1 Capital flight dims
shine of emerging markets (Phillip Inman in The Guardian) There has been no
shortage of disturbing trends in Asian foreign exchange markets this year, even
before China shocked traders last week with its unilateral devaluation of the
yuan. The Malaysian ringgit and Indonesian rupiah have been in freefall for
months, and the Thai baht was haemorrhaging support long before the Bangkok
shrine bombing.
Figures showing that
emerging markets have suffered a near-$1tn outflow of funds over the last year
give another indication that countries billed as the stars of the post-crash
economy are now waning. According to a compilation, total net capital outflows
from the 19 largest emerging market economies reached $940.2bn in the 13 months
to the end of July.
The figure was almost
double the net outflow during the nine months following the 2008 banking
collapse. Asia is not the only area to suffer. Turkey, Brazil and Mexico are
among the other emerging economies to see capital flight back to the US and
Europe.
As their currencies
shrink in value, it takes more cash to fund foreign debt payments in dollars.
The report shows that emerging markets have spent vast portions of their
foreign reserves to meet obligations that were much less onerous only a year
before. Investors quitting emerging markets either sell property and stock
market assets or simply take out and repatriate cash from local banks.
Adding to the weakening
picture, the latest survey of investor sentiment by Bank of America Merrill
Lynch found that the threat of a recession in China and a broader emerging
market debt crisis have eclipsed the eurozone’s woes as principal concerns.
Global trade declined
by 8% between December 2014 and May 2015. It had previously recovered strongly
since 2009, driven largely by emerging economies feeding off a China-induced
stimulus to world trade. The momentum was lost last year, however, and a head
of steam that saw a 40% rise in world trade over six years has vanished.
2 Europe’s challenge is
not just about Greece (Gavin Hewitt on BBC) At times it seemed that the future
of the EU itself was tied to the fate of a country that made up just over 2% of
the eurozone's economy. Now Greece has secured a third bailout, worth 85bn euros
(£60bn) in loans over three years.
The Germans do not like
the fact that the International Monetary Fund is not yet on board. The head of
the IMF, Christine Lagarde, said: "I remain firmly of the view that
Greece's debt has become unsustainable." The European institutions believe
Greek debt will reach 201% of GDP sometime next year.
But, for all the
uncertainties, it appears a Greek chapter is closing. For a long period the
future of Greece was cited as one of the dangerous unknowns hanging over the
European economy. As the Greek crisis subsides the focus returns to the wider
health of the eurozone economy.
The eurozone economy is
spluttering. There is a recovery - the eurozone is growing at an annual rate of
1.3% - but it is patchy. In the second quarter of the year France and Italy,
which account for 40% of the eurozone economy, flat-lined. Italy which had only
recently emerged from recession fell back, managing growth of just 0.2%.
The German economy is
turning in a solid performance based on exports. But it is vulnerable to a
slowdown in China and Japan, where economic growth shrank in the second quarter
of the year. The eurozone economy is still smaller than it was in 2008. It
remains an economy in fragile health. Unemployment is still above 11%, nearly
double that in the US. Even in fast-charging Spain, unemployment is stuck above
22%.
The fundamental
challenges to the European economy remain - how to innovate; how to reduce
regulations that protect powerful interest groups; how to increase
competitiveness in a global economy; how to ensure energy remains cheap; how to
modernise - an often difficult and disruptive process.
3 IS beheads aging antiquities
scholar (San Francisco Chronicle) The 81-year-old antiquities scholar had
dedicated his life to exploring and overseeing Syria's ancient ruins of
Palmyra, one of the Middle East's most spectacular archaeological sites. He
even named his daughter after Zenobia, the queen that ruled from the city 1,700
years ago.
That dedication may
have cost him his life. On Wednesday, relatives and witnesses said Khaled
al-Asaad was beheaded by Islamic State militants, his bloodied body hung on a
pole in a main square.
The brutal killing
stunned Syria's archaeological community and underscored fears the extremists
will destroy or loot the 2,000-year-old Roman-era city on the edge of a modern
town of the same name, as they have other major archaeological sites in Syria
and Iraq.
The Sunni extremists,
who have imposed a violent interpretation of Islamic law across the territory
they control in Syria and Iraq, claim ancient relics promote idolatry and say
they are destroying them as part of their purge of paganism — though they are
also believed to sell off looted antiquities, bringing in significant sums of
cash.
Known as "Mr.
Palmyra" among Syrian antiquities experts for his authoritative knowledge
and decades administering the site, al-Asaad refused to leave even after IS
militants captured the town and neighboring ruins in May. IS extremists
detained the scholar three weeks ago.
Palmyra was a prominent
ancient city-state under the rule of the Roman Empire. In the 3rd century, its
queen, Zenobia, led a revolt against Rome that briefly succeeded in holding
much of the region until it was crushed. The ancient remains, including temples
and dramatic colonnades, are a UNESCO world heritage site.
Al-Asaad was also a
hard-core supporter of President Bashar Assad, and had been a member of Syria's
ruling Baath party since 1954. He had been in charge of Palmyra's
archaeological site for four decades until 2003, when he retired. He then
worked as an expert with the Antiquities and Museums Department.
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