Labour disputes in China. Europe's low-growth normal. West Bank banks drowning in cash. Gaming the horror of trench warfare.
Great links, images and reading from Chartbook newsletter by Adam Tooze.
Chana Orloff, Prophète Wood 1916 Source: Chana Orloff
Labour disputes and social unrest in China
At a seminar in an eastern Chinese city last year, dozens of municipal and provincial level officials gathered to discuss social risks and possible solutions. Although they claimed street protests were lower last year than before the pandemic, they said online protests were proliferating. These were mostly “apolitical” and uncoordinated but were driven by the “social mood”, delegates were told. Protests centred on unpaid wages in the property and construction sectors, lay-offs in service sectors hit by ecommerce, and wage reductions in the gig economy. Worryingly for the party, perceptions about inequality “between rich and poor, cadres and the masses, have become general beliefs”, delegates heard. Although China does not publicise reliable official figures on protests — and none were provided at the seminar — US-based think-tank Freedom House said that during the first quarter of this year, it logged 655 “dissent events”, up 21 per cent from a year earlier. Plenty of young Chinese people are now having psychological problems due to the bad economy, but many don’t show it outwardly Separately, China Labour Bulletin, a worker advocacy group, noted almost 1,800 incidents across China last year, more than double that of 2022 and exceeding pre-pandemic levels. The construction industry accounted for the majority of incidents, followed by manufacturing. At the seminar, cadres acknowledged that public sentiment was very fragile — especially given the narrow channels to voice anger — and that conflicts between officials and ordinary people had become widespread. “Rioting is the language of people not listened to,” said one slide, in a possible echo of a famous Martin Luther King quote. Issues of particular concern at the seminar included the plight of young people, who attendees worried were feeling “deprived”, and unemployment in general. This year nearly 12mn Chinese students are expected to graduate from university but many complain they cannot find jobs commensurate with their qualifications. “Lots of young people have lost hope,” said one government adviser at the seminar. China’s official data on unemployment put the jobless rate at a relatively low 5 per cent in May. But unofficial measures tell a different story. … At the seminar in eastern China, officials also expressed concern at the state of general public mental health. “The public has growing psychological problems,” said an official from Shandong province. Extreme cases of violence involving random killings were becoming “increasingly frequent”, he added. Unofficial data supports the official’s thesis. Internet searches on Chinese search engine Baidu related to mental health rose 35 per cent on average in each year between 2018 and 2023. In 2023, the viewership of mental health-related videos jumped 83 per cent against a year earlier while searches for solutions to anxiety, depression and pressure grew by up to 224 per cent on Bilibili, China’s equivalent of YouTube.
Source: FT
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Two models of human community: the exclusionary wall v. the legitimate line!
Asylum seekers from China, Colombia and the Middle East line up for food prepared and delivered by a small group of volunteers near the border wall. (Robert Gauthier / Los Angeles Times)
Source: Yahoo
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Russian interest rates are close to their peak levels at the start of the war in 2022.
For subscribers only.
Europe’s low-growth normal
For subscribers only.
The Bank of England is taking an alarmingly significant role in UK fiscal policy
The banks of the West Bank are buried under cash they can’t use.
The West Bank has so much cash its lenders are worried. Bank earnings in Palestinian territory have been hit and theft is rising as Israeli curbs and war fallout leave over $1bn idling in vaults. … Most businesses worry about not having enough cash. But for lenders in the occupied West Bank, the problem is that they have too much. The surplus, which stands at Shk4.2bn, is one of numerous strains in a financial system that is also grappling with the fallout from the war in Gaza, and punitive measures imposed by Israel’s ultranationalist finance minister. Bankers and officials say the cash idling in West Bank vaults, equivalent to more than $1bn, is not only depriving lenders of earnings and complicating transactions, but is also increasingly a target for thieves. “It’s a problem,” one Palestinian official said of the pile, which is predicted to reach Shk8bn by the year-end, a figure equivalent to more than 15 per cent of the West Bank’s economic output. “It creates a lot of difficulties for our banks and for Palestinian traders doing business with Israel.” The excess stems from a long-standing limit imposed by Israel on the amount of cash West Bank institutions can transfer to the Israeli central bank. West Bank lenders use Israel’s currency in line with economic agreements signed in the 1990s. Before the war between Hamas and Israel erupted in Gaza on October 7, the main source of physical shekels in the West Bank was Palestinians who commuted to Israel for work and were paid in cash. They brought up to Shk20bn into the West Bank annually, according to a person familiar with the situation, while Palestinian citizens of Israel who crossed the Green Line to shop in the West Bank brought a further Shk6bn-Shk7bn. But Israel’s central bank only allows West Bank lenders to send it Shk18bn a year, and over time, the banks have been left with increasingly large stocks of physical shekels. … The IMF has criticised the level of its cap on shekel deposits from West Bank lenders … Since the war broke out, Israel has prevented Palestinians from entering its territory for work. But the cash surplus has persisted, because the uncertainty generated by the conflict has led Palestinians who previously kept cash at home to deposit it in banks, while the downturn triggered by the war has led many to spend less. The war has also fuelled the grey economy, which is largely based on cash. … The most direct impact of the cap on Palestinian lenders is that it deprives them of income. The IMF estimated in 2022 that holding excess shekel cash lowered Palestinian banks’ profits by about 20 per cent. According to one Palestinian banker, the lost earnings for the sector amounted to $500mn between 2012 and 2023, much of which has accrued in recent years as interest rates have risen. “We can’t place it [on deposit to earn interest], we can’t lend it, because we don’t lend physical cash,” the banker said. “This money could be put into the economy and be circulating and producing value.” …. One person familiar with the situation said there were eight armed robberies on banks in the West Bank last year, double the previous year’s total, and at least three so far this year. Other officials said the number was higher. Some observers think the thefts are as much to do with poor law enforcement as growing cash piles. But a UN official said the problem was being exacerbated by movement restrictions imposed by Israel since October 7, which made it harder for banks to transport cash from less well-protected branches to more secure central vaults.
Source: FT
There was an interesting IMF report on the problem back in 2022.
Chana Orloff, Jean-Emile Laboureur Wood, 1921
Can Starbucks break the bind between more complicated, customized drinks and slower service?
Complicated drinks with multiple modifications come with higher prices, which means average ticket prices are rising. Modified drinks now account for 85 per cent of net beverage sales at Starbucks. The most complicated can be labour-intensive, becoming a source of frustration for baristas. They are one reason for the growing unionisation efforts at stores. Former boss Howard Schultz, who left the board last year but shared his lengthy thoughts on LinkedIn, argues that management needs to spend more time in stores (as well as backing “coffee-forward innovation”). In reality, the case for Starbucks to simplify its menu and focus on the basics is straightforward enough. The company makes half its US sales during the morning rush hours, when people are looking to get their caffeine fix on their way to work or school. These are dedicated customers that Starbucks cannot afford to lose. Too many of these customers — a mid-teens percentage of them — are abandoning the orders placed on Starbucks’s mobile app because of long wait times and menu-item unavailability.
Source: FT
Conscript
‘Conscript’ takes place in maze of first-world-war trenches … Conscript does not rely on eerily realistic graphics to instil a palpable sense of nausea. Among other things in this retro-horror game, set during the first world war battle of Verdun, there are writhing pixel-art soldiers whose legs have been blown off by artillery, black shrapnel lodged in bloody flesh. Also, befitting the location, there is a baguette covered in such finely rendered mould that you can practically taste the rot. The action is viewed from a top-down perspective, an ingenious choice for a game that reimagines the classic haunted mansion conceit of 1990s horror titles as a sprawling, interconnected trench system. There are mess halls, latrines and pigeon coops populated with friends and foes, including giant, cadaver-eating rats. The 32-bit-style, PS1-era visuals exude a dank gloominess, and sonically too the game strikes a tone of discordant nightmare. Synths gurgle darkly as you tramp about, interrupted only by the cries of your fellow conscripts. The beleaguered protagonist is André, a youngster drafted into the French army. He has a brother, Pierre, also serving in the army, and a family waiting for him in the bucolic French countryside (you catch glimpses of this at key dissociative moments). Characterisation is broad, which is perhaps the point. The game is called simply Conscript: the brain-scrambling, body-obliterating events that afflict André happened to millions of helpless souls like him. As one soldier puts it: “We all end up floating in the same hole.” In its most successful passages, Conscript is gruelling and dread-filled, though there are crumbs of hope. The looping maze of passageways above and below ground quickly take on a kind of horror-stricken dream logic. Murky environments begin to bleed into one another; enemies respawn at a cruelly fast clip. There appears to be no way out — or is there? …Survive and the relief is euphoric; die and the past hour has been a waste. The game courts tension and frustration in equal measure. Conscript is a far cry from the jingoistic popcorn-spectacle of the Call of Duty franchise … In this moment of large-scale real-world conflicts, Conscript serves as a reminder of war’s oppressiveness and barbarism. The overall effect isn’t so much a sensory shock and awe in the vein of Saving Private Ryan. Rather, the game gets under your skin gradually through the sheer relentlessness of its artfully crafted despair.
Source: FT
Chana Orloff, Otto Rank, Plaster 1927
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