Credit Suisse violated a 2014 plea deal with U.S. authorities by continuing to help ultra-wealthy U.S. citizens evade taxes and conceal more than USD 700 million from the government, the U.S. Senate Finance Committee found on Wednesday.
After the necessity of UBS UBSG.S’s last-minute rescue of Switzerland’s second-largest bank, Credit Suisse CSGN.S, the Swiss financial regulator… After concluding a two-year investigation into Credit Suisse, which this month agreed to a rescue takeover by rival, the committee said it had uncovered “major violations” of the 2014 agreement between the Swiss lender and the U.S. Department of Justice for enabling tax evasion.
These violations included failing to disclose nearly USD 100 million in secret offshore accounts belonging to a single family of U.S. taxpayers, which it said represented an “ongoing and potentially criminal conspiracy”. In an emailed statement, Credit Suisse said it did not tolerate tax evasion and had been co-operating with U.S. authorities.
“Credit Suisse’s new leadership team has co-operated with the Committee’s inquiry and has supported the work of Senator Wyden, including in respect of suggested policy solutions to help strengthen the financial industry’s ability to detect undisclosed U.S. persons,” the bank said, referring to Ron Wyden, the Senate Finance Committee Chairman.
“At the center of this investigation are greedy Swiss bankers and catnapping government regulators, and the result appears to be a massive, ongoing conspiracy to help ultra-wealthy U.S. citizens to evade taxes and rip off their fellow Americans,” Wyden said in a statement.
Representatives for the U.S. Department of Justice did not immediately respond to a request for comment. Credit Suisse in 2014 became the largest bank in 20 years to plead guilty to a U.S. criminal charge, agreeing to pay a USD 2.5 billion fine to authorities for helping U.S. citizens evade taxes in a conspiracy that spanned decades.
The final straw
It was one of a string of scandals that rocked Switzerland’s second-biggest lender and contributed to it being forced into the arms of UBS. Last year, Credit Suisse pled guilty to defrauding investors over an USD 850 million loan to Mozambique meant to pay for a tuna fishing fleet, and in June the bank was convicted by Switzerland’s Federal Criminal Court of failing to prevent money-laundering by a Bulgarian cocaine trafficking gang.
Swiss authorities engineered the rescue of Credit Suisse earlier this month as they scrambled to prevent the lender from collapsing. UBS on Wednesday rehired Sergio Ermotti as CEO to steer its takeover of Credit Suisse and reassure the world’s wealthy that UBS remains a safe harbour for their money.
A spokesman for Credit Suisse declined to comment. The government-brokered purchase of Credit Suisse by UBS last weekend has been widely criticized by both politicians and ordinary citizens in Switzerland. Finma, in particular, has come under scrutiny for whether it should’ve done more to prevent Credit Suisse’s collapse.
Potential options
Amstad responded that FINMA is “exploring the options” when asked if it is considering holding current Credit Suisse managers liable for the failure of Switzerland’s second-largest bank.
“CS had a cultural problem that translated into a lack of responsibilities,” Amstad was quoted as saying by NZZ, adding: “Numerous mistakes were made over several years”. In recent years, FINMA brought six public enforcement actions against Credit Suisse.
Intel plans to invest $20 billion to build a new chip-making facility in Ohio, the company announced on Friday, in a push to ramp up domestic production of semiconductors as global supply chain disruptions and increased demand have led to a massive worldwide chip shortage.
The chip-making facility will be built in New Albany on the outskirts of Columbus, Ohio, Time first reported, citing an official confirmation by Intel.According to the report, the new complex will first have two chip making factories and directly employ 3,000 people.
Construction of the complex will reportedly begin this year and the chip making plants are expected to be operational by 2025. According to the New York Times, Biden Administration officials—who have backed a legislative effort for major federal investment into semiconductor manufacturing to compete with China—are expected to discuss the Intel announcement on Friday.
Disruptions in the global supply chain caused by the Covid-19 pandemic has had a serious impact on semiconductors in the past two years, as well as a sharp uptick in demand for digital products as more people work from home. A majority of advanced computer chips—used by the likes of Apple, AMD and Qualcomm—are manufactured by Taiwan Semiconductor Manufacturing Company (TSMC), whose proximity to China has also raised some concerns.
Legislation known as the CHIPs act, which would provide $52 billion in subsidies for the semiconductor industry, was passed by the Senate with bipartisan support last year, but it is yet to be passed by the House. In an op-ed for CNN in December, Intel CEO Pat Gelsinger backed the federal package, noting that it may not solve the current chip shortages but will “be fundamental in avoiding them in the future.”
In an effort to regain supremacy in the chips business, Intel has pledged more than $100 billion in investments over the past year. These efforts have been driven by Gelsinger, who became Intel’s CEO last year. In 2020, graphics chips maker Nvidia overtook Intel to become the most valuable chip maker in the U.S. and last year it was overtaken by Samsung as the biggest chip maker by quarterly revenue.
In the past few years, Intel chips have also lost their performance crown to rival AMD in both the desktop and mobile computing markets, caused by several years of delays to its cutting end manufacturing process.
Intel Corp said on Friday it would invest up to $100 billion to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to cars. The move is part of Chief Executive Officer Pat Gelsinger’s strategy to restore Intel’s dominance in chip making and reduce America’s reliance on Asian manufacturing hubs, which have a tight hold on the market.
An initial $20 billion investment – the largest in Ohio’s history – on a 1,000-acre site in New Albany will create 3,000 jobs, Gelsinger said. That could grow to $100 billion with eight total fabrication plants and would be the largest investment on record in Ohio, he told Reuters. Dubbed the silicon heartland, it could become “the largest semiconductor manufacturing location on the planet,” he said.
While chipmakers are scrambling to boost output, Intel’s plans for new factories will not alleviate the current supply crunch, because such complexes take years to build. Gelsinger reiterated on Friday he expected the chip shortages to persist into 2023.
To dramatically increase chip production in the United States, the Biden administration aims to persuade Congress to approve $52 billion in subsidy funding. read more …
On the heels of yet another year of record sales, Amazon is dealing with a couple of unwelcome updates in the new year. The Senate Judiciary Committee has announced it will soon be marking up the American Innovation and Choice Online Act, an antitrust bill targeting Amazon and other Big Tech companies. This follows reports that the Federal Trade Commission is ramping up its years-long antitrust investigation into Amazon’s cloud computing arm, Amazon Web Services, or AWS.
It’s clearer now than ever that Amazon, which was allowed to grow mostly unhindered for more than two decades, is caught in the middle of an international effort to check Big Tech’s power.
The Senate bill, one of several bipartisan antitrust bills in Congress, would prohibit Amazon from giving its products preferential treatment, among other things. It’s the bill that would affect the company the most, and the one it has been fighting hardest against. Meanwhile, the renewed scrutiny from the FTC about alleged anti-competitive behavior from AWS, which represents a significant and largely invisible source of Amazon’s profits, could threaten Amazon’s long-term dominance in a number of industries.
Just because a company is successful and dominates a market (or even several markets) doesn’t mean it’s violating any antitrust laws. But Amazon’s critics say it illegally uses its power to harm competition and consumers, particularly with its Marketplace, where outside, or third-party, businesses can sell their products to Amazon customers alongside Amazon’s own wares.
Amazon has been accused of copying popular products to sell under its own labels, using non-public seller data to inform its own decisions, and forcing sellers into agreements that essentially prohibit them from offering lower prices elsewhere. Amazon denies some of these allegations and says other actions are simply meant to provide the services its customers want at the best price.
Some of these complaints have been around a while, but 2022 may be the year that Amazon faces meaningful and real consequences for them. There are still caveats. State attorneys general are rumored to be looking into some of Amazon’s business practices, but only one has filed a lawsuit so far.
The FTC is still waiting for the confirmation of a fifth Democratic commissioner who would break up the deadlock of two Republican and two Democratic commissioners. And while antitrust bills are making progress in Congress, Democratic lawmakers currently seem focused on other initiatives ahead of the midterm elections — elections that could give Republicans a majority in one or both houses of Congress.
Amazon isn’t the only Big Tech company that’s been targeted, but it might have more reason than anyone else to worry about the FTC in particular. One of two federal agencies that enforce antitrust laws, the FTC is now run by Lina Khan, who basically built her career on research surrounding her 2017 Yale Law Journal paper, “Amazon’s Antitrust Paradox.”
The paper detailed how Amazon’s rise showed the flaws in antitrust laws and led to Khan becoming known as Amazon’s antitrust antagonist. Since her appointment to the FTC last June, it hasn’t seemed like the question is whether the agency will take on Amazon, but rather when and how. Amazon, meanwhile, has asked that Khan recuse herself from any antitrust matters involving the company.
Khan “is best suited to understand the various issues and problems with Amazon,” said Alex Harman, a competition policy advocate at Public Citizen, a consumer advocacy group. “And we are very excited that she will be able to bring a significant action against them.”
In response to questions about whether its size and market share were too big in too many sectors, Amazon told Recode it faces “intense competition” in all of its lines of business. It says its expansion is part of a long-running strategy to make “big bets over the long term to reinvent the customer experience.”
Sarah Miller, executive director of the American Economic Liberties Project, an anti-monopoly advocacy group, sees it differently: “Amazon leverages its power in one space to take over a new space, which is core to their business practice. They have the ability to combine the competitive advantages of different aspects of their business to take over new sectors of the economy.”
While the FTC, for now, seems interested in AWS (and Amazon’s attempt to buy MGM), most of the antitrust attention we’ve seen elsewhere is focused on Amazon’s retail business and how it treats the businesses that sell products through its Marketplace platform. Critics say Amazon uses its power to give its own wares an unfair advantage over third-party sellers, and effectively forces them to pay for extra services and make agreements that could inflate prices everywhere.
“That’s where there’s a lot of obvious harms, and where you have businesses who are unhappy with how they’re being treated,” Miller said.
Consumers may be paying more and missing out on new products, companies, and innovations that a more competitive retail space would have produced. And that may be a violation of the antitrust laws we have now, or those to come.
How Amazon’s power might lead to higher prices
Many antitrust complaints about Amazon’s practices are based on its position as both a platform and a seller on that platform. This gives Amazon a great deal of power over the companies it’s competing against, as well as an incentive to favor its products over theirs. About 60 percent of Amazon’s online sales come through Marketplace.
This can be a mutually beneficial relationship. Marketplace’s sellers — currently more than 2 million of them — get access to Amazon’s huge customer base, and Amazon gets a vastly expanded selection that has helped make it the first and only website many online shoppers visit.
This model brings in hundreds of billions of dollars in revenue every year for Amazon, which now has an estimated 40 percent share of the e-commerce market in the United States. The company with the second-largest e-commerce market share, Walmart, has just 7 percent.
At the same time, Amazon likes to say it has but a small sliver — 1 percent — of a competitive global retail market. But that’s online and offline combined, and it includes many industries in which Amazon doesn’t sell anything at all. Amazon is also on track to edge out Walmart and become the most dominant retailer, online and off, in the United States as soon as this year.
No company has the kind of ecosystem Amazon built around its retail business beyond Marketplace. Amazon collects tons of data about its shoppers — data it uses to optimize its services and to fuel its burgeoning and increasingly lucrative advertising business.
Meanwhile, Amazon Prime and its fast free shipping has not only created an intensely loyal customer base but also compelled Amazon to build up its own shipping and logistics arm, Fulfillment by Amazon, to reduce its reliance on outside services and give it more control over its sellers. Many of Amazon’s rival retailers — namely, Walmart and Target — do some or all of these things to a lesser extent, but they’re just playing catch-up.
Smaller companies simply don’t have the scale or money to offer such services. Amazon, which has turned itself from a bookstore to an “everything store” to an everything platform, is in a class by itself.
“There are dynamics in digital that are fundamentally different,” Andrew Lipsman, principal analyst at eMarketer, told Recode. “Access to data is fundamentally different than we’ve ever had before. And all the other things that has enabled — all these digital businesses that Amazon has spun off — are underpinned by completely different economics than traditional retail economics.”
Amazon is happy to tell you how good it’s been for the small- and medium-sized businesses making money using its platform and how proposed antitrust actions could harm them. Others argue that Amazon makes even more money off of third-party sellers who have to play by Amazon’s rules because their businesses wouldn’t survive without the e-commerce giant and its customer base. And those rules, they say, aren’t always fair.
Last May, the attorney general of Washington, DC, Karl Racine, sued Amazon for antitrust violations over its treatment of Marketplace sellers. In September, he amended that lawsuit to include the wholesalers, or first-party sellers, from which Amazon buys products before selling them to its customers.
Racine told Recode that he started to wonder what the price of Amazon’s much-touted “customer obsession” was, especially after seeing accusations that Amazon copied popular products on its platform and then sold its own similar products for a lower price. (Amazon says it’s standard practice for retailers to use data about customers’ interests to help determine what to make for their own private labels.)
“I found that offensive,” Racine told Recode. “I felt like Amazon was just a copycat and burying a creative source. They were not focused only on the customer. They were also focused on their bottom line.”
The DC attorney general’s office investigated and found that “Amazon, the dominant player, seeks to maximize its profits at the expense of consumers, third-party sellers, and wholesalers,” Racine said. “It’s kept prices for goods artificially high, hampered competition, stifled innovation, and illegally tilted the playing field, all in its favor.”
Racine’s suit echoes some of the issues raised in other lawsuits and investigations as well as those identified in a recent report from the Institute for Local Self-Reliance, a nonprofit that advocates for locally owned businesses.
The big sticking point is that Amazon’s policies can effectively force other companies to give Amazon the lowest price for their goods. This is due to Amazon’s “fair pricing” policy, which says it can downgrade or stop sales of third-party sellers’ products if they’re priced “significantly higher” on Amazon than at other outlets.
Meanwhile, wholesalers have to agree to give Amazon a certain cut of their products’ sales. But Amazon also sets the prices of those products. If it reduces them to price match another outlet, the wholesaler may end up eating the difference and even losing money. That keeps wholesalers from selling their wares to anyone else for less.
Amazon sees all this as looking out for its customers and making sure they’re getting the lowest prices. But Racine and those who have filed similar lawsuits believe sellers and wholesalers are being stopped from selling their products for lower prices in other stores.
Because of this, competitors can’t offer lower prices to get an advantage over Amazon, and customers end up paying Amazon’s prices even if they don’t shop at Amazon — and paying more. Sellers and wholesalers can choose not to sell to Amazon, but few of them have the size and brand recognition needed to survive in a world where so many shoppers do most, if not all, of their online shopping on Amazon.
“That’s the power of brands: Nike is able to say, ‘You know what, Amazon? We don’t need you,’” Lipsman said. “The more commoditized your product is, the more likely you have to sell through Amazon, and you’re dependent on that channel.”
Amazon has filed a motion to dismiss the DC attorney general’s lawsuit, arguing that it’s simply making sure its customers are getting the lowest prices. The policies don’t force sellers to offer the lowest price on Amazon, Amazon says; they simply discourage them from offering higher prices on Amazon than they do elsewhere. But this hasn’t always been the case.
Just a few years ago, Amazon had a price parity policy, which more explicitly said sellers couldn’t offer lower prices anywhere else. Amazon ended this practice in Europe years ago amid scrutiny there, and then did the same thing in the United States in 2019. Racine says the fair pricing policy that replaced it serves the same function and is similarly anti-competitive.
How Amazon uses its power over sellers to squeeze them for money and data
Even though one of Amazon’s selling points is its low prices, critics say those aren’t necessarily the lowest prices possible, in part due to the increasing costs to sell on Marketplace. Amazon charges sellers a referral fee, typically 15 percent, for items sold. Then it piles on optional services that many sellers feel compelled to buy if they want their businesses to survive, cutting into their margins and forcing some to raise their prices to maintain a profit.
Fulfillment by Amazon, or FBA, is one example of this. Amazon doesn’t require that its sellers use its fulfillment and shipping service, but doing so makes them eligible for Prime, and it’s exceedingly difficult to qualify for Prime if they don’t.
That recognizable Prime badge is important. There’s a higher likelihood that Amazon’s customers will buy Prime products, because the shipping is free for Prime members and because Amazon gives preference to Prime items when it assigns what’s known as the “Buy Box.” When multiple sellers offer the same product, the Buy Box winner is added to carts when customers click “buy.” More than 80 percent of an item’s sales go to the Buy Box winner, so sellers are very motivated to do everything possible to get it. That may include using FBA even if it costs them more than shipping items themselves.
This practice has already gotten Amazon into trouble abroad. In December, Italy’s antitrust regulators fined Amazon about $1.3 billion for giving sellers who use FBA benefits over those who don’t. Amazon says it’s planning to appeal the decision, but more trouble could be on the way: The company is facing a similar investigation from the European Union’s European Commission, and India is also investigating Amazon for violating its antitrust laws.
Sellers have also complained about ads, which give their items better placement in search results. Reports say that Amazon hasincreased the number of ads, upping its revenue and pushing organic results down even further — which, in turn, compels sellers to buy ads to regain the prominent placement they used to get for free. Amazon told Recode that sellers wouldn’t use FBA or buy ads if those services didn’t add value or come at the best price, as they can always use other fulfillment services and buy ads elsewhere.
But it’s not just fees that Amazon gets from its sellers. Critics say the company uses data it collects from third-party sellers to give itself a competitive advantage. This was the subject of a “statement of objections” from the European Union, and as the DC attorney general has made clear, Amazon is notorious for creating its own versions of popular products sold by third parties.
The company recently opened up some of its data to sellers, possibly in an effort to ward off some of this criticism, and says it prohibits the use of non-public data about individual sellers to develop its own products. But founder Jeff Bezos told Congress he couldn’t guarantee that policy has never been violated, and multiplepressreports suggest that it has.
The company has also been accused of self-preferencing, or giving its products preferentialtreatment — and a competitive advantage — over those sold by third parties. This could take the form of giving its own products the Buy Box or prominent search rankings they didn’t earn. Amazon has total control over its platform, so the company can really do whatever it wants, and there isn’t much sellers can do about it.
Self-preferencing has become a catch-all term for many of Amazon’s alleged anti-competitive practices. It’s attracted the most attention from regulators so far. The company denies that it gives preference to its own items in search results and says the reports that it does are inaccurate. Many legislators aren’t buying that and have proposed bills forbidding self-preferencing, with Amazon specifically in mind.
How Amazon could be changed by new antitrust laws
Per its policies, the FTC has stayed mum on what, if anything, it’s investigating on Amazon. Congress, on the other hand, has been very public.
The House Judiciary Committee spent 16 months looking into competition and digital markets, focusing on Amazon as well as Apple, Google, and Facebook. Last year, a bipartisan and mostly bicameral group of lawmakers proposed a package of Big Tech-focused antitrust bills. The House’s bills made it through committee markup last June, but have yet to be put to a vote.
The American Innovation and Choice Online Act is the only Senate bill to be scheduled for markup so far. The House’s Ending Platform Monopolies Act, which still doesn’t have a Senate equivalent, is likely the most expansive of the bills in the antitrust package, forbidding dominant digital platforms from owning lines of business that incentivize them to give their own products and services preference over third parties. Should that bill become law, it could have a huge impact on Amazon, forcing it to split off its first-party store from its sales platform.
Amazon has fought back against the bills. It has sent emails to certain sellers and set up an informational website warning them about how the bills, if they become law, could negatively impact them. Amazon claims that it might have to shut down Marketplace or limit its ability to offer Prime services. The bills’ supporters say that companies would still be able to offer all of those services, but could finally compete on a level playing field.
“We urge Congress to consider these consequences instead of rushing through this ambiguously worded bill,” Brian Huseman, Amazon vice president of public policy, told Recode in a statement. He added that the bills should apply “to all retailers, not just one.”
While Amazon waits to see what the FTC and Congress do, its antitrust battles, real and potential, haven’t seemed to harm its bottom line. Business is good, growing, and disruptive. Amazon is even reportedly preparing to take on Shopify, a platform that helps businesses create their own online shops and has grown exponentially during the pandemic, with a similar offering that could come out as early as this year. If true (Amazon wouldn’t comment), it shows that Amazon isn’t afraid of going after potential threats even while under more scrutiny than it’s ever experienced.
That’s exactly the attitude Racine, the DC attorney general, takes issue with. “Amazon claims to be all about consumers,” he said. “What our evidence shows is that Amazon is all about more profit for Amazon, at the cost of competition and at the expense of consumers. And we’re looking forward to proving that in court.
Sara Morrison covers Big Tech and antitrust regulation, in addition to personal data and privacy. She previously covered technology’s impact on the world for Vocativ. Her work has also appeared in the Atlantic, Jezebel, Boston.com, Nieman Reports, and Columbia Journalism Review, among others.
Predicting future events is hard, but it’s among the most important tasks a journalist can perform. Especially if you work at a section called Future Perfect.
Our mission is to explain the world around us to our readers, and it’s impossible to do that without anticipating what comes next. Will inflation continue to rise in the US and Europe, or level off? Will the Supreme Court allow states to ban abortion, eliminating legal access in red states? Will Brazil’s 212 million people be led by a left-wing populist, or a far-right anti-vaxxer?
All of these questions matter, and preparing ourselves for potential outcomes — and having a good sense of how likely specific outcomes are — is a major part of explaining the world accurately. And if policymakers could rely on accurate predictions about the outcome of a foreign war or the advisability of a budget proposal, they could make much better policy decisions.
Being good at predictions is a skill like any other — you have to practice it. University of Pennsylvania psychologist Philip Tetlock studies forecasting, holding tournaments to identify the skills that make people better than their peers at predicting future events. He finds that the most critical skills for forecasting are thinking numerically, being open to changing your mind, updating your beliefs incrementally and frequently instead of in rare big moments, and — most encouragingly — practicing.
Practice makes perfect for prediction-making, but you need to do it all the time, note your successes, learn from your failures, and refine your understanding of where your forecasting abilities are strongest. So for the third year in a row, the staff of Future Perfect is providing predictions on the year to come. As with last time, we assign each event a probability between 10 percent and 95 percent (Tetlock found that the best forecasters thought in terms of probabilities rather than simple yes/no predictions).
To say that something has an 80 percent chance of happening doesn’t mean it’s definitely happening; it means that if we make five predictions at 80 percent confidence, we’re expecting to have four of them come true. (This kind of probabilistic thinking can trip people up, as Nate Silver has documented.)
You can also read our retrospectives on our 2021 predictions, our 2020 predictions, and our 2019 predictions. We don’t speak for Vox, or even for each other, and we hope that where you disagree, you’ll weigh in with predictions of your own. If you want to try your hand, the site Metaculus is a good place; the successor company to Tetlock’s Good Judgment Project also runs competitions.
The United States
Democrats will lose their majorities in the US House and Senate (95 percent)
Midterm elections are fairly predictable. With extremelyrareexceptions, the party in power loses seats. Public opinion is, as political scientist Christopher Wlezien has argued, thermostatic: The public elects one party, then finds that its policies are a little too far left or right for its tastes, and compensates by moving the other way in the midterms.
Wlezien, along with Joseph Bafumi and Robert Erikson, has also found that polling many months ahead of midterms can be quite predictive of the eventual results. As of this writing, Democrats are slightly behind in national House polling, which suggests they’ll lose the popular vote for the House this coming November. Data analyst David Shor told me that as of December 9, 2021, the generic ballot polling suggests Democrats losing the House popular vote, 48 percent to 52 percent. With the current razor-thin Democratic majority in both chambers of Congress, such a performance would translate to a near-certain Republican takeover. —Dylan Matthews
Inflation in the US will average under 3 percent (80 percent)
The definition of “inflation” I’m using here is annualized rate of growth in the personal consumption expenditure (PCE) price index, excluding food and energy. This measure, known as “core PCE,” is the one preferred by the Federal Reserve, and thus the one most relevant for public policy. I’m also specifically looking at the average of the first three quarters of 2022, as we plan on reviewing these predictions in December 2022, when the final quarter’s data won’t be available.
While higher-than-expected demand and worse-than-expected supply chains have led to elevated inflation in 2021, I suspect that problem will resolve itself in 2022. The Fed predicts core PCE inflation of 2.7 percent in 2022; the Congressional Budget Office predicts 2 percent. Professional private-sector forecasters predict it will decline from 2.5 percent in quarter one to 2.3 percent in quarter three. All of this suggests to me that inflation will fall below 3 percent, toward a much more comfortable range than experienced in 2021. —DM
Unemployment in the US will fall below 4 percent by November (80 percent)
The current US unemployment rate is only a hair above 4 percent, so one might think it’d be an easy call to predict it will dip below 4 next year. But I do have a couple of hesitations, with the big one that the omicron coronavirus variant is here and looks likely to be at least temporarily devastating. And it might not be the last game-changing variant.
The pandemic has done bizarre things to the US employment situation, and predicting where the next year will take us requires predicting the pandemic’s course from here. That means that while I’m broadly optimistic about job growth in 2021, it’s hard to be too sure of anything. But on the whole, it seems to me that we ought to see at least a moderate degree of economic recovery over next summer and fall, and that moderate degree should be enough for unemployment to fall below 4 percent at some point. —Kelsey Piper
The Supreme Court will overturn Roe v. Wade (65 percent)
For nearly 50 years, anti-abortion activists have engaged in a highly organized campaign to appoint judges willing to overturn Roe v. Wade and allow states to enact outright bans on abortion. The savvy opinion has traditionally been that conservative jurists will seek to narrow, not overrule, Roe by gradually allowing more and more restrictions short of outright bans. I think this is mistaken.
While Chief Justice John Roberts may be pragmatic enough to take that option, my sense is that the other five Republican appointees genuinely believe Roe was wrongly decided and likely believe overturning it will be an admirable part of their legacy.
The Court is currently weighing Dobbs v. Jackson Women’s Health Organization, a case considering Mississippi’s ban on abortions after 15 weeks. After oral arguments, court observers like my colleague Ian Millhiser were confident that all the conservatives but Roberts were ready to overturn Roe. The prediction market at FantasyScotus concludes the same. I defer to their expertise and think 2022 will see the emergence of a divide between red states where abortion is outright banned and blue ones where it is legally protected and funded. —DM
Stephen Breyer will retire from the Supreme Court (55 percent)
In September, Supreme Court Justice Stephen Breyer, the Court’s oldest and most senior member, published a book warning against “politicizing” the Court. To me, this is absurd: The Court is, has always been, and always will be a political institution. Indeed, his colleague Ruth Bader Ginsburg’s willful obliviousness to partisan political concerns will likely soon cause the overturn of Roe and the undermining of one of her biggest legacies.
Partially as a reaction to Ginsburg’s colossal mistake, I predict Breyer will buckle to public pressure to retire before the 2022 midterms. Without a Democratic Senate, President Biden can’t replace Breyer with a like-minded jurist. Breyer is not a fool — he knows this is the dynamic, and while it likely pains him to be seen as responding to political concerns, I suspect he will ultimately let Biden pick his successor. —DM
The world
Emmanuel Macron will be reelected as president of France (65 percent)
Three years ago, when Emmanuel Macron’s public approval rating dipped below 25 percent, it appeared plausible that he would either decline to seek reelection (like his unpopular predecessor François Hollande) or fall to far-right leader Marine Le Pen. But Macron gained substantial ground over 2020, despite a chaotic handling of Covid-19, including repeated attempts at “reopening” usually followed by a new lockdown when the reopening inevitably led to a surge in the disease.
Macron also benefits from a divided far right, with newcomer Éric Zemmour digging into Le Pen’s base. Macron’s best-case scenario is that Zemmour and Le Pen continue to attack each other viciously, leaving whoever prevails in a weak position to take him on in the second round of the election. If he loses, my guess is it’s because mainstream center-right candidate Valérie Pécresse snuck past Zemmour and Le Pen and made it to the runoff, where she stands a better shot than the far-right leaders. —DM
Jair Bolsonaro will be reelected as president of Brazil (55 percent)
If you consult the opinion polls, you’ll see that Bolsonaro — the radical right-wing anti-vaxxer and death squad fanboy currently running Brazil — is behind leftist former president Luiz Inácio Lula da Silva by a decent margin. And I think it’s certainly possible Lula prevails.
But I still give Bolsonaro the edge for three reasons: 1) in Brazil in particular and modern South America more generally, incumbents very often win reelection; 2) in both 2010 and 2018, the party consistently leading in polling for months in the run-up to election season wound up dropping ground rapidly and losing the election; and 3) Lula was knocked out of the 2018 race because of since-overturned corruption charges, and while there’s probably not enough time to convict him of new charges before the 2022 election, I think it’s possible that Bolsonaro and allies will succeed in pushing Lula out of the race. —DM
Bongbong Marcos will be elected as president of the Philippines (55 percent)
The runup to the 2022 Philippine presidential election has been chaotic, to say the least. Sara Duterte, daughter of term-limited incumbent President Rodrigo Duterte, was widely expected to run but opted instead to try for the vice presidency. Duterte then endorsed longtime aide Bong Go, but Go has since withdrawn. And Duterte seems displeased with Bongbong Marcos, the son of former dictator Ferdinand Marcos, even though Marcos is Duterte’s daughter’s running mate. Among other things, Duterte has started spreading rumors that Marcos uses cocaine.
That said, the younger Duterte is a powerful ally for Marcos, as is the somewhat surprising phenomenon of autocratic nostalgia. Keiji Fujimori, the daughter of Peru’s former dictator, has come close to winning the presidency there several times, and the right-wing candidate in this year’s Chilean presidential election is the scion of a family closely allied to the late dictator Augusto Pinochet. A similar romanticization of an autocratic past could help put Marcos over the top.
Marcos seems to be ahead of Manila mayor Isko Moreno and boxer Manny Pacquiao in the (admittedly sparse) polling of the race, and I suspect his last name and canny alliance-building will win him the presidency. —DM
Rebels will NOT capture the Ethiopian capital of Addis Ababa (55 percent)
Two years after Ethiopia’s prime minister Abiy Ahmed won a Nobel Peace Prize, he finds himself losing a brutal civil war. From 1991 to 2018, Ethiopia was ruled by a coalition centered around the Tigray People’s Liberation Front. As its name suggests, the TPLF is based in the Tigray region in the country’s north, and during its rule repressed the Amhara and Oromo ethnic groups. Growing discontent led to the Oromo politician Abiy coming to power.
After a couple of calm years, during which Abiy made peace with neighboring Eritrea, conflict between Abiy and the TPLF turned violent, with the national government sending the military into Tigray and bombing the capital. The humanitarian consequences have been brutal, to say the least.
China will not reopen its borders in the first half of 2022 (80 percent)
China has been intent on preserving a zero-Covid policy, even as other governments have abandoned that strategy. When a single person tests positive there, it can trigger a lockdown for tens of thousands of people. The country mandates quarantines for even remote contacts of positive cases. And the authoritarian government has tied up its prestige with its ability to crush the virus.
There’s no indication that China’s approach will change in the coming months. In fact, when one of its top scientists suggested relaxing the zero-Covid policy in 2022, he was ridiculed. Economically, China can afford to keep its borders closed; exports and foreign investment are doing just fine. And politically, it may actually be in China’s interest to stay closed: With the Beijing Winter Olympics coming up in February, and followed by the session of its rubber-stamp parliament and, later, party congress, the government may not be keen to let in foreigners who might critique its policies, especially its human rights abuses.
So I predict that China will not reopen its borders in the first half of the year. Specifically, I mean that China will not allow in foreigners for nonessential purposes like tourism. —Sigal Samuel
Chinese GDP will continue to grow for the first three quarters of the year (95 percent)
Per World Bank data, the last year that Chinese GDP fell was 1976, when Mao Zedong died and the Gang of Four was deposed. The 2008 global financial crisis and the pandemic in 2020 (originating in China) couldn’t stop the country’s economy from growing. I’m therefore very confident that Chinese GDP in the first three quarters of 2022 (which are the quarters we’ll consider for this prediction) will grow. —DM
Covid-19
20 percent of US children between 6 months and 5 years old will have received at least one Covid vaccine by year’s end (65 percent)
Vaccine makers are busy testing the safety and efficacy of their shots in children under 5. Pfizer/BioNTech is furthest along, with Phase 2/3 trials currently running that may yield initial data within the next month. Of course, the Food and Drug Administration and the Centers for Disease Control and Prevention will still need to issue an approval before shots can go into arms, but Pfizer/BioNTech is already saying it expects to deliver the doses by April 2022.
Dr. Anthony Fauci seems to think a spring vaccination rollout is doable. “Hopefully within a reasonably short period of time, likely the beginning of next year in 2022, in the first quarter of 2022, it will be available to them,” he said, referring to kids under 5.
That said, according to polling from the Kaiser Family Foundation, 30 percent of parents with kids under 5 say they will “definitely not” vaccinate the kids. As of this writing, only about 17 percent of kids aged 5-11 have gotten at least one dose. When it comes to even younger kids, the hesitation may be more pronounced as some parents choose to “wait and see” about side effects; polling suggests that parents become more hesitant about getting their kids the Covid vaccine the younger the children are.
So, although I think there’s a decent chance that 20 percent of kids between 6 months and 5 years old will have gotten at least one shot if we give the “wait and see” crowd until the end of 2022, I’m not going to bet on a higher percentage. —SS
The WHO will designate another variant of concern by year’s end (75 percent)
I really hope I’m wrong on this one. But I fear a new variant of concern will appear on the WHO’s list, for a simple reason: Between rich countries hoarding doses and some populations showing hesitancy to get immunized, we’re not vaccinating the globe fast enough to starve the virus of opportunities to mutate into something new and serious. In low-income countries, only 7.3 percent of people have received at least one dose.
Within the past year, five variants of concern have made it onto the WHO’s list. I don’t have high hopes that we’ll go all of 2022 without adding at least one more to that sad litany. —SS
12 billion shots will be given out against Covid-19 globally by November 2022 … (80 percent)
The global vaccine rollout has not been as good as was hoped for, or as good as it needs to be to prevent the emergence of new variants. But compared to what the world was capable of even a few decades ago, it has been pretty impressive. It is about one year since the first countries issued approval for vaccines developed against Covid-19, and already more than 8.5 billion doses have been administered. If that rate continued into next year, the world would easily hit 12 billion shots given out, or enough for every person over 20 to get two shots.
Countries probably won’t maintain that rate or even close to it, because people easy to reach for vaccination have largely already been reached, and the remaining vaccination efforts are going to have to involve delivery in poor and rural areas and overcoming vaccine hesitancy. But I still expect the world to hit this milestone, probably sometime in the summer.
Of course, those 12 billion shots will still be nowhere near evenly distributed; many rich countries are now encouraging boosters and vaccinating children, and there are still some parts of the world where vaccination rates are very low. —KP
… but at least one country will have less than 10 percent of people vaccinated with two shots by November 2022 — (70 percent)
For vaccination to help protect the world against the emergence of future variants, there can’t be huge gaps in vaccination coverage. Unfortunately, that’s probably exactly what we’re going to get. In many areas, a lot of people are reluctant to get vaccinated; in others, access to vaccines has been severely limited, and changing that will require funding and dedicated effort that rich countries have been unwilling to extend.
In many parts of the world, health care clinics are viewed as an expensive option for emergencies, not as resources for preventive care; they’re also thought of as primarily serving pregnant people and young children. That makes it hard to get older people at highest risk from Covid-19 vaccinated. Underresourced vaccination campaigns won’t succeed, and sufficient resources means not just access to enough physical vaccines but also the capacity to get them to people. I’d love to see this happen in 2022, but unfortunately I don’t expect to see it everywhere it’s needed. —KP
Science and technology
A psychedelic drug will be decriminalized or legalized in at least one new US state (75 percent)
Psychedelics have been undergoing a renaissance over the past few years as the evidence mounts that they have potential to help treat mental health conditions like depression and PTSD. A movement to decriminalize or legalize such drugs is gaining traction. In 2020, Oregon voters elected to legalize psilocybin, the main psychoactive ingredient in magic mushrooms, in supervised therapeutic settings (the state also decriminalized all drugs). In Washington, DC, voters effectively decriminalized psychedelic plants. A handful of US cities, including Detroit and Denver, have decriminalized psilocybin.
As momentum continues to build, I think there’s a solid chance we’ll see a psychedelic drug decriminalized or legalized in at least one more US state. I’ll be keeping my eyes on California, which will put decriminalization of a wide class of psychedelics to a vote in a 2022 ballot measure. —SS
AI will discover a new drug — or an old drug fit for new purposes — that’s promising enough for clinical trials (85 percent)
Based on the track record of the past two years, I predict that another such discovery will happen in 2022, yielding a drug that’s promising enough to merit a clinical trial. This could be either a totally new compound or an existing drug that AI has found can be repurposed for a new use. One big new player to watch in this arena is Isomorphic Labs, just launched by Alphabet to discover new drugs using DeepMind’s AI. (Demis Hassabis, the CEO of DeepMind, will also serve as Isomorphic’s CEO.) —SS
US government will not renew the ban on funding gain-of-function research (60 percent)
In 2014, after a series of disastrous lab accidents made it clear that lab procedures weren’t adequate to prevent the release of deadly pathogens, the US government temporarily paused funding for “gain of function” research in diseases that could affect humans and make viruses more deadly or transmissible.
To my mind, this was an incredibly sensible call by the Obama administration. Biology research is valuable, and we should as a society invest more in it, but lab research that involves engineering what could effectively function as deadly weapons isn’t acceptable and shouldn’t be funded. Researchers engaged in gain-of-function work pushed back on the ban, and in 2017 it was reversed — the US is now funding such experiments again.
This is outrageous, and if anything could prompt the government to revisit it, you’d think it’d be the millions of deaths from a new pandemic over the past two years. But I haven’t yet seen any moves by the US government to put this policy back in place. I sincerely hope that changes in 2022. —KP
Environment
The Biden administration will set the social cost of carbon at $100 per ton or more (70 percent)
The social cost of carbon (SCC) is a measure, in dollars, of how much economic damage results from emitting 1 ton of carbon dioxide. SCC is an important measure because it guides policymaking — and there’s good reason to think we’ve been radically underestimating it. Although the Obama administration had set the SCC at $51 per ton, the Trump administration put it as low as $1. In early 2021, the Biden administration restored it to $51 as an interim move, promising to study the matter in depth and release its final determination in early 2022.
Recent findings indicate that the official social cost of carbon should be substantially increased. One study found that when factoring in projected heat-related deaths — the “mortality cost of carbon” — the SCC jumps to a whopping $258 per ton. The Biden administration probably won’t go that far, but it really should go at least as high as $100, economists say.
Two top experts on SCC — Joseph Stiglitz of Columbia University and Lord Nicholas Stern of the London School of Economics — have said around $100 would be appropriate. Other experts, not to mention New York state, have decided $125 is a better estimate. Taking all this into consideration, I think it’s reasonable to predict that Biden will go with at least $100. —SS
2022 will be warmer than 2021 (80 percent)
One of the more obvious — yet sometimes overlooked — consequences of climate change is that almost every year is warmer than the last, meaning experiencing the warmest year in recorded history is now routine. This means that a recurring prediction here at Future Perfect is this gloomy one: that it is 80 percent likely that each year will be warmer than the last. This is based on looking at the last 25 years of atmospheric temperature data: On average, in four out of five years, this prediction would be right. —KP
Culture
Kenneth Branagh’s Belfast will win Best Picture (55 percent)
This is not a very brave prediction; bet365, BetMGM, and Betfair all give Belfast, Kenneth Branagh’s autobiographical film about his childhood in Northern Ireland during the Troubles, the edge to win Best Picture. All of those betting sites give it odds of roughly 25 percent, so I’m going out on a bit of a limb by giving it higher odds than the field, but I think that’s justified.
The Oscars like giving late-career awards to directors they forgot to honor earlier, even if the awarded films are inferior to their best. (Think Martin Scorsese for The Departed rather than Taxi Driver or Goodfellas, or Guillermo del Toro for The Shape of Water and not Pan’s Labyrinth). Branagh, whose reputation rests on his Shakespeare adaptations in the 1980s and ’90s, fits the bill. Repeat wins for directors are rare, which is bad news for del Toro’s Nightmare Alley and Steven Spielberg’s West Side Story.
The best competition I can see are Jane Campion’s The Power of the Dog and Paul Thomas Anderson’s Licorice Pizza, but both of those directors are, to be frank, too good to win Oscars. Branagh is in the midcult sweet spot. —DM
Norway will win the most medals at the 2022 Winter Olympics (60 percent)
Similar to my Oscar prediction, here I’m relying on the odds of experts. Gracenote, a division of Nielsen, predicts the Olympics by looking at recent results in non-Olympic competitions in various events. It gives Norway a strong edge in Beijing 2022 Winter Olympics, with 45 medals to the Russian Olympic Committee’s 33. Norway also came in first in Pyeongchang in 2018, and while the Russians are formidable opposition (they came first on their home turf in Sochi in 2014), the fact that they’re still not allowed to compete as the nation of Russia, due to doping scandals, holds them back. They underperformed in 2018, and I see them coming up short again this time.
Yesterday we talked about the prospects of a digital dollar coming down the pike. It seems clear that global governments will not allow non-sovereign forms of money to continue to proliferate.
The Senate Banking committee’s hearing on the digital dollar two weeks ago was not only a public exploration and introduction to the concept a central bank-backed digital currency, the hearing was also used as a platform to publicly assassinate the viability of the private (“bogus” in the words of Senator Warren) cryptocurrency market (bitcoin, stablecoins, etc.).
With this in mind, the Chinese government has continually tightened control over the crypto market in China, most recently cracking down on cryptocurrency mining in the country. The U.S. Justice Department announced a few weeks ago that it “recovered” $2.3 million in cryptocurrency of the ransom collected from the Colonial Pipeline hack. And today, it was reported that South Korea seized almost $50 million of crypto assets from citizens accused of tax evasion.
So the benefits of the private cryptocurrency market are being deconstructed by governments. Add to that, even after gaining traction, the private crypto market continues to be used primarily as a tool of corruption and speculation. With that, this chart set up argues for a typical bubble outcome (crash).
I founded billionairesportfolio.com — an online investment advisory site that gives the average investor access to sophisticated hedge fund analysis and strategies, all in an easy to understand format. I am also CEO of Logic Fund Management. I started my career with a London-based family office hedge fund that managed money for a French billionaire.
A pair of U.S. congressmen have introduced a bill that would require the Treasury Department to evaluate the digital yuan, digital dollar and the actual dollar’s role in the global economy.
The bipartisan bill, introduced by Reps. French Hill (R-Ark.) and Jim Himes (D-Conn.), seeks to ensure the U.S. dollar remains the world’s reserve currency and directs the Treasury Department to publish a report that evaluates current policy and governance around the currency. This report would include details around central bank digital currencies (CBDC), among other issues.
Under the terms of the bill, dubbed the “21st Century Dollar Act,” the Treasury secretary (currently Janet Yellen) would submit a report to the Senate Banking and House Financial Services committees that includes “a description of efforts by major foreign central banks, including the People’s Bank of China, to create an official digital currency, as well as any risks to the national interest of the United States posed by such efforts.”
The report would update these committees on the Federal Reserve’s current status in researching a digital dollar. The bill would also require the Treasury Department to develop a strategy for boosting the dollar’s reserve status.
The report would detail “any implications for the strategy established by the secretary pursuant to subsection (a) arising from the relative state of development of an official digital currency by the United States and other nations, including the People’s Republic of China,” the bill said.
Keeping the dollar as the world’s reserve currency would be “good for American companies and workers as well as U.S. global influence,” Hill said in a statement.
Circle claims that each USDC is backed by a dollar held in reserve. USDC reserves are regularly attested (but not audited) by Grant Thornton, LLP, and the monthly attestations can be found on the Centre Consortium’s website. USDC was first announced on the 15th of May 2018 by Circle, and was launched in September of 2018.
On March 29, 2021, Visa announced that it would allow the use of USDC to settle transactions on its payment network. As of June 2021 there are 24.1 billion USDC in circulation.
Creator: TYRONE SIU | Credit: REUTERS
