Saturday, October 10, 2015
How the world economic order is collapsing; Nuclear energy to account for 16% of global grid; Turkey in mourning after blasts
1 How the world economic order is collapsing (Will Hutton in The Guardian) Europe has seen nothing like this for 70 years – the visible expression of a world where order is collapsing. The millions of refugees fleeing from ceaseless Middle Eastern war and barbarism are voting with their feet, despairing of their futures. The catalyst for their despair – the shredding of state structures and grip of Islamic fundamentalism on young Muslim minds – shows no sign of disappearing.
Yet there is a parallel collapse in the economic order that is less conspicuous: the hundreds of billions of dollars fleeing emerging economies, from Brazil to China, don’t come with images of women and children on capsizing boats. Nor do banks that have lent trillions that will never be repaid post gruesome videos.
However, this collapse threatens our liberal universe as much as certain responses to the refugees. Andy Haldane, Bank of England chief economist, describes the unfolding pattern of events as a three-part crisis. Act one was in 2007-08 in Britain and the US. Buoyed for the previous decade by absurdly high inflows of globally generated credit that created false booms, they suddenly found their overconfident banks had wildly lent too much. Money flooded out, leaving Britain’s banking system bust, to be bailed out by more than £1tn of liquidity and special injections of public capital.
Act two was in Europe in 2011-12, when it became obvious that the lending had been made on the incorrect assumption that all eurozone countries were equal. Again, money flooded out and Europe only just held the line with extraordinary printing of money by the European Central Bank and tough belt-tightening measures in over-borrowed countries such as Portugal, Greece and Ireland. It might have been unfair, but it worked.
Now act three is beginning, but in countries much less able to devise measures to stop financial contagion and whose banks are more precarious. For global finance next flooded the so-called emerging market economies (EMEs), countries such as Turkey, Brazil, Malaysia, China, all riding high on sky-high commodity prices as the China boom, itself fuelled by wild lending, seemed never-ending. China manufactured more cement from 2010-13 than the US had produced over the entire 20th century. It could not last and so it is proving.
China’s banks are, in effect, bust. Commodity prices have crashed. Money is flooding out of the EMEs, leaving over-borrowed companies, indebted households and stricken banks, but EMEs do not have institutions such as the Federal Reserve or European Central Bank to knock up rescue packages. Yet these nations now account for more than half of global GDP. Small wonder the IMF is worried.
The world needs inventive responses. It needs proper surveillance of global finance. It needs western governments to launch massive economic stimuli, centred on infrastructure spending. It needs new smart monetary policies that allow negative interest rates. None of that is in prospect. If there is no will to deal, collectively, with the refugee crisis, there is even less to reorder the global economy. We may muddle through, but don’t bet on it.
2 Nuclear energy to account for 16% of global grid (Gulf News) Nuclear energy is expected to account for roughly 16 per cent of the world’s total electricity generation in the next 20 years — up from the current 11 per cent figure, according to a top official at the World Nuclear Association (WNA).
While nuclear energy has the capacity to account for 25 per cent of the world’s energy needs, challenges arise in financing, which may limit power generation from the sector. Shah Nawaz Ahmad, senior adviser for India, Middle East, and South-East Asia at the WNA, said that in a 10-year timeframe, countries such as Vietnam, Bangladesh, Turkey, and Jordan are expected to start building nuclear power plants.
A challenge in the sector is public perception, which continues to view nuclear energy as unsafe on the back of incidents like Chernobyl and Fukushima, he said.
3 Turkey in mourning after blasts (BBC) Turkey is beginning three days of mourning after two blasts at a peace rally in the capital Ankara killed at least 95 people on Saturday, the deadliest ever such attack in Turkey. The attack left 245 people injured, with 48 of them in a serious condition.
TV footage showed scenes of panic and people lying on the ground covered in blood, amid protest banners. The government called the blasts a "terrorist act" and angrily rejected allegations that it was to blame. The blasts took place near the city's central train station as people gathered for a march organised by leftist groups.
The rally was demanding an end to the violence between the Kurdish separatist PKK militants and the Turkish government. The two explosions happened as crowds gathered ahead of the rally. The pro-Kurdish HDP party was among those attending the rally. Its leader Selahettin Demirtas has blamed the state for the attack and has cancelled all election rallies.