Last week, the Federal Reserve (Fed) significantly delayed any future interest rate hikes, leaving rates unchanged during their June meeting. Currently most members of the Federal Open Market Committee, the decision-making body of the Fed, foresee only one rate hike for the remainder of the year. Two weeks ago, I had predicted that in light of new data, the Fed would delay raising rates indefinitely, putting off any hikes until 2017. That prediction looks even more likely now. A global slowdown in growth coupled with major uncertainty of the future of the EU and China's economy may cause the Fed to publicly declare as much by the end of the summer, signaling a renewed period of accommodative monetary policy. Any hikes are off the table until December at the earliest and probably until the new year.
As the United Kingdom returns to the ballot boxes, Thursday, the fate of that country's future in the European Union hangs in the balance. Following the murder of Joanne Cox, a member of parliament representing Batley and Spen in the House of Commons, the Brexit vote has polarized the country. Beloved by many, Cox was a champion for those without a voice, including refugees hoping to make a new life in the U.K. A "Britian First" proponent is the accused murderer of Cox. Apparent ties to American neo-Nazi groups by the accused have put many proponents of Brexit in the uncomfortable position of standing on the same side of the issue as fringe groups. While the Brexit camp had led earlier polls, the EU supporters appear to have momentum on their side. I believe that "Bremain" supporters will be galvanized by this horrendous crime pushing the country to reject the referendum allowing the U.K. to remain in the EU. Should Brexit fail, many British politicians who have led the fight to leave the EU will find their political careers "Brexiting," most notably, former London Mayor, Boris Johnson.
I took part in a round table discussion last week addressing ways to help fight terrorism in Turkey and abroad. I wanted to share some thoughts on a potential step that I believe would be very effective in addressing the crisis that terror has become.
Generally there are two camps when it comes to addressing terror. The first camp argues that fighting terror using military mite is the only way. This is the "we don't negotiate with terrorists" camp. The second camp favors diplomacy and the use of other methods in trying to disarm terror groups. Both camps have had mixed levels of success globally. Generally the military solution is tried first and then "anything else" takes over as it has in much of South America and Western Europe.
While Turkey seemingly tried "diplomacy" for over a decade only to be drawn back into fighting various terror groups within Turkey and Syria, it may not have tried everything. One step that may help is moving non-essential divisions of government agencies away from Ankara, Turkey's capital.
There is a theory that all terror is based on the ability of a certain few leaders of terror to influence or coerce new members in joining their organization. This theory holds that ideological beliefs are not the driving factor in "signing-up" new members, that is, most members of terror groups do not believe in the group's ideology necessarily. I tend to agree with this theory. Conditions such as extreme poverty undoubtedly make it much easier to influence impressionable youth into joining a terror group and later carrying out terror attacks.
Investing in depressed areas that are hotbeds for such activity may be easier said than done. But what may be a much quicker "investment," is moving government agencies and the bureaucrats that run these agencies away from the capital. In this way, tens of thousands of government jobs will move to areas with lower income levels. This will give new opportunities to residents of areas where pervasive poverty exists to find steady employment, while allowing government employees more disposable income. Over time, these areas will develop to address the needs of government employees and the entire region will be lifted out of poverty making recruiting more difficult for terrorist groups.
Such a step will simultaneously address overcrowding in Ankara, unaffordable living conditions for government employees, and allow the remainder of the country to enjoy the diversity that an influx of workers from a different sector will add to the mosaic of that region.