Early Headlines: China PMIs Weaken Further, India Growth Slows, U.S. Public Sector Corruption, Americans “Angry” With Government, Australia Nears World Growth Record And More

Written by John Lounsbury

Early Bird Headlines 01 September 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

• Something historic is happening with hurricanes in the Pacific Ocean – and it could mean trouble (Business Insider) This is the first time three Category 4 storms have been seen in the central and eastern Pacific Ocean at one time, according to The Weather Channel. Category 4 hurricanes have wind speeds anywhere from 130 to 156 mph. Haaii is seen as tiny dots to the left of the center hurricane in the satellite image below. See the weekly global weather and climate report from GEI just published.

• Paul Mason’s Postcapitalism: The left’s unwitting conversion to neoliberal economics (City A.M.) A new book claims the left has sold out and makes a “karaoke leftie assumption that those who believe in smaller government have ignoble ulterior motives“. The theme of the book “Postcapitalism” by Paul Mason is that the new “sharing” or “gig” economy exemplified by Uber, Airnb and peer-to-peer lending, represents an end to the decline of the old left. But the author of this article (Ryan Bourne, head of public policy at the Institute of Economic Affairs) thinks Mason completely misses the point completely and sees the new economy of simply an extension of neo-liberalism and is not a new breath of life for the left.

U.S.

• American Voters Dissatisfied, Angry, Distrustful, Quinnipiac University National Poll Finds; Wide Support For College Tuition Assistance (Quinnipiac University) A total of 71 percent of American voters are “dissatisfied” with the way things are going in the nation today, including 41 percent who are “very dissatisfied,” according to a Quinnipiac University National poll released today. Only 2 percent are “very satisfied,” with 26 percent “somewhat satisfied.” 27% are angry with Washington and another 22% are dissatisfied; 21% are satisfied but not enthusiastic while only 2% are enthusiastic.

• Chart: Depressed energy prices wrecking havoc in Texas manufacturing sector (Walter Kurtz, Sober Look, Twitter)

Chart: Depressed energy prices wrecking havoc in Texas manufacturing sector – pic.twitter.com/J7NrSSwr7k

– SoberLook.com (@SoberLook) September 1, 2015

• Forest Service Official Who Let Nestle Drain California Water Now Works for Them (Anti Media) Hat tip to Doomsted Diner via Twitter. Revolving door corruption permeates every level of government. An ongoing investigation by The Desert Sun into Nestle’s contentious bottled water operations in drought-stricken California first disclosed that the company’s permit to draw water had a rather astonishing expiration date that occurred over a quarter century ago, in 1988. Forest Service officials shirked their duty to review the company’s long-expired permit by conducting numerous meetings about what was needed to initiate necessary procedures – but never once followed through with a single proposition to completion. And a key Forest Service official involved in the non-action retired from the Service in 2005 and has worked for Nestle since. See next article for more corruption.

• CalPERS Chief Investment Officer Defends Tax Abuse as Investor Benefit (Yves Smith, Naked Capitalism) YS has contributed to GEI. She reports here that CalPERS Chief Investment Officer, Ted Eliopoulos, “made statements to the Investment Committee that are demonstrably false“. See also next article. She writes here (it’s complicated, go to the link for more details):

Eliopoulos depicted a tax device widely used by general partners as virtuous by aligning the economic interests of the general partners with the limited partners, when it does nothing of the kind. Even worse, he failed to mention that the IRS has recently proposed rules to end this tax abuse.

• Senior Private Equity Officers at CalPERS Do Not Understand How They Guarantee That Private Equity General Partners Get Rich (Yves Smith, Naked Capitalism) YS has contributed to GEI. The California pension system is “victimized” by its poor management arising from incompetence (if not worse), according to this article. As in the previous article, this topic gets a little wonky – follow title klink for the details. Also see see the Naked Capitalism CalPERS’ Private Equity, Exposed series Executive Summary.

• Jim Cramer’s ‘Mad Money’ Recap: What if There Was a Rate Hike and Nobody Cared? (TheStreet) It’s no secret that the markets are running scared of an interest rate hike from the Federal Reserve. But what if the Fed raises rates and there’s not as much downside as we’d feared? That was the question Jim Cramer posited to his Mad Money viewers Monday. Cramer said the markets might not have a big reaction to a rate hike because much of the destruction has already occurred.

EU

• Euro-Area Inflation Stays at 0.2% as ECB Sees Downside Risks (Bloomberg) The Eurozone inflation rate held steady in August, highlighting the challenge facing European Central Bank policy makers as they seek to revive consumer-price growth.

India

• Economic growth slows to 7% in June quarter (Business Standard) Weak demand and no growth in investment offset increased government spending as India’s GDP grwoth slowed to 7.0% in the second quarter from 7.5% in the first quarter. Manufacturing, electricity and services saw slower growth in the current quarter.

China

• China Factory Activity Slips to Three-Year Low in August, Service Sector Weak (The Wall Street Journal) Weakness in China could be temporary but it’s clear economic engines not running at full speed. The official PMI (Purchasing Managers’ Index) gauge of manufacturing activity in August slumped to a three-year low while the usually strong services sector showed new weakness.

• China warned: You don’t know what you’re doing (City A.M.) City figures launched a broadside against China’s government last night, after authorities spent the weekend rounding up nearly 200 people deemed guilty of “illegal rumour-mongering“. Beijing appears to have lost faith in its ability to stem a decline in China’s shares through large-scale purchases. Instead, it has turned on traders, social media users and journalists whom it accuses of exacerbating last week’s market volatility.

• China state media announce confessions in stock market investigations (Reuters) Chinese state media announced a slew of confessions on Monday following investigations into dramatic stock market fluctuations, including from a reporter who said he had spread false information that had caused “panic and disorder“. An official from China’s securities regulator, and four senior executives from China’s largest brokerage, CITIC Securities (600030.SS) (6030.HK), confessed to insider dealing, the official Xinhua news agency reported. China is trying to restore value to its stock markets, where shares have lost around 40 percent since mid-June on concerns over the slowing economy and a devaluation of the yuan in mid-August. Authorities have announced crackdowns on fabricated trading information, alleged malicious short selling and other strategies seen as weakening confidence in the stock market.

Australia

• Australia set to rack up world’s longest growth streak (Financial Times) Australia is on track to surpass 26 consecutive years of growth, according to its treasurer, swiping the modern-era record from the Netherlands despite a slowdown in its biggest trading partner, China.