Superfluous packaging

As consumers grow increasingly conscious of the environmental toll of plastic packaging, many brands have taken steps to reduce their use of plastic. But at the same time, some brands have adopted a much less productive approach to the anti-plastic movement: adding superfluous paper packaging on top of plastic packaging to make their products look more environmentally friendly — without actually reducing plastic waste. Research found that this sort of overpackaging can indeed be effective in boosting consumers’ perceptions of sustainability, despite the fact that it is demonstrably worse for the environment (not to mention more expensive for manufacturers). However, they also found that simply adding a “minimal packaging” label to plastic packages can reduce the misperception that overpackaged products are more sustainable, enabling brands to attract environmentally-conscious consumers without creating unnecessary paper waste.

(Adapted from “How Unnecessary Paper Packaging Creates The Illusion Of Sustainability,” by Aradhna Krishna and Tatiana Sokolova, published by the Harvard Business Review)

End of the tech boom

As the market downturn drags on and investor cash remains hard to come by, more startups will start to run out of money, experts say. Some venture-backed companies will be forced to raise new funding even if it means agreeing to a lower valuation than they once secured, a deal called a down round, dreaded by founders and investors alike. Founders assiduously avoid down rounds because they signal that a company’s to-the-moon trajectory has been derailed, battering morale and wiping out millions, and sometimes billions, of paper wealth for startup founders and employees. Yet ask most tech industry professionals, and they will grimly confirm that such deals are becoming inevitable.

(Adapted from “Silicon Valley Startups Brace for a Summer of Pain,” by Lizette Chapman, published on April 24, 2023, by Bloomberg)

Steep payments and repairs

Cars are staying on the road longer, reaching an age where they need substantial repairs or break down. It is a key reason more people are falling behind on their auto loans. The trend, noted by lenders, consumer attorneys and others, is another example of the long-lasting effects of the pandemic, which transformed the auto industry by making new and lightly used vehicles hard to come by. Some lenders are getting spooked, tightening their standards so that drivers who want to buy older vehicles have fewer options for getting financing. Americans who already were discouraged by the rapid increase in car prices over the past few years could have an even harder time finding a car they can afford, or one that won’t guzzle up their savings after they buy it. Many consumers already struggled to pay the large car loans they took out to buy vehicles after prices surged in 2021 and early 2022. They are less likely to keep paying if they also have to foot steep bills to keep the cars on the road.

(Adapted from “Car Breakdowns Are Making More People Fall Behind On Their Loans,” by Ben Eisen and Gina Heeb, published on April 8, 2023, The Wall Street Journal)

Same story in Bolivia

There is no shortage of dollars,” announces a banner on the homepage of Bolivia’s central bank. “Our economy is strong, solvent and stable.” The need for the post suggests otherwise. For the past few weeks, Bolivians have desperately been trying to buy dollars. Investors are spooked. Government bonds maturing in 2028 have lost nearly half their value since January. The dollar shortage is partly a result of tighter global financial markets. When the Federal Reserve started raising interest rates last year, it became harder for Bolivia to take on foreign debt. Then came the war in Ukraine, and the annual cost of importing fuel doubled to more than $4bn (or 10pc of GDP). Though the country’s dollar shortage was exacerbated by short-term problems, it has been long in the making.

(Adapted from “Bolivia Is On The Brink Of An Economic Crisis,” by The Economist, published on April 18 2023)

Published in Dawn, The Business and Finance Weekly, May 8th, 2023