Written by Econintersect
Early Bird Headlines 12 June 2016
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
People are freaking out about the Trans Pacific Partnership’s investor dispute settlement system. Why should you care? (The Washington Post) ISDS, or Investor-State Dispute Settlement, is the international system whereby multinational corporations (MNCs) can sue the governments of countries in which they invest for violating their property rights. International treaties give MNCs access to ISDS, under which ad hoc international tribunals decide whether or not an MNC deserves compensation. There is no appeals system in place. While this can prevent a nation from arbitrarily seizing property, for example, there are many who fear abuse. For an example, see article under ‘U.S.’ titled “Hillary’s Plans for You”.
We’ve Hit Peak Human and an Algorithm Wants Your Job. Now What? (Bloomberg) Wall Street employees should be afraid, be very afraid. While people are still the lubricant that oils the wheels of finance, toiling at innumerable tasks – executing and settling trades, writing analysis, monitoring risk. That’s about to change. Squeezed by low interest rates, shrinking trading revenue, and nimbler technology-based competitors, banks are racing to remake themselves as digital companies to cut costs and better serve clients. In other words, they’re preparing for the day that machines made by men and women take over more of what used to be the sole province of humans: knowledge work. Call it self-disruption.
Oil Giant Pledges Major Shift To Renewable and Green Energy to Fight Climate Change (Politicus USA) French oil giant Total, the fourth largest oil company in the world, has joined Exxon-Mobil (see here) and changed its corporate business plan to restrict oil reserves development and invest instead in renewable energy sources. The company plans to expand the 3% of its business in renewables today to 20% of its business in 20 years.
Let’s Get Fiscal (Project Syndicate) Bill Emmott, former editor-in-chief of The Economist, says (paraphrased) ‘enough already’:
Everyone knows there is no gain without pain. But there can be pain without gain – a lesson that Western populations have been learning the hard way since at least 2012. With years of fiscal austerity in the United States, Europe, and Japan having achieved nothing, it is time for governments to start spending again.
The proposal will be met with outrage from many governments, especially, but not exclusively, Germany’s, and will be dismissed by the many political candidates who treat sovereign debt, built up by the incumbents they are seeking to depose, as the devil’s work. But beyond ideology and self-interest lies a simple and unavoidable truth: austerity is not working.
U.S.
Hotels: Occupancy Rate Tracking just behind Record Year (Bill McBride, Calculated Risk) While the single week data showed that”occupancy decreased 6.8% to 64.6%” for the week 29 May through 04 June, the 4-week moving average which is more reliable for trens following was very close to the record setting year 2015, as it has been so far this year.
Hillary’s plans for you (Pt. 3) (Elizabeth Harris, The Truth About Money) This is being listed because of the outstanding satirical graphic below representing an imagined event in the ISDS (investor dispute settlement system – see article under ‘Global’) . The author maintains:
Hillary must privatize, because the TPP, TTIP, and TISA will let corporations sue any government that does not privatize.
The corporations will sue in tribunals that are owned by the corporations, and the rulings cannot be appealed. Corporations will sue against any government-run program that helps average people, calling it “unfair competition,” and a “threat” to corporate profits.
UK
Brexit Decision Too Close to Call in Poll as Stakeholders Lobby (Bloomberg) British public opinion is too close to call on whether the country should stay in the European Union, with many voters still undecided as interest groups and political leaders make their cases, according to an Opinium survey released on Saturday.
History of the 10-year Gilt Yield (Walter Kurtz, Sober Look, Twitter) Econintersect: If average to the mean works here, interest rates would have to remain at current levels (around 2%) for another 220 years (based on basis points x years) or 55 years just based on years above 4% ( the very approximate long-term average). It is hard to buy either such argument – so ‘just saying’. The obvious point is that money and interest rates have behaved abnormally by historical standards for the period from the early to mid 1960s until the Great Financial Crisis of 2008.
Germany
Commerzbank looks at locking up spare cash in vaults (Financial Times) Commerzbank is considering storing excess deposits as cash in vaults rather than with the European Central Bank, in the latest sign of the strains that negative interest rates are putting on Europe’s financial system. The 0.4% annual charge is imposed on all bank deposits, bar some that must be set aside to meet requirements on reserves set by the ECB. Last year, the policy cost German banks €248m, according to the Bundesbank. This adds to the distress German banks are experiencing due to continuing withdrawals of deposits.
Turkey
Turkish economy grows 4.8 percent in first quarter (Hurriyet Daily News) Turkey’s economy grew a larger-than-expected 4.8% in the first quarter of 2016, official data showed on June 10, outperforming major emerging markets peers, as wage hikes and spending by Syrian migrants fueled private consumption, according to analysts. Domestic demand boosted GDP by 6%, data from the Turkish Statistics Institute (TÜİK) showed, but net external demand reduced the overall growth figure by 1.5%.
Russia
Putin’s Core Support Begins to Waver (Bloomberg) Russia embarks on an almost two-year-long election season this summer that ends with a presidential contest in 2018. But unlike previous years, the country’s faltering economy has taken its toll on lower-income voters who blame the Duma and the cabinet for their plight. Five years ago, allegations of vote rigging led to the biggest antigovernment protests since Vladimir Putin’s ascent – dozens of opposition activists and leaders were jailed. The current election cycle comes amid an economic crisis caused in large part by earlier declines in oil prices, Russia’s key export. The recession has left many employers cash-strapped, sending workers into the streets to protest unpaid wages and reduced working hours. The Center for Economic & Political Reforms, a think-tank close to the Russian Communist Party, reports an almost twofold increase in protests in March compared with previous months, a steep rise since last year.
India
With win in 11 seats, BJP gains muscle in Rajya Sabha (The Hindu) Prime Minister Modi’s BJP (Bharatiya Janata Party) gained additional strength in elections today for India’s upper house of parliament, the Rajya Sabha.
