Saturday, January 31, 2015
Germany not to cancel more Greek debt; Spain rally in support of Greek way out of debt; Dealing with 'frenemies' at work
1 Germany not to cancel more Greek debt (The Guardian) The German chancellor, Angela Merkel, has ruled out cancelling more of Greece’s debt, saying the country has already received billions of cuts from bankers and creditors.
Merkel’s intervention comes after the Greek finance minister, Yanis Varoufakis, refused to work with the troika of lenders – the European commission, European Central Bank and International Monetary Fund – to renegotiate the terms of the debt-ridden country’s €240bn (£180bn) bailout programme.
Greece’s leftwing Syriza party won last weekend’s election with a pledge to have half the debt written off and has already begun to roll back the austerity measures the creditors had demanded of the previous government.
But the German chancellor said that she still wanted Greece to stay in the eurozone. “The aim of our policies was and is for Greece to remain a part of the euro community permanently,” Merkel said. The size of the Greek economy has shrunk by more than a quarter – the worst slump in modern times – as a result of consecutive waves of budget cuts and tax rises enforced at the behest of creditors.
Alexis Tsipras, the new Greek prime minister, will visit Rome on Tuesday to meet with his Italian counterpart Matteo Renzi and Paris on Wednesday for talks with French president Francois Hollande with the aim of winning support for his anti-austerity policies.
2 Spain rally in support of Greek way out of debt (BBC) Tens of thousands of people massed in central Madrid for a rally organised by radical Spanish leftists Podemos. The "March for Change" is one of the party's first outdoor mass rallies, as it looks to build on the recent victory of its close allies Syriza in Greece.
Podemos leader Pablo Iglesias told the crowd a "wind of change" was starting to blow through Europe. Podemos has surged ahead in opinion polls, and has vowed to write off part of Spain's debt if it comes to power.
Protesters are parading in the same streets that over the past six years have seen many other gatherings against financial crisis cutbacks imposed by successive governments. But Spanish Prime Minister Mariano Rajoy said Podemos had no chance of winning elections. Many Spaniards are enraged over reports of political corruption and public spending cuts implemented by Mr Rajoy's People's Party and before that by the Socialists.
Our correspondent says that since Podemos stormed onto the political scene in last May's European elections, it has moved from strength to strength with its uncompromising message against austerity and corruption. But both left-wing and right-wing media have criticised Podemos, accusing it of having ties with Venezuela's left-wing leaders and alleging financial misconduct by some of its senior members.
Spain has now officially come out of recession but nearly one in four workers remains unemployed. Last year was the first time there has been full-year economic growth in the country since 2008, when a property bubble burst, putting millions of people out of work and pushing the country to the brink of a bail-out.
3 Dealing with ‘frenemies’ at work (Johannesburg Times/Harvard Business Review) Friends at work who are trusted confidantes may sometimes gossip about you. Co-workers who encourage you may also disparage you in front of others. How can you navigate these relationships with "frenemies"?
A. Focus on the positive: Having a frenemy is better than having an enemy. Start by sharing some personal information and building a small degree of trust; even if these relationships do not ever make it into a "friend" zone, they have some unexpected benefits. B. Try to work together on an important project: Frenemies are a source of motivation, and working alongside them will make you work harder to prove yourself.
C. Turn your enemies into frenemies: Aim to transform your worst relationships not into friendships but into ambivalent ones, which have more benefits in terms of your motivation and personal success. You can do this by getting to know your enemy better and focusing on his or her more positive characteristics.
D. Appreciate your varied social ledger: Remember that it is not just you who feels ambivalent toward others at work. Stop feeling guilty about these uncomfortable feelings and appreciate that you have a wide range of relationship types at work, as does everybody else.
Despite the benefits, we do not want all our relationships to be ambivalent. There is much more to be gained by having as many positive relationships as possible — and that is where your priorities should lie. But navigating relationships at work is complicated, and not only are love-hate relationships unavoidable, but having a few is good for us.
Friday, January 30, 2015
Greece shuns debt talks with 'troika'; Weak growth, cheap oil pull Eurozone prices down; Two things depression taught me
1 Greece shuns debt talks with ‘troika’ (Mark Lowen on BBC) Greece's new left-wing finance minister says his government will not negotiate over the Greek bailout conditions with the "troika" team from the EU and IMF. Yanis Varoufakis said he was rather seeking direct talks with eurozone leaders, to try to cancel more than half the money Greece owes.
Jeroen Dijsselbloem, head of the eurozone group of finance ministers, said Greece should stick to its reform commitments. He said Greece and the Eurogroup had a "mutual interest in the further recovery of the Greek economy inside the eurozone" and warned against Athens acting unilaterally in its efforts to renegotiate its bailout.
Greece has endured tough budget cuts in return for its €240bn ($270bn) bailout, agreed in 2010 with the "troika" - the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB).
The defiance from Athens was clear: no co-operation with the troika overseeing the bailout. The troika creditors are supposed to wrap up their latest review of Greek finances at the end of February, based on which they would dish out another €7bn of bailout money. Athens needs the tranche to meet debt commitments later this year. But Mr Varoufakis says his government does not want the money and will not honour commitments made under a previous "toxic" programme.
2 Weak growth, cheap oil pull Eurozone prices down (San Francisco Chronicle) Falling prices sent another worrying signal about the eurozone economy just before the European Central Bank starts a 1 trillion euro ($1.1 trillion) stimulus effort. Consumer prices fell 0.6 percent in the 12 months to January, accelerating the 0.2 percent annual drop in December.
Prices are weighed down by the recent plunge in oil prices. But even excluding energy costs, they are weak, a sign of the deep economic malaise afflicting the 19 countries that share the euro currency. A report by the Eurostat statistics agency showed that the core inflation rate, which strips out volatile food and energy prices, was at plus 0.5 percent, down from 0.7 percent the month before.
Falling prices have raised fears that the eurozone will fall into outright deflation, a trap that can paralyze the economy if it leads to falling wages and investment. Japan fell into deflation in the 1990s and is still trying to get out. The European Central Bank is readying a massive 1 trillion euro stimulus program to try to raise inflation close to its goal of 2 percent and to get the economy moving.
Meanwhile, jobless figures showed a slight improvement in December, with the unemployment rate falling to 11.4 percent from 11.5 percent the month before. The number of unemployed people fell by 157,000 in the eurozone.
3 Two things depression taught me (Ben Locker in The Guardian) It’s often said that depression isn’t about feeling sad. It’s part of it, of course, but to compare the life-sapping melancholy of depression to normal sadness is like comparing a paper cut to an amputation. Sadness is a healthy part of every life. Depression progressively eats away your whole being from the inside. It’s with you when you wake up in the morning, telling you there’s nothing or anyone to get up for. It’s with you when the phone rings and you’re too frightened to answer it.
And always, the biggest stigma comes from yourself. You blame yourself for the illness that you can only dimly see. So why was I depressed? The simple answer is that I don’t know. The best I can conclude is that depression can happen to anyone. I thought I was strong enough to resist it, but I was wrong. That attitude probably explains why I suffered such a serious episode – I resisted seeking help until it was nearly too late.
Let me take you back to 1996. I’d just begun my final year at university and had recently visited my doctor to complain of feeling low. He immediately put me on an antidepressant, and I got down to the business of getting my degree. The pills took a few weeks to work, but the effects were remarkable. Too remarkable. The only problem was that the drug did much more. It broke down any fragile sense I had of social appropriateness. I’d frequently say ridiculous and painful things to people I had no right to say them to.
So, after a few months, I decided to stop the pills. I ended them abruptly, not realising how foolish that was. Last spring I was in the grip of depression again. So I returned to the doctor. I took the antidepressant. And it worked. I even felt my creativity and urge to write begin to return for the first time in years. And tellingly, my wife said: “You’re becoming more like the person I first met.”
It was a turning point. The drug had given me objectivity about my illness, made me view it for what it was. This was when I realised I had been going through cycles of depression for years. I am truly grateful to all those who love and care for me for pushing me along to this stage.
And now, I need to get back to work. Depression may start for no definable reason, but it leaves a growing trail of problems in its wake. If you still attach stigma to people with mental illness, please remember two things. One, it could easily happen to you. And two, no one stigmatises their illness more than the people who suffer from it. Reach out to them.
Thursday, January 29, 2015
Greece and eurozone creditors gear up for clash over bailout; US jobless claims at 15-year low; UK young hit by wage slump
1 Greece and Eurozone creditors gear up for clash over bailout (San Francisco Chronicle) Greece's new radical left government has shot the first salvo in what is expected to be a tough clash with fellow eurozone countries over budget cuts that Athens says are choking the life out of its economy.
The government of Prime Minister Alexis Tsipras said it would ignore key budget commitments, privatizations and reforms previous administrations had promised in exchange for rescue loans from fellow eurozone countries. The hard line prompted a quick warning from the European Union and sent local investors into a panic on the prospect that the country might get cut off from its financial lifeline.
Tsipras' radical Syriza party won general elections over the weekend on a pledge to scrap the some austerity budget cuts, tax hikes and reforms that had been promised. The measures were meant to reduce debt, but had devastating side-effects for the economy, causing a years-long economic depression and spike in unemployment to over 25 percent.
The party also wants to cancel billions of euros (dollars) in repayments, something eurozone creditor nations have ruled out. As Tsipras' ministers took up their positions, they announced they were abandoning several commitments: the privatization of Greece's power utility, a refinery, the country's two biggest ports and several airports would be scrapped, and the minimum wage would be restored to pre-crisis levels.
Among the most contentious issues will be Syriza's promise to Greeks to seek forgiveness of more than half of Greece's 240 billion euros ($272 billion) in rescue loans. The Greek government has debt repayments coming in March so it needs to reach a deal with eurozone countries relatively quickly.
2 US jobless claims at 15-year low (Khaleej Times) The number of Americans filing new claims for unemployment benefits tumbled last week to its lowest level in nearly 15 years, adding to bullish signals on the labour market.
Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended on January 24, the lowest since April 2000, the Labour Department said. It was the biggest weekly decline since November 2012.
The drop, which far exceeded economists’ expectations for a fall to only 300,000, probably exaggerates the strength of the jobs market as the data included the Martin Luther King holiday, which means fewer claims were likely processed.
Non-farm payrolls likely increased 230,000 after rising 252,000 in December, according to a survey of economists. That would mark the 12th consecutive month of jobs gains above 200,000, the longest stretch since 1994.
3 UK young hit by wage slump (Heather Stewart in The Guardian) British workers are taking home less in real terms than when Tony Blair won his second general election victory in 2001, with men and young people hit hardest by the wage squeeze that followed the financial crisis, according to new research.
The Institute for Fiscal Studies thinktank said wages were 1% lower in the third quarter of 2014 than in the same period 13 years earlier after taking inflation into account. Jonathan Cribb, an author of the report, said: “Almost all groups have seen real wages fall since the recession.”
However, the study finds that women have been relatively cushioned from the worst of the wage cuts because they are more likely to be in public sector jobs, where wages fell less rapidly during the early years of the downturn. Aided at the start of the crisis by the relative stability of public sector wages, women’s average hourly pay fell by 2.5% in real terms between 2008 and 2014, the IFS found, while men’s pay fell by 7.3%.
The IFS also singled out younger workers as among the biggest victims of the falling living standards that have become widespread in post-crash Britain. “Between 2008 and 2014, there is a clear pattern across the age spectrum, with larger falls in earnings at younger ages,” the thinktank found in a detailed study of the state of the labour market.
Tuesday, January 27, 2015
Apple profit 'biggest in history'; What 'junk' credit status means to Russia; Scotch whisky industry 'bigger than UK iron & steel or computers'
1 Apple profit ‘biggest in history’ (Richard Taylor on BBC) US technology giant Apple has reported the biggest quarterly profit ever made by a public company. Apple reported a net profit of $18bn in its fiscal first quarter, which tops the $15.9bn made by ExxonMobil in the second quarter of 2012, according to Standard and Poor's. Record sales of iPhones were behind the surge in profits.
Apple sold 74.5 million iPhones in the three months to 27 December - well ahead of most analyst's expectations. However, sales of the iPad continued to disappoint, falling by 18% in 2014 from a year earlier.
Apple's impressive results represent a significant shift towards the massive untapped potential of China. With a strong line-up of devices entering the final quarter, it was able to reap the fruits of its deal with the world's biggest mobile network, China Mobile.
All eyes now are on the Apple Watch - but with a relatively high base price it is not clear whether it will be able to woo more than the Apple faithful. Apple's revenue grew to $74.6bn in 2014 - a 30% increase from a year earlier. Sales in greater China hit $16bn in 2014 - a 70% increase from a year earlier, and almost equalling the $17bn in sales the company recorded in Europe last year.
2 What ‘junk’ credit status means to Russia (San Francisco Chronicle) Russia has seen its credit grade cut to "junk" status for the first time in over a decade, a big blow for a country that wants to be a world economic power. The downgrade by Standard & Poor's reflects the country's growing economic problems, such as the collapse in the value of its oil exports and the impact of Western sanctions. But it is also rare for a country with such low debt levels.
Standard & Poor's cut Russia's rating to BB+, a non-investment grade the country last held in 2004, when it was still recovering from a painful financial collapse in the 1990s. The downgrade puts it at the same level as Turkey, Indonesia and Barbados. Russia's economy is expected to contract by 4 to 5 percent this year for the first time since 2009, when the economy was hit by a global crisis.
Investors pulled $152 billion out of the country last year, compared with an average of $57 billion annually during 2009 to 2013. Foreign currency reserves have dropped below $400 billion for the first time since August 2009.
A country's credit rating determines how expensive it will be for the government to borrow on international markets. That cost eventually affects how expensive loans are in the broader economy, for companies and consumers. As Russia does not borrow much on international bond markets, the impact on its public financing costs is likely to be limited.
Finance Minister Anton Siluanov has unveiled an anti-crisis plan that will freeze the level of government spending and reform the economy. The plan aims to get a budget surplus as soon as 2017 and "so that we do not burn recklessly through Russia's sovereign reserves."
3 Scotch whisky industry ‘bigger than UK iron & steel or computers’ (Rebecca Smithers in The Guardian) Scotch whisky is worth more than £5bn to the UK economy, according to a report that highlights its contribution to the country’s exports and job creation. Distillers directly employ 10,900 people, but they also support a further 30,000 jobs through the supply chain, the research group 4-consulting found.
The figures make whisky the third biggest industry in Scotland, behind energy and financial services, comprising about 70% of the entire Scottish food and drink sector. The industry dwarfs tourism and the creative sector and is nearly three times the size of Scotland’s digital or life science industries.
Despite a slowdown in exports, more than 1.26bn bottles of whisky are shipped each year. Exports to the US alone were worth almost £820m in 2013, a record high. Using a “value-added” measure to gauge the contribution to the economy, the research found the industry is bigger than the UK’s iron and steel, textiles, shipbuilding or computer industries.
The sector is expanding at unprecedented rates, with around 30 new distilleries being planned or built across Scotland, the report said. Capital investment reached £142m in 2013, up 31% since 2008. At its peak during the 1970s, the industry accounted for just over 20,000 jobs across the whole of Scotland. But the 1980s marked the start of an extended downturn, triggering significant structural change.
A Treasury spokeswoman said: “Scotch whisky is a huge British success story – to support the industry we ended the spirits duty escalator and froze the duty on whisky and other spirits at last year’s budget. The government has also introduced the spirits verification scheme. This will help protect the integrity and high reputation of Scotch whisky by helping consumers in the UK and abroad to identify genuine products and avoid fakes.”
Monday, January 26, 2015
Russia credit in junk status for first time in decade; Germany warns Greece over debt commitments; Rising wealth and increasing self-absorption
1 Russia credit in junk status for first time in decade (Jill Treanor in The Guardian) Russia’s credit rating has been downgraded to junk status for the first time in a decade due to the collapsing oil price, the tumbling value of the rouble and sanctions imposed because of its intervention in Ukraine.
Ratings agency Standard & Poor’s said the downgrade was caused by the country’s reduced flexibility to cut interest rates and a weakening of the financial system. Attempts to shore up the value of the rouble have had only a temporary effect, Standard & Poor’s said, noting that the 750 basis point rise in interest rates last month to take interest rates up to 17% had only a limited impact on the rouble-dollar exchange rate.
Rival agencies have not pushed Russia’s rating into junk territory although there are expectations that they will echo the S&P decision. The lower the debt rating the more expensive it is to borrow and makes its impossible for some investors to hold the debt at all.
The country is one of the world’s biggest energy exporters and the reduction in the oil price by more than half in the past six months to below $50 a barrel is reverberating through the economy. The central bank has warned that GDP could shrink by as much as 4.8% this year if oil prices fail to recover.
The banking system is already being bailed out and economists have calculated that further support may be need for the financial sector. According to the analysis by S&P, inflation could rise above 15% this year and the banks will suffer an increase in bad debts on their balance sheets.
2 Germany warns Greece over debt commitments (BBC) Germany has warned the new Greek government that it must live up to its commitments to its creditors. German government spokesman Steffan Seibert said it was important for Greece to "take measures so that the economic recovery continues".
The far-left Syriza party, which won Sunday's poll, wants to scrap austerity measures demanded by international lenders, and renegotiate debt payments. However Jeroen Dijsselbloem, president of the Eurogroup, said: "There is very little support for a write-off in Europe."
Meanwhile the German government said that Greece's new leadership should take measures to ensure the economic recovery continues. Syriza's victory has caused some concern in the financial markets. In a volatile start to the week the euro briefly touched an 11-year low against the dollar, before recovering to trade almost 0.7% higher against the US currency.
Syriza leader Alexis Tsipras helped calm investors' nerves when he said in a speech that he wanted negotiation, not confrontation, with international lenders. The troika of lenders that bailed out Greece - the European Union, European Central Bank, and International Monetary Fund - imposed big budgetary cuts and restructuring in return for the money. But Mr Tsipras said: "The troika for Greece is the thing of the past."
3 Rising wealth and increasing self-absorption (Heather Knight in San Francisco Chronicle) If it seems that San Franciscans are getting more entitled and self-absorbed, a series of psychology studies performed at UC Berkeley indicates there could be a scientific reason: the city’s increasing wealth.
Paul Piff, an assistant professor in the Department of Psychology and Social Behavior at UC Irvine, has spent the past decade conducting about 50 studies on how wealthy people and poorer people behave in the same situations. Again and again, he’s found a common thread: Rich people are more likely to behave unethically even if they get very little benefit.
They’re more likely to take candy from a jar labeled as just for kids, cheat at games and cut off pedestrians in crosswalks. They’re also more likely to say they’d do the same thing when told about somebody who accepts bribes, lies to customers, cheats on an exam or pockets the money when a clerk gives too much change.
Piff speculated that wealthier people don’t have the same sensitivity to others as poor people do because they don’t need to rely on their neighbors and the wider community as much. One of Piff’s most interesting studies found that just half the drivers of luxury cars stopped for a pedestrian about to enter a crosswalk, whereas just about all drivers of old beaters stopped. “BMW drivers were the worst,” Piff said. “They were most likely to break the law.”
Tom Cebollero, 48, drives a BMW and bought the independent auto shop eight years ago after getting sick of his job in corporate finance. He was intrigued by Piff’s study and said it makes sense because BMWs are “confidence builders.”
Sunday, January 25, 2015
Market turmoil likely as Greek radical left wins; UK recovery losing steam; US and India 'rebalance Asia' against China's rise
1 Market turmoil likely as Greek radical left wins (San Francisco Chronicle) A radical left-wing party vowing to end Greece's painful austerity program won a historic victory in Sunday's parliamentary elections, setting up a showdown with the country's international creditors that could shake the eurozone.
Alexis Tsipras, leader of the communist-rooted Syriza party, immediately promised to end the "five years of humiliation and pain" that Greece has endured since an international bailout saved it from bankruptcy in 2010. If Tsipras, 40, can put together a government, he will be Greece's youngest prime minister in 150 years, while Syriza would be the first radical left party to ever govern the country.
The prospect of an anti-bailout government coming to power in Greece has sent jitters through the financial world, reviving fears of a Greek bankruptcy that could reverberate across the eurozone. He won on promises to demand debt forgiveness and renegotiate the terms of Greece's 240 billion euro ($270 billion) bailout, which has kept the debt-ridden country afloat since mid-2010.
To qualify for the cash, Greece has had to impose deep and bitterly resented cuts in public spending, wages and pensions, along with public sector layoffs and repeated tax increases. Greece's creditors insist the country must abide by previous commitments to continue receiving support.
Syriza's anti-bailout rhetoric appealed to many in a country that, in the past five years, has seen a quarter of its economy wiped out, unemployment above 25 percent and average income losses of at least 30 percent. But Syriza's victory has renewed doubts over Greece's ability to emerge from the crisis, and generated fears that the country's finances could once again send shockwaves through global markets and undermine the euro, the currency shared by 19 European countries.
2 UK recovery losing steam (Katie Allen in The Guardian) The UK’s economic recovery lost steam at the close of 2014, official figures are expected to confirm this week. Growth is forecast to have slowed to 0.6% in the fourth quarter, from 0.7% in the third, according to a poll of economists by Reuters.
However, Chancellor George Osborne will be able to claim credit for the strongest annual performance since the financial crisis if the latest quarterly GDP data comes in as expected on Tuesday. If predictions of a 0.6% rise are correct, it would mean the economy expanded 2.6% for the year as a whole, the best performance since 2007 and faster growth than other advanced economies.
Recent reports have pointed to a slowdown at the end of 2014 for both industry and construction while consumer spending appears to have held up. The latest figures from the high street last week showed sales rose in December as motorists rushed to fill up cars with cheaper petrol and food shopping was strong ahead of Christmas.
Analysts see little chance of that pattern changing in coming months as continued troubles among the UK’s key trading partner, the eurozone, and a slowdown in China weigh on exports. But manufacturing should get some support from lower oil prices. Household spending is expected to remain the key driver for the UK economy as households get some relief from low inflation, rising employment and signs of the long-awaited return of wage growth.
3 US and India ‘rebalance Asia’ against China’s rise (Dawn) US President Barack Obama’s presence as chief guest at India's 66th Republic Day celebrations. just four months after Indian Prime Minister Narendra Modi's visit to the US, is highly symbolic. The visit is also expected to ramp up bilateral cooperation on economic growth, energy and climate change as well as address important differences such as intellectual property rights and civil nuclear liability law that pose a hindrance to taking the cooperation to the next level.
However, the larger goal that the US would be pursuing here is to convince India to join a coalition of democracies to balance China's rise. Although it won't be publicized, this topic will likely be ever-present in their private conversations. Deng Xiaoping's opening up of China's economy in 1978 began China's full integration into the global economy and normalized its diplomatic relations with other countries.
The resulting transformation of China's economy allowed it to ultimately challenge the supremacy of the US. China seeks to be the preeminent power in the Western Pacific and consolidate Asia into an exclusive bloc. In 2012, the Obama administration announced that it was going to be intensifying its focus to the Asia-Pacific in a policy popularly known as the “rebalance to Asia”.
This “concert of democracies” strategy involved courting democracies in the region to manage the uncertainties caused by a rising China. What is clear is the bilateral relations between Asia's maritime democracies – India, the US, Australia and Japan – are stronger than ever. These four countries interact regularly at a military-to-military level as well share intelligence regularly.
There is no denial that the US presence in Asia provides stability and certainty to India. There is also increasingly less doubt that India finds comfort in a US-centric world order. It is unclear if India has the capacity or the resources to address challenges posed by a rising China on its own or with the cooperation of its other allies.
Friday, January 23, 2015
2015: Year of sharing economy for cities; ECB move sends euro to 11-year low; South Korea growth at six-year low
1 2015:Year of sharing economy for cities (April Rinne in Straits Times) The sharing economy - based on the idea of "access over ownership" - is not a panacea to global problems. However, it is an incredibly powerful tool that allows individuals, companies and communities alike to do more with what they have.
It provides new and flexible opportunities for income generation, cost savings, sustainable consumption and social value. Looking ahead, I see the sharing economy becoming an increasingly important part of the new global context this year.
When it comes to the sharing economy, cities are becoming more: Supportive: Portland, Oregon, announced its Shared City partnership with Airbnb last year and has taken a very open, proactive approach to enabling the sharing economy. It is also the first city in the world to persuade Uber to cease operations in the city for a three-month period while they assess policy options.
Resourceful: Seoul launched its Sharing City initiative in 2013 which continues to grow. The South Korean capital is not only enabling sharing businesses, but it is also putting its own underutilised assets into shared use. For example, it has opened up more than 900 city-owned spaces to residents for creative and productive purposes, from music ensembles to yoga.
Engaged: Several cities in Europe, including Amsterdam and Milan, have launched sharing-economy platforms, research agendas and public consultations. They are proactively assessing how the local government can best support what residents want, need and strive for.
And it's not just cities. The British government recently commissioned an independent sharing-economy review with the goal of making Britain the sharing capital of Europe. This year will be a pivotal year for the sharing economy, cities and the new global context. Davos provides an ideal forum to catalyse these opportunities and shift the tone of the conversation.
2 ECB move sends euro to 11-year low (Phillip Inman in The Guardian) The euro hit an 11-year low against the dollar on Friday as financial markets continued to digest the effects of the European Central Bank’s unprecedented €1.1tn quantitative easing stimulus package.
Analysts said the euro, which has dived 7% since the start of the year, was on track for its biggest monthly fall against the dollar since the depths of the financial crisis in early 2009, and predicted that the single currency could yet reach unseen lows.
Manufacturers across the eurozone cheered the weakening of the euro, noting that it would make exports more competitive. Carmakers were among the biggest gainers, with BMW shares up nearly 5% to hit a record high and Peugeot Citroën rising 3.7%.
But the erosion of euro savings is expected to anger older voters in Germany, Finland, Belgium and the Netherlands. Some politicians have already warned that the ECB’s move, which cheered beleaguered southern European governments with large debts and high unemployment, will increase costs for German holidaymakers heading for popular destinations in the Caribbean and far east.
3 South Korea growth at six-year low (BBC) Growth in Asia's fourth largest economy, South Korea, fell to a six year low in the fourth quarter of last year. The economy grew a seasonally adjusted 0.4% in the October to December period from the previous quarter when growth hit 0.9%.
Economists said a slump in infrastructure spending and exports had a big impact on the country's growth. Construction investment fell by a seasonally adjusted 9.2%, the worst since 1998 as weaker tax revenue led the government to cut back spending on projects.
The disappointing data could lead the country's central bank to cut interest rates again to boost the economy, according to economists. Last week the central bank did cut its growth forecast for this year to 3.4% from an earlier forecast of 3.9%, anticipating the slowdown in the economy.
Thursday, January 22, 2015
€1.1tn plan to save eurozone; Generational change near for Saudi Arabia; South Africa's political denialism
1 €1.1tn plan to save eurozone (Heather Stewart in The Guardian) The European Central Bank launched what City experts called a “shock and awe” plan to pump €1.1tn (£830bn) into the eurozone in a last-ditch attempt to prevent the single currency bloc sliding into an intractable slump.
In the teeth of fierce political resistance from Germany, ECB president Mario Draghi said he would inject €60bn of new money into financial markets every month until at least September 2016. The bank will use electronically created money to buy the bonds of eurozone governments – quantitative easing – to try to boost confidence, push up inflation and drive down the value of the single currency, helping to increase exports and kickstart growth.
The €60bn-a-month price tag for the QE programme, which will start in March, was larger than many in financial markets had expected, and underlined Draghi’s determination to hold the 19-member currency zone together. The banker, nicknamed “Super Mario” by traders, promised QE would continue “until we see a sustained adjustment in the path of inflation”.
The ECB is meant to keep inflation below, but close to, its target level of 2% – but prices have been rising at less than half that pace for the past year, against a background of plunging oil prices and anaemic growth. With average prices in the shops already falling across the single currency area, the ECB hopes to avoid the threat of a deflationary spiral, in which consumers and businesses slash spending while they wait for prices to fall further, dragging the economy into a recession.
The long-awaited launch of QE will infuriate Berlin, which views the policy as akin to a bailout for free-spending governments such as Greece, and fears that it could allow inflation to get out of control. A headline on the website of the newspaper Bild after the announcement read: “ECB takes billions of debt off ailing euro states: What happens to my money now?”
2 Generational change near for Saudi Arabia (San Francisco Chronicle) With the death of King Abdullah, the throne of Saudi Arabia passed to another son of the country's founder as it has relatively smoothly for the past six decades. But it brings the oil-rich kingdom one step closer to a question that will test the unity of its royal family: Who in the next generation will reign?
Abdul-Aziz Al Saud, who united tribes and founded the kingdom that bears his name, had dozens of sons — possibly more than 50 — from multiple wives. Power has passed among them, from brother to brother, since his death in 1953. Crown Prince Salman, Abdullah's half-brother, is now king.
But ranks of that generation, largely in their 70s and 80s, are thinning. Soon, the throne must go to the son of one those sons, potentially putting succession and power in the hands of one branch of the family at the expense of the others. The health of Salman, 79, is uncertain. He suffered at least one stroke that has left him with limited movement on his left arm.
Abdullah sought to ensure the transition goes without intra-family rivalries by formalizing the Allegiance Council, a body made up of the living sons of Abdul-Aziz and some of the prominent grandsons who vote to pick the king and crown prince. That legacy could be tested sooner than expected. In any case, the question of the generational shift in succession will jump to the fore.
3 South Africa’s political denialism (Johannesburg Times) Denialism is a terrible thing. Not only is it fundamentally dishonest, it obviates the need to find solutions to pressing problems and crises. Thus, during the presidency of Thabo Mbeki, the link between HIV and Aids was called into question and, as a result, critical and sensible interventions were not timeously taken.
Official denialism was back in evidence this week, when Gauteng's MEC for community safety, Sizakele Nkosi-Malobane, insisted that the wholesale violence and looting being perpetrated by Soweto residents against foreign shopkeepers was not xenophobia.
Journalists covering the mayhem overheard the looters - men, women and children - screaming abusive epithets at their victims; there was talk of driving "the dogs'' out. Some of the victims told of being branded makwerekwere (a derogatory term for foreigners) as they packed their belongings to leave Soweto, probably forever.
The Collins English dictionary defines xenophobia as "hatred or fear of foreigners or strangers, or of their politics or culture''. It is possible that thugs, even business rivals who can't compete with foreign shopkeepers, are fuelling this outpouring of hate.
If so, their efforts have fallen on fertile ground in some poorer communities. The tragedy unfolding in Soweto shames us all and betrays the legacy of Nelson Mandela. Have we forgotten the terrible events of 2008?
Wednesday, January 21, 2015
BP boss sees oil low for three years; Greece's staggering debt and the poll; The great wall of Saudi Arabia
1 BP boss sees oil low for three years (BBC) The boss of oil giant BP's boss Bob Dudley has said that oil prices could remain low for up to three years. He added that could send UK petrol prices below £1 per litre. He said BP was planning for low oil prices for years to come.
That is expected to lead to job losses and falling investment in the North Sea oil industry and elsewhere, curbing supply and eventually forcing the price back up. Italian oil group Eni has said the next spike could be around $200 a barrel. Eni's chief executive, Claudio Descalzi, said the oil industry would cut capital spending by 10-13% this year because of slumping prices.
From 2010 until mid-2014, oil prices around the world were fairly stable, at around $110 a barrel. However, since June prices have more than halved. Brent crude oil is around $48 a barrel, and US crude is around $47 a barrel.
Sustained low oil prices are also likely to cause "stress" on oil producing countries such as Norway, Russia, Venezuela, Scotland, Nigeria and Angola, he said. "All these countries are really going to feel it," he said. "I think Scotland is going to be under some stress because of these low oil prices," he said. Globally, BP and the rest of the energy industry were likely to see "significant workforce reductions," he added.
2 A look at Greece’s debt before the polls (San Francisco Chronicle) Greece goes to the polls Sunday with voters given a tough choice over how to handle the country's debt after six years of recession badly weakened its economy.
Greece’s national debt topped 320 billion euros ($369 billion) last year — equivalent to nearly 30,000 euros ($34,600) for each Greek resident. Although Greece reached a major restructuring deal with private creditors three years ago, its economy has shrunk by a quarter during the recession to an annual output of 188 billion euros ($217.5 billion), making debt repayment more difficult.
Conservative Prime Minister Antonis Samaras' term should expire in mid-2016 but he was forced to call elections when opposition parties refused to back his candidate for president. Samaras is trailing the left-wing Syriza party in opinion polls and has failed to narrow the gap as voters face hardship from austerity measures imposed during the bailout.
Syriza's charismatic 40-year-old leader, Alexis Tsipras, is calling for a eurozone debt conference. The party argues that insistence on full repayment under current terms would only crush the Greek economy and be counterproductive. The party is seeking short-term help with a freeze on interest payments and longer-term aid with restructured bailout debt and repayment levels tied to domestic economic growth.
Senior Syriza economic planner Giorgos Stathakis believes a new debt deal could be possible by the end of 2015. But he added a Tsipras government would no longer talk with negotiators from the "troika" of the International Monetary Fund and European Union and central bank, but instead deal directly with governments.
3 The great wall of Saudi Arabia (Alexander Lacasse in Christian Science Monitor/Khaleej Times) Saudi Arabia has been constructing a 600-mile East-West barrier on its Northern Border with Iraq since September. The main function of the barrier will be keeping out Daesh militants, who have stated that among their goals is an eventual takeover of the Muslim holy cities of Makkah and Madina, both of which lie deep inside Saudi territory.
The Saudi “Great Wall”, will be a fence and ditch barrier that features soft sand embankments that is designed to slow down infiltrators on foot and are too step to drive a tired-vehicle up, according to the Telegraph of London. It will have 40 watchtowers and seven command and control centers complete with radar that can detect aircraft and vehicles as far away as 22 miles as well as day and night camera installations. The 600-mile structure will be patrolled by border guards and 240 rapid response vehicles.
But it’s not the first Saudi border wall. Since 2003, in fits and starts due to Yemeni opposition, the Saudi government has been working on a less costly barrier along the 1,100 mile border with Yemen on the Kingdom’s southern border.
And Saudi Arabia is not the only country that has turned to a physical barrier to keep its enemies or illegal immigrants out. The Saudi’s wall is designed to function as the modern equivalent of the Great Wall of China, which was completed in 206 B.C. The Great Wall was intended to force attacking armies to have to circumnavigate the 5,500-mile structure.
In the modern history of wall building, the Soviets militarised the border with Western Europe and separated East and West Berlin with the 87-mile Berlin Wall to stop would-be defectors from escaping to the West through the divided city that had an open border up until 1961. The US government started constructing a 700-mile border-fence on the Mexican border in order to stem the flow of illegal immigrants back in 2006 that President Barack Obama claimed in 2011 was, “now basically complete,” according to Politifact.com.
According CBS News, Daesh wants to unite the entire Levant, which includes land in Israel, Jordan, Kuwait, Syria, and Iraq. Jordan has sent more tanks and rocket launchers to the border with Iraq and its forces remain on “high alert,” as was reported in a BBC story, and Kuwait’s border with Iraq has been relatively quiet because Iraq’s Shia population lives in the areas north of Kuwait, according to the same report.
Tuesday, January 20, 2015
CEOs 'less optimistic' on economy; Solving housing crisis through 3-D printing; Winners and losers in China's slowdown
1 CEOs ‘less optimistic’ on economy (Emily Young on BBC) Chief executives are less optimistic about the economy this year than last, a survey unveiled at the World Economic Forum suggests. PwC's annual survey shows that just 37% think the economy will improve in 2015, down from 44% last year.
Perhaps unsurprisingly, Russia's bosses have gone from the most confident to the least, due to problems caused by sanctions and the falling oil price. In the UK, concern had risen sharply about the availability of talent.
The number of chief executives concerned about the skills gap rose from 64% last year to 84% this year. That is considerably higher than in Germany, France or Spain. This was partly put down to the high level of employment in the UK, which means that there is a smaller pool of workers to choose from, and partly due to concerns about the education system.
On a global level, the biggest worries that chief executives have are geo-political uncertainties, over-regulation and cyber security. Chief executives ranked the US as their most important market for growth over the next year, putting it ahead of China for the first time in the five years that the question has been asked.
2 Solving housing crisis through 3-D printing (Alastair Parvin in The Guardian) Since the Industrial Revolution the assumption has always been that the only people who can build homes at scale are large organisations – either state or market – building whole estates; rows of one-size-fits-all boxes for imaginary “average” humans. Form follows finance.
The hidden flaw is that in the “current trader” model, the houses built by property developers are not actually designed as places to live, but as financial assets; to be sold to the mortgage lending market. The term “housebuilder” is actually a little misleading. A better description might be “land developer” a company that buys land and seeks to resell it with a 20% margin for its shareholders.
In other words, traditional property developers cannot solve the housing crisis, because they are almost perfectly designed not to. So who can? Unlike property developers, custom builders (individuals or groups who buy land and procure a home for themselves as a place to live) can usually procure their homes at a fraction of the equivalent property market cost. They can also break the cycle of community resistance to new, topdown developments.
Our first step might be to develop open source tools and platforms that radically simplify the process of planning, designing and constructing customised, high performance, sustainable, low-cost homes, and to put those tools into the hands of citizens, communities and businesses. That is the aim of the WikiHouse project, an open source construction system that allows online self-build models to be shared, improved, 3D printed and self-assembled.
But we also need to reform the land market, to make it dramatically easier for those without much capital to buy a plot of land and commission their own homes – either individually or as a group. There can be a parallel land market that differentiates between a house built as a speculative asset, and a house built as a place to live. Let’s create space for both, and see which works. That is the real economic shift that citizens, with open tools and data will bring to housing.
3 Winners and losers in China’s slowdown (San Francisco Chronicle) China's economy, the world's second largest, grew 7.4 percent last year, its slowest expansion in nearly a quarter century. Forecasters expect growth to wane further in the next several years. The IMF predicts growth of 6.3 percent in 2016, a dramatic shift from double digit rates in previous years that is creating winners and losers.
The losers: Industries that profited from China's building boom are being battered by the ruling Communist Party's effort to reduce reliance on investment and nurture more sustainable growth based on domestic consumption. Developers are losing access to credit and building permissions. Suppliers of steel, copper, cement and other building materials have seen orders dry up. That has wiped out jobs in construction and real estate sales and sent shockwaves abroad, hitting countries as far away as Australia and Brazil that export iron ore and other commodities.
As explosive growth in auto sales cools, China's domestic brands are losing market share to global rivals and their state-owned manufacturing partners. Sales of cognac, Swiss watches, designer clothing and other luxury goods have been hurt by a ruling party campaign to rein in corruption and official extravagance. So has revenue at upscale restaurants and Macau casinos.
The winners: Big winners straddle the worlds of technology, private business and consumer brands — areas communist leaders want to promote as new sources of growth. E-commerce giant Alibaba Group's revenue rose 54 percent in the quarter that ended in September. Revenue for rival JD.com jumped 61 percent. Milk producer Modern Dairy Ltd.'s revenue rose 86 percent in the six months ending in June. Novice entrepreneurs in some areas are benefiting from rule changes meant to make it easier to set up barber shops, restaurants and other small businesses.
Energy-intensive industries including trucking benefit from the slump in global crude prices. E-commerce has produced unusual winners, including fledgling smartphone maker Xiaomi, which used Internet-based sales and marketing to slash costs and passed Samsung last year to become China's No. 1 brand by number of handsets sold. A stock market boom has brought a surge of revenue and profit to brokerages and finance firms.
The state industry: Government-owned companies in oil, steel, banking, telecoms and other industries still enjoy monopolies and other privileges, but the ruling party's plans, if carried out, will force them to compete. State-owned steel and aluminum mills are under pressure to make their operations cleaner and more efficient. Oil giant Sinopec Ltd. is looking at ways to use its thousands of filling stations to sell groceries and other goods.