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Left and Proper Conflict in Peru Election, With an Financial Mannequin at Stake

LIMA, Peru – On paper, the candidates for the presidential election in Peru on Sunday are a left-wing former schoolteacher with no government experience and the right-hand daughter of an imprisoned ex-president who ruled the country with an iron fist.

However, voters in Peru face an even more elementary choice: whether to stick to the neoliberal economic model that has dominated the country for the past three decades and has achieved some previous successes but ultimately fails to make sense to millions of Peruvians during the time support the pandemic.

“The model let a lot of people down,” said Cesia Caballero, 24, a video producer. The virus, she said, “was the last drop to tip the glass.”

Peru suffered the region’s worst economic slump during the pandemic, pushing nearly 10 percent of its population back into poverty. On Monday, the country announced that the virus death toll was nearly three times what it was previously reported, suddenly raising the per capita death rate to the highest in the world. Millions were unemployed and many others were displaced.

Left-wing candidate Pedro Castillo, 51, a union activist, has pledged to overhaul the political and economic system to combat poverty and inequality and to replace the current constitution with one that gives the state a greater role in the economy.

His opponent Keiko Fujimori, 46, has vowed to uphold the free-market model of her father Alberto Fujimori, who was originally credited with fighting back violent left-wing uprisings in the 1990s, but who is now despised by many as a corrupt autocrat.

Polls show the candidates in a close tie. But many voters are frustrated with their options.

Mr Castillo, who has never held office, has teamed up with a radical former governor convicted of corruption to launch his application. Ms. Fujimori has been arrested three times in money laundering investigations and faces a 30-year prison sentence for running a criminal organization that traded illicit campaign donations during a previous presidential run. She denies the allegations.

“We are between an abyss and an abyss,” said Augusto Chávez, 60, an artisan jeweler in Lima, who said he could cast a defaced vote in protest. Voting is compulsory in Peru. “I think extremes are bad for a country. And they represent two extremes. “

Mr. Castillo and Ms. Fujimori each won less than 20 percent of the vote in a crowded first-round race in April that forced the runoff election on Sunday.

The election follows a rocky five-year period in which the country went through four presidents and two congresses. And the pandemic has taken voter discontent to new levels, fueling anger over unequal access to public services and growing frustration with politicians embroiled in seemingly endless corruption scandals and political settlements.

The hospital system has become so strained by the pandemic that many have died of a lack of oxygen, while other doctors have paid for places in intensive care units – only to be turned away in excruciating ways.

Who wins on Sunday, said the Peruvian sociologist Lucía Dammert: “The future of Peru is a very turbulent future.”

“The deep injustices and the deep frustration of the people have moved, and there is no organization or no actor, neither private companies, the state, nor trade unions, which could give this a voice.”

When Fujimori’s father came to power as a populist outsider in 1990, he quickly broke an election promise not to implement a market-economy “shock” policy promoted by his rival and Western economist.

The measures he took – deregulation, cuts in government spending, privatization of industry – helped put an end to years of hyperinflation and recession. The constitution he introduced in 1993 restricted the state’s ability to participate in business activities and dissolve monopolies, strengthened the autonomy of the central bank and protected foreign investments.

Subsequent centrist and right-wing governments signed more than a dozen free trade agreements, and Peru’s pro-business policies were declared a success due to Peru’s record poverty reduction during the commodity boom of this century.

But little has been done to remove Peru’s reliance on raw material exports and long-standing social inequalities, or to ensure health, education and public services for its people.

The pandemic exposed the weakness of the Peruvian bureaucracy and underfunding of the public health system. The country had only a small fraction of its peers’ intensive care beds, and the government was slow and inconsistent in providing even a small amount of cash to those in need. Informal workers were left without a safety net, which led many to turn to high-interest loans from private banks.

“The pandemic showed that the underlying problem was the order of priorities,” said David Rivera, a Peruvian economist and political scientist. “Apparently we had saved money for so long to use in a crisis, and during the pandemic we saw that macroeconomic stability remains a priority, not people dying and starving.”

Ms. Fujimori blames the country’s problems not on its economic model but on the way previous presidents and other leaders have applied it. Still, she says, some adjustments are needed, such as raising the minimum wage and raising pension payments for the poor.

She designed her campaign against Mr Castillo as a struggle between democracy and communism, sometimes using Venezuela’s socialist-inspired government, now in crisis, as a foil. Mr. Castillo, a native of the northern highlands of Peru, gained national recognition by leading a strike by the teachers’ union in 2017. He wears the broad-brimmed hat of the Andean farmers and has performed with supporters on horseback and dancing.

“For us in the countryside we want someone who knows what it’s like to work in the fields,” says Demóstenes Reátegui.

When the pandemic started, Mr Reátegui, 29, was one of thousands of Peruvians who hitchhiked from Lima to his rural family home after a government lockdown pushed migrant workers like him out of their jobs.

It took him 28 days.

Mr Castillo has revealed little about how to keep vague promises to ensure the country’s copper, gold and natural gas resources benefit Peruvians more widely. He has promised not to seize any of the company’s assets and instead renegotiate contracts.

He said he wanted to restrict imports of agricultural products to support local farmers, a policy that economists have warned against would lead to higher food prices.

If he wins, it will be the clearest rejection by the country’s political elite since Fujimori took office in 1990.

“Why do we have so much inequality? Are you not outraged? ”Said Mr Castillo at a recent rally in southern Peru, referring to the country’s elites.

“You can’t lie to us anymore. People woke up, ”he said. “We can recapture this country!”

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Business

Peloton’s conflict with company over Tread+ security might tarnish model

Maggie Lu uses a peloton treadmill during CES 2018 at the Las Vegas Convention Center on January 11, 2018 in Las Vegas, Nevada.

Ethan Miller | Getty Images

A public argument with a federal agency over safety concerns and a terrifying video of a child being pulled under a treadmill threaten the community Peloton has built.

Time-pressed parents and workout addicts who own Peloton products scratch their heads and visit social media platforms and community chat rooms to discuss the fitness equipment manufacturer’s response to the US Consumer Product Safety Commission. The agency is investigating the safety of Peloton’s high-end treadmill, which has now been linked to numerous injuries and the death of a child.

Peloton has said it has no intention of recalling its $ 4,300 Tread +, despite regulators and politicians calling for it.

The back-and-forth jeopardizes the launch of Peloton’s lower-priced treadmill machine in the US later this year. Branding experts and attorneys warn that the longer it drags on, the bigger the peloton is when there is a growing backlash from consumers that requires stronger damage control and costs more money.

“There’s a rule of thumb that goes back to the Tylenol case, where people were poisoned,” said Luc Wathieu, professor of marketing at Georgetown University’s McDonough School of Business.

Tylenol became a textbook crisis management case in the 1980s when someone tampered with extra-strong Tylenol capsules by adding deadly potassium cyanide and killing several people. Johnson & Johnson acted quickly to devise a strategy to regain American confidence.

“If there is a threat to the customer – one that is so public – you have to overcompensate,” said Wathieu in a telephone interview. “But for some reason, companies tend not to do this, even though it has been shown time and time again that you need to act quickly.”

Over the weekend, the CPSC issued a statement asking consumers to stop using the Pelread Tread + machine when small children or pets are around. The move came after the organization’s investigation into the death of a child with one of the Tread + machines, as well as dozens of other reports of injuries.

At the same time, the commission released a surveillance camera video of a boy who was pulled under one of the Tread + machines and found it difficult to break free.

The CPSC went on to say that Peloton’s treadmills are designed differently than their counterparts. “An unusual belt design that uses individual rigid rubberized slats or treads that are connected to each other and run on a rail.” That’s instead of a thinner, continuous strap. There is also a large gap between the bottom and the belt of the Tread +, leaving room for things to move underneath.

According to Peloton, the design is supposed to make walking on knees and legs easier.

Currently, the company is refusing to withdraw the product or make design changes. Peloton said it was “shocked and devastated” to learn of the death last month. However, last weekend it also issued a statement calling the CPSC press release “inaccurate and misleading”.

The CEO and co-founder of Peloton, John Foley, wrote in a separate letter to the treadmill owners that the company is working on a new software-enabled security code “that will provide additional protection against unwanted use of the Tread +”.

“The Tread + is safe if our warnings and precautions are followed,” Foley said in the letter.

A peloton spokesman declined to comment.

“I haven’t seen a fight like this before.”

The company is better known for its stationary bikes and didn’t launch a treadmill until 2018. Initially referred to as Tread, it is now called Tread + as the company prepares to sell a cheaper version in the US later this year. The smaller, cheaper model is already available in the UK and doesn’t include the same rigid slats as the Tread +.

The clash with the CPSC was not good for Peloton’s stock. Shares fell 7% on Monday. The stock closed at $ 106.50 on Tuesday afternoon, down another 1.2%. In the past three months, Peloton stocks are down more than 32% after hitting an all-time high of $ 171.09 on Jan. 14. This follows a huge spike in 2020 when investors viewed Peloton as a stay-at-at. Home game and pandemic beneficiary, which made the stock up more than 400%. But when the fitness centers reopen, some of those gains have been given up.

BMO analyst Simeon Siegel said Peloton’s stock price was recently “detached” from underlying fundamentals and results were reported.

The stock appears “ruled by perception and hope,” he said. Siegel has an underperform rating on Peloton stock with a price target of $ 45.

“Most of Peloton’s market cap was created by the marketing department, not the equipment, engineers, or instructors,” Siegel said. “They told a story … and this peloton story is so much bigger than the peloton-paying membership base.”

For the past six months, according to Siegel, Peloton’s news has stalled as business grew exponentially during the pandemic.

“Whether it is Tread + or customers who deal with the supply chain, … ultimately, companies face obstacles to growth and cannot all face violence,” said Siegel.

While Peloton doesn’t split sales of its treadmills versus bikes, Cowen & Co. has estimated that the Tread + will account for about 2.2% of sales in 2021. This equates to about 1.633 million stationary bikes and treadmills combined.

In 2020, Peloton had sales of $ 1.8 billion, up from $ 915 million in the previous year.

John Blackledge, an analyst at Cowen, said he believes the majority of Peloton’s treadmill opportunity in the longer term will come from its upcoming Tread model, which is priced below the $ 4,300 T300 +. Hopefully, he said, the newer model will avoid similar problems with the CPSC because the belt doesn’t wrap under the machine.

Peloton has stated it is open to working with the CPSC to further ensure the safety of its customers. Its classes are said to have safety messages from instructors to remind users to keep their children, pets, and other items off the Tread + while exercising, and to remove a safety key after exercising to prevent children from activating the machines.

However, disagreements with the federal agency responsible for protecting US consumers from dangerous products are rare. The CPSC cannot force a recall, but has sued companies in the past to get them to comply.

Peloton has stuck to the agency before. Last fall, there was a recall for a version of its clip-in bicycle pedals due to the risk of breaking the axle and injuring users, affecting around 27,000 bikes.

“To be honest, I haven’t seen a fight like this here,” said Anthony Gair, a partner at Gair, Gair, Conason, Rubinowitz, Bloom, Hershenhorn, Steigman and Mackauf, who specializes in trying personal injury cases, that are tied to defective products.

“The CPSC must have reason to believe that it has not been properly designed,” he said. “Warnings are the last resort. And so the question arises: ‘Did you conduct a proper hazard analysis, either yes or no?’ And if you have carried out a proper hazard analysis: “Did this hazard analysis identify this hazard?”