Early Headlines: US Housing Unaffordable, Canada to End Fossil Fuels, China Peak Emissions, HSBC Job Cuts, India Strikes at Crony Capitalism and More
Early Bird Headlines 09 June 2015
Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
- 'Interest Rates: Natural or Artificial?' (Mark Thoma, Economist's View) Thoma summarizes what Antonio Fatás has written, in which he concludes that, if interest rates are low everywhere in the world and inflation is low everywhere in the world then "[t]hese two facts are very difficult to square with a world where the US federal reserve is keeping interest rates artificially low for many years."
- America's Housing Problem: Buying And Renting Are Both Unaffordable (Zero Hedge) Basically a large excerpt from The Wall Street Journal: New Housing Headwind Looms as Fewer Renters Can Afford to Own. Zero Hedge starts with a brief commentary with links to previous articles they have posted on this topic and then follows up with a series of data points (some we have seen in previous WWRTs and some data new to us) that relate to America's crippled housing market. Econintersect will have more on this in the future, including a GEI Analysis article by housing expert Keith Jurow this week.
- Thomas Piketty: "We need to reform tax and social background. No this constant improvisation" (Liberation - in French) Hat tip to Branko Milanovic. Piketty says the EU has chosen to follow a path similar to that of Great Britain when it took a century of austerity to pay down the Napoleonic Wars debt while the citizenry suffered in miserable poverty. He says that the current EU leaders should know better:
France and Germany suffer from historical amnesia: in 1945, both countries had more than 200% of GDP public debt, and have never returned. They drowned in inflation and debt cancellation. This is what has allowed them to invest in reconstruction, infrastructure and growth.
- Eurozone sentiment weakens further in June: Sentix (The Business Times) Sentiment in the eurozone weakened further in June as the Greek debt crisis and a slightly firmer single currency prompted investors to pare back their expectations for the economy.
- HSBC to axe up to 25,000 jobs as it slashes costs by $5bn (The Telegraph) Britain's biggest bank outlining plans to improve profitability that include reducing its UK headcount by up to 8,000.
- Juncker vents fury over Greek bailout talks at G7 summit (The Guardian) Irate European commission president accuses Greek PM of undermining negotiations. Econintersect: Perhaps Jean-Claude should have taken a course in game theory.
- Prime Minister Alexis Tsipras’ article in Le Monde newspaper: Europe at crossroads (Hellenic Republic press release) Intransigence is in the eye of the beholder.
- Greece is not Ireland – and it’s not just about the economics (Paul Mason, channel4.com)
If the IMF's negotiators wanted to give the impression their aim is to destroy most of the small businesses that keep Greek capitalism alive, and with it, consent for democracy, they are doing a brilliant job. And that's what has begun to undermine the faith of those identified as moderate and western-educated in the Syriza leadership. The IMF now seems to be not only acting as if ignorant of its own economics department, but as if Greek society did not exist.
- Iraq Struggles to Revive Military for Coming Battles With Islamic State (The Wall Street Journal) There is widespread distrust of their leadership among troops. And the military command is still trying to recover from the loss of $27 billion in military equipment to ISIS around Mosul last year.
- Reserve Bank of India announces new measures on debt restructuring by lenders (The Economic Times) The RBI (Reserve Bank of India) has struck a dagger into the heart of crony capitalism.
The Reserve Bank of India has provided banks, which are struggling to cope with a mountain of bad debt, new ammunition to deal with defaulting companies. On Monday, the banking regulator issued new norms for Strategic Debt Conversion (SDR) which will give lenders the right to convert their outstanding loans into a majority equity stake if the borrower fails to meet conditions stipulated under the restructuring package. Allowing loan conversion will now be a precondition for all debt restructuring deals.
- China’s electricity emissions may have already peaked, as coal imports plunge nearly 40% (Climate Spectator) See also China’s “new normal”: structural change, better growth, and peak emissions (London School of Economics).
- Canada pledges to end fossil-fuel use by 2100, cut emissions by 2050 (The Globe and Mail) Hat tip to Newsana. This is actually a pledge taken by all the G-7. The pledge also includes cuts in fossil fuels by up to 70% by 2050. Econintersect: We think economic forces are now underway that make these pledges rather hollow; Fossil fuels will be priced out of the energy market before these deadlines.
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