1 India outlook dims after cash ban (Straits Times) Indian
Prime Minister Narendra Modi had touted the surprise move to scrap high-value
bills as India's biggest step against unaccounted cash, which the government
estimated at 5 trillion rupees. The bulk of this money has already been
deposited with two more weeks to go before the deadline lapses, meaning the
shock to the system may have been in vain.
The decision sucked out 86 per cent of currency in
circulation, akin to withdrawing all US dollar bills except for about half of
the $1 notes. Only 50 per cent of this is projected to be replaced by the
year-end, leaving the authorities scrambling to push digital payments as public
anger rises.
"India's 'own goal' currency swap initiative
has put a crimp on the cash-dependent economy," said Singapore-based Paul
Gruenwald, chief economist for Asia-Pacific at S&P Global. The government's
"well-intentioned but poorly thought through demonetisation
programme" is driving down the pace of economic activity, he said.
As investors try to assess the impact of Mr Modi's
move, all eyes will be on the government's forecast for the year through March
- due on Jan 7. The central bank and private economists have lowered their
projections for the economy where 98 per cent of consumer payments are made in
cash.
Commercial credit sank to a 19-year low as backlogs
piled up at factories and banks stayed busy with the task of exchanging
currency notes. Meanwhile deposits surged, pushing the credit-deposit ratio to
a six-year low. The trade deficit widened to a 16-month high as export growth
slowed in November and imports surged.
Most worryingly, gold shipments jumped 26 per cent
in November, triggering speculation that consumers were converting their cash
into non-productive holdings of the precious metal. Mr Rafeeque Ahmed, chairman
of the council for leather exports, said Mr Modi's move has slashed about
75,000-100,000 jobs from his industry.
2 Instagram has 600m active users (Emily Price in
San Francisco Chronicle) Instagram has announced that it has doubled its number
of monthly active users over the past two years. The company reported that it
has 600 million monthly daily active users now, 100 million of those added over
the past six months.
It’s been a big year for Instagram. The company has
evolved from its early days, adding a number of new features to keep it
relevant. While once just a photo sharing site, Instagram has since added the
ability to share videos on the service, and this summer launched Instagram
Stories, a Snapchat-esque way to share moments from your day on the service
through posts that can only be viewed for a limited period of time.
This month, Instagram added an easier follower
removal process for private account-holders, the ability to filter out language
posted by others that one may consider abusive, and the option to use a new
live video feature that allows Instagram users to broadcast live. However,
unlike other services, those live videos must be viewed while an event is
happening, as they can’t be replayed later.
3 Savers choking world economy (Phillip Inman in The
Guardian) Saving is always said to be a good thing. But that is about
households and their spare cash. And cash accounts for only a small proportion
of the savings held by most people. These days our accumulated wealth is our
savings – and far from being a way to protect us from financial shocks, they
are toxic and slowly killing the world’s economies.
Firstly there is the sheer scale of savings held by
individuals, companies and governments. Earlier this year the International
Monetary Fund felt the need to add it all up and declared it a savings glut. It
says institutional investors such as pension funds, insurance companies and
mutual funds, along with the sovereign wealth funds of oil-rich nations and
central banks, hold around $100 trillion in assets under management.
This huge sum compares to US GDP of around $18
trillion and the total market value of US-listed companies in 2015 of $19
trillion (which today is more like $25 trillion). Mostly it is invested in
stock markets and property or lent to companies and governments in the form of
bonds. The remainder is invested in commodities such as oil, or financial
derivatives of various assets and insurance products that hedge any potential losses
on those assets.
The IMF says governments should work harder to
attract investor funds to build vital infrastructure and close their budget
deficits. But when investment banks demand between 10% and 15% returns and
pension funds think we should be grateful they only want 6% to 9%, the IMF is
supporting a rip-off perpetrated by today’s savers on tomorrow’s taxpayers.
Instead it should use its intellectual muscle to
shift the debate and support higher taxes on wealth.
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