Written by Econintersect
Early Bird Headlines 09 May 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
Asian shares trade mostly lower, Shanghai down 2.2%, Nikkei up 0.7%, ASX flat (CNBC) Asian stocks fell on Monday, as oil prices rallied on supply outages in Canada and amid surprise over the exit of Saudi Arabia’s veteran oil minister Ali al-Naimi. Investors were also digesting China’s weaker trade figures released Sunday, and mulling Federal Reserve interest rate expectations after U.S. non-farm payrolls on Friday showed a slide in the headline job number to 160,000.
Offshore finance: more than $12tn siphoned out of emerging countries (The Guardian) More than $12 trillion (£8 trillion) has been siphoned out of Russia, China and other emerging economies into the secretive world of offshore finance, new research has revealed, as David Cameron prepares to host world leaders for an anti-corruption summit. A detailed 18-month research project has uncovered a sharp increase in the capital flowing offshore from developing countries, in particular Russia and China. The analysis, carried out by Columbia University professor James S. Henry for the Tax Justice Network, shows that by the end of 2014, $1.3 trillion of assets from Russia were sitting offshore. The figures, which came from compiling and cross-checking data from global institutions including the International Monetary Fund and the United Nations, follow the Panama Papers revelations of global, systemic tax avoidance.
Live: Oil rises on Saudi Arabia reshuffle, Canada fire (CNBC) The CNBC live blog is tracking market moves as a raging fire near Canada’s oil sands and a cabinet reshuffle in Saudi Arabia push oil prices higher. Click title the latest developments.
Uncovering ancient Ashkenaz – the birthplace of Yiddish speakers (The Conversation) The Yiddish language – which consists of Hebrew, German, Slavic elements and is written in Aramaic – has been spoken at least since the 9th century AD, but its origins have been debated by linguists for several centuries. Since north-east Turkey is the only place in the world where the place names of Iskenaz, Eskenaz, Ashanaz, and Ashkuz exist this strongly implies that Yiddish was established around the first millennium at a time when Jewish traders moved goods from Asia to Europe. This was done by developing the language of Yiddish, which very few can speak or understand other than Jews.
U.S.
As Trump and Clinton face off, Main Street is looking for details (CNBC) While a face off between Donald Trump and Hillary Clinton in November seems ever more likely, Main Street is watching closely for key issues to be addressed. But what’s lacking so far are details, especially when optimism is wavering among small business owners. Recent data from Wells Fargo and the National Federation of Independent Business’ latest optimism indexes show sentiment taking a dip, due in part to uncertainty over the economy and the political climate.
Trump calls for end to federal minimum wage as views shift (The Guardian) Donald Trump has called for the elimination of the federal minimum wage, as he retreated from primary promises and once again refused to release his tax returns because of “a link” to an audit. The presumptive Republican nominee for president repeatedly said he would support a higher minimum wage, a reversal from his position when he had conservative opponents. But he insisted on Sunday that states should decide such wages.
Trump dips toe into delicate U.S. debt discussion (Reuters) Would Donald Trump really consider not paying portions of the U.S. debt? The prospect riled economists on Friday as stories in the New York Times and the conservative website The Blaze cast fresh scrutiny on comments Trump made a day earlier. Responding to a question about the national debt, the likely Republican presidential nominee said in an interview on CNBC on Thursday he would “borrow knowing that if the economy crashed you could make a deal“. When asked if that meant he had taken a page from his own playbook as a businessman and try to get U.S. creditors to accept less than the full value of the bonds they hold, he said “No,” but added: “I could see long-term renegotiations where we borrow long-term at very low rates.”
The end of American meritocracy (Financial Times)
What is in a word? When it is packed with as much moral zeal as “meritocracy”, the answer is a lot. A meritocrat owes his success to effort and talent. Luck has nothing to do with it – or so he tells himself. He shares his view with everyone else, including those too slow or indolent to follow his example. Things only go wrong when the others dispute it.
Now magnify that to a nation of 320m people – one that prides itself on being a meritocracy. Imagine that between a half and two-thirds of its people, depending on how the question is framed, disagree. They believe the system’s divisions are self-perpetuating. They used not to think that way.
Imagine, also, that the meritocrats are too enamoured of their just rewards to see it. The fact that they are split – one group calling itself Democratic, the other Republican – is detail. They are two sides of a debased coin. Sooner or later something will give.
What Donald Trump Is Telling Us about Popular Understanding of Debt and Assets (Econospeak) Hat tip to Roger Erickson. The author, an econ professor, writes:
My guess is that he [Trump] is as clueless as his supporters, none of whom have the slightest idea that the Great One has just proposed taking a slice out of their savings. Interestingly, this observation hasn’t appeared in the popular media yet, at least from what I’ve seen. Journos and pundits talk about how unorthodox the idea is and how it could trigger a financial crisis, but not that it’s a monetary form of self-cutting.
EU
Iran: Europe eyes a new silk road – and squares up to Russia and China (The Conversation) European businesses can only challenge China’s position in Iran’s capital goods and construction market in as much as the complex sanctions architecture allows them. Russia also stands in a stronger position as far as its “traditional” sectors of interest are concerned. The truth is that banks and businesses are risk-averse, and the ambiguities in US financial legislation will feed this concern. It ensures that the lifting of sanctions is no “free for all”, but a slow, tentative walk through a legal minefield.
UK
Ready for a Brexit? Most businesses are not, but financial services firms are ahead of the game (City A.M.) People up and down the country may be preparing themselves to vote at the EU referendum next month, but a study out today suggests that businesses might not be ready for the result. The research by law firm Pinsent Masons found that just a quarter (26%) of senior decision makers from businesses across Britain, France and Germany had a tangible plan for what they would do next should the UK vote to leave the EU.
Greece
On CNN, discussing Greece and its creditors with Fareed Zakaria (Yanis Varoufakis) How Greece was turned into a permanent debt-deflationary trap through unsustainable extend-and-pretend bailout loans. And how difficult it was to negotiate with creditors who do not really care about getting their money back. This was discussed Sunday on CNN with Fareed Zakaria.
India
Modi fights to strengthen his hand in India’s state elections (The Conversation) Elections to the state legislative assemblies have just got underway in India. Throughout April and May, voters in five of the country’s 29 states will nominate representatives to the country’s Upper House of Parliament. And for Prime Minister Narendra Modi, these elections will be decisive in determining how much influence his government actually wields. Out of the 250 members of the Indian Parliament’s Upper House 238 are nominated by state legislatures, of which Modi’s Bharatiya Janata Party (BJP) holds only 64 out of the 250 seats. To try and strengthen its hand, Modi himself is getting very involved in state-level election campaigns, which are normally left to regional leaders.
Another sting in the Uttarakhand tale (The Hindu) Deposed Uttarakhand Chief Minister Harish Rawat will appear before the Central Bureau of Investigation on Monday in connection with an alleged sting operation that showed him offering a deal to rebel Congress MLAs through middlemen. Mr. Rawat is scheduled to face a vote of confidence in the State Assembly on Tuesday. The CBI, conducting a preliminary enquiry into the “sting”, got the video tapes examined and found them to be “genuine.” The operation was carried out by Umesh Kumar, the chief executive officer and editor-in-chief of the Noida-based TV channel Samachar Plus. The road to the trust vote got a little more twisted as BJP legislators approached Governor K.K. Paul to disqualify at least a dozen Congress MLAs, who were allegedly caught in another sting operation selling their support.
China
Even China’s Party Mouthpiece Is Warning About Debt (Bloomberg) China’s leading Communist Party mouthpiece acknowledged the risks of a build-up of debt that is worrying the world and said the nation needed to face up to its nonperforming loans. High leverage is the “original sin” that leads to risks in the foreign-exchange market, stocks, bonds, real estate and bank credit, the People’s Daily said in a full-page interview with an unnamed “authoritative person” starting on page one and filling the second page on Monday. China should put deleveraging ahead of short-term growth and drop the “fantasy” of stimulating the economy through monetary easing, the person was cited as saying. The nation needs to be proactive in dealing with rising bad loans, rather than delaying or hiding them, the report said.
Canada
Canada getting handle on Alberta wildfire, no restart yet for oil operations (Reuters) Canadian officials showed some optimism on Sunday they were beginning to get on top of the country’s most destructive wildfire in recent memory, as favorable weather helped firefighters and winds took the flames southeast, away from oil sands boomtown Fort McMurray. There was still no time line, however, for getting Fort McMurray’s 88,000 inhabitants back into what remains of their town, or when energy companies would be able to restart operations at evacuated sites nearby. The wildfires have cut Canada’s vast oil sands output in half.
