Dorothea Lange Negro woman who has never been out of Mississippi July 1936
For the first time this year, Japan’s stock market is wilder than China’s. As the Topix index plunged 16% from mid-August through Tuesday, short-term volatility jumped to the highest since the aftermath of the 2011 earthquake. The Japan equity measure then soared 6.4% Wednesday, making its price swings more exaggerated than those on the Shanghai Composite Index for the first time since December, data compiled by Bloomberg show. “As it continues to be more volatile, gradually some investors and traders will move to the sidelines to sit back and watch because they view the markets as too dangerous,” said Andrew Clarke at Mirabaud Asia. “And they are correct – just lately Asian markets, especially China, Hong Kong and Japan, have been behaving like casinos.”
For most of the year, Japanese equity investors enjoyed market calm as corporate-governance improvements and a decoupling of stocks from the yen helped the Topix to an eight-year high. Then China’s unexpected yuan devaluation on Aug. 10 spurred a global selloff and upended investment strategies in Tokyo: the correlation between Japan’s equities and currency has soared, while the Topix has been among the world’s worst performing stock measures.
Now even central bankers openly doubt China numbers.
The risk China’s economy enters deflation is growing, data suggested on Wednesday, as signs emerge that some foreign central banks are increasingly worried about the impact falling Chinese prices and a weaker yuan could have on their economies. New Zealand’s central bank governor Graeme Wheeler said that China’s surprise devaluation of the yuan, or renminbi, last month had left them concerned about the risk they may let it slide further. “We’ve seen authorities basically say they want to stabilize the renminbi, but if there were to be a very substantial depreciation in the renminbi it would certainly export deflation around the rest of the world, so everybody is looking closely at China,” he said at a press briefing following an interest rate cut in New Zealand.
The deflation threat was underlined by data showing that Chinese manufacturers cut prices at their fastest rate in six years, with the producer price index (PPI) down 5.9% in August from a year earlier, though consumer prices are rising for now. A growing worry for overseas central banks like the Reserve Bank of New Zealand (RBNZ) is that falling Chinese factory gate prices coupled with a weaker yuan mean the price of exports from China will fall sharply, feeding downward price pressures into their economies. Wheeler’s comments came despite attempts by Chinese policymakers to reassure global markets that the yuan will remain stable and China’s economic growth, whilst slowing, is still set to be around 7% this year.
“The RBNZ…verbalised it but this is probably an underlying concern shared by policymakers around the region,” said Sim Moh Siong, foreign exchange strategist at Bank of Singapore. Wheeler said his central bank’s view is that the Chinese economy is actually growing somewhere between “5-6.5% at this point”, a rare public comment by a central bank governor suggesting that China’s growth is below where the country’s policymakers say it is. The slide in Chinese factory prices is not yet feeding into the consumer price index (CPI), which posted a rise of 2% in August from a year earlier, though the National Bureau of Statistics flagged that last month’s gains were mainly due to soaring food prices, not an improvement in economic activity. “The risk for China is still deflation, not inflation,” said Kevin Lai at Daiwa.
“They have gone from a credible peg that cost them almost nothing to a weak peg that nobody believes and that is costing them more than $10bn a day to defend. They’re paying huge sums for something they had for free just a few weeks ago..”
China has tightened its capital controls, in a sharp reversal of its market liberalising rhetoric, as it struggles to contain the fallout from last month’s devaluation of the renminbi. The August 11 devaluation unleashed turmoil on global stock markets and policy confusion at home, forcing the central bank to spend up to $200bn to support the currency. The prospect of an interest rate rise in the US has further encouraged capital flight. The State Administration of Foreign Exchange (Safe), the unit of the People’s Bank of China in charge of managing the currency, has in recent days ordered financial institutions to step up checks and strengthen controls on all foreign exchange transactions, according to people familiar with the matter and an official memo seen by the Financial Times.
The Safe has ordered banks and financial institutions to pay particular attention to the practice of over-invoicing exports, used to disguise large capital outflows. The administration confirmed the existence of the memo, but declined to comment further. China has long imposed limits on the amount of foreign exchange that can be bought or sold by individuals and companies, but those controls have broken down somewhat in recent years as the renminbi has become more widely used around the world. Wang Tao, chief China economist at UBS, said the government had been expected to tighten some FX controls. But she added that relying on them exclusively to protect the renminbi “will not be viable over the long term and hence is unlikely to be pursued by China’s central bank for long”.
The policy reversal comes after China’s central bank drew heavily on its vast foreign exchange reserves to prevent the renminbi falling dramatically against the dollar in the wake of the technical devaluation last month. Although still the largest in the world, its reserves fell by the biggest amount on record in August, dropping $94bn to about $3.56tn. For the first time since it began internationalising its currency a few years ago, the central bank has also been intervening heavily in the offshore renminbi market to narrow the gap between the onshore (CNY) and offshore (CNH) exchange rates.
Analysts and people familiar with the matter say Beijing has spent up to $200bn defending the currency, but the net impact on the reserves is disguised by fluctuating valuations of reserve assets and other inflows into the reserves. “They have gone from a credible peg that cost them almost nothing to a weak peg that nobody believes and that is costing them more than $10bn a day to defend. They’re paying huge sums for something they had for free just a few weeks ago,” said one person with close ties to China’s central bank. Within the government, the decision to move on the currency so soon after the bursting of an enormous stock market bubble is now widely regarded as a policy misstep.
55.41% would have sounded just as relevent.
Citigroup Inc. is sounding the alarm bells for the world economy. In an analysis published late on Tuesday, chief economist Willem Buiter said there is a 55% chance of some form of global recession in the next couple of years, most likely one of moderate depth and length. Unlike the U.S.-driven international slumps of the past two decades, this one will be generated by sliding demand from emerging markets, especially China, which has surged in size to become the world’s No. 2 economy. “The world appears to be at material and rising risk of entering a recession, led by EMs and in particular by China,” wrote Buiter, a former U.K. policy maker. Among reasons for worry is his view that in reality China is already growing closer to 4% than the government’s goal of about 7% targeted for this year.
A shallow recession would likely occur if expansion slowed to 2.5% in the middle of next year and stayed there, he said. Other emerging markets such as Brazil, South Africa and Russia are already in trouble while developed economies are still lackluster. Commodity prices, trade and inflation remain sluggish and corporate earnings are slowing. Buiter is a frequent outlier. Counterparts at Goldman Sachs and JPMorgan are playing down the risk posed by China to rich economies, while those at SocGen said this week that they envisage just a 10% chance of a new global recession with cheap oil providing a buffer against the emerging market weakness. In July 2012, Citigroup was warning of a 90% chance Greece would leave the euro only to be proved wrong.
In the case of China, Buiter reckons it’s facing a “high and rapidly rising risk of a cyclical hard landing” given excess capacity and debts in key sectors as well as corrections in the markets for stocks and real estate. He worries the policy response to fading demand will fall short with debts limiting the scope for monetary policy to help even as the central bank cuts interest rates and tells banks they can hold less cash. Authorities are reluctant to let the yuan fall too far after August’s devaluation or to race to the rescue with fiscal policy. Indeed, PBOC governor Zhou Xiaochuan said last weekend he sees no reason for the yuan to decline further in the long run. As for the advanced economies, Buiter said China’s woes could infect them via declines in trade given it accounted for 14.3% of global commerce in 2013. China unloading some of its $6 trillion of foreign assets such as U.S. Treasuries could also roil international financial markets, while the dollar could surge as investors seek a safe haven.
Graph is from Bloomberg; puts losses at $12,5 trillion.
The good news: the collapse in global market cap since May of 2015 is not the worst ever. The bad news: the $9 trillion drop in combined market cap between the MSCI All World index and Chinese stocks, is the second highest ever, surpassed only by the $13 plunge in global market capitalization in late 2008. Wait, $9 trillion? Yes: for all the focus on the modest correction in the S&P500, what most have forgotten is that in addition to the US, various other development markets, not to mention emerging markets, have lost trillions and trillions in value since their May peaks.
According to SocGen calculations, there has been a $1 trillion drop in emerging markets, a $4 trillion decline in development equity markets, and let’s not forget, the bursting of the Chinese stock bubble, which from a peak market capitalization of $10 trillion in early June, or about the same as China’s GDP, has lost some $4 trillion, since despite the Chinese government’s increasingly more desperate and futile attempts to reflate the bubble. Combining all this, SocGen summarizes, “we are looking at an overall $US9 trillion loss of market capitalisation in less than 3 months! To put that number in context the most severe loss in market capitalisation over 3 months during the 2008/09 financial crisis was $12.8 trillion.” The drop is almost the same as China’s $10 trillion GDP (and likely well higher if one uses credible calculations).
But that’s not the worst news. As SocGen’s Andrew Lapthorne suggests, “such a decline in market values will impact implied leverage calculations and as such all eyes should now be on credit markets. Asian credit is already reacting to the price declines, with the likes of the Markit iTraxx Asia ex Japan CDS index moving significantly wider. However there has, as yet been no significant de-rating of credit in the likes of the US.” [..] Lapthorne’s conclusion… “US corporates also have an insatiable appetite for more debt, with non-financials raising a further $450bn over the past year, according to their latest report and accounts. Why do they need to borrow so much? Well to buy back their own market capitalisation of course!“
“Spending on decommissioning old fields will increase by over 50% to 2019 and overtake spending on the development of new fields the same year..”
Investment in U.K. North Sea oil and gas projects could drop as much as 80% by 2017 as the collapse in crude prices forces the industry to cut back. Capital investment across the industry of 14.8 billion pounds ($22.8 billion) last year will probably decline by 2 billion to 4 billion pounds annually to 2017, Oil & Gas U.K., an industry lobby group, said in its annual economic report Wednesday. “This great industry of ours is facing very challenging times,” Deirdre Michie, Oil & Gas U.K.’s chief executive officer, said in a statement. “Exploration for new resources has fallen to its lowest level since the 1970s” and few new projects are gaining approval from “hard-pressed” companies, she said.
The decline in crude prices of more than 50% over the past year has forced the oil industry to review projects and reduce operating costs. The U.K. North Sea is one of the world’s most expensive areas to operate and resources that were first tapped in the 1960s are depleted. Employment supported by the industry has shrunk by 15% since last year and the lobby group predicts more reductions. “Last year, more was spent than was earned from production, a situation which has been exacerbated by the continued fall in commodity prices,” Michie said. “A continued low oil price will inevitably cause companies to reflect on the long-term viability of their assets.”
About 140 fields will stop producing over the next five years as low oil prices accelerate decommissioning efforts in the region, Wood Mackenzie said in a report. Five fields have already been retired earlier than expected this year and not even a rebound of prices to $85 a barrel would prevent further closures, it said. The Edinburgh-based energy consultant expects 38 new fields will come online over the same period and another 17 new projects to be approved. Spending on decommissioning old fields will increase by over 50% to 2019 and overtake spending on the development of new fields the same year, it said.
“Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions..”
The European Union is fracturing along multiple lines of cleavage, torn by an emerging Kulturkampf over migrant flows before it has overcome the bitter conflict at the heart of monetary union. “The bell tolls, the time has come,” said Jean-Claude Juncker, the head of the European Commission, in his State of the Union speech. “We have to look at the huge issues with which the European Union is now confronted. Our Union is not in a good situation,” he said. Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have his fingerprints all over them:
The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis – the “beneficial crisis” as the EMU enthusiasts mischievously supposed. The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe. Above all, to destroy trust by overruling the categorical “No” of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive Putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras.
One might have thought that the proper conclusion to draw is that the EU can only save itself at this stage by abandoning the Monnet method of treaty-creep and reflexive attempts to force integration beyond proper limits, and retreat instead to the surer ground of bedrock nation states wherever possible. But no, Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions, or indeed whether or not they think it is highly dangerous given the state of total war that now exists between Western liberal civilisation and Jihadi fundamentalism. [..]
By invoking EU law to impose quotas under pain of sanctions, Brussels has unwisely brought home the reality that states have given up sovereignty over their borders, police and judicial systems, just as they gave up economic sovereignty by joining the euro. This comes as a rude shock, creating a new East-West rift within European affairs to match the North-South battles over EMU. With certain nuances, the peoples of Hungary, Slovakia, the Czech Republic, Poland and the Baltic states do not accept the legitimacy of the demands being made upon them.
There were times when…
Britons hate immigrants; Britons need immigrants. History has resolved this paradox through occasional charitable outbursts, when the country’s natural defences are besieged by desperate people seeking shelter. Charity conquers aversion, and the nation has always grown stronger in consequence. The European commission president, Jean-Claude Juncker, welcomed the fact today that Europe was currently seen as “a place of refuge and exile, a beacon of hope and haven of stability”. That should be source of pride, not fear. He is right. Yet to him the Syrian refugees were a political test for the European Union, a test it was failing. Along the frontiers of Greece and Germany, the refugees were not a test. They were a human tide pleading for help – and help now.
Britain has no excuse for turning its back on this plea, least of all when its politicians are playing macho by bombing the refugees’ country of origin. It is sickening at such a time to hear the House of Commons told of “heads not hearts policy … a matter of causes not symptoms … doing more to topple Assad … getting others to pull their weight”. The British have been exemplary hosts to those in distress. The Jews expelled by Edward I began to return under Cromwell, much to the City of London’s gain. The Huguenots of the 16th and 17th centuries landed at Dover, like the Syrians on Lesbos. Britons donated a vast sum, of £50,000, to help them, worth some £8bn today. The refugees were so popular that towns such as Colchester begged for more.
Responses in the 19th century to famine in Ireland and the eastern European pogroms were not so welcoming, but refugees were not turned away. In just two years, during 1846 to 1848, Liverpool took in an astonishing 500,000 people from Ireland. Half a century later, in 1914, 700,000 European Jews were estimated to have found sanctuary in London’s Whitechapel and Manchester’s Strangeways and Red Bank neighbourhoods. There were some riots, but no one quibbled over numbers, or talked of heads not hearts. The flows continued. Government statistics found 25,000 Germans, 15,000 Belgians, 12,000 French and 10,000 Norwegians in wartime Britain. Postwar Poland saw a Syrian-scale exodus, with 8 million fleeing the country.
By the 1950s there were 35,000 Poles registered in London, producing no fewer than 50 Polish newspapers. These flows were overtopped by hundreds of thousands of Asians from the subcontinent and East Africa from the 1960s onwards. In 1972 Britain took in 27,000 Ugandan Asians virtually overnight. The result was nothing but benefit to the British economy. Indeed, the chief argument against accepting so-called economic migrants is that it is an economic sanction on the country of origin.
We all own it.
It is not that the West, or America in particular, is responsible for everything that befalls our awful world. Readers sometimes make it known that they assume this to be the ruling view in this column. But they are grossly unfair and must be corrected: The West, and American in particular, is responsible for almost everything now going wrong across the planet. This is no kind of default political position. It is a detached observation—the kind most Americans dread most. There is not much case for objecting to this thought. Since Columbus hit the rocks in Hispaniola, and da Gama anchored off the Malabar Coast six years later, the West has insisted on leading all the rest. By and large, the world as we have it—defiled, disorderly, violent—is our world.
We Westerners have known best for half a millennium, and our leaders do not take orders—or even suggestions—from anybody. Whatever you see out your window or across any ocean is the doing of those we are content to leave in charge. You may not yet realize that you are reading a column about the migrant crisis in Europe. But it is always best to begin at the beginning. Syrians, Iraqis, Libyans, Afghans, South Asians—one way or another, directly or indirectly, immediately or at a slight remove, they are all victims of the policies through which the Western powers have sought over centuries to impose their will upon weaker people they thought worth disrupting, subjugating and exploiting.
I hope some photographers win press prizes this year for the images coming out of the crisis zones. For me they produce a very weird mixture of sorrow and shame, and I know I am not alone in either case. All those lives interrupted, ruined or lost altogether: Who cannot be moved? But it is only the honest among us who can then admit that every picture coming from a Mediterranean beach or a highway in Hungary is a mirror a migrant holds up to us.
Nice from Fisk.
And we – in this critical hour in the history of our continent, in the history of the EU, in the story of what was once called “Christendom” – we failed the Great Test. Our state-of-the-art nations did not want these wretched people. They became bloodsuckers, human mosquitoes, people-smugglers, a “swarm”. And if the rags of our integrity as human beings have been salvaged these past few weeks, this is due to the dour, rather sour Protestant ethics of an east German hausfrau who history may (or may not, for let us remember her people’s grandfathers for whom my Dad was supposed to shoot his own refugees) say has saved our soul.
But if our generosity stretched that far in welcoming Belgian refugees in the First World War, Jewish refugees before the Second World War, Germans afterwards, Hungarians fleeing the 1956 uprising, even a few Chernobyl survivors (some soon to die), they usually had two things in common. They were white – or as near as much as makes no difference – and they were European and – or as near as much as makes no difference – were from our monotheistic world. The Bosnian refugees of the early 1990s were mostly Muslim, of course, but they looked like and were Europeans, and their version of Islam was for us picturesque rather than religious: snow-covered mosques rather than hot Kabaas, a whiff of eastern cuisine washed down with slivovica, Ramadan-and-one-for-the-road.
But these chaps today, camping opposite Dover, for example, as my Dad’s racist friends used to say, were “black as the ace of spades”. Or a bit black. Or brown. Even the Ethiopian Christians – who passed the Christianity test – failed the colour bar. That is why, I fear, we wept for poor Aylan al-Kurdi. His Muslim religion (such as he would have understood it at that age) was cancelled out by his Kurdish origin – the Kurds being a brave warrior people whom we regularly admirer, support and usually betray. We mourned for him not just because he was an innocent three-year old but because he was a white innocent three-year old. Only one more remark remains to me, and I say it now for the first time in my life, as the son of a father who fought the Kaiser’s arms on the Somme, and of a mother who repaired radios on damaged Spitfires during the Second World War. Thank God for Germany.
More EU. Compulsory measures.
Faced with the largest migration of displaced people since the end of World War II, the European Union proposed to redistribute 160,000 refugees across the bloc, in a move bound to challenge countries with scant experience accommodating newcomers. The EU has sputtered in previous attempts to craft a coherent approach to the crisis amid competing national interests and insistence by some countries -particularly in the poorer East- that accepting refugees must be voluntary. But support for the burden-sharing plan was growing, propelled by public outcry after 71 migrants were found dead in a truck in Austria last month and images of a drowned 3-year-old Syrian boy in Turkey went viral last week.
The new plan still has to be approved by a so-called qualified majority of EU governments, in which bigger countries have weightier votes. With the four largest countries involved -Germany, France, Spain and Italy- in favor, the odds that the proposal would be adopted are growing. In presenting the plan Wednesday, European Commission President Jean-Claude Juncker acknowledged that it wouldn’t go far enough to address the massive flow of migrants to the continent. The plan is Mr. Juncker’s second attempt to help Greece, Italy and Hungary, the three countries on the front line of the crisis.
“I do believe that given the gravity of the situation we face, this proposal is quite modest,” Mr. Juncker said at a news conference, adding that nearly 500,000 people have made their way to Europe in the past year. He added that while the number of incoming refugees and migrants may be “frightening” for some Europeans, they represent only 0.11% of the total EU population, dwarfing the efforts made by Lebanon, Turkey and Jordan, where a total of four million Syrians have found refuge. Mr. Juncker pointed out that earlier, more modest plans were rejected by EU leaders, saying that if “we had taken decisions back then, perhaps we would have saved a lot of lives.”
Farage shows his true face. Good. He’s as right on some issues as he is scarily off on others. It’s a shame that bigots will have to decide the future of the EU, but it’s better than more EU.
“Thank you. Mr Juncker you’ve simply got this wrong. “As I warned you in April, the European Common Asylum Policy sets its terms so wide that to say that anyone who sets a foot on EU soil can stay, I said it would lead to a flow of biblical proportions and indeed that is what we are beginning to see and that’s been compounded by Germany last week saying that basically anyone can come. It is a bit too late now to draw up a list of countries from whom can stay and can’t stay. All they have to do, as they’re doing, is to throw their passports in the Mediterranean and say they’re coming from Syria. As we know the majority of people that are coming and the Slovak Prime Minister has been honest enough to say so, the majority that are coming are economic migrants.
“In addition we see as I warned earlier evidence that ISIS are now using this route to put their jihadists on European soil. We must be mad to take this risk with the cohesion of our societies. If we want to help genuine refugees, if we want to protect our societies, if we want to stop the criminal trafficking gangs from benefitting as they are, we must stop the boats coming as the Australians did and then we can assess who qualifies for refugee status.
“I noted your comments because there is a referendum coming in the United Kingdom. I look forward to seeing you in the UK, I know you intend to spend tens of millions of pounds of British tax payers money telling us what we should think. I have a feeling that the British people will warm to you on a personal level but to suggest that getting rid of a few EU regulations is going to change our minds, sorry unless you give Mr Cameron back control and discretion over our borders the Brits will over the course of the next year, vote to leave.”
Unblocked by now. Refugees free to travel. What a stupid move that was.
In a new development in Europe’s escalating refugee crisis, Denmark has cut off all rail links to Germany. The country’s government is trying to stop migrants and refugees on their way to Sweden. On Wednesday (Sep.9), Danish police halted at the border two trains coming from Germany to Denmark carrying 200 migrants, reports the BBC. Authorities said that passengers refused to leave the trains because they did not want to be registered as refugees in Denmark, but rather in Sweden.
Denmark’s center-right government has recently cut benefits for asylum seekers, and has been “promoting” its new strict regulations on refugees in Middle Eastern newspapers, in attempt to stop people from coming. Earlier on the same day, Danish police also closed down a highway after 300 migrants were forced off a train and began to make their way across the country on foot. More than 1,200 migrants and refugees have crossed the border between Denmark and Germany in recent days, according to the BBC. Both countries belong to the Schengen zone of passport-free travel, but according to EU law, the scheme can be suspended in extraordinary circumstances.
At least they’re trying. At the same time, though, they’re sending back Balkan migrants at a much higher pace.
The refugees arrive exhausted in Germany, are greeted and fed by waiting volunteers, then whisked away to reception centres around the country. It all seems as smooth as the assembly line in a BMW factory. Behind this efficient welcome for asylum seekers, though, are scenes of chaos and confusion as Germany’s famous orderliness is overwhelmed and officials scramble to keep up with the waves of newcomers spilling in from the Middle East. Standard procedures like identification and registration are forgotten as most newcomers – Syrians, Iraqis, Afghans and any number of other nationalities – pass through cities like Munich on their way to a hoped-for new life elsewhere. “People who arrive in Munich don’t get registered here at all – they’re distributed all over Germany,” said Christoph Hillenbrand, senior administrator of the Upper Bavaria district around Munich.
Officials are buying so many bunk beds for refugee centres that local supplies are often exhausted and orders are made all the way to China. “IKEA can’t keep up with the demand,” he added, referring to the furniture chain store from Sweden. Newcomers are told to register for refugee benefits at their final destinations within five days, but there is no way to check if they do it. Of about 25,000 arrivals over the weekend, only around 2,000 have stayed in Munich, he added. Officials estimate almost 40% of those arriving this year come from the Balkans and most will be denied asylum, unlike Syrians deemed worthy of protection from their civil war.
Going to be a long winter.
With deflation entrenched, its industrial base shrinking and a tough new bailout to service, Greece’s economy is heading for another fall with even those of its citizens lucky enough to be in work poorer than at any time since 2001. [..] The economy grew 0.9% between April and June – the only full quarter in office for Tsipras’s government – as consumer spending rose and exports edged up. But economists say GDP will soon go back into reverse. “We expect the economy to shrink (this year) by a bit less than 2%,” Angelos Tsakanikas, economist at IOBE think tank said, after data on Wednesday showed industrial output fell for the second month running in July and August marked the 30th straight month of year-on-year deflation.
Among factors impacting growth, capital controls were imposed in July, when the banks also stayed shut for a week, and the bailout will come with fresh taxes and pension cuts. “Private consumption was a driver behind the growth in the second quarter, helped by tourism … There was also sporadic spending due to fears of haircuts on deposits related to a possible Grexit,” IOBE’s Tsakanikas said. With the danger of an exit from the eurozone and of a possible overnight devaluation averted for now, Greeks will be less inclined to splash out on consumer goods, especially given salaries are at a 14-year low.
Having risen year-on-year in the previous three quarters, the Greek wage index fell in the second quarter to 85.2, its lowest level since the same quarter of 2001, statistics office data showed on Tuesday. After minimal growth in the third quarter, Tsakanikas expects the economy to contract again in the fourth, and further declines are widely predicted for 2016. That signals a return to a recession that ran from 2008 and 2014 and augurs badly for an unemployment rate that, at 25% in May, is already the highest in Europe. “There is no job creation … The jobless rate will rise after the seasonal boost from tourism fades,” Tsakanikas said, predicting a rise to 28% – a tenth of a percentage point above the record high reached in September 2013.
Like democracy, accountability is a European orphan.
Who do you call on for €7 billion at short notice to tide over a country like Greece for a month? That was the dilemma euro-area policy makers faced in July as they raced to complete a bailout for Greece and prevent the country from defaulting on the ECB. With time against them, the European Commission’s financial mechanics hit upon a novel solution, without breaking any of the rules shielding taxpayers from losses. While financial markets were used to fund Greece’s bridge loan, the sole investor for the temporary injection was the euro area’s own firewall, according to two people familiar with the matter, who spoke on the condition of anonymity.
The European Stability Mechanism, at that point barred from lending directly to Greece, financed the EU cash advance through a private placement for the Greek bridge loan, the people said. Greece then paid back the short-term funding in August, once its €86 billion ESM bailout was approved. “It highlights just what a political animal the ESM is,” said Jacob Funk Kirkegaard of the Peterson Institute for International Economics in Washington. “That they don’t talk about it is probably because they don’t want to have a debate about just how flexible in practice the ESM is, because there may be other times in the future when people would like to call upon that flexibility to be used.”
When asked Tuesday about the bridge financing, the ESM press office said it doesn’t communicate pro-actively about its investment strategy. The decision to make the private placement to the bridge loan was in keeping with investment policies, which focus on capital preservation and require the fund to invest only in high-quality assets, the Luxembourg-based firewall said. “The proposal by the EC to invest in a short-term transaction in the name of the EU was seen as a good investment opportunity by the ESM investment and treasury department,” the ESM said. “The investment is fully compliant with the ESM existing investment guidelines.”
This could have a major effect globally.
Brazil’s sovereign rating was cut to junk by Standard & Poor’s, taking away the investment grade the country enjoyed for seven years, as President Dilma Rousseff’s struggles to shore up fiscal accounts amid a faltering economy. The country’s rating was reduced one step to BB+, with a negative outlook, S&P said in a statement after markets closed. Brazil’s largest U.S. exchange-traded fund tumbled 6.6% in late trading along with American depositary receipts for Petrobras, the state-controlled oil company. The downgrade, and S&P’s warning that another cut is possible, puts pressure on the economic team led by Finance Minister Joaquim Levy to win passage of measures that would shore up the country’s fiscal situation by cutting spending or raising taxes.
Rousseff has been unable to find support for her initiatives amid an investigation into corruption at the state-controlled oil company that allegedly occurred while she was its chairman, sending her popularity to a record low and generating calls for her impeachment. “The downgrade could be a wakeup call but the political situation is so bad that it’s difficult to resolve, so its a dark path ahead,” Daniel Weeks, the chief economist at Garde Asset Management, said from Sao Paulo. “Markets will take this as a negative, and it will probably drag down emerging markets at a global level.” Brazil’s government said in August it forecasts a fiscal deficit in 2016 of 30.5 billion reais ($7.9 billion), or about 0.5% of gross domestic product. That compares with a targeted surplus of 2% at the beginning of this year and a revised objective of 0.7% announced in July. The country’s gross debt as a percentage of its economy climbed to 65% in July from 51% at the end of 2011.
What Britain does to its own citizens.
At least 15,000 British children are growing up as “Skype kids” because an immigration income threshold does not allow both of their parents to live together in Britain, a children’s commissioner report has found. The research, by the Joint Council for the Welfare of Immigrants (JCWI) and Middlesex University, shows that thousands of British families have been affected by a Home Office minimum income threshold of £18,600 a year for sponsoring a foreign spouse to live in the UK, which was introduced in 2012. The report, Family Friendly?, says the introduction of the £18,600 threshold has resulted in separation for thousands of British families in which one parent is not entitled to live in the UK.
Most of the children – 79% in the survey – affected by the changes are themselves British citizens, and many have suffered distress and anxiety as a result of separation from a parent. The research confirms that the £18,600 minimum income threshold for a UK citizen to bring a foreign spouse or partner from outside Europe to live in Britain on a family visa would not be met by almost half of the adult population. “The threshold is too high and is discriminatory. British citizens who have lived and worked abroad and formed long-term relationships abroad are particularly penalised and find it very difficult to return to the UK,” says the report, published on Wednesday.
Anne Longfield, the children’s commissioner for England, said there was a wealth of evidence indicating that children were far more likely to thrive when raised by parents in a warm, stable and loving family environment. “I am therefore very concerned that the immigration rules introduced in July 2012 actively drive families apart, and leave British children able to communicate with one parent only via Skype,” said Longfield.
The route to chaos: Simple rules, complex behavior
The Critical Realist movement, developed by Tony Lawson at Cambridge University, argues against the use of mathematics in economics. I argue that their critique is directed at the abuse of mathematics by Neoclassical economists, rather than the proper use of mathematics per se. In this brief talk–where for some reason my webcam was as static as a Neoclassical model – I explain that my 1995 complex systems model of Minsky – led to a prediction from the properties of the model that could never have been made verbally–and which turned out to be accurate. It is also derived from a set of identities, so while it can be incomplete, it cannot be a mis-specification, as is the case with so many Neoclassical models.
Solid reporting job from American Statesman.
Gold first caught Ron Barbala’s eye in 2008. With the housing values plummeting and the stock market cratering, the Phoenix engineer felt betrayed by the economy, which increasingly he considered little more than a mirage. “The standard American method of investing, all of it”, he said. “I’d had it”. Desperate for something of value he literally could put his hands on, he began acquiring gold and silver bullion. “Its value is in its physicality”, Barbala said. “It just is.” Over the next several years, Barbala bought more than $100,000 worth of precious metals through a little-known downtown Austin company. Started in 1999, Bullion Direct began as an online virtual trading floor where thousands of customers could buy and sell precious metals to each other, with the company taking a cut of each sale.
Later, it began selling the metals to customers directly. It also stored the commodities for those who requested it such as Barbala with the glittering coins and bars kept safely in individual piles for each investor in an old bank vault in its Lavaca Street offices. At least that s what everyone thought. By the time auditors and lawyers got access to Bullion Direct s 14th-floor offices six weeks ago, there were only a handful of gold and silver coins in an office safe. A second vault it had recently rented held only slightly more. An estimated $30 million in cash, metal bullion and valuable coins, meanwhile, had vanished. The cumulative weight of the unaccounted for metal is the equivalent of dozens of standard-sized gold bullion bars and hundreds of silver ones. Also missing are an estimated 1,400 ounces of platinum and palladium.
In recent weeks, as thousands of investors in Texas and across the country have absorbed their bad fortune, there has been no shortage of theories where the precious commodities went — including whether they ever existed at all. The one person who knows for sure, company founder and owner Charles McAllister, recently moved from Wimberley to Alabama. Officials say that while he is being cooperative, many basic questions about the missing fortune remain unanswered.
“The war in Syria is a business in which the Italian government is participating and it is destroying millions of lives including people who are displaced, fleeing or dead.” “With more than 220 thousand victims, 3.5 million refugees and 12 million displaced people, of whom half are children, Syria is a country that no longer exists.”
For years, ltaly has been in the top ten countries in the world for manufacturing weapons. These are sold to countries at war, especially to Africa and the Middle East. Italy is the top European country selling weapons to Syria: since 2001, Syria purchased weapons under license from Europe to a value of €27,700,000. Of this, the value of weapons coming from our country is nearly €17,000,000. Meanwhile, the United States is arming and training the “moderate“ rebels and now ISIS fighters have rifles bearing the inscription: “Property of US Govt“. Someone’s playing games. The war in Syria is a business in which the Italian government is participating and it is destroying millions of lives including people who are displaced, fleeing or dead.
Does the government want to make a contribution to reducing the number of refugees coming from the countries at war? It has to immediately block the export of weapons to countries in the theatre of war and bring in a foreign policy that is not subject to the interests of the USA. Below is the first part of the reconstruction of Syria’s civil war with the responsibilities and the interests of the international players. In the last few days, the photo of little Aylan, who drowned in Turkey, has jolted our emotions and our consciences. And it has once more turned the spotlight onto a war that the world has forgotten. With more than 220 thousand victims, 3.5 million refugees and 12 million displaced people, of whom half are children, Syria is a country that no longer exists.
The NGOs on the ground are talking about a crisis that is worse than the second world war. We are not just looking at a simple theatre of war. Syria is not a new Kosovo or another Afghanistan, but a conflict that is wider and more complex, that is hosting scores of other micro-conflicts. It’s almost impossible to give a simple account of the last few years, but we have a moral duty to try to do so, so that we can understand the rights and wrongs of one of the worst wars of this century. In order to understand the causes that have facilitated the rise of “Islamic State” in Syria, we need to take a few steps back. At the end of 2011, it was the Syrian army that defeated the anti-government rebels, but at the beginning of January, other parallel and autonomous groups popped up.
Among these was the Al-Nusra Front that came into being on 23 January 21012. It was initially composed of members of the Iraqi branch of al Qaeda (Islamic State of Iraq) that was fighting the American presence in the country. It was the first time that there was the creation of a rebel cell clearly inspired by principles of radical Islam. The strategy of suicide attacks generally using car bombs, started off in the Al-Midan neighbourhood of Damascus on 6 January 2012 with the death of 26 people including many civilians. At the end of March 2012, the total deaths in Syria rose to 10,000 and the veil of hypocrisy fell on the rebels – the ones strongly supportred by the United States and the European Union.
Of the demonstrations out in the streets, there’s just a vague memory. Now there’s open warfare. It’s very violent and it’s between factions. In 2013, what many people had feared up until then, actually happened: the Syrian crisis went across the border with Iraq where the power vacuum left by the withdrawal of the USA troops, opened up the way to horrors that took us back to the previous decade. Armed men with their faces covered retook control of the cities of Fallujah and Ramadi, cities that had already experienced brutal urban warfare in 2004 and 2007. The militia with Abu Bakr al Baghdadi are the ones fighting under the flag of ISIL (Islamic State of Iraq and the Levant) or ISIS (Islamic State of Iraq and Syria).