Thursday, August 14, 2014

Eurozone growth grinds to a halt; Berkshire Hathaway shares hit record price; Independence Day and the great pity of India and Pakistan

1 Eurozone growth grinds to a halt (Larry Elliott in The Guardian) France piled pressure on the European Central Bank to do more to boost growth on Thursday after news that economic activity across the 18-nation single currency area came to a halt in the second quarter. With France registering zero growth for a second successive quarter, Michel Sapin, the country's finance minister, halved his growth forecast for this year, abandoned the deficit reduction target and said it was up to the Frankfurt-based ECB to respond to an "exceptional situation of weak growth and weak inflation across the eurozone".

Sapin's demand came as the latest figures from Eurostat, the European Union's statistical agency, showed that problems in the single currency's Big Three economies – Germany, France and Italy – resulted in no increase in eurozone gross domestic product in the three months to June. That compares with an increase of 0.2% in the first quarter.

France made it clear it blamed foot-dragging on the part of the ECB for the failure of the eurozone's second-biggest economy as it reduced its growth forecast for 2014 from 1% to 0.5% and ditched the 1.7% forecast for 2015, saying it would not expand by much more than 1%.

Some of the smaller economies on the periphery of the eurozone – including Spain and Portugal – recorded solid growth in the second quarter, and the Netherlands bounced back from a weak first quarter to expand by 0.5%. But Germany, France and Italy between them account for two-thirds of eurozone GDP and dragged down the overall growth figure. The annual rate of growth fell from 0.9% in the first quarter to 0.7% in the second quarter.


2 Berkshire Hathaway shares hit record (BBC) Shares in Warren Buffett's Berkshire Hathaway have surpassed $200,000 for the first time. That values the firm - which has added over 70 companies since Mr Buffett took it over in the 1960s - at an estimated $326bn. The company's shares have long been the most expensive stock in the US. Mr Buffett has never split the company's class A shares, although there are cheaper class B shares that are priced at $134 per share.

On Thursday, shares in Mr Buffett's company rose $3,241, or 2%, to end at $202,850. The price of Berkshire Hathaway's class A shares are more than 60 times the next most expensive stock listed on US exchanges - that of Seabord Corporation, a transportation and agriculture firm.

Berkshire has a large number of majority and minority investments in dozens of companies, ranging from small jewellery and furniture retailers to insurance giants Geico and General Re, chemicals group Lubrizol, Coca-Cola, IBM, American Express, Wells Fargo Bank and dozens of others. Berkshire's long-term gains have made Mr Buffett the world's third wealthiest man, with a fortune of $65.9bn, according to Forbes magazine.


3 India, Pakistan and independence days (Rahul Singh in Khaleej Times) Today, India completes 67 years as an independent nation (Pakistan did so yesterday). On August 15, 1947, as the British formally relinquished their two centuries-hold over the Indian subcontinent, the Indian tri-colour flag was proudly unfurled on the ramparts of Delhi’s Red Fort, built by Mughal Emperor Shah Jahan, while the British Union Jack was lowered.

India and Pakistan achieved their freedom almost entirely by peaceful means (the violent group was a fringe element), unlike most other colonies ruled by the imperial powers. The British had left behind an extensive industrial and social infrastructure, which provided the two countries a springboard for development. Many other colonies, like Indonesia and much of Africa, were not so fortunate and had to start virtually from scratch.

Though a Hindu fanatic assassinated Gandhi soon after India got its independence, Nehru was there to carry the torch of democracy and representative government. Pakistan was not so fortunate. It lost two of its most charismatic leaders very early, Jinnah from tuberculosis, and Liaquat Ali Khan, from an assassin’s bullet. As a result, democracy stuttered in Pakistan and the army took over, each successive military dictator being worse than his predecessor.

If Islamabad blundered in East Pakistan, New Delhi badly mishandled the Sikhs and the Kashmiris. The tragedy is that while India and Pakistan have been trying their best to destablise each other, they have neglected their own development and progress. Meanwhile, there has been a sea-change in the Indian political scene, with the recent stunning election victory of the Bharatiya Janata Party (BJP), led by Narendra Modi.

The great pity is that over a third of Indians and Pakistanis live below the poverty line and a quarter of them cannot read or write. Instead of tackling these challenges, in the 67 years of their independence, both countries have been fighting and destabilising each other. Isn’t it time some sense was dinned into the heads of their leaders, to put their differences aside and cooperate for the betterment of their people? Other neighbouring countries have done exactly that. Why not India and Pakistan?


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