Former Treasury Secretary Sees Recession Looming
Several events in the United States and global markets concern economists, who worry that the likelihood of a recession is growing. The recent supply chain disruptions, exacerbated by the resurgence of Covid-19 throughout the U.S, rising inflation above 6%, and fiscal policy delay from the U.S Congress are increasing the likelihood of a recession within the next two years, according to former Treasury Secretary Lawrence Summers. The potential outcome of the upcoming French election and political tensions building in Shanghai are two possible recession-provoking events economists are also paying close attention to.
Bitcoin Mining Sees An Increase In Investment
Bitcoin mining and technology company Blockstream and Block, formerly Square, have announced they are working together on a solar- and battery-powered bitcoin mining facility. The mining operation will be located in west Texas and will use solar and storage technology from Tesla. The climate conditions, specifically high winds and intense sunlight, are ideal for energy-efficient bitcoin miners. According to Blockstream, the partnership aims to strengthen the Bitcoin network by diversifying Bitcoin's energy sources and proving that renewable bitcoin mining at scale is possible.
Last week, a special economic zone off the coast of Honduras announced that Bitcoin, among other cryptocurrencies, will be adopted as legal tender. The island, called Honduras Prospera, was established in 2020 as part of an initiative to help encourage investment and innovation on the Caribbean coast. The island will let local governments and international firms issue bitcoin bonds. This is not the first time a developing nation has adopted Bitcoin as legal tender: El Salvador spearheaded the adoption of bitcoin as legal tender in September last year.
International Conflict Builds as New Sanctions Are Introduced
Russia faces new financial and trade sanctions imposed by the United States. The latest sanctions prohibit investments by U.S individuals, venture capital firms, and mergers in Russian businesses, causing additional financial strain on the Russian economy. Congress has also voted to remove Russia's "most-favored-nation" status, which will allow President Biden to impose tariffs on Russian imports. Meanwhile, European Union diplomats failed to approve new sanctions on Wednesday.
Vladimir Putin's invasion of Ukraine is creating severe financial strain on its economy. So far, Ukraine's economy has contracted over 45%. The Russian Federation's economy is forecasted to shrink by 11.2% this year, while output among Eastern European countries – including Moldova, Belarus, and Ukraine – is expected to be 30.7% lower.