be cut as quickly as people want, and some taxes will go up. So it’s going to be difficult,” he said, adding that he would sit down with Treasury officials on Saturday before meeting Truss on Sunday to go through the plans.’MISTAKES MADE’Kwarteng’s Sept. 23 fiscal statement prompted a backlash in financial markets that was so ferocious the Bank of England (BoE) had to intervene to prevent pension funds being caught up in the chaos as borrowing costs surged.Hunt, an experienced minister and viewed by many in his party as a safe pair of hands, said he agreed with Truss’s fundamental strategy of kickstarting economic growth, adding that their approach had not worked.”There were some mistakes made in the last few weeks. That’s why I’m sitting here. It was a mistake to cut the top rate of tax at a period when we’re asking everyone to make sacrifices,” he said.It was also a mistake, Hunt said, to “fly blind” and produce the tax plans without allowing the independent fiscal watchdog, the Office for Budget Responsibility, to check the figures.The fact that Hunt is Britain’s fourth finance minister in four months is testament to a political crisis that has gripped Britain since Johnson was ousted following a series of scandals.Hunt said Truss should be judged at an election and on her performance over the next 18 months – not the last 18 days.However, she might not get that chance. During the leadership contest, Truss won support from less than a third of Conservative lawmakers and has appointed her backers since taking office – alienating those who support her rivals.The appointment of Hunt, who ran to be leader himself and then backed her main rival ex-finance minister Rishi Sunak, has been seen as a sign of her reaching out, but the move did little to placate some of her party critics. “It’s over for her,” one such Conservative lawmakers told Reuters after Friday’s events.The next key test will come on Monday, when the British government bond market functions for the first time without the emergency buying support provided by the BoE since Sept. 28. Gilt prices plunged late on Friday after Truss’s announcement.Newspapers said Truss’s position was in jeopardy, but with no appetite in the party or country for another leadership election, it was unclear how she could be replaced.”Even Liz Truss’s most loyal allies, viewing the matter through the most rose-tinted glasses available, must now wonder how she can survive,” the Daily Mail tabloid, which had previously given Truss strong support, said in its editorial.”Yet what is the alternative?” More

Kalon Tsang, a City of London pensions lawyer, was helping a mother of two complete a complicated disability benefits form as she distracted her six-month-old toddler with a toy.The woman, who lives in Catford, south London and is on maternity leave from her job as a carer, had come to seek help at St Luke’s community centre in Islington, north London, where Tsang volunteers at a weekly cost of living crisis clinic.The 37-year-old single parent had just paid a debt of thousands of pounds and was scared about the winter ahead, with grocery inflation hitting a record high last month.“It’s very worrying,” she said. “I’ve got my landlady to change the fridge so it uses less electricity. I almost don’t switch anything on and I live in an old house which is cold. I am trying to use less gas, freezing food and then microwaving it so I don’t use the oven.” She is one of an increasing number of clients being seen by the clinic, which launched in late March. Run in two locations by the Westway Trust, a charity, the scheme is funded and staffed by volunteers from Hogan Lovells, a City law firm whose partners earn up to £1.8mn a year.Despite the government’s support package to help households meet rising energy bills, Britain faces a tough winter. Some 73 per cent of adults reported a rise in living costs between August and September, according to the Office for National Statistics. Poorer households spend an above-average proportion of their income on energy and food, so they are more vulnerable to price increases. The clinic, headed by John Mahoney, a solicitor at the Westway Trust, helps people struggling to pay utility bills complete welfare benefits forms and apply for grants. John Mahoney: ‘People coming here are struggling and getting into debt. They have no savings and often can’t borrow more’ © Charlie Bibby/FT“It’s about income maximisation really,” said Mahoney, who first assesses a person’s financial position on the phone before helping them face-to-face. “People coming here are struggling and getting into debt. They have no savings and often can’t borrow more.” More and more people were starting to fall into utility debt, he said: “They are not normally so worried about it that they mention it at this time of year.”City law firms have long done pro-bono work. HerbertSmithFreehills, for example, staffs a weekly advice clinic in Tower Hamlets, one of the capital’s poorest boroughs. But such support has traditionally not focused on the cost of living, concentrating more on helping people deal with legal claims. Mahoney often signposts clients to schemes designed to help people pay their utility bills. These include Thames WaterHelp, a social tariff run by the UK’s largest water company that halves costs for Londoners earning less than about £20,000 a year, excluding disability benefits. Hardly anyone knows about the scheme, said Mahoney, because “you have to go through about six clicks on the website to get there”, but the clinic has helped about a fifth of its clients apply.In June, the clinic supported a 92-year-old who was unable to read or write and shared a council flat with his 62-year-old son. Although the son was made redundant early on in the pandemic, he did not claim any benefits, leading him to spend most of his savings and run up £1,000 in credit card debts. Kalon Tsang helps a client fill out her government forms © Charlie Bibby/FTMahoney established that the men had been wrongly advised by the jobcentre and were eligible for housing benefit and pension credit. He also identified that the son had been incorrectly told he could not succeed his father on their flat’s tenancy.Most of the 104 clients seen by the clinic between late March and late August said their spending power had been hit by the cost of living crisis and the pandemic, with two-thirds living with a disability or long-term illness. A quarter of clients found welfare application forms too difficult to fill in by themselves, with almost half either illiterate or digitally illiterate.

More than 70 Hogan Lovells staff have signed up to volunteer at the clinic. Yasmin Waljee, partner, international pro bono, described it as “a critical time, when people need access to specialist advice more than ever”. Tsang said it was “good to do something different than the day to day” and that volunteering represented “one way to help” as families’ budgets are squeezed. On the day the Financial Times visited, Shah Warraich, a colleague of Tsang’s, had been on the phone to the benefits agency for almost two hours, helping a couple with two young children.As he ended the call, Warraich said he had secured them an extra £31.20 a week, which they should already have been receiving under universal credit. “It’s only taken him three phone calls and two hours,” said Mahoney drily. “It’s a really good result.” More

Here’s a list of places you might imagine seeing an argument over housing policy. A city council meeting. A late-night zoning hearing. Maybe a ribbon-cutting to christen a new affordable housing complex.Instead, there was Quinton Lucas, the mayor of Kansas City, Mo., on a stage dressed as the pope with a half-dozen hecklers in yellow T-shirts berating his new housing plan from the audience in front of him. Mr. Lucas had arrived at the outdoor Starlight Theater on a warm August evening for a cameo appearance in a local production of “Sister Act.” Just before he walked onto the stage, the demonstrators, who belonged to a group called KC Tenants, unfurled a banner that read “Mayor Lucas: Developing Displacement.”A pack of uniformed security guards promptly smothered the scene. During the slow procession to the exit gates that followed, members of KC Tenants chanted, “The rent is too damn high!” while the audience tried to focus on the mayor/pope and the dancing nuns.Such is the state of housing in America, where rising costs are flaring into pockets of resistance and rage. Take two-plus years of pandemic-fueled eviction anxiety and spiking home prices, add a growing inflation problem that is being increasingly driven by rising rents, and throw in a long-run affordable housing shortage that cities seem powerless to solve. Add it up and the 44 million U.S. households who rent a home or apartment have many reasons to be unhappy.That unhappiness extends across the economic spectrum. At one end are renters who aspire to buy a home but have had their dreams dashed by high home prices and, now, rising mortgage rates. At the other are low-income tenants who make up the bulk of the 11 million households who spend more than half of their income on rent. In between is a hollowed-out middle class that is steadily losing ground, although not enough to qualify for much sympathy or help.The confluence of all these forces has fueled a swell of tenants’ rights activism that has brought organizing muscle and policies like rent control to cities far beyond the high-cost coasts. Kansas City, Mo., is a leading example. With a population of 500,000, where the avenues are lined with brick buildings and side streets have modest homes with raised porches, the city offers little to suggest a renters’ revolution. Zillow’s home value index puts the typical Kansas City home at $230,000, or more than $100,000 below the national level.But with a steadily expanding economy driven by the logistics and medical industries, Kansas City has seen its rents increase 8.5 percent from a year ago, outpacing the rest of the nation, according to rental search site Apartment List. Over the past decade, Kansas City, like many places, has added a collection of high-end towers and apartments even as its stock of low-income housing has withered. The strain from rising rents, which landlords say they need to cover their costs, is creeping from people working in low-income service professions to middle-income teachers and city workers, part of a festering affordable housing crunch that spreads more widely across the nation each month.KC Tenants is one result. Pairing aggressive protests with traditional lobbying, the group exploded onto the political scene during the pandemic and has since become instrumental in passing tenant-friendly laws like an ordinance that gives renters a lawyer during eviction proceedings. It has also left a trail of embittered opponents who find the group’s tactics, such as protesting outside judges’ homes, ill-suited to what many residents describe as a cordial Midwestern town.Organizers with KC Tenants protesting a new set of housing ordinances during a council meeting at City Hall.Barrett Emke for The New York Times“It’s a transition in politics for us,” said Mayor Lucas, a Democrat, who says he meets with the leaders of KC Tenants regularly, despite being a frequent subject of the group’s protests. “There is a new, almost tougher political edge, in the sense that there are people who are organizing and intrigued by politics and are very angry and are not coming out of the same institutions that built a lot of us.”America’s housing problem was simmering long before the pandemic, and tenant organizing is a well-established trade. What’s changed is the depth of the housing shortage and the suddenness with which Covid-19 and inflation have tipped smaller cities into an affordability crisis. This has opened the aperture for policies once deemed politically impossible, in a wider range of markets.Unlike homeowners, whose budget problems are blunted by a litany of tax breaks and fixed-rate mortgages, renters are mostly unprotected from rapidly rising prices. Once cities around the country passed widespread eviction moratoriums and emergency rent caps that were followed by tens of billions of dollars in pandemic rental assistance, it was only natural for housing activists to push for some of those temporary policies to be made permanent.Politically speaking, inflation has only helped. Nationally, rents are now 20 percent higher than they were in early 2020, creating an opportunity for renter-friendly laws to get baked into long-term policy.“People take for granted that rent is always going to go up,” said Tara Raghuveer, a co-founder of KC Tenants. “There’s so little political imagination about what could be different, and now I think that’s changing.”A hyper-focused worker who blends the rhetoric of a revolutionary with the efficiency of a chief executive, Ms. Raghuveer also directs the Homes Guarantee campaign, which works to create tenant unions around the country. She described KC Tenants as both a local movement and national experiment through which organizing ideas can be test-driven.“I think every national organizer should be accountable to a local base,” she said.During a three-day visit in which I hung around the office and shadowed meetings and protests, Ms. Raghuveer returned repeatedly to an idea that has become a refrain among tenant groups: the hope that growing resentment over housing costs is fostering a broad tenant identity that will inspire a wide range of renters to organize and vote with a shared interest. In the activist nomenclature, this is known as “tenants as a class.”That’s an audacious goal in a country where homeownership is all but defined as success. An irony of the nation’s housing problem is that it’s become so pervasive that it has created as many opportunities for cleavage as it has for coalition. Need has grown faster than resources, making housing policy a prism through which a stealth conflict between the middle class and the truly poor is filtered.Even so, what’s clear is that in Kansas City and elsewhere tenants are becoming a real constituency. That’s not something you could say as recently as a few years ago. But a few years ago the rent wasn’t quite so high.Getting the DataTara Raghuveer, KC Tenants’ founding director, working outside the East Patrol Division Station where the group camped out waiting for Board President Tiana Caldwell to be released on bond.Barrett Emke for The New York TimesKC Tenants began, more or less, as homework.Ms. Raghuveer, now 30, was in her final year at Harvard when she settled on a topic for her senior thesis: evictions, inspired by the work of Matthew Desmond, the Princeton sociologist and author of “Evicted,” the 2016 book that explored the housing struggles of low-income families in Milwaukee. She’d grown up in Mission Woods, a suburb on the Kansas side of the Kansas-Missouri border, and conducted her thesis research in the Kansas City metropolitan area.After college, Ms. Raghuveer was invited to talk about her thesis in policy forums, and that’s how she met the women who would help her start KC Tenants.One was Tiana Caldwell, whose husband contacted Ms. Raghuveer as the family bounced between hotels after being evicted from their apartment amid Ms. Caldwell’s treatment for ovarian cancer. Another was Diane Charity, a 72-year-old retiree who rents a two-bedroom townhouse and who met Ms. Raghuveer during a presentation at the local health department.“She gave all these stats and I said, ‘I need to talk to you,’” Ms. Charity said. “We’ve been telling these stories forever, and no one’s listening. But she had what it took — I’m sorry to say this, but to talk to white people and people in power, you got to have data.”KC Tenants was founded in 2019 by a group that included Ms. Charity and Ms. Caldwell. A local union allowed the group to work out of its offices, and a folding table there formed KC Tenants’ first headquarters. That’s where Ms. Raghuveer was working when the Covid-19 pandemic erupted.‘Shut it down’For all the uncertainty that the pandemic wreaked on markets and the economy, there seemed to be at least one prediction that housing experts and policymakers agreed on in its early days: a “tsunami of evictions” was imminent.Nearly three years later, that prediction has yet to materialize. The economic recovery from the immediate shock of Covid was faster than many expected, and in the meantime trillions of dollars in federal stimulus spending and eviction moratoriums helped plug the gaps. Still, the attention that Covid brought to housing insecurity is poised to be a lasting remnant of the pandemic economy, even after rental assistance wanes and the patchwork of moratoriums expire.It shows up in cities like Los Angeles, where the City Council this month voted to expand tenant protections for renters in the same meeting that it voted to end its Covid-related eviction moratorium. Last year, voters in St. Paul, Minn., passed a new rent control ordinance. The uneven rollout of federal rental aid, in which bureaucratic hurdles frequently prevented cities and states from getting money to tenants, inspired a number of cities to experiment with cash assistance programs that are now becoming a permanent feature of the policy landscape.For organizers, the pandemic provided an almost perfect opportunity to build their ranks. Here was a crisis that affected large swaths of renters pretty much all at once, in contrast to the normal state of affairs in which tenants who are falling behind or evicted are dealing with problems that seem unique to their lives and mostly handled in private. “Embedded in tenant organizing are deeper questions about the structure of our political economy,” said Jamila Michener, a professor of government and public policy at Cornell who has studied tenant organizations. “It’s getting people to think about not just how you can leverage power against your landlord or get the city council to help you, but also questions like: Why does the economy seem to be rigged against people like you so systematically?”In 2019, Jenay Manley was making $11.50 an hour at a QuikTrip gas station when a paperwork error cost her a voucher that covered a portion of her rent through the federal Section 8 housing program. To help make up for the loss, she allowed a former boyfriend who she said was abusive to move back in. One night, she texted a friend who had been displaced by a rent hike to ask what she could do. The friend, Maya Neal, suggested that she go to a KC Tenants meeting. There, she heard Ms. Caldwell tell her story of being evicted during cancer treatment.Maya NealBarrett Emke for The New York Times“It was just this clarifying moment of, We’re not OK. People are not OK,” she said. “We are struggling, and no one knows. And the more of us who tell our story, the more of us realize our story is worth being told.”A few months later, after leaving the night shift at QuikTrip, Ms. Manley, along with her sister and three children, stationed herself along Interstate 70, next to a minivan with “#CancelRent” scrawled across a window in purple marker. She was there to protest the burden of Covid on tenants in a socially distant manner.In July 2020, KC Tenants protested the end of a local eviction moratorium and tried to halt eviction proceedings by logging onto virtual court hearings and continuously reading a script — “Every eviction is an act of violence” — so that judges and lawyers couldn’t hear one another. By October, the group’s members were chaining themselves to the courthouse doors.They also started targeting lawyers and public officials, including through a rally in the front yard of Judge J. Dale Youngs, who oversees the circuit court in Jackson County. Mr. Youngs said in an interview that at one point the group spray-painted “FU” onto a flagstone path in his yard. He added that he did not know if “FU” was the completed thought or if the vandal was interrupted before the message could be finished.“I’m a pretty big supporter of the First Amendment, and I’m the first to admit democracy is messy,” Judge Youngs said. “But when you go protest in front of someone’s private home, I think the only reason you’re doing that is to let them know that you know where they live. And there’s something kind of inherently not cool about that.”Locals argue over how effective these protests were, but there’s little doubt that housing pressures brought on by Covid helped open the door to policies that otherwise would never have happened. The biggest, by far, is a new right-to-counsel ordinance in which the city will pay for a lawyer to represent any tenant facing eviction. The measure was drafted by KC Tenants, according to Andrea Bough, the City Council member who introduced it.In an interview in her office, Ms. Bough expressed the same anxiety I had heard all around town, including from the mayor and from low-income tenants: even though Kansas City remains inexpensive compared with larger cities, it is spiraling into the same affordability problems as those places and is no more equipped to solve them.“We aren’t to the point of a widespread housing crisis, but if we don’t do something we’re going to get there,” she said.The right-to-counsel law, which went into effect this year, has already changed the landscape. Julie Anderson, a Kansas City attorney who represents a number of local landlords, said that the cost of an eviction had risen by a factor of five and that the process now took from three months to a year, up from a month or so. Her clients are unhappy, but it’s also been good for business: Ms. Anderson said she had hired two lawyers and three paralegals to handle the extra work.“That part of my practice was very uneventful,” she said. “Now, post-Covid, almost everything is contested.”The Tenant ClassBarrett Emke for The New York TimesKC Tenants now has 4,300 members, seven full-time employees and piles of yellow T-shirts ready for distribution. The nonprofit organization operates out of a second-floor office inside a Methodist church, and is funded through a mix of individual donors and foundations. It has a $450,000 annual budget.This month, members launched a separate entity, KC Tenants Power, that is registered as a 501(c)(4) and has more leeway to engage directly in politics. Like everyone else these days, Ms. Raghuveer seems to spend most of her time on video calls, talking in front of a banner that reads, “Eviction Kills.”Tenant-organizing has been central to any number of social justice and civil rights movements stretching from the turn of the twentieth century, but, in recent decades, it has rarely been successful outside localized pockets. An enduring issue in organizing tenants as a class is that homeownership is still most families’ goal.Covid has illustrated this. Once remote workers could live anywhere they wanted, many renters left big, expensive markets for smaller cities where they could afford a home.Ms. Raghuveer believes in a growing tenant identity, but she has no delusions. She doesn’t imagine that one day she’ll lead a protest march in which public-housing tenants lock arms with residents of luxe buildings, where one-bedrooms start at $3,000 a month and include access to rooftop pools and private dog parks. What she does believe is that housing instability, however it is experienced, can be a catalyst for a broader coalition that operates across traditional political lines.She pointed to a recent effort to help a local trailer park where the county was evicting residents in order to build a jail on the property. This would normally have been an organizing no-brainer. However, during a meeting, several members of KC Tenants said they were reluctant to get involved because a number of the cars and trailers in the park had Trump stickers and flags on them. Other members responded by recalling that the group’s community agreements, which they read before every meeting, declare that KC Tenants does not make assumptions about anyone.So a group went to knock on doors.“This little skinny gal comes to my door, and I’m like, ‘Who in the hell is this?’” said Urban Schaefer, a resident of the park who helped organize it after meeting Ms. Raghuveer. “A lot of people were skeptical about it.”In the end, about a dozen members of KC Tenants worked with residents to demand a better deal. And the county sweetened its offer: six months of free rent and at least $10,000 in relocation costs.Inventing HopeAn organizing meeting for tenants Gabriel Tower Apartments, in Kansas City.Barrett Emke for The New York TimesThere weren’t any MAGA hats at the KC Tenants meetings I went to, but it was a generally diverse group with a range of motivations for being there. There were Black women, who are among the people most affected by eviction, both locally and nationally. There were white men, who began whatever they were about to say with acknowledgments of privilege. And there was a child of the housing bust, whose faith in the American dream was shattered when his family was foreclosed on and a chain of moves followed.During a meeting of a tenants’ union in the gentrifying Midtown neighborhood, I met an economics professor who had come because she had wanted to better understand the housing problem. Later, at meeting in a Section 8 building on the other side of Troost Avenue — long the city’s dividing line between its Black and white residents — several attendees sat in wheelchairs, and one said he’d recently slept under a bridge.Small frictions abound. At one recent meeting, a young man talked about the “carceral state,” only to have Ms. Charity reply: “Are you talking about jail?”This diversity is, unintentionally, the policy conundrum that Mayor Lucas and other officials are grappling with as more people look to the government for help with housing.Around the country, developers have spent the past decade building mostly higher-end units. Eli Ungar, the founder of Mac Properties, which is based in Englewood, N.J., and owns about 9,000 apartments, including 2,000 in Kansas City, bluntly laid out the economics. The cost of development is now so high that the most reliable way to make money is by building apartments for tenants who regard the cost of rent as “a matter of curiosity.”This leaves two groups behind.“The folks who think of themselves as middle class and are feeling increased worry and pressure as rents go up faster than incomes, and the people who are most vulnerable in our society and desperately need housing that no developer can provide without a massive subsidy,” Mr. Ungar said. “As a citizen, I would be entirely comfortable with my taxes being higher to provide well-maintained housing for those who can’t afford it. The question is how that is achieved, and market-rate developers are not unilaterally going to say, ‘I will reduce my income to achieve this goal.’”Caught in the teeth of a housing problem that is growing faster than local budgets, public officials inevitably try to solve both problems at once, pitting the middle class against families who live on minimum wage or fixed incomes. This was the crux of the “Sister Act” protest.Mayor Quinton Lucas, in Kansas City, last year.Chase Castor for The New York TimesAs part of a new housing plan, Mayor Lucas had proposed a $50 million bond issue to fund low-income housing, but at the same time he wanted to loosen the city’s regulations for apartment projects that receive tax breaks through a program designed to create affordable housing in market-rate projects. The shift would allow developers to substitute middle-income units for those reserved for families in the lowest income brackets.KC Tenants framed the change as selling out families closest to the edge. The mayor’s retort was that the previous iteration of the program had resulted in no new units for anyone, and his hope was that the revisions would push developers to build middle-income housing, which the city needs as well.In the interview, he cast himself as a leader trying to navigate a difficult problem in world of limited resources.“We don’t have a Scandinavian tax structure,” he said. “Maybe we can get to it, but I don’t know that it starts in Kansas City.”Two days after the “Sister Act” protest, when the City Council held its vote on the plan, the chambers were packed with yellow T-shirts. After a 9-to-4 vote in favor of the new policy, Ms. Neal, an early KC Tenants member, yelled, “How dare you!” Security hauled her out with her arms behind her back in a scene that members’ cellphones captured from every conceivable angle.Ms. Neal being escorted out of the council meeting at City Hall.Barrett Emke for The New York TimesWhen Ms. Neal was gone, Ms. Caldwell, the once-evicted tenant whose cancer is now in remission, continued the chant. “Not another penny for the slumlords!” she shouted. She was removed just as fast, only instead of getting booted to an outdoor bench, like the one where Ms. Neal sat after she’d left the building, Ms. Caldwell was arrested and taken to a local police station.An hour later, the lawn outside the station was crowded with yellow shirts. Members of KC Tenants lay on the grass typing on laptops and eating pizza. A slice was waiting for Ms. Caldwell when she emerged a short time later to cheers.“I’m feeling great,” she said to the crowd, as her 15-year-old son joined her. “I’m doing this so that my baby will never have to.”After a chant of “Tiana, we got your back!” a small group that included Ms. Caldwell and Ms. Raghuveer went to a wine bar to relax. The bar was closing, but Ms. Raghuveer said she’d called the owner, who’d promised to keep it open for them. She added that he was a renter. More

The world’s energy infrastructure is at “significant” risk from climate change, as extreme weather events threaten dams, thermal power plants and nuclear stations, the World Meteorological Organization said this week.In its latest report, the WMO said existing energy infrastructure was already “under stress” and climate change was likely to directly affect fuel supply, energy production and the physical resilience of existing and future energy projects.Flood and drought risk was particularly highlighted. In 2020, 87 per cent of the global electricity generated from thermal, nuclear and hydroelectric systems directly depended on water availability, the WMO said, but some of the facilities are located in areas that were experiencing water stress. The WMO said a third of thermal power plants that relied on freshwater availability for cooling were already in areas of water stress, as were 15 per cent of existing nuclear power plants and 11 per cent of hydroelectric capacity. About a quarter of the world’s existing hydropower dams, and almost a quarter of projected dams, were situated within river basins that already have a “medium to very high risk” of water scarcity, the WMO said. The results affirm a study published in the journal Water earlier this year, about flood and drought risk to hydropower dams globally. It found that by 2050, 61 per cent of all hydropower dams would be in river basins at risk of “very high or extreme risk for droughts, floods or both”.While only 2 per cent of planned dams are in basins that now have the highest level of flood risk, the study forecast that almost 40 per cent of the same group of dams would be in river basins with the highest flood risk.The report modelled three scenarios, with the pessimistic scenario assuming an increase of 3.5C by the end of the century, and the optimistic scenario assuming a temperature increase of 1.5C. Global temperatures have risen at least 1.1C since the 1840s. Jeffrey Opperman, one of the authors of the study and the lead global freshwater scientist for the World Wildlife Fund, said even under an optimistic scenario for limiting global warming levels by 2050, there would be an increase in drought risk and flood risk.

“We need to adapt if we’re going to be successful,” he said. “There’s a big difference between the optimistic scenario versus the status quo, or the pessimistic.”“That underscores that if we want to avoid disruptions to our water systems or energy systems, our safety, there is a really big difference between pursuing an ambitious lowering of greenhouse gases, and really hitting our targets versus not doing that,” Opperman said.Countries with the highest existing hydropower capacity projected to experience the greatest increase in flood risk includes Canada, Uganda, Russia, Zambia, Egypt, Ghana, Venezuela, China and India. Countries with highest existing hydropower capacity at risk of water scarcity also include China and India, as well as Turkey and Mexico, and the US states of Montana, Nevada, Texas, Arizona, California, Arkansas and Oklahoma.The “megadrought” gripping the southwestern US provides a recent example. Water levels at the two largest reservoirs fell to record lows in May this year, forcing unprecedented government intervention to protect water and power supplies across seven states.

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The sharp drop in levels on Lake Mead, which is the largest US reservoir, and is near Las Vegas, and Lake Powell upstream on the Colorado River, prompted federal officials to activate an emergency drought plan.In the US, the Biden administration’s infrastructure bill earmarked $500mn over five years to fund dam safety projects, helping to shore up dams that may be subjected to increasing levels of flooding. US officials said the funding would help develop long-term resilience to drought and climate change.In China, the severe summer drought and record temperatures led to power cuts as major hydropower-producing areas such as Sichuan province struggled to meet electricity demand.Companies including Toyota and Apple supplier Foxconn suspended plant operations in the province after authorities said they would temporarily halt energy supplies to factories in a number of cities.   More

Where the markets go from here depends on whether and how deftly the Federal Reserve pivots from its hawkish stance.Making money was easy for investors when they could still plausibly believe that the Federal Reserve might back down on its aggressive campaign to subdue inflation at any cost. But harsh words from the Fed chairman, Jerome H. Powell, backed by a string of large interest rate increases, finally convinced markets that the central bank meant business, sending stock and bond prices tumbling.A nervous confidence returned as October began, with stocks experiencing a big two-day rally, but then prices sank anew. Investors at first seemed more confident that the Fed would reverse course, but anxiety returned as they worried about how much damage would be inflicted before that happened. Where the markets go from here, and how to position an investment portfolio, depends on whether and how deftly the Fed changes its strategy.“A crescendo of factors is coming together that makes me think we’re going to have another few weeks of pain before the Fed capitulates,” said Marko Papic, chief strategist at the Clocktower Group.Mr. Papic thinks a dovish turn may come soon, as the Fed signals that it would settle for inflation two or three percentage points above its 2 percent target.Others think more pain lies ahead, maybe a lot more. A prerequisite for a pivot might be a “credit event,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies, meaning a default by a large investment firm or corporate or government borrower, often with severe consequences. Mutual FundsA glance at mutual fund performance in the third quarter. More

TOKYO (Reuters) – There are no changes to Japan’s position that it will act resolutely in case of volatility in the currency market, the Kyodo news agency quoted Japan’s Finance Minister Shunichi Suzuki as saying on Saturday.The dollar jumped about 1% to a 32-year high 148.83 yen on Friday as investors remained focussed on the policy divergence between the U.S. Federal Reserve’s aggressive interest rate hikes and the Bank of Japan’s ultra-low rates. More

LONDON (Reuters) – It started out simply enough: British pension schemes were looking for a way to match their assets to future pension payments.Schemes run for pharmacy Boots and bookseller WHSmith were early adopters in the 2000s of an investment strategy of dumping stocks for bonds, to shield themselves from interest rate changes. But fifteen years later, the strategy now adopted by nearly two-thirds of pension schemes has ended up revolving around financial derivatives rather than just bonds – injecting a growing amount of risk to schemes that is only now becoming apparent as interest rates surge. In the so-called LDI or liability-driven investment strategy that became popular, pension schemes would use derivatives – contracts that derive their value from one or more assets – to protect themselves from potential swings in interest rates. With a small amount of capital they could gain large exposures.There is a catch: if the derivative becomes loss-making for the pension fund because of a change in underlying asset prices, for example, it can be called up for more money, sometimes at short notice.None of this mattered for a long time and consultants predicted in 2018 that the market would soon reach the “The Age of Peak LDI” – it was so popular that the pensions industry was running out of assets to hedge. LDI assets quadrupled in a decade to 1.6 trillion pounds ($1.79 trillion) last year.But the strategy gradually became riskier, according to interviews with pension scheme trustees, consultants, industry experts and asset managers. Things began to unravel as Britain’s Sept. 23 “mini-budget” sparked a jump in UK government bond yields, driving pension funds to race to raise cash to prop up their LDI hedges.Those derivatives came close to imploding, forcing the Bank of England to pledge on Sept 28 to buy bonds to calm the panic. The scale of the money using the LDI strategy, and ever higher borrowing through the derivatives, had amplified risks that appeared hidden during a decade of low interest rates. When rates began rising in 2022 and warnings about risk got louder, schemes were slow to act, according to those interviewed.”I do not like the term (LDI) and never did, it has been hijacked by consultants and has morphed into what we are seeing now,” said John Ralfe, who in 2001 led the 2.3 billion pound Boots Pension Fund’s shift into bonds. The fund didn’t load up on debt, he told Reuters.”Pension schemes were doing disguised borrowing, it’s absolutely toxic,” Ralfe said. “There was much greater risk in the financial system than anyone – including me – would have thought.” Boots did not respond to request for comment on Friday. WHSmith did not respond to request for comment on Thursday.Globally, investors are worrying about other financial products predicated on low interest rates, now that rates are rising.”The so-called LDI Crisis in the UK is just the symptom of a greater economic malaise,” said Nicolas J. Firzli, executive director of the World Pensions Council.RISKIER BETSIn the two decades since Ralfe’s time at Boots, defined benefit pension schemes – which guarantee retirees a set amount of pension payments – have loaded up on LDI and derivatives, using them to borrow and invest in other assets.If leverage in the LDI strategy was three times, for example, it meant the scheme only needed to spend 3.3 million pounds for 10 million pounds of interest rate protection.Instead of buying bonds to protect against falling rates – a key determinant of a scheme’s funding position – a scheme could cover 75% of its assets, but only tie up 25% of the money, using the rest for other investments.The remaining money could be chanelled into higher-yielding equities, private credit or infrastructure.The strategy worked, and schemes’ funding deficits narrowed because the hedges made them less exposed to falling interest rates. Lower interest rates require pension schemes to hold more money now for future pensions payments. This pleased companies and regulators. Asset managers including Legal & General Investment Management, Insight Investment and BlackRock (NYSE:BLK) offered LDI funds in a low-margin but big volume business. The FCA, which regulates LDI providers, declined to comment.Consultants such as Aon (NYSE:AON) and Mercer pitched LDI to trustees, while The Pensions Regulator (TPR) – the government entity regulating pension funds – encouraged schemes to use liability matching to narrow deficits.Nearly two-thirds of Britain’s defined benefit pension schemes use LDI funds, according to TPR.The strategy worked as long as government bond yields stayed below pre-agreed limits embedded in the derivatives. “LDI had been thought of (among clients) as a fire and forget strategy,” said Nigel Sillis, a portfolio manager at Cardano, which offers LDI strategies. The industry had been “a little complacent” about the knowledge among pension trustees, he added.The risk grew over time. A senior executive at an asset manager which sells LDI products said leverage rose, with some managers offering tailored products of five times leverage, versus a maximum of two or three times a decade ago. Pension schemes had rarely been asked for extra collateral before 2022, and a risk-averse industry had become less prudent, the executive said, speaking on the condition of anonymity.TPR says no scheme has been at risk of going insolvent — rising yields actually improve the funding position of funds — but schemes lacked access to liquidity.Still, the regulator this week acknowledged that some funds would have suffered. When yields surged in an unprecendented move between Sept. 23 and Sept. 28, pension schemes were left scrambling to find cash for collateral. If they did not find it in time, the LDI providers wound down their hedges, leaving schemes exposed when yields tanked following the BoE intervention.A small minority of schemes would have seen a 10-20% worsening in their funding position, according to Nikesh Patel, head of client solutions at asset manager Kempen Capital Management.Simon Daniel, partner at law firm Eversheds Sutherland, said pension schemes were now arranging standby facilities with their sponsoring employers to get cash for collateral. WARNINGSRisks in LDI had been flagged for years.The Bank of England’s Financial Policy Committee highlighted the need to monitor risks around LDI funds’ use of leverage in 2018, BoE deputy governor Jon Cunliffe said this month.There were more warnings this year, especially as rates began to soar.Pensions consultants Mercer warned clients in June to “act quickly” to make sure they had cash. Aon said in July that pension funds should prepare for “urgent intervention” to protect their hedges.TPR had “consistently alerted trustees to liquidity risk”, CEO Charles Counsell said this week.Yet in the slow-moving world of pension funds, where trustees and consultants tend to draft investment strategy shifts over years, not weeks, few funds were reducing leverage or boosting collateral, according to consultants and trustees.Some of the most sophisticated pension schemes were even bulking up on LDI this year, after rates started to rise. The Universities Superannuation Scheme, Britain’s biggest pension fund, earlier this year partly linked a decision to raise exposure to LDI to the “distinct possibility of further falls in UK real interest rates”, against which it needed to protect its 90-billion-pound portfolio. Britain’s 30-year inflation linked bond yield has tripled since late June.In a statement this week USS defended its approach, noting it had plenty of cash to meet margin calls and that it was not a forced seller of assets. It said it was comfortable if rates rose and hedging became costlier.That discussion had barely started elsewhere.”When people talked about interest rates, all they obsessed about was interest rates falling,” said David Fogarty, an independent trustee at professional pension scheme trustee provider Dalriada Trustees. “There were not many discussions about leverage either.” More