1 Ireland back in recession (Henry McDonald in The Guardian) Ireland is back in recession for the first time since its 2010 bailout, official figures have confirmed. Irish GDP shrank 0.6% in the first quarter of 2013, but the recession was confirmed when official data revised down the economy's performance in the final three months of 2012 to a decline of 0.2%. It means that Ireland has endured three successive quarters of contraction, despite the presence in Ireland of multinationals such as Apple, Google, IBM and several big pharmaceutical companies.
The blow comes as Ireland reels from the unfolding Anglo Irish Bank scandal, in which executives at the bailed-out bank were caught on tape joking about their multi-billion euro rescue in 2008 and, at one point, singing "Deutschland über Alles" as they quipped about German deposits shoring up the bank.
The output drop reflects an ongoing depression in consumer demand, amid unemployment of nearly 14%. Personal expenditure declined by 3% between the fourth quarter of 2012 and the first quarter of 2013. The decrease in demand reflects Irish consumers' fears for their jobs and a reluctance to get into debt following the credit-fuelled spending boom of the Celtic Tiger years. Exports fell by 3.2% in the first quarter, in a stark reversal for an economy that had enjoyed an export-led recovery.
2 The real crisis in Australia (William Pesek in The Sydney Morning Herald) No country is more vulnerable to the much-dreaded slowdown in China than resource-rich Australia. The mining boom that fuelled nearly all of its recent growth is nearing a cliff of economic risk. “Australia is a leveraged time bomb waiting to blow,” says Albert Edwards, Societe Generale's London-based global strategist. “It is not just a CDO, but a CDO squared. All we have in Australia is, at its simplest, a credit bubble built upon a commodity boom dependent for its sustenance on an even greater credit bubble in China.”
There's a bit of hyperbole in this view. But highly-advanced Australia is about to pay the price for growing so addicted to a developing nation. Exporting natural resources led to the neglect and atrophying of other critical sectors. It's created a two-speed economy: The commodities-rich western states and Queensland raced ahead on China's once insatiable demand for metals, while the rest of the country lagged behind. Now, the price for Western Australia's iron ore has fallen to $115 per tonne - a far cry from the $180 paid by Chinese steel mills when the Australian dollar was touching highs of $US1.10.
The shockwaves caused by even modest
attempts by China's central bank to clamp down on credit show how profoundly
this downshift will affect the globe. It will result in slower growth from
Japan to Brazil and slam industries like autos, chemicals, heavy manufacturing,
energy and steel. If China needs to dump some of its $1.3 trillion of US
Treasuries to bail out state-owned banks, markets everywhere will quake.
Australia is a microcosm of what
awaits the world. How officials respond will offer clues to policy makers
everywhere. Australia should indeed sell all the underground treasures it can
to fast-growing developing nations. But in the long run, it's more important
for the country to cultivate what's above ground. Australia's future lies in ideas,
innovation and the ingenuity of its 23 million people - not in a China that's
ripe for a crash.
3 PayPal eyes payments in space (Benny Evangelista in San Francisco Chronicle) Silicon Valley tech firms are always launching a product, service or feature. But PayPal is actually launching an initiative it hopes will carry the online payments firm into space.
PayPal, the SETI Institute and the Space Tourism Society are announcing PayPal Galactic, which is a drive to pull together the best minds of science and commerce to start discussing how future space travelers will pay for goods and services in the final frontier. In addition, PayPal is powering a crowdfunding drive for the SETI Institute.
4 Too much going wrong for South Africa (Justice Malala in Johannesburg Times) When one hears that a military ambulance carrying the revered former president of our democracy broke down by the side of the road, leading to a 40-minute wait for a replacement, the heart lurches. It does not lurch because this is a terrible thing in itself. Mishaps happen. It lurches because the nation is uneasy. It lurches because there is just too much that seems to be going wrong that should not go wrong.
The nation is uneasy. Times are getting harder. Unemployment is on the rise. Every day a community is up in arms over service delivery. Policemen are "executed". Workers are mowed down by the police. The rand continues to weaken. And South Africans are drowning in debt.The ANC has a Jacob Zuma problem, a problem now succinctly enunciated by the likes of Kenny Kunene in his open letter last week. Nothing illustrates the enormity of the ANC's problem, and therefore our problem, like Zuma's defence last week in parliament of his friendship with the accused Gupta family of Waterkloof Air Force Base fame.
The nation is uneasy. And it is restless. And it sees that the world is restless too. The Turks are throwing stones in the streets and are calling for their leaders to step down. The Brazilians are tired of an inequality that mirrors our own here in South Africa. In those countries too, the people became uneasy. Then they acted.
5 Global retailers wary of India (Rajesh Roy in The Wall Street Journal) Global retailers hoping to invest in India's recently opened retail sector are holding back as political support for foreign tie-ups appears to be crumbling.
"Some prospective investors have generally conveyed that they will have to address apprehensions of their boards" while planning their investments, according to a document prepared by India's Department of Industrial Policy and Promotion during Trade Minister Anand Sharma's visit to London recently.
In September, India for the first time opened up the multibrand retail sector to foreign companies, permitting them to own up to 51% in local ventures.
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