IMF head warns of weaker global growth; UK workers on minimum wage may double by 2020; 2015 turning terrible year for investors

1 IMF head warns of weaker growth (BBC) The head of the International Monetary Fund has warned global growth is likely to be weaker this year than last. Christine Lagarde also said she expected there would be only a modest acceleration in 2016. And she warned there could be an economic "vicious cycle" caused by higher US interest rates and the Chinese slowdown.

She said these threats could jeopardise recent economic gains in Asia, Latin America and Asia. She said: "The good news is that we are seeing a modest pickup in advanced economies. The moderate recovery is strengthening in the euro Area; Japan is returning to positive growth; and activity remains robust in the US and the UK as well.

"The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth." She added: "On the economic front, there is ... reason to be concerned. The prospect of rising interest rates in the US and China's slowdown are contributing to uncertainty and higher market volatility.

She also pointed to the "sharp deceleration" in the growth of global trade and the "rapid drop" in commodity prices, which is damaging the finances of commodity-exporting emerging market economies.

http://www.bbc.co.uk/news/business-34401043

2 UK workers on minimum wage may double by 2020 (Larry Elliott in The Guardian) The number of employees earning the minimum wage will double to more than 10% of the UK workforce by the end of this parliament, according to new research.

A study published by the Resolution Foundation, timed to coincide with the 20p an hour increase in the minimum wage, found that the decision by George Osborne to lift the statutory pay floor through a national living wage would result in a sharp increase in the numbers of people having their wages set by the state.

The Resolution Foundation said only one in 50 employees were being paid the minimum wage after it was set at a cautiously low level by Tony Blair’s government in 1999. In the years since, the number of workers earning the minimum wage has risen to one in 20, but is now set to increase to one in nine by 2020, or 3.2 million people.

Adam Corlett, the Resolution Foundation’s economic analyst, said: “Over a million workers will get a welcome pay rise today as a result of the latest increase in the minimum wage. “The new ambition shown by the chancellor is welcome. But it will mean that around one in seven private sector workers will have their pay directly set by government by 2020.”

http://www.theguardian.com/society/2015/oct/01/number-of-uk-workers-on-minimum-wage-expected-to-double-by-2020

3 2015 turning terrible year for investors (Wes Goodman in Sydney Morning Herald) For investors around the world, 2015 is turning into a year to forget. Stocks, commodities and currency funds are all in the red, and even the measly gains in bonds are being wiped out by what little inflation there is in the global economy.

Rounding out its steepest quarterly descent in four years, the MSCI All Country World Index of shares is down 6.6 per cent in 2015 including dividends. The Bloomberg Commodity Index has slumped 16 per cent, while a Parker Global Strategies index of currency funds dropped 1.8 per cent.

Fixed income has failed to offer much of a haven: Bank of America's global debt index gained just 1 per cent, less than the 2.5 per cent increase in world consumer prices shown in an International Monetary Fund index.

After three years in a virtuous cycle of rising share prices and unprecedented monetary easing, markets are now sinking as emerging economies from China to Brazil weaken and corporate profits slump. Analysts have cut their global growth estimates for 2015 to 3 per cent from 3.5 per cent at the start of the year, and the turmoil has added pressure on central banks to prolong their stimulus programs, with traders scaling back forecasts for a Federal Reserve interest-rate increase by year-end.

Investors suffered the brunt of this year's losses in the third quarter, with almost $11 trillion erased from stocks worldwide over the past three months. China has been the biggest source of anxiety for investors, after turmoil in the nation's financial markets fuelled concern that the country's worst economic slowdown since 1990 was deepening.

http://www.smh.com.au/business/markets/2015-is-turning-out-to-be-a-terrible-year-for-global-investors-20150930-gjymhb.html

Asia markets fall as China worry deepens; Saudi Arabia pulls $70bn from global funds; India's highway of death and village of widows

1 Asia markets fall as China worry deepens (Justin McCurry in The Guardian) Deepening concern over the health of the Chinese economy has again struck Asian markets, with shares in the region plummeting to their lowest level for three-and-a-half years. The Nikkei 225 ended Tuesday down 714.27 points, or 4.05%, from Monday at 16,930.84 – its lowest level for about eight months.

MSCI’s broader index of Asia-Pacific shares outside Japan slumped 2.3%, touching its lowest levels since June 2012 and extending early declines after Chinese shares opened lower. China’s blue-chip CSI300 index and the Shanghai Composite Index were down 2% and 1.9%, respectively.

 “Investors are worried about a sharp slowdown in China ... but the biggest risk is a global recession, not just a China issue,” said Steven Leung, a director at UOB Kay Hian in Hong Kong. “If you look at Japan ... its economy is in bad shape. And the economic situation is not good in Europe, either.”

For now, global concern is centered on China, where industrial companies’ profits fell at their fastest rate in four years, official data showed on Monday. The S&P 500 index hit a one-month low on bullish US consumer spending data in August as it raised concerns the Federal Reserve could hike rates at a time of slackening global growth.

Although the Fed decided not to raise interest rates at its meeting earlier this month - citing concern over China – speculation is building that the central bank could approve a rate hike as early as next month.

http://www.theguardian.com/business/2015/sep/29/asian-markets-fall-as-new-fears-raised-over-chinas-economy

2 Saudi Arabia pulls $70bn from global funds (Khaleej Times) Saudi Arabia has withdrawn $70 billion from global asset managers as Opec's largest oil producer seeks to plug its budget deficit, according to financial services market intelligence company Insight Discovery.

"Fund managers we've spoken to estimate Sama has pulled out between $50 billion to $70 billion from global asset managers over the past six months," Nigel Sillitoe, CEO of the Dubai-based firm, said. "Saudi Arabia is withdrawing funds because it's trying to cut its widening deficit," he said.

Saudi Arabia is seeking to halt the erosion of its finances after oil prices halved in the past year. The Saudi Arabian Monetary Authority's (Sama) reserves held in foreign securities have fallen about 10 per cent from a peak of $737 billion in August 2014, to $661 billion in July, according to central bank data. The government is accelerating bond sales to help sustain spending.

"Foreign-exchange reserve depletion, rather than accumulation, is the new reality for Saudi Arabia," Jason Tuvey, Middle East economist at Capital Economics, said. "None of this should come as much surprise," given the current-account deficit and risk of capital flight, he said.

Saudi Arabia's attempts to bolster its fiscal position contrast with the scene in Qatar. The world's richest nation on a per capita basis plans to channel about $35 billion of investment into the US over the next five years as it seeks to move away from European deals. That's on top of plans to set up a $10 billion investment venture with China's Citic Group.

With income from oil accounting for about 80 per cent of revenue, Saudi Arabia's budget deficit may widen to 20 per cent of gross domestic product this year, according to the International Monetary Fund (IMF). Sama plans to raise between 90 billion riyals ($24 billion) and 100 billion riyals in bonds before the end of the year as it seeks to diversify its $752 billion economy, people familiar with the matter said in August.

http://khaleejtimes.com/business/energy/saudi-arabia-withdraws-70b-from-global-funds

3 India’s highway of death and village of widows (Sriram Karri on BBC) It connects India's north and south and has been blamed for the deaths of an alarming number of south Indian tribal villagers who live alongside it. One such village is Peddakunta, belonging to the Mahbubnagar district of Telangana, and lying adjacent to the highway bypass. It is easy to locate because of its reputation as the "village of highway widows".

In the village of 35 huts and families, there is only one male adult. Thirty seven others have died, and three have left the village for good. Even World Health Organisation (WHO) statistics, which indicate that India has a road accident death every four minutes, pale in the case of Peddakunta.

"There are no men left there", says 65-year-old Mohammed Dastagir, who runs a paan-cigarette shop near the road leading to the village. "The village headquarters are on the other side of the highway. Everyone has to cross it to get any work with the government done - and many do not return. The most shocking death was a few months ago when a member of a nearby village went to the government office with a petition over the high number of deaths and died while returning."

When the highway bypass was built nearly a decade ago, provisions to build a service lane were also passed. This would have allowed pedestrians a safe route to the other side of the road without them having to cross the bypass. This never materialised, and as a result villagers are forced to walk across the four lanes of the highway bypass if they are to collect their monthly pensions or take up employment in nearby villages.

Thariya Korra, is the only man left alive, but lost his wife to the highway. He has had to look after his five-year-old son alone ever since. "First came the highway. It brought no prosperity, only death. The factory nearby came later. We were promised water, a health centre and jobs. Nothing happened," he said.

http://www.bbc.com/news/world-asia-india-34377506

The era of cheap labour is over; Pro-independence parties win in Spain; Finding an extra hour a day

1 The era of cheap labour is over (Paul Mason in The Guardian) There will soon be children alive who don’t remember the McDonald’s serving counter. Those uncertain seconds as you decided which till to queue at, that nervous wait as the last Big Mac got snatched before your server could grab it. Eonomically, it’s significant. Because unless we start automating repetitive low-skill tasks – which means replacing human beings with machines – we can’t have the third industrial revolution promised by information technology. Nor can we have the move to higher-skilled, higher-paid work that is needed to save capitalism.

In an influential paper this month, Morgan Stanley economists Charles Goodhart, Manoj Pradhan and Pratyancha Pardeshi argue that we are on the verge of a global turnaround in wages. For the past 30 years, business profits have surged on the back of a demographic glut of labour: the babyboomers of the west augmented by the newly urbanised workforce of the global south, plus millions of women brought into the labour force.

Now the catch-up effects of urbanisation will peter out, they say – and, at the same time, the falling birth rate will create a shortage of labour, triggering a rise in the bargaining power – and wages –of workers. That, in turn, will trigger the rollout of innovations across the economy. Capital and labour will rebalance; the surge in business-profit rates that happened after 1989 will subside; and Thomas Piketty’s dire predictions about 21st century inequality will be disproved.

The assertion that job security kills innovation is etched deep into the free-market mindset. The pursuit of flexible labour markets has, for the past 30 years, made it easy for bosses to hire and fire; and harder for workers to demand both higher wages and the higher security that comes with them. The result is the precariat. A broad layer numbering in some countries 25% of the workforce, whose contracts are either temporary or informal, or who arrive via employment agencies.

Now, an influential study by economists at Delft University has concluded what many of us suspected. A flexible workforce needs an expanded management bureaucracy to oversee it. Because precarity damages trust, loyalty and commitment, say the Delft researchers, it demands more management and control. An entire generation of free-market workers has begun to act according to the factory adage of the old Soviet Union: “We pretend to work, they pretend to pay us.”

The researchers conclude: “Easy hire and fire is at the cost of organisational learning, knowledge accumulation and knowledge sharing, thus damaging innovation and labour productivity growth.” The synergies are stark: if the global economy needs a return to higher-paid work, then attacking precarity is the quickest way of achieving that.

http://www.theguardian.com/commentisfree/2015/sep/27/the-era-of-cheap-labour-is-over

2 Pro-independence parties win in Spain (BBC) Pro-independence parties in Spain's Catalonia region have won an absolute majority in regional elections, near complete results show. With nearly 100% of the votes counted, the main separatist alliance and a smaller party won 72 seats in the 135-seat regional parliament.

They said earlier a majority would allow them to declare independence from Spain unilaterally within 18 months. The central government in Madrid has pledged to block such moves in court. With 99,67% of the votes counted, the "Junts per Si" ("Together for Yes") won 62 seats, while the far-left separatist CUP party is expected to secure 10 mandates.

"We have won," Catalan regional President Artus Mas told his cheering supporters late on Sunday. The pro-independence parties said ahead of the vote that they considered it a de facto referendum on independence from Spain. They argue that the Spanish government has consistently refused to allow a legally recognised referendum to take place, ignoring an unofficial vote backing independence in November 2014.

Opinion polls suggest a majority of Catalans favour a referendum on independence but are evenly divided over whether they want to secede. The centre-right government in Madrid has described any breakaway plans as "a nonsense".

http://www.bbc.co.uk/news/world-europe-34372548

3 Finding an extra hour a day (Kate Jones in Sydney Morning Herald) Finding just one extra hour in the working day could be the secret to getting off the hamster wheel. Transforming from an overburdened worker into an organised leader is all about changing habits,Larry Lucas, director of Frontline Management Institute, says.

"Success comes from working on the longer term important things as well as dealing with the immediate urgent things," he says. Freeing up an extra hour each day can usually be achieved by planning your work at the end of each day for the following day, keeping a tight written schedule, cutting out time wasters and delegating work, Lucas says.

Take a step back from your working day to spot these inefficiencies: Ever wondered how much time you spend checking your emails? Statistics from McKinsey say the average business worker receives 300 emails each week and spends more than 2.5 hours a day reading and responding to them.

Technology was designed to make us worker faster, but it can be a double-edged sword. Social media is a prime example – it can make us feel connected and inspired, but it can also be a major drain on time and efficiency. Time is of the essence, and making technology work for you is like employing a second person to your business – if you get it right!

Getting lost in the detail or multitasking more than your fair share can quickly soak up precious spare time in your calendar. Gone are days of working till you drop dead – sleep is the path to productivity. Media mogul Arianna Huffington says it took a serious fall caused by work burnout to make her slow down. Her bestselling book Thrive encourages people to "sleep their way to the top" – getting more sleep for more success.

http://www.smh.com.au/small-business/managing/how-to-find-an-extra-hour-a-day-20150920-gjr34s.html

Caterpillar could cut 10,000 jobs in three years; Fed chair hints of rate rise this year; Migration as a defining issue of this century

1 Caterpillar could cut 10,000 jobs in three years (BBC)  Caterpillar, the US maker of construction and mining equipment, has said it could cut its workforce by more than 10,000 by 2018. The company - which employs more than 126,000 worldwide - said it would cut up to 5,000 jobs by the end of 2016. It is looking to reduce annual costs by $1.5bn by the end of 2016.

Caterpillar has been hit by the collapse of commodity prices which have affected its key customers in the mining and energy sectors. The firm has reduced its revenue forecast for this year by 2% to $48bn and says earnings next year will fall 5%. It will be first time in the company's 90 year history that sales revenues have fallen for four years in a row.

Doug Oberhelman, Caterpillar chairman and chief executive, said: "We are facing a convergence of challenging marketplace conditions in key regions and industry sectors - namely in mining and energy." The company has reduced its total workforce by more than 31,000 since mid-2012.

Caterpillar warned there could be a "total possible workforce reduction of more than 10,000 people" and said it expected to close some 20 manufacturing facilities over the next three years. Mr Oberhelman said: "While we've already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now.

http://www.bbc.co.uk/news/business-34350057

2 Asian shares up as Fed chair hints of rate rise this year (Straits Times) Asian stocks rose after Federal Reserve chair Janet Yellen said the US central bank is on track to raise interest rates this year.

“Most FOMC participants including myself currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter”, Ms Yellen said. “But if the economy surprises us, our judgments about appropriate monetary policy will change”.

 http://www.straitstimes.com/business/companies-markets/asian-stocks-advance-after-fed-chief-yellen-points-to-2015-rate-increase

2 Migration as a defining issue of this century (Alexander Betts in The Guardian) This is the first time in its history that the European Union has faced a mass influx of refugees from outside the region. Each year, as UNHCR announced record numbers of displaced people, the general assumption – until recently – was that this is a problem for other parts of the world. However, rising displacement that had mainly affected the Middle East and Africa has finally reached Europe’s shores in significant numbers.

Asylum numbers do fluctuate over time depending on the state of the world, and Europe has witnessed significant spikes in numbers before. In 1992, the EU received 672,000 asylum seekers, and numbers remained high during the Bosnia conflict.

In 2001, numbers again peaked at 424,000 following the Kosovo crisis and with many arriving from Somalia and Afghanistan. This year, numbers are likely to exceed those figures but not dramatically, especially when one considers that in 1992 there were 15 EU member states and today there are 28.

In general terms, the number of refugees in the world is broadly a function of the number of wars and human-rights-abusing dictatorships at any given time. Today, there are a series of internal and regional armed conflicts around the world. Most of these are in two regions, the Middle East and Africa.

There are also grounds to believe that refugees and displacement are likely to become a defining issue of the 21st century. Two global trends in particular suggest this: fragility and mobility. In both cases, the international community is struggling to come up with viable collective responses.

First, a growing number of states are characterised by chronic fragility, with weak governance leading to an inability or unwillingness to ensure the most fundamental human rights of citizens. The Fragile States Index places countries such as South Sudan, Somalia, Central African Republic, Syria and Afghanistan towards the top of this list.

Second, there is greater human mobility than ever before. In 1970, there were 70 million international migrants; today there are well over 200 million. With globalisation, the opportunity and inclination to move is greater than ever. States continue to pursue the politically expedient fiction that they can unilaterally assert sovereign control over immigration but the reality is more complex.

http://www.theguardian.com/commentisfree/2015/sep/20/migrants-refugees-asylum-seekers-21st-century-trend

Volkswagen chief quits over emissions scandal; China economy: Shaken but still growing; How discounters are beating supermarkets in Britain

1 Volkswagen chief quits over emissions scandal (Graham Ruddick in The Guardian) The chief executive of Volkswagen has quit the car firm, insisting he was not involved in the emissions tests scandal that has rocked the automotive industry and could lead to one of the biggest ever legal claims. Martin Winterkorn said the German company needed a fresh start but stressed he was “not aware of any wrongdoing on my part” as he stepped down as boss.

The resignation of Winterkorn follows five days of growing pressure on VW after the US Environmental Protection Agency (EPA) accused the carmaker of using a defeat device to cheat emissions tests on diesel cars. The crisis could lead to millions of VW and Audi vehicles being recalled around the world and legal claims from motorists. Leigh Day, a UK law firm, said that if VW also manipulated tests in Europe then UK consumers could claim compensation.

Almost 50 class action lawsuits have already been filed in the US and Canada by law firms. German public prosecutors are also examining a collection of legal claims that have been filed by private individuals. The US Department of Justice and the New York attorney general have launched criminal investigations. VW has enlisted Kirkland & Ellis, the US law firm that defended BP after the Deepwater Horizon oil disaster, to help it deal with the growing pile of investigations and lawsuits.

VW has admitted that 11m cars were fitted with the defeat devices and set aside €6.5bn to pay for the costs of the crisis. However, it also faces the prospect of fines of up to $18bn from US regulators and a prolonged legal battle on multiple fronts. Almost €25bn, or a third, has been wiped off the value of VW this week, although shares in the carmaker rebounded 5% after Winterkorn’s resignation.

VW said in a statement on Wednesday that it has voluntarily reported itself to state prosecutors, paving the way for a criminal investigation. As the carmaker seemed to be clearing the way to pin the scandal on workers below Winterkorn, Simon Walker, the director general of the Institute of Directors, criticised the company’s response. “Fitting 11m cars with a piece of software which artificially reduces vehicle emissions during regulators’ tests is not the work of a few rogue employees. That decision was taken and put into action by people of reasonable seniority”, he wrote.

VW employs more than 600,000 staff and sold than 10m cars last year. It accounts for one in four new car sales in Europe. Prof Karel Williams of the University of Manchester business school said the VW scandal reflected badly on Germany. “Germany has been lecturing the Greeks for years on how they cheated on the budget deficit calculations and now look at this – Germany’s largest company is cheating on emissions,” Williams said.

http://www.theguardian.com/business/2015/sep/23/volkswagen-chief-martin-winterkorn-quits-emissions-scandal

2 China economy: Shaken but still growing (San Francisco Chronicle) President Xi Jinping is visiting the US as leader of a China whose image of economic success has taken a beating. But even a weaker China still is on track to turn in some of the world's strongest growth this year. And some industries including retailing are expanding at double-digit rates.

"Those touting China's sudden fragility are either exaggerating current problems or have entirely missed the slowdown of the past several years," said China Beige Book, a US research firm, in a report. It said China's image might be "more thoroughly divorced from facts on the ground" than at any time since it began conducting surveys of the country's economy five years ago.

This year, Beijing is expected to report growth of 6.5 percent to 7 percent. That is down from last year's 7.3 percent but more than double the 3.1 percent forecast for the US by the International Monetary Fund. Only India is expected to grow faster at 7.5 percent. Some forecasters suggest Beijing overstates growth and the true rate might be as low as 5 percent. Even at that level, China will add almost one Indonesia to its economy this year.

Faith in China's ability to surge ahead while the rest of the world struggled was shaken by the collapse of a stock price bubble. Yet the economic meltdown many feared never materialized. Only about 7 percent of Chinese households own stocks, which is a fraction of levels in the US, Europe or Japan, so losses had little impact on consumer spending.

Still, China is doing better than South Korea and Taiwan, where exports fell 6.1 percent and 8.8 percent in the same eight-month period, respectively. And exports matter less to China than they did in the '90s, when its domestic market was anemic.

http://www.sfgate.com/news/world/article/China-economy-Weakened-but-still-growing-6523264.php

3 How discounters are beating supermarkets in Britain (Peter Shadbbolt on BBC) Where you shop in Britain has always been one of the great social signifiers. According to shopping folklore, for the middle classes it is Marks and Spencer, for the upper-middle class Waitrose, and Morrisons is the redoubt of lower-middle class Britain.

But the big four retailers - Tesco, Asda, Sainsbury's and Morrisons - have been facing a game-changing threat as German competitors Aldi and Lidl cut into their market share with no-frills shopping that is marking a generational shift in retail patterns.

The latest statistics for the 12 weeks to 13 September from Kantar World Panel UK show just how bruising the business landscape has become for the UK's grocery retailers. The big four still occupy the commanding heights in terms of market share in grocery retail: Tesco 28.2%, Asda 16.7%, Sainsbury's 16.2%, Morrisons 10.7%.

By comparison, Aldi still only has 5.6%, and Lidl 4.2%, of the entire UK grocery market. But it is in the growth figures that the pain is visible. Sainsbury's managed a mere 0.9% growth over the same period, Tesco and Morrisons both dropped 1.4%, while Asda fell 2.9% in terms of sales growth. Yet Aldi and Lidl have achieved spectacular growth of 17.3% and 16%, respectively.

What went wrong at Morrisons, in particular, has become a signal lesson in what to avoid in grocery retailing. Analysts say its thrust for online sales, where the slice of the profits pie is smaller, undermined the profitability at its stores.

In the meantime, they say, their German competitors have simply built a better mousetrap. Rather than offering a wide range of choice to trolley-stacking weekly shoppers, the discounting German chains are aimed at the little-but-often shoppers. By ruthlessly culling brands that don't sell, producing copycat versions of high street lines, and even offering expensive fare in the form of lobster tail and Belgian chocolates, they are reaching a wide audience.

http://www.bbc.co.uk/news/business-34315643

Volkswagen faces multiple probes in US; EU governments to share 120,000 refugees; Who wants a limo? Pope Francis opts for Fiat 500 in US

1 Volkswagen faces multiple probes in US (BBC) Volkswagen is facing multiple investigations in the US including, reportedly, a criminal probe from the Department of Justice (DoJ). They follow an admission by VW that it deceived US regulators during exhaust emissions tests.

A DoJ criminal investigation would be serious, as federal authorities can bring charges with severe penalties against a firm and individuals. New York state's top lawyer has announced an investigation. New York Attorney General Eric Schneiderman said he will collaborate with other states to enforce consumer and environmental law.

"No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods," Mr Schneiderman said in a statement announcing the probe. Meanwhile the Environmental Protection Agency and the California Air Resources Board are investigating the way VW cheated tests to measure the amount of pollutants coming from its diesel cars.

Volkswagen said 11 million vehicles worldwide are involved and it is setting aside €6.5bn (£4.7bn) to cover costs of the scandal. The DoJ often extracts hefty payments from companies to settle criminal charges.VW shares were down almost 17% on Tuesday in Frankfurt, after losing 19% on Monday.

http://www.bbc.co.uk/news/business-34332452

2 EU governments to share 120,000 refugees (Ian Traynor & Patrick Kingsley in The Guardian) European governments have forced through a deal to impose refugee quotas, sharing 120,000 people between them in a watershed decision that several states bitterly opposed.

The decision to overrule opponents in the newer states of central Europe was highly unusual and perceived as an assault on the sovereignty by the four countries that voted against. While applauded by NGOs and immigration professionals, the decision was highly divisive.

After a months-long battle that the UN warned was a threat to European unity, the continent’s interior ministers finally decided to agree to the principle of sharing refugees between member states in the first meaningful move towards a common EU policy on asylum seekers.

But the Czech Republic, Hungary, Romania and Slovakia all voted against a mandatory quota, while Poland deserted its regional allies to side with a decision pushed by Germany and France. The defeated four expressed resentment at what they perceive as western – and especially German – bullying. Slovakian and Czech politicians reacted with anger to a move they claim will alter the fabric of European society. Germany thanked Poland for breaking ranks with its fellow central Europeans.

Britain has refused to take part in the scheme, having separately promised to resettle 4,000 refugees this year and 20,000 over five years – the first few of whom arrived on Tuesday, the UK government announced without giving details.

The 120,000, plus a further 40,000 already agreed, does not represent the total number of immigrants who will be admitted by the EU, simply the number that will be subject to transnational quotas. About 1 million newcomers are expected to arrive in Germany alone this year. There is no suggestion that those beyond Germany’s quota will not be admitted.

http://www.theguardian.com/world/2015/sep/22/eu-governments-divisive-quotas-deal-share-120000-refugees

3 Who needs a limo? Pope Francis opts for Fiat 500 in US (Hannah Parry in Daily Mail) There was no fancy limousine for Pope Francis on his first visit to the US after he chose to ride in a tiny Fiat 500, while the President was driven off from their meeting in his giant $1million armored car The Beast.

The 78-year-old Roman Catholic leader is in the US for the first time for a five-day tour across D.C., New York and Philadelphia, coinciding with the United Nations summit which will see more than 100 world leaders arrive in New York. President Barack Obama greeted the pontiff and introduced him to his family and Vice President Joe Biden before they walked down the line of dignitaries. The pair then got into separate motorcades.

Known for being humble and unassuming, the pontiff was driven away in the tiny Fiat 500 which was dwarfed by its security vehicles, while President Obama traveled in 'The Beast', his gigantic bomb-proof General Motors Cadillac with eight-inch thick armor-plating on its doors.

The car, worth over $1million, is 18ft in length, weighs 8 tons and has 8in thick armour plating on its doors. By comparison, Pope Francis' tiny Fiat 500, which is just 11ft 7in long and costs less than $20,000.

His choice of the small, economical car may be seen as a message on climate change - which will be the focus of his speech before the United Nations where he is expected to implore the General Assembly to take much more aggressive steps to curb greenhouse-gas emissions.

Since succeeding Pope Benedict in 2013, the former cardinal Jorge Bergoglio of Argentina has eschewed some of the more ostentatious trappings of his office and has chosen to live in a Vatican guest house rather than the opulent papal apartments. He has also picked more modest vehicles than his German predecessor who had a preference for a luxury Mercedes Popemobile.

Fiat USA tweeted, '#blessed' after the pope's vehicle departed for the Apostolic Nunciature, the Vatican's mission in Washington. The license plate on the Fiat reads SCV 1, which means Vatican City 1. SCV stands for Status Civitatis Vaticanae, Latin for Vatican City State. 

http://www.dailymail.co.uk/news/article-3245370/Who-needs-limo-Humble-Pope-Francis-tiny-Fiat-500-dwarfed-security-vehicles-motorcade-arriving-U-S-President-Obama-travels-1million-armored-Cadillac-dubbed-Beast.html

GCC credit cycle at tipping point; Fraud, fools and financial crises; Why India is concerned about Nepal's constitution

1 GCC credit cycle at tipping point (Issac John in Khaleej Times) Corporate and infrastructure companies in the Gulf Cooperation Council face a weaker operating environment as governments reduce spending on the back of lower oil prices, which have more than halved since June 2014, Standard and Poor's ratings services has said.

"Reflecting this weak economic climate, debt issuance by corporate and infrastructure companies has fallen by 58 per cent in the past 12 months to about $7 billion. This also reflects our view that the credit cycle has reached a potential tipping point, with higher pricing anticipated going forward," the ratings agency said in its latest analysis.

S&P said there are various factors that could tempt existing and new issuers to tap the capital markets over the coming year. These include the gradually declining availability of liquidity at the local banks, the opening up of markets to foreign investment - such as the Tadawul in Saudi Arabia, along with the Iranian market if the nuclear deal with the P5+1 progresses as expected - and the refinancing by government-related entities in 2016.

It noted that energy subsidy cuts by Bahrain, Oman, and the UAE governments could increase financial pressures on downstream corporates in the region. World oil prices have dropped by more than 50 per cent since June 2014. S&P expects Brent crude oil prices to remain at about $50 per barrel for the time being, which would prompt governments to postpone or delay some projects.

The International Monetary Fund forecasts that the oil price dip would result in a $300 billion drop in revenues this year for the six GCC states. Globally, energy industry players had already cancelled $200 billion in investments over the past few months in the wake of the oil price plunge. 

A Barclays survey found that oil companies worldwide shed about 20 per cent of their capital budgets to $521 billion this year and will cut another three per cent to eight per cent from their investments next year, marking the first time since the mid-1980s that oil companies will reduce spending two years in a row.

http://khaleejtimes.com/business/economy/gcc-credit-cycle-at-tipping-point

2 Fraud, fools and financial crises (Robert Shiller in The Guardian) Adam Smith famously wrote of the “invisible hand,” by which individuals’ pursuit of self-interest in free, competitive markets advances the interest of society as a whole. And Smith was right: free markets have generated unprecedented prosperity for individuals and societies alike. But, because we can be manipulated or deceived or even just passively tempted, free markets also persuade us to buy things that are good neither for us nor for society.

This observation represents an important codicil to Smith’s vision. And it is one that George Akerlof and I explore in our new book, Phishing for Phools: The Economics of Manipulation and Deception. Most of us have suffered “phishing”: unwanted emails and phone calls designed to defraud us.

A “phool” is anyone who does not fully comprehend the ubiquity of phishing. A phool sees isolated examples of phishing, but does not appreciate the extent of professionalism devoted to it, nor how deeply this professionalism affects lives. Sadly, a lot of us have been phools – including Akerlof and me, which is why we wrote this book.

Routine phishing can affect any market, but our most important observations concern financial markets – timely enough, given the massive boom in the equity and real estate markets since 2009, and the turmoil in global asset markets since last month.

We found out many years ago, to the world’s great regret, what happens when a financial epidemic is allowed to run its course. Our analysis indicates that not only are there endemic and natural forces that make the financial system highly volatile; but also that swift, effective intervention is needed in the face of financial collapse. We need to give free rein to fiscal and monetary authorities to take aggressive steps when financial turmoil turns into financial crisis. One Dark Age is one too many.

http://www.theguardian.com/business/2015/sep/20/fraud-fools-financial-crises-robert-shiller

3 Why India is concerned about Nepal’s constitution (Sanjoy Majumder on BBC) Nepal's adoption of a new federal constitution is being watched warily across the border by its giant neighbour India. The document defines the majority Hindu nation as a secular republic divided into seven federal provinces.

Although Delhi was one of the major backers of the process over the past decade, it believes the new constitution is not broad-based and is concerned that it could spur violence which could spill over into its own territory. Reports in Indian media say that its ambassador in Kathmandu spoke to Prime Minister Sushil Koirala hours before Sunday's constitution ceremony to express Delhi's disappointment at the process going through.

India's concern has been with the violent reaction to the constitution in the low-lying southern plains, adjoining India, the Terai. Communities living in the Terai, especially the Madeshis and the Tharu ethnic minorities, have expressed concern that the proposed boundaries of the new provinces could lead to their political marginalisation.

The two groups make up nearly 40% of Nepal's population and the Madeshis share close ethnic ties with people in India. Prof SD Muni, a strategic analyst who closely follows events in Nepal, says “India's concern is genuine because whatever happens in the Terai will spill over into India. So the violence is really worrying."

India shares a 1,751km-(1,088 miles)-long open border with Nepal through which people pass freely but which has often concerned the country's security agencies because of its use by smugglers, human traffickers and terror suspects.

And then there is China, India's regional bugbear. In recent years, China has been ramping up its involvement in Nepal mainly through economic engagement much to India's discomfort in what it considers its backyard. It is also wary of China's links with Nepal's Communists, never mind that most of its leadership has either been schooled in India or has spent many years in exile in this country.

http://www.bbc.com/news/world-asia-india-34313280

Syriza back in power in Greece; Italy upgrades growth forecasts; Honey, they shrunk the world

1 Syriza back in power in Greece (Helena Smith & Graeme Wearden in The Guardian) Greece’s leftwing leader Alexis Tsipras has emerged triumphant from a snap general election after securing a dramatic victory over his conservative rival, despite a turbulent first term in office.

There had been predictions that the race was too close to call after he accepted a crushing eurozone-led austerity programme during his first term in office, but the charismatic leader looked set to be returned to power with a near repeat of the stunning win that catapulted his Syriza party into office in January.

Speaking in Athens, Tsipras declared: “This victory belongs to the people and those who dream of a better tomorrow and we’ll achieve it with hard work.” Tsipras told supporters that he would tackle endemic corruption in the country. “The mandate that the Greek people have given is is a crystal clear mandate to get rid of the regime of corruption and vested issues,” he said.

The small anti-austerity right-wing Independent Greeks party, the leftists former coalition party, was prepared to enter a power-sharing arrangement with Syriza, said its leader, Panos Kammenos, joining Tsipras on stage as both men celebrated.

Tsipras fought an uphill battle following his spectacular U-turn on previous promises to tear up the excoriating bailout agreements successive Greek governments had signed with international creditors.

The 41-year-old leader went to the polls in January promising to roll back austerity measures imposed by the so-called troika of international lenders – the European commission, International Monetary Fund and European Central Bank – but was instead forced to accept even harsher terms in July after Greece teetered on the brink of bankruptcy and a eurozone exit.

http://www.theguardian.com/world/2015/sep/20/syriza-set-to-return-to-power-in-greek-general-election

2 Italy upgrades growth forecasts (James Politi in Gulf News/Financial Times) Italy has upgraded its economic forecasts for 2015 and 2016, in a sign of growing confidence within the government of Matteo Renzi, the reformist prime minister, that a recovery is taking hold after three years of recession and stagnation.

Ahead of next month’s budget law, Italy said output would rise by 0.9 per cent this year and 1.6 per cent next year, compared with earlier forecasts of 0.7 per cent growth in 2015 and 1.4 per cent in 2016. “In 2015 we turned the corner, and in 2016 we have to accelerate,” Renzi said at a press conference in Rome

The improved economic outlook — boosted by external factors such as a lower euro and lower oil but also a bump in domestic demand — will also affect Italy’s budgetary picture, which has long been a source of concern because of the country’s high levels of indebtedness.

Pier Carlo Padoan, Italy’s finance minister, said he expected Italy’s debt to gross domestic product ratio, which is forecast at 132.8 per cent in 2015, to begin declining from 2016, for the first time since 2007. Italy’s budget deficit this year is forecast at 2.6 per cent, which is well below the European Commission’s threshold of 3 per cent and is due to decline further to 2.2 per cent in 2016.

http://gulfnews.com/business/economy/matteo-renzi-upbeat-as-italy-upgrades-2015-2016-growth-forecasts-1.1587076

3 Honey, they shrunk the world (Darrel Bristow-Bovey in Johannesburg Times) This week a small aircraft - a specially modified twin-prop Beechcraft King Air 200, to be specific, flying from Johannesburg and refuelling in Angola - landed for the first time on a tiny island in the south Atlantic, and the world became vastly smaller and less interesting.

When Napoleon Bonaparte was defeated at Waterloo he was like a super-villain in the setup for a Marvel movie: the Allied powers needed to send him somewhere so remote and godforsaken, so fortress-like and impenetrable that he could never again escape, so they banished him to St Helena, a tiny volcanic speck in the endless ocean. Napoleon never made it off St Helena alive, because the English had chosen well.

Even today, or at least until this week, the fastest way on or off the island was five or six days on the last working British mail ship, the RMS St Helena. She was strong but not especially stable - she could make a barnacle seasick or a whelk unsteady on its feet. I've visited St Helena several times, so I've spent about a month of days cursing Poseidon and praying for death, but I still loved that voyage and now that the airport is built and the ship almost decommissioned, I mourn her passing.

The island was like a Devonshire village in the 1800s: people were polite, wary of strangers, slightly incurious. I met a woman in her seventies who had never left the island but also never visited Blue Hill or the Gates of Chaos in the southern part of the island. Why would she want to go all the way over there? Those weren't her people over there. (The island is 16km long and 8km wide.)

Ten years ago there was a referendum on the island about building an airport. I was opposed. It would tear apart the unique fabric of a unique community, I declared, but really what I feared was it would change the world I lived in from one that had space for a time-travelling ship to one that didn't. Those who voted for the airport - they narrowly won - voted to be a part of the world, to join a modern global community.

If the Saints are happy about the airport, I'm glad, because they deserve to be happy, and I hope they don't mind that when those wheels touched down on Tuesday afternoon, a small part of my heart silently broke.

http://www.timeslive.co.za/thetimes/2015/09/21/The-Big-Read-Honey-they-shrunk-the-world

Moody's lowers France rating; Goldman sees 15 years of weak crude; Japan scripts major upset in rugby history

1 Moody’s lowers France rating (San Francisco Chronicle) Moody's Investors Service is downgrading the credit rating of France, saying the French economy will grow slowly for the rest of this decade while the country's debt remains high.

The firm lowered its rating to "Aa2" from "Aa1." That means France has Moody's third-highest possible rating. Moody's said the outlook for economic growth in France is weak, and it does not expect that to change soon. It says the high national debt burden probably will not be reduced in the next few years because of low growth and institutional and political constraints.

Overall Moody's says France's creditworthiness is "extremely high" because of its large, wealthy, well-diversified economy, high per-capita income, good demographic trends, strong investor base and low financing costs. The outlook was raised to "stable" from "negative."

http://www.sfgate.com/business/article/Moody-s-downgrades-credit-rating-of-France-6514475.php

2 Goldman sees 15 years of weak crude (Gulf News) A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. There’s less than a 50 per cent chance that prices will drop to $20 a barrel, most likely when refineries shut in October or March for maintenance, Jeffrey Currie, head of commodities research at the bank, said. Goldman’s long-term forecast for crude is at $50 a barrel, he said.

Goldman cut its crude forecasts earlier this month, saying the global surplus of oil is bigger than it previously thought and that failure to reduce production fast enough may require prices to fall near $20 a barrel to clear the glut. Prices may touch that level when stockpiles are filled to capacity, forcing producers in some areas to cut output, Currie said.

Lower iron ore, copper and steel prices as well as weaker currencies in commodity-producing countries have reduced costs for oil companies, according to Currie. The world is shifting from an “investment phase” of a 30-year commodity cycle to an “exploitation phase,” with shale fields as an important source of output, he said.

http://gulfnews.com/business/sectors/energy/goldman-sees-15-years-of-weak-crude-as-20-oil-looms-on-glut-1.1585830

3 Japan scripts major upset in rugby history (BBC) Japan stunned two-time champions South Africa to cause arguably the biggest upset in rugby union history. Karne Hesketh crossed in the final minute to win an incredible World Cup Pool B encounter in Brighton.

South Africa led 12-10 after Francois Louw and Bismark du Plessis tries. Lood de Jager and Adriaan Strauss also scored for the Springboks, but Ayumu Goromaru contributed 24 points, including a try, before Hesketh's dramatic clincher. Japan had not won a World Cup game since 1991, while South Africa were world champions in both 1995 and 2007.

Japan started the game brightly, played with quick ball and took the game to South Africa, never looking overawed by their powerful opponents. Captain Michael Leitch went over for Japan's first try as they went 10-7 up after 29 minutes and, although Du Plessis quickly responded, the Brave Blossoms stayed in touch throughout the second half.

Japan were always looking to attack, with scrum-half Fumiaki Tanaka dictating the tempo of their game and full-back Goromaru putting in a near-flawless kicking display. The 29-year-old added to his points tally when he finished off a well-worked move and, after he converted his own try, the score was 29-29 with just over 10 minutes remaining.

Replacement Handre Pollard kicked South Africa back in front eight minutes from the end after Japan strayed offside but the underdogs were not to be denied. They laid siege to the Springboks' line as time ticked beyond 80 minutes, twice opting not to kick penalties that would have earned them a draw. Their adventure was rewarded as they span the ball across the field for Hesketh's winning try on the left flank.

Several kickable penalties were given away after the break to allow Goromaru to keep Japan in touch, while Coenraad Oosthuizen's late yellow card proved costly as Japan were able to stretch the play for Hesketh to touch down in the corner.

http://www.bbc.com/sport/0/rugby-union/34269878

UK seen to need interest rate cut; Market bubble fears grow; 'Cool clock' boy shows best and worst of America

1 UK seen to need interest rate cut (Katie Allen in The Guardian) Interest rates in the UK may have to be cut further from their record low level, the Bank of England’s chief economist has warned, as he highlighted signs that the global financial crisis is entering a third phase of turmoil.

Andy Haldane cited evidence of a slowdown on the domestic front and risks to the global economy from China, where an economic downturn has coincided with a stock market rout that has sent shockwaves through the world’s markets.

His view that the Bank may need to resort to even more unconventional moves to protect the UK recovery puts Haldane at odds with the Bank’s governor, Mark Carney, who has indicated that rates may rise from 0.5% early next year. The warning from a top Bank official over the UK’s fragility is also unwelcome news for George Osborne as he seeks to emphasise his stewardship of the economy following Jeremy Corbyn’s election as Labour leader.

Haldane, one of nine policymakers who set interest rates, was speaking a day after the US central bank decided to delay an interest rate hike for the world’s biggest economy. The US rate-setters blamed a more fragile global outlook in remarks that further rattled jittery financial markets. The FTSE 100 fell more than 1% in the wake of the US decision.

Haldane warned the UK was not ready for higher borrowing costs. “In my view, the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside,” he said. “Against that backdrop, the case for raising UK rates in the current environment is, for me, some way from being made.” Given the range of risks facing the economy, there is every chance the next rate move could be a cut instead of an increase.

Added to that, Haldane highlighted challenges in Britain. “While the UK’s recovery remains on track, there are straws in the wind to suggest slowing growth into the second half of the year,” he said. “Employment is softening, with a fall in employment in the second quarter and surveys suggesting slowing growth rates.

http://www.theguardian.com/business/2015/sep/18/interest-rates-rise-bank-of-england-chief-economist-andy-haldane

2 Market bubble fears grow (Jamie Robertson on BBC) No increase in interest rates - crack open the champagne - another month (or two or three) of cheap money. There may well be a few investors breathing a sigh of relief that the Federal Reserve has kept US interest rates on hold. But most realise that the days of cheap money are coming to an end.

Only now are we beginning to look at the stock market, blown up by cheap money over the last six years, and starting to question the resilience of this quivering balloon. With rates close to zero the stock market has been the first choice for anyone hungry for a decent return since March 2009. And in their enthusiasm those investors may well have inflated a bubble of alarming proportions.

One valuation, known as Cape, and which gained popularity after the collapse of the dot.com boom in 2000, is flashing red and sending shivers through the market. Cape stands for "cyclically adjusted price to earnings" ratio. The price to earnings ratio (or PE) is the relationship between the price of a share in the market, and the earnings of the company to which it relates.

Prof Robert Shiller, the Nobel laureate economist who popularised Cape, decided to use average earnings, adjusted for inflation, over the last ten years. The historic average Cape for the S&P 500, the broad US market index, is 16.6. Its rock bottom was just below 5 in the early 1920s. Last year Prof Shiller said that over 25, Cape was at "a level that has been surpassed since 1881 in only three previous periods: the years clustered around 1929, 1999 and 2007. Major market drops followed those peaks".

Now, I know what you're thinking. Where are we now? 25.33. Uh-oh... But before you grab the phone to your broker, it should be pointed out that no-one, Prof Shiller included, sees Cape as a predictor of a crash. In fact had you used Cape to time your investment for most of this century you would have gone spectacularly wrong. For all that time Cape has been, with one brief exception in mid-2009, above its long term average of 16.6, i.e. telling you your returns were going to be below average.

The last quarter saw total earnings for companies in the S&P 500 index down 2.1% on the same period last year. The third quarter is likely to be worse, maybe 5.5% lower than last year. Now a lot of that is to do with the energy sector getting knocked sideways by the low oil price, but other sectors are hardly shining. The bottom line is that earnings are at their weakest level in six years. That in itself (let alone confidence levels and the Cape ratio) should make investors cautious. And interest rates haven't even gone up yet.

http://www.bbc.com/news/business-34281167

3 ‘Cool clock’ boy shows best and worst of America (Khaleej Times) Ahmed Mohammad is now a celebrity in the US. The little boy who was handcuffed and suspended for bringing his homemade clock, which was mistaken for a bomb by the school authorities, is now all smiles and has a tale to tell. President Barack Obama has invited him to the White House to share with him his invention, and similar invites are pouring in from Facebook CEO Mark Zuckerberg, Google, the Massachusetts Institute of Technology and Nasa to visit their facilities.

This episode is in need of being studied in an objective manner. The psychological terror and abuse that Mohammad, 14-year-old son of a Muslim immigrant from Sudan, suffered at the hands of his school authorities is condemnable. The fact that he was handcuffed and Texas cops were called in to arrest him is disgusting. All that he was carrying with him is his clock invention that resembled a bomb!

This speaks high of not only the fear factor but also the sense of otherness that has set in American society in the aftermath of the 9/11 attacks. Call it Islamophobia or paranoia, minorities still face the uphill task of proving their loyalty and patriotism when it comes to the business of the state.

Obama, nonetheless, made the necessary socio-political correction by tweeting in support of the student. The gesture to invite the ninth-grader to take his clock to the White House is laudable, and will go a long way in wooing minorities and other dispossessed sections of the American society. This is like appreciating the nation's enterprise and their zest to contribute to the development and prosperity of the state.

"We should inspire more kids like you to like science...it's what makes America great," Obama tweeted. Similarly, the Facebook chief was candid, as he said: "Having the skill and ambition to build something cool should lead to applause, not arrest. The future belongs to people like Ahmed. I'd love to meet you. Keep building."

While Mohammad will be a sought-after guest on the Astronomy Night (September 19) - an event bringing together scientists, engineers, astronauts, teachers and students on the lawns of the White House - Obama has an opportunity to send across the message that none should be discriminated on the basis of unreasoned prejudice.

http://khaleejtimes.com/editorials-columns/the-cool-clock-boy-shows-the-worst-and-best-of-america