1 Extreme poverty to hit record low (BBC) The World
Bank has said that for the first time less than 10% of the world's population
will be living in extreme poverty by the end of 2015. The bank said it was
using a new income figure of $1.90 per day to define extreme poverty, up from
$1.25. It forecasts the proportion of the world's population in this category
to fall from 12.8% in 2012 to 9.6%.
However, it said the "growing concentration of
global poverty in sub-Saharan Africa is of great concern". Although the
share of people in poverty in sub-Saharan Africa is projected to fall from
42.6% in 2012 to 35.2% by the end of 2015, this will still represent around
half of the world's poor.
"We are the first generation in human history
that can end extreme poverty," World Bank President Jim Yong Kim said. The
bank says the downward trend was due to strong growth rates in developing
countries and investments in education, health, and social safety nets.
But Mr Kim warned that continuing the progress would
be "extraordinarily hard, especially in a period of slower global growth,
volatile financial markets, conflicts, high youth unemployment, and the growing
impact of climate change". And the bank warned that poverty is
"becoming deeper and more entrenched in countries that are either conflict
ridden or overly dependent on commodity exports".
2 Fears of a global bubble (Paul Sheehan in Sydney
Morning Herald) We are now deep in bubble territory. Australia's sense of its
own prosperity floats in large part on a property bubble while the global
economy floats on an unprecedented liquidity created by governments.
"Low rates, almost by definition, build bubbles
– stock market bubbles, real estate bubbles, even bubbles in the art
market," warns Carl Icahn, one of the world's most prominent financial
magnates. Last week, Icahn took the unusual step of releasing a documentary
video entitled Danger Ahead, to warn of a coming financial storm: "I don't
think it's if it will happen, it's when it will happen."
He regrets his reticence in 2007, when he believed a
financial storm was building and acted on his fears, but did not think he was
public enough about his concerns. He is not making that mistake twice.
The world economy is already a dangerous place for
Australia. The crash in the global commodities markets is as precipitous as the
general stock market crash of 2008. Canada, another wealthy, resourced-based
economy, is in recession. This year, $11 trillion has been wiped off the value
of global stock markets, or more than 10 times the size of Australia's gross
domestic product. At the centre of that decline has been the commodities crash.
Icahn thinks worse is to come. He blames corporate
greed and a dysfunctional political culture in Washington. He argues that the
enormous liquidity, at near-zero interest rates, pumped out by the Federal
Reserve and other central banks, is building pressure into the global system.
"If low interest rates were a simple panacea, we would never have
recessions."
3 You can print money, so long as it is not for
people (Zoe Williams in The Guardian) Jeremy Corbyn – along with anyone who
challenges the prevailing fiscal narrative – is dangerous and wrong, since he
wants to print money. Money cannot be created from nowhere, because there’s no
magic money tree. End of.
The flaw in that argument is that all money is
created from nowhere. In normal circumstances, it is created from nowhere as
credit, by private banks, and lent to us, usually (85% of the time) in the form
of a mortgage on an existing residential property. Decades of credit extension
have perverted the housing market to turn a mortgage into a lifetime’s bonded
servitude.
The economists Jordá, Schularick and Taylor argued convincingly
last year that the causes of this economic crisis, the next and the one before
are all, fundamentally, the extension of credit and its impact on house prices.
So the magic money tree isn’t gushing cash in a socially responsible fashion
(if it were used responsibly, it wouldn’t be magic).
The Bank of England has created £375bn in
quantitative easing (QE); the Federal Reserve bought $1.25tn worth of
mortgage-backed securities in its first round of QE; the European Central Bank
had as a core principle that it couldn’t create money until, suddenly, in
awesome amounts, it could; the Bank of Korea has a stimulus package, as does
the People’s Bank of China; and Japan started it.
Central banks typically justify money creation on
the basis that it’s temporary, it’s unfortunate, it’s driven by the crisis and
it will ultimately get back to normal. None of that alters the fact that no
bank had that money in savings.
The real barrier to debate is, as with so much in
the realm of debt and austerity, that it’s conducted in bad faith, with
infantilising aphorisms, aimed not at deepening understanding but at shooing
away public interest with unavoidable economic realities. As a tactic, this has
reached the end of its plausibility.
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