Written by Econintersect
Early Bird Headlines 28 October 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
10,000-year-old extinct lion cubs discovered in near-perfect condition in Siberian permafrost (The Week, MSN News) Two extinct cave lion cubs were discovered in permafrost in northeastern Siberia, a “sensational” and unprecedented find according to The Siberian Times. The cubs are believed to be at least 10,000 years old, though they might be even older, and were found almost perfectly preserved thanks to the permafrost. The region where the cubs were discovered, the Sakha Republic, has yielded discoveries before, including woolly mammoths, woolly rhinoceros, bison, and horses. The remains of the lions are the most complete specimens of their kind ever discovered, according to researchers involved. Cave lions lived during the Middle to Late Pleistocene eras in Eurasia, the British Isles, to the far east of Russia, and into Alaska and northwestern Canada. Their extinction remains something of a mystery because they had few predators and, due to their smaller size, they wouldn’t get trapped in bogs like woolly mammoths and rhinos. One theory is that their extinction might have been due to a decline in prey. By studying the cubs, scientists hope to reach firmer conclusions. Econintersect: With the remarkable preservation of these cubs there is a distinct possibility that DNA would be sufficient for cloning. Should scientists consider resurrecting species that have gone extinct early in the sixth great extinction currently underway?
U.S.
Royals win Game 1 of World Series (CNN) The Kansas City Royals beat the New York Mets 5-4 in the 14th inning early Wednesday morning to claim the first game of the series. It was the longest Game 1 in World Series history and ended with a sacrifice fly by first baseman Eric Hosmer scoring shortstop Alcides Escobar .
How a Fed Rate Hike Could Actually Stimulate the U.S. Economy (Bloomberg) The consensus view, steeped in decades of economic thought, maintains that higher rates encourage saving instead of spending by households and raises the cost of capital for businesses, weakening current demand. Higher interest rates could also be a negative for asset values, as income generated would be subject to a higher discount rate. The ensuing negative wealth effect would be a drag on consumption. An increase in interest rates is also typically accompanied by a rise in the U.S. dollar, which crimps competitiveness and weighs on production in the tradable goods sectors. But, as this article summarizes, there are those who contend that lower interest rates have tendency to create more household saving and higher rates would lead to an increase in spending. One of the arguments is that with little interest income there is nothing being gained to spend, whereas when households see an increase in income on their savings they will spend more. Of course there is a window for this argument ot be valid and once rates are raised sufficiently higher interest will become a headwind. What that level is was not revealed in this article. For a related discussion see What If Low Inflation Is Impeding Hiring (GEI Opinion).
Boehner Defends His Budget Deal (Huffington Post) Conservative Republicans are not happy that centrist Republicans teamed with Democrats to “hand Obama a gift“. Outgoing House Speaker John Boehner referred to the two year budget deal which takes the debt ceiling off the table until a new presidential term is underway as leaving a “clean barn“.
EU
Migrant crisis: Slovenia considers calling for EU military aid (Financial Times) Slovenia, the tiny Balkan state struggling to cope with the migration crisis, has raised the idea of invoking a never-before-used solidarity clause in the EU treaties to formally request European aid and military support. Article 222 enables military aid to EU nations overwhelmed by disasters.
UK
Tax credits showdown: for once, public opinion may be with the House of Lords (The Conversation) The House of Lords has voted against the Conservative government plans to reduce tax credits for 3 million low income households. The government is unlikely to let matters rest. The veto means they will be unable to make the budget savings they needed this year, and the climb down announced by George Osborne last night was embarrassing. The defeat put the lords in direct conflict not just with the prime minister and chancellor, but with the House of Commons which had previously approved it.
Consumer confidence hit its lowest level for 2015 in September – Lloyds Bank (City A.M.) Consumer confidence dropped to the lowest level it has been in 2015 during September, the Lloyds Bank Spending Power Report revealed today. The proportion of people who feel comfortable about their household finances also dropped to the lowest it has been for the last five months, said the report. And the number of people who say they have money to spare after paying their bills also fell, with one in five consumers now saying they have no disposable income.
Syria
First serving Russian soldier killed in Syria (The Telegraph) A nineteen-year-old air force man has died on active duty in Syria, the first confirmed casualty suffered by Russian forces. Vadim Kostenko, a 19-year-old contract soldier with the airforce, died at Russia’s airbase near Latakia on Saturday, his parents said, citing information from their son’s commanding officer. The Russian ministry of defence said on Tuesday that a Russian serviceman had committed suicide. Mr Kostenko’s parents rejected this statement, saying they had spoken to him the day he died and that he was “cheerful.”
India
India Moves Up in World Bank’s Ease of Doing Business List (NDTV) India now ranks 130 out of 189 countries in the ease of doing business, moving up 12 places from last year, according to a World Bank report.
China
China Headlines: China can accept, attain 6.5-pct annual growth in 2016-2020: experts (Xinhuanet) In a news aticle published by the official government news agency, a lower average annual growth target of 6.5% will be acceptable and attainable for the world’s second largest economy in the next five years, according to analysts. This is expected “given looming downward pressure and ongoing economic restructuring“.
U.S. Rivalry With China Heats Up Over Key Asia Shipping Lane (Bloomberg) The moment the U.S. Navy sailed a warship into waters claimed by China in the South China Sea it gave President Xi Jinping a pretext to accelerate his country’s military presence in the disputed waterway, further placing the vital shipping lane at the heart of U.S.-China rivalry in the Pacific. The patrol by the USS Lassen prompted an angry response by Beijing and came just weeks after Xi met with President Barack Obama in Washington, where he said China “does not intend to pursue militarization” of the area. The decision to send in the warship — the most direct challenge to China over its island building in the waters — may change that. What is curious about this event is that in September China performed an entirely similar act by sailing war vessels through U.S. territorial waters in the Aleutian Islands. See Chinese warships spotted off Alaska coast reportedly passed through US waters (Fox News). The U.S. had no objection to the act:
Pentagon officials told the Journal that the ships complied with international law, saying the Chinese actions were in accordance with the principal of “innocent passage.”
Australia
Australian CPI undershoots (Macro Business) The Australian Consumer Price Index (CPI) for the September quarter is out and came in at 0.5% for the quarter, below market expectations of 0.7%. In the year to September, CPI was just 1.5%, the same as last quarter’s reading but below the 1.7% expected. Most importantly for interest rates, underlying inflation is running at the lower end of the RBA’s inflation target. And there are complications – see the next article.
Parched Australia Risks Lower Growth, Turning Up Heat on RBA (Bloomberg) The world’s driest inhabited continent is confronting scorching temperatures that Goldman Sachs Group Inc. says threaten to cut growth in 2016 to the weakest in 24 years and could pressure the central bank to reduce interest rates from an already record-low 2%. The strongest El Nino in 18 years and cooler ocean temperatures around Indonesia will combine to produce weather that parches Australia’s farms and ranches. The fall in rural production would compound problems in an economy already struggling with slumping commodity prices and record-low private-sector wage rises.
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