Week of March 20th, 2023

Plus, more love for cherry blossoms!

U.S. borrowers hold a collective $1.8 trillion in both public and private student loans.

It’s the examiners’ job to monitor a bank’s safety and soundness. What does that entail? Plus, franchise films aim to lure back moviegoers.

At least three big franchise sequels have come out this month, which could get the public back in the movie-going habit.

Examiners are the government employees who monitor a bank’s safety and soundness. What happened in the case of Silicon Valley Bank?

Some schools are creating college programs for adults who’ve finished one career — and may want to use their past experience to give back to their communities.

Affordability is attracting people to sunnier climes — and that’s helping to heat up those regions’ economies.

Econ Extra Credit newsletter #143

No, right now, central banks around the world have moved to a second level of coordination. All of the economic jitters have more people around the world turning to U.S. dollars for investment security. That rapid flow of dollars can upset the balance, and so the Federal Reserve has had to step in and manage things more carefully. Plus, what’s referred to as “China’s Davos” is underway, but fewer business leaders from the U.S. will be in attendance. Also, protests in France over pension overhauls reach a fever pitch. And, how long until lab-grown meat hits the grocery store shelves?

The FDA has approved a chicken product grown this way by California-based company Good Meat. It’s only the second company to get that agency’s green light.

But at least this week they borrowed less than they did last week. That’s a good sign. We look at why the U.S. central bank is making it easier for banks to borrow more money. And, earlier this month, after 10 years of negotiating, countries at the United Nations hammered out a new treaty that has the potential to significantly change how the world’s oceans are governed. The treaty also sets some rules and regulations around trade on the high seas and the use of natural resources.

From the BBC World Service: For the first time since 2019, China is hosting its three-day development forum to show the world that it’s back in business. However, the U.S. guest list is pretty short due to growing tensions between the two countries. Plus, the South Korean businessman, Do Kwon, has been charged by U.S. prosecutors with fraud, over a failed cryptocurrency scheme. Plus, a Tyrannosaurus rex skeleton is going on sale for the first time ever in Europe, valued at around $6 million. But there are concerns it could be locked away from public view by a private buyer.

The newly-signed UN High Seas treaty seeks to regulate resource usage and environmental protection in international waters.

Stephanie Nguyen, chief technology officer, is hiring people to help the agency respond quickly and efficiently to rapidly evolving tech.

Plus, what happens when a SPAC fails?

Only one state in America has a public bank. But support for more public options was growing even before the current financial turbulence began.

This month marks a year since the Federal Reserve started raising interest rates to curb inflation. Today we’ll take stock of where we are.

Artificial intelligence researcher and blogger Janelle Shane explains modern chatbot behavior.

Back then it seemed like inflation might be what economists call “transitory.” But here we are.

The company expects to lose another $3 billion this year in its transition from internal combustion cars to electric.

The failures of Silicon Valley Bank and Signature Bank have rattled some small business owners, even though contagion hasn’t spread to smaller banks.

The U.S. Federal Reserve coordinates some operations — sometimes even interest rates changes — with other central banks. Here’s how that works.

When your EV is no longer under warranty, who fixes it?

In the wake of turmoil in the banking system, some in Congress argue the solution is more regulation. Republican Sen. Rick Scott and Democratic Sen. Elizabeth Warren have unveiled legislation that would add a new watchdog to oversee the Federal Reserve itself. That’s just one part of the conversation happening in Washington about tightening regulation. Plus, will banking system jitters do the Federal Reserve’s job for it? Also, keeping an eye on the housing market, which is starting to show some traces of stabilization after new home sales rose unexpectedly in February. And, how China hopes to boost its population and, by extension, its economy.

Jerome Powell says the Fed is committed to getting inflation down to 2%.

The shrinking payments reflect a cooling housing market and higher interest rates.

The recent bank rescues should serve as a wake-up call for regulators to do more, says senior economics contributor Chris Farrell.

The Federal Reserve, after much hand-wringing amongst market watchers, ended up raising interest rates by 0.25% yesterday, signaling the central bank’s emphasis on fighting inflation despite recent instability in the financial sector. We look into what went into Chair Jerome Powell’s calculus on the rate decision. Meanwhile, Treasury Secretary Janet Yellen sought to assuage monetary hawks yesterday, saying that the government would not implement a blanket policy of fully insuring bank deposits. And, China’s population is changing as many workers age, but some say the demographic shift isn’t as big of a deal as it’s made out to be. 

A new episode from APM’s mental health initiative “Call to Mind” explores how loneliness affects mental and physical health, and how meeting an online community offline can help.

From the BBC World Service: After the Federal Reserve, it’s the turn of the Bank of England to make a decision on interest rates. Central banks are juggling two major concerns — inflation and stability in the banking sector. Since SVB collapsed, we’ve seen how higher rates affect the value of assets like bond portfolios held by banks. But in the UK, that decision may be clearer because inflation remains stubbornly high — markets are certainly expecting another rise. Meanwhile, there’s a tussle in the European Union over the date to phase out gas-powered and diesel cars. And, what’s it like doing business in Iraq 20 years after the U.S.-led invasion?

Plus, a lesson on voice memos vs. voicemails.

The Federal Reserve tests big banks to see how they’d respond to economic crises. Could the SVB debacle change that?

But the pharma company promised that individuals won’t pay the full amount.

Bed Bath & Beyond is seeking a reverse split, a sign that a company is not confident that its stock will rise on its own, one expert says.

Businesses that received some federal pandemic loans could defer paying for two years, meaning most are coming due this year.

The sectors hit hardest during the pandemic, including hospitality and retail, are coming back.

But the probes can’t uncover every problem before trouble erupts.

Whom does welfare-to-work really work for?

The central bank also signaled that it’s likely nearing the end of its aggressive series of rate hikes.

Educators, teachers and other employees at the Los Angeles Unified School District are continuing their strike for higher pay. We look into how broader labor trends are helping demonstrators on the ground make their case. And, we talk with Boston College Law School professor Patricia McCoy about how the government’s recent actions to calm anxiety in the financial sector are adding to so-called “moral hazard”.

The ongoing strike by Los Angeles educators is being fueled largely by high demand for workers.

According to Boston College’s Patricia McCoy, data underscore concerns about the government’s role in risk-taking at banks.

A quarter of U.S. workers now live in a place where local law requires job listings to include a salary range.

Eight states thus far have passed laws to boost pay transparency in job listings, aiming to grant applicants more information in a competitive job market. We look at the experience of New York City after implementing its own rule. Chris Farrell explains how to make the most of federal deposit insurance — and how someone can get more than $250,000 in the bank insured. And, Google yesterday released Bard, its competitor to Microsoft’s AI chatbot, ChatGPT. 

From the BBC World Service: As the Islamic holy month of Ramadan gets underway, we look at the significance of dates and the multi-billion dollar business of supplying those breaking their fasts. Plus, Ukraine gets a $15bn boost from the International Monetary Fund, and we hear about the class action launched in Indonesia by parents whose children died or were injured by contaminated cough syrup.

From creating joint accounts to patronizing multiple banks, there are ways to maximize FDIC coverage, says economics contributor Chris Farrell.

TikTok’s CEO will face questions from Congress Thursday about the platform’s data practices. But it’s business as usual for TikTokers.

Many factors led to Silicon Valley Bank’s collapse, but content creator Kyla Scanlon says “social media risk” accelerated the slide.

Today, we’ll examine why the Federal Reserve’s rate hikes got financial companies like Silicon Valley Bank into trouble. Plus, consumers’ confidence remains resilient despite drama in the banking industry.

Rents at the bottom of the market, where supply is tighter relative to demand, have risen faster than those of higher-priced properties.

The Swiss grocery giant bought the maker of Palforzia as part of an effort to take Nestle into the profitable health and wellness space.

It goes further back than Dodd-Frank.

Millions of people have had their benefits cut by at least $95 a month, at a time when food prices are up almost 10%.

Consumers haven’t seen much reason to hold back.

Why bonds lose value when the Fed hikes interest rates and what that has to do with banks.

Industry analysts, would-be buyers and sellers are waiting for the Federal Reserve’s next rate decision.

The latest data on U.S. home sales showed a huge rebound of 14.5% in February, reversing a trend of decline that lasted more than a year. That said, the market is still fraught with uncertainty, especially amid the recent jitters in the global financial sector. We talk to Guy LeBas of Janney Montgomery Scott about Treasury Secretary Janet Yellen’s recent announcement that the government would insure the balance of deposits at smaller banks. And, prior to the collapse of Silicon Valley Bank and Signature Bank, both institutions received favorable credit ratings from firms like Moody’s, prompting questions about what ratings are actually useful for.

Credit rating agency Moody’s had given Silicon Valley Bank a high rating — right up until it failed.

We explore what’s really going on here with Washington Post reporter Julian Mark.

Trouble in the banking sector is scrambling expectations of how much oil the global economy needs right now.

The collapse of SBV could lead to increased scrutiny around potential risks for banks.

Amid the continued fallout from the failure of two mid-sized U.S. banks and the acquisition of Credit Suisse, financial institutions are likely to start applying greater scrutiny to the loans they give out. We look at what could move banks’ calculus in that direction…and who would be most affected. Another consequence of the recent turmoil in the financial sector has been lower oil prices, which have seen one of their biggest slumps in recent years. And, a fact-check of claims — often made by prominent Republicans — that so-called “woke investing” caused the collapse of Silicon Valley Bank with Washington Post reporter Julian Mark.

From the BBC World Service: Sri Lanka has been battling economic breakdown for nearly a year. A foreign reserve crisis toppled the country’s president and led to shortages and soaring inflation. Now a $3 billion rescue package has been agreed upon with the International Monetary Fund. We ask if it’s enough and find out what reforms the nation will have to implement to keep the cash flowing. Plus, investors holding Credit Suisse debt lost everything in the rescue deal with UBS. We hear from one of them on how it’s affected confidence in the market. And, with another warning on climate collapse from the UN, we ask what Lego — one of the biggest toymakers in the world — is doing to cut emissions.

Data labeling is an important step in developing artificial intelligence but also exposes the people doing the work to harmful content.

To raise or not to raise?

The inflation threat calls for one type of action, and the banking turmoil calls for another. How will the Fed respond?

Switzerland’s reputation for secure, secret banking goes back to at least WW I. But its banks have changed over time, with mixed results.

Do banking rules need tightening? Do supervisors need better training and greater powers? The answer will influence what comes next.

Do banking rules need tightening? Or do we need more supervisors with better training and greater powers? Plus, a look at where the semiconductor industry sends gems that aren’t up to snuff.

Exotic crystals grown for science and industry that don’t make the cut for the lab are being repurposed as jewelry.

Amid regional efforts to conserve the Colorado River’s flow, the U.S. government argues it has no duty to enforce Navajo water rights.

One concern: People will put their money in a bigger bank. But there’s a good reason to leave it in smaller institution, one banker says.

Critics say ESG investments allocate money based on political agendas rather than on earning the best returns for savers.

The Federal Reserve’s top committee that sets interest rate targets is due to meet in the middle of this week, where it suddenly has a lot more to consider amid global unease about the banking system. Economist Julia Coronado explains what Jerome Powell and co. may be thinking. Meanwhile over the weekend, the Fed announced it’s coordinating with other world central banks to make sure there are enough dollars in the financial system. In Europe, stock markets took a hammering after the acquisition of Credit Suisse. And, a look at how holders of federal housing vouchers in Texas are facing difficulties finding a place to live. 

More than 90% of landlords in the Dallas-Fort Worth metro area won’t rent to people who rely on housing vouchers to pay the rent.

It’s been a tough couple of weeks for the global banking sector — the embattled lender Credit Suisse was purchased by fellow Swiss rival UBS for a motley sum of around $3 billion. University of Michigan professor Erik Gordon explains what that means amid the wider unease about the financial sector. Meanwhile, the Fed was one a group of the world’s central banks that came up with system to ensure banks have cash if they need it. And, a look into what’s happened to Signature Bank since it was acquired by federal regulators little over a week ago. 

From the BBC World Service: Just another manic Monday in the banking sector after UBS agrees a $3 billion deal to buy beleaguered Credit Suisse. But who loses out, and has it restored confidence in banks? Chinese President Xi Jinping is due to visit Russia this week, which may impact the latter’s fortunes in Ukraine. Plus, on the 20th anniversary of the invasion of Iraq, we travel to Baghdad’s central market and speak to traders about the country’s dollar crisis.

Advertisers will need to figure out how to adapt before they are left behind by the next generation of search engines. Competition is quickening the pace of change, says Garrett Johnson of Boston University.