Written by John Lounsbury
Early Bird Headlines 09 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
- Japanese stocks soar as Asia rides global rally (Reuters) Asian shares extended a global rally on Wednesday, with markets in China stabilizing and Japanese stocks posting their biggest one-day gain since the height of the global financial crisis in 2008. The upbeat mood was set to lift Europe, with financial spreadbetters expecting Britain’s FTSE 100 .FTSE to open up as much as 2.2%, Germany’s DAX .GDAXI 3.6% higher, and France’s CAC 40 .FCHI 2.2% higher. Japan’s Nikkei soared 7.7%, its biggest single-day gain since October 2008, apparently galvanized by hopes of corporate tax cuts.
US
- Obama Has Done More for Clean Energy Than You Think (Scientific American)
The most important thing the Obama administration has done to combat climate change may not end up being raised fuel-efficiency standards for cars and trucks or even its Clean Power Plan to cut carbon dioxide emissions from power plants. The most important thing may turn out to be the loans that enabled large power facilities that run on sunshine or Earth’s heat to break ground out west, wind farms to be built from coast to coast and construction of the nation’s first brewery for biofuels not made from food – as well as a host of other advanced manufacturing energy projects.
- Cheap gas slows electric car sales as trucks and SUVs break records (EnergyWire) Consumers in the United States bought automobiles in the four months from May through August at the fastest clip in more than a decade, propelled by strong appetite for trucks, sport utility vehicles and crossover models and by low gas prices. Light-vehicle sales for August surpassed 17 million units for the fourth month in a row, measured at an annualized, seasonally adjusted rate, according to automotive data company WardsAuto. The last time that happened was 2000.
EU
- ‘They Are Not Going to Like it Here’ and Other European Excuses to Avoid Refugees (Foreign Policy) There is a collection of absurd rationalizations collected in this article.
Saudi Arabia
- The Gulf’s Castles of Sand (Foreign Policy) Fortunes appear to be shifting in the Middle East. Oil prices have plummeted, leaving Saudi Arabia and its allies with a long-term economic crisis – just as Iran’s economy looks poised for rapid gains.
South Korea
- Ministry proposes 3% budget boost (The Korea Herald) The government proposed a 3% increase in its 2016 budget formulation from this year to continue to push for an expansionary economic policy next year despite concerns over worsening fiscal soundness.
- National debt to GDP ratio expected to surpass 40% next year (MK Business News) South Korean government debt is predicted to grow to 645.2 trillion won ($530 billion) next year, up 50.1 trillion won from this year. The national debt to gross domestic product (GDP) ratio would exceed 40% for the first time.
India
- UBS cuts India’s growth forecast to 7.1% for FY16 (The Hindu) Swiss brokerage UBS has revised downwards India’s GDP growth projection for the current fiscal to 7.1%, from 7.5% earlier in the year, because of weaker external demand prospects. The global financial services firm has also lowered its growth projection for financial year 2016-17 to 7.6%t from 8.3%.
- ‘RBI has less stringent norms on systemically important banks’ (Business Standard) Moody’s criticizes the Reserve Bank of India (RBI) for insufficient standards on its banks after only two banks were identified as “systemically important“. Moody’s said:
“RBI’s implementation of its domestic systemically important banks framework appears less stringent than that of other jurisdictions, which appears to be related to the capital stress that banks in India are currently experiencing,”
Japan
- Japan logs current account surplus for 13th straight month in July (Xinhuanet.com) Japan logged a current account surplus for the 13th straight month in July, mainly due to declining costs of crude oil and increased income boosted by a weaker yen. Exports increased 4.6% from a year earlier to 6,544.8 billion yen ($54.8 billion), while imports dropped 6.5% to 6,652.9 billion yen ($55.7 billion). With trade in deficit by $1.3 billion), the positive current account balance came from the inclusion of capital flows which were positive by 2,231.2 billion yen ($18.7 billion), up 19.6% from a year ago.
China
- Will China Crash? (Robert Samuelson, The Washington Post) Like many economic juggernauts before it – Japan springs to mind – China seemed unstoppable. Its economy hummed along at the almost unimaginable annual growth rate of about 10%. No obstacle seemed beyond its power to surmount. After the 2008-2009 financial crisis, it adopted a huge stimulus package equal to about 13% of its gross domestic product. Growth resumed, and China’s leaders were widely praised. But like Japan before it, China now has to rebalance from an over-dependence on exports and investment. The question is: Will China have a more successful experience than its island neighbor?
- So How Long Can China Keep Up its Fragile New Exchange Rate? (Bloomberg) Capital outflows have been Chinese policymakers’ biggest headache. These waves of money leaving the world’s second-largest economy are a source of downward pressure on the yuan and have a deleterious effect on domestic liquidity – the last thing a nation that’s enjoyed an extended run of buoyant, credit-fueled growth needs. Because China’s delicate balancing act isn’t a permanent solution, market participants are wondering how – and when – it might end. It could last for months but not years, according to analysts.
- China’s Real GDP Isn’t 7%: Its Closer To Zero And Declining (Jeremy Blum, Seeking Alpha) The following summary statements may have elements of veracity. But the author’s title contention of 0% GDP growth is not supported by any data in the article and many commenters take him to task for that. Summary statements:
- China’s GDP number is manipulated and unreliable.
- More reliable figures indicate recent deterioration in many sectors of the economy.
- China will be in recession due to overcapacity, speculative excesses and bubbles.
- A Chinese recession would have a moderate negative impact on the U.S.
Canada
- Canada’s economic scorecard: ‘Best. Recession. Ever.’ (The Globe and Mail) Canada has suffered two consecutive quarters of negative GDP growth. But the final month of the second quarter saw growth, employment has continued to rise and the dip over the first half of the year has been shallow (–0.3%). The downturn has been caused by an oil price shock but in other sectors the economy has not turned down. But it is too early to celebrate the continued growth in employment – employment is a lagging indicator. We won’t know for sure how employment has been affected until next summer.
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