Early Headlines: Kurds Limit Erdogan Power, New Snowden Documents, U.S. Inflation Pressures, Korea Income Growth Surges, IMF Confusion, Migration Development Bank and More

Early Bird Headlines 05 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.

Global

• IMF Economists: Stop Obsessing Over Debt (The Wall Street Journal) In a white paper published by the IMF Tuesday, top economists from the IMF argue that, rather than being obsessed by debt, some countries should spur growth by not paying down their debt. This is totally misaligned with at least some IMF management – see next article.
• IMF calls for simpler EU budget rules, focus on debt (The Business Times) The head of the IMF’s fiscal department Vitor Gaspar told a seminar organised by the European Political Strategy Centre that the European Union’s rules were overlapping, difficult to explain and that they diverted attention from debt. Econintersect: What does IMF stand for again? Is it Idiotic Monetary Fools?
  
• It’s A Global Bond Market Rout! (Michael Haltman) MH contributes to GEI. Michael says:

… we could definitely be witnessing the beginnings of a move down the proverbial slippery slope, particularly given the sensitive state of our economy.

‘Unless of course we aren’t, particularly if central banks step in once again to try and save the day while kicking the proverbial can down the road.

• Toward a Migration Development Bank for Transition Economies (Huffington Post) Labor migration and remittances may bring positive economic effects to developing countries. This is the case particularly in countries like those in Eastern Europe and Former Soviet Union members where remittances constitute high shares of foreign-currency revenues and GDP. There is nevertheless clear evidence of an untapped development potential associated with those flows of labor and remittances, especially because of a lack of appropriate institutions. This author is in favor of a creation of a migration development bank as part of efforts to fill such a gap. See also One in Nine People Go Hungry. Can Remittances be the Remedy? by Florica Mois, GEI Associate.

U.S.

• New Snowden Documents Reveal Secret Memos Expanding Spying (ProPublica) The Obama administration has stepped up the NSA’s warrantless surveillance program on U.S. soil to search for signs of hacking.
• Weak U.S. productivity, rising labor costs stir inflation concern (Reuters) U.S. nonfarm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labor-related production costs, a trend that could ignite inflation if sustained. Other data on Thursday showed the labor market tightening, with first-time applications for unemployment aid falling last week and the number of people on benefit rolls hitting the lowest level since 2000. Reuters says the reports are likely keep the Federal Reserve on track to raise interest rates later this year.

Greece

• Barclays CEO Bets on Potential 11th Hour Solution for Greece (Bloomberg) Barclays Chief Executive Officer Antony Jenkins said he expects a solution to the standoff between Greece and international creditors, which risks ousting the country from the eurozone.
  

Turkey

• Erdogan’s Kurdish Chickens Are Coming Home to Roost (Foreign Policy) The president’s peace process with his country’s rebellious Kurds could be the very thing that stops his bid for total power. A coalition aligned around the pro-Kurdish Peoples’ Democratic Party (HDP) in the upcoming parliamentary vote could deny Erdogan’s Justice and Development Party (AKP) the 330 seats it needs to control the government.
  

Russia

• U.S. Aims to Hold the Line on Russian Sanctions at G-7 Summit (Foreign Policy) At the G-7 summit starting Sunday in Germany, as heavy fighting rages on in eastern Ukraine, the United States plans to urge European allies to extend sanctions against Moscow as continued punishment for fueling pro-Russian separatists in their year-long battle against Kiev’s forces.
  

India

• FDI inflow dips 40% in March (Business Standard) Foreign direct investment (FDI) was lower in March but increased 27% over the entire fiscal year. During the entire financial year, India received the maximum FDI from Mauritius ($9.03 billion), followed by Singapore ($6.74 billion), the Netherlands ($3.43 billion), Japan ($2.08 billion) and the US ($1.82 billion).
  

South Korea

• Korea’s growth hits 5-year high (The Korea Herald) South Korea’s gross national income (GNI) posted its highest growth in more than five years during the first quarter on the back of improved trade terms from then-low oil import prices. Though the nation’s first-quarter GDP growth stood at 0.8% over the previous quarter, its GNI – a barometer for consumers’ purchasing power – increased by 4.2%.
  

China

• Col. Liu and Dr. Pillsbury Have a Dream: The Inevitable Showdown Between China and America (Foreign Policy) The authors of two books about conflict between China and the U.S. have become the best of friends. Liu Mingfu, a retired colonel in China’s People’s Liberation Army and author of The China Dream, a book about how China can displace the United States to become the world’s most powerful country. Liu suggests that Beijing should pour resources into its military, so that the United States won’t dare meddle with China in the seas off of its coast. Michael Pillsbury, a longtime China strategist at the Pentagon has written, The Hundred-Year Marathon, which argues that China has a “secret strategy to replace America as the global superpower” by 2049. Pillsbury told FP that China “is essentially outsmarting us in this game of thrones,” and that as a result, the United States needs a strategy to manage China’s rise.
• China may free up bank deposit rates soon: PBOC official (China Daily) China’s central bank is likely to remove the ceiling on bank deposit rates soon, instead of raising the cap again. The move would mark a landmark reform towards allowing market forces to determine the cost of credit to help rebalance the world’s second-largest economy.
• China Said to Probe a Relative of Former Central Bank Governor (Bloomberg) Chinese authorities are holding for questioning Che Feng, son-in-law of former central bank Governor Dai Xianglong, as part of a probe into economic and financial matters (aka corruption).

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