Monday 6th - BESA Times
Seventy-Fourth Edition - Monday 6th Every week a complete snapshot of what happened around the world in the past seven days
Venezuela's wait for change continues
Tuesday morning the citizens of Venezuela, long-suffering from a dysfunctional economy, woke up to the prospect of an impending regime change. President Maduro, under whose totalitarian control Venezuela turned from one of South America's most prosperous nation to one suffering from crippling hyperinflation and shortage of food and medicine, was supposedly on his way out as his challenger Joan Guido called citizens to take to the streets for the climax of 'Operation Liberty.' The intention of the move was to give the go-ahead to the Maduro supportive security forces to switch allegiances. General Figueroa, the head of secret police SEBIN and one of Maduro's closest confidantes, had made his defection public by allowing the release of Mr. Lopez: the leader of the opposition who was put under house arrest by Maduro. As per US NSA John Bolton, this was supposed to be followed by the Supreme Court declaring Maduro's national assembly illegitimate and several other important security officials like the Defense Minister and Commander of Presidential Guard publicly defecting and supporting Guido. But these events did not occur as planned. Later in the day several officials, including those mentioned above, released declarations of support to Maduro, who then went on live television to denounce the coup and promised to bring justice to the 'coup mongers.' The demonstrations on the ground lost steam eventually, owing to very few significant defections and the use of force by the security forces.
Guido and his allies, which comprise up to 50 countries including the US, had expected that an offer of exile to Maduro and amnesty and interim government positions to his officials would permit a smooth transition to power by bringing about the right defections from the Maduro regime. However, after the move proved unsuccessful, the US put the blame on both Russia and Cuba for dissuading Maduro and his officials to hand their power to Guido.
FED (US central bank) – Market communication.
FED had emphasized in recent meetings the need for a more balanced targeting of price inflation amid persistent undershooting of the inflation target. Traders interpreted this as a major dovish signal on the grounds that persistent shortfall of inflation would be an agreeable cause for rate reductions. As a result, bond traders increased the chances of rate cuts from 40% to 65% as inflation cooled in the last few months.
In this weeks' FOMC (Fed meeting), however, FED Chairman Powell remarked: 'some or all unexpected weakness in core inflation may wind up being transitory.'
The financial community latched onto the word ‘transitory’ leading to a significant sell-off in markets as chances of rate cuts, which had increased on account of dovish signals, suffered a downward correction (higher inflation became more probable). The cause for concern wasn't restricted just to a fall in markets; Whereas earlier the FED had declared persistent low inflation to be an important and a difficult challenge for itself, this week it indicated that the occurrence of the same could be due to temporary reasons. Noting this seemingly contradictory stand taken by the FED, Wall Street accused it of sending mixed signals and using lousy communication.
It should be noted that the same accusation had been leveled on the FED on two earlier occasions.
1. In October, when Powell stated that interest rates were far from neutral
2. In December, when he stated that balance sheet reduction was on autopilot.
On both these points, the FED later made 'U-turns.' On paper, they appeared as communication blunders, and thus, negatively affected the credibility of the already maligned central bank. Despite this, it is worth pondering why such twists have begun to occur with an increased frequency in recent times. It might be the case that avoiding the procedure of forward guidance to monetary policy in favor of a hands-on and a data-based approach necessitates such U-turns especially when profound structural changes in the economy have caused the predictable Philip’s curve relationship to weaken and the economy is highly leveraged. Therefore, as more and better data is made available to FED, it must update its thinking and approach, but at the same time, if the basis behind the updates are not communicated in a thorough way to the market, there could be unintended outcomes.
Social Change- Facebook
This week the social networking behemoth unveiled a new vision for its future self and added multiple new features to the various platforms it owns. In Mark Zuckerberg's own words, these latest additions involve transforming the overall user experience from one similar to roaming in a digital town square to one which is more akin to relaxing in virtual living rooms. This change in experience relies on shifting away from newsfeed style browsing to more private and customizable stories and groups.
Let us take a quick look at what this new strategy means for our favorite apps in terms of features.
Messenger:
Faster and lighter app with new technology and architecture.
New Feature to watch videos, that you share on facebook, with your friends or family live on messenger.
Messenger desktop app.
Redefined space for creating and sharing stories.
Feature to Engage in Q&A and book appointments with businesses.
Whatsapp:
Business catalog within Whatsapp for businesses to showcase their products.
Facebook:
More tools to make it easier to discover and engage with groups. (new preferred mode of using fb)
Special features for specific communities in groups, e.g. health support group, jobs group etc.
Facebook dating app and secret crush feature
Instagram:
Feature to Directly buy goods from creators.
The new vision of Facebook aims at putting the messenger app at the forefront of various modes of networking while other apps retain their more specific features. Privacy is the focus of this approach, and most of the communication is planned to take place through encrypted messages.
Tech market followers provide the following reasons for the adoption of this strategy by Facebook.
1. Facebook recently suffered a significant amount of reputational damage due to their involvement in privacy abuses. Even though its revenues have been mostly unaffected, it still wants to put an end to the whole chapter, and therefore finds a move towards an encryption-based system, in which it cannot face any liability due to user-generated content, beneficial and desirable.
2. Its plan to put messenger at the center of all activity and knit together all instant messaging services ( WhatsApp, Insta)would make the process of a potential breakup of the whole entity by regulators ( for reasons of monopoly power) more cumbersome and therefore less likely.
3. It is common knowledge that the newsfeed system is losing popularity across all demographics and especially among the younger generation which prefers stories and groups. Social media apps are known to lose popularity quickly and give way to trendy new apps with interesting user experience. Thus, there is a need to keep reinventing the social experience the app provides.
DID YOU KNOW?
The world’s largest exercise of democracy is under way. Yes, you guessed it right, it’s the Indian national elections. Here are some mind-boggling numbers from the great spectacle.
1 in 8: Proportion of human beings in the world eligible to vote in Indian elections
543: Seats at stake in the lower house of India's parliament
272: Seats any party needs, outright or by coalition, to form a government and choose India's next prime minister
2,293: Political parties, national and local, contesting Indian elections
8,000+: Candidates running for Indian parliament
2: Anglo-Indian seats in India's parliament. Those are seats reserved for members of the British community who stayed behind in India after the end of colonial rule.
1 million: Polling stations set up across India
11 million: Government employees deployed to oversee Indian voting
3.9 million: Electronic voting machines (EVMs) in use
1991: Year EVMs were introduced in India
At least $345 million: Value of cash, drugs, alcohol and goods confiscated so far from politicians attempting to bribe voters with gifts
15,256: Feet in elevation above sea level of India's highest-altitude polling station in Tashigang, a Buddhist settlement near the Chinese border
66 percent: Voter turnout for the last Indian elections, in 2014
$5 billion: Cost of 2014 elections; this year is expected to exceed that
300 million: Estimated number of Indians on Facebook. This is the social media site's largest market. The Indian government has expressed concern that fake news, spread on Facebook and the phone messaging app WhatsApp, could sway voters. Facebook says some 40 million rupees (half a million dollars) has been spent on political ads in India so far.
WRITTEN BY Aditya Vaghela
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