October 29, 2019
America’s Middle Class Is Addicted to a New Kind of Credit
“The payday-loan business was in decline. Regulators were circling, storefronts were vanishing and investors were abandoning the industry’s biggest companies en masse. And yet today, just a few years later, many of the same subprime lenders that specialized in the debt are promoting an almost equally onerous type of credit. It’s called the online installment loan, a form of debt with much longer maturities but often the same sort of crippling, triple-digit interest rates. If the payday loan’s target audience is the nation’s poor, then the installment loan is geared to all those working-class Americans who have seen their wages stagnate and unpaid bills pile up in the years since the Great Recession. In just a span of five years, online installment loans have gone from being a relatively niche offering to a red-hot industry. Subprime borrowers now collectively owe about $50 billion on installment products, according to credit reporting firm TransUnion. In the process, they’re helping transform the way that a large swathe of the country accesses debt. And they have done so without attracting the kind of public and regulatory backlash that hounded the payday loan. “Installment loans are a cash cow for creditors, but a devastating cost to borrowers,” said Margot Saunders, senior counsel for the National Consumer Law Center, a nonprofit advocacy group.”
U.K. Set for December Election in Bid to Break Brexit Deadlock
“The U.K. is set for its third general election since 2015 as political leaders attempt to resolve the Brexit crisis paralyzing the country. Prime Minister Boris Johnson won the backing of opposition Labour Party leader Jeremy Corbyn for a snap poll to take place between Dec. 9 and 12. While the date is yet to be confirmed, the vote is set to become a proxy referendum on European Union membership. It is likely to be the last chance voters have to choose between parties offering to cancel Brexit or force through a hard split at any cost. The pound pared losses as traders judged an early election would go ahead, and on speculation it could produce a Conservative Party majority to end the Brexit deadlock. “This is a once in a generation chance to build a country for the many, not the few,” Corbyn said on Twitter to announce Labour’s support for the early poll. “It’s time.” Meanwhile, the haggling over the exact date continues. Johnson doesn’t consider a poll on Dec. 9 as logistically possible, according to his spokesman. That means Dec. 10 or 11 could emerge as a viable compromise. Members of Parliament will vote Tuesday on whether to endorse the plan. It will be the fourth time the prime minister has tried to persuade the House of Commons to back his call for a snap election.”
Pig Disease Means China Will Struggle to Meet U.S. Import Target
“President Donald Trump touted China’s promise to buy as much as $50 billion in agricultural goods over two years in a trade deal, a boost to Midwest soybean farmers suffering from the current slump in trade. But a deadly disease in China has killed off many of the pigs who would have eaten those American soybeans, possibly putting that target out of reach. “Meeting this target will be quite challenging because around 70% of China’s agricultural imports from the U.S. before the trade war were soybeans” and almost all soybean imported into China are used for animal feed, Nomura economists led by Lu Ting wrote in a research note. Hog stocks are down about 40% in the last year, and even though farmers are restocking it will take a while to return to earlier levels. China aims to buy at least $20 billion of agricultural products in a year if it signs a partial trade deal with the U.S., and would consider boosting purchases further in future rounds of talks, people familiar with the matter told Bloomberg last week. That would take China’s imports of U.S. farm goods back to around 2017 levels, before Trump began a tit-for-tat tariff feud with Beijing. In the second year of a potential final deal, purchases could rise to $40 billion to $50 billion, if Trump removed remaining punitive tariffs, said the people, who asked not to be named because talks are private. But Chinese negotiators have made clear that their purchases will be based on real demand, and if there’s fewer animals to eat the feed, then that means imports may not rise as much as some expect. “Even considering the rising output of poultry and other meat, we expect a 15% contraction in soybean import demand in 2020” from the level in 2017, Nomura said, even if China adds to its strategic reserves.”
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