Government
Economic crisis in Cuba: government missteps and tightening US sanctions are to blame
Cuba’s economy – saddled by US sanctions and ill-timed reforms – is in dire straits.
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Cuba is going through its worst economic crisis in 30 years. Since 2020, Cubans have suffered falling wages, deteriorating public services, regular power outages, severe shortages and a growing black market. Hundreds of thousands of people have fled the country.
Some place the blame for this desperate situation at the door of the Cuban government and its mismanagement of the economy. Others point to the damage caused by longstanding US economic sanctions that, to varying degrees, have been in place since 1962.
But which of these is more true? Both have inflicted economic damage. The US has done so deliberately, while the Cuban government’s flawed policies spring from inertia and miscalculation.
The case against the government
In January 2021, the Cuban government introduced major currency and price reforms. The reforms, which involved devaluing the Cuban peso from one to the US dollar to 24 per dollar, were supposed to begin a process of aligning Cuban prices with international markets.
The hope was that the move would incentivise economic restructuring and innovation to improve efficiency, reduce dependence on imported goods, and eventually stimulate exports.
But things did not turn out as planned. State sector salaries had been more than trebled in December 2020 to protect living standards in anticipation of price rises that would result from the higher cost of imports. However, this salary increase was quickly overtaken as higher costs and consumer spending power pushed up prices and started an inflationary spiral.
The rate of inflation has eased since then. But the official annual rate is still alarmingly high, at around 30% (more than twice the Latin American regional average).
The Caribbean has generally experienced strong post-pandemic economic recovery. But Cuba’s national income remains well below its pre-COVID level and, with export earnings still depressed and import dependency unchecked, there is little sign that any restructuring has occurred.
The effect of US sanctions
The effect of US economic coercion is less obvious, but no less significant. Cuba has been under a US trade embargo for the past 60 years, but a new stream of measures was introduced under the presidency of Donald Trump (2017–21). Trump’s policies cut earnings from services, interrupted fuel supplies, blocked remittances and deterred foreign investment.
Growth was subdued and shortages were already starting to emerge in 2019. But the most devastating action came in January 2021. One of Trump’s final acts in office – occurring just days after the currency reform – was to add Cuba to the US list of “state sponsors of terrorism”.
The effect of this has been huge. Interviews that I conducted with representatives of foreign companies doing business with Cuba and with Cuban officials responsible for managing international trade confirm that foreign businesses delayed payments and abruptly cancelled shipments of imports, export contracts and investment plans in the months that followed.
The resultant supply bottlenecks and loss of foreign exchange supercharged inflation, adding to frustration and uncertainty, and preventing recovery.
But perhaps Cuba’s greatest error was to give credence to Joe Biden’s rhetoric in his 2020 US election campaign. Biden spoke about Trump’s “failed Cuba policy” and vowed to reverse his “harmful” policies. If that had happened, a less tight foreign exchange constraint would have allowed some possibility of a positive supply response to the monetary reforms.
Despite his campaign promises, Biden has left Cuban sanctions in place. This has obstructed Cuba’s access to foreign exchange, putting the investment required for restructuring out of reach.
Bad timing
The pandemic has also contributed to Cuba’s economic turmoil. Cuba responded to COVID by closing its borders and imposing strict lockdowns. This resulted in a sharp economic contraction and a severe depletion of its foreign currency reserves.
The pandemic also had a dramatic impact on the world economy. High fuel and food prices served to worsen Cuba’s foreign exchange shortage, and supplies were further disrupted by logistical bottlenecks and inflated shipping costs.
Cuba had actually performed exceptionally well in containing the virus throughout 2020. But a major shock came in 2021 when Cuba grappled with a surge in cases of a new COVID variant.
US sanctions blocked access to sources of COVID support that helped to ease hardships in other nations. As a result, the government had no choice but to cut investment and was unable to prevent the decline in real salaries.
Looking for a way out of crisis
Discontent fuelled by COVID restrictions and widespread shortages resulted in protests, revealing dissatisfaction with how Cuba’s leaders had responded to these challenges. Officials are seen as having been slow to fully acknowledge the government’s miscalculations or the degree of hardship that is being experienced by Cuban households.
As the rate of inflation gradually eases, the government is starting to outline a recovery strategy. With no end to US sanctions in sight, the focus is on reforming the economic system.
The reforms are wide-ranging, aimed at tackling the economic distortions and inertia inherited from decades of strict centralised control. They include a gradual reduction in price subsidies, more targeted welfare, improving the efficiency and responsiveness of state bureaucracy, and opening up to private businesses.
The aim is to stimulate innovation, boost investment and improve public services, which should eventually lift growth and boost living standards.
But the process of restructuring will be difficult. There will be both winners and losers, and resistance to change is inevitable. The reform and recovery process also hinges on rebuilding the shaken confidence of the public and investors, as well as avoiding further external shocks – or deliberate blows from the US.
Emily Morris has received funding from the British Embassy, Havana, and the Ford Foundation, and is Director of Caribbean Research and Innovation Collaboration for Knowledge Exchange and Transfer (CRICKET) Community Interest Company.
economic recovery subsidies pandemic us dollar trump gdp recovery consumer spending
Government
Low Iron Levels In Blood Could Trigger Long COVID: Study
Low Iron Levels In Blood Could Trigger Long COVID: Study
Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate…
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Authored by Amie Dahnke via The Epoch Times (emphasis ours),
People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.
A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.
Long COVID Patients Have Low Iron Levels
Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.
In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.
According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.
But it can jeopardize a person’s recovery.
“When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”
The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.
“It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”
The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.
1 in 5 Still Affected by Long COVID
COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.
Government
Walmart joins Costco in sharing key pricing news
The massive retailers have both shared information that some retailers keep very close to the vest.
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As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trumpGovernment
Walmart has really good news for shoppers (and Joe Biden)
The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.
Share this:
As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters.
The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.
The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.
Related: Popular mall retailer shuts down abruptly after bankruptcy filing
It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.
You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.
Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.
However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.
Image source: Joe Raedle/Getty Images
Walmart sees lower prices
McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.
During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.
"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.
He was specific about where the chain has seen prices go down.
"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."
McMillon said that in other areas prices were still up but have been falling.
"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.
Costco sees almost no inflation impact
McMillon avoided the word inflation in his comments. Costco (COST) Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.
The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.
"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.
Galanti made clear that inflation (and even deflation) varied by category.
"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.
bankruptcy pandemic trump
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