1 Argentina fears new financial crisis (Uki Goni in
The Guardian) Argentinians, battered by decades of apparently cyclical economic
crises, fear a new one following a US supreme court ruling this week that could
make the country liable for up to $15bn owed to so-called "vulture
funds". The vultures, led by a US billionaire, are mainly hedge fund
investors who snapped up Argentinian bonds at rock-bottom prices following the
country's $95bn default on its foreign debt in 2001. The court in Washington DC
has ordered that they be repaid in full – and that ruling threatens a new
default, possibly within weeks.
Argentina descended into chaos after the 2001
financial crisis, then the largest in world history. Violence erupted across
the nation after Argentina declared itself unable to meet its payments in the
last week of December 2001. Argentina had lived through hyperinflation up to
12,000% in 1989. There had been economic collapse in 1975 and decades of
military rule. But what happened in 2002 was unique, even in comparison to
those catastrophes. Bank accounts were frozen and withdrawals banned. Barter
clubs sprouted like mushrooms after rain everywhere.
Although the situation in Argentina today is a far
cry from that dismal crash 12 years ago, recent supermarket lootings that left
11 dead, caused by the economic slowdown of the last year, have triggered
painful memories for those who lived through the 2001 default. But with the
heady days of an annual 8% growth definitely behind Argentina now, Central Bank
reserves are dwindling, inflation by some estimates is close to a yearly 40%,
consumption is collapsing and Argentina's peso is steadily losing value against
the US dollar.
http://www.theguardian.com/world/2014/jun/18/supreme-court-orders-vulture-investors-repaid-argentina
2 Tech exports to drive US trade growth (Andrew S
Ross in San Francisco Chronicle) The California Bay Area's global footprint is
growing substantially, led by high tech. The sector's hard goods exports alone,
worth $25 billion last year, is expected to grow to $30 billion by 2016,
accounting for at least half of the region's total exports. By 2020,
tech-intensive goods will "become the largest single contributor to US trade
growth," according to a research report published by the Bay Area Council
Economic Institute.
These numbers don't include the contributions of
software and service providers, like Google, Facebook and the current wave of
disruptors with ambitions to take over the world, like Netflix, Tesla, Uber,
Yelp and Airbnb. All of which puts the Bay Area "in the catbird seat"
tradewise, said the institute's CEO, Sean Randolph.
Lest we forget, California also has the highest
poverty rate in the country, a bifurcated economy leaving millions of its
residents behind, and, in the Bay Area, one of the biggest income gaps in the
world. More generally, as Fortune notes, reflecting the top 500's haul,
"the earnings story is still one mainly about squeezing more cars,
semiconductors, and grocery sales from a barely rising workforce." And, of
course, there's that niggling issue of tax-avoidance schemes involving many of
these super-successful companies.
3 Dubai grows from refueling stop to global crossroad
(Jad Mouawad in The New York Times) From its humble beginning as a refueling
stop for travelers with no desire to linger in an inhospitable corner of the
Arabian Peninsula, Dubai’s airport has recently overtaken Heathrow Airport in
London as the world’s busiest international air travel hub. Just a decade ago,
Dubai ranked as the 45th-largest international hub.
Dubai’s rise as a modern crossroads connecting East
and West — with the name of its hometown airline, Emirates, adorning the
jerseys of the world’s best soccer teams and sponsoring Formula One car racing
and the United States Open — is a tale of globalization and ambition, and an
audacious bet on the future of air travel. Dubai received 67.3 million
passengers in the 12 months through February, and expects to hit its capacity
of 100 million in 2019.
With few natural resources, barely any oil of its
own, only 168,000 Emiratis and average temperatures exceeding 100 degrees
Fahrenheit from May to September, Dubai has taken on a hazardous gambit. But
what Dubai lacked in climate it more than made up in geography. Situated within
eight flying hours of two-thirds of the world’s population, Dubai has set up a
global hub that can connect virtually any two cities in the world with just one
stop. And despite the last economic downturn, it has stuck with grand plans to
build a second airport that will eventually dwarf its existing one in the next
decade.
The cornerstone of its strategy was creating a new
airline and building an aviation infrastructure around it to support its
growth. Dubai received 67.3 million passengers in the 12 months through
February, jumping for the first time ahead of Heathrow’s 66.9 million
international travelers, and Hong Kong’s 59.9 million. It trails
Hartsfield-Jackson Atlanta International Airport and its 95 million passengers,
though many of those are domestic passengers. Given Dubai’s growth rate, it
should also overtake Atlanta within a few years.
Five years ago, the global credit crisis brought
Dubai near bankruptcy. But the city has recovered its drive, helped partly by a
$10 billion bailout from neighboring Abu Dhabi, and a return of investors from
the Middle East and Eastern Europe. Dubai’s government planners expect traffic
to hit 100 million passengers in 2019, at which point the current airport will
reach its maximum capacity. By then Dubai will be tackling a much bigger
project, a second airport with five parallel runways, and an annual capacity of
120 million passengers. Dubai World Central-Al Maktoum International Airport is
expected to cost about $80 billion and should be completed in the middle of the
next decade.
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