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tv   Counting the Cost  Al Jazeera  January 24, 2022 7:30pm-8:00pm AST

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its decades of deregulation that focused on corporate profits instead of building infrastructure like truck depots, for example, and taking care of workers that got us her. she, abraham c al jazeera, maryland. ah, this is odyssey these at the top stories. nato has put his forces in stand by incense, ships and aircraft to eastern europe has tensions grow between ukraine and russia. you pharmacists of promised a 1300000000 dollar loan to help he ev, kimberly argued as the latest from washington dc. the president worked right through the weekend and into monday, working at cap david, a secure location, mulling over a number of scenarios, including whether or not to deploy american troops by the thousands. the numbers still not determined, but the understanding is that there is a plan,
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a number of options being drawn up where the president likely to make a decision by the end of the week to deploy troops not to ukraine proper, but instead of potentially to nato allies. this would not only include in terms of personnel, but also aircraft as well as war ships. emitter to qu, attempt is underway in burkina, faso security. so say the president's been detained at a military base. soldiers have taken control of the country's main television station. the u. e has intercepted the ballistic missiles fired by hooky rebels. it's retaliated by launching airstrikes in yemen, who the spokesman is threatening further. attacks on the u. e. on the lebanese prime minister, sally hardy says he suspended his role in political life and would not run in the upcoming parliamentary elections or any has urged his political party not to participate either. the afghan taliban and western diplomats had begun their 1st
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official talks in europe sees the group took control of of ghana, san last august. the closed door meetings with u. s. and e officials are taking place in norway. earlier and sunday. the taliban met civil society groups diplomats are asking them to uphold basic freedoms. in return for humanitarian aid, the former roman catholic pope benedict has admitted giving a false statement to a child, sex abuse inquiry. he says he mistakenly told investigators in germany that he wasn't at a meeting in 1980 when he was archbishop of munich an inquiry find that benedict knew about peter far priest, but failed to report that claims. and those are the headlines that he is, continues here on al jazeera, after counting the cost good by ah
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ah, i hello, i'm kim, i'll santa maria. this is counting to call stone al jazeera, your weekly look at the world of business and economics this week, a year of the biden presidency. he took over a lockdown economy a result of the 1st year of the pandemic. now the u. s. is seen something of an economic recovery, but to every day americans see the been. and in running the economy, hot people are also feeling the pinch inflations, hit an almost 40 year high. can jo vine and bring down the rising cost of living in his 2nd year as presidents? while in turkey, the president's going on all thoughts? project typo on has cut interest rates despite spiraling inflation. opposite to
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what mainstream economists suggest, wise, the currency crash, not worrying him to how do you define a successful 1st year in charge of a country? there are so many metrics, and when you add in a pandemic while is a lot to sort out, asked joe biden and his team. and i'd say it's been a success. the economy recovered foster from the pandemic than most others. and based on some of the 10 main market indicate as the economy is improved, more in bivens 1st him than any of his predecessors in the past. 50 years here, the numbers to back it all up strong, consumer demanded helps the economy grow. an estimated 7 percent in the final quarter of last year. that may well slow down as on the context effect. but the strong markets been thriving. the s and p 500 index, for example, had a great run in 2021 rising more than 25 percent. unemployment such an important indicator. it fails from 6.3 percent to 3.9 percent employees added 6400000 jobs.
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the most of any 1st year president and jobless claims had a 50 year. lo, although the u. s. is still around 3600000 jobs, short of pre pandemic levels. but interestingly, wages have gone up. the average hourly pay jumped 4.7 percent in december. part of that is the scramble to find and hold onto work is after a record number of people actually quit their jobs, it's phenomenon known as the great resignation. now, all of that is quite remarkable, but not necessarily in the view of many american voters to separate polls show a majority, describe me economy as poor or fair and disapproving of biden's handling of the situation. and then there are the everyday problems supply chain problems, leaving supermarket shelves bear groceries and petro costing much more inflation, climbing to 7 percent the biggest 12 month gain for 40 years. let's start things off with this report from mike hannah in washington,
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dc. price is for groceries rent another, neither the items continue to saw. the own. the small shops are particularly hard hit as they see their customers beginning to treat what will every day purchases as luxuries. you can see have the money flows you can seeing when people are not getting the extras when they're getting coffee trip coffee instead of capital. you can see it. you can see how they pay. they're paying in coins, be increased in prices, is now being felt at every gas station and in every grocery store. i just think for a little more careful, i notice it in almost every product. fruits vegetables, which we buy, a lot of jelly products. i can't really see anywhere that the prices have gone down, but they've gone up bottlenecks in the supply chains of distributors. the primary
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reason and these, and turn the direct result of stopping shortages as a pandemic continues to rage world wide. at the stage, though, the head of the federal reserve insists there's no need for panic. that this is a temporary situation. we will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched. it's a similar message coming from the white house, which points to a dropping unemployment rate as evidence that economic recovery is underway and is adamant that the supply chain issue will be resolved. we are well positioned to attack the challenges of prices and cost had on. and that's exactly what the president and this administration are doing. but republicans continue to blame stimulus measures for overheating the economy. one thing is clear, it's impossible to predict the ongoing economic impact of the on the crone varian
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serge, which the nation continues to face. i don't believe we've seen that peak yet here in the united states. the rise in price increases reflect the harsh reality that in the pandemic. it's not just people who get sick, but the economy as well. well, let's get into it all now with james nightly. here is the chief international economist with i and j. he's with us from new york to the james. thanks so much for your time. i'm inheriting a locked down economy is how i've described what, what joe biden got not an easy position to be and not dissimilar to barack obama many years ago. and he inherited a, a faltering economy as well, using that as a baseline. has he done? well? yeah, it's, i mean, you would look at an economy today that high is, is actually substantially larger than it was before. pandemic struck in the economy . us now $1.00 percentage points bigger than it was so on the face of it, what the economy and what the global economy is going through. that is
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a remarkable achievements. however, you look at other aspects of the u. s. economy and you can see that there are 3600000 people, fewer in work than the pandemic struck. so there's still clearly quite a lot of healing to do in cordele reaction that your source is still need to do to get the, the recombinant economy fully back on its feet. ok, let's go with jobs and saying is if mentioned at 3600000 fewer but unemployment is down. jobless claims are down as well. is it feels like a mixed bag, but generally it's a, it's a good story. the employment side of things. yes, i mean, the thing is this something for everyone, it within the u. s. states on the jobs market, unemployment has broken below $0.04, which on the face of it is a fantastic care outcome. however, you look at the other aspects of what's going on in the job market and why is that unemployment has fallen so sharply without the jobs being created. and that's because workers have just vanished at the labor force participation rates, as, as is well below where it was pre pandemic. can we have below with century about 62
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percent that substantially below where we were 20 years ago, where it's sort of 6768 percent. so there has been a vanishing of people and why he's this? well, partly it is suggested that there has been a lot of early retirements, but also at the lower end of the income distribution. we're seeing a lot of their people missing from people who work in retail. people work in leisure and hospitality. and this is a bit of a conundrum for us so far. it is because it's also meaning that companies want to expand and take advantage of bigger us growth in the u. s. economy costs because they haven't got the workforce to do that. and that's putting up with pressure on wages, and that in turn is going to put up with pressure on it on inflation, which in turn is putting up the pressure on interest rates in the us. yeah. talk me through inflation if you would please james. well, when a president in his 1st year is happy to come out and say, yes, this is bad at that a 40 a home, we need to do something. but then he clearly acknowledging that there is something at play here in basic terms. what is it play for it to have reached such high
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levels? ill? i say it's a combination of factors. one is on the demand side when you throw 5 trillion dollars of stimulus at an economy, some of that is going to stick, can actually work in that. and that is why we have got an economy that is larger than it was before the pandemic. so the demand side is very vigorous, but at the same time supply side capacity of the u. s. economy to meet that demand hasn't grown, in fact, is probably shrunk, as we can tell with a loss of workers in u. s. economy, the supply chain. strains that we're all well aware of the chip shortages. so those that sort of demands supply mismatch and means that there's a lot of money chasing, not as many goods. i mean, you look at it in the car market in particular, where use car prices have risen the best part of 40 percent in the last year because he just can't get hold of a brand new car. so these sorts of dislocations of bottlenecks in amidst good demand is, is really what's driving the inflation story. james,
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i want to drill down into something a bit more policy related in some detail. so just bear with me a 2nd while i sort of go through this with our viewers, build back better. sure. 3 words which are at the core of jo biden's, economic plans and act, which includes social policy, hundreds of billions of dollars for climate change programs and increase in taxes on corporations in the richest individuals. all though, put in doubt because of senators from jo biden's own parties that they wouldn't support it. the, the president, however, did sign into law a one trillion dollar infrastructure bill aiming to protect communities against climate fuel disasters and among some other projects. now i do want to get james into too much of the politics of dimension and kirsten cinema and the likes that the whole other story. but you know everything and bill back ben is sounded like it was positive and strong. why couldn't get the support? yes, it's interesting, we've seen this basically being sliced and sliced and sliced and smaller and smaller each time it initially started out as a $2.00 trillion dollar plan. then it became
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a $1.00 trillion plan and he's now down towards closer towards one trillion in terms of the additions in into the infrastructure bill. this already passed as a physical infrastructure bill of one trillion that has got 3. but as you say, they sort of build back better social policy, green climates related aspects is struggling, and this large he sent his on again, this inflationary aspect that some people within his own kasey are anxious that we've got a highly inflationary economy. that's very, very strong. as well, and this is just going to add more fuel to the fire and people are very nervous about inflation. people can feel it in their pockets, the value of their dollars doesn't go as far as it used to. and that has led to consumer confidence falling away quite sharply. so there is this sort of anxiety, not just amongst his own republicans, but as i say, even amongst his own part about what this means for household finance is over the medium to long term. so it's all about this concern that inflation could really
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take cold, and we might end up seeing the federal so taking more aggressive action. and so the economy so good in some people's minds actually be counter productive. ready and that's why i think there is some hesitancy amongst some members, nissan parts to back it. i wonder if that will lead to hesitancy or change, at least in, in jo biden's part. this is perhaps a more political question. but when you've put everything into this idea of building back an infrastructure and it hasn't really worked in the 1st term and you want to get reelected, not just in 3 years time, but you want to win the midterms in his time as well. and the people aren't responding to it that well, maybe there's a change in tac needed. that's quite possibly true. we had j biden's big speech was hoping to be a big resets of his policies. you know, we'd find out what he plans to. and in the end, he kind of got sort of stuck down into russian politics and you know, the politics and ukraine. and so we haven't got a clear vision really. and this is a challenge because domestic political fact is really drive you are selections,
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we have, we have to admit that. and those domestic political considerations are very tough. joe biden is the least popular presidents of all time. if you exclude donald trump, that shows you how, you know, political politically fraught, it is all in us right now. and as you say, the mid term elections are just in november. and it looks as though the democrats could lose control of the house and possibly also lose control of the senate. and if you haven't got control congress, you can get your legislation. so this is a real issue for biden, and the democrats, unless we can turn things around, get the popularity, get a poll ratings rising. the 2nd term will, the 2nd half of his term is going to be really stuck in terms of domestic agenda. he's going to end up being forced down what donald trump had to do and used and focus on areas of political or presidential executive authority, which basically relate this means he's sort of the sole to international relations
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and trade. and that's is not what really sort of floats, people's excitements in u. s. domestic policy. so it's going to be a very, very challenging environment for him if he can't send things around very, very quickly. just one against what has joe biden got left to fire as it were, you know, it as economic towards the minis tapped strategic or reserves. as he said, there's been individual payouts. now is there, is there anything left in your opinion that could work? yeah, we'll build that better, isn't debt yet, we have to say, and it does look as though what they're going to try and do is break this up into little hearts and put it under the umbrella of bill by better because it's clear that you know, some of his own party won't back the full package of everything, you know, this extra significant source of money thrown at the economy. but if he breaks it down into little carts that even some republicans may back, they can get lots and lots of little quick wins that could build up to a bigger win in the election in november. so it's not all completely lost. turns on
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a pleasure talking to you. thanks for breaking it all down for us and exciting. so clearly really appreciate it now has a slightly different approach to inflation was in fact, it's more than slightly different. it goes against what many mainstream economists think, but that is not stopping the turkish president, reject typo to one. he's repeatedly described himself as an enemy of interest rates, believing high borrowing costs is what increases inflation. so his cutting interest rates. owen's goal is to boost growth and to free the economy from the burden of higher interest rates, which he says are imposed on turkey by and these are his words, the global barons of finance. the president is targeting a new economic model in which chief credit would help attract investments, raise employment, and exports, and boost turkey's independence from other countries. but turks, well, they've been queueing up to buy cheap bread as inflation is sold to more than 36 percent last month compared to a year ago. that was the shop as rise in almost 20 years. the cost of electricity,
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natural gas fuel level jumped as well. and of course, there's been a dramatic fallen the value of the turkish lira lost 44 percent of its value against the u. s. dollar last year. now it on as introduced her a mechanism if you like, the promises to compensate holders of the lira when the currency weakens to a certain level, the measure had reversed the lira slide and triggered a big surge in its value. in late december, minimum wage was also raised by 50 percent, and the government boosted its match on private contributions to public pensions. and now that of course, has all been costly. turkey central bank has had to sell from its foreign exchange reserves to shore up the lira, but it's not all. blake, the country showed positive figures for industrial production and retail sales that was in november. the government has exports in the 1st half of last year, hit a $100000000000.00 which the highest 6 month figured ever. the world bank estimated turkeys economy to have grown 9 and a half percent in 2021. and president odo and says he's determined to put turkey
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into the world's top 10 economies as a lot to unpack there. and we're going to do that with carlos dest. sousa joining us and zurich here is the emerging markets strategist and portfolio manager at the zurich base asset management, fin vancho. and it's great to have you with us, carlos as i read through all of those things. this bit of a rollercoaster, isn't it? and i'm starting to wonder what 1st of all your views on, on this sort of reverse thinking which president early one is employ. yeah, thank you very much for the introduction and thank you for having me. yeah, i mean are the views on the interest rates and inflation are quite on conventional as you have mentioned is not quite clear why he believes that higher interest rates actually drive higher. you have mentioned the opposite of what we economists believe. and one explanation potentially in the short term, at least, is that last year he gave the chance to the central bank to raise interest rate
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divide inflation and inflation actually accelerated, was kind of prove him, right? at least in the short term. now i'm not saying hiring and i'm not saying his right, but there were other costs as station increasing in turkey last year. and all over the world. there was the reopening of the economies that were supply side constraints. that was more and monetary expansion in 2020. so lots of reasons for inflation up and just interest rates don't have an effect on inflation. that is immediate. it just takes a while for interest rates to transmit to the economy and really lower inflation. so now he things, he's had enough of my interest rates and he's trying his way with i'm skeptical work but, but let's see. well, it's like he wants to be the guy who is the low interest rights man, because that's going to appeal, obviously, to people. plus he talks about foreign financial tools and global barons of,
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of finance. what was he talking about there? i mean, it's funny that he's blaming for investors right now because the currency is turkey experience of the 2021 is very different from the one the experience in 2018 in 2021. it was actually domestic favors. so basically, churches citizen who were driving the weakness of the turkish nearest not for an investors like in 2018 when turkey had a very in our spurn account. and 40 investors were moving out of turkey. so those portfolio out those were costing or where the trigger of dileo depreciation in 2018 in 2021. it's just that turkey citizens who want to protect themselves from inflation as you mentioned is ridge 36 percent in december. so they're all on the right and you're converting their holding fee or their savings into us dollars and other parents use to protect their purchasing power, which makes sense. so i think it's more of just
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a rhetoric to blame for players that we have left turkey quite a while ago, most of our investors were not in the lira here. it's actually, it's our citizen for don't trust their own currency. right. so let's expand on that with this sort of this mechanism that i put in place. you know, 10, what was it? $10000000000.00 worth of layer, i think. and 300000 citizens participated in it. it's, i mean it's, again, it's so it's almost like a populace move, it's a good idea and it shows people that he's doing something, but you can't maintain that. that's right. this short term it's seems to be working in the short term and then make the currency appreciate regain part of the losses of the biggest 2 months. but in the medium term, i very much doubt it can work. why? because it is the government and the center bank, who will compensate circus favors for the turkish near other. this means that as the turkish eventually depreciates any will have to negotiate. when you have more
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than 30 percent inflation, the currency cannot be stable, is just not possible because it will just make imports much cheaper. and this will make the grand account why then in the sustainable way. so there is just no way that any country in the world and just 30 any country there were, can have high inflation and stable, of course. okay, low the low currency. one likes that as well, doesn't, he says that's actually a good factor. it's good for exports and for boosting you economy that way, it is good for exports is good for tourism. of course it does those the economy to some extent. but it just means that the currency is ready to right now, and it's really competitive right now. in one year's time. if you accumulate, say 40 percent inflation quite likely. then in real terms, the currency would be 40 percent more expense today. so in one year, if the currency remain stable, it will not be competitive anymore, which is why it has to depreciate. and what is the ratio rate then the government,
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the treasury will have to pay all of this deposit just this time $1000000000.00 that you mentioned. there will have to compensate them partly at the restaurant and partly back. so that's more of that. that's more money printing. that means more inflation in the medium. and so it's a bit of a vicious circle in the medium term right now. it has worked. we have changed expectations of the people. people are no longer afraid of holding us because it will be compensated, which is all that they want. they want their purchasing power to be maintained like wields. but medium term, i don't do this working. you refer to quite rightly the medium term children long term. have you got any thoughts on what that time scale actually is? because as we said, he can't keep popping up the currency like this all the time. and there's gotta be some long term plan here. it all just seems to be it all things feel very short term this? yes, i think for the next 6 months it will probably work. i don't see this that's
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a major problem in the next 6 months because the truck is, is so competitive right now. it can withstand some appreciation in real term, but if this is maintain through the next 2 years, it will become extremely costly for the government. it will become quite costly in terms of money for the central bank as well. so i have to, i want to highlight that one of the strengths of the turkish economy is the levels of public that are really quite low there. where around 40 percent of that to be back in november. the latest figures are not yet published. i would be a little bit higher with the still really quite low compared to most emerging markets. and what's going to happen with this scheme is, is that if it is maintained for say, 2 years, at least, then that's assets will accumulate. and it will accumulate quite some public debt. so the main strength of the current economy will be weekend. it will no longer be such a strength as it is today. and that will tell us,
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let's move away from sort of the, the numbers in the policy and actually talk about turkeys economy. phil 8th, president, early one wants to get turkey into the world's top 10 economies, which is a very ambitious what's going to take it in to tell you is about what turkey has to offer the rest of the world. i guess that's a bit of more abstract question. i think growth is never been or rarely been a problem in turkey. it's hypertension, economy because they have relatively high population growth. they have quite a, quite relative to diversified economies of growth is really not a problem to become the top 10. i think that will take a very long time. i don't think it will. you know, it is not a matter of just a few years. you know, this is getting can take several decades and i think have very high inflation like they want for the past. right now, it's a big problem. it's a challenge to achieve some visions because typically countries that have 304050
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percent inflation, they're not stable. and turkey, even though it has had time cation for the last 4 years, double digit inflation since 2017 notify us today, but high inflation. and that has been a source of repair and crises, and turkey. so we have a high potential growth, but they have very frequent crisis. at the end, they accumulated growth over the non term. it's not as high as a country that maybe has a little bit less growth, but it's much more more stable that it doesn't have such frequent crisis. so if they want to achieve some business, they have to tackle cation really. i think this is very important. and i don't see the current policies as been their way to success. call us to serve talking turkey with us this week on counting the cost. thank you for your time. we do appreciate it. my pleasure. thank it. and that's our show for this week,
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but to let me know what you're thinking, what you would like to see on the show. and so you can tweak d and me a, j. e, please, is the hash tag agency deeply when you do or females more, you think, come from that costs about 0 dot net is our training, and there's plenty more as well online. and i'll just, or dot com slash seeking takes you straight to our home page with individual report links and entire episode for you to catch up on when, if you. but that is this for this edition of counting the cost on come all santa maria. and the whole team, thanks for joining us. the news on out of the, the ah, along with
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of the earth and further experienced the unimaginable of the people who live it. witness award winning documentaries on a just a year. oh, nato says it's sending reinforcements to eastern europe as fears grow about a possible russian invasion of ukraine. moscow accuses the west of hysteria. ah, i'm about to say this is the 0 life and doha also coming up a co attempt appears to be on the way in. but.


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