1 The Guardian on bankocracy in Britain. The national interest. It's a phrase we've heard a lot recently. David Cameron promised to defend it before flying off last week to Brussels. The national interest he saw as threatened by Europe is concentrated in a few expensive parts of
London, in an industry that would surely come bottom in any occupational popularity contest (yes, lower even than journalists): investment banking.
On one issue in particular, Cameron had a good case: Britain wants banks to put more money aside for a rainy day than the EU is considering. Elsewhere, he just looked unreasonable – what exactly is wrong with having international banking supervision? Cameron is merely expressing more openly something Labour frontbenchers also believe: that the City is pretty much the last engine functioning in Britain's misfiring economy. What is it that justifies the kid-glove treatment of the finance sector? Switch on the news and you normally hear some minister or lobbyist talking about the vital contribution banking makes to employment. Our tax revenue. Or the role banks ideally play in directing money to needy businesses.
Yet they are largely bogus. On nearly any important measure, finance actually contributes less to Britain than manufacturing. Take jobs. The finance sector employs 1m people in Britain. Chuck in the lawyers, the PRs and the smaller fry that swim in its wake and you are up to a
grand total of 1.5m. And most of these people are not the investment bankers for whom Cameron went to war in Brussels. At the big British banks such as RBS and HBOS, 80% of the staff work in the retail business. Even in its current state of emaciation, manufacturing
employs 2m people.
The evidence and the voters are against investment bankers. So why do the politicians cling on to them? Part of the answer must be cultural. Running this government are two sons of bankers. Cameron's father was a stockbroker, Clegg's is still chairman of United Trust Bank (and
famously helped his son get some work experience). What are the results of bankocracy? It means that the main figures arguing for a Robin Hood tax are the Archbishop of Canterbury Rowan Williams and Bill Nighy. It means that opposition to the rule of banks isn't found
in Westminster, but in tents outside St Paul's or among a few grizzled academics and NGO-hands – with no political vehicle to carry them. Meanwhile, the politicians declare that the national interest of Britain can be defined by what suits one square mile of it.
2 BBC on Nicolas Sarkozy saying there are two Europes now. The French president has said that there are now clearly "two Europes", following last week's summit in which the UK vetoed EU treaty changes. Nicolas Sarkozy said he and Chancellor Merkel of Germany did everything they
could to persuade the UK to sign up to the EU deal to tackle the debt crisis. He said the agreement marked "the birth of a different Europe". UK PM David Cameron defended his decision, telling MPs he acted to protect the UK's financial sector. Sarkozy said that there is
one Europe "which wants more solidarity between its members and regulation, the other [is] attached solely to the logic of the single market".
3 The Khaleej Times on the coming Asian crunch. By 2050, Asia will have more than five billion people, while the European Union’s share of the global population will decline from nine per cent to five per cent. Annual economic growth in Asia over the past 30 years has averaged five per cent. Its GDP is projected to increase from $30 trillion to about $230 trillion by 2050. The balance of power in the twenty-first century is shifting — in social, economic, and, arguably, political terms — from west to east. Western anxieties about a looming “Asian century” stem largely from the precedent of 21st geopolitics, in which the West dominated less-developed nations. But this dynamic is outdated, and Asia would suffer as much as the West from any attempt to emulate the British and American empires of the nineteenth and twentieth centuries.
As Asian economic growth has increased, consumption in the region has also risen. Multinational companies and Western countries — both of which stand to benefit greatly from Asia’s increasing consumption — have encouraged Asians to aspire to a Western standard of living, with its high energy usage, electronic toys, and meat-heavy diet. Asian governments seem willing partners in this one-dimensional approach to development, and are eager to lead global economic growth. Yet it is neither desirable nor possible for Asians to consume in the way that Westerners do, and Asian governments should face up to this reality.
The planet simply cannot support five billion Asians consuming like Westerners. The earth’s regenerative capacity was exceeded more than 30 years ago, and we now use 30% more resources than the planet can sustain. Although we know this to be the case, the vast majority of
Western economists and institutions continue to encourage China and India to consume more. Asian governments must reject this trend, but, having been intellectually subservient for so long, it is not clear that they will. Asia must adopt three core principles to avert environmental and social crises. First, economic activity must be secondary to maintaining resources. Second, Asian governments must take action to re-price resources and focus on increasing their productivity. Third, Asian states must recast their central role as being to defend our collective welfare by protecting natural capital and the environment.
4 The Dawn on Delhi not having a birthday bash. The Indian capital of New Delhi marked its 100th birthday on Monday without any official celebrations of a day that revives memories of British rule over the country. On December 12, 1911, visiting King George V told crowds at
an elaborate imperial ceremony that India’s capital would be moved from the eastern port of Calcutta to a new city to be built next to the ancient settlement of Delhi. “New Delhi” was designed on a grand scale with tree-lined boulevards, a 340-room palace for the British
viceroy and elegant public buildings – all of which remain intact today. The centenary of the decision has been the subject of public lectures and discussion seminars, but there has been no programme or parades organised by city authorities. “The best may be still to come,” the Times of India declared in its editorial on Monday, pointing out that the sprawling city now had about 160 times as many residents as in 1911. With India undergoing a dramatic economic
transformation in the past 20 years, the country’s time under British rule before independence in 1947 has little resonance today for many Indians.
5 The Economic Times on India’s distressed economy. India’s industrial output fell for the first time in 28 months on the back of falling consumer demand and declining corporate investments, spooking the financial markets, but brightening the prospects of an interest rate cut. Production at factories, utilities and mines shrank 5.1% in October, far exceeding forecasts of a 0.5-1% decline, causing share indices to fall 2%, benchmark yields to drop, and the rupee to hit a new low of 52.61 against the dollar.
Last week, the government cut its growth forecast for the year to around 7.5%, but industrial output data released on Monday has raised fresh doubts about the economy’s ability to meet even the new target. While every segment of the manufacturing sector contracted in October,
capital goods output declined as much as 25.5%, suggesting a near shutdown in corporate investments and expansion. C Rangarajan, former Reserve Bank of India governor and chairman of the Prime Minister's Economic Advisory Council, said there was a need to watch inflation
for some more time before taking action. “Immediately, the RBI may take a pause. But, unless (inflation) numbers clearly indicate a decline, there may not be a policy reversal,” he said. Production of durables and consumer durables declined together for the first time since February 2009, a clear sign of weak consumer demand, as overall manufacturing output slid 6% in October.
6 The Economic Times on Infosys employees working on weekends to help company meet targets. Infosys is making its nearly 1,50,000 employees work extra hard this quarter by shortening two weekend breaks, a rare step which may mean the company is huffing and puffing to meet its revenue growth target. Staff at India's second-largest software exporter worked on November 19 and December 10 (both Saturdays), giving the company a revenue boost of 1-1.3% for the October-December quarter, JP Morgan analyst Viju K George wrote in a report. While all top-tier IT services providers have cited the weak global economic situation in their prognosis, Infosys has been particularly pessimistic in recent weeks. Its chief financial officer, V
Balakrishnan, said recently that the company may not reach the upper end of its sales growth forecast of 3-5% for the December quarter and 17.1-19.1% for the financial year, or $7.08-7.2 billion.
7 The Business Line on the risk of capital flight from Asia owing to Eurozone meltdown. A big risk to Asian economies from a Eurozone meltdown could come in the form of deleveraging or repatriation of funds as experienced during the US financial crisis. Quoting data from Bank for International Settlements (BIS), a panel of economists from Nomura Research, in a media call, said that total claims by European banks on Asia ex-Japan economies stood at $1.4 trillion as of June 2011. According to BIS data as of June 2011, India is the fifth largest Asian borrower from Eurozone banks. The Euro region lent India $61.4 billion or 3.4 per cent of India's GDP as of June 2011.
Could that pose a near-term risk of capital flight from India? While there was no immediate data available to confirm this, according to Tomo Kinoshita, Deputy Head of Economics, Asia ex-Japan at Nomura - of international banks' total claims due from India, 60% or $128.5 billion had a maturity of up to one year. This seen together with India's foreign exchange reserves of $311.5 billion as of September, does place India in the risk radar. China, Singapore, Hong Kong and
South Korea are other top Asian borrowers from European banks.
8 Business Standard report about old dams in India. Some 115 of them are more than a century old and capable of unleashing devastation if breached.
9 Mint’s comment on India overstating its export figure by $9 bn last week and on Monday saying capital goods output had grown by 25.5% before correcting it: ‘Sorry guys, the dog ate the GDP data’.
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My take on the day: Star of Delhi in Dec 1811 — Akbar Shah II. In Dec 1911 — King George V. In Dec 2011 — Anna Hazare.
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