1 Ultimatum to Greece after talks break down
(Jennifer Rankin & Larry Elliott in The Guardian) Talks between Greece and
its eurozone creditors collapsed in disarray on Monday night, heightening
concerns that the country is edging closer to a disruptive exit from the single
currency.
The Greek delegation was told in no uncertain terms
that further talks would recommence only if the country was willing to extend
its bailout package, which carries a list of austerity measures that the new
left-wing government in Athens has vowed to pare back.
Effectively presenting Greece with an ultimatum, the
eurogroup of eurozone finance ministers said Athens had until Friday to agree
to maintain the current bailout under the auspices of the European Union, the
European Central Bank and the International Monetary Fund – something that
Greece has said is unacceptable.
Greece’s finance minister, Yanis Varoufakis, made it
clear in the acrimonious discussions in Brussels on Monday that Greece would
not accept prolonging the bail out for six months unless the other 18 members
of the eurozone agreed to water down the austerity conditions attached to the
deal.
The Syriza-led coalition in Athens is convinced
that, despite the tough language used by Germany, it can secure more favourable
terms by holding out until closer to the 28 February deadline when its current
€172bn (£127bn) bailout expires. Varoufakis, an economics professor, who
specialises in game theory, insisted Greece is not bluffing about its
negotiating tactics.
2 Global dividend
income at record (BBC) The total dividend
income paid to shareholders around the world rose by 11% last year to $1.167
trillion, according to investment firm Henderson Global Investors. The biggest
increase in cash payouts came from US firms at $52bn.
Henderson said global
dividends would rise by just 1% this year because of lower oil prices and
slowing economies. Another factor acting as a drag on dividends would be the
recent rise in the value of the dollar, the firm said. This will depress the
value of dividend income from around the world once it has been translated into
the US currency.
"2014 was a superb
year for income investors, with developed markets leading the charge,"
said Alex Crooke at Henderson Global Investors. About one-third of global
dividend income came from firms on the US stock market.
Global dividend income
has now risen by 60% in the five years since 2009, far outstripping inflation
and savers' interest rates in the UK, and also the growth of economies around
the world. That underlines the vital importance to investors of dividend
income, especially when share prices have stagnated, as reinvesting the
dividends increases the value of a shareholding in a similar fashion to
compound interest.
Just 10 firms accounted
for 11% of all global payouts in 2014, and the top 20 accounted for 18% of all
dividends. They were led by Vodafone whose huge special dividend early last
year meant it was responsible for 20% of all UK dividend payments.
3 Test for GCC's non-oil
economy (N Janardhan in Khaleej Times) Oil prices have crashed from over $100
to sub-$60 a barrel in just five months. While this is good news for consumer
countries, it also means only half the revenue for the energy producers,
especially the Gulf Cooperation Council (GCC) countries. Hydrocarbon incomes
are set to reduce from $743 billion in 2012 to about $410 billion in 2015. The
bloc may, therefore, record a current account deficit for the first time since
the late 1990s.
However, rather than
worry, it is business as usual because they have accumulated about $2.3
trillion in current account surpluses since 2003. GCC countries will be able to
weather the storm better than the low oil price era in the 1980s and 1990s
because of the conscious policy to invest in a diversified economy. It is a
matter of irony that the GCC governments pursued economic diversification
during the high oil price era of the last decade, rather than attempt it when
prices slumped.
To facilitate non-oil
economic growth, projects worth about $2.4 trillion were reportedly planned in
the region. Many of these may be complete before 2020, including the Gulf
railway project, the first nuclear energy plant, economic cities and a regional
electricity grid, among others. It is
interesting to note that sports, tourism, airlines, real estate, hospitality,
and hi-tech chip-making industries, among others, are part of the diversification
mix.
The most ironical
diversification is in the renewable energy sector – Abu Dhabi is now the
headquarters of the International Renewable Energy Agency. The West Asia and
North Africa region is expected to see solar projects worth $2.7 billion
unveiled in 2015, six times more than in 2014. Saudi Arabia, the world’s
largest oil exporter, announced in 2012 that it would install 17 giga-watts of
nuclear power by 2032 and around 41 GW of solar capacity.
Overall, the GCC
countries learnt a lesson after squandering oil wealth during the 1970s. The
stability in the GCC region has not just been a consequence of possessing oil
wealth, but ensuring pragmatic politics while disbursing it. Finally, how the
diversification process and the creation of an economic state intersects with
the ongoing ‘knowledge economy’ development will not only determine the health
of the non-oil economy in the near future, but also condition long-term
sustainable growth.
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