Friday, November 28, 2014

Oil plunge is threat and boon; India growth slows to 5.3%; The ambition explosion

1 Oil plunge is threat and boon (San Francisco Chronicle) A renewed plunge in oil prices is a worrying sign of weakness in the global economy that could shake governments dependent on oil revenues. Yet it is also a bonus for consumers as prices fall at the pump, giving individuals more spending money and lowering costs for many businesses.

Overall, the slide is a boon for consumers in oil-importing regions like Asia, Europe and North America. But there are also some possible negatives. The US economy will receive an outsized benefit from lower oil prices because the US is the world's largest oil consumer. Canadian consumers are also catching a break. In some regions, such as southern Ontario, gasoline could fall below the important psychological barrier of $1 per liter.

The oil companies propelling a production boom in Canada and the US won't be so happy. Crude produced in Canadian oil sands, deep offshore in the Gulf of Mexico and in some US onshore shale formations is some of the most expensive oil to produce in the world.

Many of Europe's economies are net importers of oil, so lower prices are likely to give a welcome, if small, boost to growth. That will be particularly useful in the 18-nation eurozone, where unemployment is high. Declining fuel prices also, however, add to one of the eurozone's biggest headaches: low inflation. The few European producing countries — mainly Britain and Norway in the North Sea — face a drop in revenues that could balance out the positives of cheaper fuel.

Russia gets about 50 percent of its state revenue from oil exports, so the government's concerns are clear. The national economy is already sliding into recession under the impact of Western sanctions and investors are pulling money out. In China, cheaper fuel would ease financial pressure on manufacturers and small businesses. China's economic growth has declined steadily over the past two years.

2 India growth slows to 5.3% (BBC) India's economy grew by 5.3% in the July-to-September period from a year earlier, down from a rate of 5.7% in the previous quarter. Although the rate was slower than earlier in the year, it was still better than many analysts had expected. The figures cover the first full quarter under the government of Prime Minister Narendra Modi.

Both the service sector and agriculture performed better than anticipated, despite a weak start to the monsoon. Investors were also encouraged by the news that the government is to cut its holdings in state-run banks, such as State Bank of India.

Despite the slightly stronger-than-expected figure, pressure is mounting on India's central bank, the Reserve Bank of India, to cut interest rates, possibly as early as the next policy review meeting on 2 December. The benchmark interest rate has been kept at 8% since last January in an effort to curb inflation. India has a history of high inflation, but recently the rate dipped below 6%.

3 The ambition explosion (David Brooks in Straits Times) The real contradiction of capitalism is that it arouses enormous ambition, but it doesn't help you define where you should focus it. It doesn't define an end to which you should devote your life. It nurtures the illusion that career and economic success can lead to fulfilment, which is the central illusion of our time.

To survive, capitalism needs to be embedded in a moral culture that sits in tension with it and provides a scale of values based on moral and not monetary grounds. Capitalism, though, is voracious. The personal ambition it arouses is always threatening to blot out the counterculture it requires.

Modern China is an extreme example of this phenomenon, as eloquently described by journalist Evan Osnos in his book, Age Of Ambition. As Osnos describes it, the capitalist reforms of Deng Xiaoping raised the ambition levels of an entire society. A people raised under Mao Zedong to be a "rustless screw in the revolutionary machine" had the chance, in the course of one generation, to achieve rags-to-riches wealth. This led, Osnos writes, to a hunger for new sensations, a ravenous desire to make new fortunes.

It was the ambition explosion as much as anything else that created China's prosperity. One woman who called herself "Harvard Mum" had her daughter hold ice cubes in her hands for 15 minutes at a time to teach fortitude. Soon China was building the real estate equivalent of Rome every fortnight.

But the fever, like communism before it, stripped away the deep rich spiritual traditions of Buddhism and Taoism. Society hardened. Corruption became rampant. People came to believe society was cruel and unforgiving. They hunkered down. One day, a little girl was hit by a bread truck in the city of Foshan. Seventeen people passed by and did nothing as the child lay bleeding on the ground. The security video of the incident played over and over again on TV, haunting the country.

China is desperately searching for a spiritual and humanist nest to hold capitalist ambition. Those of us in the rest of the world may not be searching as feverishly for a counterculture, but the essential challenge is the same. Capitalist ambition is an energising gale force. If there's not an equally fervent counterculture to direct it, the wind uproots the tender foliage that makes life sweet.

Thursday, November 27, 2014

Oil price hurtles down after Opec meet; German jobless at record low; South Asia's boring club

1 Oil hurtles down after Opec meet (Terry Macalister & Graeme Wearden in The Guardian) Oil prices have crashed to a new four-year low, below $72 per barrel, after a major split inside Opec forced the cartel to hold production at current levels rather than make cuts to try to turn the market around.

The reduced cost of energy - prices are now down 37% since the summer - should be a boost to British consumers and the wider economy, but experts warned the North Sea oil industry is now facing a slump in investment and major job cuts. There are now predictions that the price of Brent blend could fall to as low as $60, which would be disastrous for countries with high producing costs and economies dependent on oil and gas, such as Russia and Iran.

Norway, an important oil and gas producer outside OPEC, saw its Krona currency hit a five year low against the dollar while Shell and BP saw their shares battered. Prior to a crunch meeting at its Vienna headquarters, OPEC was under huge pressure from some members to reduce output in a bid to counter the five month slide in Brent blend prices from $115. Prices have fallen due to increased US shale production and faltering demand as growth slows in China, Europe and emerging markets.

2 German jobless at record low (BBC) Germany's unemployment rate has hit a record low, but slower inflation has raised concerns over deflation. The Federal Statistical Office revised October's unemployment number from 6.7% to 6.6%, November's figure was also 6.6%. Both figures were adjusted for seasonal variation. Meanwhile inflation fell to its lowest rate in nearly five years in November. Official figures showed inflation dropped to 0.5% in November from 0.7% in October.

The fall in the number of unemployed was larger than analysts' expectations, down 14,000 to 2.872 million, the Federal Labour Office said. The figures are in marked contrast to many other economies in the eurozone. Economists have warned of a potential economic "stagnation trap" in the euro area. However, analysts said that record employment, rising wages and low interest rates are helping to prop up domestic demand in Germany.

Inflation remains weak in the eurozone and economists say the rate in Germany could fall further. Low German inflation may put pressure on the European Central Bank (ECB) to further stimulate the eurozone economy, Jennifer McKeown of Capital Economics said. The ECB has started buying covered bonds and asset-backed securities to try to revive the eurozone economy and keep deflation at bay.

3 South Asia’s boring club (Khaleej Times) Next year will be the 30th since the South Asian Association for Regional Cooperation was formed. Its career as an association has, since the mid-eighties, been neither distinguished nor even promising. The countries of the region, viewing the emerging tide of multi-lateralism elsewhere (especially in Latin America) and viewing the debris of the non-aligned movement, shuffled together to form SAARC.

The group has all the equipment — a secretariat, various centres that profess to tackle common subjects, a stable of professionals who advise bored officials, and so on — but has produced little. Some of the blame for such a desultory career must lie with the relations between Pakistan and India, which every other month swing between ‘hostile’ and ‘concerned’ but rarely tread any other territory.

Still, that ought not to have weighed so heavily on the other members of SAARC — Sri Lanka, Nepal, Afghanistan, Bangladesh, the Maldives and Bhutan. The accoutrements of SAARC should have served them just as well, but have simply not been used. This is the greyish and uninspiring background to the 18th SAARC summit this week in Kathmandu, Nepal.

The economic globalisation of the last decade especially has linked countries — within South Asia and outside — with bilateral agreements rather than through multi-lateral fora like SAARC. The poor showing has not deterred the countries from announcing yet another new SAARC centre which will merge four existing regional centres — the SAARC Disaster Management Centre (in India), the SAARC Coastal Zone Management Centre (in the Maldives), the SAARC Meteorological Research Centre (in Bangladesh) and the SAARC Forestry Centre (in Bhutan).

The suspicion, not unfounded, is that SAARC and its colourless apparatus exists to provide convenient sinecures for ex-diplomats from the eight countries and their colleagues. Of course, the “meetings on the sidelines”, over which some mild interest is mustered pertaining to SAARC, may lead to a front page headline or two, but on the balance, that occasional fillip is hardly worth the expense of maintaining the club.

Wednesday, November 26, 2014

Oil price falls ahead of Opec meet; Denmark is most connected country; Ferguson lessons

1 Oil price falls ahead of Opec meet (BBC) The price of oil has fallen as Opec oil producers prepare for their meeting on Thursday and data showed crude stocks rose last week. Inventories of commercial US crude oil increased by 1.9 million barrels from the previous week, according to the US Energy Information Administration. Brent crude future's price slid 0.8 to $77.75 a barrel after the data.

The drop came as Saudi Arabia indicated it would not push for output cuts to help push up oil prices. US crude finished Wednesday's business down 40 cents at $73.69 a barrel. The oil market will "stabilise itself eventually", said Saudi Oil Minister Ali al-Naimi. Saudi Arabia is the largest producer of the 12 members of the Organization of the Petroleum Exporting Countries (Opec).

The oil cartel is split over how to react to the sharp slump in oil prices. The price of Brent crude has plunged 30% since June, triggered by a sharp rise in US shale oil output and weakening global demand. Among the Opec members, Venezuela and Iraq have called for output cuts. Russia, which produces an estimated 11% of global oil, said it would not co-operate with any production cut.

2 Denmark is most connected country (Straits Times) Denmark has overtaken South Korea as the world's top country for cellphone and Internet use, a study has said. In third place was Sweden, followed by Iceland and Britain, emphasising European dominance in the connectivity stakes, according to the International Telecommunication Union, a leading analyst for information and communication technologies, or ICTs.

Hong Kong led Asia, in ninth place in the world rankings, and the US came 14th. The Central African Republic was last, part of a long list of African countries bringing up the tail of the list. The International Telecommunications Union's ICT development index takes into account Internet and mobile phone access and use, and the population's competence with the technology.

3 Ferguson lessons (Khaleej Times) American society is in a dilemma as race-related violence has raised its ugly head again. The protests across the US, which emanated in Ferguson on Monday night over a grand jury’s decision not to indict a White policeman who shot a black teenager in Missouri in August, have stirred a national debate on the scope of law, as police officers are seldom punished for their action during the discharge of duties.

The White policeman, Darren Wilson, who shot dead the 18-year-old teenager, Micheal Brown, says that he discharged his duties in true professional spirit, and his ‘conscience is clear’. The grand jury too believes that the officer cannot be tried under state criminal laws over the shooting. People across the US are now calling for a better introspection of law, irrespective of the race of the people involved.

This is no less than a catch-22 situation for the first Black African-American president, who had risen above race and personal considerations to appeal for calm. It goes to his credit that he didn’t push charges of race discrimination in an attempt to make political mileage out of it. He spoke his heart for the aggrieved community when he said the “jury’s decision had deep roots in many communities of colour who have a sense that our laws are not being enforced uniformly or fairly”. The nation should rally behind the president who has called for building trust in communities and for ensuring that enforcement of law is fair.

A glance at America’s socio-political psyche reveals that the society is sensitive when it comes to race-related incidents. What it indicates is that it is all about the level of tolerance in society, especially when a certain community interprets a tragedy in the backdrop of traditional grievances. Trayvon Martin’s killing in a similar manner in February 2012 is a case in point.

The attorney general, who is also a Black, can do a better job by personally taking the Ferguson victim family and its constituents into confidence and letting the true circumstances of the killing be interpreted in a more rational and lawful manner. Until then there is no need to get judgmental by either community.

Tuesday, November 25, 2014

US Q3 growth faster than expected; Troops out as Ferguson sees more violence; Apple is first $700bn company

1 US Q3 growth faster than forecast (BBC) he US economy grew much faster in the third quarter than first reported, official figures have shown. It expanded at an annualised rate of 3.9% between July and September, up from the 3.5% first estimated by the Bureau of Economic Analysis.

The rise, which follows a strong second quarter, means the US has seen its strongest two consecutive quarters of growth for a decade. Consumer spending was the biggest driver of the raised estimate. It grew by 2.2% according to the latest estimate, which was higher than the initial calculation of 1.8%. Consumer spending is closely watched as it accounts for 70% of US gross domestic product (GDP).

The data suggests the US has shrugged off the slow start to the year when heavy snow saw the economy shrink. Meanwhile, a separate survey, showed US house prices rose by more than expected in September. The closely-watched S&P/Case Shiller index jumped 4.9% year-on-year.

At the end of October, the US Federal Reserve said it would not raise interest rates for a "considerable time". It also ended its quantitative easing (QE) stimulus programme of buying financial assets and creating new money to pay for them, aimed at stimulating the economy.

2 Troops out as Ferguson sees more violence (Ben Kesling, Pervaiz Shallwani & Mark Peters in The Wall Street Journal) Missouri Gov. Jay Nixon said he would triple the National Guard presence in the St. Louis region in the wake of widespread violence following a grand jury decision not to indict police officer Darren Wilson in the shooting death of Michael Brown.

The governor said about 2,200 National Guardsmen will be in the region, up from about 700 last night. The governor said National Guard troops were protecting public property and key infrastructure, but would be deployed to protect homes and businesses.

Protesters Monday night had set police cruisers on fire, smashed windows and looted stores, while police responded by firing nonlethal munitions and tear gas at crowds. By morning, more than 20 businesses were burned and more than 60 people were arrested.

Meanwhile, protesters set out again in cities around the country on Tuesday following protests Monday evening in cities from New York to San Francisco.

3 Apple is first $700bn company (Nick Fletcher in The Guardian) Apple set a record by becoming the first company to be valued at $700bn. The iPhone maker was already the world’s most valuable business, but in early trading its shares rose nearly 1% to $119.75, giving it a market capitalisation of $701.7bn. This is higher than the GDP of all but the top 19 countries in the world.

Apple’s shares have risen around 60% this year, with the success of its iPhone 6 and iPhone 6 Plus one of the main reasons behind the surge. Last month it announced that it had sold a record 39.3m iPhones in its third quarter, and predicted that its latest products would help it boost sales by at least 10% over the forthcoming holiday period. It expects to sell more in the Christmas quarter this year than it did in the whole of 2010.

Apple has been vying with oil company Exxon Mobil for the accolade of the world’s largest company for a number of years, first overtaking its rival in August 2011 before falling back after concerns that its future products may not live up to past glories. It regained the top spot in August 2013 after Exxon suffered from falling oil prices and weak earnings. Exxon is now worth around $405bn, while Apple’s technology rivals Microsoft and Google are valued at $392bn and $368bn respectively.

Analysts believe Apple could go even higher, with Michael Corcelli, head of US fund Alexander Alternative Capital, saying he expected its market capitalisation to reach $1trn next year. But Apple is not the world’s most valuable company in history if inflation is taken into account. CNBC calculated that Microsoft’s peak market capitalisation of $613bn in 1999 would become nearly $875bn at 2014 prices.

Sunday, November 23, 2014

Global business confidence at five-year low; Asean's youth advantage; India's women detective agencies

1 Global business confidence at five-year low (BBC) Global business confidence slipped to five-year low in October, according to a survey of 6,100 companies. The number of firms that expect business activity to be higher in the year ahead exceeded those that expected a decline by about 28%. But, that net balance was lower than 39% in June and the lowest since the Markit Global Business Outlook Survey began in 2009. Hiring and investment plans also dipped to post financial crisis lows.

The decline in optimism among businesses was due to a growing list of worries, according to the report. Fears of a renewed downturn in the eurozone, the prospect of higher interest rates in the UK and US next year, along with geo-political risks from crises in Ukraine and the Middle East have all dented business confidence across the globe.

Russia was the biggest concern among the leading countries as "sanctions, a spiralling currency and uncertainty drove business expectations down sharply to a new low". On the bright side, UK companies were the most upbeat about the year ahead out of all the major countries surveyed in October. On the downside was a surprise downturn in the US, where optimism hit a new survey low as the service sector saw a "dramatic" decline.

2 Asean’s youth advantage (Muhamed Hazali Abu Hassan in Straits Times) Asean is nearing its half-century milestone with quite a few notches under its belt, while facing new challenges with regard to its uniquely young demographic.

Moving forward, the grouping's main challenges lie distinctly in fulfilling the hopes and dreams of its youth. One similarity all Asean nations have is our youth bulge. According to a 2012 Credit Suisse report - "Asean's positive demographics underpin stable growth" - the median age for all Asean nations is below 40. This trend is expected to continue well until 2035. Malaysia, for example, has a median age of 25.1 while Indonesia's is 27.9.

When there are many young people and they are provided employment or business opportunities, the country will experience a "demographic dividend" - a situation where people actively participating in the economy outnumber those who are dependent on it. However, if their needs are not addressed, the youth bulge will become a "demographic bomb" as a large mass of frustrated young people is likely to become a source of social and political instability.

Asean's young people have consistently been vocal about finding non-material achievements. It is no longer enough to be financially or physically successful - it is also a question of how they get there. While gross domestic product is a direct measure of a country's wealth, it is equally important that the people are able to find happiness in this community. This means a solid value system as well as job satisfaction from work that is individually fulfilling.

3 India’s women detective agencies (Snigdha Poonam in The Guardian) Bhavna Paliwal, Delhi’s self-anointed “commander of detectives” is Delhi’s most famous private detective. She’s also the most colourful. In 2003, she started her detective outfit, Tejas Detective Agency. Private investigation is technically illegal in India, and working from unidentified locations is common.

She lords it over matrimonial investigations. “I get three to four calls a day, sometimes more,” she says. The rate for a prematrimonial assignment – discovering the details of “salary, character, family status, and, if it’s a man, whether he drinks, smokes, gambles” – ranges from 50,000 to 150,000 rupees (£510-£1,530). The rate for cases involving married couples depends on the nature of the job, and can run into millions of rupees.

Paliwal’s success as a matrimonial detective is directly proportional to the failure of urban Indian marriage. She’s quick to point out a game-changing factor, though: “Earlier, the cheating was one-sided. Now it’s two-sided.” The culprit, she says, is technology: “Most people who come to me have been married for eight to 10 years. Their marriages were going fine, but they started copying youngsters and got into the habit of Facebook, WhatsApp. Many of them go too far into it, ruining their families.”

There were a handful of female detectives working in Delhi when Paliwal started out, but now women are a dominant presence. A basic internet search for female detectives in Delhi throws up a glut of agencies. Does their work make them cynical about marriage? None admit to it, but all the female detectives I speak to say they continue to be surprised by the games partners played in relationships.

Wednesday, November 19, 2014

China factory output shrinks; UK Royal Mail faces Amazon threat; Why Indians flock to gurus

1 China factory output shrinks (Straits Times) Growth in China's immense factory sector stalled in November, with output contracting for the first time in six months, a private survey has shown, adding to signs that the world's second-largest economy may still be losing traction.

The flash HSBC/Markit manufacturing purchasing managers' index (PMI) fell to a six-month low of 50.0 from a final reading of 50.4 in October and well below the 50.3 reading forecast by analysts.
A reading above 50 indicates expansion, while one below 50 points to contraction on a monthly basis. The factory output sub-index fell to 49.5, the first contraction since May.

2 UK Royal Mail faces Amazon threat (Julia Kollewe & Graeme Wearden in The Guardian) Royal Mail has warned that growing competition from Amazon will hit its UK parcels business, as it reported a 21% fall in first-half profits.

The 500-year-old postal service, which was privatised last October, said operating profits before transformation costs fell to £279m in the six months to 28 September. The figure was at the top end of analysts’ forecasts. Revenues rose 2% to £4.5bn.

While the results were not as weak as feared, the outlook for the parcel market is worse and took the City by surprise. The group said Amazon’s own delivery service would cut the annual rate of growth in the UK parcels market to 1-2% for the next two years. This is half the 4% growth expected for this year. Last month, Amazon launched a same-day delivery service which allows customers to collect items from local newsagents and high street shops, through a tie-up with the distribution group Smiths News.

Jefferies analyst David Kerstens said: “This implies parcel revenues would remain at best stable, which compares to our assumption of 2% parcel revenue growth and compared to double-digit parcel revenue growth historically.”

The parcels business is Royal Mail’s main area of growth as online shopping makes up for the decline in letters due to the shift to email and social media. Currently 10% of UK retail sales happen online, which is set to rise to 13% by 2017.

3 Why Indians flock to gurus (Soutik Biswas on BBC) I don't think many people were aware of the controversial Hindu guru Rampal before Tuesday's violent clashes between his supporters and the police. But then India is a country of more than a billion people and tens of thousands of gurus.
There are gurus for rich and poor. Many of them command huge followings at home and overseas counting politicians, film and cricket stars, bureaucrats and ordinary people among their devotees. 

The world's best known cricketer, Sachin Tendulkar, is a follower of Sai Baba, whose mystique and influence lasted long after his death in 2011. Gurus also peddle influence as politicians run to them for advice. Proximity to a guru legitimises a politician and adds to his power, says sociologist Shiv Visvanathan. Many of the gurus are also successful entrepreneurs and run massive business empires, selling traditional medicines, health products, yoga classes and spiritual therapies.

A guru from Punjab, Gurmeet Ram Rahim Singh, who heads a popular religious sect, even performs at rock concerts and acts in films. The gurus also believe in what big companies call "corporate social responsibility", or investing in communities and caring for the environment. So they supply drinking water to parched villages, run rehab programmes for prisoners and drug addicts, organise blood donation camps and open schools for poor children.

So what accounts for India's enduring relationship with gurus? For one, in a fast-urbanising country bristling with ambition, frustration and confusion, gurus are like placebos for the uncertain masses. People flock to them, thinking that they can help give them the next big break in their lives.

Also, most Indians believe in magic, miracle and faith healing. Sociologist Dipankar Gupta says Hinduism depends on magic more than other religions as "Hinduism does not have a single book and communion". "If you are in a communion, you pray together, you have other kinds of solace," he says. So many Indians depend on gurus to produce miracles and improve their lives.

"Gurus are essentially seen as magicians who promise miracles. You go to a guru hoping he will deliver things to you. Religion, as we know it, is just a gloss and doesn't draw Indians to gurus in the first place," says Dr Gupta. As long as belief in magic and miracle survives and times remain uncertain, India's gurus are assured a place in the sun.

Tuesday, November 18, 2014

G20 summit -- High on promise, low on delivery; UK grocery sales dip, first time in 20 years; Abuse, hunger await South Africa children

1 G20 summit – High on promise low on delivery (Linda Yueh on BBC) The G20 summit of world leaders has concluded with a communique, a fancy way of describing a joint statement, that has both delivered more, but also somewhat less, than expected.

Where they've delivered more is by putting issues such as climate change in the message from world leaders. Those weren't on the formal agenda as the host, Australian PM Tony Abbott, had nixed climate change, for one. But, after US President Obama mentioned the urgency of dealing with climate change before the summit, it's unsurprising that it was discussed after all. Ebola is also in the final statement.

But, where they have delivered less is with respect to concrete commitments on those issues. For instance, the gist of the G20 statement on climate and Ebola is that they are concerned, and support effective action - without committing money or quantitative targets. Maybe that's too much to expect given that these originally weren't on the agenda.

Fighting tax evasion was on the agenda, and the G20 agreed to automatically share tax information, but I've already heard criticism from Transparency International and others that it doesn't go far enough because the information won't be in the public domain.

World leaders reaffirmed their goal of lifting the GDP of G20 economies - which represent 85% of the world's economy - by an additional 2% within four years, by 2018. It's equivalent to adding $2 trillion to global output, and they say that will create millions of jobs. How they can achieve that, of course, is the big question. The statement says that they'll deliver jobs through increasing "investment, trade and competition".

2 UK grocery sales dip, first time in 20 years (Sarah Butler in The Guardian) UK grocery sales have gone into decline for the first time in at least 20 years as a raging price war and the falling cost of food commodities hit Britain’s supermarkets. In good news for shoppers, the average price of a basket of everyday essentials such as milk, bread and vegetables now costs 0.4% less than it did a year ago, according to the latest figures from market research firm Kantar Worldpanel.

But the figures highlight lean times for the UK’s biggest retailers with all of the “big four” supermarkets seeing sales fall back in the 12 weeks to 9 November as the overall grocery market contracted by 0.2% compared with a year ago. This is the first time there has been a decline in UK grocery sales by value since it data collection began in 1994. Back then Sainsbury’s was still the market leader but was to be overtaken by Tesco the following year.

The “big four” are spending billions of pounds cutting prices in an effort to stem the rate of shopper defections to German discounters Aldi and Lidl. The declining grocery market is likely to be of concern to retailers as they gear up for the key Christmas trading season. In keeping with a trend that has continued throughout this year, the German discounters Aldi and Lidl continued to grow strongly, as did the up-market grocer Waitrose.

3 Abuse, hunger await South Africa children (Tanya Farber in Johannesburg Times) Abuse and hunger await millions of South African children, according to a new report. It paints a grim picture of the treatment of children at the hands of the adults who would be expected to care for them. In some communities, the report says, more than half of the children have been abused on a long-term basis by caregivers, teachers or relatives.

The responsive approach to dealing with violence against children, the report contends, does not decrease its incidence and is expensive. A preventative approach is advocated. About 40% of children have witnessed violence against their mother, causing them severe trauma and, in some cases, mental illness.

The ground-breaking Child Gauge 2014 report, which brings together in-depth research by specialists, also says that: 15% of children are neglected by their parents; 74% of all child homicides involve children under the age of five, and half of these are due to babies being dumped before they are a week old; and at least 10% of child murders involve sexual assault.

The Human Sciences Research Council's senior research specialist, Mokhantso Makoae, says in the report that a responsive approach does not decrease the incidence of violence against children and is expensive. A preventative approach is advocated. "The costs of prevention programmes are a fraction of the treatment costs and are estimated to give a saving of 96% to 98%."

Other figures from the report: 2million children live in shacks; more than half live in poverty; 6million live in a household in which no one is employed; one-third of children have no access to water on site; one third of children have no basic sanitation; about 800000 are orphans; and about 2.5million go hungry.

Monday, November 17, 2014

What Japan's recession means for the world; Facebook mulls free internet for Africa; 18,000 terrorism deaths in a year

1 What Japan’s recession means for the world (BBC) In a surprise, Japan said its economy, the world's 3rd-biggest following the US and China, contracted 1.6 percent at an annual pace in the July-September quarter as consumer and corporate spending failed to regain momentum after a sales tax increase in April.

Here are some implications for the global economy and for Japan: The slump comes as China's growth is slowing and Europe's economy is limping along. It could drag on Asia's growth if Japanese businesses hold back on investing abroad and companies and consumers buy fewer imports. The drop also adds to uncertainties in world financial markets.

Prime Minister Shinzo Abe will likely delay another sales tax hike planned for October 2015, and use that decision and the bad GDP numbers as reasons to call snap elections, possibly as early as next month, to seek a public mandate on this course of action.

Japan's population is shrinking and aging, creating a smaller domestic market and placing heavier tax burdens on younger wage-earners. Apart from its automakers, Japan's many manufacturers have lost their innovative edge and have been shifting production offshore. Household incomes peaked more than a decade ago, and a growing share of workers struggle to make ends meet on part-time, contract work.

Abe has promised drastic reforms of labor regulations, the tax system and the health industry, among other areas, to help improve Japan's competitiveness. But so far he's made little headway, while most companies have not passed on windfall gains from stock price increases and surging profits to their workers in the form of higher wages.

2 Facebook mulls free internet for Africa (Christopher Williams in Telegraph/Johannesburg Times) Facebook is in an advanced stage of talks with UK satellite operator Avanti about a ground-breaking project that would provide free internet access across swathes of Africa. Facebook founder Mark Zuckerberg says he is determined to connect the developing world.

It is expected that a deal between Avanti and the social network, under the auspices of its initiative, will be announced soon. aims "to bring the internet to the two-thirds of the world's population that doesn't have it". Avanti, which owns two broadband satellites positioned over Africa, plans to launch two more in the next three years to increase capacity and coverage.

According to, if developing economies had the standard of internet access enjoyed in rich countries global productivity would be boosted by 25% and 160million people would be lifted out of poverty. Facebook turned to the British company after an appeal to network operators to help spread internet access received a cool reception.

The Avanti solution is also likely to be quicker to set up and more reliable than some of the more exotic and experimental technologies in development. Google, for instance, is working on Project Loon, which involves high-altitude balloons. Facebook itself is testing solar-powered drones but has said they will not be ready for deployment for years. Facebook and Avanti declined to comment.

3 Terrorism took 18,000 lives last year (Ewen MacAskill in The Guardian) Terrorism is on the rise, with an almost fivefold increase in fatalities since 9/11, in spite of US-led efforts to combat it in the Middle East and elsewhere around the world, according to a report.

The Global Terrorism Index recorded almost 18,000 deaths last year, a jump of about 60% over the previous year. Four groups were responsible for most of them: Islamic State (Isis) in Iraq and Syria; Boko Haram in Nigeria; the Taliban in Afghanistan; and al-Qaida in various parts of the world.

The terrorism index raises questions about the effectiveness of a western counter-terrorism strategy since 9/11 that has seen US-led invasions of Iraq and Afghanistan, drone strikes in Pakistan and Yemen and the use of proxy forces around the world. According to the index figures, the number of fatalities has steadily grown over the last 14 years, from 3,361 in 2000 to 11,133 in 2012 and 17,958 in 2013.

Supporters of the US strategy can find solace in a decrease in the four years from 2007, which could be attributed to the US troop surge in Iraq. The next steep rise began in 2011 as a result of the Syrian civil war, which was born out of the Arab spring rather than US-led action. But the emergence of Isis can be attributed directly to the US invasion of Iraq. Its genesis can be traced to the insurgency against the US forces. It grew from al-Qaida in Iraq.

Steve Killelea, executive director of the Institute for Economics and Peace, an independent thinktank with offices in Sydney, New York and Oxford, said there had been a “significant and worrying increase in worldwide terrorism” over the last two years. He did not have the figures for this year yet but “my gut instinct is that it will be worse. I think we will see an increase.”

The report says that the two most successful strategies for ending terrorist groups since the late 1960s have been policing and the initiation of a political process. “These strategies were the main reason for the ending of more than 80% of terrorist organisations that ceased operation. “ The report says that there were 437,000 murders in 2012 compared to 11,113 terrorist deaths.

Sunday, November 16, 2014

Cameron sees second global crash coming; Japan economy in recession; Singapore's tuition dilemma

1 David Cameron says second global crash is looming (Patrick Wintour in The Guardian) David Cameron has issued a stark message that “red warning lights are flashing on the dashboard of the global economy” in the same way as when the financial crash brought the world to its knees six years ago. Cameron says there is now “a dangerous backdrop of instability and uncertainty” that presents a real risk to the UK recovery, adding that the eurozone slowdown is already having an impact on British exports and manufacturing.

His warning comes days after the Bank of England governor, Mark Carney, claimed a spectre of stagnation was haunting Europe. The International Monetary Fund managing director, Christine Lagarde, expressed fears in Brisbane that a diet of high debt, low growth and unemployment may yet become “the new normal in Europe”.

“The eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk of falling prices too,” Cameron wrote. “Emerging market economies which were the driver of growth in the early stages of the recovery are now slowing down. Despite the progress in Bali [trade talks in 2013], global trade talks have stalled while the epidemic of Ebola, conflict in the Middle East and Russia’s illegal actions in Ukraine are all adding a dangerous backdrop of instability and uncertainty.”

With Germany, Europe’s manufacturing powerhouse, growing by just 0.1% in the third quarter, the eurozone economy appears to be faltering. The EU may also be only one or two new rounds of sanctions away from pushing Russia into a deep recession as punishment for its interference in Ukraine. World leaders pledged 800 separate measures designed to lift their combined economic growth by an additional 2.1% above the current trajectory by 2018 compared with 2013.

2 Japan economy in recession (BBC) Japan's economy unexpectedly shrank for the second consecutive quarter, marking a technical recession in the world's third largest economy. Gross domestic product fell at annualised 1.6% from July to September, compared to forecasts of a 2.1% rise. That followed a revised 7.3% contraction in the second quarter, which was the biggest fall since the March 2011 earthquake and tsunami.

The economy shrank 0.4% in the third quarter from the previous one. Economists said the disappointing figures are likely to lead to a delay to the proposed increase of the country's sale tax. Private consumption, which accounts for about 60% of the economy, was 0.4% higher from the previous quarter - much weaker than the 0.8% increase that economists had been expecting.

3 Singapore’s tuition dilemma (Straits Times) That the tuition industry is now worth $1.1 billion a year is cause for concern, although tutors are contributing to the gross domestic product and the Inland Revenue Authority of Singapore has recovered more than $2.3 million in unpaid taxes and penalties from private tutors and tuition centre proprietors who under-declared their incomes.

There would be nothing to complain about tuition per se as an educational transaction engaged in by parents and tutors, willing buyers and sellers of knowledge and skills. But it is the purpose and impact of tuition on students generally that warrants introspection. Individual attention can help immensely. But for many parents, tuition is synonymous with educational rites of passage such as the PSLE and later national examinations. To them, tuition is all about making a difference to test scores.

However, those who truly embrace holistic education might instead tap tuition to spark or sustain a child's interest in the arts or sports, to broaden his social horizons, or to equip him to participate more fully in the life of the country. Not every such child will become a literary or sporting star, but all children will gain from a sounder sense of their place in the social scheme of things.

The problem occurs when parents view tuition not as an exceptional means of meeting minimal educational goals or of expanding a child's mind, but as a perpetual attempt to game the educational system at elusively higher and higher levels of expectation.

Saturday, November 15, 2014

Oil's fall 'set to continue'; Biz schools churn out most billionaires; Banking is changing, but corruption stays

1 Oil’s fall ‘set to continue’ (BBC) Oil prices are likely to continue falling well into 2015, the International Energy Agency has said. The IEA, a consultancy to 29 countries, said weak demand and the US shale gas boom meant crude's recent fall below $80 a barrel was not over. On Friday, Brent crude traded at $78.13 a barrel, near a four-year low.

"Barring any new supply problems, downward price pressures could build further in the first half of 2015", IEA said. The organisation, set up after the "oil shock" of the early 1970s to advise major oil importing countries, said that pressure was building on the Opec oil producers' group to restrict supply to bolster prices. However, there have been reports that Saudi Arabia, Opec's key member, is not yet willing to turn off the taps.

Also, it is likely that oil and gas explorers will become increasingly worried that falling prices will make exploration uneconomical. Brent has fallen for eight weeks in a row, its longest losing streak since 1988, according to Reuters' data. The US energy department said this week that it expected low fuel prices to last into next year.

2 Biz schools churn out most billionaires (Julie Balise in San Francisco Chronicle) Harvard Business School's MBA program has produced more billionaires than any other business school, according to a report from Wealth-X.

With 64 billionaire MBA alumni, the Cambridge, Massachusetts-based school has nearly three times as many as runner up Stanford University. Seven of the top 10 business schools with the most billionaire alumni are based in the US. Three of them are Ivy League colleges.

While the recent Wealth-X study focused on MBA programs, several of those colleges also appear on the list of schools with the most billionaire undergraduate alumni, released by Wealth-X in October. University of Pennsylvania took the top spot on that list, with 25 billionaire undergraduate alumni, followed by Harvard University.

There are 2,325 billionaires in the world, with a combined net worth of $7.3 trillion, according to the Wealth-X and UBS Billionaire Census 2014. Europe is home to more billionaires than any other continent, while the US has more billionaires than any other country. New York City has the largest population of billionaires of any city.

3 Banking is changing, but corruption stays (Will Hutton in The Guardian) Another week, another financial scandal. Six global banks, including RBS and HSBC, were fined £2.6bn last week for rigging the foreign exchange markets. Since 2008, total fines levied in Europe and the US for banking crimes and misdemeanours now top £100bn, with banks making provision for a further £60bn. British banks alone have set aside an estimated £30bn for fines, provisions and litigation costs.

What has gone wrong with western finance? The systemic ripping off of customers continued after the financial crisis to constitute what is now the biggest-ever global corporate scandal. Banks worldwide duped clients into buying products that were either not needed or provided no purpose. Worse, they organised financial markets whose purpose was to serve their own interests rather than those they purported to serve. It has proved a hard habit to break.

Banking itself is being reformed. The implementation of the Vickers commission proposals will separate commercial banking from investment banking in five years’ time, and proprietary trading will become ever harder. The FCA’s increasingly tough stance and astonishing fines will incentivise bank managements to stop indulging the traders who have landed them in such trouble.

And yet reading the chatroom banter, with its echoes of the banter over mis-selling PPI, rigging interest rates or derivatives, offers a window into a very degraded culture. Making money from money, with the clients’ interest last, is too dominant an element in the culture of investment bankers. This is not an environment where good flourishes. For that we need a much deeper change of heart, a process that, I suspect, will need more crises before it becomes more widely accepted as imperative.

Friday, November 14, 2014

Germany avoids triple-dip recession; Brent crude falls below $80; Techie women and egg-freezing parties

1 Germany avoids triple-dip recession (Julia Kollewe & Graeme Wearden in The Guardian) Germany and France, the eurozone’s two largest economies, performed better than expected in the third quarter, with Germany narrowly avoiding a triple-dip recession. However, Italy, the third-largest economy, has slid back into recession, its third since the financial crisis struck.

The eurozone as a whole grew by 0.2% between July and September following 0.1% growth in the second quarter, according to Eurostat. Greece has finally come out of recession, after nearly six years of misery. There was some relief in financial markets as Germany, Europe’s largest economy, eked out growth of 0.1%. Many economists had feared the country could slip back into recession, defined as two or more consecutive quarters of contraction.

France expanded 0.3% in the third quarter, the highest since the second quarter of 2013. Among the bigger eurozone economies, Italy was the only one that disappointed. It shrank 0.1% between July and September, marking the 13th quarter without any growth. Following a 0.2% contraction in the second quarter, this means Italy is in its third recession since 2008.

Spain was the best performer among major European economies this quarter, having reported 0.5% growth, while Portugal and the Netherlands both grew 0.2%. Outside the eurozone, Poland outperformed the currency bloc with 0.9% growth.

2 Brent crude falls below $80 (BBC) The price of Brent crude oil has fallen $3.60 - 4.4% - to $77.52, its lowest level for four years. The benchmark US crude oil price is also at a four-year low, after losing $2.57 to close at $74.28. The price has fallen sharply since the summer and is 30% below its June price. The drop comes as traders believe members of the Opec oil exporting countries, which control about 40% of world oil exports, will not cut production.

Opec's 12 member countries will meet later this month to discuss the global oil market. Lower oil prices typically prompt Opec nations, which include the biggest oil exporting nation in the world, Saudi Arabia, to rein back output in order to limit supply and boost prices and income. Most need higher oil prices to fund rising government spending. But recent comments by oil ministers from Saudi Arabia and Kuwait suggest the group is unlikely to agree to a cut.

3 Techie women and egg-freezing parties (Wendy Lee in San Francisco Chronicle) In Silicon Valley, where many tech employees put in long hours, Dr Aimee Eyvazzadeh wants women to think about freezing their eggs — after work, and over drinks. The fertility expert is hosting three informational events this week, called egg freezing parties. Over wine and appetizers, a small group of women will learn more about the egg freezing process and there will be experts to help with any questions.

Eyvazzadeh, who calls herself “The Egg Whisperer,” is jumping on growing interest in preserving eggs in Silicon Valley, as some tech companies have decided to make the procedure a standard health benefit for a young workforce that is faced with the decision on whether to delay parenthood.

“It’s the 2014 version of the Tupperware party,” Eyvazzadeh said. “I thought it would be a fun way to promote fertility awareness before it’s too late.”  More tech companies are offering perks for parenthood in order to keep employees happy. Facebook already covers up to $20,000 for several procedures, including egg freezing, and also offers other benefits for parents, including giving $4,000 in “baby cash” for each child born. Meanwhile, Apple plans to include egg freezing and storage as part of items covered by its health insurance policy next year.

Eyvazzadeh’s explains how it works:  A woman injects herself with hormones in the skin of her midsection every night for ten nights. Then, the woman under goes a procedure in which a doctor collects her eggs. Those eggs are then frozen and stored. The cost of freezing eggs in general could be roughly $15,000. That’s compared to spending well over $30,000 to find an egg donor when you’re 40, she added.

Wednesday, November 12, 2014

UK, Japan and 1% inflation; War on education; The next 50 years of Singapore's economy

1 UK, Japan and 1% inflation (Linda Yueh on BBC) The Bank of England forecasts that price rises may fall below 1% temporarily over the next six months and won't hit the 2% target for perhaps 3 years. So, the BoE now expects that the first interest rate rise could be delayed to next autumn. It means that inflation could be more than one percentage point below target and it would be the first time that the BoE governor has had to write a letter to the chancellor due to inflation being too low.

Inflation slowing to 1% in Japan was followed by the Bank of Japan unleashing a massive amount of cash injection that surprised even markets that had gotten used to the BOJ's propensity to print. Prices were moving further away from their target of 2% and the BOJ feared that the country would not see the end to 15 years of deflation after some promising signs.

So, the Japanese central bank is now injecting 80 trillion yen, which is a staggering $720bn per year. That's equivalent to a new Switzerland each year (Swiss annual output is about $650bn). There is no magic number for how quickly (or slowly) prices should rise. But, around 2% is what developed economies have largely settled on, which is just enough to get their economies going as price rises spur firms to produce but not so high that consumers see their incomes squeezed. It's essentially the target for the major central banks of the Federal Reserve, BOE, BOJ, and European Central Bank, among others.

Each country is different and the UK doesn't have the same deflation concerns as Japan, nor does the euro area yet. But, one common trait is that weak wage growth is a contributor to lower prices. Of course, it's a welcome change from the years where inflation was growing faster than wages and squeezing incomes. All countries will eye the Japanese experience closely should inflation linger below 1%.

2 War on education (Dawn) The ferocity with which Islamist militants have been attacking educational institutions in Nigeria makes the efforts of their ideological comrades in Pakistan, Afghanistan and Syria pale by comparison. A suicide bomber in the northern Nigerian town of Potiskum attacked a school assembly on Monday killing almost 50 students. Though Boko Haram — Nigeria’s most lethal extremist group — had not publicly claimed the attack at the time of writing, the outfit has carried out similar attacks in the past.

The Boko Haram leadership has openly instructed followers to destroy schools. Pakistan is familiar with such patterns of violence, as local militant groups, most prominently the banned TTP, have bombed or attacked hundreds of schools in Khyber Pakhtunkhwa and Fata, while extremists have also threatened and attacked schools in Balochistan.

In Afghanistan, though things have improved since the Taliban’s fall in 2001, the harsh restrictions the militant group placed on girls’ education while it ruled Kabul are still fresh in the mind. Media reports indicate that the self-styled Islamic State has closed down schools in parts of Syria it controls in order to ‘Islamise’ the curriculum.

The unfortunate truth is that these extremists are jeopardising the future of countless children in the areas they control. If left to their devices the militants will create an entire generation of children with little knowledge or skills other than rote learning of scripture and a very narrow interpretation of Islam. Or the youngsters will be left illiterate. Apart from the other effects of militancy, we may lose an entire generation to the obscurantists.

3 The next 50 years of Singapore’s economy (Ho Kwon Ping in Straits Times) The first L is Location. How do we maintain our competitiveness as Singapore's strategic location may decline? I believe that the answer is in creating several critical ecosystems of business activity, as we are now doing. To create critical ecosystems which are so elaborately interrelated that they cannot be reconstructed by competitors. Even if Singapore's geographic location becomes less strategic in a global context, the eventual creation of a genuine Asean Economic Community will finally create opportunities for our SMEs.

The second L: Land. I had identified two challenges: viability of manufacturing in the face of land shortages, and housing affordability. On the first challenge, there is no evidence that manufacturing of high value, sophisticated products requires more space or labour than services. The second challenge of housing affordability is more intractable and perhaps requires a more radical approach. First, property prices should perhaps be more actively managed. Second, in terms of pricing, the tail should not wag the dog - public housing prices should perhaps determine private housing prices, not the other way round.

Finally, the third L: Labour. One reason for Singapore's high income inequality is the high wage differential between different job vocations. There are two reasons for this. First, a large workforce of low-cost, low-skill foreign workers depresses the wages of everyone in that wage band, regardless of nationality. Second, our education system creates a large differential in starting salaries between the technical versus university graduates.

There are two possible ways to address these causes of our problems. First, we can perhaps devise a more innovative immigration programme where foreign workers are seen less as a necessary evil but more as one element in an overall population strategy which does not distinguish so much between foreigner and Singaporean, but recognises their mutual dependency.

Second, perhaps education pathways can be re-designed to help reduce income inequality. We can amend the technical school - meaning polytechnic - educational pathway so that their students graduate at the same age as university graduates, and have starting salaries closer to graduates. This can be done with a longer industry attachment and genuine apprenticeship programmes which provide much deeper (and equitably paid) work experience and job knowledge.

And two "soft" suggestions:d" economics. My first suggestion is that Singapore can take the lead, again over the next 50 years, in defining new and more holistic indices for economic progress, which take into account factors such as human well-being, environmental sustainability, and socio-cultural development. My final suggestion is that inclusion, diversity and freedom of expression need to be proactively cultivated if we want to attract the best global talent.