Early Headlines: End of Nightmare on Elm Street?, Latest from Greece, Global PMI Trend is Down, China Risk to Global Economy, India Manufacturing Growth Less Than Expected and More

Early Bird Headlines 11 July 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

• Global growth threat posed by China’s structural economic shift (South China Morning Post) Structural shifts in international trade flows and industrial activity have likely turned China into the single biggest threat to global economic stability. Twin reports within 24 hours of each other from two of the world’s biggest financial institutions – banking giant HSBC and global money manager Standard Life Investments – point to the mainland as their common denominator of risk to world economic well-being.
• Global Investors: You Should Be Paying Attention to this Economic Indicator (Frank Holmes, U.S. Global Investors) A key economic trend indicator is the Global Manufacturing PMI (Purchasing Managers’ Index). It is still above 50 (the demarcation between expansion and contraction) but has trended lower from a peak above 53 1Q 2014 to less than 51.5 today.

U.S.

• A rundown of just how badly the Fair Housing Act has failed (The Washington Post) This article suggests that poor results in health, education and economic well-being for minorities are all related to failure to enforce the nearly 50-year old Fair Housing Act of 1965.
• Are American Elm Trees On The Rebound? (Adirondack Almanack) Ever since the fungus Ophiostoma ulmi, which causes Dutch elm disease arrived from Europe on a shipment of logs in 1930, the American Elm has been progressively decimated. It is possible that research at Dartmouth College has developed new hybrids of the American Elm which are resistant to the fungus.
• 10 States Reach New Price Peaks (Realtor Mag) Home prices in the following states are now at record highs:
  1. Alaska
  2. Colorado
  3. Iowa
  4. Nebraska
  5. New York
  6. North Carolina
  7. Oklahoma
  8. Tennessee
  9. Texas
  10. Vermont

UK

• UK income tax regime has become more progressive since 2000 (app.ft.com) Income taxes have declined for the lowest income levels and risen for the highest since the turn of the century.

Greece

• Greece Faces Showdown With Creditors as Lawmakers Back Bailout (Bloomberg) Greek Prime Minister Alexis Tsipra won overwhelming support for the package of spending cuts, pension savings and tax increases with a majority of 251 votes in the 300-seat parliament after securing backing from opposition parties. However, it cost him within his own party as a more than a dozen members of his Coalition of the Radical Left, or Syriza, party refused to back the plan with some of them denouncing the harsh austerity measures it prescribes. Sunday Tsipras and Euro-zone finance ministers will discuss the Greek plan before a meeting of European Union leaders Sunday.
• Path to Grexit tragedy paved by political incompetence (Barry Eichengreen, Voxeu) BE has contributed to GEI. Prof. Eichengreen faults the Greek government for errors in the negotiations, especially at the end, but he faults the Troika Institution even more. The three institutions (European Commission, the ECB and the IMF) opposed debt restructuring in 2010 when the crisis still could have been resolved at low cost. They continued to resist it in 2015, when a debt write-down was the obvious concession to Mr Tsipras and Company. The cost would have been small. Pretending instead that Greece’s debts could be repaid hardly enhanced their credibility. And in the end this led to an even higher cost which will eventually be realized.

Indonesia

• Report: Indonesian pilots may have been radicalized by ISIS (CNN) Authorities in Australia are concerned about the potential radicalization of two Indonesian commercial pilots, according to an intelligence report obtained by the news website The Intercept.

India

• India’s Factory Output Misses Estimates as Consumer Goods Fall (Bloomberg) India’s manufacturing sector is growing, just not as fast as economists had predicted. India’s factory output rose less than economists estimated, boosting pressure on policy makers to revive investment in Asia’s third-largest economy. Industrial production rose 2.7% in May from a year earlier after a revised 3.4% gain in April, the Central Statistical Office said in a statement on Friday. That compares with a 4% percent rise predicted by the median of 32 estimates in a Bloomberg survey of economists.

China

• China stabilized its markets by forcing companies and their employees to buy shares (Quartz) China’s market rout ended July 9, after government regulators ordered listed companies, state-owned enterprises, and their employees to buy stocks. Another ‘whatever it takes’ moment.
• China stocks’ wild ride not a 1929 moment, say top economists (Sydney Morning Herald) Economists say China’s economy is “largely quarantined from sharemarket fluctuations“. Below is a graphic suggesting a comparison:

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