Connect with us

America

Quo Vadis World Economy – I: White Darkness at Davos

Published

on

A gloomy mood marked this year’s meeting at the rich club Davos. Women were told to take care owing to the explosion of “sex tourism” in Davos, and many millionaires who advocated for vegetarianism and gender equality flew private planes to Switzerland.

Nevertheless, the atmosphere there was dark. Annually released around the time of the Davos Summit, the World Economic Forum (WEF) Global Risk Report presented shocking findings. We are expected to witness social and environmental crises; the cost of living is ranked as the most severe crisis, and “biodiversity loss and ecosystem collapse” is viewed as one of the fastest deteriorating global risks.

Inflation could lead to stagflation, the socioeconomic consequences of which could be severe, given an unprecedented interaction with historically high public debt levels. Global economic fragmentation and geopolitical tensions could also contribute to widespread debt distress.

As if that wasn’t bad enough, the report went on to predict that technology would worsen inequality, food and fuel crises exacerbate societal vulnerabilities, and declining investments in human development erode future resilience.

Is there any cause for optimism in this dark scenario? For the WEF, there is.

‘Stakeholder capitalism’

“What kind of capitalism do we want?” was asked by Klaus Schwab, a WEF founder, in his 2019 Davos keynote.

Schwab thinks there are three models/answers to address the crisis.

The first is ‘shareholder capitalism,’ embraced by Western corporations. In this model, a corporation’s primary goal is to maximize its profits.

The second model is “state capitalism,” which entrusts the government with setting the economy’s direction and has risen to prominence in many emerging markets, not least China.

Third, of course, is the way Schwab also proposes, ‘stakeholder capitalism.’ In Schwab’s own words, it is a model he proposed half a century ago, positioning private companies as ‘trustees of society.’

The WEF founder argues that the single-minded focus on profits caused capitalism to become increasingly disconnected from the ‘real economy.’ This form of capitalism is no longer sustainable. Instead, large corporations must cultivate ‘stakeholder capitalism’ along with governments and multilateral organizations.

When discussing the transition from shareholder capitalism to stakeholder capitalism, Schwab emphasized the significance of the ‘Greta Thunberg effect.’ For him, the Swedish climate activist has reminded us that adherence to the current economic system represents a betrayal of future generations. Moreover, Generation Z no longer wants to work for, buy from, or invest in companies that lack values beyond ‘shareholder values.’

Now some facts

The WEF-painted bleak picture and its calls for ‘sustainable’ capitalism are close to the truth.

The 2022 Global Wealth Report by Credit Suisse estimates that global wealth will have increased to $463.6 trillion by the end of 2021. This is almost 4.5 times the total worldwide output.

Furthermore, international wealth climbed by 9.8 percent in 2021, much higher than the average growth rate of 6.8 percent witnessed since the turn of the century.

Behind this enormous jump are rising real estate prices and stock market growth fueled by credit expansion. That is to say, a significant portion of the rise in wealth can be explained by the enrichment of the richer in the world.

Indeed, the report estimates that by 2020, a mere one percent of the global population (56 million individuals) possessed 45.8% of all wealth, while the other 2.9 billion owned just 1.3%. This ratio changed as follows in 2021: What one percent of the population now owns rose to 47.8 percent of all the wealth. The richest 13% has 86 percent of the total wealth.

According to the inequality report by Oxfam, just four cents in every dollar of tax revenue collected globally came from taxes on wealth.

Income tax collection from the wealthiest in OECD countries has decreased from 58 percent (in 1980) to 42 percent now.

This rate drops to 31 percent when the number of countries in the sample is expanded to 100. In the same sampling set, tax on capital income, one of the significant sources of wealth for the top 1%, has an average rate of just 18 percent. Only three countries have a higher tax rate on capital income than on wages.

International institutions are also pessimistic

The warnings of IMF Director Kristalina Georgieva before Davos are worth remembering. According to Georgieva, a third of the world will face a recession in 2023.

The OECD revised down the IMF’s forecast for global GDP growth from 2.7% to 2.2%. Arguing that the growth ‘has lost its momentum,’ the OECD noted that risks are skewed to the downside.

The World Bank went even further, projecting the global growth rate to be at 1.7 percent and growth in per capita income in all regions of the world to be lower than in the pre-COVID decade.

According to the World Bank, by the end of 2024, GDP levels in emerging and developing economies will be roughly 6% below the levels expected before the pandemic.

In the WEF’s Chief Economists Outlook survey, economists are even more pessimistic. 18% of polled chief economists in public and private sectors said that experiencing a global recession this year is ‘extremely likely.’

One-third of economists expect a global recession and anticipate that the United States and Europe will maintain their tight monetary policies.

All surveyed chief economists predict Europe to grow ‘weakly or very weakly’ in 2023. For the US, 91% forecasted ‘weak or very weak growth.’

In last year’s survey, these rates were 86 percent (for Europe) and 64 percent (for the United States).

Nine out of ten respondents agreed that corporations would feel the effects of low demand and high financing costs. At the same time, six out of ten underscored the rising input prices. For these reasons, many chief economists expect multinational corporations to reduce operational costs to cut expenses.

Huge dismissals at tech giants

What the economists polled by the WEF thought about multinational corporations has taken place for a while.

Having seen exorbitant stock rises and announced huge profits during the pandemic, technology giants began to ‘update’ their operational expenses due to the severe drops in their balance sheets last year.

Expanding their workforces in tandem with the growth of online activities during the pandemic period, American multinational monopolies, such as Alphabet (Google), Meta, Amazon, and Microsoft, started laying off employees as a primary measure against the shrinking industry.

The number of layoffs in the IT industry has reportedly reached 200,000 since the beginning of 2022, according to the website layoffs.fyi, which tracks releases in the technology sector.

In 2023, 67,268 people would have lost their jobs in this industry. About 51,000 people have been dismissed in the previous several weeks by Meta, Amazon, Microsoft, and Google alone. The only giant in the industry that has not announced a layoff so far is Apple.

The tech monopolies, on the other hand, are wallowing in money. Recently, Microsoft announced its profit for 2022 Q3 as $16 billion. If federal regulators had not stepped in to block the deal, Microsoft would have acquired the video game producer Activision Blizzard last year for $69 billion.

Meta reported a profit of $4.4 billion in the third quarter of 2022, although reporting a 52% decrease compared to last year.

Amazon also announced a decline in profits, but the company still made almost $3 billion in the latest quarter.

Layoffs spread across all industries

However, Silicon Valley giants are not an exception in dismissals.

Software giant SAP of Germany has announced it would lay off 3,500 staff, while chemical conglomerate Dow will fire 2,000 workers. Executives at Dow have said that they will cut costs by $1 billion this year.

3M, another American multinational giant, will reduce its staff by 2,500 on the pretext of falling customer demand.

The toys company Hasbro will lay off 1,000 workers, equal to 15% of its current workforce.

10% of employees will be dismissed at Salesforce, 6% at Spotify, 11% at Vimeo, 3% at BlackRock, and 7% at Goldman Sachs.

In the following articles, I will focus on the situation in the USA and Europe.

America

Thiel targets Pope and Obama over AI in new ‘Antichrist’ lectures

Published

on

Peter Thiel has argued that former President Barack Obama and Pope Leo XIV are stoking public fears over artificial intelligence merely to enhance their own popularity.

In newly disclosed “Antichrist” lectures obtained by Politico, Thiel specifically targeted the two leaders while warning against the Antichrist, which he sees as halting technological progress and advocating a regulatory “one-world government”.

“A lot of people know that AI is politically unpopular, and they want to use that to boost their own popularity,” Thiel reportedly said during his address in Nashville.

Thiel continued:

“Both Obama and the pope fall into this category. Obama knows that Democrats have no ideas, but at least they can oppose AI.”

Obama recently called on Democrats to develop a comprehensive approach to the regulation of artificial intelligence.

Referring to Leo’s first encyclical on AI, “Magnifica Humanitas”, Thiel said: “The Church needed a politically popular issue to divert attention from child sexual abuse scandals, and it found it in AI.”

On the pontiff, he stated verbatim:

“AI is the greatest threat to late modernity. The pope realizes this. That is why he wrote his first encyclical… The Church needed a politically popular issue to divert attention from child sexual abuse scandals, and it found it in AI.”

In recent months, Pope Leo has gone on the offensive against artificial intelligence. The leader of the Catholic world recently said that this technology could create a “paradise of machines” that could endanger humanity.

Thiel’s relationship with the Catholic Church is fraught. This spring, largely in response to Thiel’s earlier lectures on the “Antichrist”, Vatican adviser Father Paolo Benanti penned an article entitled “The American Heresy: Should We Burn Peter Thiel?”

Throughout the lectures, Thiel framed familiar technology debates in religious terms.

Citing Matthew 24:24, for instance, the investor quoted:

“For false christs and false prophets will arise and perform great signs and wonders, so as to deceive, if possible, even the elect.”

Regarding this verse, he asked in Nashville: “And what about the psychology of the Antichrist? Could he see himself as the Christ?”

In his Nashville lectures, he also delved into the concept of the “Katechon”, drawn from the Second Epistle to the Thessalonians, which restrains the arrival and rise to power of the Antichrist.

Figures who may have briefly assumed the role of the Katechon throughout history included Charlemagne and Klemens von Metternich.

“If anti-communism is the Katechon holding back communists trying to create a communist one-world state, then neoliberalism is anti-communism in a world without communists,” Thiel said.

In both San Francisco and Nashville, Thiel devoted a significant portion of his opening lecture to addressing “effective altruism”.

This ideology rests on the premise that human beings should always act to minimise existential risk to the species and maximise positive long-term impact.

Many effective altruists and affiliated groups are based in San Francisco and work on artificial intelligence research.

In Nashville, Thiel criticised their ideas. This stance reflects the fact that they have dominated much of the recent AI safety debate, showing Thiel’s concern over the growing influence of this group.

Thiel stated:

“One reason [the effective altruists’] strategy works, of course, is that an apocalypse is impossible to undo. You only have one planet. Even Greta [Thunberg] was right about that. … So you can’t just ignore the risks. But we must also take seriously that when you establish a near-totalitarian one-world government empowered to stop all dangerous scientific work, undoing that will not be easy either… There is no historical example suggesting this global warden would willingly surrender power. Effective altruist ideology has brainwashed a significant portion of the people working on AI.”

The remarks delivered by Thiel in his lectures on 28 September and on Monday provide a rare glimpse into the conservative tech billionaire’s shifting political priorities over time.

Thiel’s opposition to regulation is not new. That perspective is widely shared among Silicon Valley venture capitalists.

What distinguishes Thiel from his peers in the conservative tech sector is his decision to frame political disputes in religious terms while simultaneously attacking the leader of the Catholic Church.

This shift could reverberate across the political arena. Thiel was an early backer of President Donald Trump and served as a major financial sponsor of Vice President JD Vance’s transition from venture capital into politics.

Politico noted that Thiel’s attacks on the church could complicate matters for Vance, a Catholic convert.

Democrats positioning themselves for the 2028 presidential election have already begun targeting Vance over his ties to the billionaire investor.

Continue Reading

America

Energy firms enlist ex-US officials to tap Venezuelan oil

Published

on

Service in the US administration has become one of the most valuable assets opening doors in the search for fresh profits across the Venezuelan energy sector.

Following the protracted crisis that ultimately brought the Venezuelan oil sector under substantial supervision by Washington, investors are enlisting former government officials who possess an intimate understanding of policy toward the country and maintain official contacts.

According to a report by The Washington Post (WP), energy companies and investors have begun employing former bureaucrats who served in the administration of Donald Trump.

Former officials move to the private sector

Michael Jensen, the former senior director for the Western Hemisphere at the White House National Security Council, features prominently among these figures.

Just three days after stepping down from his administration post in May, Jensen travelled to Venezuela alongside cryptocurrency billionaire Fred Ehrsam.

As of 1 June, Jensen serves as chief operating officer at Primavera, an energy firm founded by Ehrsam.

Last month, Primavera signed production agreements with the Venezuelan state oil company, PDVSA.

Another former government official, Brittany Caelm, left her role on the White House National Energy Dominance Council in August to join Sable Offshore.

According to reporting by the WP and the Financial Times, the company is conducting negotiations with the Venezuelan government over the operation of oilfields.

Micah Thomas Ketchel, a former adviser at the State Department, also joined the lobbying firm Ballard Partners following his departure from the administration and began working on the Venezuela portfolio.

US law imposes various post-government employment restrictions on former officials.

Company representatives stated that Jensen, Caelm, and Ketchel consulted ethics lawyers and complied with applicable rules.

Richard Painter, a former chief White House ethics counsel, also noted that Jensen’s transition to the private sector did not violate the law, provided that the relevant restrictions were respected.

Trump announces massive deal for oilfields

In January, following the abduction and detention of elected President Nicolas Maduro, US President Donald Trump urged American oil companies to invest in Venezuela to increase heavy crude production and shipments to US refineries.

Prior to this call, companies had demanded security guarantees alongside changes to the country’s legal and commercial regulations.

Maduro and his wife were abducted in a US operation carried out in January and taken to the US. Venezuelan authorities characterised the episode as a military assault, reporting that approximately 100 people were killed.

In the US proceedings against Maduro, two hearings took place in January and March, during which Maduro maintained his innocence.

Amid the rapprochement between Caracas and Washington, American oil and natural gas companies accelerated preparations to expand their operations in Venezuela.

The Wall Street Journal (WSJ) reported on 28 August that companies were close to concluding investment deals worth billions of dollars.

Chevron, the only major American oil company that maintained operations in the country, weighed taking over two additional heavy oilfields, while Halliburton engaged in talks to supply equipment.

During this process, the Trump administration also addressed the issue of direct access to Venezuela’s most prolific oilfields.

According to the WSJ, these discussions encompassed 17 oilfields with estimated proven reserves totalling approximately 90 billion barrels.

On 29 August, Trump announced that an agreement had been reached with Venezuela.

Trump stated that the pact provides for more than 65 billion barrels of the country’s oil reserves to come under US control, declaring: “The US just signed the largest oil deal in world history with Venezuela.”

Continue Reading

America

How will Brazil’s presidential runoff work?

Avatar photo

Published

on

The second round will determine which candidate secures a majority of the valid votes.

By Micaela Ovelar, São Paulo

Brazil’s presidential election will be decided in a runoff between Senator Flávio Bolsonaro, of the Liberal Party (PL), and President Luiz Inácio Lula da Silva, of the Workers’ Party (PT). With all voting machines counted, Bolsonaro finished the October 4 first round with 47.03% of valid votes, ahead of Lula’s 45.16%. Neither secured the majority required for an outright victory, sending the two candidates to a second round on October 25.

Bolsonaro received 56,104,503 votes, while Lula obtained 53,879,538—a difference of 2,224,965 votes, or approximately 1.87 percentage points. Bolsonaro therefore enters the runoff as the first-round leader.

The election also settled legislative contests and most gubernatorial races. In São Paulo, Brazil’s largest electoral state, Governor Tarcísio de Freitas (Republicanos) secured reelection in the first round. Nationwide, 20 gubernatorial contests were decided without a runoff.

The presidential count

The two leading candidates together accounted for 92.19% of valid presidential votes. The remaining candidates shared 7.81%

Candidate

Party

Votes

Share of valid votes

Difference

Flávio Bolsonaro

Liberal Party (PL)

56,104,503

47.03%

2,224,965

Luiz Inácio Lula da Silva

Workers’ Party (PT)

53,879,538

45.16%

1.87 %

Source: Brazilian Superior Electoral Court (SEC).

Augusto Cury, of Avante, placed third with approximately 2.89% of valid votes (3,448,569), followed by Renan Santos, of Missão, with 2.24% (2,675,887), and Ronaldo Caiado, of the Social Democratic Party (PSD), with 2.18% (2,605,148). Romeu Zema, of Novo, received 0.27% (326,488). None advanced to the runoff.

Cury and Santos subsequently said they would not endorse either finalist. Their announcements do not determine how their supporters will vote on October 25: ballots cast for eliminated candidates cannot be automatically assigned to Bolsonaro or Lula.

The completed count also differed from the final polls, which had placed Lula ahead with 45%, against Bolsonaro’s 42%. The election result instead gave Bolsonaro a narrow lead.

The territorial distribution showed Lula ahead in the Northeast, while Bolsonaro prevailed in the three southern states: Paraná, Santa Catarina and Rio Grande do Sul. Across the country, Bolsonaro led in 14 states and the Federal District, while Lula finished ahead in 12 states. These results contribute to a single nationwide presidential count rather than awarding separate electoral mandates for individual state victories.

How the election works

Brazil elects its president and vice president on a joint ticket through a two-round system. A ticket wins in the first round only by obtaining more than half of valid votes. Blank and invalid ballots are excluded from that calculation. If no ticket crosses the threshold, the two highest-placed candidates advance to a runoff.

The October 4 election combined presidential voting with contests for governors, the Chamber of Deputies, the Senate and state or Federal District legislatures. All 513 Chamber seats and 54 of the Senate’s 81 seats were contested. The Senate election renewed two-thirds of the chamber, with voters choosing two different senatorial candidates in each state and the Federal District.

Voting in Brazilian territory ended at 5 p.m., Brasília time, after which electoral authorities published the count. The Superior Electoral Court (TSE in Portuguese) provides results through its official results website and mobile application.

The October 25 runoff will decide the presidency and gubernatorial contests requiring a second round. Legislative elections are determined through the first-round vote and do not proceed to a runoff.

Participation and abstention

Approximately 125.3 million people voted in the presidential election, representing a turnout of 78.92%. Around 33.5 million registered voters did not participate, producing an abstention rate of 21.08%.

The count also recorded approximately 2.3 million blank ballots and 3.67 million invalid ballots. Together, these represented roughly 4.77% of ballots cast, leaving approximately 119.3 million valid presidential votes. Bolsonaro’s 47.03% and Lula’s 45.16% refer to that valid-vote total, not to all ballots cast or the entire registered electorate.

Abstention is distinct from blank or invalid voting. An abstaining voter did not cast a ballot; someone who submitted a blank or invalid ballot participated without recording a valid candidate choice. Neither group should automatically be described as undecided voters.

Those who did not participate on October 4 will have another opportunity to vote in the second round. Of course, the first-round figures do not establish how many will return to the polls or which finalist they will choose.

São Paulo and state results

São Paulo entered the election with approximately 34.1 million registered voters, around 21.5% of Brazil’s electorate. It is the country’s largest electoral state and forms part of the Southeast alongside Rio de Janeiro, Minas Gerais and Espírito Santo. Its weight in the national electorate makes it particularly important when examining presidential results.

The state’s gubernatorial contest ended in the first round. Tarcísio de Freitas, of Republicanos, won reelection with almost 63% of valid votes (14,491,874), defeating PT candidate Fernando Haddad (8,423,656). This is a gap of approximately 26 percentage points between them.

Across Brazil, 20 gubernatorial races were settled on October 4, the highest first-round total of elections since 1994. That exceeded the 15 contests decided in the first round in 2022 and the previous high of 18 in 2010.

Other first-round winners included Cleitinho Azevedo in Minas Gerais, Sérgio Moro in Paraná and Luciano Zucco in Rio Grande do Sul. PT incumbents Jerônimo Rodrigues, Elmano de Freitas and Rafael Fonteles won reelection in Bahia, Ceará and Piauí, respectively. Six gubernatorial runoffs have been confirmed: Acre, Amazonas, Espírito Santo, Rio Grande do Norte, Tocantins, and the Federal District.

Rio de Janeiro Case

In Rio de Janeiro, Douglas Ruas had 49.27% and Eduardo Paes 42.76%. Anthony Garotinho’s withdrawal of an appeal concerning his rejected candidacy could change which votes enter the calculation, potentially lifting Ruas above the first-round threshold. Rio de Janeiro remains an unresolved case because a pending electoral decision could affect the total number of valid votes. Formal action by electoral authorities was still required, so the contest could not yet be presented as a settled first-round victory. However, the electoral justice system is highly likely to announce a first-round victory for Douglas Ruas, who is also a candidate from Bolsonaro’s political party, the PL.

Brazilian voters abroad

Brazilians registered abroad participated in the presidential contest, with approximately 341,800 casting ballots in 186 cities, according to TSE data. Around 916,500 voters were eligible to vote overseas. Unlike the nationwide result, the overseas count placed Lula ahead. He received 157,387 votes, or 47.57% of valid ballots cast abroad, against approximately 143,900 votes, or 43.49%, for Bolsonaro. Lula led in 64 countries and Bolsonaro in 37.

The distribution varied sharply by country. Bolsonaro obtained 61.10% in the United States and 71.76% in Japan. Lula led in Portugal with 52.45%, Argentina with 64.44%, Canada with 57.75% and Germany with 71.93%. Overseas ballots form part of the national presidential total rather than a separate electoral contest.

Brazil now heads to the October 25 runoff with Bolsonaro ahead in the first-round count, but the presidency is still undecided. The second round will determine which ticket secures a majority of valid votes.

Continue Reading

MOST READ

Turkey