Monday, October 31, 2016

Saudi FM sacked in effort to remake economy; Tata's dented image; Alarming deforestation for avocados

1 Saudi FM sacked in effort to remake economy (Straits Times) Saudi Arabia's Finance Minister for two decades was replaced on Monday, the latest in a series of government shake-ups as the world's largest oil exporter tries to remake its economy.

A royal order excused Mr Ibrahim Al-Assaf from his post and replaced him with Mr Mohammed Al-Jadaan, formerly head of the kingdom's Capital Markets Authority. Mr Al-Assaf was appointed a state minister and will remain a member of the Cabinet.

Low crude prices have battered Saudi Arabia's economy and opened a hole in its budget that reached nearly $100 billion last year. Deputy Crown Prince Mohammed bin Salman announced Saudi Vision 2030 in April to overhaul the kingdom's economy and government.

A Cabinet reshuffle in May replaced long-time Oil Minister Ali Al-Naimi as well as other top officials but left Mr Al-Assaf in his position, making him the longest serving minister in the kingdom. Mr Al-Assaf was one of three officials who appeared on a popular Saudi talk show this month to defend recent austerity measures implemented by the government. The ministers' performance was criticised by many Saudis who said they were unconvinced.

2 Tata’s dented image (Yogita Limaye on BBC) "Trust", "trustworthy", "reliable", "prestigious" - these are the answers I got when I asked a few people to give me a word that they associated with India’s Tata brand. So the ugly public spat between the Tata group and its ousted chairman, Cyrus Mistry, is not just an upheaval for the corporate world here. It has shaken the faith of millions of ordinary Indians.

The respect that people feel for the group, to a large extent, comes from the stature of the men who have led the company over the years: from its visionary founder, Jamsetji Tata, to the pioneering JRD Tata who was chairman of the group for more than 50 years and, in recent decades, Ratan Tata, who was behind the firm's global expansion.

Ratan Tata managed to keep his reputation as one of India's most revered business leaders intact. In 2012, at the age of 75, he retired after serving as chairman of the Tata group for more than 20 years. The day he stepped down, newspapers were full of glowing commentaries about him. Four years later, the cautious and private man finds himself at the centre of a bitter controversy.

In a letter to the Tata board, sacked chairman Cyrus Mistry accused Mr Tata of interfering in the running of the company and thrusting business decisions on him. Tata Sons has rejected the claims, saying Mr Mistry was given complete autonomy. But the allegations have sowed the seeds of doubt in the minds of many.

"It has dented the reputation of Mr Tata," says Rajiv Kumar from think tank Centre for Policy Research. "It demonstrates that he wasn't as hands off as he claimed and he took part in decisions or at least tried to influence decisions. It shows that he found it difficult to go away."

It is unclear how this dispute will play out in the coming days. Both sides have been frantically consulting lawyers. This, even as most of the group's companies struggle to make money.

It has certainly left Tata's employees and investors worried but the overwhelming feeling among people is one of sadness, a sense of despondency at watching a name that India feels proud of being dragged through the mud.

3 Alarming deforestation for avocados (San Francisco Chronicle) Deforestation caused by the expansion of Mexican avocado orchards is much higher than previously thought, authorities have said.

Talia Coria, an official in the attorney general's office for environmental protection, said almost 50,000 acres (20,000 hectares) of forest land are converted to agricultural uses each year in the western state of Michoacan, the world's top producer of avocados.

Coria said between 30 percent and 40 percent of the annual forest loss is due to avocados. That is about 15,000 to 20,000 acres (6,000 to 8,000 hectares). Experts say a mature avocado orchard uses almost twice as much water as fairly dense forest, meaning less water reaches Michoacan's legendary crystalline mountain streams on which trees and animals in the forests depend.

Guillermo Haro, the attorney general for environmental protection, said Michoacan grows about eight out of 10 avocados exported worldwide, but added that the state's forests "are a wealth greater than any export of avocados."

Mexico's National Institute for Forestry, Farming and Fisheries Research had previously estimated the loss of forest land to avocado planting at about 1,700 acres (690 hectares) a year from 2000 through 2010. However, the rising popularity of the fruit and higher prices have apparently lured growers to expand orchards faster in recent years.

The largely impoverished state depends on avocado growing and harvesting for jobs and income as an alternative to the rampant production of synthetic drugs that also exists in the state. Coria said authorities have begun meetings with avocado producers to discuss the problem of deforestation. She noted that other agricultural sectors, such as berry and peach farms and cattle ranches, have contributed to deforestation in Michoacan.

Sunday, October 30, 2016

EU, Canada sign trade deal; Weak pound not a tonic for UK recovery; Samsung profit falls 30%

1 EU, Canada sign trade deal (BBC) The European Union and Canada have signed a long-delayed landmark trade deal, following weeks of uncertainty due to opposition in Belgium. The deal was signed in Brussels by Canadian Prime Minister Justin Trudeau and top EU officials.

All 28 EU states approved the deal on Friday when consensus was reached. The Comprehensive Economic and Trade Agreement, known as Ceta, required all EU member states to endorse it. The deal removes 99% of tariffs - and officials hope it will generate an increase in trade worth $12bn (€10.9bn; £9.8bn) a year.

After the agreement was finally signed, Mr Trudeau said: "Canadians and Europeans share the understanding that in order for real and meaningful economic growth, we need to create more good, well-paying jobs for our citizens.

2 Weak pound not a tonic for UK recovery (Phillip Inman in The Guardian) A tumbling pound is the defibrillator shock that Britain’s ailing exporters desperately needed to halt their terminal decline. That’s the message repeated on an almost daily loop by economists for Brexit.

Now that sterling has lost almost a fifth of its value against the dollar and about 14% against the euro since the referendum, it follows that the EU referendum vote was the best thing that could happen to the economy.

Almost overnight, manufacturers have found the price of their goods abroad have dropped, making them more competitive. They just need to let the currency work for them, revving up production safe in the knowledge they can undercut their rivals.

It is a narrow economic argument that uses Germany’s exporting prowess as a template. With the euro in place, Germany has kept manufacturing at the heart of its economy, accounting for about 20% of its national income. The UK manufacturing sector accounts for less than 10%.

Britain needs a sunny postcard from the future now that the immediate effects of a low pound are making life difficult for consumers. Import prices are rising and already feeding into shop prices. We’ve seen the early signs: Apple added £500 to the cost of its latest MacBook Pros and Unilever’s prices, including for Marmite, leaped by more than 10% at Morrisons.

The chances of mimicking Germany are slim. Firstly, there is the currency itself. We have a floating exchange rate against the rest of the world, which means it goes down in the bad times and up in the good times. Why would a manufacturing company bet on the currency staying low when a recovery in the UK’s fortunes will send it back up again?

3 Samsung profit falls 30% (Khaleej Times) Samsung Electronics has reported an expected 30 percent profit plunge on the back of a highly damaging recall crisis that hammered the reputation of the world's largest smartphone maker.

The third quarter earnings were announced just hours before the start of an annual shareholder meeting which was set to approve the latest step in a complex generational change of leadership at the family-run South Korean conglomerate.

Samsung said its operating profit for the July-September period stood at 5.2 trillion won ($4.6 billion), compared with 7.3 trillion won a year ago. The profit slump was in line with a revised earning estimate issued by Samsung two weeks earlier after it killed off its flagship Galaxy Note 7 smartphone due to devices overheating and bursting into flames.

The Lee family controls the Samsung group companies, with interests that extend into financial services, hotels, biopharmaceuticals and fashion, through a complex network of cross ownership. Samsung alone accounts for around 17 percent of South Korea's GDP and the Note 7 crisis has impacted the national economy, with the Bank of Korea adjusting its overall growth forecast.

Friday, October 28, 2016

US growth fastest in two years; Twitter layoffs part of massive cuts in tech; England, Wales insolvencies jump by a fifth

1 US growth fastest in two years (BBC) The US economy grew at the fastest pace in two years in the third quarter, initial figures have indicated. The world's largest economy grew at an annual rate of 2.9% in the three months to September, the Commerce Department said.

The stronger-than-forecast rate could increase expectations that the Federal Reserve will raise interest rates before the end of the year. The annualised rate of 2.9% is equivalent to a quarter-on-quarter rate of 0.7%, which is the way that many other countries express their growth rates.

"There's nothing here that will put the Fed off hiking in December," said Aberdeen Asset Management fixed income investment manager Luke Bartholomew. "This shows that the US is roughly on track. It's a natural bounce-back following a pretty underwhelming year so far.”

2 Twitter layoffs part of massive cuts in tech (David Curran in San Francisco Chronicle) The tech layoffs continue to mount in 2016, as San Francisco's Twitter is set to announce this week that it's laying off roughly 300 people. 

It comes on the heels of thousands of other tech industry cuts in 2016. Intel, IBM and Cisco are a few of the giant corporations that have let people go but many startups have also contributed to the thousands of pink slips doled out this year in San Francisco and Silicon Valley.

And there may be much more to come, with some predicting many more companies with layoffs this year.

3 England, Wales insolvencies jump by a fifth (The Guardian) The number of people becoming insolvent across England and Wales leapt by a fifth in the third quarter of 2016, with experts warning that the numbers could continue to increase as the cost of living rises following the UK’s Brexit vote.

There were 24,251 personal insolvencies between July and September, marking a 19.3% increase compared with the third quarter of 2015 and a 6% rise on the second quarter of this year, the figures from the Insolvency Service show.

Insolvency experts said the rising cost of living had combined with changes to the rules on insolvencies to drive up the numbers, and that price rises resulting from the falling pound could push more people into difficulty.

Between July and September, the number of bankruptcies – often seen as a last resort – increased by 7% compared with the second quarter of 2016, with 3,844 new cases recorded in the third quarter, the figures show. Despite the jump, bankruptcies are still down by 1.5% compared with a year ago.

Brian Johnson, insolvency partner at HW Fisher & Co chartered accountant, said the rise in IVAs was down to the fact that people carrying debt were doing so in a largely resilient economy where jobs were still stable and they could still earn enough to make payments. “How the economy performs in the next year or two, and the direction of interest rates, will have a material impact on personal insolvency levels moving forward,” he said.

Tuesday, October 25, 2016

Apple profits slide, first time in 15 years; Low oil price hits expat remittances; The epidemic of online shaming

1 Apple profits slide, first time in 15 years (Rupert Neate in The Guardian) Apple has reported its first decline in annual sales and profit in 15 years. The Silicon Valley company, which had bounced back from near bankruptcy in 1997 to become the world’s most valuable company today, told investors that it had sold $215.6bn worth of iPhones, Watches, Mac computers and other products in the year to 24 September.

That works out as an 8% decrease on Apple’s record $233.7bn of sales it collected in the previous year. The decline in sales hit the company’s profits, which fell 14% to $45.7bn.

It is the first time Apple’s annual sales or profits have declined since 2001, and some analysts are concerned that the world may have reached “peak Apple”, meaning nearly everyone who wants (and can afford) an iPhone or other products already has one.

The fall in sales was mostly down to declining sales of the iPhone, which is by far Apple’s most important product and accounts for two-thirds of all sales. Apple sold 45.5m iPhones in the quarter, a 5% drop on last year.

Despite the decline in sales and profits, Tim Cook, Apple’s chief executive, said: “Our strong September quarter results cap a very successful fiscal 2016 for Apple. We’re thrilled with the customer response to iPhone 7, iPhone 7 Plus and Apple Watch Series 2.”

Apple forecast that it would sell $76-$78bn of products in the coming quarter, a 1% increase on last year. The company’s cashpile has grown to $237bn, up from $231.5bn three months ago.

2 Low oil price hits expat remittances (Issac John in Khaleej Times) As low oil prices continued to hit remittance flows from the GCC and Russia, India, the world's largest remittance recipient in 2015, is to record a five per cent drop in remittance to $65.5 billion in 2016, the World Bank has said in a report.

However, despite the drop, India, which attracted about $69 billion in remittances in 2015, is likely to stay at the top as the world's largest remittance recipient, closely followed by China at $65.2 billion, the bank said.

Overall, remittances to South Asia are expected to decline by 2.3 per cent in 2016, following a 1.6 per cent decline in 2015 due to weak economic growth in remittances-source countries and cyclic low oil prices, the World Bank said.

"Remittances from the GCC countries continued to decline due to lower oil prices and labour market 'nationalisation' policies in Saudi Arabia," the bank said. In addition, structural factors have also played a role in dampening remittances growth. Anti-money laundering efforts have prompted banks to close down accounts of money transfer operators, diverting activity to informal channels, it added.

In 2016, remittance flows to low and middle-income countries, or LMICs, are projected to reach $442 billion, marking an increase of 0.8 per cent over 2015. "Against a backdrop of tepid global growth, remittance flows to LMICs seem to have entered a 'new normal' of slow growth," the report said.

Other top remittance recipient countries include the Philippines at $29.1 billion, Mexico at $28.1 billion, Nigeria at $20 billion, Egypt at $18.4 billion, Bangladesh at $14.9 billion, Vietnam at $13.4 billion and Indonesia at $9.8 billion.

3 The epidemic of online shaming (Daniel Silas Adamson on BBC) A BBC investigation has found that thousands of young women in conservative societies across North Africa, the Middle East, and South Asia are being shamed or blackmailed with private and sometimes sexually explicit images.

Revenge porn is a problem in every country on Earth, but the potency of sexual images as weapons of intimidation stems from their capacity to inflict shame on women - and in some societies, shame is a much more serious matter.

"In the West, it's a different culture," says Inam al-Asha, a psychologist and women's rights activist in Amman, Jordan. "A naked picture might only humiliate a girl. But in our society, a naked picture might lead to her death. And even if her life isn't finished physically, it is finished socially and professionally. People stop associating with her and she ends up ostracised and isolated."

In Saudi Arabia, the problem is so serious that the religious police have set up a special unit to pursue blackmailers and to help women who are being threatened. Further east, Pavan Duggal, a lawyer with India's Supreme Court, talks of a "torrent" of cases involving digital images of women. "My guesstimate is going to be that we are seeing thousands of such cases [in India] on a daily basis," he says.

And in Pakistan, Nighat Dad, head of an NGO dedicated to making the online world safer for women, says "two or three girls or women every day" - about 900 per year - contact her organisation because they are being threatened.

The more devastating the consequences of public exposure, the more power the perpetrator has over the victim. It is in India and Pakistan, however, that the use of mobile phones to record sexual assault appears to be most widespread.

In August 2016, the Times of India found that hundreds - perhaps thousands - of video clips of rape were being sold in shops across the northern state of Uttar Pradesh every day. One shopkeeper in Agra told the newspaper: "Porn is passé. These real-life crimes are the rage."

Monday, October 24, 2016

Eurozone grows at fastest pace this year; Tata group removes chairman; Women now drink as much as men

1 Eurozone grows at fastest pace this year (San Francisco Chronicle) Business activity across the 19 eurozone economies grew in October at its fastest pace so far this year, shrugging off any major concerns about Britain’s “Brexit” vote, a survey has shown.
The purchasing managers’ index, a survey of activity among 5,000 companies in the services and manufacturing sectors, rose to 53.7 points from 52.6 the month before. The index, compiled by research firm IHS Markit, is on a 100-point scale, with 50 separating growth from contraction.
The increase was led by stronger momentum in Germany, whereas France saw a slowdown. Overall, new orders and hiring intentions rose. Work backlogs accumulated at the fastest pace in five years — a positive sign for the economy that suggests companies are enjoying good demand.
The improvement may not be strong enough to keep the European Central Bank from expanding its bond-buying stimulus program in December, analysts say. Inflation, at 0.4 percent annually, is still far below the 2 percent target rate.
2 Tata group removes chairman (BBC) The board of Tata Sons, the holding company of the Tata Group, has unexpectedly replaced Cyrus Mistry as chairman. Ratan Tata has been named as interim chairman while a selection committee finds a permanent replacement.
Mr Mistry has led the company, which owns Tata Steel, since late December 2012. He was the first chairman to be appointed from outside the family for 70 years. No details were given by the company as to why the board had decided to make the change. Mr Mistry was only the sixth chairman of the group, which is nearly 150 years old.
Ratan Tata was the previous chairman and was in charge of the company for more than two decades until he stepped down in 2012 at the age of 75. Tata Sons owns Jaguar Land Rover, as well as Tetley Tea. It is one of India’s oldest conglomerates and is made up of more than 100 companies, including Tata Motors, Tata Power and the IT giant, Tata Consultancy Services.
This is perhaps the biggest upheaval that corporate India has seen in recent years. It was during Ratan Tata’s tenure that the group made many bold acquisitions, among them the takeover of Corus Steel and Jaguar Land Rover. Some of those decisions paid off, while others have cost the company a lot of money.
JLR has turned into a profitable company, but Tata Steel has been suffering heavy losses in the UK. The members of the selection committee charged with finding the permanent replacement are Ratan Tata, Venu Srinivasan, Amit Chandra, Ronen Sen and Lord Kumar Bhattacharyya. The committee will complete the selection process in four months.
Mr Mistry is the youngest son of Pallonji Mistry, an Indian construction tycoon. The Shapoorji Pallonji Group owns 18% of Tata Sons, making it the largest shareholder.
3 Women now drink as much as men (Sarah Boseley in The Guardian) Women have caught up with men in the amount of alcohol they drink and are doing increasing amounts of damage to their health as a result, according to a global study that looked at the consumption habits of four million people over a period of over a century.
The change is partly the result of successful marketing campaigns and the creation of sweeter products aimed at young women or girls, as well as cuts in price, say health campaigners. Some studies have even suggested that younger women may be out-drinking men, according to the study’s authors.
The researchers from the National Drug and Alcohol Research Centre of the University of New South Wales, Australia, say the conclusion is that public health efforts need to focus more on women.
The analysis, published in the journal BMJ Open, looks at the convergence of drinking habits between men and women over time, from 1891 to 2014. It pools the results of 68 international studies, published since 1980, to look at the changing ratio of male to female drinking over the years.
Historically, far more men drank alcohol than women. Men born between 1891 and 1910 were twice as likely as their female peers to drink alcohol and more than three times as likely to be involved in problematic use or use leading to harms. But in all three respects, this had almost reached parity among those born between 1991 and 2000.
Women’s drinking has increased for a number of reasons. Those who have succeeded in obtaining jobs that were once the preserve of men have joined – or found it necessary to become part of – the after-work drinking culture.
But drops in the price, which have led to wine and beer becoming regular items in the supermarket shopping trolley and part of everyday life at home, have also been a factor, alongside deliberate marketing targeted at women.
Sally Davies, the chief medical officer (CMO), changed the alcohol guidance earlier this year, advising both men and women they risked harm if they drank more than 14 units a week – previously the upper limit for men was 21 units. But she warned that there was no safe limit for anybody.
Women’s bodies do not tolerate alcohol as well as men’s, however, because they have a higher fat to water ratio. Because they have less water, the alcohol in their system remains more concentrated. They also have smaller livers than men, which makes it harder to process alcohol safely.

Wednesday, October 19, 2016

Saudi Arabia's first foray into global bond markets; Signs of IS leaders fleeing Mosul; Malala on education, women and men

1 Saudi Arabia’s first foray into global bond markets (Larry Elliott in The Guardian) Saudi Arabia has raised $17.5bn from its first foray into the global bond markets as it seeks to repair the damage to its public finances caused by the collapse in the oil price since 2014.

Strong investor demand meant the Middle Eastern kingdom raised more from the bond sale than had been anticipated, beating the previous record set by Argentina for an issuance by an emerging market country.

Riyadh will use the money raised to reduce a budget deficit on course to be well in excess of 10% of gross domestic product this year and to broaden the economy so that it is less dependent on oil.
Saudi Arabia – along with other oil-producing countries – was caught unawares by the fall in crude from $115 a barrel in the summer of 2014 to a low of under $30 a barrel at the end of 2015. Despite the subsequent rally to just over $50 a barrel, the oil price is still too low to balance the country’s budget.

The rating agency Standard & Poor said: “The region’s funding requirement has been mounting since 2015, when the drop in oil-related revenue turned fiscal surpluses into deficits, although these differ among the sovereigns in scale and duration. We estimate that, in nominal terms, GCC sovereigns’ combined fiscal deficit will reach $150bn (12.8% of combined GDP) in 2016 alone.

2 Signs of IS leaders fleeing Mosul (Alan Johnston on BBC) There are signs that leaders from self-styled Islamic State (IS) have fled Mosul as Iraqi forces close in on the city, the US military says. "Make no doubt the Iraqi security forces have the momentum," Gen Gary Volesky said.

The Iraqi army has been moving towards Mosul from the south, while their Kurdish allies have been approaching from the east. There are thought to be up to 5,000 IS fighters still in the city.

The whereabouts of IS leader Abu Bakr al-Baghdadi are unknown. Some reports say he is in Mosul; others say he has fled the northern Iraqi city. It is possible that any fighters leaving the city had simply been going to man front line areas, which still lie beyond the outskirts.

Gen Volesky, who heads the land component of the US-led coalition fighting IS, said that foreign fighters are likely to form the bulk of the force who will hold out. The charity Save the Children claims that 5,000 people from the conflict area have fled to a refugee camp over the border in Syria in the last 10 days, with another 1,000 waiting at the border.

Refugee camps are being built in the south, east and north of Mosul in preparation for a flood of people fleeing the city. The UN says it expects at least 200,000 in the coming days and weeks. Up to 1.5 million civilians are thought to still be in Mosul, with those inside reporting that IS was preventing them from leaving and that they were running out of basic supplies.

There are warnings the group could use human shields or chemical weapons. It could be months before the city is liberated.

3 Malala on education, women and men (Afkar Abdullah & Saman Haziq in Khaleej Times) "My dream changed from becoming a doctor to becoming the Prime Minister of Pakistan fixing all issues and bringing in education for the girls in Pakistan, said Pakistani female education activist Malala Yousafzai, the youngest person to receive the Nobel Peace Prize, in Sharjah.

Malala's talk centered around three key areas she considered vital for women empowerment - quality education, need for women role models and role of men. I cannot imagine myself for a second without education. Education is needed the most for girls and women. We need to inspire women to dream beyond limits, in order to do that we need women role models."

Talking about her childhood, Malala said: "When I was in Grade 4, I remember I could only think of women as doctors, teachers or otherwise housewives. But when I saw women role models, it broadened my vision. I saw Benazir Bhutto as woman leader and prime minister of Pakistan.

“I heard about women athletes, astronauts, artists, entrepreneurs and many more leading roles that women were taking up. This allowed me to recognise the potential I have as a woman to achieve anything in my life. And my dream changed from becoming a doctor to becoming the prime minister of Pakistan fixing all the issues and bringing in education to my people."

Emphasising the fact that women's emancipation and empowerment are incomplete without men's participation, Malala said: "If my father did not allow me and encourage me to believe in my voice, I would not have been able to stand here and speak out. I would have been like many other girls in my hometown, who are not allowed by their brothers and parents."

Tuesday, October 18, 2016

Netflix subscriptions boom globally; UK inflation near 1%; Avocado toast and the Aussie generational divide

1 Netflix subscriptions boom globally (Gulf News) Netflix added over 50 per cent more subscribers than expected in the third quarter as original shows such as “Stranger Things” drew new international viewers and kept US customers despite a price hike, sending its shares soaring 20 per cent in late trade.

The company’s performance represented a turnaround from the previous quarter of disappointing subscription growth. Netflix, which has spent heavily to expand outside its home market, also said that it was on track to start harvesting “material global profits” next year, even as it raised spending on original programming.

Netflix added about 3.20 million subscribers internationally in the third quarter, higher than the 2.01 million average analyst estimate. In the US, Netflix added 370,000 subscriptions, compared with analysts’ estimate of 309,000, according to research firm FactSet StreetAccount.

Netflix has expanded into more than 130 markets worldwide, including most major countries, except China. It said it was dropping plans to launch a service in China in the near term, opting instead to licence its shows for “modest” revenue. The company said it still hopes to launch service in China “eventually.”

2 UK inflation near 1% (Phillip Inman, Sarah Butler & Larry Elliott in The Guardian) Britain’s biggest supermarket has warned that dearer food prices triggered by the plunge in the value of the pound will have a lethal impact on poor families worst affected by the expected jump in inflation over the next two years.

Although a price war among the leading food retailers has so far blunted the impact of more expensive imports on grocery bills, Tesco’s UK chief executive, Matt Davies, said rising prices would be “toxic” for consumers if stores found that they had to pass on extra costs.

Official figures from the Office for National Statistics showed the annual inflation rate rising from 0.6% to 1% in September, its highest for almost two years. The ONS said the cost of living had yet to be much affected by the drop in the value of the pound seen since the EU referendum, but the Bank of England, the International Monetary Fund and City economists believe that inflation will rise above the government’s 2% target in early 2017 and will reach at least 3% by the end of the year.

3 Avocado toast and Aussie generation divide (BBC) Millennials - give up your smashing avocado toast brunches and buy a house instead. That's the message coming from Australia this week, leaving young people on social media outraged, and those who are a little more seasoned in years scratching their heads.

A column at the weekend for The Australian newspaper by "baby boomer" columnist Bernard Salt contained one paragraph asking why young people today spend their cash on fancy breakfast rather than saving for a property.

"I can afford to eat this for lunch because I am middle-aged and have raised my family. But how can young people afford to eat like this? Shouldn't they be economising by eating at home? How often are they eating out? Twenty-two dollars several times a week could go towards a deposit on a house."

Mockery erupted on social media over the mathematics, which suggest you could stop a weekly brunch for well over a century and still not quite reach your savings goal. Comedian Deirdre Fidge, writing for SBS, decided to share her "life story", titled "I Stopped Eating Smashed Avocado And Now I Own A Castle".

But the comic reaction masked a concern by some that young people simply can't access the housing market no matter how much they save - so are spending their cash on enjoying life instead. "What do you do when you can't afford to buy somewhere to live? Well, you decide to live," Bridget Delaney wrote in The Guardian.

Australian foodie magazine Broadsheet - which is naturally at the centre of the smashed avocado circle - argued that cafes have become a social hub for millennials, whose friends are spread far and wide. But they've gone one step further - collaborating with some of their favourite cafes to launch "home savers" specials to several menus this week - at about A$11 each.

Monday, October 17, 2016

US factory output up; Zombie banks stalk European economy; Hindus for Trump

1 US factory output up (Gulf News) Output at US manufacturers rose for the third time in four months on production of consumer goods and construction materials, a sign the industry is gradually recovering from a prolonged spell of weakness.

The 0.2 per cent gain at factories, which make up 75 per cent of production, followed a 0.5 per cent decrease the prior month, a Federal Reserve report showed. The median forecast in a Bloomberg survey of economists called for a 0.1 per cent gain. Total industrial production, which also includes mines and utilities, increased 0.1 per cent.

Production is beginning to revive due to a diminishing drag from a range of forces including lower oil prices, the strong dollar and weak overseas markets. Steady household spending, the biggest part of the economy, also is a sign factories will keep busy in coming months and gradually begin to contribute to economic growth. Manufacturing accounts for about 12 per cent of the economy.

2 Zombie banks stalk European economy (San Francisco Chronicle) The walking dead are gnawing at Europe's weak economy — zombie banks and zombie companies.

Almost a decade after the financial crisis that ravaged the global economy, analysts and top officials are warning that too many banks in Europe are struggling financially, keeping them from lending to companies and fostering growth.

Calls to fix the problem have come repeatedly from the International Monetary Fund, US Treasury Secretary Jacob Lew, and European Central Bank chief Mario Draghi. They say something has to be done if Europe's economy is to gain more traction and bring down unemployment.

Here is a look at Europe's slow-burning banking crisis and how it hurts the economy. Soured loans are one of the biggest problems, especially in Italy. They create a vicious cycle: the slow economy means businesses can't repay their loans. That leaves the banks short of cash to finance new business ventures, which holds back the economy even more.

Banks under financial pressure, meanwhile, tend to prop up "zombie" companies by extending loans rather than pressing for repayment. A group of economists has found that banks under stress tend to maintain credit to companies they already have a relationship with, even if those companies are struggling. Yanking credit to such companies would mean recognizing the bank's own losses on the loans.

Weak share prices for banks have compounded the problems, as they make it harder for banks to raise money from investors. All of this would be less of a problem if banks made enough money to build new capital reserves. But earnings have been sagging, too. Return on banks' loans and investments has not recovered to the levels seen before the crisis.

The ECB and IMF argue that European banks should fix their underlying business models: their costs are too high and they have too many branches. That's particularly true at a time when more banking is done online. In some countries, customers can withdraw cash at grocery stores and gas stations as they check out with the milk and broccoli — no teller involved.

The banks' situation is further complicated by new European Union restrictions on government bailouts. The new rules, which took effect this year, are meant to protect taxpayers from picking up the bill for rescuing banks — as happened during the financial crisis, overwhelming entire states' finances as in the case of Ireland.

3 Hindus for Trump (Rahmee Kumar in The Guardian) Three weeks before the election, Donald Trump made a brief but rousing appearance at the Republican Hindu Coalition’s (RHC) Humanity United Against Terror charity concert, an event framed around raising money to combat “radical Islamic terrorism”, particularly for Hindus from Bangladesh and Kashmir.

“I’m a big fan of Hindu, and I’m a big fan of India,” Trump told hundreds of enthusiastic attendees in Edison, New Jersey, a town known for its sizable South Asian population. Trump, after lighting Diwali lamps onstage with the RHC’s founding chairman, Shalabh “Shalli” Kumar, said: “The Indian and Hindu community will have a true friend in the White House.

The Republican nominee went on to praise the Indian prime minister, Narendra Modi, as a “great man” and confused the 2001 Indian parliament attack with the 2008 Mumbai attacks in his pledge to fight terrorism.

The RHC supports Trump’s stances on immigration and terrorism, including his “extreme vetting” policy on incoming refugees, said Kumar, a businessman originally from Punjab.

“The Islamic extremist terrorists have declared a war on us. They have declared they will use every possible means to infiltrate into the US through refugees coming in who have nothing but a piece of paper with their name and not even a passport or birth certificate,” Kumar said. “We should also monitor the mosques throughout the US and wherever the centers of this type of activity exist.”

The RHC plans to donate half of the event’s proceeds to Hindu refugees from Bangladesh and Kashmiri Hindus, known as Hindu pandits, who underwent what Kumar called “the second Hindu holocaust”, the first being Partition after India’s independence in 1947 from British colonial rule, he said.

Kumar said Hindu Republicans, who make up about 13% of the Hindu American population, align with Trump on four major policy principles: free enterprise with small government, fiscal discipline with a constitutional amendment to eliminate deficits, legislation that upholds the “traditional” family unit, and a firm foreign policy stance against terrorism.

Sunday, October 16, 2016

China launches manned space mission; Xi sees global economy in precarious state; Let the pound fall and economy rise

1 China launches manned space mission (BBC) China has launched two men into orbit in a project designed to develop its ability to explore space. The astronauts took off from the Jiuquan Satellite Launch Centre in northern China. They will dock with the experimental Tiangong 2 space lab and spend 30 days there, the longest stay in space by Chinese astronauts.

This and previous launches are seen as pointers to possible crewed missions to the Moon or Mars. An earlier Tiangong - or "Heavenly Palace" - space station was decommissioned earlier this year after docking with three rockets.

China plans to expand the lab over the next few years by sending up additional modules. It is expected to be fully operational by 2022. China is only the third country - after Russia and the US - to carry out its own crewed space missions. In 2013 it successfully landed its un-crewed Yutu, or Jade Rabbit, rover on the Moon.

2 Xi sees global economy in precarious state (Gulf News) China’s President Xi Jinping warned Sunday that the global economy remained in a precarious condition as leaders of the BRICS group of nations tried to find ways to fire up growth in the troubled bloc.

Speaking at a summit in the Indian state of Goa, Xi told his host Narendra Modi and the leaders of Russia, Brazil and South Africa that the club of emerging powers had been undermined by both domestic and international woes.

But the leader of the world’s second largest economy said the long-term forecast for Brics members was positive as he called for more confidence-building measures. Brics was formed in 2011 with the aim of using members’ growing economic and political influence to challenge Western hegemony.

The nations, with a joint estimated GDP of $16 trillion, set up their own bank in parallel to the Washington-based International Monetary Fund and World Bank and hold summits rivalling the G7 forum. But the countries, accounting for 53 per cent of world population, have been hit by falling global demand and lower commodity prices, while several have also been mired in corruption scandals.

3 Let the pound fall and economy rise (Larry Elliott in The Guardian) Put the Brexit vote to one side for a second and ask yourself the following questions: is the economy currently unbalanced? Is growth too dependent on consumer spending and asset price bubbles? Is the productive base of the economy too small? Is it a problem that the UK is running a balance of payments deficit worth 6% of GDP, bigger than ever before in peacetime?

If your answer to these four questions is yes – as it should be – then you need to accept that there is an upside to the falling pound. Indeed, many of those who are now talking about a sterling crisis were last year bemoaning the fact that Greece – trapped as it was inside the eurozone – did not have the benefit of a floating currency and so had to use a brutal internal devaluation involving wage cuts, pension reductions and welfare retrenchment to restore its competitiveness.

Britain has discovered a way of living beyond its means. Assets are sold to overseas buyers bringing capital into the country to offset the balance of payments deficit. It is the equivalent of a once well-to-do household that has fallen on hard times pawning the silver to keep up appearances. At some point, referendum or no referendum, the financial markets were going to say enough is enough and it is delusional to think otherwise.

Running permanent balance of payment deficits amounts to borrowing growth from the future. Sooner or later, it has to be paid back and Brexit means it will be sooner. A weaker pound works by making exports cheaper and imports dearer. The effect, as after all the other devaluations and depreciations of the past 100 years – 1931, 1949, 1967, 1976, 1992 and 2007 – will make the economy less dependent on consumers and more reliant on producers.

Will dearer food and the coming squeeze on living standards will prompt a change of heart about Brexit? Remainers should not bank on it. Life has not been great for many in recent years anyway. What’s more, Britain is a country with a streak of cussedness that delights in having its back to the wall.

Profound economic change is usually the result of a convulsive shock, of which Brexit is clearly one. The referendum should lead to a period of national introspection and a willingness to address the fundamental vulnerabilities of the economy. If it doesn’t, the opportunity to set sail from fantasy island will be lost.

Saturday, October 15, 2016

Global liquidity to stay abundant; To do an MBA or not; Anger of India's Marathas

1 Global liquidity to stay abundant (Khaleej Times) Despite US Fed hikes, global liquidity will remain extremely abundant due to monetary easing by other central banks (ECB, BoE, BoJ, China), according to Euler Hermes, the worldwide leader in trade credit insurance.

In its updated risk analysis for Q3 2016, the company notes, however, that global growth should reach its lowest level in 2016 2.4 per cent and will in 2017 be below three per cent for the seventh consecutive year, driven up by the US and emerging markets.

"Global liquidity should remain abundant due to further monetary easing by major central banks, despite the US Fed hikes," said Ludovic Subran, chief economist at Euler Hermes. "However, low rates and monetary policies are far from uniform, so liquidity can move rapidly across the regions, generating volatility and turbulences."

Euler Hermes identified various alerts coming from the regional tectonic plates: The US economy should benefit from resilient consumption due to increasing confidence and private investment. The stronger economic activity will alleviate the downward pressures on main suppliers of the industrial sector. The expected Fed hikes have limited impact on emerging market currencies.

Fine-tuned macro policies in China are aimed at supporting growth, expected at +6.5 per cent in 2016 and +6.4 per cent in 2017. There will, however, be lower demand for foreign goods, negative price pressures and financial stress.

In Europe, growth is expected to remain stable at +1.6 per cent due to a better policy mix. The ECB's Quantative Easing (QE) programme is Europe's biggest safety belt and has doubled to 630 billion euros. The region is characterised by multiple political uncertainties including Brexit, upcoming elections and several points of tension.

Emerging markets will face various situations. Expected growth of +3.8 per cent in 2016 and +4.4 per cent in 2017 will, respectively, contribute to 1.5pp and 1.7pp of global growth. While Brazil and Russia should exit recession, the credit crunch and exchange rate crisis impact several other countries such as Mexico, Nigeria, Turkey or Venezuela.

2 To do an MBA or not (Lee Xin En in Straits Times) Amid the gloom of an economic downturn, the prospect of a challenging job market and the Government's exhortations to upgrade our skills, many are looking into the next step to propel their career forward.

One option that seems to promise bigger salaries and a higher rung on the management ladder is to enrol in a top business school for a Master of Business Administration. Many senior and successful people felt that learning on the job was more important. Several pointed out that MBA graduates still had to be taught managerial skills and had to be treated like most new employees.

But in my interviews with MBA graduates, many felt they could not have learnt as much and as quickly about so many different industries in this way. At an information session at Insead last week, I was struck by the soft skills, such as negotiation, that can be learnt in an MBA class through real-life situations.

The other criticism of the MBA, which is often voiced more vociferously, is its cost. This year, Insead's 10-month MBA costs €73,500 for tuition. That does not include accommodation and living expenses. The top American MBA programmes, which typically take two years to complete, cost about $70,000 for tuition.

For those interested in joining start-ups or looking for a partner to start one, business school seems like a good place to begin. What most savvy investors talk about when they discuss a good investment is often related to their relationships and personal development.

In my opinion, an MBA is a good investment if you are genuinely interested in business-related topics - the better if the MBA's focus is specific and you want to find people with whom you can develop in tandem, with common career and industry interests.

3 Anger of India’s Marathas (The Guardian) Over the past two months, at least a dozen cities in the western Indian state of Maharashtra have exploded in an unprecedented outburst of popular uprising from the Maratha community, made up of the landowning farmer castes. The Marathas comprise a third of Maharashtra’s 114 million population.

The silent protests began in July after the gang rape and murder of a 15-year-old Maratha girl in the village of Kopardi, allegedly by “untouchable” Dalit men. The incident stirred up anger in the Maratha community, who argued that the police and media were neglecting the case in the interests of political correctness.

In India, for generations, low-caste Dalit people were considered “dirty” in the Hindu caste system. After independence in 1947, caste was formally abolished, but continued to be one of the most important identity markers, especially in rural India.

Maratha activists argue that if the girl had been Dalit, and her alleged rapists and killers had been high-caste men, the narrative would be far more appealing to politicians and journalists, who want to be seen as champions of the underdog Dalit community. Discrimination, they say, has now swung in the opposite direction: Dalits enjoy the benefits of affirmative action in jobs and universities, while farmers face neglect from successive governments.

The Marathas are so neglected that when the first march happened, in the city of Aurangabad, none of the major local newspaper or television outlets bothered to turn up, says Bhaiya Patil, a 28-year-old activist who has become the social media manager of the movement.

“There were 500,000 people in the street and no one was interested. There was no footage, no cameras, no coverage. That’s why we turned to social media. We started posting our own pictures and video and suddenly everyone started listening. It gave us our voice.”

The marches are silent, but their demands are loud and clear. The movement brings together the economic and social grievances of millions of people across Maharashtra. They want reforms in the Scheduled Caste and Scheduled Tribe (Prevention of Atrocities) Act, which they argue is unfairly used against higher-caste communities.

They want to be included in the list of “other backward castes”, which gives welfare benefits to listed castes and which politicians change every election season to win votes. The Marathas also want loan repayments cancelled and a fund for drought-hit farmers.