China and the issue of investor trust; Almost all PC game sales are now digital; Why men should open up

1 China and the issue of investor trust (Straits Times) Foreign car and car-part makers are the latest firms to be hit in China’s clampdown on anti-competitive practices in various industries. This week, Daimler was found guilty of infringing the six-year-old anti-monopoly law while 12 Japanese car-part makers were fined a total of $201.8 million for the same offence, even as American tech firms Microsoft and Qualcomm have come under scrutiny.

Antitrust probes of multinationals in recent months have sparked concern that China is turning protectionist to nurture indigenous innovation and firms. What is also worrying is the charge that “administrative intimidation tactics” are being used to get firms to accept punishments and remedies without full hearings.

To be fair to the Chinese, many of the probes, from cars to pharmaceuticals, appear aimed at bringing down prices. In the Daimler case, an antitrust official called it a “vertical monopoly”, with the carmaker using its leading position to control prices of its spare parts and repair and maintenance services. The motive for cracking down on tech firms is less clear. Microsoft is being probed for problems of compatibility, bundling and document verification in its products.

China denies gunning for foreign firms, naming local ones nabbed, such as China Unicom. With limited resources, it targets a few industries at a time and, with foreign luxury makes dominant in the car industry, they are naturally scrutinised. Whether foreign firms are unfairly targeted will be clearer when antitrust officials move to sectors dominated by local firms.

http://www.straitstimes.com/news/opinion/more-opinion-stories/story/china-must-not-lose-investors-trust-20140821

2 Almost all PC game sales are now digital (James ‘DexX’ Dominguez in Sydney Morning Herald) Around 92 per cent of PC game sales worldwide in 2013 were online purchases, downloaded direct to the user’s computer, meaning that only 8 per cent of PC games were purchased on a disc. This is the startling figure that analysis firm DFC Intelligence revealed to British technology news site PCR this week.

DFC said that the total revenue of the PC gaming sector also exceeded revenue for TV-based consoles in 2013. These claims come after the news in January, from British gaming site MCV, that digital purchases of games across all platforms in the UK exceeded those of traditional physical media for the first time in 2013. Downloaded games accounted for £1.18 billion in sales revenue for the year, compared to £1.015 billion for boxed physical media such as discs and cartridges.

There are many reasons for the increase in digital game sales. Access to broadband internet and increased speed of that connection is a major factor. For example, the Australian Bureau of Statistics reports that while around half of Australian internet connections in 2006 were broadband, in 2013 they made up over 98 per cent. An increase in secure online payment methods, and the willingness of more people to pay via those methods, has also had an effect.

Cheaper hard drives and devices with larger storage capacity also had an impact – mkomo.com reports that hard drive cost-per-gigabyte has halve in the past five years, and decreased by a factor of 20 in the past decade. Price-per-gigabyte for flash memory, the type used for storage in phones and tablets, has likewise plunged.

The death of physical media has been expected for a long time. Way back in 2003, industry analysis firm Forrester told The Register that “CD and DVD sales are doomed”. While they were talking about non-interactive media, they were remarkably prescient: years before Apple launched iTunes, they predicted that a third of music sales would be digital by 2005. iTunes alone reportedly now sells around a third of all music worldwide.

http://www.smh.com.au/digital-life/games/almost-all-pc-game-sales-are-now-digital-20140820-1063p3.html

3 Why men should open up (Professor Green in The Guardian) I was 24 when my dad, Peter Manderson, took his own life. We had a troubled relationship and hadn’t spoken to each other for about six years; for no real reason we just stopped. Then one day I got in touch to try and repair some of the damage. It was Boxing Day and we argued over the phone about where to meet. I got angry, and my dad, who was a gentle man, stammered and stuttered. The last words I said to him were: “If I ever see you again I’m going to knock you out.” It all seems so desperately trivial now.

I still don’t know what was going through my dad’s mind when he killed himself in a park not far from where he lived in Brentwood, Essex, in April 2008. I’ll never know. The last time I saw him alive was my 18th birthday. He had been in and out of my life for years. I was brought up by my gran in Hackney, east London, because neither of my parents were capable of looking after me. I just wish that he could have reached out to someone, anyone.

His death was a complete shock and it’s still a struggle to articulate how I felt. I went through so many emotions that day. At first I was angry with him for doing what he did. I kept thinking, how could he take himself away from me? The daughter of actor Robin Williams, who took his life recently, Zelda said something similar about her dad: “I’ll never understand how he could be so loved and not find it in his heart to stay.”

I thought my dad was selfish for taking the easy way out. But then I quickly realised that I was the one who was being selfish for thinking he was selfish. The last thing I said to him kept replaying in my head – you have no idea how much I regret that the final words he heard from me were anger and hate. I would give anything to change that. I never got a chance to say a proper goodbye or tell him that I loved him.

Last year in Britain, almost 6,000 people killed themselves, leaving behind families struggling for answers. Men aged between 30 and 44 are most at risk. My dad was 43. Communication is a big problem with us men. We don’t like to talk about our problems; we think it makes us look weak. Society likes to tell you that you have to be happy all the time, and it’s easy to think that if you’re not happy then there’s something wrong with you. But happiness isn’t permanent, it’s not something you can feel all the time – and neither is sadness.

What happened to my dad and uncles makes me want to deal with things. As much as I love my dad, I don’t want to be the father to my child that he was to me. I wrote the song Lullaby about my experience of depression and how it has affected my life. The most important lyrics are the final two lines: “Things always change, as long as you give them the chance to.” Know that is true. I just wish my dad did.

http://www.theguardian.com/commentisfree/2014/aug/20/men-suffer-depression-anxiety

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Second shooting raises US racial tension; Moody’s downgrades four South Africa banks; The reason we yawn

1 Second shooting raises US racial tension (Chris McGreal & Rory Carroll in The Guardian) Racial tensions in Missouri were stoked again on Tuesday when police killed another African American man as the authorities struggled to quell the nightly confrontations over the shooting of an unarmed teenager, Michael Brown, in Ferguson last week.

Angry residents of a black neighbourhood in St Louis, not far from Ferguson, accused the police of excessive force after two officers fired several bullets into a 23-year-old man described as carrying a knife and behaving erratically. The man has not yet been named but he was well known in the area and was said to have learning difficulties.

Brown’s parents said they believed the unrest would be alleviated if Darren Wilson, the officer who shot and killed their son was prosecuted. “Justice will bring peace I believe,” Lesley McSpadden, Brown’s mother, said. “Him being arrested, charges being filed and a prosecution. Him being held accountable for what he did.”

In Ferguson, leaders of the overwhelmingly white city administration urged people to stay at home to “allow peace to settle in” and pledged to reconnect with the predominantly black community. According to a statement, officials have been exploring how to increase the number of African American applicants to the law enforcement academy and raise funds for cameras that would be attached to patrol car dashboards and officers’ vests. “We plan to learn from this tragedy,” the leaders said in the statement.

The death of Brown has stoked 10 days of unrest in Ferguson and the surrounding area. The latest police killing took place a few miles away in a predominantly black neighbourhood. Doris Davis, who saw the shooting from an upstairs window in her house, said she looked out when she heard the man shouting. “He said: No, no, no. Then they shot him from the front,” she said. Davis, 66, said she saw two policemen open fire together and shoot several bullets each in rapid succession.

http://www.theguardian.com/world/2014/aug/19/police-officer-shooting-st-louis-dead-knife

2 Moody’s downgrades four SA banks (Johannesburg Times) Ratings agency Moody’s has downgraded four South African banks and put them on review for further cuts, saying there was a lower likelihood of support from the central bank to protect creditors after African Bank’s debt crisis. Moody’s cut by a notch the long-term local currency deposit ratings for Standard Bank of South Africa, FirstRand, Nedbank and Absa Bank, the local operation for Barclays Group Africa.

The ratings agency said it was adjusting its view following the $1.6bn bailout of African Bank by the South African Reserve Bank (SARB). Moody’s said while SARB’s actions mitigated the risk of contagion across the banking sector, the Bank had indicated by its actions that it was willing to impose losses on creditors.

The ratings change comes days after a downgrade of smaller lender Capitec, prompted by the bailout for unsecured lender African Bank. SARB said at the time that it disputed the downgrade of Capitec because the lender had a different model to African Bank. Some analysts believe the latest wave of downgrades may be an overreaction. Moody’s also downgraded long-term national scale deposit ratings for the four lenders and placed foreign-currency ratings for the four and smaller lender Investec on review.

http://www.bdlive.co.za/business/financial/2014/08/19/moodys-downgrades-south-africas-four-biggest-banks

3 The reason we yawn (Jonathan D Rockoff in The Wall Street Journal) Researchers are starting to unravel the mystery surrounding the yawn, one of the most common and often embarrassing behaviors. Yawning, they have discovered, is much more complicated than previously thought. Although all yawns look the same, they appear to have many different causes and to serve a variety of functions.

Yawning is believed to be a means to keep our brains alert in times of stress. Contagious yawning appears to have evolved in many animal species as a way to protect family and friends, by keeping everyone in the group vigilant. Changes in brain chemistry trigger yawns, which typically last about six seconds and often occur in clusters.

“What this tells us is it’s a very complicated system, and there are probably many different roles for yawning,” says Gregory Collins, a researcher at the University of Texas Health Science Center in San Antonio who has identified some of the chemical processes at work in the brain.

To unravel the mystery of yawning, scientists built upon early, observed clues. Yawning tends to occur more in summer. Most people yawn upon seeing someone else do it, but infants and people with autism or schizophrenia aren’t so affected by this contagion effect. And certain people yawn at surprising times, like parachutists who are about to jump out of a plane or Olympic athletes getting ready to compete.

A leading hypothesis is that yawning plays an important role in keeping the brain at its cool, optimal working temperature. The brain is particularly sensitive to overheating, according to Andrew Gallup, an assistant professor of psychology at the State University of New York at Oneonta. Reaction times slow and memory wanes when the brain’s temperature varies even less than a degree from the ideal 98.6 degrees Fahrenheit.

http://online.wsj.com/articles/the-real-reason-we-yawn-1408403897?mod=trending_now_2

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Unrest continues in Missouri; Fear of another muddle in Iraq; UK bosses’ gender pay gap at 35%

1 Unrest continues in Missouri (BBC) US police say they have arrested 31 people during another night of angry protests in the town of Ferguson in the state of Missouri. Unrest flared hours after President Obama called for calm following the fatal police shooting of unarmed black teenager Michael Brown on 9 August. The US attorney general is due to visit Ferguson on Wednesday to meet federal officials investigating the killing. The National Guard has been deployed to support police operations.

The killing of Mr Brown by a white policeman in a street has inflamed racial tensions in the largely black community of Ferguson. A new poll by the Pew Research Center has found US reaction to the police killing of Michael Brown falls along distinct racial lines. Officer Darren Wilson shot the teenager last week after reportedly stopping him for walking in the street.

Police Captain Ron Johnson said officers were forced to use tear gas and stun grenades on Tuesday after they came under “heavy gunfire” and were attacked with petrol bombs and bottles. President Barack Obama said he recognised that in many communities in the US a “gulf of mistrust” existed between local residents and law enforcement. “In too many communities, too many young men of colour are left behind and seen only as objects of fear,” he said.

Earlier, a former New York pathologist hired by Mr Brown’s family performed an independent post-mortem examination. Dr Michael Baden said he believed six bullets struck the teenager, two of which may have re-entered. “All of the gunshot wounds could have been survivable, except the one at the top of the head,” he said.

Witnesses have said Mr Brown was shot as he held his hands up in a position of surrender, while the police and supporters of Mr Wilson have said he fired during a fight with Mr Brown. The officer who shot Mr Brown, Darren Wilson, has been suspended with pay since the shooting. Mr Brown’s family have called for his arrest.

http://www.bbc.com/news/world-us-canada-28848753

2 Signs of another Iraq muddle (Straits Times) The United States is at risk of getting sucked into another misadventure in Iraq, three years after President Barack Obama ended what he called a dumb war. That entanglement of dubious justification left Iraq – the fabled Mesopotamia of antiquity – in a shambles for the net gain of one dictator’s removal. (Of course, America also coveted the oil.)

Mr Obama has consistently argued that there is no American military solution to Iraq’s existential dilemma spawned by conflicting regional allegiances based on ethnicity and faith. Just last week, when ordering air strikes to evacuate persecuted minorities fleeing the murderous Islamic State in Iraq and Syria (ISIS) militants, Mr Obama said he would not allow the US to be dragged into another war in Iraq.

But military operations unfolding in the past 48 hours show he is being pulled along by the dynamic of war. He seems to have little choice, given the threat of ISIS militants establishing a firmer hold on the ground. In Baghdad, the central government, which controls only about half of the country after losing territory to the ISIS advance, is pressing the US to widen its air attacks on ISIS positions, including around the region of the capital.

Pressure also is growing from Mr Obama’s Atlantic allies, principally Britain, to extend the scope of intervention to counter the ideological virulence that ISIS represents. This is much like a reprise of Afghanistan and the Taleban. Yet, if the Americans end up fighting the Iraqi government’s war to evict the extremists and shut down their caliphate, it will be war all over again as no such campaign is possible without the use of troops.

http://www.straitstimes.com/news/opinion/more-opinion-stories/story/beware-another-iraq-quagmire-20140819

3 UK bosses’ gender pay gap at 35% (Simon Goodley in The Guardian) Women bosses are still earning only three-quarters as much as their male colleagues, meaning they would have to work until they were nearly 80 to catch up with men’s lifetime earnings, according to new figures.

More than 40 years after the Equal Pay Act outlawed less favourable pay and conditions in the workplace, the data shows that discrepancies in salaries widen at the higher echelons of management, with a “midlife pay crisis” particularly hitting female managers aged over 40, who earn 35% less than men. The average pay gap between men and women aged between 46 and 60 stands at £16,680 a year, while among company directors men take home £21,084 more than their female colleagues.

Ann Francke, chief executive of the Chartered Management Institute (CMI), said: “This is all about apathy and ignorance. Companies think it is not a problem for them, so they don’t do anything about it. There are very few good guys.” Including men and women managers of all ages, the CMI said that the pay gap stands at £9,069, with men getting an average salary of £39,461 where women get £30,392.

This means women are earning only three-quarters (77%) of what men in full-time comparable jobs earn,” the CMI said. “Yet the gap is far worse for women aged 40-plus, where the problem is twofold. Not only does the salary gap increase with age and seniority, but there is also a persistent “bonus pay gap”. The average bonus for a female director stands at £41,956, while for male directors the average payout is £53,010.”

http://www.theguardian.com/business/2014/aug/19/gender-pay-gap-women-bosses-earn-35-percent-less-than-men

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UK CEOs earn 143 times company average pay; Facebook offers free internet access to Zambia; First impression of India’s Narendra Modi

1 UK CEOs earn 143 times company average pay (Juliette Garside in The Guardian) The bosses of Britain’s 100 biggest listed companies are earning on average 143 times more than their staff, according to data that exposes the growing imbalance between how the nation’s workforce and its business leaders are rewarded. The pay gap is widest at Rangold Resources, where boss Mark Bristow was paid £4.4m last year, nearly 1,500 times that of his average employee, many of whom work in the company’s African mines. The study by the High Pay Centre, also singles out marketing giant WPP and the retailer Next, both companies with large British workforces.

WPP founder, Sir Martin Sorrell, received nearly £30m last year, 780 times the £38,000 earned by his average worker. At Next, Lord Wolfson received £4.6m, while his staff, most of whom work on the shop floor, typically took home £10,000 – about 459 times less than their boss. The disparity at Next would have been greater had Wolfson not chosen to waive a £3.8m bonus and share the sum among the company’s 20,000 staff.

At Compass Group, which employs many cooks, cleaners and security officers, the average £13,000 annual salary is among the lowest in the FTSE 100 index of Britain’s biggest listed companies. But chief executive Richard Cousins took home £5.5m last year – 418 times more than his workers. The gap is widening, according to the High Pay Centre. In 1998, a FTSE 100 boss was typically paid 47 times more than their workers. Analysis of six major UK companies in 1980 found the senior executive was paid between 13 and 44 times more than their staff.

http://www.theguardian.com/business/2014/aug/18/pay-gap-grows-ftse-bosses

2 Facebook offers free internet access to Zambia (Wendy Lee in San Francisco Chronicle) In the African nation of Zambia, few can afford an Internet connection. Watching a few mobile videos on YouTube requires a data plan that costs 51 cents – roughly half the daily earnings of many Zambians. It may seem purely altruistic, then, that Facebook is working to provide free Internet access to the country. But the company stands to benefit greatly if it manages to connect the developing world to its social network.

Working through its Internet.org coalition, which includes a number of tech firms including Samsung and Nokia, Facebook has launched a free app that provides limited Internet access to Zambians who have cell phones without data plans. Customers of cellular provider Airtel can download the app Internet.org for access to 13 outlets, including Facebook and Wikipedia. They can find out about the weather, women’s rights and job openings for several months before they will eventually need to decide whether they want to buy a data plan. The app doesn’t directly show ads, but users can see ads through certain websites accessed through the app.

For Facebook, expanding Internet access helps expand its user base. Facebook wants to remain the dominant social network in the world. But after saturating developed countries like the US and the UK, the company is rushing to convert people in developing nations into Facebook users before competitors can target them. Anyone who signs up for Facebook in Zambia through the free app will count toward the company’s more than 1.3 billion monthly active users worldwide. Advertising experts say there is great demand for a digital way to reach consumers in developing countries.

 

Right now, advertisers in developing countries run billboards and print ads – forms of advertising that don’t provide as much data as social media ads, which can target specific consumers based on their age and interests, said Leo Ryan, group head of digital consultancy for Social@Ogilvy, UK. If Facebook’s app becomes the primary way people in Zambia access the Internet, it could dominate the nation’s ad market, Ryan said. Even though more than 85 percent of the world lives in areas with cellular coverage, only 30 percent are accessing the Internet, according to Internet.org. But Facebook spokesman Derick Mains said there are no plans to monetize the Internet.org app.

http://www.sfgate.com/news/article/Facebook-offers-Zambia-free-Internet-access-5693578.php?cmpid=hp-hc-bustech

3 First impression of India’s Narendra Modi (Seema Guha in Khaleej Times) Can he deliver an India free of communal tension?  India Prime Minister Narendra Modi’s first address to the nation, from the ramparts of the Red Fort on India’s 68th independence anniversary, was a refreshing change for people accustomed for the last 10 years to listening to the bland growth figures and percentages doled out by an erudite economist.

Modi spoke extempore, though he had a couple of points jotted down. He exuded confidence as he spoke and instead of sweeping policy issues, which ordinary people may or may not understand, he emphasised small but important measurers, the nuts and bolts of everyday life. The bottom line, however, is whether Modi can actually walk the talk, considering that he has so far not succeeded in reining in the right-wing elements of the larger Hindutva family.

There was mixed response to his speech. Most ordinary citizens related, others said it fell short of expectation and grumbled that foreign policy did not figure at all. Surprisngly for a man known for his thundering rhetoric, the speech was conciliatory, taking in the contribution of previous governments, avoiding jingoism, a trademark of his previous avatar as chief minister. There was no mention either of terrorism or Pakistan.

Women in India are delighted that Modi spoke of rape and taken the bull by the horn. Instead of blaming the victim, he asked every family to take responsibility for their sons. He also spoke of building toilets for women, and stressed on cleanliness, something no prime minister has done before and showed that he is in touch with the real India and knows its problems.

Modi came into government with the promise of reform and development. Many were hoping to hear some big ticket announcements. But the prime minsiter concentrated mainly talking of strengthening the manufacturing sector, which can create jobs. “Come, make in India,’’ he invited. This invitation was to people across the world, to set up manufacturing units here and sell where ever they wanted. It is a good slogan, but the government has to create a business-friendly and rid the country of the red tape, which can daunt the most enthusiastic of businessmen.

http://khaleejtimes.com/kt-article-display-1.asp?xfile=data/opinion/2014/August/opinion_August25.xml&section=opinion

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More massacres in Iraq and Syria; Fear of a tech bubble; Teaching is not a business

1 More massacres in Iraq and Syria (BBC) Islamic State (IS) militants have been accused of massacring hundreds of people in areas under their control in northern Iraq and eastern Syria. At least 80 members of the Yazidi religious minority are believed to have been killed with women and children abducted in a village in Iraq. IS is also accused of killing 700 tribesmen opposing them in Syria’s Deir Ezzor province, over a two-week period. The violence has displaced an estimated 1.2 million people in Iraq alone.

US aircraft are providing air support for Kurdish forces in northern Iraq to drive back the militants and retake the strategic Mosul dam. US Central Command said it carried out nine air strikes on Saturday, hitting targets near Irbil and the dam. The UK, Germany and other countries are delivering humanitarian aid for refugees in the north.

IS first emerged in Syria, fighting President Bashar al-Assad during the ongoing civil war there, but it has since overrun parts of northern Iraq, making its capital in the city of Mosul. Pursuing an extreme form of Sunni Islam, it has persecuted non-Muslims and Shia Muslims, whom it regards as heretics.

http://www.bbc.com/news/world-middle-east-28824212

2 Fear of a tech bubble ( Charles Arthur in The Guardian) What constitutes a technology bubble? If it’s gigantic valuations, you don’t have to look far. When venture capital company Andreessen Horowtiz put $85m last week into online publisher Buzzfeed in exchange for 10% of its equity, that implied BuzzFeed was worth $850m, more than the 137-year-old Washington Post. Five-year-old Uber raised a little over $1.2bn from venture capitalist for about 5% of its equity, to give it that $17bn valuation.

 

And if Snapchat, the vanishing-picture service, could turn down a $3bn offer from Facebook in November 2013 (according to the Wall Street Journal) and was in talks last month with China’s Alibaba over funding that could value it at $10bn, isn’t that evidence of a bubble?

 

But are the foundations solid enough to stop sky-high valuations crashing down? The latest debate over whether we’re in a “tech bubble” has been raging in Silicon Valley and beyond since at least late 2010, when venture capitalist John Doerr suggested we were entering a “third wave” of innovation, focused on smartphones and social networking. To the suggestion that valuations were – even then – “overheated”, Doerr replied: “I prefer to think of these bubbles as booms. I think booms are good. Booms lead to overinvestment, to full employment. Booms lead to lots of innovation.”

 

“In some ways, the sharing economy is a throwback to the pre-industrial age, when village communities had to share resources to survive,” says John Hawksworth, PwC’s chief economist. “They built up trust through repeated interactions with people they had known all their lives.”

 

http://www.theguardian.com/technology/2014/aug/17/technology-bubble-uber-snapchat-buzzfeed

3 Teaching is not a business (David L Kirp in The New York Times) Today’s education reformers believe that schools are broken and that business can supply the remedy. Some place their faith in the idea of competition. Others embrace disruptive innovation, mainly through online learning. Both camps share the belief that the solution resides in the impersonal, whether it’s the invisible hand of the market or the transformative power of technology.

Neither strategy has lived up to its hype, and with good reason. It’s impossible to improve education by doing an end run around inherently complicated and messy human relationships. Marketplace mantras dominate policy discussions. High-stakes reading and math tests are treated as the single metric of success, the counterpart to the business bottom line. Teachers whose students do poorly on those tests get pink slips, while those whose students excel receive merit pay, much as businesses pay bonuses to their star performers and fire the laggards. This approach might sound plausible in a think tank, but in practice it has been a flop.

Firing teachers, rather than giving them the coaching they need, undermines morale. In some cases it may well discourage undergraduates from pursuing careers in teaching, and with a looming teacher shortage as baby boomers retire, that’s a recipe for disaster. Merit pay invites rivalries among teachers, when what’s needed is collaboration. Closing schools treats everyone there as guilty of causing low test scores, ignoring the difficult lives of the children in these schools — “no excuses,” say the reformers, as if poverty were an excuse.

While these reformers talk a lot about markets and competition, the essence of a good education — bringing together talented teachers, engaged students and a challenging curriculum — goes undiscussed. Business does have something to teach educators, but it’s neither the saving power of competition nor flashy ideas like disruptive innovation. Instead, what works are time-tested strategies..

While technology can be put to good use by talented teachers, they, and not the futurists, must take the lead. The process of teaching and learning is an intimate act that neither computers nor markets can hope to replicate. Small wonder, then, that the business model hasn’t worked in reforming the schools — there is simply no substitute for the personal element.

http://www.nytimes.com/2014/08/17/opinion/sunday/teaching-is-not-a-business.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region&region=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=0

 

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The Brics and their bank; Fear of a UK housing bubble; India shamed by rape, says PM

1 The Brics and their bank (Barry Eichengreen in The Guardian) For the leaders of the Brics countries (Brazil, Russia, India, China, and South Africa), the announcement in July of their agreement to establish a “New Development Bank” (NDB) and a “Contingent Reserve Arrangement” (CRA) was a public-relations coup. The agreement was also an opportunity for the five countries to reiterate their dissatisfaction with the World Bank, the International Monetary Fund, and the role of the dollar in the global monetary system.

The Brics possess just 11% of the votes in the IMF, despite accounting for more than 20% of global economic activity. The US Congress refuses to ratify the agreement reached in 2010 to correct this skewed state of affairs. Meanwhile, the share of the dollar in global foreign-exchange reserves remains more than 60%, while 85% of global foreign-exchange transactions involve dollars.

Given the reluctance of underrepresented countries to sign up for the IMF’s precautionary credit lines, central banks desperate for dollars can obtain them only from the Federal Reserve. Thus, the Brics’ dissatisfaction with the status quo is understandable. The question is whether their NDB and CRA will make a difference. There already is a proliferation of regional development banks, from the Inter-American Development Bank and the Asian Development Bank to the more modestly capitalized African Development Bank. These institutions co-operate with the World Bank. Their existence creates no major problems for the Bretton Woods institutions.

But the interests of prospective borrowers and lenders of NDB are not obviously compatible. The next Brics country experiencing a crisis will want to draw on the CRA. But the other members will hesitate to lend more than token amounts, especially if there are repayment doubts. Other attempts to establish networks of swap lines and credits, such as the Chiang Mai Initiative, which was negotiated in the wake of the Asian crisis, have been bedevilled by the same problem.

There is the fact that the Brics’ commitments to the CRA are expressed in US dollars. The NDB makes sense for the Brics, and it has a future. But the CRA is empty symbolism, and that is how it will be remembered.

http://www.theguardian.com/business/2014/aug/14/brics-development-bank-imf-world-bank-dollar

2 Fear of a UK housing bubble (Khaleej Times) London house prices have leaped 25 per cent in a year, the steepest price rise since 1987. The increase across Britain is the highest it has been in nine years. Official data from the UK shows a government unable to contain a rising property bubble: stricter lending measures, introduced in April, have only led to an acceleration in price rises. The cost of buying a London home for single first-home buyers is now nine times their average salary — the worst it’s ever been in the UK.

The IMF and Bank of England have both warned of the potential economic consequences of overpriced housing. The only part of the UK to be spared the growing housing bubble has been Scotland. Its housing market was flat during the first two quarters of the year.

Left-leaning Scotland’s rejection of Tory politics has become a key linchpin in the debate. Scotland seeks to reinvent itself as a Scandinavian-style welfare state, bringing more equal healthcare and education. That the UK is among the most — and increasingly — unequal countries in the OECD only stokes the fire.

The UK capital’s house prices are 30 per cent higher than their last peak in 2007, growing at more than 7 per cent a quarter. An online estate agent told the UK’s Guardian newspaper that it was a “supercharged bubble”: “If anything shouts ‘unsustainable’, it’s annual price inflation of 25 per cent.”

http://khaleejtimes.com/kt-article-display-1.asp?xfile=/data/editorial/2014/August/editorial_August32.xml&section=editorial

3 India shamed by rape, says PM (BBC) Narendra Modi said India had been shamed by a recent spate of rapes, as he made his first Independence Day speech as prime minister. He called on parents to take responsibility for their sons’ actions, saying parents must teach their sons the difference between right and wrong. Mr Modi also pledged bank accounts for all and toilets in every school.

Mr Modi, who led his party to victory in this summer’s general election, addressed the nation from the 17th Century Red Fort in Delhi. He did not read from a prepared text and for the first time in many years the prime minister did not stand behind a bullet-proof screen. In a departure from tradition, Mr Modi spoke extempore, without consulting any notes, and in his hour-long speech, did not falter even once.

He talked about societal and family responsibility in ending rapes, advising parents to bring up better sons and not just question daughters. He lamented the skewed sex ratio and appealed to doctors to end abortion of female foetuses and advised mothers not to hanker after sons. And he spoke proudly of the “29 medals women athletes have won” at the 2014 Commonwealth Games.

Over many years, prime ministers have used their annual Independence Day speeches to warn Pakistan and for grandstanding, but Mr Modi used the historic occasion to say how he was bothered by the all-pervasive filth around him and why India must end open-air defecation and build more toilets. But critics have used the occasion to question his performance in the months since taking over as prime minister and his government’s failure to deliver reforms to overhaul the economy going through the worst slowdown in two decades.

http://www.bbc.com/news/world-asia-india-28799392

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Eurozone growth grinds to a halt; Berkshire Hathaway shares hit record price; Independence Day and the great pity of India and Pakistan

1 Eurozone growth grinds to a halt (Larry Elliott in The Guardian) France piled pressure on the European Central Bank to do more to boost growth on Thursday after news that economic activity across the 18-nation single currency area came to a halt in the second quarter. With France registering zero growth for a second successive quarter, Michel Sapin, the country’s finance minister, halved his growth forecast for this year, abandoned the deficit reduction target and said it was up to the Frankfurt-based ECB to respond to an “exceptional situation of weak growth and weak inflation across the eurozone”.

Sapin’s demand came as the latest figures from Eurostat, the European Union’s statistical agency, showed that problems in the single currency’s Big Three economies – Germany, France and Italy – resulted in no increase in eurozone gross domestic product in the three months to June. That compares with an increase of 0.2% in the first quarter.

France made it clear it blamed foot-dragging on the part of the ECB for the failure of the eurozone’s second-biggest economy as it reduced its growth forecast for 2014 from 1% to 0.5% and ditched the 1.7% forecast for 2015, saying it would not expand by much more than 1%.

Some of the smaller economies on the periphery of the eurozone – including Spain and Portugal – recorded solid growth in the second quarter, and the Netherlands bounced back from a weak first quarter to expand by 0.5%. But Germany, France and Italy between them account for two-thirds of eurozone GDP and dragged down the overall growth figure. The annual rate of growth fell from 0.9% in the first quarter to 0.7% in the second quarter.

http://www.theguardian.com/business/2014/aug/14/eurozone-growth-economy-germany-fall-france-stagnation-italy

2 Berkshire Hathaway shares hit record (BBC) Shares in Warren Buffett’s Berkshire Hathaway have surpassed $200,000 for the first time. That values the firm – which has added over 70 companies since Mr Buffett took it over in the 1960s – at an estimated $326bn. The company’s shares have long been the most expensive stock in the US. Mr Buffett has never split the company’s class A shares, although there are cheaper class B shares that are priced at $134 per share.

On Thursday, shares in Mr Buffett’s company rose $3,241, or 2%, to end at $202,850. The price of Berkshire Hathaway’s class A shares are more than 60 times the next most expensive stock listed on US exchanges – that of Seabord Corporation, a transportation and agriculture firm.

Berkshire has a large number of majority and minority investments in dozens of companies, ranging from small jewellery and furniture retailers to insurance giants Geico and General Re, chemicals group Lubrizol, Coca-Cola, IBM, American Express, Wells Fargo Bank and dozens of others. Berkshire’s long-term gains have made Mr Buffett the world’s third wealthiest man, with a fortune of $65.9bn, according to Forbes magazine.

http://www.bbc.com/news/business-28795260

3 India, Pakistan and independence days (Rahul Singh in Khaleej Times) Today, India completes 67 years as an independent nation (Pakistan did so yesterday). On August 15, 1947, as the British formally relinquished their two centuries-hold over the Indian subcontinent, the Indian tri-colour flag was proudly unfurled on the ramparts of Delhi’s Red Fort, built by Mughal Emperor Shah Jahan, while the British Union Jack was lowered.

India and Pakistan achieved their freedom almost entirely by peaceful means (the violent group was a fringe element), unlike most other colonies ruled by the imperial powers. The British had left behind an extensive industrial and social infrastructure, which provided the two countries a springboard for development. Many other colonies, like Indonesia and much of Africa, were not so fortunate and had to start virtually from scratch.

Though a Hindu fanatic assassinated Gandhi soon after India got its independence, Nehru was there to carry the torch of democracy and representative government. Pakistan was not so fortunate. It lost two of its most charismatic leaders very early, Jinnah from tuberculosis, and Liaquat Ali Khan, from an assassin’s bullet. As a result, democracy stuttered in Pakistan and the army took over, each successive military dictator being worse than his predecessor.

If Islamabad blundered in East Pakistan, New Delhi badly mishandled the Sikhs and the Kashmiris. The tragedy is that while India and Pakistan have been trying their best to destablise each other, they have neglected their own development and progress.
Meanwhile, there has been a sea-change in the Indian political scene, with the recent stunning election victory of the Bharatiya Janata Party (BJP), led by Narendra Modi.

The great pity is that over a third of Indians and Pakistanis live below the poverty line and a quarter of them cannot read or write. Instead of tackling these challenges, in the 67 years of their independence, both countries have been fighting and destabilising each other. Isn’t it time some sense was dinned into the heads of their leaders, to put their differences aside and cooperate for the betterment of their people? Other neighbouring countries have done exactly that. Why not India and Pakistan?

http://khaleejtimes.com/kt-article-display-1.asp?xfile=data/opinion/2014/August/opinion_August18.xml&section=opinion

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