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posted on 23 August 2016

Early Headlines: Asia Stocks Mixed, Banks' New Swaps Margins, Clinton's Health, Voter ID Laws And Fraud, Pound-Euro Parity?, China Goes Supply Side And More

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Early Bird Headlines 23 August 2016

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.




  • Emerging economies hope to get economic boost from G20 summit (China Daily) A record number of developing countries will participate in the summit for the first time in the G20's history, said Chinese Ambassador to Ethiopia La Yifan on Friday. A visible symbol of that is the BRICS summit is now routinely held on the sidelines of the G20 summit. Extensive representation is also expected from Africa.

  • Banks Sprint to Meet $493 Trillion Swaps Market Margin Rules (Bloomberg) The world's largest banks are racing to meet a U.S. and Japanese deadline next month when billions of dollars in new collateral requirements will begin to hit the over-the-counter derivatives market, even as new regulatory fault lines emerge. Firms are testing systems for exchanging collateral for the trades, signing new legal documents and pursuing regulatory approval for models that could help blunt the cost of compliance. The rules are taking effect in the U.S. and Japan on Sept. 1, while the European Union, Singapore, Hong Kong and Australia have announced delays.

  • Goldman says oil recovery fragile, keeps $45-$50/bbl forecast (CNBC) Goldman Sachs isn't getting too excited about the rally in oil. Crude oil prices have risen 15 percent since the start of August on speculation of a reduction in output by OPEC members as well the weakening of the greenback that has boosted demand for oil, which is traded internationally in dollars. Still, the investment bank reckons that the recovery remains fragile due to signs that disruptions in Nigeria, Iraq and Libya are easing.


  • Clinton Rejects Trump's Speculation That She's in Poor Health (Bloomberg) Democratic presidential nominee Hillary Clinton on Monday dismissed speculation that she's in poor health as part of an "alternative reality" that Republican rival Donald Trump and his supporters have created. Clinton said in Los Angeles during an appearance on ABC's "Jimmy Kimmel Live":

"I don't know why they are saying this. I think on the one hand it's part of the wacky strategy, just say all these crazy things and maybe you can get some people to believe you. On the other hand, it just absolutely makes no sense."

  • New Jersey Legislators Move to Reform Aggressive Student Loan Program (ProPublica) New Jersey lawmakers have announced a series of measures addressing student debt issues this week, including one bill aimed at reforming the state's controversial student loan program. The measure would require the state agency that administers the loan program to offer income-driven repayment for its struggling borrowers, bringing the loans closer in line with the federal government's loan program. Last month, ProPublica and the New York Times published an investigation into the program, which found that its loans come with onerous terms that can easily lead borrowers to financial ruin.

  • Four in Five Americans Support Voter ID Laws, Early Voting (Gallup) As partisan-fueled court battles over state voting laws are poised to shape the political landscape in 2016 and beyond, new Gallup research shows four in five Americans support both early voting and voter ID laws. A smaller majority of 63% support automatic voter registration. See also next article.

  • A comprehensive investigation of voter impersonation finds 31 credible incidents out of one billion ballots cast (The Washington Post) And some of those were not even prosecuted in court. This post is by Justin Levitt, a professor at the Loyola Law School, Los Angeles and an expert in constitutional law and the law of democracy, with a particular focus on election administration and redistricting. He found that the type of election fraud voter ID laws are aimed at is virtually non-existant. There are more common types of election fraud which voter ID laws do nothing to address: Multiple registrations, casting multiple votes, vote buying and ballot box stuffing are a few. Prof. Levitt suggests that the number of votes "affirmatively rejected for lack of ID" is much less than the number of voters who avoided the polls because of ID questions. He also points out that in just four states that have held just a few elections under the harshest ID laws, more than 3,000 votes have been rejected but then no follow-up was done to determine how many of the more than 3,000 would actually have been fraudulent.


  • Two top asset managers to drop staff bonuses (Financial Times) Two prominent UK asset managers have decided to stop paying executive bonuses, as pressure mounts on the investment industry to rethink the way it rewards top employees. This is seen as an effort to reduce "short-termism" in investment management.

  • Pound-euro parity HSBC predicts already real for travellers (The BusinessTimes) The official exchange rate is now about 0.86 pound for one euro, but travellers making currency exchanges in airports are having to pay closer to a full pound to get a euro. Airport currency exchanges are notorious for large exchange rate cuts but this may be are harbinger of things to come for the official exchange rate. A cheaper pound would benefit Britain's exporters but increase the domestic cost of living. Daragh Maher, head of U.S. currency strategy at HSBC, who moved to New York in 2015 after 16 years in London commented:

"The parity level would make the UK more attractive to foreign investors. [At the same time, a continued slide in sterling] "would also make it more expensive for people to come and visit me [in the U.S.]."


  • Renault emissions discrepancy omitted from inquiry report (The Irish Times) A French government report omitted significant details of how Renault's diesel cars were able to emit fewer deadly gasses when subject to official emissions testing, members of the state inquiry have said. The inquiry's report, published last month, found some models emitted nitrogen oxides - a cause of respiratory diseases linked to early death - at levels nine to 11 times higher than EU limits. But three of the commission's 17 members said the published report did not include the full details of their findings, including the fact that a NOx "trap" in the Renault Captur went into overdrive when the sport utility vehicle was prepared for emissions testing but not during normal driving conditions. The independent commission members fear government may be too lenient due to 20% stake in carmaker.


  • New RBI governor Urjit Patel's arduous task: getting banks to lower rates (Business Standard) One of the biggest challenges for India's incoming central bank chief is a problem he and his predecessor have long grappled with - how to spur stubborn state banks to cut borrowing costs more aggressively to boost the economy. Under Raghuram Rajan, the Reserve Bank of India (RBI) has cut lending rates by 150 basis points (bps) (1.5%) since early last year, but banks have only lowered their rates by roughly half that and say they can only manage another 10-15 bps more in coming months.

South Korea

  • Central bank, regulator at odds over household debt (The Korea Herald) Contrary to the International Monetary Fund's assessment that South Korea's household debt is manageable in part due to increased regulations, the central bank sees the rapid growth of borrowings as a serious problem that could further undermine Korea's economic structure. In direct conflict with the Financial Services Commission, which has provided industry guidelines to curb borrowings, the Bank of Korea suggested that the country would need additional measures as the government's regulatory guidelines does not seem to be enough to contain the situation.


  • Former China boom town learns hard lessons about service economy (Reuters) At the section of the Great Wall of China that runs through Yulin, tour guide Gao Jing says she tried to learn English in expectation of the increased number of overseas visitors the city planned to attract as part of its economic transformation. But the international tourists haven't come to Yulin, once a coal, oil and natural gas boom town in the northwestern province of Shaanxi, and in their absence she has forgotten her English. Yulin, which was to be a poster child of China's rebalancing economy, has become instead an example the difficulties the economic change can bring.

  • China eyes broad business cost cuts to underpin growth (Reuters) China is going to the 'supply side' to attempt to deal with their economic slowdown. China's cabinet has unveiled detailed plans to lower business costs in the next several years, the latest steps to cushion an economic slowdown in the world's second-largest economy. Authorities aim to cut financing and labor costs, energy and logistics costs as well as reduce the annual tax burden for firms over the next few years, according to guidance published on a government website on Monday. China is looking to achieve "'a reasonable decline' in the overall cost for firms in the real economy in about three years", the cabinet said, adding that the measures will help "effectively cope with the downward pressure on the economy".


  • Australia continues to be shamefully silent on Indonesia's human rights abuses (The Conversation) Here's the glaring omission in Australian Attorney-General George Brandis' list of issues raised with Indonesian President Joko "Jokowi" Widodo in Jakarta this month: human rights. Brandis touted their discussion on "counter-terrorism issues" and "information sharing between our law enforcement and intelligence agencies". Human rights either wasn't on the agenda or didn't rate mention in Brandis' trip report. That omission was more than just a failure by Australia's top judicial official to voice Australia's support for universal rights and freedoms. It is a betrayal of Indonesian human rights victims in dire need of international support.

New Zealand

  • New Zealand is letting economics rule its environmental policies (The Conversation) What is needed, according to the author, is a government that is willing to go beyond requiring that development minimises harm to requiring that it does actual good. What is happening with New Zealand's current policies is a continued trading down of ecosystem assets in order to boost economic ones. New Zealand's economically driven approach to ecological decline risks entrenching environmental problems rather than solving them.

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