Finances

Liz Truss’s Departure Creates Economic Uncertainty As Inflation Rises

The fall of Liz Truss, Britain’s prime minister for just six tumultuous weeks, has plunged the nation into another phase of economic uncertainty.

When Ms. Truss announced her resignation on Thursday as Conservative Party leader, saying she would stand down as prime minister, the markets that had rebelled against her fiscal policies engaged in a weak and short-lived rally. Investors were left wondering who would be the new leader and what lay ahead for Britain’s economic policy. On Friday morning, government bonds were falling, pushing yields higher, and the pound was dropping.

“It’s a leap into the unknown,” said Antoine Bouvet, an interest rates strategist at ING.

Overall the initial reaction, Mr. Bouvet added, suggested that investors expect that a new prime minister will go ahead with fiscal plans generally supported by the market. But he said it was too early to be sure.

“Let’s see who gets elected leader and what they say on fiscal policy,” he said.

The next prime minister, the third this year, will face a long list of economic challenges. Annual inflation topped 10 percent last month as food prices rose at their fastest pace in more than 40 years. Wages haven’t kept up with rising prices, bringing about a cost-of-living crisis and labor unrest. There is a deepening slump in consumer spending with data on Friday showing people were buying less than before the pandemic. Interest rates are set to rise even as the economy stagnates. And Russia’s war in Ukraine is still rippling through the global economy, especially the energy market.

provoked extraordinary volatility in markets at the end of September when her first chancellor of the Exchequer, Kwasi Kwarteng, announced a plan for widespread tax cuts and huge spending, to be financed by borrowing. Amid the highest inflation in four decades and rising interest rates, markets deemed the plan, delivered without any independent assessment, a rupture in Britain’s reputation for fiscal credibility. The pound dropped to a record low, and government bond yields shot up so violently the central bank was forced to intervene to stop a crisis in the pension funds industry.

began to settle markets. However, bond yields remain noticeably higher than they were before the September tax plan was announced, as investors still demand a higher premium to lend to Britain. On Thursday, 10-year government bond yields closed at 3.91 percent, up from 3.50 percent on Sept. 22, the day before Mr. Kwarteng’s policy announcement.

Ms. Truss’s tenure as prime minister, the shortest in British history, was undone by economic policies that harked back to the trickle-down economics of the 1980s, built on the belief that tax cuts for the wealthy were fair and would lead to investment and economic growth that would benefit everyone.

fixed rates have settled higher.

Meanwhile, the new government is likely to be focused on restoring the government’s fiscal credibility. Mr. Hunt is set to deliver a “medium-term fiscal plan,” with spending and tax measures, on Oct. 31. He said he expected to make “difficult” spending cuts as he planned to show that debt levels were falling in the medium term.

It will be accompanied by an independent assessment of the fiscal and economic impact of the policies by the Office for Budget Responsibility, a government watchdog.

While markets have cheered the government’s promise to have its policies independently reviewed, questions remain about how the gap in the public finances can be closed. Economists say there is very little room in stretched department budgets to make cuts. That has led to concerns of a return to austerity measures, reminiscent of the spending cuts after the 2008 financial crisis.

“There is a danger,” Mr. Chadha said, “that we end up with tighter fiscal policy than actually is appropriate given the shock that many households are suffering.” This could make it harder to support people suffering amid rising food and energy prices. But Mr. Chadha argues that it’s clear what needs to happen next: a complete elimination of unfunded tax cuts and careful planning on how to support vulnerable households.

The chancellor could also end up having a lot more autonomy over fiscal policy than the prime minister, he added.

“The best outcome for markets would be a rapid rallying of the parliamentary Conservative Party around a single candidate” who would validate Mr. Hunt’s approach and the timing of the Oct. 31 report, Trevor Greetham, a portfolio manager at Royal London Asset Management, said in a written comment.

Three days after the fiscal statement, on Nov. 3, Bank of England policymakers will announce their next interest rate decisions.

Bond investors are trying to parse how the central bank will react to the rapidly changing fiscal news. On Thursday, before Ms. Truss’s resignation, Ben Broadbent, a member of the central bank’s rate-setting committee, indicated that policymakers might not need to raise interest rates as much as markets currently expect. Traders are betting that the bank will raise rates above 5 percent next year, from 2.25 percent.

The bank could raise rates less than expected next year partly because the economy is forecast to shrink over the year. The International Monetary Fund predicted that the British economy would go from 3.6 percent growth this year to a 0.3 percent contraction next year.

That’s a mild recession compared with some other forecasts, but it would only compound the longstanding economic problems that Britain faced, including weak investment, low productivity growth and businesses’ inability to find employees with the right skills. These were among the challenges that Ms. Truss said she would resolve by shaking up the status quo and targeting economic growth of 2.5 percent a year.

Most economists didn’t believe that “Trussonomics,” as her policies were called, would deliver this economic growth. Instead, they predicted the policies would prolong the country’s inflation problem.

Despite the change in leadership, analysts don’t expect a big rally in Britain’s financial markets. The nation’s international standing could take a long time to recover.

“It takes years to build a reputation and one day to undo it,” Mr. Bouvet said, adding, “Investors will come progressively back to the U.K.,” but it won’t be quickly.

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A Strong Dollar Is Wreaking Havoc on Emerging Markets. A Debt Crisis Could Be Next.

The average household in Ghana is paying two-thirds more than it did last year for diesel, flour and other necessities. In Egypt, wheat is so expensive that the government has fallen half a billion dollars short of its budget for a bread subsidy it provides to its citizens. And Sri Lanka, already struggling to control a political crisis, is running out of fuel, food and medical supplies.

A strong dollar is making the problems worse.

Compared with other currencies, the U.S. dollar is the strongest it has been in two decades. It is rising because the Federal Reserve has increased interest rates sharply to combat inflation and because America’s economic health is better than most. Together, these factors have attracted investors from all over the world. Sometimes they simply buy dollars, but even if investors buy other assets, like government bonds, they need dollars to do so — in each case pushing up the currency’s value.

That strength has become much of the world’s weakness. The dollar is the de facto currency for global trade, and its steep rise is squeezing dozens of lower-income nations, chiefly those that rely heavily on imports of food and oil and borrow in dollars to fund them.

But much of the damage is already behind us.

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“We are in a fragile situation,” Mr. El-Erian said. “Country after country is flashing amber, and some are already flashing red.”

Many lower-income countries were already struggling during the pandemic.

Roughly 22 million people in Ghana, or a third of its population, reported a decline in their income between April 2020 and May 2021, according to a survey from the World Bank and Unicef. Adults in almost half of the households with children surveyed said they were skipping a meal because they didn’t have enough money. Almost three-quarters said the prices of major food items had increased.

Then came Russia’s invasion of Ukraine. The war between two of the world’s largest exporters of food and energy led to a big surge in prices, especially for importers like Ghana. Consumer prices have gone up 30 percent for the year through June, according to data from the research firm Moody’s Analytics. For household essentials, annual inflation has reached 60 percent or more this year, the S&P data shows.

To illustrate this, consider the price of a barrel of oil in dollars versus the Ghanaian cedi. At the beginning of October last year, the price of oil stood at $78.52 per barrel, rising to nearly $130 per barrel in March before falling back to $87.96 at the beginning of this month, a one-year increase of 12 percent in dollar terms. Over the same period, the Ghanaian cedi has weakened over 40 percent against the dollar, meaning that the same barrel of oil that cost roughly 475 cedi a year ago now costs over 900 cedi, almost twice as much.

Adding to the problem are large state-funded subsidies, some taken on or increased through the pandemic, that are now weighing on government finances.

Ghana’s president cut fuel taxes in November 2021, losing roughly $22 million in projected revenue for the government — the latest available numbers.

In Egypt, spending on what the government refers to as “supply commodities,” almost all of which is wheat for its long-running bread subsidy, is expected to come in at around 7 percent of all government spending this year, 12 percent higher — or more than half a billion dollars — than the government budgeted.

As costs ballooned throughout the pandemic, governments took on more debt. Ghana’s public debt grew to nearly $60 billion from roughly $40 billion at the end of 2019, or to nearly 80 percent of its gross domestic product from around 63 percent, according to Moody’s.

It’s one of four countries listed by S&P, alongside Pakistan, Nigeria and Sri Lanka, where interest payments alone account for more than half of the government’s revenues.

“We can’t forget that this is happening on the back end of a once-in-a-century pandemic in which governments, to try and support families as best they could, did borrow more,” said Frank Gill, an analyst at S&P. “This is a shock following up on another shock.”

In May, Sri Lanka defaulted on its government debt for the first time in its history. Over the past month, the governments of Egypt, Pakistan and Ghana have all reached out to the International Monetary Fund for a bailout as they struggle to meet their debt financing needs, no longer able to turn to international investors for more money.

“I don’t think there is a lot of appetite to lend money to some of these countries,” said Brian Weinstein, co-head of credit trading at Bank of America. “They are incredibly vulnerable at the moment.”

That vulnerability is already reflected in the bond market.

In 2016, Ghana borrowed $1 billion for 10 years, paying an interest rate of just over 8 percent. As the country’s financial position has worsened and investors have backed away, the yield — indicative of what it would now cost Ghana to borrow money until 2026 — has risen to above 35 percent.

It’s an untenable cost of debt for a country in Ghana’s situation. And Ghana is not alone. For bonds that also mature in 2026, yields for Pakistan have reached almost 40 percent.

“We have concerns where any country has yields that calls into question their ability to refinance in public markets,” said Charles Cohen, deputy division chief of monetary and capital market departments at IMF.

The risk of a sovereign debt crisis in some emerging markets is “very, very high,” said Jesse Rogers, an economist at Moody’s Analytics. Mr. Rogers likened the current situation to the debt crises that crushed Latin America in the 1980s — the last time the Fed sought to quell soaring inflation.

Already this year, more than $80 billion has been withdrawn from mutual funds and exchange-traded funds — two popular types of investment products — that buy emerging market bonds, according to EPFR Global, a data provider. As investors sell, the United States is often the beneficiary, further strengthening the dollar.

“It’s by far the worst year for outflows the market has ever seen,” said Pramol Dhawan, head of emerging markets at Pimco.

Even citizens in some of these countries are trying to exchange their money for dollars, fearful of what’s to come and of further currency depreciation — yet inadvertently also contributing to it.

“For pockets of emerging markets, this is a really challenging backdrop and one of the most challenging backdrops we have faced for many years,” Mr. Dhawan said.

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U.K. Borrowers React to Soaring Interest Rates in Mortgage Market

LOUGHTON, England — After nearly two decades of renting in one of the world’s most expensive cities, the Szostek family began the week almost certain that they would finally own a home.

Transplants to London who fell in love as housemates, Laetitia Anne, an operations manager from France and her husband, Maciej Szostek, a chef from Poland, had long dreamed of being homeowners. They had waited out the uncertain pandemic years and worked overtime shifts to save up for the deposit for a mortgage on a three-bedroom apartment in a neighborhood outside London. Their 13-year-old twins were excited they could finally paint the walls.

That was before British financial markets were upended, with the pound briefly hitting a record low against the dollar on Monday and interest rates soaring so rapidly that the Bank of England was forced to intervene to restore order. The economic situation was so volatile that some mortgage lenders temporarily withdrew many products.

By Tuesday evening, the Szostek family learned the bad news: The loan that they were close to securing had fallen through. Suddenly, they were scrambling to find another lender as interest rates climb higher.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

Rising home prices and income inequality priced many out of the market, but for strivers who aspired to homeownership, the latest ruptures to the economy hit hard. The release of the new government’s sweeping plan for debt-funded tax cuts led to a big uptick in interest rates this week that roiled the mortgage market. Many homeowners are calculating their potential future mortgage payments with alarm, amid soaring energy and food prices and a general cost-of-living crisis.

Before they were informed they were no longer eligible, the family had been in the final stages of applying for a five-year fixed-rate mortgage on an apartment priced at £519,000, or around $576,000, in the leafy parish of Loughton, a town about 40 minutes north of London by train where the streets fill with students in the afternoon and the properties span from lower-end apartments to million-pound mansions.

according to the Financial Conduct Authority. And more than a third of all mortgages are on fixed rates that expire within the next two years, most likely exposing those borrowers to higher rates, too. By contrast, the vast majority of mortgages in the United States are locked in for 30-year fixed terms.

And the abrupt surge in interest rates could threaten to set off a housing market crisis, analysts at Oxford Economics wrote in a note on Friday, adding that if mortgage rates stayed at the levels now being offered, that would suggest that house prices were around 30 percent overvalued “based on the affordability of mortgage payment.”

“This just adds a significant further strain to finances in the order of hundreds of pounds a month,” said David Sturrock, a senior research economist at the Institute for Fiscal Studies, adding that the squeeze on household budgets will affect the broader economy.

Uncertainty and even panic was clear this week, with many homeowners seeking financial advice. Mortgage brokers said they were receiving a higher volume of inquiries than normal from people stressed about refinancing their loans.

“You can feel the fear in people’s voices,” said Caroline Opie, a mortgage broker working with Ms. Anne who said she had not seen this level of worry in a long time. One couple this week even called her the morning of their wedding, she said, to set an appointment to refinance their mortgage next week.

the war in Ukraine. “Something has got to give,” he said. “Prices are too high anyway.”

To save for the deposit, Mr. Szostek, 37, picked up construction shifts and cleaning jobs when restaurants closed during Covid-19 lockdowns. A £5,000 inheritance from Ms. Anne’s grandfather went into their deposit fund. At a 3.99 percent interest rate, the mortgage repayments were set to be about £2,200 a month.

“I wanted to feel at home for real,” said Ms. Anne, adding she would have been the first in her family to own a property. Mr. Szostek called it “a lifelong dream.”

On Wednesday night, that dream still seemed in reach: The mortgage dealer Ms. Opie had found another loan, which they rushed to apply for.

The higher interest rate — 4.6 percent — will mean their new monthly mortgage payment will be £2,400, the upper limit of what the Szostek family can afford. Still, they felt lucky to secure anything at all, hoping it will mean their promises to their children — of bigger bedrooms, more space, freedom to decorate how they like — will materialize.

They would wait to celebrate, Mr. Szostek said, until they had the keys in hand.

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How a Hospital Chain Used a Poor Neighborhood to Turn Huge Profits

RICHMOND, Va. — In late July, Norman Otey was rushed by ambulance to Richmond Community Hospital. The 63-year-old was doubled over in pain and babbling incoherently. Blood tests suggested septic shock, a grave emergency that required the resources and expertise of an intensive care unit.

But Richmond Community, a struggling hospital in a predominantly Black neighborhood, had closed its I.C.U. in 2017.

It took several hours for Mr. Otey to be transported to another hospital, according to his sister, Linda Jones-Smith. He deteriorated on the way there, and later died of sepsis. Two people who cared for Mr. Otey said the delay had most likely contributed to his death.

the hospital’s financial data.

More than half of all hospitals in the United States are set up as nonprofits, a designation that allows them to make money but avoid paying taxes. Although Bon Secours has taken a financial hit this year like many other hospital systems, the chain made nearly $1 billion in profit last year at its 50 hospitals in the United States and Ireland and was sitting on more than $9 billion in cash reserves. It avoids at least $440 million in federal, state and local taxes every year that it would otherwise have to pay, according to an analysis by the Lown Institute, a nonpartisan think tank.

In exchange for the tax breaks, the Internal Revenue Service requires nonprofit hospitals to provide a benefit to their communities. But an investigation by The New York Times found that many of the country’s largest nonprofit hospital systems have drifted far from their charitable roots. The hospitals operate like for-profit companies, fixating on revenue targets and expansions into affluent suburbs.

borrowing tricks from business consultants, have trained staff to squeeze payments from poor patients who should be eligible for free care.

John M. Starcher Jr., made about $6 million in 2020, according to the most recent tax filings.

“Our mission is clear — to extend the compassionate ministry of Jesus by improving the health and well-being of our communities and bring good help to those in need, especially people who are poor, dying and underserved,” the spokeswoman, Maureen Richmond, said. Bon Secours did not comment on Mr. Otey’s case.

In interviews, doctors, nurses and former executives said the hospital had been given short shrift, and pointed to a decade-old development deal with the city of Richmond as another example.

In 2012, the city agreed to lease land to Bon Secours at far below market value on the condition that the chain expand Richmond Community’s facilities. Instead, Bon Secours focused on building a luxury apartment and office complex. The hospital system waited a decade to build the promised medical offices next to Richmond Community, breaking ground only this year.

‘Glorified Emergency Room’

founded in 1907 by Black doctors who were not allowed to work at the white hospitals across town. In the 1930s, Dr. Jackson’s grandfather, Dr. Isaiah Jackson, mortgaged his house to help pay for an expansion of the hospital. His father, also a doctor, would take his children to the hospital’s fund-raising telethons.

Cassandra Newby-Alexander at Norfolk State University.

got its first supermarket.

according to research done by Virginia Commonwealth University. The public bus route to St. Mary’s, a large Bon Secours facility in the northwest part of the city, takes more than an hour. There is no public transportation from the East End to Memorial Regional, nine miles away.

“It became impossible for me to send people to the advanced heart valve clinic at St. Mary’s,” said Dr. Michael Kelly, a cardiologist who worked at Richmond Community until Bon Secours scaled back the specialty service in 2019. He said he had driven some patients to the clinic in his own car.

Richmond Community has the feel of an urgent-care clinic, with a small waiting room and a tan brick facade. The contrast with Bon Secours’s nearby hospitals is striking.

At the chain’s St. Francis Medical Center, an Italianate-style compound in a suburb 18 miles from Community, golf carts shuttle patients from the lobby entrance, past a marble fountain, to their cars.

after the section of the federal law that authorized it, allows hospitals to buy drugs from manufacturers at a discount — roughly half the average sales price. The hospitals are then allowed to charge patients’ insurers a much higher price for the same drugs.

The theory behind the law was that nonprofit hospitals would invest the savings in their communities. But the 340B program came with few rules. Hospitals did not have to disclose how much money they made from sales of the discounted drugs. And they were not required to use the revenues to help the underserved patients who qualified them for the program in the first place.

In 2019, more than 2,500 nonprofit and government-owned hospitals participated in the program, or more than half of all hospitals in the country, according to the independent Medicare Payment Advisory Commission.

in wealthier neighborhoods, where patients with generous private insurance could receive expensive drugs, but on paper make the clinics extensions of poor hospitals to take advantage of 340B.

to a price list that hospitals are required to publish. That is nearly $22,000 profit on a single vial. Adults need two vials per treatment course.

work has shown that hospitals participating in the 340B program have increasingly opened clinics in wealthier areas since the mid-2000s.

were unveiling a major economic deal that would bring $40 million to Richmond, add 200 jobs and keep the Washington team — now known as the Commanders — in the state for summer training.

The deal had three main parts. Bon Secours would get naming rights and help the team build a training camp and medical offices on a lot next to Richmond’s science museum.

The city would lease Bon Secours a prime piece of real estate that the chain had long coveted for $5,000 a year. The parcel was on the city’s west side, next to St. Mary’s, where Bon Secours wanted to build medical offices and a nursing school.

Finally, the nonprofit’s executives promised city leaders that they would build a 25,000-square-foot medical office building next to Richmond Community Hospital. Bon Secours also said it would hire 75 local workers and build a fitness center.

“It’s going to be a quick timetable, but I think we can accomplish it,” the mayor at the time, Dwight C. Jones, said at the news conference.

Today, physical therapy and doctors’ offices overlook the football field at the training center.

On the west side of Richmond, Bon Secours dropped its plans to build a nursing school. Instead, it worked with a real estate developer to build luxury apartments on the site, and delayed its plans to build medical offices. Residents at The Crest at Westhampton Commons, part of the $73 million project, can swim in a saltwater pool and work out on communal Peloton bicycles. On the ground floor, an upscale Mexican restaurant serves cucumber jalapeño margaritas and a Drybar offers salon blowouts.

have said they plan to house mental health, hospice and other services there.

a cardiologist and an expert on racial disparities in amputation, said many people in poor, nonwhite communities faced similar delays in getting the procedure. “I am not surprised by what’s transpired with this patient at all,” he said.

Because Ms. Scarborough does not drive, her nephew must take time off work every time she visits the vascular surgeon, whose office is 10 miles from her home. Richmond Community would have been a five-minute walk. Bon Secours did not comment on her case.

“They have good doctors over there,” Ms. Scarborough said of the neighborhood hospital. “But there does need to be more facilities and services over there for our community, for us.”

Susan C. Beachy contributed research.

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TikTok’s CEO Navigates the Limits of His Power

TikTok recently tried to tamp down concerns from U.S. lawmakers that it poses a national security threat because it is owned by the Chinese internet company ByteDance. The viral video app insisted it had an arm’s-length relationship with ByteDance and that its own executive was in charge.

“TikTok is led by its own global C.E.O., Shou Zi Chew, a Singaporean based in Singapore,” TikTok wrote in a June letter to U.S. lawmakers.

But in fact, Mr. Chew’s decision-making power over TikTok is limited, according to 12 former TikTok and ByteDance employees and executives.

Zhang Yiming, ByteDance’s founder, as well as by a top ByteDance strategy executive and the head of TikTok’s research and development team, said the people, who declined to be identified for fear of reprisals. TikTok’s growth and strategy, which are led by ByteDance teams, report not to Mr. Chew but to ByteDance’s office in Beijing, they said.

increasingly questioned TikTok’s data practices, reigniting a debate over how the United States should treat business relationships with foreign companies.

On Wednesday, TikTok’s chief operating officer testified in Congress and downplayed the app’s China connections. On Thursday, President Biden signed an executive order to sharpen the federal government’s powers to block Chinese investment in tech in the United States and to limit its access to private data on citizens.

a March interview with the billionaire investor David Rubenstein, whose firm, the Carlyle Group, has a stake in the Chinese giant. Mr. Chew added that he had become familiar with TikTok as a “creator” and amassed “185,000 followers.” (He appeared to be referring to a corporate account that posted videos of him while he was an executive at Xiaomi, one of China’s largest phone manufacturers.)

Jinri Toutiao. The two built a rapport, and an investment vehicle associated with Mr. Milner led a $10 million financing in Mr. Zhang’s company that same year, three people with knowledge of the deal said.

The news aggregator eventually became ByteDance — now valued at around $360 billion, according to PitchBook — and owns TikTok; its Chinese sister app, Douyin; and various education and enterprise software ventures.

By 2015, Mr. Chew had joined Xiaomi as chief financial officer. He spearheaded the device maker’s 2018 initial public offering, led its international efforts and became an English-speaking face for the brand.

“Shou grew up with both American and Chinese language and culture surrounding him,” said Hugo Barra, a former Google executive who worked with Mr. Chew at Xiaomi. “He is objectively better positioned than anyone I’ve ever met in the China business world to be this incredible dual-edged executive in a Chinese company that wants to become a global powerhouse.”

In March 2021, Mr. Chew announced that he was joining ByteDance as chief financial officer, fueling speculation that the company would go public. (It remains privately held.)

appointed Mr. Chew as chief executive, with Mr. Zhang praising his “deep knowledge of the company and industry.” Late last year, Mr. Chew stepped down from his ByteDance role to focus on TikTok.

Kevin Mayer, a former Disney executive, left after the Trump administration’s effort to sunder the app from its Chinese parent. China was also cracking down on its domestic internet giants, with Mr. Zhang resigning from his official roles at ByteDance last year. Mr. Zhang remains involved in decision making, people with knowledge of ByteDance said.

Mr. Chew moved to establish himself as TikTok’s new head during visits to the app’s Los Angeles office in mid-2021. At a dinner with TikTok executives, he sought to build camaraderie by keeping a Culver City, Calif., restaurant open past closing time, three people with knowledge of the event said. He asked attendees if he should buy the establishment to keep it open longer, they said.

a TikTok NFT project involving the musical artists Lil Nas X and Bella Poarch. He reprimanded TikTok’s global head of marketing on a video call with Beijing-based leaders for ByteDance after some celebrities dropped out of the project, four people familiar with the meeting said. It showed that Mr. Chew answered to higher powers, they said.

Mr. Chew also ended a half-developed TikTok store off Melrose Avenue in Los Angeles, three people familiar with the initiative said. TikTok briefly explored obtaining the naming rights of the Los Angeles stadium formerly known as the Staples Center, they said.

He has also overseen layoffs of American managers, two people familiar with the decisions said, while building up teams related to trust and safety. In its U.S. marketing, the app has shifted its emphasis from a brand that starts trends and conversations toward its utility as a place where people can go to learn.

In May, Mr. Chew flew to Davos, Switzerland, for the World Economic Forum, speaking with European regulators and ministers from Saudi Arabia to discuss digital strategy.

June letter to U.S. lawmakers, he noted that ByteDance employees in China could gain access to the data of Americans when “subject to a series of robust cybersecurity controls.” But he said TikTok was in the process of separating and securing its U.S. user data under an initiative known as Project Texas, which has the app working with the American software giant Oracle.

“We know we’re among the most scrutinized platforms,” Mr. Chew wrote.

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Prenups Aren’t All Bad. Here’s Why They’re Becoming More Common

Prenups can be a touchy subject, but the stigma is fading, with some experts saying it could be a smart move for anyone getting married.

Prenups, or pre-nuptial agreements, don’t always have the most positive connotation.

While they are legal agreements entered into by couples before marriage — often to keep finances separate despite being otherwise legally joined — they can be a touchy subject for couples starting to build a life together.

But that stigma seems to be fading away. A new report from The Harris Poll said that this year, 15% of U.S. adults surveyed signed a prenup, which is up from just 3% in 2010. It also found that 35% of unmarried people say they’re likely to sign a prenup in the future.

In the Americas, prenups go back to 17th century Canada, when French colonist men married women who came to the country with financial assistance from King Louis XIV. These women were so highly sought after that they were able to convince their husbands to sign prenups. This came at a time when men outnumbered women, so women had a leg up. Eventually that gender ratio evened out, and prenups went away.

They got popular again in the U.S. much later. A 1970 Florida case Posner v Posner ruled that prenups should be a standard practice.

One big possible factor in their usage today is the fact that millennials now have more debt than previous generations. One survey found that nearly three quarters of millennials have over $100,000 in debt on average, not including mortgages.

The most common debt is credit card debt followed by student loans. There’s also medical debt and personal loans.

Prenups can protect your partner from taking on your debt in the case of death of divorce. In some states, your spouse can be held accountable for all of your debt acquired during the marriage.

Kelly Chang Rickert is a family law attorney in California who specializes in prenups, and she sees debt come up in divorce cases all the time.

“It’s not unusual for me to have a divorce where one side has a Neiman Marcus card and charged up $70,000, and the other side… they are responsible for half the debt because it was acquired during the marriage,” Chang Rickert said.

But the breakdown of who’s responsible for what differs from state to state. For instance, some states are community property states, meaning unless you sign a prenup, everything acquired during the marriage must be split 50/50. That’s how things work in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In other states, laws differ. There can be different rules around what makes prenups enforceable. For example, in Connecticut there’s a specific window of time between when the prenup is presented and when the marriage happens for it to hold up. So, it’s important to see what a state requires beforehand.

Another reason more people could be getting prenups is because they’re getting married later in life and have more assets to protect coming into the marriage. According to Pew, in 2019 the average age a man first got married was 30, and for women it was 28. That’s three years later for both men and women compared to 2003 and four years later than 1987.

“These days, a lot of people work for themselves,” Chang Rickert said. “If you’re a social media influencer or you’re an artist or you’re a writer, a lot of people make money off their creative efforts. So if they have a business coming into the marriage, a lot of them don’t want to share that in case it doesn’t work out.”

This leads to the question of how finances are split. This determines what a prenup could look like. In the 70s and 80s, it was common practice to put all your money into shared accounts with your spouse. But over the past several years, the number of married couples who keep some of their finances separate has risen.

Experts say if couples have a joint account for things they share, they can opt to keep everything else separate, and in the case of divorce, they’ll only have to worry about dividing the joint account. But it’s important to note that separate accounts won’t stay separate unless a prenup is signed stating that.

“Even if you don’t have a prenup, you kind of do: It’s called the law,” Chang Rickert said. “So if you don’t have a prenup, you’re just going by what your state law says. California says community property, so your debt is my debt. That’s what the state law says. So if you don’t like that, then you should craft your own.”

Rickert Chang recommends getting a prenup ideally a year before your wedding. She also points out a few pros of prenups. For one, the stereotypical scenario we see in movies where a rich guy asks his fiancé to sign a prenup — it could actually be a good thing.

“If you were smart about it, and the guy’s like, ‘I want you to sign a prenup saying I don’t want community,’ then what you could do is you can negotiate it,” Chang Rickert said. “You could be like, ‘Fine, I won’t touch your stuff, but in lieu of that, I would like 50,000 a year or 1,000, 100,000 a year,’ and that way you can negotiate, and you can actually get money by agreeing to sign a prenup.”

There’s also certain professions where it’s strongly encouraged to protect the other person.

“Definitely lawyers or doctors, I think you should always get prenup,” Chang Rickert said. “Not just only because it’s my business — I don’t want you taking half of it, but also it’s a business that I can get sued on. So, I would like to protect you from any lawsuits that I might get.”

As prenups have become more common, more people have dug into this topic on social media platforms like TikTok. Chang Rickert has an account of her own where she educates people on prenups to help break down myths and stigmas, including that they aren’t just for rich people and not just in case of divorce.

Now, there aren’t necessarily more divorces now. CDC data shows that divorces declined between 2000 and 2020.

However in the case of a divorce, not signing a prenup could really pile on to the cost of divorce, which can already be pretty high, costing between $15,000 to $20,000 on average.

: newsy.com

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Florida Democrats Choose Rep. Crist To Challenge Gov. Desantis

Rep. Charlie Crist defeated Nikki Fried, who staked out a more progressive campaign, in the Florida governor race.

U.S. Rep. Charlie Crist won the Democratic nomination for governor in Florida on Tuesday, putting him in position to challenge Gov. Ron DeSantis this fall in a campaign that the Republican incumbent is eyeing as the first step toward a potential White House run.

U.S. Rep. Val Demings seized the Democratic nomination to challenge Republican Sen. Marco Rubio this fall. Demings, a former police chief and a prodigious political fundraiser, has a chance to become Florida’s first Black female senator.

In selecting Crist in the race for governor, Florida Democrats sided with a candidate backed by many in the party’s establishment who viewed him as the safest choice, even after he lost his previous two statewide elections. The 66-year-old already served one term as a Republican governor more than a decade ago before becoming a Democrat. His moderate stances could appeal to voters in Florida’s teeming suburbs as Democrats seek to reverse a losing pattern in a state that was recently seen as a perennial political battleground.

Crist defeated Nikki Fried, the state agriculture commissioner. She staked out a more progressive campaign and was particularly vocal in defending abortion and LGBTQ rights. The 44-year-old cast herself as “something new” and hoped to become Florida’s first female governor. In a sign of the party’s meager standing in Florida, she’s currently the only Democrat holding statewide office.

But the race ultimately centered on the political future of DeSantis, who emerged from a narrow victory four years ago to become one of the most prominent figures in GOP politics. His hands-off approach to the pandemic and eagerness to lean into divides over race, gender and LGBTQ rights have resonated with many Republican voters who see DeSantis as a natural heir to former President Donald Trump.

DeSantis’ reelection effort is widely assumed to be a precursor to a presidential run in 2024, adding to a sense of urgency among Democrats to blunt his rise now.

The Florida contest concludes the busiest stretch of primaries this year, which featured contests in 18 states over just 22 days. In that span, Republicans from Arizona to Alaska have supported contenders who embraced Trump’s lies that the 2020 election was stolen, an assertion roundly rejected by elections officials, the former president’s attorney general and judges he appointed.

And for the most part, Democrats have avoided brutal primary fights — with some exceptions. Voters in New York Tuesday night decided congressional primaries that featured two powerful Democratic committee chairs, Carolyn Maloney and Jerry Nadler, competing for the same seat and other incumbents fending off challenges from the left.

Democrats are entering the final weeks ahead of the midterms with a sense of cautious optimism, hoping the Supreme Court’s decision overturning a woman’s constitutional right to an abortion will energize the party’s base. But Democrats still face tremendous headwinds, including economic uncertainty and the historic reality that most parties lose seats in the first midterm after they’ve won the White House.

The dynamics are especially challenging for Democrats in Florida, one of the most politically divided states in the U.S. Its last three races for governor were decided by 1 percentage point or less. But the state has steadily become more favorable to Republicans in recent years.

For the first time in modern history, Florida has more registered Republicans — nearly 5.2 million — than Democrats, who have nearly 5 million registered voters. Fried serves as the only Democrat in statewide office. And Republicans have no primary competition for four of those five positions – governor, U.S. Senate, attorney general and chief financial officer — which are all held by GOP incumbents.

Democrats hope that Demings, who defeated a little-known candidate in her Senate primary Tuesday, can unseat the state’s senior U.S. senator, Republican Marco Rubio, this fall. But for now, the party’s national leadership is prioritizing competitive Senate contests in other states, including neighboring Georgia, Arizona and Pennsylvania.

Demings sounded an optimistic note as she reflected on her unlikely life story.

“Together, I really do believe this daughter of a maid and janitor who is not supposed to be standing here tonight — I really do believe that together we can do anything,” she said.

In Florida’s governor’s race, the Supreme Court’s abortion decision animated the final weeks of the Democratic primary.

Fried promoted herself as the only true abortion-rights supporter in the race, seizing on Crist’s appointment of two conservative Supreme Court justices while he was governor.

The conservative-leaning court will soon decide whether the Republican-backed state legislature’s law to ban abortions after 15 weeks is constitutional. Florida’s new abortion law is in effect, with exceptions if the procedure is necessary to save the pregnant woman’s life, to prevent serious injury or if the fetus has a fatal abnormality. It does not allow exemptions in cases of rape, incest or human trafficking.

Crist insisted he is “pro-choice” and highlighted a bill he vetoed as governor in 2010 that would have required women seeking a first-trimester abortion to get and pay for an ultrasound exam.

“It is a woman’s right to choose,” Crist said. “My record is crystal clear, and for my opponent to try to muddy that up is unconscionable, unfair and unwise.”

DeSantis and Fried spent several hours together Tuesday morning during a Cabinet meeting at the Tallahassee statehouse. They kept things cordial during the hourslong event, which placed Fried seats away from the governor as they heard reports from agency heads on state finances, contracting and other matters.

DeSantis shook Fried’s hand as the meeting concluded and told her “good luck” before criticizing her campaign and predicting her loss in brief remarks to reporters.

“I think that you know she had an opportunity as being the only Democrat elected statewide to exercise some leadership and maybe get some things done and instead she’s used her time to try and smear me on a daily basis, that’s all she does,” DeSantis said of Fried.

After the meeting, Fried told reporters she thought the governor had scheduled the meeting as a way to sideline her during her final day of campaigning.

“Of course it’s not a coincidence,” she said of the meeting’s timing. “I think that he is scared of me winning tonight so he’s doing everything in his power to keep me off the campaign trail today.”

Additional reporting by The Associated Press.

: newsy.com

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Newsy Timeline: A Messy Week For Donald Trump

By Andrea Diaz

and Rodney Young
August 14, 2022

This is your Newsy Timeline, where we highlight the week’s biggest and most compelling stories.

He may live in the Sunshine State, but legal battles clouded Donald Trump’s week.

This week’s Newsy Timeline highlights major developments involving the former U.S. President that stretched from South Florida, to Washington D.C. and New York.

Monday: FBI executes search warrant at Trump’s Mar-a-Lago home.

The search was part of an ongoing investigation into whether the former president took classified records from the White House to Mar-a-Lago illegally.

Trump maintains he provided the national archives with presidential records in an “ordinary and routine process.”

This is the first time in U.S. history federal agents have searched a former president’s private home.

Trump’s lawyer says about a dozen boxes of items were removed.

Tuesday: Appeals court votes in favor of releasing Trump’s tax records.

The fight to reveal the former president’s tax returns is moving forward, as a federal appeals court has approved a request that allows the House Ways and Means Committee to obtain Trump’s tax returns from the IRS.

The decision from the D.C. Circuit Court is a major defeat for Trump, who has spent years trying to prevent the release of his tax information.

However, Trump lawyers could appeal the decision and continue to extend the litigation.

Wednesday: Trump invoked his Fifth Amendment right in a deposition.

Trump invoked his Fifth Amendment right against self-incrimination and refused to answer any questions from New York’s attorney general, during a deposition.

The deposition comes following a three-year civil investigation into the Trump organization’s finances.

Attorney General Letitia James says there is evidence the organization used false information to obtain loans, accusations the Trump organization denies.

Prior to the deposition, Trump himself posted about the situation on Truth Social, calling it a “continuation of the greatest witch hunt in U.S. history.”

Thursday: The DOJ seeks to unseal Trump’s home raid warrant.

Attorney General Merrick Garland announced the Department of Justice asked a court to unseal the search warrant and property receipt from Monday’s Mar-a-Lago raid.

Garland stated the substantial public interest in the case as a reason to unseal the warrant, which would include details about what crimes federal law enforcement officials suspect were committed.

Garland also said he personally approved the search warrant.

Friday: Judge unseals warrant and inventory related to Mar-a-Lago search.

The warrant revealed FBI agents removed 11 sets of classified information from Trump’s property, including some marked as top secret.

The documents also confirm the FBI removed classified documents that were only meant to be kept in secure government facilities.

The revelations undercut Trump and his allies’ claims that the search warrant was baseless.

The DOJ is investigating if Trump violated three federal laws, including espionage, obstruction of justice and criminal handling of government records.

Saturday: Trump’s lawyer told the DOJ in June that all classified material was returned.

At least one of Trump’s lawyers in June said all classified material at Mar-a-Lago had been returned to the government, according to a report from The New York Times.

That written statement reportedly came after a Justice Department official had stopped by the president’s private residence.

The former president is claiming on his social media site that the declassified documents found at Mar-a-Lago were declassified before leaving the White House. He did not provide any details or evidence.

Trump also claims investigators could have had the documents any time they wanted to, but this new reporting suggests investigators were told in June that everything was already handed over.

: newsy.com

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U.S. Inflation Slips From 40-Year Peak But Remains High At 8.5%

By Associated Press

and Newsy Staff
August 10, 2022

Consumer prices jumped 8.5% in July compared with a year earlier, down from a 9.1% year-over-year jump in June, according to government data.

Falling gas prices gave Americans a slight break from the pain of high inflation last month, though the surge in overall prices slowed only modestly from the four-decade high it reached in June.

Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year jump in June. On a monthly basis, prices were unchanged from June to July, the smallest such rise more than two years.

Still, prices have risen across a wide range of goods and services, leaving most Americans worse off. Average paychecks are rising faster than they have in decades — but not fast enough to keep up with accelerating costs for such items as food, rent, autos and medical services.

Last month, excluding the volatile food and energy categories, so-called core prices rose just 0.3% from June, the smallest month-to-month increase since April. And compared with a year ago, core prices rose 5.9% in July, the same year-over-year increase as in June.

President Joe Biden has pointed to declining gas prices as a sign that his policies — including large releases of oil from the nation’s strategic reserve — are helping lessen the higher costs that have strained Americans’ finances, particularly for lower-income Americans and Black and Hispanic households.

Yet Republicans are stressing the persistence of high inflation as a top issue in the midterm congressional elections, with polls showing that elevated prices have driven President Biden’s approval ratings down sharply.

On Friday, the House is poised to give final congressional approval to a revived tax-and-climate package pushed by the president and Democratic lawmakers. Economists say the measure, which its proponents have titled the Inflation Reduction Act, will have only a minimal effect on inflation over the next several years.

While there are signs that inflation may ease in the coming months, it will likely remain far above the Federal Reserve’s 2% annual target well into next year or even into 2024. Chair Jerome Powell has said the Fed needs to see a series of declining monthly core inflation readings before it would consider pausing its rate hikes. The Fed has raised its benchmark short-term rate at its past four rate-setting meetings, including a three-quarter-point hike in both June and July — the first increases that large since 1994.

A blockbuster jobs report for July that the government issued Friday — with 528,000 jobs added, rising wages and an unemployment rate that matched a half-century low of 3.5% — solidified expectations that the Fed will announce yet another three-quarter-point hike when it next meets in September. Robust hiring tends to fuel inflation because it gives Americans more collective spending power.

One positive sign, though, is that Americans’ expectations for future inflation have fallen, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is highly visible to most consumers.

Inflation expectations can be self-fulfilling: If people believe inflation will stay high or worsen, they’re likely to take steps — such as demanding higher pay — that can send prices higher in a self-perpetuating cycle. Companies then often raise prices to offset their higher labor costs. But the New York Fed survey found that Americans foresee lower inflation one, three and five years from now than they did a month ago.

Supply chain snarls are also loosening, with fewer ships moored off Southern California ports and shipping costs declining. Prices for commodities like corn, wheat and copper have fallen steeply.

Yet in categories where price changes are stickier, such as rents, costs are still surging. One-third of Americans rent their homes, and higher rental costs are leaving many of them with less money to spend on other items.

Data from Bank of America, based on its customer accounts, shows that rent increases have fallen particularly hard on younger Americans. Average rent payments for so-called Generation Z renters (those born after 1996) jumped 16% in July from a year ago, while for baby boomers the increase was just 3%.

Stubborn inflation isn’t just a U.S. phenomenon. Prices have jumped in the United Kingdom, Europe and in less developed nations such as Argentina.

In the U.K., inflation soared 9.4% in June from a year earlier, a four-decade high. In the 19 countries that use the euro currency, it reached 8.9% in June compared with a year earlier, the highest since record-keeping for the euro began.

Additional reporting by The Associated Press.

: newsy.com

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Biden Administration’s Bid to Cap Russia Oil Prices Faces Resistance

WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.

The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.

But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.

Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”

He added: “We’ve said it won’t work. We’ve explained to everybody why.”

That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.

“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.

The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.

not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.

restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.

senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”

But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.

John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.

“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”

Matina Stevis-Gridneff contributed reporting from Brussels.

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