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.

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