1 Portuguese bank fear triggers new eurozone concern
(Phillip Inman in The Guardian) Stock markets on both sides of the Atlantic have
been rattled this week on fears that the suspension of shares in Portugal's
third largest bank could lead to a run on the eurozone's debt-ridden banking
sector. Trading in shares of Banco Espírito Santo was halted on the Lisbon
stock exchange after they fell 19% as the bank's credit rating was downgraded.
Banks in Italy, Spain and Portugal saw their shares
dive as investors betted they may be hiding bad debts dating back to the 2008
financial crisis. Peter Garnry, head of equity research at the Danish bank
Saxo, said the febrile state of European markets showed that the crisis and its
aftershocks were far from over.
Analysts said the problems at Espírito Santo brought
to the fore concerns that European banks may be harbouring bigger debts than
thought, and that countries outside the Brussels bailout scheme have made
themselves ineligible for funds in the event of a sudden credit crunch.
The IMF said: "The Portuguese banking system
has been able to endure the crisis without significant disruption, aided by
substantial public capital support and extraordinary measures from the
ECB." However, "pockets of vulnerability remain, warranting
corrective measures in some cases and intrusive supervision in others. The IMF
does not comment on individual financial institutions."
2 Best of capitalism over for rich nations (Paul
Mason in The Guardian) One of the upsides of having a global elite is that at
least they know what's going on. Just how difficult this has become was shown
last week when the OECD released its predictions for the world economy until
2060. These are that growth will slow to around two-thirds its current rate;
that inequality will increase massively; and that there is a big risk that
climate change will make things worse.
Despite all this, says the OECD, the world will be
four times richer, more productive, more globalised and more highly educated.
If you are struggling to rationalise the two halves of that prediction then
don't worry – so are some of the best-qualified economists on earth. World
growth will slow to 2.7%, says the Paris-based thinktank, because the catch-up
effects boosting growth in the developing world – population growth, education,
urbanisation – will peter out.
Even before that happens, near-stagnation in
advanced economies means a long-term global average over the next 50 years of
just 3% growth, which is low. The growth of high-skilled jobs and the
automation of medium-skilled jobs means, on the central projection, that
inequality will rise by 30%. By 2060 countries such as Sweden will have levels
of inequality currently seen in the USA.
The whole projection is overlaid by the risk that
the economic effects of climate change begin to destroy capital, coastal land
and agriculture in the first half of the century, shaving up to 2.5% off world
GDP and 6% in south-east Asia. The bleakest part of the OECD report lies not in
what it projects but what it assumes. It assumes, first, a rapid rise in
productivity, due to information technology. Three-quarters of all the growth
expected comes from this. There is no certainty at all that the IT revolution
of the past 20 years will cascade down into ever more highly productive and
value-creating industries.
The OECD has a clear messagefor the world: for the
rich countries, the best of capitalism is over. For the poor ones – now
experiencing the glitter and haze of industrialisation – it will be over by
2060. If you want higher growth, says the OECD, you must accept higher
inequality. And vice versa. Even to achieve a meagre average global growth rate
of 3% we have to make labour "more flexible", the economy more
globalised.
The ultimate lesson from the report is that, sooner
or later, an alternative programme to "more of the same" will emerge.
Because populations armed with smartphones, and an increased sense of their
human rights, will not accept a future of high inequality and low growth.
3 How Uber beat Lyft (Megan Rose Dickey in San
Francisco Chronicle) Uber means serious business. It's notoriously been a step,
if not several, ahead of the competition. In just a few years, Uber has turned
into a tech powerhouse that generates $20 million per week.
Here's how Uber did it: It raised a ton of money — $1.5 billion to be exact—
from high-profile investors. About a month after Lyft announced a massive $250
million round, Uber raised $1.2 billion in new funding. That was not a
coincidence, according to a venture capitalist Business Insider previously met
with. That round valued the company at $18.2 billion.
Uber has poached former TLC and government workers to
help with regulatory issues. Uber CEO Travis Kalanick seems to strategically
try to one-up Lyft when it has a big launch or promotion. The same day Lyft
announced that it would be giving out unlimited free rides for two weeks in 24
cities, Uber offered the same thing did the same in Connecticut.
Uber pays Lyft riders to convert drivers to Uber. Back
in June, Uber had a promotion that offered $250 in Uber credit to people who
could convince a Lyft driver to sign up for UberX. Uber also offers drivers
$500 to switch from Lyft and other ridesharing competitors to Uber.
Uber found a loophole to get legal in New York. Unlike
its ridesharing competitors, Uber's operations in New York, a key taxi market,
are totally legal. The company did this by abandoning the traditional
ridesharing model where everyday people can work as part-time drivers and by
establishing relationships with licensed taxi base stations.
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