Researched by: Nirmal Bhansali, Aarthi Ramnath & Smriti Arora
The US Fed ruins Wall Street’s day
After the Silicon Valley Bank collapsed—triggering a banking crisis around the world—everyone expected the US Federal Reserve to stop its interest-hiking spree. But instead it announced a fresh increase of 0.25%—which is small but still disappointing to many economists who say it will make recession almost inevitable. Vox has more on its implications.
Econ 101 reminder: Central banks like RBI or the Fed hike interest rates to curb inflation—it restricts spending by making borrowing money more expensive. But reducing demand also slows the economy down. For banks, it is also more expensive to borrow money to increase their cash reserves—in case customers decide to withdraw their cash all at the same time. And it also decreases the value of their bond investments—since new bonds at a higher interest rate are worth more than old ones at a lower interest rate. We explained all of this in greater detail in our Big Story on SVB.
High commission chaos, continued
The context: As you may know, the government was quite miffed at UK authorities for not providing sufficient security to the Indian commission in London. The lax arrangements made it possible for pro-Khalistan protesters to enter the premises and take down the Indian flag last week.
What happened now: The government has quietly removed the concrete security barricades around the British high commission and the residence of the high commissioner in Delhi—in what many see as a tit-for-tat move. There has been no official comments, and the Delhi police source only said this: “The security arrangements outside the British high commission in the capital are intact. However, barricades placed on the pathway towards the commission that created hurdles for traffic have been removed.” (The Telegraph)
Meanwhile, in London: The protests have turned into a near-farcical standoff. Supporters of Amritpal and Khalistan continue to besiege the high commission—which has literally draped itself in the jhanda: “A very large Indian flag was fixed to the ‘India House’ (the High Commission) building front, with flags in each window and the national colours draped across the length of the roof.” (The Hindu)
Foreign travel is gonna get pricey
The Indian government announced that it will not sign any more bilateral agreements to allow foreign airlines to operate more flights out of India. The reason: it wants Indian airlines to become global players—and reduce the dependence on foreign carriers. But all this atmanirbharta comes at the expense of the Indian passenger—who will have to pay a higher price for their ticket:
For consumers, ‘no more foreign flights’ would mean high fares in the near-to medium-term. Aircraft induction plans of airlines such as Air India and IndiGo are spread over a decade but the capacity issue should start to ease in the next two to three years. In the near term, fares are expected to be high on routes where the capacity is limited and demand is strong such as India-Dubai, and on routes where flights are few despite open skies such as India-US.
Of course, Indian airlines are delighted since it protects them from foreign competition. But yeah, Air India may have inked the largest aircraft order in history, but you will likely pay the price for it. (Mint)
Uganda’s horrific anti-gay law
The country—along with 30 other African nations—bans same-sex relationships. It was already a ‘crime’ that was punishable by life imprisonment. But a new set of laws impose even harsher sentences—including the death penalty:
According to the bill, the death penalty can be invoked for cases involving “aggravated homosexuality” – a broad term used in the legislation to describe sex acts committed without consent or under duress, against children, people with mental or physical disabilities, by a “serial offender,” or involving incest.
And you can now serve 20 years in prison just for identifying as queer. The bill will likely be signed by President Yoweri Museveni—who recently derided homosexuals as “deviants.” Even more distressing: these scenes of celebration in parliament when the bill was passed. (CNN)
Waiting on the Donald’s arrest
All of America is waiting breathlessly for the verdict of a grand jury in New York. If they indict him for breaking election laws, Donald Trump will become the first former or sitting President to ever be charged with a crime: “It would also raise the prospect of a former leader of the free world being arrested, booked, fingerprinted and possibly handcuffed.” There was great anticipation that the jury would make its decision yesterday. But it once again cancelled its planned meeting—which means there will be no decision until next week.
FYI: Trump is facing arrest because his lawyer paid hush money to porn star Stormy Daniels to prevent the public disclosure of a sexual encounter with Trump. The money was paid in the final days of the 2016 presidential election—and was covered up:
[District Attorney] Bragg will likely accuse Trump of covering up the reimbursements to Cohen. Falsifying business records can be a felony in New York if done to conceal another crime. In this case, the other crime could be a violation of election law: Cohen’s payment to Daniels. The most likely charge Trump faces is punishable by up to four years in prison.
The AFP via The Hindu has the latest. Politico has more on how the indictment may unfold.
Something related to see: People are already sharing AI-generated images of Trump’s arrest on social media—which are far more colourful than anything likely to happen in real life (we hope). (Ars Technica)
Beijing’s population is falling
The city’s population numbers have fallen for the first time in two decades. The city’s death rate rose to 5.72 deaths per 1,000 people, while the birth rate fell to 5.67 births per 1,000 people. China, in general, is grappling with an ageing population as more couples than ever are choosing not to have babies. The problem is especially serious in big cities: “Given the high living and education cost and education levels in Beijing, it is very normal that the birthrate of permanent residents is low.” Why this matters:
In the long run, we are going to see a China the world has never seen. It will no longer be the young, vibrant, growing population. We will start to appreciate China, in terms of its population, as an old and shrinking population.
And that will have serious consequences for its economy. This older New York Times piece has more on the fallout of this falling birth rate. (The Guardian)
China’s other big problem: An overly thin skin. Back in 2013, memes like this compared President Xi Jinping—as he was walking next to President Obama—to Winnie the Pooh:
Then it became kind of a running joke—like this one of Xi with Japanese PM Shinzo Abe:
What’s happened now: All things Pooh have been banned—including the new British Slasher film ‘Winnie the Pooh: Blood and Honey’. It has been abruptly pulled from theatres in Hong Kong and Macau. Beijing has been on a banning spree lately. Marvel films were the target of a shadow ban. ‘Spider-Man: No Way Home’ was denied a release after the CFA asked the film’s distributor, Sony, to remove the Statue of Liberty from scenes they deemed too “patriotic.” So, yeah, the Pooh bear was never going to survive the Chinese censors. Quartz has more on how Winnie the Pooh became an unlikely protest symbol in the Hong Kong protests. (Associated Press)
Can pricey booze save lives?
Scotland became one of the first countries to introduce a minimum price for alcohol—in face of great protests. But a study comparing Scotland to England (which doesn’t have a price floor) shows that it led to 13.4% fewer deaths directly related to alcohol.
Politicians in Wales—which has the same policy—argue that such laws are not anti-poor: “It’s not about making alcohol unaffordable, it is addressing the most harmful and damaging alcohol—high-strength, cheap alcohol.” Then again, in India, prohibition in states like Bihar are just as likely to create a lucrative market for illicit liquor—which can be far more dangerous. And it is far more likely to kill poor Indians. (Quartz)
Three things to see
One: Lionel Messi was seriously mobbed by fans when he stepped out for a meal in Buenos Aires. Even B’wood stars don’t inspire this kind of madness. Then again, maybe he needed it after being booed by Paris Saint-Germain fans at his last game. (CBS Sports)
Two: The Delhi Police registered a whopping 44 FIRS—and arrested two people—for putting up posters that declared “Modi Hatao, desh bachao.” (Indian Express)
Three: Protests in France—inspired by a new law changing the age of retirement from 62 to 64—have resulted in an unexpected problem. There are 9,300 tonnes of trash on the streets of Paris since garbage collectors are on strike as well. Look at that image—we’ll think twice before we grumble about street trash in Bangalore. (Axios)