Our editors give us a breakdown of this week’s biggest news stories
United Kingdom: Ross Alexander Hutton
Almost two million people in the north-east of England are now under stricter measures aimed at tackling “concerning rates of infection”, with more interventions planned for most of Lancashire. Further to the strategy of local lockdowns, a second national lockdown coinciding with the school half-term in October is being considered by the Government’s scientific advisors, if the recently introduced ‘rule of 6’ fails to halt the resurgence of the virus on these shores. Reluctance to initiate another national hibernation should not be taken as a refusal to take the necessary steps to curb the virus – rather an admission that there may not be another choice given that the ‘Test and Trace’ scheme has become more like ‘trace a test’ in recent weeks.
In an announcement confirming its intention to hold interest rates at a historic low of 0.1% and continue supporting the economy with no significant changes to the bond-buying programme, the Bank of England warned of an “unusually uncertain” economic outlook. Between rising coronavirus cases in Europe and the uncertainty surrounding the U.K.’s trading relationship with the E.U., the Bank has begun preparing for the use of ‘negative’ interest rates should there be a serious downturn in the coming months. Whilst there is disagreement between economists in the city, it has become clear that negative interest rates now have a firm place in the Bank of England’s ‘toolkit’.
Even with unity among Johnson’s predecessors against the government’s Internal Market Bill, it passed first reading with a majority of 77. Concerns over the Bill’s trajectory of breaking international law reside not only in the E.U. but further a field too. U.S. democratic presidential hopeful Joe Biden intervened this week by supporting the letter sent by Congressional leaders to Boris Johnson issuing a veto threat if the Internal Market Bill becomes law. It is now more conceivable that come 2021, Britain may find itself in a particularly difficult situation with diplomatic frictions arising from a No-deal Brexit and a democrat in the White House.
Europe: Peter Hourston
EU Internal Market Commissioner Thierry Breton has announced draft proposals for the European Commission to take on tough new regulatory powers on big tech companies. If their market power became too large then Brussels could force them to disinvest in some of their European operations. In extreme circumstances, some companies could be completely banned from the Single Market in the case of egregious rule breaches. Breton did confirm, however, that the limited liability tech firms have on the content published on their sites would stay. It means that companies such as Facebook, Google and Twitter cannot be held responsible for illegal or offensive content published by network users.
EU Commission President Ursula von der Leyen has said EU-UK trade talks should continue despite London admitting that legislation introduced in the House of Commons was in breach of the Northern Ireland protocol. Maros Sefcovic, the EU’s top representative on the joint committee on the UK-EU withdrawal agreement wrote to his British counterpart Michael Gove demanding that the UK remove from the bill the measures that would override the treaty by the end of September. It comes as the EU also refused British attempts to keep access to the Single Market for electric car components.
The European Central Bank relaxed leverage rules on Eurozone banks this week to free up €73bn of capital in an attempt to boost lending and prevent a pandemic induced credit crunch. The move permits commercial banks to request permission from their home central bank to exclude central bank exposures from their leverage ratio. The exclusion, which lasts until June 2021 raised the aggregate leverage ratio of 5.36% by about 0.3 percentage points.
Asia Pacific: Satyajit Mohanan
Yoshihide Suga was sworn in as Japan’s New Prime Minister on Wednesday following former PM Shinzo Abe’s resignation due to ill health. He has promised continuity and has retained nearly half of the earlier cabinet ministers from the Abe Administration. PM Suga’s humble origins have earned him the name ‘the self-made Prime Minister’. He inherits an intense domestic agenda, as Japan is experiencing the country’s biggest economic slump caused by the coronavirus pandemic. PM Suga intends to stick with “Abenomics” which includes an expansionary monetary policy and fiscal stimulus.
Student-led Thai protestors last week directly challenged the country’s monarchy and demanded sweeping royal reforms. They delivered a list of 10 demands which included the powers and wealth of King Maha Vajiralongkorn to be curbed. They also planted a plaque declaring that “the nation belongs to the people, not the monarchy”. This is the biggest demonstration the country has witnessed in several years.
North America: Amelia Brown
Just as voters start to receive and return election ballots, the game of politics in the U.S. has become a very unstable jenga tower. The passing of U.S. Supreme Court Justice Ruth Bader Ginsburg on Friday leaves an opening for the President to fill and gives the opportunity for a heavily conservative court; Ginsburg was one of four liberal judges, a champion of women’s rights and gender equality since the 1970s. The supreme court nomination process usually takes at least three months, and with the election just over a month away, the precedent set during the Obama administration is to wait for the next president to decide the nominee. The precedent was set by Majority Senate leader Mitch McConnell, who stonewalled the consideration of Obama’s nominee with 11 months left in his term on the basis that it was an election year. McConnell now announced this week that, “President Trump’s nominee will receive a vote on the floor of the United States Senate.” The complicated pieces don’t stop there though. A nominee needs a 51 vote majority in the House to pass through. Republicans currently hold a 53-47 majority, but two Republican representatives have already stated there’s not enough time to confirm someone before November. Additionally, a special election is happening in Arizona, where a Democratic candidate is fighting to unseat the Republican Senator. A change in seats from the special election, in addition to the two or more defections from Republicans would avoid a 50-50 split vote where Vice President Mike Pence would then decide. All the moving pieces, in addition to the normal election voter issues, has caused an already wobbly political landscape to rock even more. Ginsburg’s last wish was that she “not be replaced until a new president is installed.”
All eyes are on the Supreme Court of Mexico as well this week. Mexican president Andrés Manuel López Obrador announced a referendum to vote whether his five predecessors should be put on trial or not. Obrador holds a majority in both congressional houses, but the Supreme Court must decide the constitutionality of the referendum first. The president wants the referendum to happen in June 2021 on the same day as Midterm elections.
In light of the 407 new coronavirus cases seen Saturday, Ontario Premier Doug Ford has put into place further gathering restrictions for the entire province. For the next 28 days, the limit for indoor, unmonitored gatherings is down to 10 people, and down to 25 outside. This is a major slash from the previous 50 indoor, 100 outdoor limit, although Ottawa, Peel Region, and Toronto already had the new rules in effect since Thursday. Breaking the rules could result in a $10,000 fine for the host and $50 fine for guests.
South America: Annie Smith
After Brazil became the epicentre of the COVID-19 pandemic in the spring, there are now signs that Argentina has become the pandemic hot-spot in Latin America. On Thursday, the country broke its daily new infection record on Thursday with nearly 13,000 cases, marking more than 600,000 cases in total. While Brazil and Mexico are still struggling against the virus, an average of 30,000 and 4,500 new cases a day respectively, both countries appear to be flattering the curve of daily new cases, unlike Argentina. A nationwide lockdown remains in the country, although from late August groups of 10 have been allowed to meet outside, and some restaurants have begun to reopen.
Investigators from the United Nations say that Venezuela’s government has committed “egregious violations” amounting to crimes against humanity, including cases of killing, torture, violence, and disappearances that have been investigated by the UN Human Rights Council. The investigation implicates President Nicolás Maduro and other top officials, yet Venezuela’s UN ambassador has described the mission as a “hostile initiative.” In a report of its findings on Wednesday, the United Nations team said that Venezuela’s security services engaged in a pattern of systematic violence since 2014, with the aim of suppressing political opposition and terrorising the population.
Barbados has announced that it plans to remove Queen Elizabeth as its head of state and become a republic by November 2021, the 55th anniversary of its independence from Britain. Prime Minister Mia Mottley, the country’s first female president, said that Barbadians want a Barbadian head of state. Though it gained independence from Britain in 1966, Queen Elizabeth has remained its constitutional monarch. Buckingham Palace has said that it is a matter for the government and people of Barbados.
Science & Technology: Paula Plechschmidt
Trump seems to have given his blessing for a deal between ByteDance and US firms Oracle and Walmart. This would allow the app to continue operating in the US, under conditions that Trump deems as safe for the data of the 100 million Americans that use the app. However, as Alasdair Richmond, one of the writers for the Science and Technology section, has outlined in his recent article “TikTok on the Clock” the logistics of this deal will prove to be a lot more challenging than Trump has anticipated.
Nvidia announced a definite agreement under which NVIDIA will acquire Arm for $40 billion. This is bringing together Nvidia, a company that has recently overtaken Intel, a firm that was once one of the worlds biggest tech companies, and Arm, who dominates the market for processors in mobile phones, computers and chips in smart TVs. This collaboration is bringing together Nvidia’s AI technology with arms vast ecosystem which will result in a company that will be at the forefront of the AI age.
Theory: Cassi Ainsworth-Grace
Gold has always been considered a reliable store of value. It is durable, rare but widely available enough for effective trade, and it holds value in real terms over a long period of time. In this way, gold is often considered a ‘safe asset’ for investors in times of uncertainty, just like what is happening in the world today.
Gold is also seen as a good hedge against increasing levels of inflation as opposed to cash as asset prices rise and the rising cost of goods and services eat away at the real value of cash. The significant increase in quantitative easing in developed economies like the US, Japan and Europe have sparked fears of rising inflation, leading to a rush in investment in gold. The result has been net flows of $64.,2 billion into commodity exchange traded funds in the last seven months, compared to $7.8 billion in the same period last year. As a result, gold is trading at historical highs, at around $1,949 per ounce as of the 18th of September, up from the average of between $600-$700. This safe-haven seeking behaviour may continue for some time, as investor fears remain high.