Sunday, May 31, 2015
Greek default or not, prospects look grim; UK economy seen picking up; No bubble this, but get ready for a 'correction', banker warns
1 Greek default or not, prospects look grim (The Guardian) As Greek prime minister Alexis Tsipras and his finance minister Yanis Varoufakis have discovered the hard way, international financial deal-making is a world away from the thrill of a barnstorming election campaign.
But with Varoufakis sidelined after a series of less-than-helpful public interventions, Tsipras and his colleagues appear to be in the final stages of agreeing a deal with the country’s eurozone creditors and the International Monetary Fund – renamed the “Brussels Group” to assuage the Greek public’s hatred of the “troika”.
If Tsipras pulls off a deal and skirts default, it will be a political and personal triumph, in the face of extraordinary odds. And if he can persuade Greek voters to back him in the messy compromises he will inevitably have to make to win over the lenders – especially the IMF, which is reportedly taking a particularly tough line – it will be close to miraculous.
As Gabriel Sterne of Oxford Economics pointed out last week, while two-thirds of the Greek public believe Syriza should be willing to compromise, almost 60% thought that should not include pension reform – likely to be a red line for creditors. Sterne believes there is now almost a 50/50 chance that the country could be forced out of the single currency.
The sad truth for the Greek people is that none of the roads ahead of them looks anything but grindingly hard. This is a country where GDP collapsed by a quarter in the aftermath of the crisis; where unemployment remains above 25%; and where average wages fell by almost 18% in real terms between 2008 and 2013.
If a deal is done, the country is likely to face another bout of painful structural reforms and stringent spending cuts, to satisfy the Brussels Group that it’s not throwing good money after bad. That means Greece will still face hefty repayments, and the scrutiny of its paymasters, for years to come. And if no deal is forthcoming by the 30 June deadline both sides appear to have set, then Greece faces the risky and uncertain prospect of defaulting on its debts and crashing out of the euro.
2 UK economy seen picking up (BBC) The speed at which the British economy is growing is increasing, the Confederation of British Industry says. Research by the CBI suggests business activity increased markedly in the three months to May. Rain Newton-Smith, the CBI's director of economics, said growth had "cranked up several gears".
In April official figures revealed the UK economy grew by 0.3% in the first three months of 2015, which marked the slowest quarterly growth for two years. The CBI said growth could be boosted further as things improve economically in the Eurozone, which is the UK's largest trading partner.
Earlier in the month the CBI urged businesses to "speak out early" in favour of remaining in a reformed European Union. Its president Sir Mike Rake said there were "no credible alternatives" to EU membership.
3 No bubble, but get ready for ‘correction’, banker warns (Joe Garofoli in San Francisco Chronicle) No, we’re not living in an economic bubble. That’s what former Treasury Department official and investment banker Roger Altman told a venture capitalist conference. However, Altman predicted there will be a “correction.”
“But I don’t think we’re going to see a repeat of the dotcom” bust, Altman said. “That was a broad correction across the tech sector. I don’t think that’s likely to likely to repeat itself,” he said.
Altman is the executive chairman of Evercore, one of the most active independent investment banks in the US. As evidence, Altman pointed out that “some of the social media sector is very highly valued. Is it probably going to be a fairly sharp correction? Usually corrections are fairly sharp,” Altman said. “We’ll see a regression to the mean.”
Altman said we are living in a “golden moment” where “the Ubers of the world” can be highly valued without going public, thus avoiding the increased regulatory scrutiny that comes with being a public company. “Remaining private is attractive because of the autonomy and control factors. If I could achieve all of my business objectives while remaining private, I would. I think it’s one of those golden moments. I don’t think it will last very long, but I can understand why people are taking advantage of it.”
Saturday, May 30, 2015
1 US economy shrank in Q1 (BBC) The US economy shrank 0.7% in the first three months of 2015, compared to the same period last year. The Bureau of Economic Analysis significantly revised down its earlier economic growth estimate of 0.2%. The US economy last contracted in the first quarter of 2014, when it shrank by 2.1%.
As was the case last year, a harsh winter may have been partly to blame for falling goods and services production in the US. The strong US dollar has pushed up imports and lowered exports. At current dollar prices, GDP slipped further from 0.1% growth to a 0.9% contraction.
The revision in GDP prompted investors to shift to traditionally safer assets, such as bonds. This is why yields on US Treasuries have fallen as their price has risen. "From a policy perspective, the first quarter lull is already history; it's the extent of the rebound that will be critical in determining the timing of the Fed's first move on interest rates," says Chris Williamson, chief economist at Markit. "Survey evidence is already pointing to a second quarter pick-up," he added.
2 Iraq in free fall (Fareed Zakaria in Khaleej Times) US Secretary of Defence Ash Carter did misspeak last week with remarks that caused a firestorm in both Washington and Baghdad. He explained Daesh’s takeover of Ramadi by saying, “Iraqi forces showed no will to fight.” He just forgot to complete the sentence by adding the words, “for Iraq.”
The Kurds fight ferociously for Kurdistan. The Shias have been fighting doggedly for their people. Daesh are killing and dying for their cause. But nobody is willing to fight for Iraq. The problem really is not that Iraq’s army has collapsed. It’s that Iraq has collapsed.
Daesh is, at heart, an insurgency against the governments of Iraq and Syria. And no insurgency can thrive without some support from the local population. It gets that support from the disgruntled Sunni populations of both countries, who feel that they are being persecuted by the Shia and Alawite governments.
The vast majority of Sunnis oppose Daesh and flee every place it seizes. But they cannot find towns where they can resettle. The ethnic cleansing of Iraq — with Shias moving to Shia areas, and Kurds and Sunnis doing the same — began with the civil war in 2006 but has accelerated dramatically. Even Baghdad, which was a diverse and mixed city, has been segregated into sectarian ethnic enclaves and become mostly Shia.
Iraq today no longer exists. In 2008, 80 percent of those polled said they were “Iraqi above all.” Today that number is 40 percent. The Kurds have taken every opportunity to further enhance their already considerable autonomy. Twelve years after Saddam Hussein’s fall, the Kurds and the Baghdad government still cannot agree on a deal to share oil revenues.
The sectarian divide is being exacerbated from the outside. Iran supports the Baghdad government and Shia militias. Others support the Sunni militant groups in both Iraq and Syria and have declined to support the Baghdad government, even in its struggle against Daesh. Washington can provide aid, training, arms, air power — even troops. But it cannot hold together a nation that is falling apart.
3 Digital industry isn’t a boys’ club (Donna Sepala in The Guardian) As a woman working in digital, I am part of the 30%. According to Digital Marketing Institute research that is, which found that while women are 11% more “digitally proficient” than men, they account for just 30% of the digital marketing workforce in the UK.
The digital industry attracts a lot of criticism when it comes to equality. The media is always willing to shout about high profile cases of sexism. These cases are indeed deplorable. However, anything tech and digitally focused tends to be pigeonholed as being a “boys’ club”, when in my experience it has been anything but.
Today, as the director of a UK digital agency, I understand the blood, sweat and tears that our team puts into their work, the outcome of which is judged solely on merit. If a client doesn’t like our ideas, we go back to the drawing board and come up with something until it’s right. Such is agency life. Ideas are gender free.
As a very young industry, digital, especially digital creative, has managed to forge itself from a blank canvas. It doesn’t face deeply ingrained and historical gender inequality like other more established career paths. I believe this gives talented women and men equal opportunity to shine. Nobody looks at a beautifully created website and wonders about the gender of the person who built it. They just enjoy the design and experience.
While I do believe that the industry as a whole doesn’t discriminate, I also understand that women may need reassurance that they will not be judged on the basis of their gender. I am also aware that despite being an exciting, dynamic and diverse industry, there is still that lingering whiff of male stigma associated with a certain aspect of digital: programming. Ironic really, as the very first computer programmer, Ada Lovelace, was a woman.
Code has no gender. I urge both men and women considering a role in digital creative to be inspired by role models, explore the opportunities out there as best they can, understand where their skills are best suited and not to be deterred by the “introverted programmer” or “boys’ club” stereotypes. As a new industry, we have the chance to keep skill level and ability at the forefront of our hiring policies, and to hire the best person for the job, regardless of gender.
Thursday, May 28, 2015
IMF chief feels Grexit a possibility; Why sponsors aren't tougher on Fifa; Tough times for Singapore ornamental fish biz
1 IMF chief sees Grexit a possibility (Helena Smith & Heather Stewart in The Guardian) The head of the International Monetary Fund has warned that a Greek exit from the eurozone is a “possibility” as debt talks reach a critical stage.
Christine Lagarde said a deal with Athens was unlikely to be reached over the next few days, as the indebted country strives to meet a 5 June deadline for a €305m (£218m) payment to the IMF. The IMF managing director said: “A Greek exit is a possibility.” Lagarde added that such a step would “not be a walk in the park”, but would “probably not” mean the end of the euro.
Her comments came as Athens’ lead negotiator admitted Greece required intervention at the highest political level in Europe in order to seal an agreement after acknowledging that ongoing negotiations in Brussels would not achieve a final deal. Greek ministers have admitted next week’s €305m payment cannot be met without securing a deal to release the €7.2bn of loans outstanding on the country’s current bailout programme.
The IMF is said to be insisting that Athens must be offered debt relief if its future repayments are to be manageable, but that would mean lenders, including the European Central Bank, writing off some of the Greek debts they own. That proposal is being resisted by other members of what was known as the creditors’ “troika” of the IMF, the EU and the ECB.
2 Why sponsors aren’t tougher on Fifa (Robert Peston on BBC) The Fifa scandal is an "absolute disaster" for the multinationals who sponsor it - because they cannot escape taint from the perceived lapses of football's supreme governing body. So why aren't these huge and powerful global companies doing what the UK culture secretary John Whittingdale has asked, and following the lead of Visa - which said it would review its sponsorship deal if Fifa does not clean up its act?
Well, part of the answer is implicit even in the less mild sabre-rattling of Visa. Because it is striking that even Visa only said it might review its commercial relationship with Fifa, not that it was doing so. The point, according to well-placed executives, is that Coca Cola, Hyundai, Budweiser, McDonald's, Gazprom and Visa (among others) have signed legally binding contracts.
So they may not be able to get out of the contracts without paying spectacular damages - given that they are each believed to be paying Fifa up to $200m (£130m) over four years for the marketing opportunities associated with the World Cup. There is another point, though, which is that the World Cup is "the best sponsorship opportunity on the planet".
How so? Well, association football is arguably the world's most global sport - though the Olympics and Formula One also have serious worldwide reach. And the World Cup allows the sponsors to get their names in front of hundreds of millions of consumers, both in the rich West and in the faster-growing economies of Asia and South America.
So, although all the sponsors want to be seen to be doing the "right thing" by putting pressure on Fifa to reform, they are fearful that if they completely incinerate their relationships with the World Cup, they may simply be providing a precious and rare marketing opportunity to their bitterest rivals.
3 Tough times for Singapore ornamental fish biz (Jessica Lim in Straits Times) Things are not looking pretty for Singapore's ornamental fish business. The Republic might still be the world's largest exporter of ornamental fish like mollies, guppies, goldfish and koi, but the amount of fish exported has fallen to levels similar to those a decade ago.
Major exporters here point to a strong Singapore dollar, falling global demand, high operating costs and uncertainty over the lease of their premises. The latest UN Comtrade statistics showed that firms here exported about $56 million worth of fish in 2013. This is a dip from 2012, when Singapore exported $62 million worth of ornamental fish, and is even lower than the $60 million in 2009 - in the aftermath of the global financial crisis. Figures peaked at $69 million in 2008.
Export figures for 2013 were comparable to the $54 million worth of fish exported in 2005. Sanyo Aquarium managing director William Chew had 20 per cent less turnover last year than in 2013. Mr Chew said ornamental fish farms here "are afraid to invest". They can set up only in locations approved by the Government, and such land is leased out for a limited number of years.
Dr Maliki Osman, Minister of State for National Development, said it was critical that firms find ways to raise productivity. He said the ministry is exploring the possibility of developing a multi-storey building for flatted farming, like a flatted factory, a move he called a "game changer".
But at least one company has thrown in the towel. Mr Fong Ching Loon, 78, owner of Pisces Tropica and chairman of the Singapore Aquarium Fish Exporters' Association, shut his firm in January despite having paid rent until 2020 and spending $2 million to relocate in 2010. "We make a smaller loss closing down than remaining open," he said.
Wednesday, May 27, 2015
Fifa corruption sparks sponsor concern; Greece is all but bankrupt; Facebook claims 40m small business pages
1 Fifa corruption sparks sponsor concern (BBC) Key sponsors of Fifa have expressed "serious concern" after the US accused senior officials of football's governing body of racketeering, fraud and money laundering. Coca-Cola said the World Cup had been "tarnished" by "lengthy controversy".
Seven top officials were arrested in Zurich on Wednesday, among a group of 14 people indicted.
Fifa has announced a provisional ban from football-related activity on 11 of the people involved in the US prosecution. But it said Friday's vote - in which Fifa president Sepp Blatter is seeking a fifth term - would go ahead. Swiss prosecutors have also opened a separate investigation into the bidding process for the World Cup tournaments in 2018 in Russia and 2022 in Qatar.
Fifa's key sponsors, including Adidas, Coca-Cola, Visa, Sony, Gazprom and Hyundai/KIA have faced increasing calls to put pressure on Fifa as corruption allegations have mounted. Cobus de Swardt, managing director of campaigning group Transparency International, said: "If you are putting many, many millions of euros into a business, then you definitely have a right and responsibility to demand that you are not tainted."
Fifa's main sponsors are afforded exposure in stadiums and have the right to use Fifa trademarks in advertising. Mr Blatter also received a stinging rebuke from Uefa. The European football governing body said the events were "a disaster for Fifa and tarnish the image of football as a whole". It said corruption was deeply rooted in Fifa's culture.
2 Greece is all but bankrupt (Landon Thomas Jr in The New York Times) Two weeks ago, Greece nearly defaulted on a debt payment of 750 million euros, or about $825 million, to the International Monetary Fund. For the rest of this month, Greece should be able to cover daily cash deficits of around 100 million euros. Starting June 5, however, these shortfalls will rise sharply, to around 400 million euros as another IMF obligation comes due. They will then double in size on June 8 and 9. “At that point it is all over,” said a senior Greek finance official.
Prime Minister Alexis Tsipras’challenge is to keep the backing of a majority of Syriza’s party officials and legislators. A new election would provide a way for Tsipras to kick out the hard-liners in his party. Interior minister, Nikos Voutsis, said that there would not be enough money to pay the IMF if there was no deal by June 5.
In a society that has lived off the generosity of the government for decades, the cash crisis has already had a shattering impact. Universities, hospitals and municipalities are struggling to provide basic services, and the country’s underfunded security apparatus is losing its battle against an influx of illegal immigrants. In effect, analysts say, Greece is already operating as a bankrupt state.
The government’s call to conserve funds has been far-reaching. All embassies and consulates — as well as municipalities throughout the country — have been told to forward surplus funds to Athens. Hospitals and schools face strict orders not to hire doctors and teachers. And national security officials complain they are under intense pressure to keep air and sea missions to a minimum, at a time when migrants from Africa and the Middle East are rushing to Greece’s shores.
For a generation of Greek politicians who saw government spending (and borrowing) as a national birth right, the idea of deploying only the money at hand has been jarring. Security experts say that well-to-do families in suburban pockets surrounding Athens are now supplying critical funds to local police departments.
At the University of Athens, the country’s largest educational institution and home to about 125,000 students, the annual operating budget has fallen to €10 million from about €40 million before the crisis. In the first four months of this year, health officials say that the 140 or so public hospitals in Greece received just €43 million from the state — down from €650 million during the same period last year.
3 Facebook claims 40m small business pages (Benjamin Synder in Fortune) Facebook has 40 million active small business pages, the company has announced. Almost all of the 2 million who advertise on the platform are small business owners, up from 1.5 million last year. Facebook defines an active small business page as a profile that has posted information in the last 28 days. Facebook said it had 30 million active small business pages last June.
The social media company has been on a full-court press to keep business owners happy. It’s set to unveil a chat function, for instance, that offers “live one-on-one support, so businesses can ask questions and get the answers they need, in real time,” a Facebook spokesperson said.
But Facebook’s recent efforts to court small business owners come after the company made changes that left some of them confused at best, and angry at worst. While many small business owners had come to view their Facebook page as a source of free or nearly free advertising, Facebook’s recent alterations made it harder for small businesses to get ad-style content in users’ feeds without paying up.
Tuesday, May 26, 2015
China industrial profit reverses falling trend; Hopelessly adrift in Europe, Asia; In 5 years, poachers kill half of Mozambique elephants
1 China industrial profits reverse falling trend (Straits Times) Chinese industrial sector profits rose 2.6 per cent in April, in their first annual rise since last September, National Bureau of Statistics data showed, in a sign that the central bank's easing measures may finally be filtering into the real economy.
Profits were still down 1.3 per cent for the year to date, reflecting the extreme weakness of growth in the first quarter. With China's credit and money supply data in April missing expectations on the one hand, and some signs of a bottom in the real estate sector on the other, analysts have been watching closely for any signs of a turnaround in the industrial sector.
2 Hopelessly adrift in Europe, Asia (Mahir Ali in Dawn) There are differences as well as similarities between the refugee crises that have lately been brewing simultaneously in the unforgiving waters off southern Europe and Southeast Asia.
The most obvious parallel is that in both cases they relate largely to segments of humanity desperate enough to risk their lives in a quest for safe havens. Other parallels are to be found in the motivations and behaviour of the parties that demand top dollar for arranging the passage, as well as the fact that some of those embarking on these high-risk journeys are seeking to escape economic despair rather than existential threats.
In the Asian case, the latter dichotomy divides Rohingyas, faced in Myanmar with a situation increasingly seen as verging on genocide, from Bangladeshis seeking a better life in Malaysia. The authorities in Myanmar, meanwhile, refuse to countenance any usage of the term ‘Rohingya’, classifying the Muslim residents of Rakhine state as Bengalis and denying them citizenship or civil rights.
With thousands of Rohingya (and Bangladeshi) refugees adrift in the Andaman Sea, Myanmarese officials agreed some days ago to participate in emergency talks in Thailand. Indonesia and Malaysia have agreed to accept some of the asylum-seekers on a temporary basis, while the Philippines has responded to the crisis with greater generosity and even the US has offered resettlement on a small scale. But the prime minister of the richest country in the region, Australia, has gone to the other extreme by decreeing that no Rohingya will set foot on his nation’s soil.
Tackling the root causes of the various forms of despair that trigger the mass-migration impulse can only be a long-term objective, with few indications in most cases of what can be done. What are the practical pathways to restoring peace in Syria, for example? Or rooting out entrenched racism in Myanmar?
It is also vital to realise that regional conflicts, the consequences of climate change and, more broadly, glaring economic disparities in an increasingly unequal global order can only exacerbate the tendency for substantial segments of humanity to seek refuge in other lands. Ultimately, the world’s ability to cope may depend on its willingness to change the course of history.
3 In 5 years, poachers kill half of Mozambique elephants (Johannesburg Times) Poachers have killed nearly half of Mozambique's elephants for their ivory in the past five years, the US-based Wildlife Conservation Society said yesterday.
A survey showed a dramatic 48% decline in elephant numbers from just over 20,000 to an estimated 10,300, the conservation society said. Northern Mozambique, which includes the Niassa National Reserve, was the hardest hit, accounting for 95% of elephant deaths, reducing the population from about 15,400 to an estimated 6,100.
The figures can be explained by the arrival of poachers from Tanzania, according to Alastair Nelson, director of the Wildlife Conservation Society in Mozambique. Elephant tusks are prized in Asia, where they are carved into ivory statuettes and jewellery. Across Africa, up to 30,000 elephants are estimated to be killed illegally each year to fuel the ivory trade.
Sunday, May 24, 2015
Greece warns it is set to default on loans; 'Middle East pays $1trn for gender gap'; A year of Narendra Modi in India
1 Greece warns it is set to default on loans (Phillip Inman in The Guardian) Greece has threatened to default on €1.6bn (£1.14bn) of debt repayment due on international bailout loans next month, claiming it does not have the funds to satisfy creditors at the same time as paying wages and pensions.
Greek interior minister, Nikos Voutsis, a long-standing ally of the prime minister, Alexis Tsipras, insisted the country was near to financial collapse. He said Athens needed to strike a deal with its European partners within the next couple of weeks or it would default on repayments to the International Monetary Fund that form part of its €240bn rescue package.
His comments came as the finance minister, Yanis Varoufakis, repeated his warning that the entire euro project would be undermined without a deal that proved acceptable to the Greek people. Varoufakis said that the Syriza-led Greek government has now “made enormous strides at reaching a deal”, and that it is now up to the European Central Bank, IMF and European Union to do their bit and “meet us one-quarter of the way”.
With crucial debt payments looming, combined with the need for Athens to find around €1bn to pay public sector wages and welfare payments in the first week of June, the eurozone appeared to be entering the final chapter in its dispute with Greece. Tsipras wants the EU, ECB and IMF to release a blocked final €7.2bn tranche of the bailout without imposing tough reforms and spending cuts agreed with the previous right-of-centre administration.
2 ‘Middle East pays $1trn for gender gap’ (Khaleej Times) Bring more Arab women into the workforce, invest in “bite-sized” infrastructure projects and get the private sector more involved in training young job seekers — these are the prescriptions of a leading Gulf entrepreneur for growing Middle Eastern economies and combating rampant youth unemployment.
Decision makers long seemed paralysed by the sheer size of the troubled region’s economic problems, but attitudes have changed in recent years, said Omar Kutayba Alghanim, co-chairman of last week’s regional World Economic Forum (WEF) conference and a leader of private sector efforts to tackle youth unemployment.
The Middle East and North Africa have the world’s highest rate of youth unemployment, with 29.5 per cent, up two percentage points from over a decade ago, according to the International Labour Organisation (ILO). Unemployment is particularly high among young women, in part because of the constraints placed on them by traditional societies in many parts of the region. Alghanim said that bringing more women into the workforce would spur economic growth.
He said the gender gap in the Middle East is three times bigger than that in most developing economies. If the gap were narrowed by just one-third, the regional GDP would grow by $1 trillion a year, or six per cent, said Alghanim, a former investment banker who now heads Alghanim Industries, one of the largest privately held companies in the Gulf.
One of the causes of youth unemployment is a disconnect between the skills young people acquire in schools and universities, where learning by rote tends to be the norm, and what modern private companies look for in potential employees. Alghanim said governments need to invest more in infrastructure projects. The region spends only five per cent of its gross domestic product on infrastructure, compared to 15 per cent in China, he said.
3 A year of Narendra Modi in India (Soutik Biswas on BBC) Is a year in power long enough to evaluate the performance of a new government? Possibly difficult in a country with many unresolved social and economic issues like India, but it is a good time for some stock-taking.
So it is with Narendra Modi and his BJP government, which stormed into power last May. Mr Modi promised achhe din, or better times, if elected. It is a promise which his supporters continue to cling to, and his detractors sneer at, saying it was a deceit to capture political power. If opinion polls are to be believed, Indians continue to be hopeful about Mr Modi.
In truth, Mr Modi faces little competition: the Congress party, under Sonia and Rahul Gandhi has still not recovered from last year's debacle. Mr Modi's first year in office has met with a mixed response. All leaders need luck on their side, and Mr Modi has had his share. Inflation has been tamed, and the fiscal deficit contained. For both, Mr Modi should thank cheap commodity - mainly oil - prices. Electricity generation has surged to a record high.
His government so far has been free of scams, and he is making his ministers and bureaucrats work hard. Plans to auction mineral rights - starting with this year's coal auction - should check corruption and foster transparency. He has energised India's foreign policy. He is mining the diaspora. Taking the lead in evacuating stranded people in conflict-zones like Yemen and rushing relief to earthquake-ravaged Nepal has earned his government rightful praise. "Two foreign policy priorities have emerged: South Asia and the management of a larger periphery with a focus on China," says Harsh V Pant of King's College, London.
Many say, it is not clear whether Mr Modi is a serious reformer or somebody merely comfortable with tinkering with the status quo. There is talk about reducing bloated government, but no radical reforms seem to be on the table. Mr Modi wants to set up 100 smart cities, but most of India's main cities have turned into urban dystopias. Nobody quite knows what Digital India means in a country where the elementary mobile telephone network is broken.
Mr Modi's problem is that he doesn't have the luxury his predecessors enjoyed. He raised massive hopes of transforming India; the tyranny of high expectations can bite badly. Some 13 million Indians are seeking jobs every year, and if Mr Modi cannot get them work, he won't have their votes. This is no longer an India which is endlessly willing to wait patiently. Mr Modi must know that - and that he needs to do more.
Saturday, May 23, 2015
US rate rise 'some time this year'; Ireland first to legalise gay marriage by popular vote; Britain resigns as a global power
1 US rate rise ‘some time this year’ (Straits Times) Janet Yellen has said she expects the Federal Reserve to begin raising interest rates "at some point this year," saying delaying the long-awaited move risks the economy overheating. But the Fed chair also stressed the economy still showed weaknesses, with significant job market slack not reflected in the 5.4 percent jobless rate.
The comments came after minutes of the Fed's policy board made clear that slow economic growth in recent months meant it was not expecting to increase the benchmark Fed funds rate before July, despite earlier forecasts of a mid-year hike. Yellen said she expects the economy to bounce back from the stall in the first quarter, but that any decision needed to be based on clear improvement in the data.
2 Ireland first to legalise gay marriage by popular vote (Henry McDonald in The Guardian) Ireland has as voted by a huge majority to legalise same-sex marriage, becoming the first country in the world to do so by popular vote in a move hailed as a social revolution and welcomed around the world.
Some 62% of the Irish Republic’s electorate voted in favour of gay marriage. The result means that a republic once dominated by the Catholic Church ignored the instructions of its cardinals and bishops. The huge Yes vote marks another milestone in Ireland’s journey towards a more liberal, secular society.
All but one of the republic’s 43 parliamentary constituencies voted Yes to same-sex marriage. And fears of an urban-rural, Yes/No split were not realised either. Health minister Leo Varadkar, who this year came out as the country’s first openly gay minister, said the campaign had been “almost like a social revolution”.
3 Britian resigns as a global power (Fareed Zakaria in Khaleej Times) On Monday, the Right Honorable David Cameron, prime minister of Britain, gave his first major speech after being re-elected to his high office —once held by Pitt, Gladstone, Disraeli, Lloyd George, Churchill, and Thatcher. Confronting a world of challenges — from Greece’s possible exit from the Euro, a massive migration crisis on Europe’s shores, Ukraine’s perilous state, Russia’s continued intransigence, the advance of Daesh, and the continuing chaos in the Middle East — Cameron chose to talk about ... a plan to ensure that hospitals in the UK would be better staffed on weekends.
OK, that’s a bit unfair. Leaders everywhere, including the US, understand that “all politics is local.” But spending a few days recently in Britain, I was struck by just how parochial it has become. After an extraordinary 300-year run, Britain has essentially resigned as a global power.
Over the next few years, Britain’s army will shrink to somewhere around 80,000. A report from the Royal United Services Institute predicts that the number could get as low as 50,000, which would be smaller than at any point since the 1770s. No wonder, then, that Britain has been a minor, reluctant ally in the airstrikes against the Islamic State.
The same story is true of other elements of Britain’s global influence. In Cameron’s first term, the Foreign Office budget was cut by more than a quarter, and further trims are likely. The BBC World Service, perhaps the most influential arm of the country’s global public diplomacy, has shuttered five of its foreign-language broadcasts, and the entire organisation has seen its budget slashed, with more to come.
Britain essentially created the world we live in. Britain managed to become the first great industrial economy and the modern world’s first superpower. It colonised and shaped countries and cultures from Australia to India to Africa to the Western Hemisphere, including of course, its settlements in North America. Had Spain or Germany become the world’s leading power, things would look very different today.
It is a paradox, readily apparent to visitors to the UK, that London continues to thrive as a global hub, increasingly cosmopolitan and worldly. More than a third of Londoners were born outside the UK. And this government has been more than willing to travel around the world petitioning for investment whether it be Chinese, Russian or Arab. That is fine as a strategy for an aspiring entrepot or financial safe haven, but Britain is not Luxembourg. It is, even now, a country with the talent, history and capacity to shape the international order. Which is why the inward turn of the UK is a tragedy not just for them but for all of us.
Thursday, May 21, 2015
Indonesia's record $2bn Islamic bond issue; McDonald's faces worker protests; Fear over the fate of Palmyra
1 Indonesia’s record $2bn Islamic bond issue (Straits Times) Indonesia completed its largest-ever global sukuk offer, selling $2 billion of the debt at the lowest yield in three years. The Finance Ministry issued the dollar notes at 4.325 per cent, lower than its initial indication of 4.55 per cent, Robert Pakpahan, director general at the budget financing and risk management office at the ministry, said. That compares with the 4.35 per cent rate paid on similar Shariah-compliant debt sold last year and the record-low 3.3 per cent on 10-year sukuk issued in 2012.
Standard & Poor's, which ranks Indonesia at the highest junk level, raised its outlook on the nation's credit rating to positive from stable, citing policy framework improvements and enhanced monetary and financial management. Hong Kong ended a roadshow for a planned sale of Shariah-compliant dollar notes on Thursday, while PT Garuda Indonesia, the country's state-controlled airline, is meeting investors to market an upcoming greenback-denominated sukuk issue.
"Demand for sukuk is increasing globally," Pakpahan said from Jakarta. "Our gross issuance has also increased this year, compared to last year," so the government decided to raise a larger amount from Islamic bonds, he said.
2 McDonald’s faces worker protests (BBC) Fast food giant McDonald's is facing pressure from both workers and investors, who are increasingly unhappy with the firm's business strategy. Hundreds of fast food workers and supporters converged in front of McDonald's corporate headquarters on Thursday before the company's annual shareholder meeting.
They demanded the fast food giant raise wages to $15 per hour, from $9. Separately, investors voted to change how board members are elected. They are unhappy with the firm's slumping sales. McDonald's - the once invincible-seeming US corporate food giant whose arches are seen across the globe - is struggling, as health-conscious consumers eschew its food in the US and workers stage day-long protests against the company.
That has made this shareholder meeting - the first since British-born chief executive Steve Easterbrook took over the firm in January - a crucial focus of both worker angst and investor frustration. McDonald's banned media from attending the event, and has sought to dismiss both worker complaints and investor efforts to change the management of the firm.
3 Fear over the fate of Palmyra (San Francisco Chronicle) Fears mounted over the fate of one of the Mideast's most prominent archaeological sites after Islamic State militants overran the historic Syrian town of Palmyra, seizing control of its temples, tombs and colonnades within hours.
The takeover also expanded the extremists' hold, making them the single group controlling the most territory in Syria. "The Syrian regime appears to be in terminal decline, and the Islamic State group in its timing is capitalizing on recent losses by government forces in the north and south," said Amr Al-Azm, an antiquities expert and professor at Shawnee State University in Ohio.
The militants overran the famed archaeological site early Thursday, just hours after seizing the nearby town in central Syria, activists and officials said. They also captured Palmyra's airport and the notorious Tadmur prison, delivering a startling new defeat for President Bashar Assad, whose forces quickly retreated.
An oasis set in the Syrian desert, Palmyra is a strategic crossroads linking the capital Damascus and cities to the east and the west. Its capture raised alarm over some of the world's most important ancient ruins, whose fate remained unknown. A UNESCO world heritage site, Palymra boasts 2,000-year-old towering Roman-era colonnades, temples and priceless artifacts that have earned it the affectionate name among Syrians of the "Bride of the Desert."
They are the remnants of an Arab client state of the Roman Empire that briefly rebelled and carved out its own kingdom in the 3rd Century, led by Queen Zenobia, with Palmyra as its capital. Before the war, it was Syria's top tourist attraction, drawing tens of thousands of visitors each year. It includes a 3,000-seat amphitheater overlooking a colonnaded main avenue where plays, concerts and youth festivals were staged.
Tuesday, May 19, 2015
UK inflation negative, first time since 1960; 'Only a quarter of employees in permanent jobs'; Pleas for euthanasia in India
1 UK inflation negative, first time since 1960 (Katie Allen in The Guardian) Inflation in Britain has turned negative for the first time in more than half a century, giving a boost to household finances and bolstering expectations that interest rates will remain at a record low for the rest of this year.
The Office for National Statistics said its consumer price index measure of inflation was down 0.1% in April from a year ago. That compared with the inflation rate at zero in February and March. Statisticians said this was the first time the CPI had fallen since official records began in 1996 and the first time since 1960 based on comparable historic estimates.
The fall in living costs will be welcomed by many as it means workers’ wages go further, after years when pay was falling in real terms. But for savers it means interest rates will remain low and there are also warnings negative inflation is a symptom of underlying weakness in Britain’s economic recovery.
The main downward effect on price changes in April came from air fares and ferry tickets. The largest upward effect came from motor fuels, which rose this April but fell between March and April in 2014. The Bank of England had already forecast inflation would turn negative at some point this year but predicted it would soon pick up again. Economists agree there is little reason to fear the UK will fall into outright deflation, as seen between 1921 and 1933, which is regarded as a sustained fall in the cost of living, not a temporary decline below zero.
2 ‘Only a quarter of workers in permanent jobs’ (BBC) Only one quarter of workers around the world have permanent jobs, according to a report by the International Labour Organization. The remaining three quarters of the workforce are employed on temporary or short-term contracts, along with informal jobs often without a contract. The ILO also found that many workers not in full-time employment have no pensions or benefits.
Part-time jobs outpaced full-time ones between 2009 and 2013 in a majority of countries where the data was available. The ILO says flexibility in employment does have some advantages, but it also adds to the risk that workers will be exploited.
The study shows an increasingly diversified global workforce, said director-general Guy Ryder, with some forms of "non-standard" work helping people get a foothold into the job market. Women were a big part of the current trend of rising part-time employment, according to the ILO. They accounted for 24% of people working less than 30 hours per week across 86 countries - nearly double the percentage of men at 12.4%.
Meanwhile, the income gap between permanent and non-permanent workers has also increased. Benefits such as pensions and unemployment benefits are still mainly available for permanent employees. The ILO is calling for policies by governments to ensure income security for all types of workers, not just those on "stable contracts".
3 Plea for euthanasia in India (Khaleej Times) Pleas for euthanasia were made not only on behalf of nurse Aruna Shanbaug, but kin of many others in similar vegetative state also had sought end of their lives in a dignified manner. Most of these pleas were, however, rejected. Shanbaug, a nurse in Mumbai hospital, lay comatose for 42 years after being sexually assaulted by a ward boy and her case meandered through courts.
Those fighting difficult and debilitating illnesses had also pleaded for euthanasia in the absence of proper treatment or the funds required for the same. Euthanasia is an act of intentionally ending a life to end pain in the case of terminally ill patients or those in a persistent vegetative state. Passive euthanasia - withdrawing life support of patients in a persistent vegetative state - is, however, legal in India.
Some of the instances of euthanasia pleas: 2013, Dennis Kumar, Tamil Nadu: A porter, Dennis Kumar from Kanyakumari district sought permission from the district collector to grant euthanasia for his infant son, who had been suffering since birth from an unknown disorder. Unable to pay for his treatment or see his son suffer, Kumar felt euthanasia would relieve both his son and him of their misery. The plea was rejected by a court.
2008, Jeet Narayan, Uttar Pradesh: Jeet Narayan of Mirzapur had pleaded for euthanasia for his four sons who were all paralysed below the neck and were confined to bed. He had written in 2008 to President Pratibha Patil, who rejected his plea.
The Supreme Court on March 7, 2011, ruled out active euthanasia—the administration of a lethal injection to end lives of terminally ill patients. The court permitted only passive euthanasia for patients who were either brain dead, or were in a persistent vegetative state or were supported entirely through a ventilator or any artificial life support.
Saturday, May 16, 2015
China, India ink deals worth $22bn; Unlocking talent for the 21st century; Using stress to your advantage
1 China, India ink deals worth $22bn (The Guardian) China and India signed deals worth more than $22bn in areas including renewable energy, ports, financing and industrial parks. Namgya C Khampa, of the Indian embassy in Beijing, gave the information at the end of a three-day visit by the Indian prime minister, Narendra Modi, during which he sought to boost economic ties and quell anxiety over a border dispute between the neighbours.
Khampa said: “The agreements have a bilateral commercial engagement in sectors like renewable energy, industrial parks, power, steel, logistics, finance and media and entertainment.” China is interested in more opportunities in India’s $2tn economy.
During a visit to India in 2014 by China’s president, Xi Jinping, China announced $20bn in investments over five years, including the establishment of two industrial parks. Since then, progress has been slow, in part because of the difficulties Modi has had in getting political approval for easier land acquisition laws.
2 Unlocking talent for the 21st century (Klaus Schwab in Straits Times) When financial policymakers attempt to promote economic growth, they almost invariably focus on looking for new ways to unleash capital. But, although this approach may have worked in the past, it risks giving short shrift to the role that talent plays in generating and realising the ideas that make growth possible.
Indeed, in a future of rapid technological change and widespread automation, the determining factor - or crippling limit - to innovation, competitiveness and growth is less likely to be the availability of capital than the existence of a skilled workforce. By some estimates, almost half of today's professions could be automatable by 2025. Speculation about what will replace them ranges from predictions of unexpected opportunities to forecasts of large-scale unemployment as machines displace most human labour.
Global unemployment has topped 212 million, according to the International Labour Organisation, and another 42 million new jobs will need to be created each year if the world economy is to provide employment to the growing number of new entrants into the labour market.
As technology increasingly takes over knowledge- based work, the cognitive skills that are central to today's education systems will remain important; but behavioural and non-cognitive skills necessary for collaboration, innovation and problem solving will become essential as well. Today's schools and universities, which are dominated by approaches to learning that are fundamentally individualistic and competitive in nature, must be redesigned to focus on learning to learn and acquiring the skills needed to collaborate with others.
Uniquely human skills, like being able to work in teams, manage relationships and understand cultural sensitivities will become vital for businesses across all sectors, and must become a core component of future generations' education. Moreover, with education increasingly becoming a lifelong pursuit, businesses must rethink their role in providing for a competitive workforce. Some companies are already investing in their employees' continual learning, re-skilling, and up-skilling. Yet most employers still expect to obtain pre-trained talent from schools, universities and other companies.
Given rapid change in the skill sets required for many occupations, business must redirect investment to on-the-job training and lifelong learning, particularly as millennials enter the workforce, seeking purpose and diversity of experience where their predecessors sought remuneration and stability. Unlocking the world's latent talent requires us to look beyond business cycles and quarterly reports. The future is full of potential, but only if we are smart enough - and courageous enough - to grasp it.
3 Using stress to your advantage (Kelly McGonigal in The Wall Street Journal) For a research paper, Harvard Business School professor Alison Wood Brooks recruited 140 people to give a speech. She told part of the group to relax and to calm their nerves by saying to themselves, “I am calm.” The others were told to embrace their anxiety and to tell themselves, “I am excited.”
Members of both groups were still nervous before the speech, but the participants who had told themselves “I am excited” felt better able to handle the pressure and were more confident of their ability to give a good talk. Not only that, observers who rated the talks found the excited speakers more persuasive, confident and competent than the participants who had tried to calm down. With this one change in mind-set, the speakers had transformed their anxiety into energy that helped them to perform under pressure.
The Harvard study is part of a growing body of research to find that the best way to handle stress is to embrace it rather than to minimize it. Whether it’s a student facing a final exam, an executive delivering a big presentation or an athlete preparing for a championship game, welcoming stress can boost confidence and improve performance. When you stop resisting it, stress can fuel you.
A positive view of anxiety also can make you less likely to burn out in a demanding job. In a study published in 2014, researchers at Jacobs University in Bremen, Germany, followed midcareer teachers and physicians for a year to see if their views on this issue influenced their well-being at work. At the beginning of the year, the teachers and doctors were asked if they saw anxiety as a helpful feeling, providing energy and motivation, or as harmful.
At the end of the year, those who saw their anxiety as helpful were less likely to be burned out, frustrated or drained by their work. The upshot? When you are anxious before having to perform at a big event—whether it’s a meeting, a speech, a competition or an exam—remember that there is a fine line between tension and excitement. Embrace your nerves.