Originally published at: https://peakprosperity.com/daily-digest/imf-warns-us-on-debt-china-eyes-tech-dominance/
The IMF has advised the U.S. to delay interest rate cuts until late 2024 and to raise taxes to manage the increasing federal debt. Following an Article IV consultation, the IMF highlighted the strong performance of the U.S. economy post-pandemic, with significant job growth and rising real incomes. However, income and wealth gains have been uneven, and poverty remains high. The Federal Reserve’s policy rate hikes have helped control inflation, expected to return to 2% by mid-2025. The IMF recommended raising taxes, including on households earning less than $400,000 annually, and reforming entitlement programs to address the rising federal debt. Without these measures, the U.S. debt-to-GDP ratio could exceed 140% by 2032, posing risks to both the U.S. and global economies.
China’s Third Plenum concluded with President Xi Jinping emphasizing “high-quality development” and addressing risks in real estate and local government debt. The Communist Party reaffirmed its focus on advanced manufacturing and technological sovereignty, potentially increasing trade tensions with the US and EU. Key takeaways include promoting urban-rural integration, land system reform, and establishing a high-level socialist market economy by 2035. Despite calls to boost consumer spending, the focus remains on structural reforms and avoiding abrupt policy changes. The property market crisis and deflationary pressures persist, with modest impacts from recent real estate policy packages. Military modernization and social governance are also prioritized, reflecting China’s complex challenges.
The Biden Administration’s support for Ukraine’s NATO membership, with Secretary Blinken outlining a robust package, is seen as provocative towards Russia. The U.S. aims to reassure Ukraine amidst its struggles on the battlefield and concerns about future U.S. support. The broader geopolitical implications trace the origins of the conflict to the Bush Administration’s 2008 push for Ukraine’s NATO membership. The ongoing tension between the West and Russia is deemed a long-term issue with no foreseeable resolution. The potential impact of a Trump presidency on the war is debated, with skepticism about Trump’s ability to negotiate a peace deal that satisfies Russia’s demands.
Early today, a global IT outage caused by an issue with cybersecurity firm CrowdStrike disrupted flights, banks, retailers, stock exchanges, 911 call centers, and media outlets. CrowdStrike’s Falcon Sensor threat-monitoring product caused Microsoft’s Windows operating system to crash, affecting Microsoft’s Azure cloud and 365 Office software. Microsoft acknowledged the issue and anticipated a resolution soon. Experts described the outage as unprecedented, predicting significant economic impacts. Microsoft shares dropped 2% in premarket trading, while CrowdStrike shares fell by up to 14%. The outage led to major disruptions, including grounding flights from United, American, Delta, and Allegiant in the US. Despite the widespread disruptions, Bitcoin remained unaffected. The situation is still developing.
Sources
China’s Third Plenum: Xi’s Vague Promises and Market Disappointment
“High-quality development is the top mission of building a modern socialist country,” the official Xinhua News Agency said after the four-day meeting in Beijing.
Source | Submitted by Redneck Engineer
IMF to U.S.: Delay Rate Cuts, Raise Taxes to Tackle Rising Debt
“The Executive Board of the IMF has recommended that the U.S. delay interest rate cuts until ‘late 2024,’ and said the government should raise taxes to slow the growing federal debt.”
Source | Submitted by rhollenb
Biden Administration’s NATO Strategy for Ukraine: A Well-Lit Bridge or a Poke at the Russian Bear?
We have an incredibly robust package that will be unveiled over the next couple of days at NATO that builds a very clear, strong, robust, well-lit bridge to NATO membership for Ukraine, including, as you mentioned, the first time NATO’s dedicated a command to helping an aspiring country join the alliance.
Source | Submitted by rhollenb
Global IT Meltdown: CrowdStrike Glitch Paralyzes Industries Worldwide
“I don’t think it’s too early to call it: this will be the largest IT outage in history.”
Source | Submitted by AaronMcKeon