Written by Econintersect
Early Bird Headlines 05 January 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.
Global
Asia shares steady as uneasy calm settles over China (Reuters) Asian share markets struggled to stay positive on Tuesday as a semblance of calm returned to Chinese stocks, though more wild swings appeared likely given the uncertain global outlook for economic growth and interest rates. After plunging almost 7% on Monday, the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen eked out a 0.8% gain in choppy trade. Shares in Shanghai .SSEC veered either side of flat and were last up 0.4%. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS recouped early losses to be all but flat. E-Mini futures for the U.S. S&P 500 ESc1 also hinted at stabilization with a rise of 0.2%.
10 Conflicts to Watch in 2016 (Foreign Policy) From Syria to the South China Sea, the conflicts and crises the world will face in the coming year. Pulling together a list of the wars most in need of international attention and support in 2016 is challenging for all the wrong reasons. For 20 years after the end of the Cold War, deadly conflict was in decline. Fewer wars were killing fewer people the world over. Five years ago, however, that positive trend went into reverse, and each year since has seen more conflict, more victims, and more people displaced.
U.S.
Oops! The Feds Screwed Up 10 Years of Housing Data (Fiscal Times) Economists who have been studying housing data published monthly by the U.S. Census Bureau now have some work ahead of them. How significant are the errors just corrected that went back to 2004? The largest of these errors have occurred most recently and those were understating residential construction by 3% to 3.5% per month for 2014 and 2015. Earlier errors were smaller (on average) and were both positive and negative.
Signs of Mass Extinction Behind a New Jersey Store (The New York Times, MSN News) About 66 million years ago, the oceans were higher, and what is now Mantua Township in southern New Jersey was a shallow sea, 10 to 15 miles offshore from an ancient mountain range that rose from the water. Today there is a quarry pit here that was once the sea bottom, and one particular layer about 40 feet beneath the surface contains a bounty of fossils. Kenneth J. Lacovara, a professor of paleontology and geology at nearby Rowan University, calls the layer a “mass death assemblage“. He believes it may be the only known collection of animal remains that dates from the mass extinction itself.
EU
European Stocks Suffer Worst Start To Year Ever (Zero Hedge) Led by a 4.3% collapse in Germany’s DAX index, European Stocks plunged 2.5% today which is the worst start to a year ever. European credit markets spiked higher in a risk off move
UK
UK house prices: Sales to first time buyers rise by almost a quarter in 2015 as deposit costs drop (City A.M.) A breath of life for the stretched UK housing market which has been seeing prices rise at unsustainable rates for some time? First-time buyer sales rose at their fastest rate in November since August 2007 as the cost of owning a first home continued to fall. An estimated 31,300 first-time purchases were completed in November, up 23.7% on the same month last year, according to figures released today by estate agents Your Move and Reeds Rains. The average purchase price of a first home dropped by 4.7% over the year to £148,385, the first annual fall since March 2013. Deposit costs also declined by 4.2% annually to £24,598, taking the average loan to value ratio for first-time buyers to 83.4%.
Germany
Volkswagen Could Have to Pay $90 billion for Its Emissions Cheat (Foreign Policy) Volkswagen, the iconic German carmaker that installed emissions-cheats on some 11 million vehicles, has been in U.S. crosshairs for months. On Monday, the Justice Department finally pulled the trigger. The move came in a federal court in Detroit, where prosecutors acting on behalf of the Environmental Protection Agency accused Volkswagen of a systematic effort to evade the environmental regulations enshrined in the 1963 Clean Air Act (the law has been subsequently amended). In a statement, the government alleged “that nearly 600,000 diesel engine vehicles had illegal defeat devices installed that impair their emission control systems and cause emissions to exceed EPA’s standards, resulting in harmful air pollution.” If the auto maker is found guilty, the Justice Department wants Volkswagen to pay as much as $37,500 for every vehicle that violated the law. That means Volkswagen could have to pay out more than $90 billion, far greater than initial estimates of $18 billion in penalties. That would be almost nine years of 2014 level profits for VW. See Volkswagen Group (Wikipedia)
Turkey
Turkish deputy PM says inflation main economic challenge in 2016 (Hurriyet Daily News) Turkey’s main economic challenge this year will be battling inflation amid a continuing increase in the rate, according to Turkish Deputy Prime Minister Mehmet Şimşek. Consumer prices rose 8.81% year-on-year in December 2015, above estimates, data from the Turkish Statistics Institute (TÜİK) showed on Jan. 4. On the 12-month basis, the average rate was 7.67% in December 2015. According to TÜİK data, the largest increase was seen in food and non-alcoholic beverages last month with a 1.24 percent hike. The steepest drop was seen in clothing and footwear with a decrease of around 2%. Şimşek said in a televised interview with NTV on Jan. 4:
“The general trend in the inflation rate is not at desired levels and our inflation performance is relatively poorer than our general macroeconomic performance…We need to maintain solid steps in the fight against the rising inflation rate in 2016. This target can be achieved.”
Turkey’s exports drop 8.7 percent in 2015: Association (Hurriyet Daily News) Turkey’s exports decreased by around 8.7% to $143.7 billion in 2015 compared to 2014 due to fluctuations in parity, a plunge in commodity prices and escalating geopolitical risks, according to data from the Exporters’ Assembly of Turkey (TİM). The developments caused around $30 billion in losses in Turkey’s exports in 2015, Economy Minister Mustafa Elitaş said at a meeting on Jan. 4 to release the TİM data, while adding that the government would retain its $150 billion target in 2016 even if there is no recovery from the problems.
India
Why Delhi is the world’s most polluted city – and what can be done about it (The Conversation) The Indian capital has the dubious accolade of being regularly-cited as the most polluted city in the world, with air pollution causing thousands of excess deaths each year. While it might be easy to blame this on increased vehicle use, dirty industries or a growing population, the truth is that Delhi is a toxic pollutant punchbowl with lots of different ingredients.
China
China establishes Rocket Force and Strategic Support Force (Ministry of National Defense, The People’s Republic of China) Hat tip to Rob Carter. China has inaugurated three new military forces: a general command for the army, the People’s Liberation Army (PLA) Strategic Support Force, and the PLA Rocket Force. The latter, which replaces the Second Artillery Force, will be in charge of China’s nuclear arsenal. From the official press release:
President Xi Jinping pointed out that the establishment of the PLA Army’s leading organ, the PLA Rocket Force and the PLA Strategic Support Force is an important decision made by the CPC Central Committee and the CMC to realize the Chinese Dream and the Dream of a Strong Military, and a strategic initiative to build a modern military power system with Chinese characteristics.
Xi said that the PLA Army should optimize its power structure and troop formation, speed up the Army’s transformation from the regional defensive type to the full-spectrum combat type, so as to build a powerful, modern and new-type Army.
Taiwan
Taiwan needs to prepare for TPP expansion to ASEAN members: minister (Focus Taiwan) Taiwan needs to be ready if all members of the Association of Southeast Asian Nations (ASEAN) join the U.S.-led Trans-Pacific Partnership (TPP), the country’s economic affairs minister said Monday. Economics Minister John Deng (鄧振中) told the press Monday that ASEAN has been Taiwan’s important trade market and investment destination, but if more ASEAN members join the TPP:
” … it is hard to tell in the short term if this will hurt Taiwan.”
Brazil
Brazil’s trade surplus hits December record (Financial Times) Brazil has reported its largest December trade surplus on record as economic turmoil curbs demand for imports. The trade ministry said on Monday that Brazil rebounded from a deficit of $4 billion in 2014 to a trade surplus of $19.7 billion last year. In December, the surplus reached $6.2 billion – the largest for that month since the data series began in 1980. Analysts are forecasting a surplus of $40.7 billion in 2016. The reason is a deepening recession that threatens to build into a depression as experienced in the 1930s. See next article.
Brazil’s finances worsen in November (Financial Times) In a stark illustration of the challenges facing Brazil’s new finance minister, Nelson Barbosa, the government’s primary fiscal deficit – the budget balance before interest payments – during the month rose to R$19.6bn, the central bank said. This brought the 12-month primary fiscal deficit as of November to 0.89% of gross domestic product compared with 0.7% a month earlier. With the addition of interest payments, the level was 9.3%. Mr Barbosa has pledged to continue the fiscal consolidation but to also tackle a recession that is threatening to become the country`s worst since the Great Depression of the 1930s. Econintersect: Fiscal consolidation in a deepening depression? What could possibly go wrong?
Venezuela
Venezuela sets scene for power struggle country can ill afford (Financial Times) Incoming lawmakers of the conservative Mesa de la Unidad Democrfltica (MUD) coalition – which won a “supermajority” in December’s legislative elections in Latin America’s most polarised nation – are on edge in a country gripped by its worst ever political, social and economic crisis. The crisis threatens to escalate because Socialst President Hugo Maduro is not scheduled to face presidential elections until 2018. He is not giving up power lightly – setting the stage for a “final battle” between the opposing camps this year. Venezuela has been hardest hit of all major oil producers by the collapse in prices. See Venezuela: ‘Terrorised by oil price drop’ (Financial Times)
Photo from the Street. Forwarded by Roger Erickson.
