IMF: Rich world recovering faster than expected
This podcast from BBC Business Matters discussed how rich countries are recovering faster than expected — and is it for real based on data? How about the world’s billionaires suggesting Americans to pay more taxes, is it fair? Also discussed are the NFTs or non-fungible tokens — do they have values or are these just a fad? Lastly, how the workplace changed since the 1980s in terms of safety and gender equality?
This podcast was published on April 7, 2021 and the original source can be found at https://www.bbc.co.uk/sounds/play/w172xvq88yhlfkj.
BBC Business Matters Description:
The IMF says that the rich world is recovering faster than expected from the downturn resulting from the pandemic. But what about the developing world? Jubilee USA campaigns for debt relief for developing countries – we speak to its executive director, Eric Le Compte.
And in a world struggling to pull itself out of a pandemic, lockdowns and recession, why are there quite so many billionaires? We hear from Kerry Dolan, Assistant Managing Editor of Wealth at Forbes about their latest rich list.
Credit Suisse replaced two key executives and cut bonuses amid the fallout from two major business relationships; Peter Hody from Finnews.com in Zurich analyses what went wrong. And we’re joined throughout the programme by Mehmal Sarfraz, journalist and co-founder The Current in Lahore, Pakistan; we’re also joined by Tony Nash, chief economist at Complete Intelligence in Houston Texas.
JR: OK, well, let’s get the picture from the economy, which is going to swell, it would seem, according to the IMF, over the next year or so Tony. How are things in Texas?
TN: You know what’s interesting about the about Pakistan to kind of follow on what I said? What I find interesting about these numbers is you really have to average out 2019, 2020 and 2021 to really see how a country is doing. And so if you average out Pakistan for 19, 20, 21, there’s a 1% average growth rate that’s better than almost every other OECD country. The only country in Europe that actually shows growth over that period is the Netherlands. Germany, France, U.K., Italy and so on, they’re all negative average for the last three years. So for the U.S., it’s just over 1% average for the last three or so. So this may look like stellar growth, but it’s not because it’s using what’s called a base effect, meaning the U.S. economy is estimated to decline 3.5% in 2020. So a 5.1% growth rate on top of a 3.4% decline really is not stellar. So we’re struggling to get back to 2019 levels. And the message I would take away from here is countries are struggling to get back to 2019. Much of Europe will not be back at 2019 levels by the end of 2021.
JR: Tony, is Credit Suisse a typical bank, do you think, or a typical bank in the circumstances?
TN: I think they’re in a typical bank that got caught doing things that banks do pretty regularly. We have to be aware that these banks have risk management teams who look at the investments and evaluate how much of their capital is at risk when they make investments. I don’t doubt that banks make very risky risk management decisions on a regular basis. Credit Suisse. This problem is they didn’t get out in time. There were other banks that had built capital who got out earlier. So they made similar bets, but they got out of the trade earlier than Credit Suisse did.
JR: Do you think even Mr. Bezos thinking perhaps he should be doing a bit more taxes at a bit of a relief to us?
TN: Well, it’s it’s interesting. Nothing is stopping billionaires from paying more money to the Internal Revenue Service in the U.S. So if they want to pay more money, if companies want to pay more money, they’re welcome at any time to pay more money. So if Bezos personally or through Amazon wants to pay more money to the U.S. Treasury, they’re welcome to do that. There’s nothing in law that stopping them from contributing more to the U.S. Treasury.
JR: So I suppose in many ways this story is a kind of a sort of reflection of our earlier story, which is really about sort of rich rich countries and poor countries and how they’re coming out of this pandemic and the problems of inequality and whether it causes resentment, which we talked about in that report. Do you see resentment over this, do you think, in the United States?
TN: Well, I do. Warren Buffett has said the same. Americans should pay more tax. Your average middle class or higher American who here, a billionaire, say that people should be paying more tax, people get really resentful about it because, again, everyone knows that if someone wants to pay more tax, they can just write the check or send the wire and do more. So I think it is the the resentment is growing. The gains in equity markets are strange. They’re at strange highs. Central banks are enabling that. And the people who gain disproportionately from that are the ultra wealthy, not just the wealthy, but the ultra wealthy.
JR: Tony, when I listen to that report, I kept on thinking of tulips for some reason or another, and I kept thinking of bubbles. Do you feel the same way or are you convinced?
TN: It really depends on what you want to do with it. So if you actually own that image and you can license it and make money off of that image, then fine. That’s really interesting. Or if you want to own that image for the inherent value of that of owning that image like, let’s say a digital Mona Lisa, that’s fine. But I’m not sure that the kind of demand for that is there, meaning my kids of 19 year old twins, they’ll go out and copy images or whatever and throw them into presentations. I’ll do the same. Actually, I don’t know that there is an appreciation of the value of a digital image. And this is really the problem, right? When you have physical artwork, there is limited supply. When you have a digital image that can just be copied and pasted and then you have infinite number of those images. It’s difficult because there’s never a tangible, supply constrained number of those images, if that makes sense. So I I’m like you when I hear it. I think this doesn’t really make sense unless you’re using it to license. Let’s say there’s a logo for a company like Amazon and somebody owns that intangible property. How much is that logo image worth that?
JR: OK, so it’s actually quite close to a currency really isn’t it, or it’s close to an intangible thing like sort of a money, a unit of money, a unit of cash.
TN: Well, there’s a difference between money and an asset, right. If you hold let’s say gold, gold is really an asset. You don’t go down to your corner shop and spend gold. In the crypto world, these things aren’t really currencies because you can’t really spend them freely. Of course, you can always barter gold for something. You can always barter a crypto asset for something, but it’s not readily accepted in many, many places. So these things are really assets that you hold onto and wait for a buyer who appreciates the asset more than you to buy it.
You’re not going out and buying your groceries or a new car or anything with that asset. You can’t do that with this artwork. You can’t spend it. So it’s questionable. I’m not saying it’s nothing, but it’s questionable. It’s not really the market fit. I don’t really understand it. Maybe this is genius, but it just doesn’t seem like it right now.
JR: Tony, thanks very much indeed. I still keep on thinking of tulips anyway. Tony, I was just going to ask you whether you had a lot of similar experience, but experience of unpleasantness, London.
TN: Sure. Absolutely. In my 20s, I was with a retailer in their headquarters and and then again later in my career. You know, this is it’s not anything that is rare. I don’t think. Well, maybe it is more rare now, but it’s terrible for everyone involved.
JR: And it doesn’t seem to go away even in the virtual world. That’s where we got time for on business matters. Thank you very much indeed for listening. And thank you, Tony. Thank you so much for being my guest on Business Matters. Goodbye.