Sunday, October 14, 2012

IMF says US QE-III could hurt emerging nations; Dilemma over RBS break-up; Enumerating Obama's feats; Self-destruction of the 1%; Future of farming may be up



1 IMF says US QE-III could hurt emerging nations (Straits Times) IMF managing director Christine Lagarde said the US’ third round of quantitative easing - the introduction of new money supply to boost economic growth - could hurt emerging economies. "This could strain the capacity of these economies to absorb the potentially large flows and could lead to overheating, asset price bubbles and the build-up of financial imbalances," she said at the International Monetary Fund meetings in Tokyo.

Her view has found support from emerging economies. It was supposed to be curtains down on Sunday, but that did not stop delegates from hitting out at controversial policies like the US' decision to loosen monetary policy.

In its defence, the US argued that a strong US economy would boost global growth. "It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies," US Federal Reserve chairman Ben Bernanke said in prepared remarks for a seminar in Tokyo.

2 Dilemma over RBS break-up (Robert Peston on BBC) In a way the mystery is why it has taken so long for RBS's sale of 316 branches to Santander to collapse. It has been clear almost from the start in 2009, when the European Commission obliged RBS to dispose of these branches as a way of injecting greater competition into the small-business banking market, that it would be a nightmarishly difficult deal to execute.

The banking industry was in crisis and most banks were trying to retrench rather than expand, so there were never going to be many buyers. In the end, there was only one, Santander. But that was only the start of the challenge for RBS. Persuading more than two million customers to move to a new bank was always going to be hard. 

And seamlessly transferring the computerised accounts from RBS's patched-up old systems to Santander's was a mammoth and complex task. Inevitably the process has been hit by repeated delays. A deal that originally supposed to have been completed at the end of 2011 was - according to my sources at Santander - looking as though it would not finally happen until 2015.

3 Enumerating Obama’s feats (Jonathan Power in Khaleej Times) Obama’s Recovery Act was massive — over $800 billion, larger than Roosevelt’s entire New Deal in constant dollars. Obama has struggled with Congress to make this much bigger, but the Republican majority continuously blocked him, as they have on so many other things. Nevertheless, compared with Europe, the US is well ahead in the recovery of economic growth. Unemployment is now beginning to fall, consumer confidence is increasing and people are buying houses again.

The US President also bailed out the bankrupt car manufacturers, GM and Chrysler. He succeeded faster than anyone expected and the companies paid back the government’s loans well ahead of schedule.
Not only did the Recovery Act lay the foundations for resuscitating the economy, it was the most transformative energy bill in history. It has financed unprecedented government investments in a better electricity grid, cleaner coal, a substantial increase in energy efficiency, “green collar” job training, electric vehicles and the infrastructure to support them, advanced biofuels and the refineries to brew them, renewable power from the sun, wind and heat below the earth’s surface. He persuaded automobile manufacturers to go to 54 miles per gallon by 2025, which is double that existing when he took office.

And that’s not it. Obama initiated the biggest expansion of anti-poverty initiatives since the presidency of Lyndon Johnson and the largest middle class tax cut since Ronald Reagan. He is spending $8 billion on a new high-speed passenger rail network and has poured $7 billion into expanding the country’s high-speed Internet network to under-served communities. It’s time that Obama blows his trumpet, otherwise he could lose the election.

4 Self-destruction of the 1 per cent (Chrystia Freeland in The New York Times) Karl Marx wrote that capitalism contained the seeds of its own destruction. And it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.

You can see it in America’s growing social and, especially, educational chasm between those at the top and everyone else. At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school. Economists point out that the woes of the middle class are in large part a consequence of globalization and technological change. Culture may also play a role. In his recent book on the white working class, the libertarian writer Charles Murray blames the hollowed-out middle for straying from the traditional family values and old-fashioned work ethic that he says prevail among the rich.

5 Future of farming may be up (Owen Fletcher in The Wall Street Journal) Want to see where your food might come from in the future? Look up. The seeds of an agricultural revolution are taking root in cities around the world—a movement that boosters say will change the way that urbanites get their produce and solve some of the world's biggest environmental problems along the way.

It's called vertical farming, and it's based on one simple principle: Instead of trucking food from farms into cities, grow it as close to home as possible—in urban greenhouses that stretch upward instead of sprawling outward.

The idea is flowering in many forms. There's the 12-story triangular building going up in Sweden, where plants will travel on tracks from the top floor to the bottom to take advantage of sunlight and make harvesting easier. Then there's the onetime meatpacking plant in Chicago where vegetables are grown on floating rafts, nourished by waste from nearby fish tanks. And the farms dotted across the US that hang their crops in the air, spraying the roots with nutrients, so they don't have to bring in soil or water tanks for the plants.

Advocates say the immediate benefits will be easy to see. There won't be as many delivery trucks guzzling fuel and belching out exhaust, and city dwellers will get easier access to fresh, healthy food.

6 Cartoon in Khaleej Times on EU receiving Nobel Peace Prize
http://www.khaleejtimes.com/cartoongall.asp?next=0&file=data/photogallery/cartoon/cartoon.xml&section=cartoon

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