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<ul class="summary-list"><li>The national debt has blown past $35 trillion, and it's only going to go up under Trump or Harris.</li><li>Left unchecked, unsustainable deficits will slow GDP growth, decrease savings, and spur inflation.</li></ul>The US has a big, $35 trillion problem: the national debt.After a bout of pandemic stimulus, the <a target="_blank" href="https://fred.stlouisfed.org/series/GFDEGDQ188S">national debt</a> ballooned from an already hefty 103% of GDP in 2019 to 120% currently.Left unchecked, the deficit will continue to creep higher and could drag GDP growth. Too much government spending reduces public and private savings levels, decreases labor productivity, and increases our dependence on foreign investment, according to <a target="_blank" href="https://www.businessinsider.com/immigration-policy-boost-labor-market-national-debt-job-market-taxes-2024-10">Chris Brightman</a>, CEO and CIO of the investment advisory Research Affiliates.<div type="image" title="Federal budget deficits crowd out national saving" height="648" width="1237" msid="114740934" hostid="261" sizebytes="20852"></div>If the US debt continues on this trajectory, Brightman predicts that the US could follow in the footsteps of European economies and see annual GDP growth decline to 1%.<div type="image" title="High spend and national debt associated with slow growth for various countries" height="580" width="923" msid="114740936" hostid="261" sizebytes="20990"></div>That's not to mention that welfare programs like Social Security will be on the chopping block. According to the Social Security Administration, Social Security benefits will be reduced by almost 25% starting in 2034 if nothing is done to address the national debt.<h2 id="ff5f9554-8d16-41da-bb6b-669693d7fe8e">No change in November</h2>Neither Harris nor Trump have a plan to address the deficit.In fact, both candidates are pushing policies that would increase deficit spending. If there's a blue or red sweep in November, government spending levels will be even higher.There are two main ways to reduce deficits, according to Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group. The first is to grow your way out. By growing the economy at a faster rate, the proportion of debt to GDP decreases."Nobody wants to really think about Plan B. Plan B is either raising taxes or cutting social programs and raising taxes when inflation is high," Yoshioka said.Both of those policies are incredibly unpopular, which is why the candidates haven't said much on the topic.However, growing GDP won't be sufficient to fix the situation, according to Brightman. "The math doesn't work," he said. If GDP continues to grow at its predicted pace of 2% per year, that's not even enough to cover the US government's interest payments on debt, much less reduce the principal amount. Interest costs are projected to reach 3.4% of GDP by 2025, and 4.1% by 2034.<h2 id="c865dcdc-9063-4908-8e2c-e1b6f1e4bae8">How to invest</h2>Until the government takes steps to get the deficit under control, there are a few things investors can do to protect their holdings.Continued high national deficits could put the credibility of US sovereign debt into question, leading to a depreciating dollar and increased inflation.The US government might try to use inflation to chip away at the real value of the debt by pursuing expansionary monetary policies such as quantitative easing, according to Jeff Muhlenkamp, portfolio manager at Muhlenkamp &amp; Company. If the US dollar were to decrease in value, the government could repay the debt more cheaply than when it was first incurred."As the US government continues to get deeper in debt, how are they going to work their way out of that?" Muhlenkamp said. "One of the potential outcomes ends up being a devaluation, and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-in-gold-price-record-highs-safe-haven-2024-10">gold</a> is a nice hedge against that.""Real" assets, or investments backed by tangible resources, are generally a good hedge in a high-debt environment, according to JPMorgan. These investments have direct intrinsic value and tend to store long-term value effectively. Examples include commodities, real estate, and infrastructure. Muhlenkamp likes the energy sector in particular. JPMorgan also recommends increasing exposure to non-US dollar-denominated assets.Avoid long-term Treasurys, Muhlenkamp added."Where you definitely don't want to be is in long-term government debt," he said. "[The government] will inflate away the value of the debt if they can get away with it."Muhlenkamp is predicting that the next decade will see <a target="_blank" href="https://www.businessinsider.com/higher-long-term-inflation-outlook-investing-strategy-attractive-bonds-stocks-2024-10">increased inflation</a>, which will eat away at bond yields.Yoshioka points out that there's also the risk of a failed treasury auction, which is when the Treasury Department doesn't receive enough bids to take on the debt it's trying to sell. If this were to happen, the Federal Reserve would need to step in and purchase the unwanted bonds by printing money, creating more inflation.Some funds that offer exposure to real assets include the iShares US Energy ETF (<a target="_blank" class="" href="https://markets.businessinsider.com/etfs/ishares-us-energy-etf-us4642877967?miRedirects=1">IYE</a>), the Fidelity MSCI Real Estate Index ETF (<a target="_blank" class="" href="https://markets.businessinsider.com/etfs/fidelity-msci-real-estate-index-etf-us3160928574?miRedirects=1">FREL</a>), and the iShares Gold Trust (<a target="_blank" class="" href="https://markets.businessinsider.com/etfs/ishares-gold-trust-us4642852044?miRedirects=1">IAU</a>).

The national debt crisis is set to worsen no matter who wins the election — here's what you can do to protect your portfolio 

<ul class="summary-list"><li>Goldman Sachs warned Europe's energy crisis isn't resolved just yet even as LNG prices tumble.</li><li>Europe still faces a structural deficit in natural gas and has to make up for lost Russian imports.</li></ul><a href="https://markets.businessinsider.com/news/commodities/europe-energy-crisis-russia-natural-gas-perfect-storm-bofa-electricity-2022-8?_gl=1*1kit0dz*_ga*MjA5NTAyMzYyOS4xNjYyNDcwMDc5*_ga_E21CV80ZCZ*MTcwNzQ4ODYwMC4xNTk2LjEuMTcwNzQ4OTc5My4yLjAuMA..">Europe's energy crisis</a> and <a href="https://markets.businessinsider.com/news/commodities/europe-natural-gas-prices-energy-groningen-energy-crisis-russia-nordstream-2023-6?_gl=1*8x3dud*_ga*MjA5NTAyMzYyOS4xNjYyNDcwMDc5*_ga_E21CV80ZCZ*MTcwNzQ4ODYwMC4xNTk2LjEuMTcwNzQ4OTc1MS40NC4wLjA.">extreme fuel costs</a> emerged as a dominant narrative in the two years after Russia invaded Ukraine, but tumbling liquefied natural gas prices have recently quelled concerns.Warm weather and <a href="https://markets.businessinsider.com/news/currencies/russia-economy-charts-ukraine-war-oil-trade-europe-sanctions-energy-2023-4">shuffled trade flows</a> have been an encouraging sign. This winter proved to be the second-warmest in the last decade, and European gas prices are down 37% since November, which has allowed Europe to build up a sizable inventory of fuel. But strategists at Goldman Sachs aren't convinced the continent is in the clear. "While the decline in gas prices may leave the impression that Europe has solved its energy crisis, we believe the crisis is not over yet, and we have one more winter to go through before fully allaying the risk of extreme gas prices re-emerging," the firm's strategists wrote in a Thursday note. In their view, improvements in near-term LNG supply haven't resolved the structural deficit and lost imports from Russia. Prices in turn remain vulnerable to supply interruptions or fluctuations in demand.<div type="image" title="Winter weather has been warm in Europe" height="922" width="807" msid="107565863" hostid="261" sizebytes="44828"></div>European gas still "has one more winter to go," the strategists said, given that cold weather can cause demand to spike, which would deplete inventory and push prices higher.Weather-dependent heating, they note, comprises more than 60% of consumer demand.By their estimations, a winter that's colder by one standard deviation — about 1° C below average — could increase demand worth about 12% of storage capacity.Storage is above seasonal norms, which provides a comfortable inventory setup for the summer. But next winter looms, and storage must reach full capacity ahead of the colder months. Not only has Europe failed to fully compensate for the roughly 20% of lost supply they no longer receive from Russia, much of the recent LNG price declines stem from demand destruction rather than added supply, according to Goldman Sachs.<div type="image" title="Demand destruction has brought LNG prices lower." height="922" width="1061" msid="107565865" hostid="261" sizebytes="44958"></div>Looking beyond this year, Goldman forecasts new LNG export projects could come online in 2025, which would lead to increases in global LNG supply and begin tilting markets into oversupply."With significantly more LNG available, Europe will no longer have to crowd out price-sensitive buyers in the rest of the world to guarantee sufficient imports, and will be able to accommodate incremental domestic demand, leading to sustainably lower LNG and European gas prices," Goldman strategists said.Should this play out accordingly, 2025-2026 winter should see a "comfortable supply backdrop."

Europe's energy crisis still isn't over

<ul class="summary-list"><li>President-elect Donald Trump has questioned the reality of the climate crisis.</li><li>He's expected to withdraw the US from the Paris Agreement, which he also did in his first term.</li></ul>President-elect Donald Trump has long questioned the reality of the climate crisis, describing it as a "scam" and accusing policies to tackle the crisis of destroying US jobs.Many expect him to withdraw the US from the Paris Agreement to limit emissions upon taking power in January, as he did in his first term.But his hostility to green policies conflicts with another of his priorities — challenging the rise of China."A second US withdrawal from the Paris Agreement would present a significant opportunity for China to expand its leadership role in multilateral climate issues," Herbert Crowther, an analyst with the Eurasia Group in New York told Business Insider.Trump's victory is overshadowing this week's UN climate summit in Baku, Azerbaijan, where pledges from Biden administration officials are tempered by the fact they won't be around for long.And China is already positioning itself to fill the power vacuum and build its global influence."In the week since the election, we're already seeing China try to claim the mantle of global climate leadership and portray itself as the more "responsible" actor in this space," Lily McElwee, fellow in the Freeman Chair in China Studies at the Center for Strategic and International Studies in Washington, DC, told Business Insider."Beijing is out in force at COP29 calling for the United States under Trump to engage in 'constructive dialogue' and highlighting China's contributions to decarbonization through major investments in electric vehicles and other greentech industries."<div type="image" title="Chinese solar power station" height="576" width="1024" msid="115335201" hostid="261" sizebytes="137800"></div><h2 id="f89b9ca3-aa4a-4bb2-a5bf-27324f610f4d">The green tech superpower</h2>China has a curious position as both the world's largest polluter, and a powerhouse of green technology.It tops the <a target="_blank" class="" href="https://interactive.carbonbrief.org/the-carbon-brief-profile-china/index.html#">rankings for greenhouse emissions</a>, which helped power its huge economic growth in recent decades. In 2020, President Xi Jinping pledged that China would become <a target="_blank" class="" href="https://chinaeucn.com/carbon-neutrality-china/#:~:text=In%20September%202020%2C%20president%20Xi,carbon%20neutrality%20to%20the%20world.">carbon neutral by 2060,</a> and it's on track this year to record its first drop in greenhouse <a target="_blank" class="" href="https://www.businessinsider.com/china-meeting-us-climate-solar-panels-coal-power-energy-security-2024-5">emissions since 2016.</a>At the same time, China has pushed harder to produce its own green technology — and sell it to the rest of the world.It is the world's largest producer of electric vehicles and solar panels, and the percentage of its energy coming from renewable sources <a target="_blank" class="" href="https://www.iea.org/reports/renewables-2023/executive-summary#">is rapidly growing.</a>That work brings practical and economic benefits. Analysts also point to other motives for Beijing's green push: influence and power."Where the Trump administration sees renewable energy as a threat to jobs, China is leveraging clean energy as part of a long-term strategic gambit," wrote <a target="_blank" class="" href="https://www.brookings.edu/articles/chinas-belt-and-road-initiative-is-poised-to-transform-the-clean-energy-industry/">Daniel Araya of the Brookings Institute in Washington, DC, in 2018.</a>China, as part of its "Belt and Road" initiative to grow its global influence, has provided developing countries with renewable energy technologies, including wind farms."Green tech plays a critical role in Xi's economic vision. While China has spent a decade trying to catch up to the United States and other advanced economies in existing tech (like semiconductors), it is increasingly focused on securing leadership in emerging industries like cleantech," said McElwee.The strategy is paying off, with global demand for renewable energy production technologies predicted to surge, and China set to account for 60% of installed global renewable energy capacity by 2030, according to an <a target="_blank" class="" href="https://www.iea.org/news/massive-global-growth-of-renewables-to-2030-is-set-to-match-entire-power-capacity-of-major-economies-today-moving-world-closer-to-tripling-goal">October report by the International Energy Agency.</a>The US lags China as a clean tech economic power.Trump has been explicit about his plans to repeal and otherwise roll back climate policies from the Biden administration.That included <a target="_blank" class="" href="https://www.politico.com/news/2024/09/05/trump-inflation-reduction-act-00177493">a pledge</a> just before the election to "rescind all unspent funds" from President Joe Biden's Inflation Reduction Act, which provided billions in funding for clean tech.<h2 id="d064aeb1-2497-4d9c-b893-7e2c1b98241d">Will China step up? </h2>There are also doubts over how much China is willing to take an international leadership role on climate issues.It's been wary of international agreements to tackle climate change in the past, and last year was accused by European officials of <a target="_blank" class="" href="https://www.reuters.com/business/environment/china-denies-reports-it-obstructed-g20-climate-discussions-2023-08-02/#:~:text=China%20denies%20reports%20it%20obstructed%20G20%20climate%20discussions%20%7C%20Reuters">obstructing G20 efforts </a>to tackle the climate crisis, Reuters reported. Assuming a leadership role would likely require China to send money to other countries, said Crowther. "The key question for officials in Beijing will now turn to whether China wants to deepen its financial commitments to helping other countries—particularly emerging markets—accelerate their own energy transitions," he said.Crowther said the run up to next year's COP30 summit in Brazil would provide clues of China's intentions. Ultimately, Xi may be more interested in cementing China's economic advantages than in concrete diplomatic pledges. "Although Beijing will try to boost its image as a global leader on climate change, I don't know how much substance will follow," said McElwee.

Trump called the climate crisis a scam. It could prove a gift to China.

<ul class="summary-list"><li>The Fed has started cutting rates, but it's not likely to boost the economy much, Lisa Shalett says.</li><li>The economy is less rate-sensitive than it was during previous rate cuts, Shalett argues.</li></ul>Rate cuts have long been seen as an integral part of the Federal Reserve's monetary policy toolbox to juice up the economy.However, don't expect rate cuts to save the economy this time around, according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.Investors may have reacted positively after the initial 50-basis-point cut, but Shalett believes rate cuts have already been largely priced in from here on out. Beyond the stock market, several parts of the economy aren't very sensitive to interest rate cuts and won't see much upside either.Today's economy is facing different challenges than it has in past cutting cycles. In an interview with Business Insider, Shalett shared what to expect — and not expect — from this cutting cycle.<h2 id="f23ffa4b-b498-4d31-84b2-6a9dff847e03">3 reasons rate cuts won't work</h2>First, companies today are carrying more cash, resulting in stronger balance sheets.Many also locked in low borrowing rates after the Global Financial Crisis. The average cost of capital for the biggest companies in the index is only 4.2%, according to Shalett. With less debt, and subsequently fewer interest payments, many S&amp;P 500 constituents aren't that exposed to interest rate risk.Household consumption also points to reduced rate-cut relief. Wealth is disproportionately concentrated across American households, Shalett said, with the top 40% of households driving two-thirds of total consumption."For those households with net savings, high interest rates were actually stimulative," Shalett said. High-income households with extra cash on hand benefited from increased interest income in a higher-rate environment.One example is baby boomers, many of whom live off of fixed incomes in retirement. "For them, lower interest rates are not stimulative. It's actually net reductive to their incomes," Shalett said.While lower interest rates could potentially spur consumption for lower-income households, this group makes up only a small portion of overall spending, so don't count on that to materially stimulate the economy, she said.Lastly, the housing market poses a large challenge for the economy, and Shallett doesn't believe rate cuts will be able to improve the situation.Lower mortgage rates can help housing affordability, but they won't solve the underlying issue of housing inventory undersupply. According to Shalett, the US is about 4 million housing units short, thanks to a lack of construction after the housing crisis.In addition to a dearth of supply, how homes are financed also poses an issue."Forty percent of the entire housing stock of the US is now owned outright with zero mortgage," Shalett said. That means homeowners are disincentivized to sell into a housing market where mortgage rates — while down from earlier highs — are still hovering around 6%. Many of these homes are owned by retired baby boomers, Shalett added.Another 36% of the housing market has a mortgage locked below 4%, thanks to record-low pandemic interest rates."So the fact that mortgage rates are at 6% today doesn't really create an incentive for those people to transact in the mortgage market," Shallett said. "Seventy-six percent of your entire housing market is frozen and is not moved by the rate cuts."<h2 id="002388a3-cc3f-44ad-bf7c-dd5d6ca2a259">Keep an eye out for corporate earnings</h2>If rate cuts won't significantly kickstart the economy, then what will?In Shalett's view, the economy's success hinges on increasing corporate productivity. Shalett recommends that investors closely monitor corporate earnings for the upcoming quarters.Earnings expectations are already quite ambitious for the next year — Wall Street is forecasting 13-14% profit growth in 2025, a tall order in a slowing economy.However, a productivity-driven rebound isn't out of the question. Companies are still reporting above-average capital expenditures, and government stimulus will boost areas of the economy such as infrastructure and energy. And the promise of AI could also drive productivity gains. All of these factors could lead the economy to a soft landing.

3 reasons rate cuts won't stimulate the economy like they have in the past: Morgan Stanley Wealth Management CIO 

<ul class="summary-list"><li>Saudi Arabia could flood the market with oil to regain control of prices.</li><li>This would create a difficult situation for Russia, which is reliant on higher crude prices. </li></ul>Russia's wartime economy could face a tougher time securing needed oil revenue if Saudi Arabia tanks global crude prices.The kingdom has reportedly signaled that crude <a target="_blank" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-opec-oil-production-cuts-crude-prices-middle-east-2024-10">could drop as low as $50 a barrel</a> if the Organization of Petroleum Exporting Countries does not commit to reducing oil output.In other words, Riyadh is hinting that it could flood the market with oil supply, analysts say. The move would slash prices and penalize OPEC members who have not cooperated in reducing oil flows — including Russia."With Russia already selling its oil at discounted rates and with higher production costs, a low-price environment in oil markets may impact its ability to finance its aggression in Ukraine," Luke Cooper, a research fellow at the London School of Economics, <a target="_blank" href="https://www.ips-journal.eu/topics/foreign-and-security-policy/will-oil-decide-the-fate-of-the-russia-ukraine-war-7836/">wrote for the IPS Journal</a>.Saudi Arabia, the de facto leader of OPEC, has been trying to keep oil above $100 per barrel by pushing for member states to cut production.But with <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">international crude</a> hovering below the $80 mark, this hasn't worked. To shift strategy sources told the Financial Times that <a target="_blank" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-oil-prices-brent-crude-outlook-opec-production-cuts-2024-9">Riyadh now plans to turn on its taps</a> by December."Saudi Arabia is fed up," Simon Henderson, director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute, told Business Insider. "Leadership of OPEC is a multifaceted responsibility. It can work well, but it's also like herding cats — pretty damn impossible, at least some of the time."<a target="_blank" href="https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/oil/080824-opec-produces-437000-bd-above-quota-in-first-month-of-compensation-cuts">S&amp;P Global Ratings</a> data counts Russia among the overproducers in OPEC+. According to its last available data, Moscow produced 122,000 barrels above its daily quota in July. Iran and Kazakhstan also breached agreed-upon thresholds.<h3 id="60a31c17-d810-4adf-87a8-d604514ebe43">The Kremlin's dilemma</h3>Henderson suggested that some coalition members might be doing this to maximize profits.In Russia's case, Moscow is facing pressure to rake in as much as it can, as its war in Ukraine has ballooned defense and security spending in three years of war. These sectors will collectively account for <a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">40% of all federal expenditures in Russia next year</a>.Russia's finances, meanwhile, are heavily dependent on oil revenue. A few years ago, gas and oil production made up <a target="_blank" href="https://www.reuters.com/business/energy/russia-reducing-share-budget-revenue-gas-oil-minister-says-2024-10-10/">35%-40% of the nation's budget revenue</a>, the country's finance minister said this week.It's for this reason that the West has been so focused on curbing Russian oil profits. Consider the Group of Seven's $60 price cap on Moscow's crude: though the two-year initiative has <a target="_blank" href="https://www.dallasfed.org/research/economics/2024/0514">not panned out as hoped</a>, it was considered to be a key to keeping oil supply stable while denying the Kremlin much needed revenue.Russia has been able to circumvent these caps <a target="_blank" href="https://markets.businessinsider.com/news/commodities/russia-sanctions-oil-trade-shadow-fleet-tankers-ukraine-war-economy-2024-8">using unregistered "shadow" tankers</a>, but Riyadh's $50 per barrel threat might be harder to overcome.Things could turn sour if Saudia Arabia's supply dump reignites an oil price war between Russia and the kingdom. Henderson <a target="_blank" href="https://www.washingtoninstitute.org/policy-analysis/saudi-arabia-signals-oil-policy-shift">suggested this could happen</a>, referring to a similar event that occurred in 2020.That year, production cut disagreements prompted both nations to unleash supply, testing who could survive this low-price environment longer.In these situations, foreign exchange reserves become essential, which is problematic for Russia. Since invading Ukraine, the country's insurance against low oil prices has dissipated. Russia's National Wealth fund was nearly <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-bleeding-money-liquid-reserves-national-wealth-fund-war-2024-1">halved at the start of this year,</a> and it is no longer able to source Western currencies to diversify its foreign exchange reserves.It remains to be seen whether President Vladimir Putin will want to engage in a price war with Riyadh, given his other, more immediate priorities, Henderson said.Predicting the Kremlin's moves is hard, he said, given many unknowns tied to Russia's oil sales.However, some kind of confrontation with Saudi Arabia may be stirring. This week, Russia's deputy prime minister Alexander Novak said it's <a target="_blank" href="https://www.reuters.com/business/energy/russia-says-too-early-say-if-market-ready-extra-oil-dec-2024-10-09/">unclear whether OPEC should increase oil output at its December meeting</a>, as signaled by Saudi Arabia.If things do take a turn for the worst, Cooper sees a potential price war as bad news for Russia. "Unlike Saudi Arabia, its oil is not cheap to extract, making it poorly equipped to deal with low-price conditions. This drives a short-term escalatory logic for Russia's war on Ukraine, requiring rapid battlefield successes prior to the emergence of low-price oil market conditions."

How Saudi Arabia could create a crisis for Russia's economy

<ul class="summary-list"><li>Russia faces a crisis whether it continues the war or not, economist Alexander Mertens says.</li><li>He pointed to signs of economic distress like high inflation and interest rates.</li></ul>Russia's overheated economy is almost certainly headed for a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-outlook-moscow-sanctions-west-firms-uchicago-2024-10">crisis</a> no matter what Vladimir Putin does, according to a Ukrainian economist.Alexander Mertens, a professor of finance and economics at Kyiv's International Institute of Business, issued a grim forecast about Russia's economic future in the midst of the nation's third year of its war against Ukraine.If Russia continues the war, the economy looks on track for a "severe <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-collapse-recession-moscow-ukraine-war-us-dollar-energy-2024-7">recession</a>" and long-running stagnation, Mertens said. However, if the war stops, the economy is in trouble trouble, given how much war spending has pumped up growth amid a shortage of capital and workers, Mertens wrote in an <a target="_blank" class="" href="https://www.atlanticcouncil.org/blogs/ukrainealert/russias-economy-is-overheating-but-putin-cannot-change-course/">op-ed</a> for the Atlantic Council on Thursday."The current state of the Russian economy is far from critical but it does present Putin with a dilemma. He currently appears intent on continuing the war indefinitely while hoping to outlast the West and exhaust Ukraine. Alternatively, he could seek to move toward a settlement of some kind. However, there is a very real danger that either option could end up plunging Russia into a serious economic crisis," Merten said.Merten pointed to the field of red flags for Moscow's economy since it began its invasion of Ukraine.For one, while Putin has rebuffed the impact of Western sanctions, the restrictions are clearly having an impact on Russia's trade and finances, with the nation's <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/russian-energy-revenue-crude-oil-prices-gas-exports-sanctions-ukraine-2024-1">energy revenue falling</a> by nearly a quarter 2023.Russia's <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-bleeding-money-liquid-reserves-national-wealth-fund-war-2024-1">sovereign wealth fund</a> is also shrinking. Around 44% of liquid assets in the Russian National Welfare Fund were depleted from the start of the invasion to December 2023, according to data from Russia's finance ministry.The nation is also suffering from a <a target="_blank" class="" href="https://www.businessinsider.com/russia-lacks-workers-ukraine-war-labor-crisis-worker-shortage-2023-12">severe worker shortage</a> and a <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-population-decline-worker-shortage-growth-outlook-ukraine-war-2024-8">looming demographic crisis</a>, which have been exacerbated by the one million Russians estimated to have fled the country in the early days of the war.Russia's central bank, meanwhile, <a target="_blank" class="" href="https://www.businessinsider.com/russian-central-bank-raises-key-interest-rate-to-21-2024-10">raised interest rates to 21%</a> in October, a sign policymakers are scrambling to get inflation — which clocked in well above target at 8.6% — under control."While Kremlin officials and many international analysts insist that the Russian economy remains in remarkably good shape, the country's longer-term economic outlook is becoming increasingly precarious," Merten said. "Taken together, these negative factors are likely to contribute to a period of slower growth, if not <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-west-sanctions-inflation-gdp-2024-10">stagnation</a>.And yet, Russia can't easily stop the war without shutting off one of the key engines of its economy: its hefty defense budget. The nation allotted a record 6% of GDP to defense spending in 2024.That's been a major factor behind Russia's solid economic growth, Merten said, with real GDP in the nation on track to expand another 3.6% this year, according to <a target="_blank" class="" href="https://www.imf.org/en/Countries/RUS">International Monetary Fund</a> estimates."If Putin opts to maintain his uncompromising push for an historic victory in Ukraine, it is not clear that Russia has the resources to wage a prolonged war on the present scale. In this scenario, current warning signs such as rising inflation and labor shortages could eventually become major problems," Merten said.He continued: "If he seeks a settlement and withdraws the Keynesian crutch of today's vastly <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">inflated military spending</a>, the economic repercussions could be dire. The Russian economy is not yet close to collapse, but it is increasingly dependent on wartime conditions and faces growing risks of overheating."Other experts have said Russia looks to be facing a Catch-22 situation, with the nation <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-inflation-worker-shortage-2024-2">neither being able to afford winning or losing</a> the war. Over the long-term, its economy could be <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-outlook-ukraine-war-worker-shortage-population-brain-drain-2024-8">de-industrialized</a> or face a long-term stagnation, economists previously told BI.

Russia faces a crisis regardless if Putin ends or continues the war in Ukraine, economist says

<ul class="summary-list"><li>Russia can avoid crisis for three to five years, the Center for Analysis and Strategies in Europe said.</li><li>Domestic demand has kept the country strong, becoming a key driver of growth, the think tank said.</li></ul>Russia's wartime economy could be in it for the long-haul — or at least longer than expected.A team of economists is unconvinced that Russia will tumble into economic collapse any time soon, as suggested by some analysts.Instead, Russia's economic capability "excludes almost any chance of a serious crisis cause by internal factors in at least three-to-five years perspective," three authors wrote in a <a target="_blank" href="https://case-center.org/wp-content/uploads/2024/11/case-241112-en_fin2_compressed.pdf">report</a> for the Center for Analysis and Strategies in Europe.The paper counters notions that a Russian crisis will come as soon as next year, an argument made by economists such as Yuriy Gorodnichenko. The UC Berkley analyst told Business Insider that Moscow's slowing energy trade and dollar shortage would <a target="_blank" href="https://www.businessinsider.com/russia-economy-collapse-recession-moscow-ukraine-war-us-dollar-energy-2024-7">cause the crisis</a>.Even observers within the country expect<a target="_blank" href="https://www.businessinsider.com/russia-economic-experts-forecast-bumpy-2025-for-country-inflation-putin-2024-11"> struggle in 2025</a>, including <a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-stagflation-recession-inflation-gdp-growth-ukraine-war-2024-11">the specter of staglfation</a>.But though Moscow is guaranteed to face challenges at some point, the CASE authors cautioned not to translate hardships into proof of a near-term crisis.Instead, these three trends will keep Russia resilient, they said:<h3 id="e2e33bea-404e-4393-9ba3-00371b80bb8d">1. Don't underestimate domestic demand</h3>According to the report, Russia's domestic market has been an underrated factor behind the country's perseverance.After Moscow's invasion of Ukraine, local consumption has kept the economy afloat, with domestic demand overtaking exports as a leading growth driver."In the construction sector alone in 2023, up to 30 million tons of steel were consumed (the increase from the previous year amounted to 9 percent), while before the war, in 2021, just over 15 million tons were exported," CASE said.Moscow's war efforts boosted the purchasing power of millions, as the need for soldiers lifted wages across the country. With more manpower needed at the front-lined, a rising <a target="_blank" href="https://www.businessinsider.com/russia-economy-growth-recession-labor-worker-shortage-inflation-sanctions-west-2024-9">labor shortage</a> at home furthered the wage trend.Lower-income Russians benefited the most, as recruited soldiers have largely stemmed from economically-depressed regions. In turn, these households spent heavily on domestically-products essentials.Meanwhile, wealthier households have benefited from Russia's high interest rates, which have boosted investment incomes, the report said."As a result, in 2022–2024, federal budget revenues from domestic sources were growing faster than oil and gas proceeds, whose share has declined from 40–45 percent of overall revenues in 2014–2019 to 30–35 percent in 2023–2024," it said.Demand is also not going away if the war does end soon, the CASE analysts said. On one hand, it shouldn't be assumed that defense spending will ease once peace returns, given that the Kremlin has indicated plans to keep defense industry production running at elevated levels.Secondly, returning soldiers will require care, and the subsidy programs that crop up should keep aggregate demand afloat.<h3 id="7977f137-74bc-4736-a4f9-c8bbde4a0eaa">2. Sustainable war spending</h3>Some have forecast an <a target="_blank" href="https://www.businessinsider.com/russia-economy-ukraine-war-moscow-military-spending-currency-inflation-budget-2024-9">immediate recession</a> if Russia's war in Ukraine ever ends, arguing that the Kremlin's massive war budget is responsible for the economy's continued survival.But Moscow's swelling war expenditures aren't unsustainable, CASE said.Though defense and national security spending will now account for <a target="_blank" href="https://www.businessinsider.com/russia-economy-outlook-defense-budget-spending-ukraine-war-putin-sanctions-2024-10">40% of all federal expenditures</a>, the report noted that the Kremlin has financing options.For instance, Moscow has a "huge space" in domestic borrowing, given that Russia's government's 18.1% debt-to-GDP isn't significant by modern standards.At the same time, the government has steadily increased tax burdens on both individuals and corporations. Next year, a long-standing flat income tax rate is set to be replaced by a progressive tax scale.Nominal business tax rates face an annual increase, equal to about 1 percentage point of GDP between 2023 and 2025.<h3 id="51c2f739-8912-4254-ba4d-5b049839921d">3. Inflation and labor concerns are non-issues</h3>CASE acknowledged that more spending and higher wages have created an fueled inflation, but said it shouldn't pose a severe threat.As price growth <a target="_blank" href="https://tass.com/economy/1871947">reached 8.54% in October,</a> that's good news for Moscow, as single-digit inflation won't trigger a slowdown. Instead, it will most likely be treated as a "new normal."Russia can also expect labor relief over time. Though the country was estimated to be missing as many as <a target="_blank" href="https://www.businessinsider.com/russia-lacks-workers-ukraine-war-labor-crisis-worker-shortage-2023-12">five million workers in 2023</a>, cutting down on excess employment among corporations could free up 2 million workers, CASE estimated.The report also cited discussions to cut down on easy access to higher education, and potentially make technical colleges a requirement. Changes to migration policy that would bring in more labor are also being pursued.

3 reasons why Russia's economy can survive without crisis for up to 5 more years, think-tank economists say

Our homes should make us feel safe. A decent home is a refuge from the outside world, a relatively fixed point where people can drop their vigilance. Most of us need the security of home to stay balanced in the face of an unstable, sometimes frightening world.But Americans are increasingly less safe in their own homes. This isn't because of a sudden surge in crime (<a target="_blank" class="" href="https://www.businessinsider.com/us-murder-rate-dropped-by-13-percent-in-2023">which is actually declining in most places</a>) but because of climate and geography.Compared with much of the rest of the country, many of America's cities are well situated to weather the coming decades of the climate crisis. Their density makes them <a target="_blank" class="" href="https://www.businessinsider.com/passive-house-energy-efficient-lower-utility-bills-2023-7">more energy-efficient</a> — partly because residents tend to drive less and apartments are easier to keep cool than single-family homes. They also have more robust emergency-services infrastructure than rural areas and are situated further from fire-prone wooded areas.But as <a target="_blank" class="" href="https://www.businessinsider.com/yimbys-winning-lower-house-prices-rents-build-more-homes-neighborhoods-2023-9">local zoning and resident opposition</a> have made it nearly impossible to build housing in these cities, would-be residents are pushed into more treacherous areas. In some parts of the country, the only affordable homes for middle-class households are in areas prone to disasters. The people who move to those high-risk areas are being robbed of the security that everyone should be able to enjoy in their homes. Because of our collective refusal to build more housing where it is most needed, millions of people live with elevated climate risk.Until we act, more of those people are fated to lose their homes — or their lives.<h2>The heat is on</h2>As is increasingly routine, extreme heat has been roasting much of the United States this summer. <a target="_blank" href="https://www.azfamily.com/2024/07/05/heatwave-hell-phoenix-high-temp-soars-118-shattering-previous-record/">Phoenix hit a daily high of 118 degrees</a> in June, breaking a 40-year-old record. In Texas, a broiling July heat wave caused power outages for millions of people and clogged hospitals with patients who could not be safely discharged to homes that lacked air conditioning. These heat waves have deadly consequences: <a target="_blank" class="" href="https://www.businessinsider.com/dangers-extreme-summer-heat-united-states-poverty-air-conditioning-access-2023-8">Extreme heat killed 2,302 Americans</a> in 2023 alone.While many parts of the country have faced high temperatures this year, the danger has not been evenly distributed. Where I live, across the bay from San Francisco, thermometers climbed into the mid-80s — not exactly pleasant for perspiration-prone Ashkenazi men such as myself, but tolerable. Further-inland locales like California's fast-growing Central Valley, on the other hand, have been getting positively scorched. On the West Coast, the safest place to be in a heat wave tends to be near the Pacific Ocean. But that's not where people are moving. Thanks to the city's anemic new-housing growth, the population of San Francisco (average daily high in July: 66 degrees) has stagnated for years while home prices have soared. Growth has been faster and more consistent in white-hot cities like Fresno (98 degrees), Sacramento (93 degrees), and Bakersfield (98 degrees), where housing is more abundant but deadly heat is far more common. The Golden State's land-use patterns are putting middle-class and working-class households at a higher risk of exposure to extreme, possibly fatal, heat. This split is a miniature version of the trend playing out across the US: Migration is pushing more people into harm's way. The fastest-growing states in the country are in the Sun Belt: Texas, Florida, Georgia, and the Carolinas. The Sun Belt also happens to be the part of the country <a target="_blank" class="" href="https://www.businessinsider.com/real-estate-housing-market-prediction-sun-belt-climate-change-zelman-2024-7">most at risk of extreme heat</a> as the climate crisis gets worse. There were <a target="_blank" href="https://www.texastribune.org/2024/01/12/texas-heat-deaths-2023-record-climate-change/">more than 300 heat-related deaths in Texas</a> last year. And that's to say nothing of the risk Gulf states face from hurricanes, which climate change has similarly exacerbated.The shift to the Sun Belt isn't part of some sublimated death drive or a desire to test the limits of modern sunscreen. The reason for the mass movement is pretty simple: People are going where they can afford housing. Compare homebuilding in Houston (average daily July high of 95 degrees) with homebuilding in San Francisco. I've found that <a target="_blank" href="https://cayimby.org/reports/housing-first/">Houston had roughly three times as many housing starts per capita in 2021 as San Francisco</a>, and even in parts of the past decade where Houston's housing starts dipped a bit, <a target="_blank" class="" href="https://www.businessinsider.com/houston-building-cheap-new-starter-homes-real-estate-construction-lots-2024-1">they were still significantly higher than San Francisco's</a>. No wonder, then, that a one-bedroom apartment in <a target="_blank" class="" href="https://www.businessinsider.com/austin-real-estate-housing-market-prices-houston-zoning-affordable-2023-8">Houston costs half as much</a> as one in San Francisco, even though Houston has increased its population by more than 200,000 residents since 2010. Houston's ability to build more housing than San Francisco comes down to the rules the two cities impose on the construction of new housing. The same could be said of much of the rest of the Sun Belt. Houston is an extreme example because it literally does not have a zoning code, but in general, Sun Belt cities tend to have much looser zoning and permitting rules than high-cost California cities.Even within many states, new housing tends to get built in the areas most vulnerable to climate disasters. Once again, take California: San Francisco and other exclusionary coastal towns block new housing, so much of the state's homebuilding takes the form of single-family sprawl deep into extremely hot inland, low-lying areas or into what's called the <a target="_blank" href="https://affiliate.insider.com?h=92a86309da8af9c28c10ca5b6aa5757a3e91f2f44f8b02e2d254a15f222499c9&amp;postID=66c33fc47d61a86c186c52d0&amp;postSlug=affordable-home-house-prices-americans-danger-death-climate-change-2024-8&amp;site=bi&amp;u=https%3A%2F%2Fwww.nature.com%2Farticles%2Fs41598-022-09707-7">wildland-urban interface</a>: the part of the state where forest fires crash up against human habitation, with deadly results. Ironically, some of this allocation is done under the cover of environmentalism. The California Environmental Quality Act requires developers to go through a convoluted environmental-review process to get their projects approved. While California's legislature has spent the past few years expanding the types of projects that are exempt from the law, it's still a powerful tool that not-in-my-backyarders, or NIMBYs, can use to block development in their neighborhoods. Unsurprisingly, the threat of CEQA litigation tends to loom largest in affluent, exclusive communities; the risk of litigation is lowest in sparsely populated areas, where there are few residents to complain about new housing. Thus the law actually creates an incentive to concentrate development in the wildland-urban interface, away from the more densely populated areas that also happen to be more fire-resistant.To be sure, income and climate risk are not perfectly correlated; <a target="_blank" class="" href="https://www.businessinsider.com/million-nantucket-beach-house-sold-200k-after-erosion-swallows-land-2024-7">several wealthy enclaves</a> are at <a target="_blank" class="" href="https://www.businessinsider.com/nantucket-homes-wealthy-falling-into-ocean-erosion-climate-2024-5">risk of coastal erosion</a>. And a fair amount of high-value real estate is nestled in the wildland-urban interface, as the San Francisco Bay Area learned during the 1991 Oakland Hills fires and as Los Angeles learned during the 2018 Woolsey fire that chewed up Malibu. But America's housing shortage tends to distribute climate-related suffering along class lines. Even if they manage to avoid sudden catastrophes, people who have been pushed out to the urban periphery may well face subtler long-term consequences. If living in a wildfire-prone area doesn't kill you or destroy your house, it can still increase your exposure to toxic smoke, <a target="_blank" class="" href="https://www.businessinsider.com/symptoms-poor-air-quality-exposure-harms-health-wildfire-smoke">which can lead to serious respiratory and cardiovascular conditions</a>. Beyond the risks from heat, fire, and smoke inhalation are the more quotidian harms of being geographically cut off from the center of a metropolitan area. In 2010, nearly 10% of Americans lived in areas where it would take them more than an hour to reach a trauma-care center in the event of an emergency. For those who work in the central city, even the long commute from the exurbs can be dangerous. <a target="_blank" class="" href="https://www.businessinsider.com/public-transportation-commuting-health-driving-2015-2">Long car commutes</a> have been <a target="_blank" class="" href="https://www.businessinsider.com/commuting-by-car-is-hurting-peoples-mental-health-2023-7">associated with higher blood pressure</a>, and that's to <a target="_blank" class="" href="https://www.businessinsider.com/ways-your-commute-is-slowly-killing-you-2016-2">say nothing of the other risks</a> associated with a long ride in a country where traffic collisions <a target="_blank" class="" href="https://www.businessinsider.com/vehicle-related-deaths-increase-car-safety-pedestrians-cyclists-2023-9">kill more than 40,000 people each year</a>. If we could somehow wish away the large and growing risk of climate disasters, sprawl would still be bad for American public health.<h2>What makes a home</h2>In his book about Hurricane Katrina, the historian Andy Horowitz writes that "disasters are less discrete events than they are contingent processes." The true disaster is not the hurricane on its own but how the hurricane collides with society, politics, and infrastructure. A hurricane of a certain strength, speed, and rainfall can have drastically different effects depending on whether it makes landfall in an uninhabited area, a thoroughly prepared city, or a city with inadequate levees, entrenched patterns of residential segregation, and an ill-equipped emergency-response system.Similarly, the safety of our communities is directly tied to choices about where, how, and why we build them. Sure, small things like doing controlled burns, making air conditioning more widely available, and building better evacuation routes can reduce some of the dangers created by pushing people out to the periphery. But we have a moral imperative to allow more homebuilding in the parts of the country that are already well positioned to accept more people. While NIMBYs have cleverly cited environmental concerns to block housing development in these areas, making it possible for more people to live in them is essential to sustainably and safely growing our country for the next generation.<a target="_blank" rel="" href="https://www.businessinsider.com/author/ned-resnikoff">Ned Resnikoff</a> is the policy director of California YIMBY and co-leader of the Metropolitan Abundance Project.

The deadly cost of America's housing crisis

<ul class="summary-list"><li>Abaxx is a new commodities exchange that aims to stabilize prices and aid the energy transition.</li><li>"Trade and network keeps the world at peace," Abaxx's CEO told BI.</li></ul>The race to clean-up the global economy is on.Investment in the <a target="_blank" class="" href="https://www.businessinsider.com/us-renewable-energy-transition-solar-electric-vehicles-hit-records-2024-2">energy transition</a> — a broad shift from fossil-based energy production systems to renewable resources like wind and solar power — hit $1.8 billion in 2023, with countries like China and the United States leading the charge, according to BloombergNEF, an energy research company. The International Energy Agency says total investment in clean energy could reach $2 trillion by the end of the year.But the shift to a cleaner, lower-carbon world doesn't depend solely on the work of government officials, legislators, or even major businesses. It also hinges on players working behind the scenes to secure the prices of key commodities like liquefied natural gas, essential for electricity generation and heating, and <a target="_blank" class="" href="https://www.businessinsider.com/fund-carbon-removal-corporates-avoid-bad-credits-2023-2">carbon offsets</a>, which help companies counteract the impact of their carbon emissions.A new Singapore-based commodities exchange called Abaxx, which launched in June, is working to do that by providing companies, governments, and project developers with a transparent marketplace for their trades. Commodities markets help stabilize prices by helping suppliers and consumers figure out fair prices, hedge against volatile price changes, and execute efficient and transparent transactions.Exchanges like Abaxx play a role in this because they help lock in prices and mitigate drastic fluctuations in the future. Abaxx deals in futures contracts, legally binding agreements to buy or sell commodities at a specified future date. Three regionally deliverable liquified natural gas contracts and two carbon offset contracts are already trading on the exchange. It's working on launching futures contracts for gold and battery metals, like lithium, a component in <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-tesla-cheaper-electric-vehicle-battery-technology-lithium-shift-2023-3">batteries that power EVs like Tesla</a>.Josh Crumb, the CEO and founder of Abaxx, says unclear pricing can lead to higher and more volatile prices for consumers while also forcing commodity producers to navigate turbulent investment cycles."If we look at the battery supply chain, nickel sulfate, lithium, cobalt, these things have gone through huge swings of boom and bust over the last couple of years," Crumb told Business Insider. "The main reason why is we don't have a lot of market transparency so that people can forward plan, price, hedge, all of that."Crumb first realized that the commodity industry needed more innovation when he was working as a <a target="_blank" class="" href="https://www.businessinsider.com/rip-goldman-sachs-wall-street-investment-bank-dead-2023-11">strategist at Goldman Sachs</a> in the years following the 2008 financial crisis. That coincided with the end of the commodities boom of the 2000s, during which the prices of many commodities, from food to oil to chemicals, had drastically surged.Now, with trading in full swing, Crumb hopes Abaxx will play a role in stabilizing what he sees as the next commodity investment cycle — marked not just by a need for new commodities to facilitate the energy transition but also a surge in electrification."When people speak of the energy transition to a lower carbon economy, they are usually speaking of replacing internal combustion engines with electric vehicles, with electricity supplied by low carbon renewables, hydro, and nuclear power. This will lead to a dramatic increase in electricity consumption," a representative for Crumb wrote to Business Insider by email. Between 2022 and 2050, global electricity generation is expected to surge at a faster rate than it did over the past decade, according to a report from the International Energy Agency.Most importantly, though, exchanges like Abaxx could play a critical role in geopolitics, Crumb said. "You want more transparency; you want more markets because we think that leads to more peace," he said. "We think trade and networks keeps the world at peace."

Founder of new commodities exchange explains how it can fuel the green energy transition

India’s diamond industry is grappling with a severe downturn as both imports and exports have significantly declined over the past three years, triggering defaults, <keyword id="23043782" type="General" weightage="20" keywordseo="factory-closures" source="keywords">factory closures</keyword>, and widespread <keyword id="20013745" type="General" weightage="20" keywordseo="job-losses" source="keywords">job losses</keyword>, according to a report by the Global Trade Research Initiative (<keyword id="19962754" type="General" weightage="20" keywordseo="GTRI" source="keywords" meta.keywordsubtype="org" meta.entityname="GTRI" meta.hostid="261" meta.entityid="GTRI">GTRI</keyword>). The think tank highlighted that the sector is struggling with unsold <keyword id="20237406" type="General" weightage="20" keywordseo="rough-diamonds" source="keywords">rough diamonds</keyword> and increasing competition from lab-grown alternatives. Ajay Srivastava, Founder of GTRI, pointed out that the downturn in India’s diamond industry has had devastating effects. "This has led to defaults, factory closures, and widespread job losses. Tragically, more than 60 individuals from Gujarat’s diamond sector have taken their own lives, highlighting the intense financial and emotional stress," Srivastava said. He emphasised the urgent need for intervention to address these issues and ensure the survival of the sector. <h2>Declining imports and exports</h2>Data from GTRI paints a grim picture of the industry. Imports of rough diamonds have dropped by 24.5%, from USD 18.5 billion in 2021-22 to USD 14 billion in 2023-24, reflecting weakened global demand and fewer orders for diamond processing. After accounting for re-exported rough diamonds, net imports saw a 25.3% decrease, signalling reduced interest in processing diamonds in India. The situation is even worse on the export front. Exports of cut and polished diamonds fell by 34.6%, from USD 24.4 billion in FY 2022 to USD 13.1 billion in FY 2024. Net exports experienced an even sharper decline, dropping by 45.3% from USD 15.9 billion to USD 8.7 billion, indicating a weak global market and rising inventories of unsold diamonds. <h2>Rising inventories and market competition</h2>The report also highlighted that the percentage of unsold diamonds returned to India increased from 35% to 45.6% during this period. Additionally, the gap between net rough diamond imports and net exports of cut and polished diamonds widened from USD 1.6 billion in FY 2022 to USD 4.4 billion in FY 2024, signifying a growing stockpile of unsold inventory and insufficient export demand. Several factors contribute to this crisis. Global economic uncertainty, inflation, and geopolitical tensions — particularly in key markets like the US, China, and Europe — have led to decreased spending on luxury items such as diamonds. Fluctuating global diamond prices have added to this uncertainty, causing buyers to hesitate in purchasing rough diamonds. <div type="Article" hostid="261" msid="113445065" title="&amp;#39;The pressure became too much for her&amp;#39;: Mother blames &amp;#39;work stress&amp;#39; for 26-year-old EY employee&amp;#39;s death" mstype="2" mssubtype="0"></div>Moreover, the Russia-Ukraine conflict has disrupted the global diamond supply chain, with sanctions on Russia, a major producer of rough diamonds, further complicating trade. This slowdown has impacted the global market, stalling the flow of diamonds and affecting India’s processing sector. Another challenge facing the industry is the shift in consumer preferences toward <keyword id="20662742" type="General" weightage="20" keywordseo="lab-grown-diamonds" source="keywords">lab-grown diamonds</keyword>, which are seen as more affordable, ethical, and sustainable. This shift is particularly evident in markets where customers are becoming more conscious of the environmental and ethical implications of their purchases. <h2>Internal regulatory and operational hurdles</h2>Internally, the Indian diamond sector is facing a host of challenges. Many polishing units are burdened with unsold inventories of polished diamonds, discouraging them from importing new rough diamonds. Rising operational costs, including labour, energy, and materials, have also made it difficult for many polishing units to remain profitable. These factors have led to the closure of many shops and significant layoffs, particularly in Surat, the world’s largest hub for diamond cutting and polishing. The sector's heavy reliance on financing has also become a problem. Tighter credit conditions and reduced lending from banks have made it increasingly difficult for businesses to purchase rough diamonds, further stalling production. Additionally, a significant number of cut and polished diamonds exported from India are being returned due to quality issues, overstocking, and price fluctuations, creating costly delays and adding to the strain on exporters. <h2>Dubai's rising influence</h2>An interesting development highlighted by GTRI is the increasing share of rough diamond imports from Dubai, which does not produce diamonds itself. Instead, Dubai imports diamonds from countries like Botswana, Angola, South Africa, and Russia and re-exports them to India. Dubai’s share in India’s rough diamond imports surged from 36.3% in FY 2020 to 60.8% in FY 2024, further rising to 64.5% in April-June 2024. In contrast, Belgium’s share of these imports fell from 37.9% in FY 2020 to 17.6% in FY 2024. One major reason for Dubai's increasing role is India’s high corporate tax regime, which pushes foreign suppliers of rough diamonds to re-export their diamonds to Dubai before sending them to India. This has rendered India’s Special Notified Zones (SNZs) in Mumbai and Surat largely ineffective. <h2>Revitalising the sector</h2>To help revitalise the struggling sector, GTRI has proposed several measures. These include extending export credit terms, exempting foreign rough diamond sellers from corporate taxes in India, regulating the lab-grown diamond industry, and reconsidering the zero-tariff import of cut and polished diamonds from Dubai under the India-UAE trade agreement. The think tank also suggested that the Reserve Bank of India (RBI) extend the export credit period for cut and polished diamond exporters from six months to 12 months, as buyers are increasingly demanding longer credit terms. India’s strong foreign exchange reserves make this feasible. <div type="Article" hostid="261" msid="113449316" title="Small businesses generated 35 million job applications till Aug 2024, 14 million were from women: Report" mstype="2" mssubtype="0"></div>The Indian diamond industry, which consists of over 7,000 companies — many of them small or medium enterprises — provides direct employment to about 1.3 million workers, with Surat alone employing nearly 8,00,000 people. The industry is also crucial for millions of indirect jobs in sectors like logistics, transport, and retail. With the sector being such a vital part of India’s economy, immediate and coordinated efforts are needed to address its current challenges and ensure its long-term viability. (With inputs from PTI)

India's diamond sector faces major crisis amid plummeting imports, exports, and massive job losses

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Happy Friday! Looking for a new way to jumpstart your mornings? (Besides reading this newsletter, of course.) Retired Navy SEAL Jocko Willink <a target="_blank" href="https://www.businessinsider.com/former-navy-seal-military-morning-routine-helps-him-in-business-2024-10">shared his daily routine</a> that keeps the now-business owner focused.Speaking of new, we've got a cool tool for you to play around with: AI-powered search. We're using generative AI to help easily find all of our great stories. <a target="_blank" href="https://www.businessinsider.com/">Check it out on our homepage</a>.In today's big story, inside Amazon's internal pitch for turning to nuclear power <a target="_blank" href="https://www.businessinsider.com/amazon-nuclear-power-strategy-ai-2024-10">to meet its growing energy needs</a>.What's on deck:<ul><li>Markets: <a target="_blank" href="https://markets.businessinsider.com/news/stocks/tesla-stock-price-q3-earnings-elon-musk-profit-margins-guidance-2024-10">Tesla's stock had a monster day</a> following its stellar earnings report.</li><li>Tech: In an exclusive interview, <a target="_blank" href="https://www.businessinsider.com/marc-benioff-salesforce-ceo-interview-microsoft-ai-threatens-crm-lead-2024-10">Marc Benioff bashes Microsoft's Copilot</a>.</li><li>Business: The <a target="_blank" href="https://www.businessinsider.com/what-is-going-on-with-economy-jobs-inflation-election-voting-2024-10">good and bad about the economy</a> less than two weeks from the election.</li></ul>But first, let's power up.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h3 id="7fa5f018-5b05-4a37-a8dc-d3f89138bcb3">The big story</h3><h2 id="5fd547b9-ec52-41fc-8e08-4f4b27dd8097">Nuclear needs</h2><div type="image" title="Amazon logo with smoke coming out." height="1250" width="2500" msid="114590276" hostid="261" sizebytes="87984"></div>What's bigger than tech's ambitious plans for generative AI? The amount of energy needed to power it.That's led Big Tech to consider nuclear power to address its skyrocketing energy requirements.Business Insider's Eugene Kim has a report on <a target="_blank" href="https://www.businessinsider.com/amazon-nuclear-power-strategy-ai-2024-10">how Amazon navigates its nuclear ambitions</a>. In a signal of how serious Amazon is about going nuclear, the company pitched the energy source to CEO Andy Jassy this June, according to a company document he obtained.Since then, Amazon has led a $500 million financing round for a company developing modular nuclear reactors. It also agreed to purchase power from Talen Energy's nuclear-powered data center in March.And it's not alone.Microsoft and Google have invested in the sector, and OpenAI CEO Sam Altman backed a nuclear reactor startup.The stakes are high for tech players to get energy. Eugene previously reported on how Amazon's dreams of building a data center empire <a target="_blank" href="https://www.businessinsider.com/amazon-data-centers-delays-costs-power-labor-shortages-aws-ai-2024-10">face the realities of electricity, water, and labor constraints</a>.Should those data center efforts continue to struggle, companies' big bets on generative AI could also falter.<div type="image" title="Protesters at Three Mile Island." height="470" width="700" msid="114590280" hostid="261" sizebytes="35920"></div>A tech-nuclear relationship is mutually beneficial.Tech companies need cost-efficient, reliable energy sources <a target="_blank" href="https://www.businessinsider.com/google-nuclear-power-ai-data-centers-2024-10">that won't increase their carbon footprint</a>, writes BI's Hasan Chowdhury. Nuclear power ticks that box better than other clean energy options like solar or wind.Nuclear power, meanwhile, <a target="_blank" href="https://www.businessinsider.com/data-centers-amazon-ai-nuclear-power-grid-2024-5">is an industry in desperate need of some love</a>, BI's Daniel Geiger and Ellen Thomas previously reported. With at least one commercial nuclear plant closing every year since 2013, the sector has welcomed the interest."We're seeing customers approach us at a rate that we haven't seen in my history with this industry," Jim Burke, CEO of nuclear owner Vistra, said back in March.Naturally, there are skeptics. A byproduct of nuclear power is radioactive waste. The transportation and storage of that remains a hot-button issue. High-profile incidents involving power plants like Chernobyl and Fukushima also drew criticism and stoked fears around the globe.Big Tech hasn't shied away from it. In September, Microsoft cut a deal with Constellation Energy to get power from <a target="_blank" href="https://www.businessinsider.com/three-mile-island-nuclear-plant-reopens-power-microsoft-ai-push-2024-9">part of the Three Mile Island nuclear plant</a>, home to the worst commercial nuclear accident in US history.<h3 id="77f31a4c-8462-4e3d-a71f-838cb79493fb">News brief</h3><h2 id="1fcd294b-3f53-425f-9f20-4093e8623b59">Top headlines</h2><ul><li>Exclusive: Maven Clinic is swapping out its finance chiefs <a target="_blank" href="https://www.businessinsider.com/mavens-cfo-out-as-womens-health-startup-gets-fresh-funding-2024-10">as the women's health unicorn looks ahead to an IPO</a>.</li><li>The 'whale' placing huge bets on a Trump win is a French national with <a target="_blank" href="https://www.businessinsider.com/polymarket-donald-trump-betting-odds-whale-french-trader-harris-polls-2024-10">extensive trading experience</a>.</li><li>The New York Liberty celebrated its first-ever championship and record-breaking WNBA season <a target="_blank" href="https://www.businessinsider.com/new-york-liberty-wnba-championship-parade-photos-2024-10">with a jubilant party</a>.</li><li>Former Avenue employee accused of 'blackmailing' billionaire Marc Lasry countersues, claiming sexual harassment <a target="_blank" href="https://www.businessinsider.com/billionaire-marc-lasry-accused-of-sexual-harassment-in-countersuit-2024-10">including forced kissing, groping, and comments about her body</a>.</li><li>Putin once asked Elon Musk to not activate Starlink over Taiwan as a <a target="_blank" rel="noopener" href="https://www.businessinsider.com/putin-elon-musk-starlink-taiwan-china-favor-xi-jinping-report-2024-10">favor to Xi Jinping</a>: report.</li></ul><h2 id="8120060b-ae66-48dc-b149-f0489a30ffa2">3 things in markets</h2><div type="image" title="Name plates on blue background" height="900" width="1200" msid="114590272" hostid="261" sizebytes="60254"></div><ol><li>Welcome to the world of hedge funds, where job titles are made up and don't matter. Unlike its Wall Street peers, the $4.3 trillion hedge-fund industry <a target="_blank" href="https://www.businessinsider.com/an-inside-look-at-hedge-fund-job-titles-2024-10">has little uniformity regarding titles</a>. The naming free-for-all means employees and hiring managers can take advantage of using trumped-up titles.</li><li>Tesla's stock just went from 0 to 60. Shares of the EV giant <a target="_blank" href="https://markets.businessinsider.com/news/stocks/elon-musk-net-worth-gains-tesla-stock-price-earnings-tsla-2024-10">finished the day up almost 22%</a> after Wednesday's strong earnings report. Elon Musk added $30 billion to his net worth from the spike.</li><li>The election's biggest risk to the market isn't who wins but how long it takes to decide. BlackRock Investment Institute head Jean Boivin said <a target="_blank" href="https://markets.businessinsider.com/news/stocks/us-presidential-election-trump-harris-outlook-volatility-stock-sell-off-2024-10">a contested election would be bad news for investors</a>. He's not alone in his concerns, as others have pointed to short-term volatility when results were delayed in 2020 and 2000.</li></ol><h2 id="f4b54806-7f81-450c-ba32-92560d4fae9b">3 things in tech</h2><div type="image" title="Salesforce CEO Marc Benioff." height="1333" width="2000" msid="114590275" hostid="261" sizebytes="41956"></div><ol><li>Marc Benioff isn't buying Microsoft's AI hype. In an exclusive interview with BI, <a target="_blank" href="https://www.businessinsider.com/marc-benioff-salesforce-ceo-interview-microsoft-ai-threatens-crm-lead-2024-10">the Salesforce CEO bashed Microsoft's AI Copilot</a>, calling it inaccurate and dubbing the tool "Clippy 2.0." Benioff's diss came after Microsoft recently announced new Dynamics 365 AI agents, directly competing with a new Salesforce product available today.</li><li>Keep your eyes on these 13 creator-economy startups. New startups are finding ways to break into an industry dominated by Big Tech. BI asked venture capitalists which new creator companies they felt showed promise. From advertising platforms to AI tech companies, <a target="_blank" href="https://www.businessinsider.com/promising-creator-economy-influencer-marketing-startups-per-top-vcs-2024-10">here's the startups to watch</a>.</li><li>A longtime safety researcher left OpenAI. Miles Brundage, who advised OpenAI leadership on safety and policy, <a target="_blank" href="https://www.businessinsider.com/another-safety-researcher-is-leaving-openai-2024-10">announced his departure</a> on X. The AGI Readiness team he oversaw will also be disbanded. Brundage's exit is the latest in a string of high-profile departures from the startup.</li></ol><h2 id="9260fa45-d397-4b3c-b4f8-4bb193976216">3 things in business</h2><div type="image" title="Ben Franklin flag on red background" height="900" width="1200" msid="114590270" hostid="261" sizebytes="100740"></div><ol><li>Here's what's going on with the economy ahead of the election. For many Americans, the state of the economy is top of mind heading into the polls. The good news? <a target="_blank" href="https://www.businessinsider.com/what-is-going-on-with-economy-jobs-inflation-election-voting-2024-10">It's doing broadly well</a>. The unemployment rate remains relatively low, and inflation has slowed. Still, other not-so-great data points have voters feeling pessimistic.</li><li>The housing crisis, as explained by two swing states. Renters and homeowners in swing states have been disproportionately affected by rising housing costs. Two states, Pennsylvania and Arizona, exemplify the problem. While Arizona's population is surging, Pennsylvania's is shrinking — <a target="_blank" href="https://www.businessinsider.com/arizona-pennsylvania-swing-state-home-prices-surge-housing-shortage-2024-10">and neither can build enough homes</a>.</li><li>Behind the scenes of Emma Tucker's Wall Street Journal makeover. Tucker joined the legacy outlet in 2023 with a focus on diversifying and growing the paper's subscriber base. So far, it seems to be working, with subscriptions increasing by 11% over the past year. <a target="_blank" href="https://www.businessinsider.com/wall-street-journal-editor-emma-tucker-interview-peter-kafka-2024-10">She spoke with BI about how she's remaking the paper</a> — including reorganizing and cutting staff.</li></ol><h2 id="1ad7b482-3f4b-44b4-81b6-a864aa386478">In other news</h2><ul><li>Jensen Huang says <a target="_blank" href="https://www.businessinsider.com/jensen-huang-tsmc-helped-fix-design-flaw-with-nvidias-blackwell-2024-10">a design flaw with Nvidia's Blackwell chips has been fixed</a> — with TSMC's help.</li><li>Why some CEOs are <a target="_blank" href="https://www.businessinsider.com/jamie-dimon-bill-gates-ceo-avoid-criticizing-trump-2024-10">afraid of publicly criticizing Trump</a>.</li><li>Norway wants to ban under-15s from social media, and <a target="_blank" href="https://www.businessinsider.com/norway-ban-social-media-kids-under-15-backfire-2024-10">expects an 'uphill battle.'</a></li></ul><h2 id="9f5d80ac-3466-429f-a50a-2ffbb70c65ff">What's happening today</h2><ul><li>Former Abercrombie &amp; Fitch CEO Mike Jeffries will be arraigned on sex trafficking charges in federal court.</li><li>SpaceX's Crew-8 mission crew returns to Earth today.</li></ul>The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Milan Sehmbi, fellow, in London.

Big Tech goes nuclear: Amazon's pitch to use power plants shows the crucial role the energy source plays for AI

Imagine a lunar Noah’s Ark, but instead of two-by-two, it’s millions by millions — and instead of a big boat, it’s a frosty <keyword id="19899207" type="General" weightage="20" keywordseo="moon" source="keywords">moon</keyword> crater. This intriguing idea is gaining traction among scientists who suggest using the moon as a celestial safehouse for Earth's <keyword id="20208424" type="General" weightage="100" keywordseo="endangered-species" source="keywords">endangered species</keyword>. Earth is bustling with life, with estimates suggesting up to 8 million species call our planet home. Yet, over 1 million of these are facing imminent extinction, often before we even get a chance to discover them. To combat this <keyword id="21547970" type="General" weightage="20" keywordseo="biodiversity-crisis" source="keywords">biodiversity crisis</keyword>, Mary Hagedorn from the Smithsonian's National Zoo and Conservation Biology Institute proposes an innovative solution: a <keyword id="22642665" type="General" weightage="20" keywordseo="lunar-biorepository" source="keywords">lunar biorepository</keyword>. This lunar library would store “fibroblast cells” — essential building blocks of animal skin that support tissues and organs. By cryopreserving these cells in the moon's naturally cold regions, we could potentially clone and revive species that might otherwise vanish forever. <h2>Freezing life in time</h2><keyword id="22542865" type="General" weightage="20" keywordseo="cryopreservation" source="keywords">Cryopreservation</keyword> – the process of deep-freezing biological material to suspend its biological functions — may be a common theme in sci-fi, but you may be surprised to know that it is already a proven technology on Earth. The only problem is that our planet lacks natural cryogenic conditions, forcing us to rely on expensive, energy-intensive methods to keep samples frozen. <div type="Article" hostid="261" msid="111772552" title="Newly discovered Moon caves could shelter astronauts as they set up lunar bases!" mstype="2" mssubtype="0"></div>That’s why scientists are looking at the moon's polar craters, where some areas haven't seen sunlight in billions of years. These permanent shadows maintain temperatures well below -196°C, creating a perfect environment for passive cryopreservation. Unlike Earth, where maintaining such conditions is a costly affair, the moon offers a naturally occurring deep freeze. If this lunar library sounds familiar, that's because it echoes the concept behind the Svalbard Global Seed Vault, often dubbed the "<keyword id="4371119" type="General" weightage="20" keywordseo="doomsday-vault" source="Orion">Doomsday Vault</keyword>." Nestled in the Arctic permafrost, the Svalbard vault stores seeds from around the world, ensuring agricultural diversity in the face of global crises. <h2>A logistical mountain</h2>However, sending our endangered species' <keyword id="21903960" type="General" weightage="20" keywordseo="genetic-material" source="keywords">genetic material</keyword> to the moon isn't as simple as packing a suitcase. The logistical hurdles are as immense as the concept itself. Samples would need robust protection against space radiation and the rigours of space travel. Then there's the challenge of international collaboration and funding — a cosmic piggy bank of sorts to support such an ambitious project. <div type="Article" hostid="261" msid="111684049" title="The next generation of customised space suits may be moulded around astronauts’ genitalia to filter water from urine!" mstype="2" mssubtype="0"></div>Hagedorn and her team are already taking the first steps. Their work with the starry goby (Asterropteryx semipunctata), a carnivorous blue-speckled fish, aims to refine cryopreservation techniques for the lunar environment. This tiny fish might just be the pioneer in a journey that saves countless species from oblivion. As we grapple with an <keyword id="22642666" type="General" weightage="20" keywordseo="extinction-crisis" source="keywords">extinction crisis</keyword> on Earth, the moon, with its ancient, ice-cold craters, offers a unique lifeline — a place where the essence of endangered species can be kept in suspended animation, awaiting a future where they might roam the Earth once more. The findings of this research have been published in BioScience and can be accessed <a href="https://academic.oup.com/bioscience/article-lookup/doi/10.1093/biosci/biae058">here</a>.

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India's diamond sector faces major crisis amid plummeting imports, exports, and massive job losses

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