Early Headlines: Cameron to Pledge No New Taxes, Pope on Climate Change, British Economy Slumps, Nepal News and More

Early Bird Headlines 29 April 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

• Pope to weigh in on climate change action (Financial Times) An encyclical to be published in June is expected to weigh in heavily in support of action being needed to address environmental and climate change issues. An indication of this is an attack on fossil fuels launched by a senior Vatican official this week.
• Negative interest rates put world on course for biggest mass default in history (The Telegraph) Hat tip to John O’Donnell. More than €2 trillion-worth of eurozone government bonds trade on a negative interest rate. It’s a bubble that is bound to end badly, according to this author. But why does a collapse in bond prices lead to default? Is it because issuers will not be able to afford higher interest rates when debt is rolled over after the collapse? See also article about China QE below.

U.S.

• Obama: We’re All for the Asian Infrastructure Investment Bank (The Wall Street Journal) The U.S. was dealt an embarrassing political blow when the U.K., Germany, France and a host of other Western nations snubbed requests by Washington officials to sit out membership in the AIIB amid questions over the new institution’s standards. Tuesday Mr. Obama said that the U.S. never opposed a new China-led infrastructure bank, but wanted clarification on standards for financial, social and environmental safeguards. White House and Treasury Department officials say the new bank could help address a dearth of infrastructure financing needed in the coming years, especially in Asia.
• GOP, Pentagon tussle over East Coast shield (Politico) Hat tip to Roger Erickson, who says this is another entry in “couldn’t make this stuff up” database. The authors say It’s shaping up to be one of the most partisan disputes in the Armed Services Committees. The Pentagon has repeatedly said it doesn’t need and cannot afford a third anti-missile battery on American territory to defend against a possible attack from North Korea or Iran. But the GOP is after the gravy. Econintersect: Couldn’t they spend the money on infrastructure? Or would that give too much money to folks who would vote democratic?
• What led to the Baltimore riots? (The Conversation) Better handling of peaceful protests at the death of Freddie Gray might have prevented the riots.

UK

• UK economic growth slows to 0.3% (BBC News) The rate of economic growth halved in the three months to the end of March, official figures show, marking the slowest quarterly growth for two years. The annualized rate is 1.2% growth. However, the slowdown comes at a particularly damaging time for the incumbent Conservative government which has been running on the strength of the economy. The election is less than 2 weeks away.
  
• Cameron pledge to ban tax rises until 2020 (Financial Times) Will the pledge expected from Cameron today becomes another “read my lips” moment?
• Is Brexit a good idea? Lessons from Norway on the advantages of EU membership (The Conversation)
  

China

• Shanghai equities roar as China floats QE-lite (The Telegraph) The central bank is acting as a lender-of-last-resort for debt-strapped local governments struggling to sell new bonds on the open market. China is drafting plans for bond purchases to boost liquidity and shore up the country’s $2.6 trillion edifice of local government debt, becoming last of the world’s big economic powers to resort to quantitative easing. Econintersect: This is essentially removing the local government debt from the economy because QE is Debt Cancellation.
• The bitter medicine China will be forced to swallow (China Spectator) China holds the distinction of being the only country, possibly in human history, to sustain annual GDP growth of more than 6% for more than 32 years. The author says the average of other high growth spurts was a duration of 9 years. China’s transition out of this exceptional period will involve some fundamental changes in the county’s soco-economic traditions, some of which are discussed in this article , as well as here and here, for those who want to dig further.

Australia

• Who will pay the bill if coal power stations close? (Climate Spectator) Here is the old question of how to pay for accumulated deferred costs for the vast amount of toxic pollution accumulated while the coal burning power companies made their money without accounting for the future costs. Now a large oversupply of power generating capacity in Australia and the advent of price competitive (and cleaner) natural gas is about to bring the clean-up cost question into full view. Econintersect: The problem will not get any easier as lower cost solar displaces all fossil fuels (coal or gas) to a significant extent. After all, few places on earth have a better location for solar electricity than Australia. Will Australians be charged more for their solar electricity to pay for the clean-up of the abandoned systems?
  

Nepal

• The Everest Airlift (Outside Magazine) There were mountaineers on other 8,000 meter peaks besides Everest and some were closer to the epicenter. Reports are now coming in of devastating avalanches on these peaks and into the narrow valleys below. It is still not known how many mountaineers are still unaccounted for on these other peaks but reports from those that have been heard from include accounts of villages that disappeared in a minute’s crush of snow, ice and rock flung down from the heights. Many fatalities have undoubtedly occurred and bodies may never be found.
• Nepal earthquake: Relief starts reaching remote villages (BBC News) The official death toll now exceeds 5,000 as help has begun to reach a few remote regions of Nepal. Many people remain in desperate need of food and water.
• Big Aftershocks In Nepal Could Persist For Years (NPR) So far, there have been more than a dozen quakes of magnitude 5 or higher, and another two dozen between magnitude 4.5 and 5. But geologists say that there is a chance that many quakes could exceed 6 or even 6.7 which was the largest the day after the main tremor. There is a 1-2% chance of a quake magnitude 8.0% or larger in the next year or two, bigger than the original one.
  

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