Monday, August 31, 2015
India growth slows to 7%; Save a job, not a cent; Schools less like Singapore, more like Silicon Valley
1 India growth slows to 7% (Simon Atkinson on BBC) India's economy grew at an annual rate of 7% between April and June, official figures have shown. This is slower than the 7.5% growth recorded for the previous quarter, and lower than expected. India and China - which also posted 7% growth in the second quarter - are now the joint fastest growing major economies in the world.
But some economists have expressed concerns that India's official figures do not accurately reflect true growth. "At face value, today's GDP figures for [the second quarter] suggest that India matched China as the world's fastest-growing major economy last quarter," said Shilan Shah at Capital Economics.
"But the GDP data remain inconsistent with numerous other indicators which suggest that, at best, the economy is in the early stages of recovery after three years of tepid growth. "The official GDP data are overstating the strength of the economy, most probably by a significant margin."
Digging into the detail - it looks like growth in Indian manufacturing has slowed from a year ago - a bit of a blow given this is one of the Modi government's main initiatives. And whether pace picks up in the July-September period will largely depend on the weather. This is the monsoon season and when rains are good and harvest plentiful, rural consumption goes up as people working in agriculture have more money to spend. But, so far, many parts of the country have seen less rain than you'd expect.
2 Save a job, not a cent (Natasha Marrian & Sikonathi Mantshantsha in Johannesburg Times) South African president Jacob Zuma has called the economy "sick" and appealed to business and labour to put jobs before profits and wage hikes. Acknowledging that it could no longer be "business as usual", Zuma appealed to business and labour to play their parts in saving jobs.
Zuma said that when jobs were lost the government had to step in, even though it was "in the business of running the country", not businesses. “If the private sector were concerned only about profit margins in the current economic climate, it would mean that it "did not care", Zuma said. Reducing labour to maintain profit margins, is that the way to go?"
Labour should not demand high wages that could result in job losses, he said. "Should we come together and recognise that the economy is sick? How should we save jobs? Should we tighten our belts?"
In the mining and steel sectors, the government, business and labour are in talks to save thousands of jobs as the energy crisis, among other factors, bites harder. The Department of Trade and Industry has come to the rescue of the beleaguered steel industry, approving a 10% duty on certain imported steel products currently entering the country free of duty.
3 Schools less like Singapore, more like Silicon Valley (Zoe Williams in The Guardian) In the UK we are on the brink of a crisis in teacher numbers. Apparently it’s harder to recruit when the country comes out of recession, since the profession loses its risk-takers. It doesn’t help one bit when the population insists on continuing to produce more children.
It feels passe to listen to teachers’ unions these days: the Department for Education wrote them off as dinosaurs, “the blob”. Yet the unions have an inconvenient habit of making predictions that come to pass and delivering findings that are observable in the real world. In 2014, a survey by the National Union of Teachers found that 96.5% of teachers said the hours damaged their family life, and 90% had considered leaving in the previous two years.
When results are good, that is billed as “parent power”; when they’re bad, that’s because the school is “coasting”. When a teacher is experienced and/or opinionated, the term for that is “burnt out”. When the targets aren’t met, that is definitely the fault of the school. An unrealistic goal is never named as such; rather, it’s a “challenge”, or it is “modern”, or it’s the way they do it in Singapore.
Community schools continue to form mutually supportive clusters. They do this not because they’re dinosaurs, or inherently left-wing, but because some people understand instinctively that networks of trusting experts, working together towards the same goals, drive up standards. This has been noted repeatedly in the private sector; it was Silicon Valley’s porousness, the cooperation between Xerox and Apple, the sharing of information and standardisation of connectivity, which drove excellence.
The contrast is Boston’s Route 128, which until the 80s was the other technology cluster: it was dominated by large corporations who jealously held on to staff, privileged loyalty over cross-pollination, put competition at the centre of their strategy and thereby consigned themselves to the stasis that was their undoing. By the end of the 80s the Massachusetts Miracle was over.
The analogy with schools is pretty clear: teachers, like any other bold professional innovators, will work best if they’re allowed to work together. Teachers mostly understand the grades for what they are, essentially measures of pupil affluence, unrelated to teaching quality; and yet they are still ground down by the relentless quantification.
Teachers and parents would work much better in tandem, given that their ends are identical. The assumption of teaching as a network, rather than a bear pit of competing institutions, would obviate much of the measuring and marking that consumes a lot of their time and introduces so much tedium into what recently was a rewarding career. It wouldn’t just be better for the teachers themselves, it would be better for everyone.
Sunday, August 30, 2015
Japan industrial production slips; China woe 'broader than expected'; Malaysia protests recipe for chaos
1 Japan industrial production slips (Straits Times) Japan's industrial production unexpectedly fell in July, sapping a rebound in the economy from a slump last quarter. Output fell 0.6 per cent from June, when it increased 1.1 percent, the trade ministry said on Monday, compared with the median forecast for a 0.1 per cent gain in Bloomberg survey.
The world's third-biggest economy is struggling to recover from a contraction, as slowing growth in China - Japan's biggest trading partner - weighs on exports. Household spending unexpectedly declined and the Bank of Japan's key inflation gauge slowed to zero for a third time this year, data for July showed last week.
Production cutbacks in the electrical components and the transport equipment industries led the decline in manufacturing. Companies trimmed inventories by 0.8 per cent in July from the previous month, the first reduction since May. Bank of Japan Governor Haruhiko Kuroda said in New York last week that weakness in production and exports would pass and that leading indicators point to a pick-up in business investment.
2 China woe ‘broader than expected’ (Sydney Morning Herald) China's deepening struggles are starting to make a bigger dent in the global economic outlook. Moody's Investors Service on Friday cut its 2016 growth forecast in Group of 20 economies to 2.8 per cent, down 0.3 percentage point from the company's call less than two weeks ago. China is projected to grow 6.3 per cent in 2016, down from 6.5 per cent previously, the credit-rating company said.
Citigroup last week pared its projection for world growth in 2016 to 3.1 per cent from 3.3 per cent, the third straight time the bank has cut the forecast. Recent Chinese data including numbers on credit expansion and fixed-asset investment suggest a sharper slowdown this quarter than Moody's previously judged, while Citigroup said the worsening outlook was driven by "significant" downgrades for China, the euro area, Japan and several other major countries.
Economists in a Bloomberg survey earlier this month gave a median estimate of 3.5 per cent global growth in 2016, compared with 3.6 per cent in the July survey. China shocked markets on August 11 by devaluing the yuan and aligning its exchange-rate policy more with market forces. The currency is down 2.8 per cent against the dollar this month, while the Shanghai Composite Index of stocks has plunged 12 per cent.
Even with the weaker outlook, Moody's dismissed the impact of China's stock-market rout, saying it happened after a "long period of price increases" and will have limited effects on consumer spending and financial-industry profit. US growth also rebounded more than estimated in the second quarter, with the world's biggest economy expanding at a 3.7 per cent annual pace, compared with the initial estimate of 2.3 per cent.
3 Malaysia protests recipe for chaos (Khaleej Times) Malaysia is in turmoil because Prime Minister Najib Razak allegedly swindled money. Street protests are not good for the economy and for political stability. The 1MDB scandal is likely to have far-reaching consequences for the Southeast Asian country. It is alleged the prime minister accepted a staggering $700 million, which went into his personal account.
An investigation is called for and the PM has a moral responsibility to clear the air and prove it was a legal transaction or step down for an impartial probe. Razak's kneejerk reaction to remove the attorney general and suspend the investigation has made him a prime suspect.
The crosscurrents are political in essence and could push the country into administrative chaos and anarchy. Mahathir Muhammad, who is still widely respected as the father of modern Malaysia, has came out openly against the man he groomed to be his successor. These upheavals could not have come at a worse time for Malaysia as the impact of the China's downturn is being felt across the world.
The PM has to introspect and take the right, ethical decision, or fight the taint with proof that clears his name. Malaysians still value his national unity campaign in which he pledged to broker a new social contract and to make the economy more transparent and introduce serious political reforms. He must live up to those lofty ideals before the demonstrations get out of control.
Saturday, August 29, 2015
Brazil in recession as GDP plunges; No, China economy is not on verge of collapse; Challenges of doing business in India
1 Brazil in recession as GDP plunges 1.9% (San Francisco Chronicle) The bottom seems to have fallen out of Brazil's economy, with the government reporting that the gross domestic product plunged 1.9 percent in the second quarter alone, once again throwing the nation into a technical recession. Brazil is the world’s seventh largest economy.
It's more bad news for President Dilma Rousseff, who is fighting for her political life. Two-thirds of Brazilians polled say they want to see her impeached because of a massive corruption scandal and what is widely perceived as mishandling of the economy.
The drop was slightly larger than consensus forecasts of private economists published by the Central Bank, and prompted many to take an even gloomier view or prospects for the globe's seventh-largest economy.
Like most Latin American nations, Brazil has been hurt by the plunge in commodity prices and the slowdown in China, which has been a big buyer of Brazil's soy, iron ore and other commodities. However, Brazil's economy depends far less on trade than most nations in the region, with exports and imports making up just 27 percent of GDP according to the World Bank.
Brazil boomed for several years on the back of a middle class that expanded by some 40 million people since 2003. Suddenly flush with easy credit, they went on a sustained spending spree, upon which Brazil's government built its economic model.
That spree started to sputter about three years ago and is now officially dead. Many Brazilians are in debt over their heads and are cutting spending severely. Household spending reported Friday fell 2.1 percent as compared to the previous quarter. Rising inflation, unemployment and tightening personal credit have added to souring consumer confidence.
2 No, China economy is not on verge of collapse (John Wong in Straits Times) The Chinese yuan, after ending its de facto peg to the US dollar in 2005, has been steadily appreciating over the years. Just how could its initial 1.9 per cent devaluation against the US dollar be dubbed "sharp devaluation"? It was merely a small step primarily meant to correct the yuan's exchange rate misalignment caused by China's weaker macroeconomic fundamentals, including slower export growth and increasing capital flight.
Even after a second, equally small devaluation, the yuan has since depreciated only about 3.8 per cent against the US dollar while it has since appreciated heavily against all major currencies: Up over 10 per cent against the South Korean won and the euro, and almost 20 per cent against the yen.
The Shanghai Stock Exchange is still a relatively small market (only the fifth in the world), which is essentially not widely open to foreign investors. It is therefore hard to understand how a single-day market correction in Shanghai could have caused the Dow Jones to shed 1,000 points!
During the 1997 Asian financial crisis, as the region's stock markets all plunged, Wall Street held its ground. This eventually stabilised the global financial markets. Why not this time? Has the US lost its former financial dominance? When China catches a cold, does the US also sneeze?
As China is the world's second-largest economy accounting for 13.4 per cent of global GDP (or 16 per cent by the purchasing power parity measure), as compared with 22.5 per cent for the US economy, any major slowdown in China's growth will therefore herald a potential global slowdown.
China's economy experienced phenomenal growth of 9.8 per cent a year during 1979-2013. China's growth must come down after so many years, due to the inevitable weakening of its major growth drivers or the drying up of its sources of high growth. Put into proper perspective, China's present "lower" growth is "low" only in its own context, as its current 7 per cent level of growth is still remarkably high by any regional or global standard, and certainly well above the average global economic growth of 2.8 per cent for last year.
The critical thing right now is not to misinterpret the fluctuations in the yuan and stock markets, which are just corrections to overvaluations in the past, certainly not a signal that the Chinese economy is about to collapse.
3 Challenges of doing business in India (Vikram Barhat on BBC) Aside from recent stock market jitters, the World Bank pegs India’s GDP growth at 7.5% for 2015. Much of India’s economy is driven by its so-called “demographic dividend”: Nearly two-thirds of India’s 1.2 billion population is under the age of 35, creating one of the largest consumer markets in the world. It’s no surprise it’s attracting businesses the world over, keen to access these new customers.
There’s no doubt there are many rich investment opportunities in India, but they’re scattered over an obstacle course of opaque rules and regulations. India has long struggled with endemic corruption and it’s still a problem. Overt or implied demands ranging from small kickbacks, called “baksheesh,” to large corporate “donations” can quickly frustrate foreigners. India still ranks 85 among 175 countries on Transparency International's Corruption Perception Index.
Paperwork and processing times are still a little tedious even for Indians, according to a person familiar with the situation. It takes an average of 30 days just to get a business officially registered, too slow for entrepreneurs used to speedy processing in Canada (five days) or Australia (2.5 days).
The flow of foreign direct investment in India has long been hindered by a complex system of inscrutable regulations. Few things have dented India’s appeal for foreign business people more than its arduous tax laws. Critics argue that in addition to being out of sync with the global norm, they’re draconian and, in some cases, amount to tax terrorism. India’s highly publicised battles with local subsidiaries of foreign businesses — Vodafone, Nokia, and more recently Nestle, for instance — have drawn media attention and global scrutiny.
Cultural misunderstanding also plays a role in almost every case of cross-border business failure. As a society, India is very relationship focused. To complicate matters, it’s many countries within a country. Compared to rival China, there’s plenty of room for infrastructure growth in India, according to one person. There is a also a huge gap in the market for skilled professionals. While India has around 487 million workers, more than two-thirds of Indian employers are struggling to find employable workers.
Friday, August 28, 2015
Worst monthly fall for FTSE 100 since 2012; Africa uneasy as China turmoil pricks investment boom; Why India needs new debate on caste quotas
1 Worst monthly fall for FTSE 100 since 2012 (David Hellier & Katie Allen in The Guardian) Chill economic winds from China have left the FTSE 100 nursing its worst monthly losses since May 2012 after a week that saw global stock markets shaken by concerns over the world’s second largest economy. London’s leading share index lost 6.7% during August while the pan-European FTSEurofirst 300 shed 10% over the same period.
That reflected growing concerns about the outlook for the global economy, as the world’s growth engine, China, appeared to lose steam. Investors in commodities, shares and emerging market currencies have taken fright over the past month as moves by the Chinese authorities hinted at the true extent of their worries about slowing growth.
Among Beijing’s actions, the biggest shock came from a dramatic devaluation of the yuan in an apparent attempt to shore up flagging exports. The turmoil carried a silver lining for investors, as it prompted markets to push back expectations of when interest rates in the US and the UK might finally start to rise after years at record lows.
It has also prompted policymakers at the Federal Reserve, the US central bank, to indicate that a looming interest rate rise might not go ahead as soon as expected. Indications that a rate increase would be delayed in the US helped calm investors unnerved by the prospect of an imminent tightening in credit costs in the world’s largest economy.
Global oil markets have fallen by a third since May and are still well under half their value a year ago, thanks to a huge oversupply of fuel and sluggish demand. Worries about China’s economy have compounded the falls in recent weeks. But analysts said oil markets fell too far, too fast and a rebound was on the cards.
2 Africa uneasy as China turmoil pricks investment boom (Stephanie Findlay in Johannesburg Times) When Chinese company Shanghai Zendai bought 4,000 acres of land outside Johannesburg in 2013, it promised to build the "New York of Africa." The sleepy district of Modderfontein would be transformed into a $7.8 billion metropolis with a forest of skyscrapers, 35,000 houses and a sanctuary of green space to rival Central Park.
The planned city became a symbol of China's seemingly limitless ambition across the African continent. But as global alarm bells ring over China's slowing economic growth, future projects on the vast scale of Modderfontein could be under threat.
For the past decade, China gobbled up much of the commodities that Africa produces, overtaking the US in 2009 to became the continent's single largest trading partner. Surging commodity prices helped the sub-Saharan Africa region grow at over four percent annually for two decades. Beijing even built the $200 million African Union headquarters in the Ethiopian capital Addis Ababa in 2012 as a gift expressing "friendship to the African people."
However, the rapid pace of investment could be at risk as China grapples with weak demand for its goods and a schizophrenic stock market. Many experts now question the sturdiness of China's growth and warn of the inevitable damage to those countries who rely on it.
"The first impact is on commodity prices, which directly influences Africa. The second is investment, which will obviously slow down," said Celeste Fauconnier, Africa analyst at Rand Merchant Bank. Already, countries are reeling from the Chinese turmoil, with commodity prices falling to a 16-year low.
To keep growing, African economies have to wean themselves off commodities, analysts say. Despite the worries, economists say predictions that China will no longer be a major player in Africa are overblown. Instead, China's activities in Africa are set for a wholesale review to take into account the new global economic outlook.
3 Why India needs new debate on caste quotas (Shashi Tharoor on BBC) India has been shaken, and its thriving state of Gujarat paralysed, by a massive agitation by its influential Patel community. Millions gathered in the state's major towns under the surprisingly belligerent leadership of a hitherto unknown 22-year-old called Hardik Patel, clamouring for their caste to be granted affirmative-action benefits known as "reservations".
The agitation damaged not only property and people but also some of the fundamental assumptions of Indian politics. India's constitution, adopted in 1950, inaugurated the world's oldest and farthest-reaching affirmative action programme, guaranteeing scheduled castes and tribes - the most disadvantaged groups in Hinduism's hierarchy - not only equality of opportunity but guaranteed outcomes, with reserved places in educational institutions, government jobs and even seats in parliament and the state assemblies.
As more and more people sought fewer available government and university positions, we witnessed the unedifying (and unwittingly hilarious) spectacle of castes fighting with each other to be declared backward. As an uncle of mine sagely observed, "In our country now, you can't go forward unless you're a backward."
India's first prime minister Jawaharlal Nehru had hoped that caste consciousness would wither away after Independence, but the opposite has happened. The number benefiting from such sops varies from state to state, but has reached extreme proportions in a state like Tamil Nadu, where 69% of government jobs and educational positions are reserved for a range of deprived and disadvantaged castes.
Some argue for reservations to no longer be caste-based but tied only to economic criteria, with the poorest of all castes benefiting from them rather than the better-off of some castes. Gujarat's Patel agitation has succeeded in starting a nationwide debate on reservations. It has an interesting partner in India's Supreme Court, which earlier this year struck down the government's notification including the powerful Jat caste in the list of OBCs.
"The gates would be opened only to permit entry of the most distressed. Any other inclusions would be a serious abdication of the constitutional duty of the State," the court warned. This suggests that the Patel's demands to be classified as OBCs will not stand the scrutiny of the Supreme Court. But it also suggests that India's entire range of affirmative action practices will need to be reviewed. The battle has truly been joined.
Thursday, August 27, 2015
Ghosts of deflation back to haunt us; One in 65 UK adults a millionaire; Chaos to confidence through strategic planning
1 Ghosts of deflation back to haunt us (Lim Say Boon in Straits Times) The ghosts of deflation past have returned to haunt global stock markets. The casualties have spread from other emerging markets to China and, now, the developed markets are affected as well. Since the global financial crisis, the world has found itself six years older but none the wiser on how to fix the economy, for all the money printed around the world.
The US, euro area, Japan and even China- fell into deflation as a result of the global financial crisis in 2008. At one stage, it looked as if quantitative easing had overcome inflation in the US, and economic recovery would also lift Europe and Japan out of deflation. Not so. US inflation has been declining relentlessly since 2012. Prices in Europe and Japan are borderline deflationary again. The ghosts from 2008 were never exorcised.
Inflation has been on a downtrend since 2011. Beyond an initial rebound in consumer prices from 2009, the global economy never overcame the structural tendency towards deflation. The collapse in commodity prices over recent years is troubling on a number of fronts. Quantitative easing was supposed to lift commodity prices by debasing paper currencies. But it didn't work. Note that this was one of the strategies that lifted the US out of the Great Depression.
Ageing demographics and low productivity growth have also been structural drags on growth. Older people who continue working but spend less than in the prime of their lives add to deflationary pressures. Meanwhile, productivity growth in the developed market economies has also shifted down.
This is a world of inadequate demand and excess supply. There had been a series of competitive devaluations around the world, starting with quantitative easing in the US and a weaker dollar immediately after the global financial crisis. But since then, rates have been cut all around the world. They are all doing the same thing - that is, exporting their deflation or attempting to stop somebody else doing that to them in a world of inadequate demand.
In such a world, the suppliers - the emerging markets, for everything from commodities to manufactured goods - are at a disadvantage. Economies with demand are likely to enjoy a bit more insulation from the shocks. But mind you, they are not immune from a slower world. And this will show in the coming days and weeks in the equities markets.
2 One in 65 UK adults a millionaire (Patrick Collinson in The Guardian) The number of millionaires in the UK has shot up by 41% over the past five years, with one in 65 adults now classed as having a seven-figure fortune thanks to booming house prices and stock market gains.
There are now 715,000 millionaires living in Britain compared with 508,000 in 2010, with London having the highest concentration of wealthy individuals. But wealth does not correlate with kindness. The region of the UK with the lowest average annual pay – Northern Ireland – is by far the country’s most charitable, with 45% of households giving to charity, Barclays found. The figure for London was just 28%.
The figures are likely to reignite concerns about the north/south divide and income inequality in Britain. Median household incomes have gone up just 2% since 2011, according to the Institute of Fiscal Studies, yet the number of millionaires continues to surge.
It was revealed this week that more than £42bn was paid out in bonuses in the last tax year, much of it to bankers in the City, where payouts have returned to within a whisker of their 2007-08 peak. Rampant house price inflation in the capital is behind much of the surge in London millionaire numbers. .The research showed that every UK region is now more affluent than it was five years ago.
3 Chaos to confidence through strategic planning (Clate Mask in San Francisco Chronicle) The day-to-day hustle of business lends itself to a world of chaos and confusion. You feel like you’re failing as an entrepreneur and as the leader of your company. High performing people, well-paid athletes and successful business owners have one thing in common: confidence. Confidence drives success, but it takes preparedness and daily execution excellence. Strategic planning provides confidence and clarity.
Strategic planning isn’t a one-time event. It’s not a set-it-and-forget-it activity. Once you’ve developed your mission, you need to break it down into annual and quarterly priorities.
At Infusionsoft, a small business sales and marketing software company, we hold quarterly planning sessions with team leaders to provide context for the upcoming quarter. This context provides clarity and focuses on the 20 percent of the activities we do as a collective company that contribute 80 percent of the strategic progress that we’re trying to make towards our mission.
You can have a vision for the future, but you need to focus on the work you have today. Plans are great, but you won’t see progress unless they’re translated into daily activities. Employees need to be able to tie their projects and job functions to your current mission.
With a strategy in place and daily focus made clear for each of your employees, you’ve laid the groundwork for high performance. Now, it’s time to make sure that your people are working together like a well-oiled machine. There’s nothing more frustrating than individual parts that don’t add up to a whole. Stepping back to look at the business holistically is key.
Entrepreneurs who aren’t intentional about planning are in a constant state of chaos and confusion. Ultimately, they leave the fate of their business to chance. The strategic planning process is about creating the future that you desire. It’s intended to transform chaos and confusion into clarity and confidence. If you want to improve the likelihood of success for your business, you must be intentional. Plan strategically, strive for daily execution excellence and work as a team. The future of your business depends on it.
Wednesday, August 26, 2015
China can ride out this crisis, but we are on course for another; Protests, clashes in India for job reservations; Art as a country's heartbeat
1 China can ride out this crisis, but we are on course for another (Seumas Milne in The Guardian) Seven years after the collapse of Lehman Brothers brought down the global financial system and plunged half the world into a slump, it’s scarcely alarmist to see the financial panic as the harbinger of a new crisis in a still crippled world economy.
The market gyrations that followed “Black Monday” this week and the 40% drop in the value of Chinese stocks since June have only underlined the fragility of what is supposed to be an international recovery. After three decades of deregulation punctuated by financial crises and a systemic meltdown, there is every reason to fear more fallout from casino capitalism.
Financial markets pumped up with credit and quantitative easing to keep the real economy afloat are in any case ripe for a crash – or “correction”, as the market players like to call it. The only question is how far and fast they go – and how great is the price paid by the rest of us.
Paradoxically, Beijing may be better placed than others to ride out this storm. China’s economy is slowing down, as it shifts from export-led growth to consumption. But it’s still growing at 7%, nearly three times as fast as Britain and the US, which are supposed to be the west’s current star performers.
China rode out the 2008 crash by pumping public investment into the economy, delivering 78% growth between 2007 and 2014, while the US managed 8%. That has left it with a huge debt pile, estimated at 282% of national income, which some now believe will bring China’s economy to a juddering halt. But that is mostly debt between state-owned institutions, so there is no basis for a speculative Lehmans-type collapse.
A dysfunctional model of capitalism, built on deregulation, privatisation and low wages, crashed and burned seven years ago. But the fallout from that crisis is still ricocheting around the world. Any idea that the western economies that generated stagnation have been fixed is not serious. Their recoveries have been the slowest on record and interest rates remain at a historic low – because owners of capital are prepared to invest in anything except the productive economy.
The likelihood must be that this stagnation continues indefinitely, punctuated by financial upheavals. Without far-reaching change in economic policy, they can be expected to trigger crises that will tip western economies, and others, back into full-blown recession.
3 Protests, clashes in India for job reservations (San Francisco Chronicle) Clashes erupted overnight between police and members of a farming caste demanding government benefits in western India’s Gujarat state. Authorities sent paramilitary forces to help restore order Wednesday, as the group's leader called for a strike.
On Tuesday, Patel leaders led a rally attended by 500,000 Patels from across Gujarat. Later, police detained the group's 22-year-old firebrand leader Hardik Patel, prompting members of the community to rampage through cities in Gujarat.
The Patidars, also known as the Patel community for the last name they share, are demanding the special status given to many minorities in India, guaranteeing them a share of government jobs and school places. The Patels, which make up about 20 percent of Gujarat's 63 million population, say their livelihoods based on seasonal farming and small industry have become increasingly difficult amid India's agricultural malaise and rapid economic growth marked by high inflation.
India's constitution sets out affirmative action, called reservations, for India's lowest Dalit and untouchable castes to help them overcome centuries of discrimination. That has been expanded over the years to include several other relatively disadvantaged low caste groups.
Because reservations allow easier access to government jobs, schools and universities, they've become a huge political bargaining chip in this country of 1.2 billion, and over the last decade several groups have led violent protests to demand that they be counted at the bottom of the country's complex caste system.
3 Art as a country’s heartbeat (Leonie Wagner & Gabe Mbele in Johannesburg Times) If South Africa is flat-lining, then arts and culture are the defibrillator. This is according to some artists at the launch of the Department of Arts and Culture's Living Legends Legacy Project, which is intended to promote cultural development through mentorship and master classes.
Minister Nathi Mthethwa has pledged R5-million as an initial investment. Veterans such as Joe Mafela, Abigail Kubeka, Don Mattera, Caiphus Semenya and Thandi Klaasen will run master classes and mentor up-and-coming artists.
Director and playwright John Kani and musician Simphiwe Dana said more funding was needed. Kani said that the lack of funding was a reflection of the government's attitude to the arts. "It makes me angry that arts and culture are not [on the government's] agenda. We've lost our humanity because we are so focused on maths, science and engineering. Ubuntu was not found in science, it's in the arts.
Tuesday, August 25, 2015
1 Asia stock sell-off continues (BBC) Asian shares have opened lower again as concerns over China's slowing growth continue to haunt investors. Chinese mainland shares have fallen more 16% since the beginning of the week, sending shockwaves through global markets.
The fall came despite Beijing's latest efforts to boost growth and reassure traders by cutting interest rates. The People's Bank of China cut its key lending rate by 0.25 percentage points to 4.6% in an effort to calm stock markets after two days of turmoil. It is the fifth interest rate cut since November last year.
The Nikkei's fall on Wednesday added to an already painful week for the Tokyo index which has already shed more than 8% so far. Elsewhere in Asia, investors were equally hesitant sending Australia's S&P/ASX 200 down by 0.5% to 5,109.90 while South Korea's Kospi index was flat.
Overnight, European and US markets saw another session of volatile trading. Wall Street's Dow Jones closed 1.3% down, marking the sixth consecutive day of falls for US stocks. London's FTSE 100 index closed up 3%. Major markets in France and Germany both gained more than 4%.
2 China 2015: Beware the links with 1929 (Larry Elliott in The Guardian) On day one the stock market fell by 13%. On day two it fell by a further 12%. On day three hopes were high the storm had blown over after equity prices recouped the previous session’s losses. Let this be a cautionary tale. These figures relate not to the Shanghai Composite index in August 2015 but the Dow Jones Industrial Average in October 1929.
Even in the most savage bear markets prices never fall in a straight line. Instead, within a downward trend big daily falls are punctuated by sizeable daily rallies. Events of the past few days conform to this pattern, at least in Europe. Shares in London, Frankfurt and Paris fell heavily on Friday and Monday, then recovered on Tuesday.
For a good while, there was every indication that New York would follow the same pattern. The Dow Jones Industrial Average was up more than 400 points at one stage only to suffer a bout of jitters in the last hour of trading to close more than 200 points lower.
This is a bad omen. Markets were not over-impressed when China hit the panic button by both cutting interest rates and allowing banks to lend more money. Wall Street’s late loss of nerve suggests there is a lot more turbulence to come, with attention firmly focused on China. It is not just that the growth rate of the world’s second biggest economy is faltering, it is that the quality of that growth is deteriorating.
Mike Riddell of M&G notes that the share of gross domestic product accounted for by investment rose from just over 40% in 2007, to 48% between 2008 and 2013, to 54% last year. A higher investment rate is normally associated with higher growth; in China’s case it has been associated with lower growth.
Riddell’s conclusion is that much of the investment has been wasteful and that China is “trying to hit unsustainably high GDP growth rates by generating bigger and bigger credit and investment bubbles”.
3 Indian, Muslim and female (Rafia Zakaria in Dawn) Amid all the hubbub over talks between India and Pakistan, news emerged last week about a survey done by the Indian Muslim women’s rights organisation Bharatiya Muslim Mahila Andolan (BMMA). The survey revealed that over 90pc of Indian Muslim women surveyed want a ban on polygamy, oral talaq (divorce) and child marriage.
The results of the survey have since spurred a debate regarding the need for the reform of personal status laws that currently govern marriage and divorce for Indian Muslim women. Like so much else that ails the contemporary subcontinent, the personal status laws originated in the British era.
Under the veneer of their attempts at equal treatment, the British ensured that Hindus and Muslims, now governed by the laws that they had codified, would, in the years to come, begin to believe that religious difference was something crucial, never to be transcended. The Indian Muslim woman living in the now, however, cannot sate herself with the colonial origins of inhabiting the uncomfortable position of being a minority within a minority.
Surveys like the one produced by BMMA reveal the depth of the conundrum they face. The complexity of the situation should not, however, deter Indian Muslim women from either action or advocacy. Indian Muslims have the opportunity to lead change from within, championing the empowerment of their own women without state intervention.
The point is simple: If Indian Muslims — like British Muslims or American Muslims — dislike state intervention in matters of religious law, they must create and enact processes that promote the empowerment of Muslim women within their communities.
Monday, August 24, 2015
Market panic shows what happens when stimulants wear off; The great fall of China explained; Rival Koreas find a way out of disaster
1 Market panic shows what happens when stimulants wear off (Larry Elliott in The Guardian) Financial markets have gone cold turkey. For the past seven years, they have been given regular doses of strong and dangerous narcotics. The threat that the drugs will no longer be available has resulted in severe withdrawal symptoms.
Unlike in 2007, the crash could be seen coming. But this is about more than China. Financial markets in the west have been booming for the past six years at a time when the real economy has been struggling. Recovery from the last recession has been patchy and weak by historical standards, but that has not prevented a bull market in equities.
The reason for this is simple: the markets have been pumped full of stimulants in the form of quantitative easing, the money creation programmes adopted by central banks as a response to the last crisis.
On the day that QE was launched in the UK, 9 March 2009, the FTSE 100 stood at 3542 points. Its recent peak on 27 April this year was 7103 points, a gain of 100.5%. There is a similar correlation between the three rounds of QE in the US and the performance of the S&P 500, which was up more than 200% during the same period.
But there were always doubts about what might happen when central banks decided it was time to remove some of the stimulus they have been providing for the past seven years. Now we know. The Federal Reserve and the Bank of England halted their QE programmes and started to muse publicly about the timing of the first increase in interest rates.
At that point, financial markets merely needed a trigger for a big selloff. China has provided that, because the world’s second biggest economy has shown distinct signs of slowing. What was inevitably dubbed “Black Monday” began in east Asia where there was disappointment that Beijing did not provide fresh support for shares in Shanghai overnight.
But, unlike in 2008, interest rates are already zero. Budget deficits mean governments have less scope to cut taxes or raise spending. China’s total debt is four times what it was seven years ago. Central banks have pulled all the conventional policy levers and a few unconventional ones as well. They could shelve plans for interest rate rises and contemplate further rounds of QE, even though that amounts to doubling the dosage for drugs that become less effective every time they are administered.
2 The great fall of China explained (Gulf News) Although China, a major engine of global growth, has been slowing for some time, financial markets have nevertheless tumbled over fears its economic growth will decelerate faster than expected. Here are a series of answers to key questions on the Chinese stock market and the wider economy:
What has China done to try to stop shares falling? China rolled out a range of measures last month after Shanghai stocks slumped more than 30 per cent from their mid-June peak. In the early July moves, the government intervened with a rescue package that included funding the state-backed China Securities Finance Corp (CSF) to buy stocks on behalf of the government. Other measures include barring “big” investors from selling their stakes and cracking down on short-selling — when investors bet prices will go lower.
Where next for China’s stock market and currency? Despite the government’s “national team” having made a major effort to support the market, analysts say shares are likely to go still lower as the plunge in global bourses is blowing back on China in what is effectively a vicious circle. The yuan is widely expected to weaken further against the US dollar, although the central bank is expected to intervene to prevent steep slides.
Why are financial markets so gloomy about the Chinese economy? China’s economy expanded 7.4 per cent last year, its weakest since 1990, and growth has slowed further this year, measuring 7.0 per cent in each of the first two quarters. It is a far faster growth rate than most other major countries, but the yuan move raised suspicions that the state of the economy is worse than officials have revealed.
Why is slowing growth such a problem domestically? Experts say China’s ruling Communist Party needs to deliver improved living standards, lifting more people out of poverty and satisfying the growing middle class, in exchange for acceptance of its rule. The government also needs to maintain a minimum level of economic growth, which some analysts put at seven percent, in order to create jobs for millions of people and prevent social unrest.
Why is slowing growth a problem internationally? With Europe’s economy weak and the US preparing to raise interest rates, the world has looked to China’s thirst for raw materials to keep finances humming. With more than 1.3 billion potential consumers, the country is also a big market for manufactured goods such as cars. Any weakness in demand could be keenly felt by producers.
2 Rival Koreas find a way out of disaster (San Francisco Chronicle) After 40-plus-hours of talks, North and South Korea on Tuesday pulled back from the brink with an accord that allows both sides to save face and, for the moment, avert the bloodshed they've been threatening each other with for weeks.
In a carefully crafted, though vague, piece of diplomacy, Pyongyang expressed "regret" that two South Korean soldiers were maimed in a recent land mine blast Seoul blamed on the North. While not an acknowledgement of responsibility, let alone the "definite apology" South Korea's president had demanded, it allows Seoul to claim some measure of victory in holding the North to account.
South Korea, for its part, agreed to halt anti-Pyongyang propaganda broadcasts on the border, which will let the authoritarian North trumpet to its people a propaganda win over its bitter rival — and put an end to hated loudspeaker messages that outside analysts say could demoralize front-line troops and inspire them to defect.
The agreement marks a good first step in easing animosity that has built since South Korea blamed North Korea for the mine explosion at the border earlier this month and restarted the propaganda broadcasts in retaliation. But, as always on the Korean Peninsula, it's unclear how long the good mood will continue.
The Koreas also struck an important humanitarian agreement by promising to resume in September the emotional reunions of families separated by the Korean War. They said more reunions would follow, but there were no immediate details.
Sunday, August 23, 2015
North Sea oil revenues fall by over 75%; Airbnb gives Paris luxury hoteliers a fright; What black and white people think about one another
1 North Sea oil revenues fall by over 75% (BBC) North Sea oil revenues in the first three months of 2015 were down 75% on the previous quarter, the Scottish Conservatives have said. The Scottish government's quarterly national accounts show that the amount received in tax receipts between January and March was £168m. This was down from £742m oil revenues in the final three months of 2014.
Finance Minister John Swinney said oil was a bonus - not the basis of the economy. The Scottish Conservatives said the figures for Scotland's geographical share of oil revenues, which they claimed were "buried" in a table in a report, showed "how wildly wrong" the SNP's pre-referendum calculations had been.
The Tories said the figures also further demonstrated the case against full fiscal autonomy for Scotland - an SNP policy. In its oil and gas bulletin published in May 2014, the Scottish government estimated that oil revenues would be between £15.8bn and £38.7bn between 2014/15 and 2018/19.
It latest bulletin, published in June this year, said revenues could be as low as £2.4bn for 2016/17 to 2019/20, with it highest estimate at £10.8bn, based on a best-case scenario of the oil price returning to 100 US dollars per barrel.
2 Airbnb gives Paris luxury hoteliers a fright (Gulf News) Nowhere in the world has more accommodation available on Airbnb than Paris. Now the home-sharing website that has transformed budget travel to the French capital is giving its super-deluxe hotels a fright too.
“The Paris market is going to get very difficult,” said Didier le Calvez, managing director of The Bristol Hotel. Along with bosses of the city’s other “palaces”, he denounces Airbnb as a menace that enjoys an unfair advantage. A trawl of the Paris region’s 50,000 Airbnb offerings — there were only 7,000 across the whole of France in 2012 -suggests le Calvez and his colleagues have reason to worry.
Airbnb offers between 380 and 400 Paris properties at over 500 euros a night. Of those, about 40 charge over 1,000 euros ($1,090). Add in the attraction of individuality, anonymity and in some cases extra beds, and that puts them potentially in competition with the 1,000 euro a night Bristol and half a dozen other high-end Paris hotels, which have about 1,500 rooms to offer in total.
The Paris luxury sector is already worried about a surge in competition from newly opening hotels. Consultants JLL Hotels & Hospitality reckon that capacity will be 60 per cent greater in 2018 than a decade earlier. A downturn in visits from wealthy Russians and Brazilians as the economies there falter, and fears among US visitors of rising anti-semitism in France, are also a factor.
2 What black and white people think about one another (Hugh Muir in The Guardian) There is a degree of truth-telling going on. The film Dear White People, released in the UK in July, is a satirical look at the situation of black students at a predominantly white Ivy League universities. Americans do a good trade in discussing cultural idiosyncrasies. Such humour works less well in the UK. Yet, it is the contention of my friend Dotun Adebayo – broadcaster and columnist – that such trading on stereotypes happens in the UK in private, and he set out to prove it.
He presented two programmes this month on BBC Radio London, one on what white folks really think about black people, and the other on what black people really think about white people. The four white Britons he invited into the studio for the first programme said, without rancour, that they found black people loud, excessively feisty, excessively ebullient and oversensitive.
Sample complaints: “When someone calls me ‘white trash’, I don’t get upset. Why do black people have to take a diss so personally?” and “Why has everything got to get an ‘Is it because I’m black?’ response?” This suggests that those who took part in the experiment had been exposed to a good few stereotypes, and principally very negative ones. The lack of frankness between the races about each other is more a white problem, said one, “because black people know more about us than we know about them”.
The following week, four black guests cheerily questioned why their white friends dress down while black people dress up, but – more seriously – cited an enduring reluctance to discuss what they saw as a core issue: majority mindsets conditioned still by the imposition of enslavement and colonialism. “They felt that for all the conversations white and black people have, they never truly deal with that. They saw it as the elephant in the room,” says Adebayo.
It wasn’t all just stereotypes, he says. There was a genuine acceptance among his white guests that black Britons get a raw deal, but although they felt part of an equation that caused them real concern, they felt impotent in terms of doing anything about it. Hence, perhaps, some of the frustrations and resentments expressed in private. Guilt and impotence never was a good mix.