1 The next crash is coming, with the same flaws as
before (Heather Stewart in The Guardian) The next financial crisis is coming,
it’s a just a matter of time – and we haven’t finished fixing the flaws in the
global system that were so brutally exposed by the last one. That is the
message from the International Monetary Fund’s latest Global Financial
Stability report.
Massive monetary policy stimulus has rekindled
growth in developed economies since the deep recession that followed the
collapse of Lehman Brothers in 2008; but what the IMF calls the “handover” to a
more sustainable recovery – without the extra prop of ultra-low borrowing costs
– has so far failed to materialise.
Meanwhile, the cheap money created to rescue the
developed economies has flooded out into emerging markets, inflating asset
bubbles, and encouraging companies and governments to take advantage of
unusually low borrowing costs and load up on debt.
The failure to patch up the international financial
system after the last crash, by ensuring that banks in emerging markets hold
enough capital, and constraining risky borrowing, for example, means that a new
Lehman Brothers-type shock could spark another global panic.
The IMF’s warning echoes a chorus of others. The
Bank of England’s chief economist, Andy Haldane, has argued that the world is
entering the latest episode of a “three-part crisis trilogy”. Unctad, the UN’s
trade and development arm, would like to see advanced economies boost public
spending to offset the downturn in emerging economies.
The Bank for International Settlements believes
interest rates have been too low for too long, encouraging too much risk-taking
in financial markets. All of them fear that the global financial system is
primed for a crisis. The failure of the world’s policymakers to get to grips
with the shortcomings of the international financial system over the past seven
years, suggests that any measures enacted now are likely to be too little, too
late.
2 Standard Chartered ‘to cut 1,000 senior jobs’
(BBC) Standard Chartered bank, a London-based lender that makes most of its
profit in Asia, could cut up to 1,000 senior jobs, according to an internal
memo sent to staff. The move from chief executive Bill Winters is meant to cut
costs.
The bank has grown very quickly since the financial
crisis and some roles are now not needed, sources told the BBC. "We have
already acted to reduce management layers, and a result will have up to 25%
fewer senior staff," the bank said in a statement.
Mr Winters told staff in the memo that about a
quarter of senior managers, of director level or above, would be cut. There are
about 4,000 bankers in the grades affected by the decision. The bank employs
about 88,000 people in total. It has grown rapidly, from about 44,000 in 2005.
The bank has already shed some businesses, in Hong
Kong, China and Korea, booking a gain of $219m and improving its capital
position. Mr Winters also cut the dividend to help the bank strengthen its
capital base - a safety net protecting it from unexpected financial knocks. He
has also not ruled out raising more capital if needed.
3 Nobel Prize boosts Tunisia democracy (San
Francisco Chronicle) It was the fall of 2013 and Tunisia's newfound democracy
was in grave danger. The assassination of a left-wing politician had prompted
the opposition to walk out of the constitutional assembly. The government was
paralyzed, the constitution unfinished and the country on the brink of war.
In nearby Egypt, which had followed Tunisia in a
democratic revolution, a coup had just overthrown the Islamist government, and
some sectors in Tunisia wanted to follow suit.
Then four civil society groups — the main labor
union, the bar association, the employers' association and the human rights
league — stepped into the fray. Working together, they got the Islamists to
agree to resign in favor of a caretaker government that would organize new
elections, while the angry opposition returned to the table to complete the
country's constitution.
On Friday, that coalition — the National Dialogue
Quartet — received the Nobel Peace Prize for its patient negotiating efforts,
which carried Tunisia through an extended constitutional crisis and laid the
groundwork for the only democracy that remains following the 2011 Arab Spring
demonstrations.
The prize comes at an important time, as Tunisia
faces a new crisis that is nearly as critical as the one it confronted in the fall
of 2013: A pair of attacks against tourists earlier this year provoked fear and
devastated Tunisia's vital tourism sector, even as the faltering economy
dragged support for the democratic process to historic lows.
The quartet was a long shot for the prize and none
were more surprised than its actual members. Houcine Abbassi, the head of the
labor union and the driving force in the 2013 negotiations, learned about the
win from an Associated Press journalist. Growth in 2015 for Tunisia is expected
to be flat or negative while unemployment is over 15 percent and inflation has
been running around 6 percent.
Tunisia's revolution was sparked by the
self-immolation of a young itinerant fruit seller after he was harassed by
police and occurred against a backdrop of high unemployment and economic
troubles that have yet to be solved by the new elected governments. Many
Tunisians complain that the revolution and democracy has brought them little
improvements despite an increased freedom of expression, and young people in
particular stayed away from the last election in droves.
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