If you live in the United States, an common weekend chore is a trip to Costco, the most beloved store in the country, to conveniently purchase a five litre bottle of ketchup, a five pound bag of your favourite candy or 10 toothbrushes in one packet. Abundant quantities mean more bang for your buck. The pushers of hundreds of carts rolling out of the store seek sense of security that ensuring that will never run out of ketchup and that by buying in bulk, they are getting a great deal. While big box stores have gradually morphed into consumer marketplaces, whether you are a household of two or ten you can buy all you want to the delight of your heart. A trip to Costco can make you forget all about the world, be it just for 30 minutes. 

Despite the world being full of commodities, scarcity is a living reality for millions in America. Economic wellbeing is not a certainty in a capitalistic society like the United States. Capitalism inherently is not a discriminatory economic model, as it is based on the core fundamentals of free enterprise and competitive marketplaces. There is no dearth of free enterprise in the US; however, the element of competitiveness is gradually depleting. One big corporation is swallowing another company to create a bigger giant than before, just to benefit from bigger breaks. America is the land of opportunity; There are countless anecdotal stories of those who have been able to make fortunes out of nothing. However those that are successfully able to accumulate wealth remain a few in number; while those who are economically vulnerable, remain vulnerable. While Elon Musk and Jeff Bezos are in efforts to launch rockets into  outer space, 1 in 7 American children goes hungry to bed. For thousands of families, school closures during the global Covid-19 pandemic did not mean just entail learning gaps, but meant one less meal for their child. Vulnerable economic populations deserving some share of the abundance are often described as “free riders”. ‘Each for its own self’ is the core principal of the American economy.

Unfortunately, one’s zip code and where he or she resides determines one’s economic and social standing in the system. A zip code with a higher percentage of low income and minority populations translates into poor infrastructure, inadequate healthcare services, poorly rated public schools, and housing scarcity, making poverty a multi-generational cyclical issue. In mainstream America, a bricks and mortar store has aisles and aisles of cereal types, yet a good number of the population cannot afford even cereal – there’s a plethora of variety, but it remains inaccessible to many. One in seven Americans are projected to have resources below the poverty line in 2021. The poverty rates for 2021 are projected at 13.7%, with 4.4 percent of people in deep poverty. Black people and Hispanic people are experiencing poverty at about twice the rate of white people. Poor neighbourhoods visually depict scarcity; there are usually more liquor stores than fresh produce stores, more cash checking shops than banks, and less affordable housing than mainstream America suburbs.

Public Housing projects have started to emerge in the 1960s promising  minority demographics economic security. Somehow, they became a major hindrance to economic freedom for the same communities. Suburban areas with a largely white demographic developed into small towns and cities of their own with ample access to supermarkets and fancier establishments, while those living in urban minority populations remained yearning for the basics. In addition, poor minority populations have to carry the heavy burden of strong, undermining stereotypes, illiteracy and less opportunistic attitudes. This cause and effect of economic disparity contributes to the systematic discrimination. The challenge of mental and physical escape from the zip code boundaries makes it not a fair game. As in a reversal of fate, today the same minority groups are experiencing gentrification in major cities and poorer communities are being further pushed out to areas with little to no economic resources. 

The financial rescue or the stimulus package for low-income groups and businesses hit by Covid is criticised at almost all affluent dinner tables. While Walmart and Best Buy have had to slightly adjust their business models, the blue collar workers or businesses do not have similar conveniences; the latter have been hit harder. Big companies are finding new savings by facilitating a remote work environment, and the shift to remote work seems inevitable. My no-commute work will be a convenient, flexible and often described as creative solution. But, this solution is not available by service workers such as bus drivers, gas station workers, or security guards whose physical presence is compulsory. What is profitable to one group will result in less for another. Access to education, public services, investment in infrastructure will further decline due to the widening digital and economic divide. 

Political leaders advocating for social support are ridiculed as being socialists who are working against the core American values. Historically, economic decisions have been more favourable for wealthier America. Social welfare is considered un-American.  Political leaders are shy to put forward any agenda for free education, health care or taxes for the wealthy; and those who do, often lose. The question of how to address scarcity for millions in an abundant land such as America requires a policy, economical, and societal shift. The future seems bright as younger America is promoting a new vision of equality, but it is too early to determine when scarcity will change into availability.

What are you actually getting when investing in Cryptocurrencies? We discuss this question and more in this episode of On the Radar, with Azeem Khan, CEO of the Medici Consulting Group and Maaz Bajwa, Engineer and Macro Economist, looking at the differences between standard or fiat currencies and these new, blockchain-based cryptocurrencies.

THIS IS NOT FINANCIAL ADVICE. You should do your own research before investing any money.

Canada has seen dramatic inflation of house prices in the past decade, one of the highest in G20 nations (Figure 1). Amongst other factors such as foreign investment and economic growth, experts accredit this rise to increased mortgage accessibility. During the 2008 financial crisis, Canada remained largely immune to the global crash of the housing market due to government-mediated reduction in interest rates and easing criteria for mortgages. This encouraged house buying that not only stabilized the market but also inflated prices. 

Since then, efforts have been made by the Canadian government to prevent housing bubbles, including after the 2016-17 market overheating event, with some success. Subsequently, rising interest rates and stiffening mortgage criteria resulted in a partial cooldown of the market. However, the Covid-19 pandemic sparked anxieties regarding Canada’s economic future. Anxieties further heightened following a slight decline in house prices at the onset of the pandemic in early 2020. As a result, Bank of Canada once again slashed the interest prices driving eager investors and buyers into the market, thereby reversing the short-lived downwards trend.

The housing market continued to overheat beyond expectations throughout 2020 and early 2021. Today the average house price in Canada has soared to $678,091, a 25% increase from last year. A recent analysis of housing affordability by RBC Economics showed that housing is more unaffordable than ever in major metropolitan areas in Ontario, British Columbia, and Quebec. Such overheating has not been observed since the early 1980s, and has led many experts to believe that the housing bubble is on the verge of collapse. But the ever-growing demand for real estate shows that many still have unshaken faith in the housing markets of major Canadian cities.

Thus far, the Canadian government and Bank of Canada have expressed little interest in tackling the housing crisis, at least until the economy can recover from the effects of the pandemic. In a recent press conference Bank of Canada governor Tiff Macklem stated, “right now the economy is weak…I think we need the support – we need the growth we can get.” While investors rejoice, this trend is troubling for low-to-middle income Canadians and new buyers, who wonder if home ownership is now out of their reach.

In the fourth quarter of 2020, 50.3% of an average Canadian household income was required to cover costs of home ownership. These statistics were even higher in major cities like Vancouver and Toronto, where households spent 78.8% and 67.6% of their income, respectively, just to own a house. Such effects are no longer isolated to major cities as housing unaffordability drives buyers further from city centers, spilling the housing crisis into neighboring areas and smaller towns. 

Even more worrying is the immense mounting household debt as a result of increased housing prices and lowered interest rates. Between third and fourth quarter of 2020 alone, mortgage debt increased by $6.6 billion, bringing it to a total of $34.9 billion. Currently, the average household debt exceeds average income. While experienced and inexperienced investors alike, rush to cash in on the hot market, growing debt and subsequent imbalances in the housing market make it vulnerable to economic stress.

The threat of this imbalance worries even the Bank of Canada, as Macklem recently expressed concern; “what gets us worried is when you start to see extrapolative expectations, or people starting to speculate on this, and houses become assets as opposed to something we live in”. Unsurprisingly, at most risk are lower income households, for whom mortgage debt can be crushing. A recent study published by the International Journal for Equity in Health revealed that in Canada, high mortgage debt is strongly associated with high prevalence of food insecurity. Furthermore, this effect was found to be even more pronounced in lower-income homeowners.

Some experts believe strong federal intervention can make the housing market more affordable. The Liberal government has discussed plans for constructing affordable housing, as well as further taxing foreign investors, though little action has been taken so far. Some believe more needs to be done if Canada’s unruly housing market is to be controlled. Suggestions include additional aid to first-time home buyers, taxing investors, especially those hoarding vacant homes, and diversifying the economy. Nevertheless, the focus of the federal government at the moment seems to be limited to the pandemic.

The housing market in Canada has historically been treated as a buffer to mediate periods of economic stress. This method has seen some success in the past and currently seems to be holding together a fragile economy destabilized by Covid-19. However, this approach is ultimately short-sighted. Rising house prices and household debt make Canadians and their economy increasingly sensitive to economic shock. Relying on the housing market to soften the blow of economic uncertainty is not a solution, rather it is delaying the inevitable. Moreover, this tactic benefits the wealthy, while furthering the plight of vulnerable groups. Canada must work towards building a robust economy more adept at handling unforeseen stresses without targeting affordable housing.

Housing needs have been changing. One year of a novel SARS virus has adjusted the way we live and work, perhaps forever. This particular fallout from a year of pandemic was wholly unexpected. A booming housing market in the richer parts of the world were not considered an inevitable impact of Covid-19 a year ago.

In the UK, the mortgage lender Nationwide reported that prices have risen by about £1,000 per month on average since the start of the pandemic last year. This means an annual gain of around 5% the equivalent of over £15,000. Even the most recent figures reported by Halifax show a house price rise just between February and March of £3,000.

The pandemic-led shutting down of the economy has had similar surprise effects across the richer world globally. House prices have risen by 11% in America as of January this year, over the last 12 months, and a huge 22% in New Zealand. Canada has been no different with a 25% upsurge in house prices reported for the year to February 2021. In Europe, Turkey leads the house price hike with a 30.3% rise from late 2019 to late 2020, with countries such as Russia, Poland, Slovakia and Luxembourg all showing an increase of over 10%.

Lifestyle changes

The biggest impetus to the global housing market boom arguably is the change to the working styles of huge numbers of workers across the world. Stay at home orders from governments have included an instruction to people to work from home wherever possible. This has led to many workers who had a daily commute to work via car, bus, tube, train or other, to set up a home office. This could be on their dining table, study, kitchen or perhaps even bedroom depending on the size of their home. Having recently been interviewed (in my dining room) by my new employer from her bedroom in her new home, it is no exaggeration to say the work environment has seriously changed. 

Low interest rates

Another factor that has impacted the housing boom has been the low interest rates set by global economies in a bid to reinvigorate their slumping growth. Businesses have lost billions in the last year, many well known brands going bust. The infamous Arcadia Group, Edinburgh Woollen Mill, Bensons for Beds, Oak Furnitureland and Monsoon to name just a few of the brands hit by administration in the last year in the UK. Governments have reacted by keeping interest rates fixed at, in some cases, all-time lows. 

UK Market

The UK housing market has had an additional boost with the stamp duty holiday in England and Northern Ireland. Stamp duty is a tax normally paid by buyers on homes costing over £125,000. This threshold was raised to £500,000 by the government last summer. Although due to end by 31^st March this year, the government has further extended the stamp duty holiday till 30^th June. Thereafter, the stamp duty starting amount will be £250,000 until September 2021 after which it will return to its usual level of £125,000. Additionally, the UK Treasury has offered a ‘mortgage guarantee’ scheme to lenders such as Santander, HSBC, Barclays and Natwest who offer mortgages of up to £600,000 to lenders with only a 5% deposit. The aim is to enable more non homeowners to buy their first home turning ‘generation rent’ into ‘generation buy’. The scheme, set to begin in April, is seen as another development which will keep the housing market buoyant.

Suburban Dreams

Many city dwellers have found the pandemic lockdowns tough. Previously having been able to enjoy the attractions of the city, remaining pent up in tiny homes has been frustrating. No seated eating out, travelling abroad, cinema, theatre, gyms or even the ability to spend recreational outdoor time further afield has been hard. Fleeing to spacious homes with gardens in the suburbs has been a solution for many. 

With the economy slowly opening up, the previous attractions in cities such as restaurants, bars and entertainment will soon regain some of their lustre. At least temporarily. However, it is unlikely this will slow the race to find permanent space in the suburbs for now as buyers look to save thousands of pounds before the stamp duty holiday ends in September.

What is Cryptocurrency?

Think of cryptocurrency as digital money or tokens that can be used as payment for (usually) online transactions. Much like the stock market, cryptocurrency has become an increasingly popular asset to invest in. 

Although more than 5,000 types of cryptocurrency exist, new forms are continuously being created. Examples of cryptocurrency include Ethereum, Tether, and perhaps most notably of all, Bitcoin. In recent months, companies, like Tesla, have affirmed usage of the cryptocurrency and while writing this, a single Bitcoin is valued at $63,588 USD.

How does it function? 

Unlike currencies issued by countries, cryptocurrency is intangible, unregulated, encrypted and decentralized. 

Most cryptocurrency exists exclusively online, however, some cryptocurrencies have tangible properties such as those associated with credit cards. One appealing aspect of cryptocurrency is that it is not regulated by a central authority. This is directly opposite fiat currency, which is regulated by the central authority, usually government, that issues it. Transactions are encrypted to provide safety and security. As the entire system is unregulated and decentralized, the responsibility falls on users to update the public ledger also known as a blockchain. Transactions are recorded in blocks and those blocks are linked in a chain, hence, the term blockchain.

Transactions are verified by one of two methods, proof of work or proof of stake, before they are added to the blockchain. Proof of work requires a computer to solve a mathematical problem whereas proof of stake limits “the number of transactions each person can verify…by the amount of cryptocurrency they’re willing to ‘stake,’ or temporarily lock up in a communal safe, for the chance to participate in the process”. While proof of work is a more energy consuming process, users stand to lose more in the proof of stake process. 

Why are users interested in verifying transactions? Well, this is how new cryptocurrency is created and it is awarded to the first person to verify the transaction. As the current value of a single Bitcoin exceeds $60,000 USD, transaction verification seems like a lucrative proposition. 

The price of cryptocurrency changes based on supply and demand. In the case of Bitcoin, only 21 million Bitcoin can exist and approximately 18 million have already been mined. 

Advantages of Cryptocurrency

Cryptocurrency is more transparent than traditional banking systems as users can, at any point, view the blockchain with the complete list of transactions. Moreover, individuals using cryptocurrency are exempt from several fees that traditional banks require.

In addition to transparency, cryptocurrency is highly accessible as users can access their currency 24-7 using a smartphone. Unlike a traditional bank, users no longer need to deal with an intermediary to make financial decisions thereby, providing users with a greater sense of autonomy. Accessing and using cryptocurrency is relatively easy and has made it so that users can make financial decisions in real time. 

Cryptocurrencies, like Bitcoin, are configured to preserve anonymity, as much as possible, as a user’s personal information is not linked with their transactions. Anonymity can be useful for users looking to protect their privacy. However, there is evidence that cryptocurrency has been used on the black market and dark web. 

Disadvantages of Cryptocurrency

Perhaps the single greatest disadvantage of cryptocurrency is its volatility. This is underscored by the fact that in 2018, the price of Bitcoin fell by 60%. Bitcoin stands to drop by 20-30% at any given moment. Many investors are predicting that there is a looming Bitcoin crash, and they say this time, if Bitcoin crashes, it is going to take the rest of the cryptocurrency market with it. Cryptocurrency is marred with volatility and investors should only invest that which they can afford to lose.

Related to volatility is that cryptocurrency valuation fluctuates. For example, users may find themselves in situations where they purchase an item for one Bitcoin, however, the value of the Bitcoin has changed by the time the user wishes to return it. How much Bitcoin should be returned to the user? 

The safety and security of cryptocurrency is minimal at best and non-existent at worst. According to the Federal Trade Commission, if the company from which cryptocurrency was purchased enters bankruptcy, the government does not have the authority to help users. If a user is scammed there is nothing that can be done to reverse the transaction. Taking advantage of these aspects of cryptocurrency, some individuals engage in cryptojacking, where scammers can use your device as a processor to mine cryptocurrency—for their own benefit.

As cryptocurrency is not widely accepted, it can only be used like fiat currency in a handful of spaces. In order to track transactions, governments may prevent the use of cryptocurrency in certain domains.

Cryptocurrencies using the proof of work method to verify transactions have now faced the added consequence of mining. Each computer attempting to verify the transaction is called a miner and as it is a race to solve the mathematical equation, complex computers are now needed to achieve this task. The amount of electricity needed to mine Bitcoin is more than what it used by entire countries like Ireland. As the world is in dire need to reduce greenhouse emissions, is mining for cryptocurrency compatible with our goals?

While cryptocurrency has many benefits, the associated risk should make any investor wary. 

It has been over one year since the initial outbreak of Covid-19, and there’s no doubt that it continues to affect our daily lives in one way or the other. We are craving the chance to restart our social lives again through being able to travel, eat out, shop without fear and so on. In addition, the standstill of these activities has also consequently led to varying economic impacts all over the world. 

Limited economic activity has naturally, and unsurprisingly, led to a decline in economic growth. The IMF estimates that last year alone, the global economy shrunk by 4.4%. They further described the decrease as the worst since the 1930s Great Depression. Rising unemployment was one of the key factors associated with the decline in economic growth. According to the IMF, in the United States, the yearly total of those unemployed was 8.9%, indicating an end to a decade of increasing employment. 

With the lockdown affecting travel, it was expected that the air travel industry would be the hardest hit. “Air traffic is barely at 25% of what it was at the end of 2019 and it’s not really going to recover for at least another couple of years.” says economist Nariman Behravesh. It’s not only lockdowns and restrictions that are causing people to limit their social activities, but the fear of Coronavirus itself. The World Tourism Organisation predicts a decrease in international arrivals, of approximately by 70%. Furthermore, it is expected that recovery to pre-crisis levels will not occur before 2023. 

On the other hand, an industry that has particularly benefited from this pandemic is hi-tech. This is evident from the fact that, “the global lockdown has accelerated an existing trend that has been on the horizon for decades. Worldwide e-commerce sales hit $3.5 trillion in 2019, an increase of 18% from the year before.”

Interestingly, the housing market has also been thriving during the pandemic with many people, for example, looking to find more space to accommodate the work-from-home environment that they are trying to nurture. According to Global Property Guide’s research, 34 of the world’s housing markets, demonstrated a ‘stronger upward momentum during Q3 2020’.

On a further positive note, the economy is heading more towards environmental sustainability, such as reductions in greenhouse gas emissions, as a direct result of a significant decrease in air and road traffic, as well as tourism. It also appears that the Coronavirus has proven more successful in reducing climate breakdown and ecological collapse than all of the world’s policy initiatives put together. In February, Chinese CO2 emissions decreased by over 25%. It was calculated by one scientist that 20 times as many Chinese lives have been saved by a decline in air pollution than directly lost to coronavirus. 

Although a slow process, the Covid-19 vaccine brings with it hope that will lead the economy to recovery. It is hoped that once the majority of people have been vaccinated, restrictions should loosen, and fear of contracting this common strain of the virus should decrease, thus leading to an increase in economic activity and global economic stability. However, this will be a time consuming process, therefore in the meantime, the economy will remain fragile.

Unfortunately, inequality also comes into play when it comes to the supply of vaccines for developing countries. For example, The United States has managed to secure claims on as many as 1.5 billion doses of vaccine, while the European Union has secured approximately 2 billion doses for themselves, sufficient to vaccinate all of their citizens. However, the majority of poorer countries could unfortunately be left waiting until 2024 to completely vaccinate their populations. [7] While a somewhat bitter pill to swallow, the economies of the poorer countries will still be able to gain some benefit from effects of the overflow of vaccines from developed countries once they go back to normal. In the midst the chaos of this global crisis, one thing rings true: “In a world shaped by inequality, growth can coincide with inequity.”