Britain may jail reckless bankers; Europe car sales lowest in 20 years; Decade of citizen activism; Rise of the global middle class; The China credit bubble

1 Britain may jail reckless bankers (Jill Treanor in The Guardian) George Osborne is facing pressure to radically overhaul Britain's banks by introducing a new law to jail bankers for "reckless misconduct" and force bankers to wait up to 10 years to receive their bonuses. The proposals, among the key measures recommended in a major report by the parliamentary commission on banking standards, also include a call on him to consider breaking up the Royal Bank of Scotland.

The chancellor is urged to restore confidence in the financial system by making top bankers more accountable for their actions in the wake of the 2008 bank bailouts, the Libor rigging scandal, and the shoddy treatment of customers mis-sold payment protection insurance.

The senior Conservative MP Andrew Tyrie, who led the commission, said the 80 or so recommendations were intended to "change banking for good". They also include giving regulators new powers to halt bonus payouts and pensions for bosses of any banks that have to be bailed out by the taxpayer in the future. "It is not just bankers that need to change. The actions

2 Europe car sales lowest in 20 years (David Jolly in The New York Times) European car sales tumbled again in May, reaching their lowest level in 20 years, but analysts and industry officials said the market might have finally begun to bottom out. Sales fell 5.9% in May from a year earlier, to 1.04 million units, the European Automobile Manufacturers’ Association said. The association said it was the smallest number of vehicles sold in the month since May 1993, when the number stood below one million.

The European auto market peaked in 2007 at nearly 16 million new passenger vehicles, but it has been in retreat ever since. In the five months through May, new-car sales were declining at a 6.8% annual pace, somewhat worse than most forecasts at the start of the year. 

Five years after the financial crisis arrived, Europe is still struggling to restart economic growth, and households remain extremely reluctant about big purchases like automobiles. The unemployment rate of the 17-nation euro zone stood at a record high of 12.2% in April, and nearly 27 million men and women across the wider European Union were unable to find jobs. Among young people, a top demographic for the future of the auto industry, the jobless problem is even worse. 

3 Decade of citizen activism (Khaleej Times) Is this decade going to be one of citizen activism? This is the question that comes to mind when one looks at the events that are transpiring around the world. It was the Arab Spring that brought the hitherto silent majority of Tunisia, Egypt, Libya and Syria on the streets of their cities to demonstrate against their regimes. Inspired by the power of protest  in the Middle East, even people of developed countries, like the US and the UK, came out to protest against rampant unemployment and income inequalities.

Recently, Turkey has been seriously bitten by the protest bug. The economic powerhouse has become the site of raucous demonstrations by youngsters, who accuse Prime Minister Recep Tayyip Erdogan of becoming increasingly authoritarian and attacking Turkey’s celebrated tradition of secularism. And it seems like Brazilians surely have been observing the pattern of protest across the Atlantic, because they too have now come out on the roads to channel their anger against their own government.

With the World Cup fast approaching, the Brazilian government might just give in to demands of the protesters to get them off the streets. But this might just inspire people in some other corner of the world to rise against their government. It seems like that the world will experience more citizen activism in the future.

4 Rise of the global middle class (Linda Yueh on BBC) The UN describes it as a historic shift not seen for 150 years. The new global middle class in China, India and Brazil have propelled their economies to equal the size of the industrialised G7 countries. By 2050, they are forecast to account for nearly half of world output, far surpassing the G7. 

Plus, within a decade, the middle class in Europe and North America will be less than a third of the world's total, down from more than half now. The Brookings Institution estimates that there are 1.8 billion in the middle class, which will grow to 3.2 billion by the end of the decade. Asia is almost entirely responsible for this growth. Its middle class is forecast to triple to 1.7 billion by 2020. By 2030, Asia will be the home of 3 billion middle class people. It would be 10 times more than North America and five times more than Europe.

So who counts as middle class? According to organisations like the UN and the Organisation for Economic Co-operation and Development (OECD), it's someone who earns or spends $10 to $100 per day. As the UN suggests, the growth is being driven by industrialisation. The industrial revolution of the 19th Century transformed the economies of Britain, the US and Germany. The move from agrarian to industrial societies generated income rises that created the middle class. Now it's the turn of emerging economies, particularly in Asia. 

5 The China credit bubble (Ambrose Evans-Pritchard in The Telegraph) China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned. The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion segment of the shadow banking system.

Fitch warned that wealth products worth $2 trillion of lending are in reality a "hidden second balance sheet" for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses. This niche is the epicentre of risk. Half the loans must be rolled over every three months, and another 25% in less than six months. This has echoes of Northern Rock, Lehman Brothers and others that came to grief in the West on short-term liabilities when the wholesale capital markets froze.

6 India media buries paid news report (Tom Wright & R Jai Krishna in The Wall Street Journal) A major new report on the phenomenon of paid news in India’s media is, well, hardly making big news. The report, submitted to Parliament last month by the Standing Committee on Information Technology, is pretty racy stuff.

It details how newspapers, television channels and radio stations allegedly take money for positive news coverage. The report, which points out that self-regulation by India’s media has failed to stop the practice of paid news, has some eye-catching recommendations. It suggests a more-powerful regulator and stiffer penalties, including criminal charges possibly leading to imprisonment, for those who accept payment for news.

 “The rise of ‘Paid News’,” the report says, “has undermined the essence of a democratic process.” But the document, submitted to the Lok Sabha on May 6, generated little media coverage. The committee report, noting the issue of paid news has been a feature of the media landscape since the 2009 national election, said it was “astonishing that a large section of the media is completely silent on this malpractice.”

Reaching a solution will not be easy, as the UK’s experience has shown. There, efforts to set up a powerful media regulator have gotten bogged down in a debate over free speech. The issue, though, doesn’t appear to be going away. The council found that 61 candidates admitted to paying for news coverage during Gujarat state elections in December. With national polls due in 2014, the issue is sure to come into the spotlight again, however dimmed.