Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
For some, rejection just means a stronger resolve to get a deal done. Alimentation Couche-Tard has told Japan’s Seven & i Holdings that it is willing to pay about $47bn to take over the convenience store giant — a fifth more than its first offer. Still, the Canadian operator could end up jilted.
Seven & i shares surged more than 10 per cent in Tokyo morning trade following reports of the proposed all-share buyout. The latest approach follows an offer of $38.5bn in September, which the Japanese group received and rejected, saying it “grossly” undervalued the group.
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Couche-Tard has good reason to make an aggressive push for this deal. Unlike in Japan where three groups — 7-Eleven, FamilyMart and Lawson — control about 90 per cent of the country’s convenience store market, the US market is highly fragmented and presents ample opportunity for a new leader to win market share from local rivals. 7-Eleven and Couche-Tard’s brands would give it a combined market share of about a fifth in the US, making it the country’s biggest convenience store operator.
The US is an especially lucrative market for convenience stores with sales hitting a record $860bn last year. That is reflected at Seven & i, with three-quarters of group revenues coming from outside Japan, mostly from North America. Recent trends also make an acquisition of a Japanese group more attractive — fuel sales have been decreasing while prepared food and beverage sales have been rising. In Japan, convenience store sales consist primarily of food and beverages.
But for Seven & i, the offer comes at a time when there is a rosy outlook at home too. Convenience store sales in Japan rose last year to a record high of $78.6bn, the third straight year of sales growth for the sector, according to industry data. Increasingly frequent heatwaves in Japan have made ice cream and drink sales especially lucrative.
Since Couche-Tard’s first approach, Japan has designated Seven & i as a “core business” that is essential to national security. As foreign investors would be required to go through a security review to take over a Japanese company anyway, the designation does not necessarily change much for Couche-Tard. But the designation does suggest that striking a deal will not be easy.
Seven & i investors should benefit regardless. The stock is up 45 per cent from an August low. It now trades at a forward earnings multiple of approaching 22 times. Meanwhile, the Canadian company’s interest has already prompted Seven & i’s management to consider an overdue pruning of its conglomerate structure. As the offer price rises, the urgency to mount those defences will only increase.
SHOPPERS are left devastated after a family-run clothing shop has been forced to close after 144 years.
Dancers is run by the fourth and fifth generation of the Dancer family, but the rise in online shopping meant they had to let it go.
Assistant manager Dave Dancer, 37, hoped he could keep up the family tradition and take over the business in Halesowen, Dudley, from his father.
Unfortunately, due to the shift to online shopping and rising running costs, he is unable to do so.
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He told Halesowen News: “I’ve been trying to control my emotions and come to terms with it.
“If I won the lottery I would invest in the shop and keep all the staff – it’s my family legacy.”
The beloved store shop which has been a part of the Halesowen high street for nearly 15 decades, started out as a boot shop in 1880 under Queen Victoria I.
After surviving two world wars, the great depression and a global pandemic, it finally has had to close its doors.
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Members of the community and the 10 members of staff, some of which are the Dancers family, are all devastated to see it go.
Dave said that the staff who are about to lose their jobs are like one big family and that the whole ordeal is quite emotional.
The team have until December 11 to say their final goodbyes to the historic clothing store.
In the Halesowen shopping area there are parking charges, but Dave said they had made the decision to close together before the charges were implemented.
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New Beginning for The Body Shop
He added: “It hasn’t helped – it’s been free for seven years – a lot of traders aren’t happy seeing less cars on the car parks and a lack of footfall.
“Over the years footfall has slowly declined as habits have changed.
“Especially during Covid people switched to shop online out of town centres.
“That together with the rising costs of everything including fees of running the building and business rates meant we just can’t keep it going.”
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Originating as a boot shop, founded by John Lye in 1880, the company now sells a variety of clothing including school uniforms and scout outfits.
Dancers was created by John and his wife Sarah in 1884, after they moved to Halesowen, building a store for the community on “Good Understandings.”
It now has one of the biggest set of suits and accessories to hire in the area and prides itself on its high quality items and client relations.
The company will continue to offer school uniforms online after the store closes until they are bought out.
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The shop has been recognised for its value and was offered a The Legacy Award at The Small Awards 2020, a ceremony which supports small businesses.
Despite this, and giving back to the community by assisting Halesowen Business Improvement District projects, the team must say goodbye to their store.
Dave and his Aunt Janet Duerden, who is in her 70s said at least they are now able to retire and “go out on a high.”
Several high-street retailers have been finding it difficult to get by over the past few years.
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Lockdown restrictions were a tough blow as many stores had to close during the pandemic.
Since then energy costs have increased and more shoppers than ever are deciding to order online rather than head into shops.
This has left some remaining retailers struggling with their budget and having no choice but to close stores to cut costs.
Generally supermarkets have been able to survive the closures as they provide essential household items like food and drink.
RETAILERS have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
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The high street has seen a whole raft of closures over the past year, and more are coming.
The number of jobs lost in British retail dropped last year, but 120,000 people still lost their employment, figures have suggested.
Figures from the Centre for Retail Research revealed that 10,494 shops closed for the last time during 2023, and 119,405 jobs were lost in the sector.
It was fewer shops than had been lost for several years, and a reduction from 151,641 jobs lost in 2022.
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The centre’s director, Professor Joshua Bamfield, said the improvement is “less bad” than good.
Although there were some big-name losses from the high street, including Wilko, many large companies had already gone bust before 2022, the centre said, such as Topshop owner Arcadia, Jessops and Debenhams.
“The cost-of-living crisis, inflation and increases in interest rates have led many consumers to tighten their belts, reducing retail spend,” Prof Bamfield said.
“Retailers themselves have suffered increasing energy and occupancy costs, staff shortages and falling demand that have made rebuilding profits after extensive store closures during the pandemic exceptionally difficult.”
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Alongside Wilko, which employed around 12,000 people when it collapsed, 2023’s biggest failures included Paperchase, Cath Kidston, Planet Organic and Tile Giant.
The Centre for Retail Research said most stores were closed because companies were trying to reorganise and cut costs rather than the business failing.
However, experts have warned there will likely be more failures this year as consumers keep their belts tight and borrowing costs soar for businesses.
The Body Shop and Ted Baker are the biggest names to have already collapsed into administration this year.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
India’s finance minister Nirmala Sitharaman has denounced the EU’s planned carbon tax on imports as an arbitrary “trade barrier” that will hurt the world’s fastest-growing large economy and other industrialising nations.
Sitharaman said the EU Carbon Border Adjustment Mechanism (CBAM), under which tariffs are to be levied from 2026, would impede developing countries’ transition away from fossil fuels by making the change harder to fund.
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“They are unilateral and are not helpful,” Sitharaman told the Financial Times’ Energy Transition Summit India in New Delhi. “Absolutely, it is a trade barrier.”
“You are being stifled by steps which are not going to facilitate the green transition,” she added.
The CBAM is intended to penalise embedded carbon emissions from the production of goods imported to the EU such as cement, fertilisers, iron and steel, and chemicals. The tax, which was approved last year, has triggered alarm among India’s fast-growing heavy industries, which fear it could wipe out one of their biggest markets.
A report by the New Delhi-based Centre for Science and Environment estimated the CBAM would result in an additional 25 per cent tax on carbon-intensive goods exported from India to the EU, a burden that at 2022-23 levels would be equivalent to 0.05 per cent of the country’s GDP.
New Delhi has also been riled by a controversial EU anti-deforestation law that will block foreign companies from exporting to the bloc if their products are deemed to have contributed to forest loss.
Sitharaman said India was on track to be a net zero carbon emitter by 2070, barring “unilateral” external challenges such as the EU carbon tariff and deforestation initiatives.
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“That is another one of those steps which can hurt countries like India,” she said of the deforestation rules. “You will have major disruptions in the supply chain, that’s not going to help countries spending a lot on transition costs.”
Under the CBAM, exporters to the EU must register the emissions produced in creating their products, with charges kicking in from 2026. The EU is confident the measure would survive a possible challenge at the World Trade Organization because it applies to domestic producers as well imports.
Sitharaman said India had raised concerns with the EU “several times” and would do so again, but that she did not expect the issue to affect ongoing free trade negotiations with the bloc.
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“I’m sure it won’t be escalated to the level of hurting the talks,” the finance minister added. “But our concerns will definitely be voiced.”
Ignacio Garcia Bercero, non-resident fellow at the Breugel think-tank in Brussels, said the EU measures were being taken to meet the global challenge of climate change and damage to nature, not for protectionist reasons.
“We are not going to meet internationally agreed global goals to stop deforestation unless importing countries contribute. Europe does not produce most of these commodities so it is not protectionist,” he said.
On CBAM, Bercero said the EU’s heavy industry was paying more for emissions and without the tariff would simply be forced out of business by cheaper imports from countries without a carbon tax.
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Ngozi Okonjo-Iweala, the WTO director-general, told the FT last month that global carbon pricing was necessary, but that poorer countries should pay less.
MARTIN Lewis has clashed with government minister Lisa Nandy over the decision to scrap the £300 Winter Fuel Payments for millions of pensioners.
The fiery exchange on Good Morning Britain today saw the Money Saving Expert founder slam the move as “indefensible” and call out the government for failing to reach the poorest pensioners.
Speaking directly to the Culture Secretary, Lewis didn’t hold back.
The money-saving guru said: “Why are you defending this?
“You’ve been a campaigner for the poorest in society for so long, yet you’re sitting there defending a policy that charities like Age UK are pulling their hair out about.”
The row comes after AgeUK urged the government to scrap the policy, warning that the poorest pensioners, some earning under £11,000 a year, will be left without support.
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Read more on martin lewis
Lewis was especially concerned that many of the elderly eligible for pension credit wouldn’t apply for it – and therefore miss out on the vital £300 Winter Fuel Payment.
The argument heated up as Lewis continued to press Nandy on the government’s failure to reach those most in need, describing the policy as a “huge flaw.”
He said: “You believe they should get pension credit and the Winter Fuel Payment, but you’re not doing enough to make sure they do.
” You’re not writing individual letters to the hardest-to-reach pensioners.
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Martin Lewis energy warning
“‘There’s lots you could do. So to try and talk about it, ‘we’re targeting the poorest’… The truth is you’re not targeting them. Why aren’t you writing them bloody letters?’
“You have to accept that there are hundreds of thousands of pensioners earning under £11,400 who will not get this payment this year.”
In response, Nandy defended the government’s efforts, pointing to the rise in pension credit claims, claiming that a “huge drive” had resulted in a 115 per cent increase in applications.
But Lewis wasn’t convinced, he added: “It will take four years for everyone to be signed up. And what’s the solution now? Why aren’t you writing them bloody letters?”.
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Despite the tension, Nandy stuck to her guns, stressing that the government was writing letters to eligible pensioners, but acknowledged the frustration from campaigners like Lewis.
The Sun’s Winter Fuel S.O.S Campaign
WORRIED about energy bills? The Sun’s Winter Fuel SOS crew are taking calls on Wednesday.
We want to help thousands of pensioners worried about energy bills this winter, with tips and advice on how to make cash go further.
Our Winter Fuel SOS crew will be able to help answer your questions on whether you can get Pension Credit and the Winter Fuel Payment.
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Ten million OAPs are set to lose the £300 Winter Fuel Payment due to government cutbacks.
It comes in the same month that millions of households are hit by a ten per cent rise in bills as the Energy Price Cap shoots up.
We can help with advice on how else to save money. Our phone line is open 7am to 7pm Wednesday October 9 – you can call us on 0800 028 1978.
Or you can email now: WinterfuelSOS@the-sun.co.uk
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Nandy said: “We are working with a wide range of people to reach those who need help.
“I just want to make it clear, we are not leaving anyone high and dry.”
What’s at stake for pensioners?
With changes announced in July, the government confirmed that from this winter, only pensioners who claim pension credit or certain other means-tested benefits will be eligible for the Winter Fuel Payment.
Previously it went to around 11million of state pension age regardless of income.
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But around 880,000 eligible pensioners on the lowest incomes may miss out on the energy help because they haven’t claimed pension credit.
Lewis pressed further, saying: “You’re taking money out of their hands.
“Are you willing to accept the collateral damage of pensioners, many with dementia, not getting the Winter Fuel Payment?”
Nandy responded, insisting the cut-off point for pension credit applications had been extended to April 2025.
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This means pensioners who are eligible, but have yet to apply, can still receive backdated payments.
Typically claims for pension credit can be backdated up to three months.
As the qualifying week for the payment is September 16 to 22, It means the last date for claiming the benefit is December 21.
We’ve asked the government which date applies and will update when we hear back.
Applications are still being accepted, but pensioners must apply by December 21 to receive this year’s Winter Fuel Payment.
Lewis, however, remains sceptical that many of the most vulnerable will get the help they need.
With Christmas just around the corner, time is running out, and the pressure is on for the government to ensure no one is left out in the cold.
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How to apply for pension credit
YOU can start your application up to four months before you reach state pension age.
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Applications for pension credit can be made on the government website or by ringing the pension credit claim line on 0800 99 1234.
You can get a friend or family member to ring for you, but you’ll need to be with them when they do.
You’ll need the following information about you and your partner if you have one:
National Insurance number
Information about any income, savings and investments you have
Information about your income, savings and investments on the date you want to backdate your application to (usually three months ago or the date you reached state pension age)
You can also check your eligibility online by visiting www.gov.uk/pension-credit first.
If you claim after you reach pension age, you can backdate your claim for up to three months.
Simply sign up to the German economy myFT Digest — delivered directly to your inbox.
Germany is facing its first two-year recession since the early 2000s, as the government downgraded its growth forecast for 2024, predicting a contraction of 0.2 per cent.
“The situation is not satisfactory,” Robert Habeck, economy minister, said on Wednesday. “Since 2018, the German economy has not been growing strongly any more.”
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Just a few months ago he had forecast the economy would grow by 0.3 per cent this year.
Germany has been battered by high interest rates, inflation and an increasingly uncertain geopolitical environment, which has suppressed consumer demand and investment activity.
Some companies, complaining of high labour and energy costs, a big tax burden and political turbulence, are considering locating some of their production to cheaper countries.
At the same time, consumer spending remains depressed, despite an increase in real wages and falling inflation. The government’s earlier forecast had expected a more robust rebound in consumer demand.
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Political instability is also taking its toll on sentiment. Chancellor Olaf Scholz’s three-party coalition is riven by policy conflicts and the rise of populist parties on the far right and far left is undermining business confidence.
Ministers said the economy was increasingly beset by both structural problems, such as demographic change, and short-term challenges such as weak domestic and foreign demand.
“Early indications such as industrial production and the business climate suggest this phase of economic weakness will last into the second half of the year,” the economy ministry said in a statement.
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However, the government also forecast the economy would grow by 1.1 per cent next year and by 1.6 per cent in 2026.
The ministry said a revival in private consumption and in international demand for industrial goods, as well as a resurgence in investment activity, would power an economic recovery at the start of 2025.
If Habeck’s prediction for this year proves accurate, Germany will experience its first two-year recession in more than 20 years. The economy shrank by 0.3 per cent in 2023. In 2002, it contracted by 0.2 per cent and in 2003 by 0.5 per cent.
BORROWERS could face a surge in mortgage costs as rates increase and lenders withdraw their cheapest deals.
Coventry Building Society, Co-operative Bank, Molo, and LiveMore have all announced plans to raise their rates in the coming days.
It follows an increase in swap rates, which are used to price fixed rate mortgage deals.
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As swap rates rise, mortgage lenders tend to increase their rates to avoid financial losses.
The two-year swap rate was 4.06% as of 7 October, while the five-year swap rate was 3.81%, according to Chatham Financial.
These figures are higher than the respective rates of 3.91% and 3.56% recorded in September.
At Coventry Building Society, all fixed rates offered at 65-75% loan-to-value (LTV) for new borrowers, as well as all two and five year fixed remortgage rates at 80% LTV, will rise at on Friday.
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Prior to these latest changes, Coventry offered a 3.69% five-year fixed-rate mortgage, one of the lowest rates on the market.
Co-operative Bank will withdraw some of its lowest rates Thursday night.
Experts predict other lenders will soon follow suit.
David Hollingworth, associate director at L&C Mortgages, said: “The mortgage market has seen rates fall in recent months, but that may be coming to an abrupt halt.
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“Fixed rate pricing depends on what the market anticipates may happen to interest rates and uncertainty over the forthcoming budget, mixed messages from the Bank of England and global unrest is pushing costs back up for lenders.”
HSBC, Metro Bank, Santander, and Yorkshire Building Society told The Sun they are keeping their fixed rates under review.
How Jasmine Cleared £27k Debt with Simple Hacks (1)
Why is this happening?
A variety of factors have unsettled market expectations, causing an increase in both gilt yields and swap rates, according to Nicholas Mendes, mortgage technical manager at John Charcol.
He said: “First, Andrew Bailey’s recent comments, in which he indicated expectations for larger or more frequent interest rate reductions, have introduced some uncertainty.”
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Currently, interest rates stand at 5%.
The rate, which banks use to determine the interest on mortgages and loans, was last reduced from 5.25% in August.
Nicholas added: “Markets had been pricing in interest rate cuts for November and December, but expectations for December have softened slightly.”
This shift has occurred because various members of the Bank of England Monetary Policy Committee (MPC) have expressed views contrary to those of Andrew Bailey.
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Last week, MPC member Huw Pill indicated that rates should be reduced “gradually,” citing caution over the long-term trajectory of inflation.
A similar situation arose at the beginning of the year when mortgage rates initially fell below 4%, only to be increased again as it became apparent that the Bank of England would not reduce rates as swiftly as anticipated.
The Bank of England will decide whether or not to cut interest rates on November 7.
What are the different types of mortgages?
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We break down all you need to know about mortgages and what categories they fall into.
A fixed rate mortgage provides an interest rate that remains the same for an agreed period such as two, five or even 10 years.
Your monthly repayments would remain the same for the whole deal period.
There are a few different types of variable mortgages and, as the name suggests, the rates can change.
A tracker mortgage sets your rate a certain percentage above or below an external benchmark.
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This is usually the Bank of England base rate or a bank may have its figure.
If the base rate rises, so will your mortgage but if it drops then your monthly repayments will be reduced.
A standard variable rate (SVR) is a default rate offered by banks. You usually revert to this at the end of a fixed deal term, unless you get a new one.
SVRs are generally higher than other types of mortgage, so if you’re on one then you’re likely to be paying more than you need to.
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Variable rate mortgages often don’t have exit fees while a fixed rate could do.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
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And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
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You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
Hurricane Helene only dissipated September 29th, and Hurricane Milton — the first “category 6” hurricane, a category that has not yet even become generally accepted as a possibility — is set to make landfall today. Swift and sizeable disaster aid is going to be essential.
Since Congress is only set to reconvene after the election, this could mean a new FEMA appropriations bill could take a month or more to be passed. Regardless of the final outcome in this particular situation, it’s clearly far from ideal for responses to increasingly disastrous hurricanes to live or die by ever more fickle vicissitudes of short-term Congressional appropriations negotiations.
Enter the bond market. The Council of Development Finance Agencies is pushing the creation of a permanent category of “disaster recovery bonds” that would be exempt from federal taxation and issuable on the declaration of a state of emergency at the state level.
The point is that a federal subsidy for disaster relief would be available instantaneously at the local level rather than having to wait on federal dollars, which are often painfully delayed and inadequate. It also would be at their initiative since the state government — or a “political subdivision” such as a county — could decide the quantity and timing of the bonds they issue.
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Of course, municipal bond markets are infamously illiquid precisely because of their reliance on complicated tax exemption subsidies. So it’s questionable whether further reliance on tax exemptions is really the best approach to supplying timely disaster relief finance. Regardless of whether we do, liquidity support would surely make municipal issuers more confident.
If this is all sounding vaguely familiar, it should. The Federal Reserve created the Municipal Liquidity Facility in April 2020 to deal with the financial effects of Covid-19 on municipalities.
Despite various problems, including its onerouspricing, it establishes a firm precedent for using the Federal Reserve’s 13(3) authority to lend in “unusual and exigent circumstances” in order to support municipalities. If natural disasters are not “unusual and exigent circumstances”, nothing is.
What would such a program do? Provide direct lending to municipalities just as the Municipal Liquidity Facility did. Eligibility would, similar to CDFA’s proposal for permanent disaster relief bonds, be based on the declaration of a state of emergency at the state level (or the territorial equivalent). The facility should have uniform pricing, and maturities maximised to make the most effective disaster responses possible.
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Still panicky about inflation — and risk adverse in general — it’s understandable that the Federal Reserve has not taken the initiative in getting involved in disaster relief financing. But the Fed isn’t simply a financial market policymaker; it’s America’s pre-eminent macroeconomic government agency. And disaster-ravaged areas are part of the economy too.
It would be a dereliction of duty for the Fed to not get involved in making disaster-financing smoother. Whatever concerns there would be from the demand effects of ensuring timely and sufficient disaster financing must be weighed against the supply chain and productive capacity effects of allowing recovery efforts to be slower and less sufficient.
More generally, this problem is probably only going to grow and grow in frequency and magnitude. Short-term considerations regarding the state of inflation shouldn’t define how the US central bank prepares for this. It should (if it has not already done so) develop contingency plans for a disaster relief liquidity facility.
If the Fed is unwilling to step into disaster financing for fear of Congressional criticism, then it should open such contingency plans up for public debate. Let the National League of Cities, the Council of Development Finance agencies, local constituencies and the general public react. Permanent natural disaster bonds would clearly fit seamlessly with such a liquidity facility proposal.
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The Fed is, above all else, worried about its credibility and reputation. But being seen to help assistance reach ordinary people when they need it most would enhance its reputation in the public. Only acting urgently when bankers are in trouble is a reputational risk the Fed shouldn’t discount.
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