Theway we live now:BigBrothe r’sendearing little sentry
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MONEYWEEK 8October 2021 moneyweek.com
WashingtonDC
Congresssquabbles:Americacouldbejustaweek
awayfromdefaultingonitsdebts.Treasury
secretaryJanetYellen(pictured)haswarnedthat
theUSgovernmentwillrunoutofmoneyby 18
OctoberunlessCongressraisesorsuspendsthe
$28.4trnfederal-debtceiling.Adefaultwould
becatastrophicforboththeUSeconomyand
globalfinancialmarkets.Republicanssaythatthe
Democratsshouldraisethelimitontheirownusing
theparty’sslimmajorityintheSenate,butDemocrats
saythatcomplexCongressionalproceduresmeanthey
don’thavetimetodosowithoutabipartisanvote.TheDemocratic
partyisalsointernallydividedovernewspendingplans:lastweek
NancyPelosiwasforcedtoshelveavoteonthelong-delayed$1trn
infrastructurebillamidinfightingoveranevenlarger$3.5trn
social-spendingpackage.Meanwhile,theUSeconomyappears
tobepickingupsteamagainafteraDelta-inducedslowdownin
thethirdquarter,saysSarahChaneyCamboninTheWallStreet
Journal.Demandforrestaurants,hotelsandairtravelisincreasing.
London
Recovery stalls:Businessesraisedprices at “the fastestpace
on record lastmonth”because of staffshortages andstretched
supplychains, says Gurpreet Narwan inTheTimes.Halfofall
service-sectorbusinessesreportedrisingaverage costsinthe latest
IHSMarkit/CIPS compositepurchasingmanagers’ index(PMI).
Theeconomyis still growing, butsurveyssuggest it is struggling
“togathermuchmomentumfollowingthe slowdownin July”,
saysGabriellaDickens of PantheonMacroeconomics.Bankof
Englandpayments data paints asimilar pictureofasluggish
recovery.Elsewhere, therearesigns that thehousing boomslowed
lastmonth as thestamp-dutyholiday cameto an end. “A ll is not
well in shortage-plagued Britain,”saysNickAndrews of Gavekal
Research.The UK’s lowgas storagereservesleave itparticularly
exposedto theenergy-pricespike.Itlooks as though theBankof
Englandwill be forcedtohikeinterest ratesseveral timesnextyear
to head offa“wage-price spiral”atthe cost of growth:“theUK
economywilllikelyfacea
recessionin2022”.Amazon’s new domestic robot,
Astro, hasbeenhailedasa“symbol
of thesurve illance age” andlabelled
“a ‘privacynightmare’ by oneofi ts
owndevelopers”,saysMatthew
FieldinThe DailyTelegraph.The
smallthree-wheeled gadget is
designed to roll around your home
like an armoured sentry,responding
to requeststoplay musicand
videotaping family members and
intrudersalike .“It performs like a
well-behaved toddler,” says John
Gapperint he FinancialTimes. “It
will even go away oncommand.”
However,these endearing feat urescome with an unexpectedcost.
Not onlyist he machinepricedat
an eye-watering£1,000 aunit, but it
also collects enormous amounts
of personaldata on itsowners.
This information is confined to the
robots themselves forthe ti me
being, but Amazon’s record with
data handlingsuggeststhatthis
maynot be the case forlong.
Footagerecordedby thefirm’s
smartdoorbel ls hasbeenhanded
overtol aw enforcementin thepast
–anotherreason to th inkthat
Astro’ssmile mightbealittle more
sinister th an it first appears.SanFrancis co
Turo roarsontomarket:SanFrancisco-basedpeer-to-
peercar-sharing platformTu ro is hopingtocashinona
“red-hotmarketand ageneraltransportationcrunch”
withan initialpublicoffering, saysLauraFormaninThe Wall Street
Journal. Thecompany allowscar ownerstorentout theirvehicles to
each other. Thesemiconductor shortage hascrimped thesupplyof
newcarsand because car-rental firmssoldoff theirfleetslastyear
amid plunging demand,traditional rental services remain scarce
andpricey. Uber’s supplyof drivers,moreover, remainsbelowpre-
pandemic levels. Tu ro claimsto be thelargest companyofits kind,
offeringover450,000 vehiclesof850 different typesin over 5,
cities.The companymakes moneybytakingacut fromboth thehost
andthe guest. It struggled throughthe spring of 2020,but “cameback
better thanever”asconsumers sought to travel again:the thirdquarter of
lastyear markedits firstprofitablequarter sinceits inceptionin2011.It has
forecast full-yearprofitability before taxesand interest nextyear.
Johannesburg
Metalworkersonindefinite strike:TheNational
UnionofMetalworkers of SouthAfricawenton
an indefinite strike on Tuesday, threateningto
block supplies of cars andcar parts. The155,
membersofNumsa,the biggestmetalworkers
unioninthe country, called foratotal shutdown
of theengineering sector aftertalks with
employers’bodiesreachedastalemate, says
Reuters. Numsawas afteran8%across-the-
boardincreaseinwages in thefirst year of apay
deal andanincreaseequal to therateofinflation
plus 2%forthetwoyearsafter that.Annual
inflation currentlysitsataround5%.Employers
have been loathtoyield to unions’demands
afterthe pandemic hitthe economy, includingits
export-focused carsector; carsales dropped by
around 30%lastyear.The central
bank hassaidborrowing costs
need to be increasedgradually
to keep inflation closeto the
4.5%target,saysBloomberg.The
benchmark interest rate is at an all-time-
lowof3.5%after themonetarypolicy
committeeslasheditin2020toalleviate
theimpactofthe pandemic.The country
enjoyedanunexpectedlyvigorouseconomic
recovery in thefirst half of 2021:output
increasedby7.5%fromthe year before.
Thebankexpects theeconomyto contract
by 1.2%in thethird quarterowing to riots
in July,but it shouldexpand by around 5.2%
overallin2021.Amazon’s Astro robot isa“privacynightmare”
©Ama
zon;
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