Tuesday, June 3, 2014

Europe struggles to avoid deflation; Self-driving cars likely by 2018; Can Air India be saved?; The power of Tiananmen's memory

1 Europe struggles to escape deflation (Liz Alderman in The New York Times) While consumers welcome lower prices, economists are worried that an outbreak of ultralow inflation across the 18-nation euro zone is doing more harm than good to the bloc’s economic recovery.

On Tuesday, Europe’s statistics agency reported that annual euro zone inflation slumped to 0.5 percent in May from 0.7 percent in April, falling further below the 2 percent level that the European Central Bank considers healthy. Even in Germany, which has been the euro zone’s stalwart economy, inflation fell to a 0.9 percent rate in May, its lowest level in four years.

The situation has grown so alarming that the central bank is expected on Thursday to take extraordinary measures to try to stimulate the economy. Not only is it expected to cut its main interest rate for the first time since November 2013, but analysts also anticipate it will start charging commercial banks to keep money in its vaults — the imposition of so-called negative interest rates — whose consequences might be hard to predict.

The central bank’s moves would be aimed at preventing low inflation from becoming outright deflation: a tailspin of falling prices and wages from which it can be difficult for economies to recover. In such an environment, consumers and companies may delay spending in anticipation that prices will fall further, which would only exacerbate the economic problems.

After years of a debt crisis, a number of countries in the euro zone are grappling with the effects of economic lethargy. At clothing stores, cellphone companies and factories making items as disparate as aluminum and tiles, owners faced with slumping demand have been pressured to cut their prices. In hard-hit countries, wages have also fallen sharply from pre-crisis levels. Especially in the most fragile economies, the dynamic is crimping growth and dampening government efforts to pay down debt, regain competitiveness and tackle unemployment.

http://www.nytimes.com/2014/06/04/business/international/europe-struggles-to-avoid-deflations-grip.html?_r=0

2 Self-driving cars likely by 2018 (Straits Times) Cars that drive themselves could be on the roads four years from now, provided red tape does not get in the way, Mr Carlos Ghosn, head of the Renault-Nissan alliance, has said. Silicon Valley companies have long pioneered "autonomous vehicles", and Google tested one in Nevada in 2012. German luxury carmaker Mercedes-Benz developed an S-class limousine that drove in August without any driver input.

Renault has created the Next 2 prototype version of its Zoe model which enables drivers to let go of the controls at speeds below 30 kmh thanks to GPS positioning, cameras and sensors, though a human must stay behind the wheel. "The problem isn't technology, it's legislation, and the whole question of responsibility that goes with these cars moving around... and especially who is responsible once there is no longer anyone inside," Mr Ghosn said.

The first cars could hit the roads in 2018 in the "pioneer countries" of France, Japan and the US, with commercialisation starting across Europe in 2020, the chief executive said.

http://www.straitstimes.com/news/business/companies/story/self-driving-cars-may-hit-roads-2018-renault-nissan-ceo-20140604

3 Can Air India be saved? (Khaleej Times) India’s new Civil Aviation Minister Ashok Gajapati Raju has said he doesn’t rule out privatisation of the ailing flagship carrier Air India. Raju is the second minister after Ajit Singh to float the idea of freeing up the white elephant from the government stable.

The terminally ill ‘Maharaja’ has been surviving on cash and equity infusion worth billions of rupees, but no amount of public money has been able to resuscitate the carrier which bleeds Rs50 billion a year. While nationalists argue the iconic airline should be allowed to keep flying at any cost, others are of the opinion that all white elephants in the government sector should be put to sleep. There are two breeds of public sector white elephants — one that is allowed to be so because of its social significance and the other being the creation of corrupt and inefficient bureaucrats. Air India belongs to the latter group.

Air India suffers from manifold problems, such as a huge interest burden, poor aircraft utilisation, insufficient recapitalisation, regular government intervention, unbridled trade unionism, poor customer service, inordinate flight delays, a bloated workforce and a lackadaisical work culture, alleged corruption involving service cancellations to favour foreign carriers, bonanza for extended families of employees, et al.

Under such circumstances, the debate has shifted to whether there will be a suitor at all for the airline, which sits on a mountain of Rs450 billion accumulated debt, including an unsecured working capital loan of about Rs220 billion. At a time when the Indian skies are getting crowded with the impending arrival of AirAsia India and Tata-SIA airline and an increase in destinations and seat entitlements to Gulf carriers, Modi may have to turn to the Tatas, the original owner of the carrier which was nationalised in 1953, to restore the Maharaja’s lost glory.

http://khaleejtimes.com/kt-article-display-1.asp?xfile=/data/editorial/2014/June/editorial_June8.xml&section=editorial

4 The power of Tiananmen’s memory (Wu’er Kaixi in The Wall Street Journal) The Tiananmen Square massacre of 1989 has been banished from the collective memory of the Chinese people. Or so we are often told. It is certainly true that many older Chinese don't want to talk about it, and some young Chinese don't know it happened. But for a society just like an individual, repressing a memory is different from forgetting. Tiananmen continues to reverberate across China.

I'm often asked whether the Chinese authorities have successfully turned their people apolitical. My answer is always the same: Yes, to a certain extent. Their methods include the censorship of key words in Internet searches and on social media. The state-owned media are tightly censored, and anyone who attempts to spread dissident views will be arrested and their family mistreated. It is no wonder that most Chinese don't even contemplate speaking out.

As a result, there are many young people in China who know next to nothing about what happened on June 4, 1989. But, I always continue, those young people don't matter. The point is, up to 100 million people took the streets against the Chinese Communist Party in 1989, and they remember. In short, enough people remember, and those who do are the ones who really count.

Enough people remember for Tiananmen to seriously trouble the Beijing leadership, because that memory is so powerful. The 25th anniversary comes at a key juncture for the party. It is ideologically conflicted and at war with itself amid a series of high-profile purges. As economic growth slows and conflicts at the grass roots intensify, the party faces a level of public disaffection unmatched since the years leading up to 1989.

Just as in the heady days of 1989, when I took to the streets of Beijing and marched against the party leadership along with 100 million people China-wide, a specter haunts the government. That specter is the growing realization by China's population that 30 years of heady growth has enriched an entrenched, powerful elite. The ideology of China's leadership is falling to tatters, as it was 25 years ago. The demands made by the people then are coming back. The best way to sum up the legacy of Tiananmen is not enforced forgetting, it is resurgent memory.

http://online.wsj.com/articles/kaixi-the-power-of-tiananmens-memory-1401837443

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