Written by Econintersect
Early Bird Headlines 03 August 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
Asia markets lose ground; Japanese shares, bonds under pressure as stimulus plan disappoints (CNBC) Most Asian stock markets lost ground on Wednesday, with the Nikkei selling off on the back of another yen spike amid disappointment with the country’s latest stimulus plan.
Bitcoin Sinks After Hackers Steal $65 Million From Exchange (Bloomberg) Bitcoin plunged after one of the largest exchanges halted trading because hackers stole about $65 million of the digital currency. Bitcoin slumped 5.5% against the dollar as of 2:30 p.m. on Wednesday in Tokyo, bringing its two-day drop to 13%. Prices also sank 6.2% on Monday, although it was not clear if that initial move was related to the hack.
Are we living through another 1930s? (The Guardian Things are happening with machine-gun rapidity: Brexit, the Turkish coup, Islamist massacres in France, the surrounding of Aleppo, the nomination of Donald Trump. From the USA to France to post-Brexit Britain, the high levels of public racism and xenophobia, reflected now in the outpourings of politicians with double-digit poll ratings, have got people asking: is it a rerun of the 1930s? The author (Paul Mason) says:
On the face of it, the similarities are real. Britain’s vote to leave the EU parallels its panicked decision to quit the gold standard in September 1931 – the first major country to quit the global economic system. Labour’s incipient split mirrors the one that left the party out of power for 14 years. And of course the economic background – a depression and a banking crisis – has echoes in the present situation.
But a proper study of the 1930s reveals our situation today to be better and more salvageable in many ways, although in one respect worse.
Following the Wall Street crash of 1929, the economic downturn took hold in 1931, with the failure of banks on both sides of the Atlantic, the imposition of austerity measures on already-weak economies, the resort to tariffs, currency blocks and economic nationalism. The fact that elites advocated mass unemployment, as a downward pressure on wages, created the firewood; overtly militarized and genocidal fascist groups lit the spark. It took just two years from Hitler’s first electoral breakthrough in 1930 for the Nazi party to score 37% in an election.
Then you get the million-strong far-right demonstration in Paris in 1934; therising of the Asturian miners in Spain, put down by the army; German rearmament beginning in 1935. The Spanish civil war starts in 1936 – while, in the same year, workers in both France and the US stage mass occupations of factories, and Stalin begins the great purge.
It is here that the 30s take their essential shape: the surrender of democracy, the certainty of war – and the march to mass civilian death.
For us today, the single biggest positive difference is that we start from a globalised world economy. We begin from a qualitatively more interdependent economic system, in which autarky is widely understood – even by politicians who would like to try it – as suicide.
U.S.
FBI took months to warn Democrats of suspected Russian role in hack: sources (Reuters) The FBI did not tell the Democratic National Committee that U.S officials suspected it was the target of a Russian government-backed cyber attack when agents first contacted the party last fall, three people with knowledge of the discussions told Reuters. And in months of follow-up conversations about the DNC’s network security, the FBI did not warn party officials that the attack was being investigated as Russian espionage, the sources said. The lack of full disclosure by the FBI prevented DNC staffers from taking steps that could have reduced the number of confidential emails and documents stolen, one of the sources said. Instead, Russian hackers whom security experts believe are affiliated with the Russian government continued to have access to Democratic Party computers for months during a crucial phase in the U.S. presidential campaign, the source said.
Trump refuses to endorse Paul Ryan in GOP primary: ‘I’m just not quite there yet’ (The Washington Post) Hat tip to Roger Erickson and Philip Rucker. Republican presidential nominee Donald Trump escalated his war with his own party’s leadership Tuesday by refusing to endorse House Speaker Paul D. Ryan or Sen. John McCain, two of the GOP’s highest-ranking elected officials, in their primary campaigns. Trump used words identical to those used by Ryan before he finally endorsed Trump for the nomination early this year. Econintersect: Trump doesn’t forget.
US election 2016: Trump hits back at ‘disastrous’ Obama (BBC News) Donald Trump has dismissed Barack Obama’s time in the White House as a “disaster” after the US president said he was not fit to succeed him. “He’s been weak, he’s been ineffective,” Republican candidate Mr Trump said of Mr Obama in a Fox News interview on Tuesday. Mr Obama has questioned why Mr Trump’s party hasn’t disowned him.
Underwater in the Las Vegas Desert, Years After the Housing Crash (The New York Times) More than eight years after rotten loans and plunging home values made Las Vegas the center of the housing crisis, thousands of people have yet to recover. This mostly a review of a few case study stories of people who built houses they may never get repaid for.
UK
City braced for rate cut as construction data and banking woes unsettle markets (City A.M.) The FTSE 100 fell to a two-week low of 6,645.40 yesterday, spooked by a double whammy of gloomy UK construction data and faltering bank stocks. Official data shows that UK construction has shrunk at its fastest pace in seven years. Markets are now bracing themselves for tomorrow’s Bank of England policy meeting, at which governor Mark Carney is expected to unveil a stimulus package. Many economists are predicting that interest rates could be cut to a 300-year low.
Bank of England stress tests “worse than useless” according to free market think tank (City A.M.) The Bank of England’s stress-testing regime is “worse than useless” according to a new report from free market think tank the Adam Smith Institute. The tests gave the UK’s banking system a clean bill of health in 2015, but the think tank argues that the regime is riven with fundamental flaws. And days after alarm bells were sounded on the the capitalization of Italian bank Montei dei Paschi; the Adam Smith Institute report said that the UK is “sailing blindly into a second financial crisis“.
Turkey
Erdogan says Turkey’s coup script was ‘written abroad’ (CNBC) President Tayyip Erdogan accused the West of supporting terrorism and standing by coups on Tuesday, questioning Turkey’s relationship with the United States and saying the “script” for an abortive putsch last month was “written abroad“. In a combative speech at his palace in Ankara, Erdogan said charter schools in the United States were the main source of income for the network of U.S.-based cleric Fethullah Gulen, who he says masterminded the bloody July 15 putsch. Erdogan said in a speech to local representatives of multinational firms operating in Turkey:
“I’m calling on the United States: what kind of strategic partners are we, that you can still host someone whose extradition I have asked for? This coup attempt has actors inside Turkey, but its script was written outside. Unfortunately the West is supporting terrorism and stands by coup plotters.”
North Korea
N. Korea fires mid-range missile toward waters near Japan (Associated Press) A medium-range ballistic missile fired Wednesday by North Korea flew about 1,000 kilometers (620 miles) and landed near Japan’s territorial waters, Seoul and Tokyo officials said, one of the longest flights by a North Korean missile. The U.S. Strategic Command said North Korea fired two presumed Rodong missiles simultaneously on Wednesday, not just one. The command’s statement said initial indications reveal one of the missiles exploded immediately after launch, while the second was tracked over North Korea and into the Sea of Japan.
China
China’s Trouble With Bubbles (Bloomberg) China has had housing bubbles and stock bubbles, which now seem to be somewhat calmed. But the country is still plagued by ‘bubbly’ credit. Any possible solutions are going to painful. Similar to the situation facing financial regulators, Chinese authorities have to balance the short-term costs and long-term benefits of corporate reform. Sweeping cuts in capacity and aggressive market opening would hammer the state-owned firms that are currently the only force holding up growth. Without such cuts though, stimulus will continue to fuel speculative bubbles. The lesson of China’s 2015 market crash — that early intervention is less costly than crisis resolution — is easy enough to learn. With the potential costs rising, it’s even more urgent for regulators to heed.
Australia
Australia’s bad luck continues with four Olympic water polo players in quarantine (The Washington Post) And they haven’t even gotten in the contaminated water in Rio yet. Members of the Australian team have had to deal with toilets that don’t work, illness, robbery and the list goes on.
