Hey and welcome to issue #045 of the abroaden weekly insights newsletter (formerly WTF is going on with the Economy?!) where we go over the baby bust. The featured photo is by Battlecreek Coffee Roasters on Unsplash, which was one of the top results when I searched for “pregnancy test.” Either there’s an algorithm problem or I need to urgently research the side-effects of coffee.
What We’re Watching This Week
- Europe’s vaccine response and its impact on the global economy
- The baby bust no one saw coming
- Our featured piece in the amazing Barcinno newsletter
- The Turkish Lira takes a tumble (again)
- The Washington Post’s neat new word for digital nomads
- The EU’s plan to give startups and talent a powerful new tool
Europe’s Vaccine Response🇪🇺💉
Last week, the international affairs magazine Foreign Policy ran an article on the state of the EU’s vaccination drive. While many passages concerned us, this one below particularly stood out:
“The union’s resulting macroeconomic outlook is, in one word, lousy. The bloc’s largest economies are also its oldest and most policy-cautious.”
At this point in the pandemic, it’s clear that both policymakers and consumers won’t feel comfortable returning to normal until the majority of adults get their jabs. Until that time comes, we’ll remain stuck in this economic no man’s land where economies stay in first gear.
However, Europe’s problems don’t stay within the old continent’s borders. As the Wall Street Journal’s editorial board recently wrote (potential paywall), the global economy can’t return to normal without one of its biggest pieces. Hopefully, leaders across Europe will fix these hiccups within the coming weeks.
The Baby Bust No One Saw Coming🙅
This time last year, most of the planet was in a varying degree of confinement, staying at home to beat back the first wave of the pandemic. During this unknown and frankly scary period, wild predictions on the future were spreading almost as fast as the virus. One of the boldest predictions was that we’d see a baby boom starting in late 2020 and continuing until nine months after the pandemic finishes.
After all, with couples locked at home and with nothing else to do, they’d, uh, “get to work” growing their household. As with most prophecies from last March, the baby boom never materialized.
The opposite happened.
Over the past year, births and expected birth rates fell to some of their lowest levels in recent memory.
As it turns out, sitting at home in pajamas with the same person 24/7 for weeks on end while the economy went down the toilet doesn’t exactly set the mood romantically. Throw in the economic uncertainty, and it makes total sense that people put off procreation.
Aside from writers’ hurt feelings everywhere, this year’s baby bust will ripple for decades to come.
The slowdown in births in the west means fewer workers per retired persons 25 years from now. For governments, that means less tax revenue from workers. In turn, they’ll have to make painful decisions, specifically do they:
- Increase taxes
- cut benefits
- raise the retirement age
None of those are appealing choices. Whatever they do, furthermore, will impact the way people interact with the economy.
Policymakers will need to reconcile this coming reality today.
Meanwhile, people should make sure that they’re correctly investing in their retirement and not wholly dependent on a state pension (oh, on that, we’re building a platform to help you with all of that /ninja pitch)
Our Feature in Barcinno🎉🤗
Speaking of self-promotion, our co-founder, Elliott, was recently featured on the excellent Barcinno Tech Startup website. He’s currently writing a monthly piece on abroaden’s journey through the F10 incubator.
If you’re a fan of all things tech and startup, I highly recommend subscribing to their weekly update. Scott and Clemens do a fantastic job filling you in with everything you need to know about the Barcelona, Spanish, and European startup scene.
We’re building the first online financial adviser & investment manager for people living & working abroad like yourself. Sign up now to get on our early access list and receive a special offer.
Turkish Lira Drop🇹🇷⬇️
For Thanksgiving last year, we ran a feature piece on the Turkish economy. In short, political interference created instability at the central bank and chaos in the currency markets.
After what appeared to be a reprieve from the storm, Turkish President Erdogan removed the Central Bank president late on Friday.
In short, Turkey is one of the few countries in the world with a growing economy. However, the mismanagement of the currency created some of the highest inflation rates around.
Turkey’s president is of the (very) minority opinion that high interest rates cause inflation. In reality, higher interest rates stop inflation as consumers will keep their money in banks instead of spending it.
The saga is interesting for us because there’s a lot of buzz that we’re going to enter into a high-inflation cycle once the pandemic ends. We’re personally skeptical of that claim, but Turkey is giving us a first-hand case study on what that timeline might look like.
Last month, the Washington Post ran a thought piece on “slowmadism.” In short, this new buzzword is about digital nomads who are a bit slower to rotate in and out of countries.
In our experience, digital nomads (if you like that label) don’t work on any sort of time frame other than their work deadlines and visa limits. Even for the latter, extending your stay is a quick visa run away. The whole point of being a digital nomad is to decouple yourself from any long-term routine or setting.
Still, as these sorts of articles become more prevalent, people and policymakers will take note. As anyone who has lived abroad will tell you, it’s all fun and games until you need to get your papers taken care of. If cliche articles inspire governments to make remote working easier, then we say, bring ’em on!
The EU’s (Proposed) New Rules For Startups🚀
Finally, some good news for all of you startup types living in Europe. If you’ve ever spoken to a founder or even a highly-talented employee, you probably heard the word “stock options.”
In short, these enigmatic financial instruments allow companies to give promising key workers a share of the company. Startups (and even big companies) tend to like options because it’s a way to incentivize workers, build loyalty and save on salary.
However, despite their massive popularity in the United States, Europe kind of sucks at them. Most countries don’t have a legal framework for stock options; they either conflict with the legal system, never bothered to write rules or both.
Now, though, the EU is jumping in to create bloc-wide rules for employee stock options. This measure would give startups here a valuable tool in attracting and compensating highly-skilled workers. Considering that the US and China will be competing for global talent, a rule change on stock options in Europe couldn’t come sooner.