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1 IMF warns of deflation risk (BBC) The head of the International Monetary Fund has warned about the risks to global economic recovery of deflation. Christine Lagarde said that “optimism is in the air” about growth, but the recovery is still “fragile”. In a speech in Washington, she said, “If inflation is the genie, then deflation is the ogre that must be fought decisively”. Earlier, the World Bank said that the global economy was at a “turning point” but “remained vulnerable”.
There has been growing debate about whether deflation might take hold in the eurozone, where inflation remains persistently below the European Central Bank’s target. Deflation can reduce personal consumption as people wait for prices to fall further, and discourage investment because it can raise the real cost of borrowing. Ms Lagarde also warned about the volatility that could accompany the US Federal Reserve’s gradual withdrawal of monetary stimulus.
The US Federal Reserve has already begun to wind down its monthly bond-buying programme, previously set at $85bn a month. There is concern this could push up global interest rates, which could affect the flow of money in and out of developing countries and lead to more volatile international financial markets. The bank forecasts that global GDP will grow by 3.2% this year, up from 2.4% in 2013, with much of the pick-up coming from developed economies. Developing nations will grow by 5.3% this year, up from 4.8% in 2013.
2 Shopping by smartphone doubles in UK (Sarah Butler in The Guardian) Mobile phones and tablet computers are now used for nearly 6% of all retail sales as Brits embrace shopping from the sofa, the train and under the duvet. While total online sales rose 18% year-on-year in December to £11.1bn, according to e-tail industry body IMRG and advisory firm Capgemini, sales via mobile devices doubled to £3bn.
“Sales via mobiles will continue to rise in 2014, this is now mainstream,” said Chris Webster, head of retail at Capgemini. He said that the adoption of hand-held technology, as well as the development of click-and-collect” services, which enable shoppers to order online and then pick up their purchases at a convenient store, had accelerated the switch from the high street to online. IMRG is predicting that this year total online sales will rise by 17% to £107bn after rising 16% to £91bn last year.
Shoppers’ switching to the internet is already having a huge impact on traditional retailers who are having to invest millions of pounds in creating logistics networks and IT systems to cope with delivery of online orders while sales in stores fall back. Those retailers without a strong online presence, such as supermarket Morrisons, had a very poor Christmas. “Tablet computers are lowering the barriers to entry. People not comfortable with technology are comfortable with tablets which are more tactile,” said Andrew McClelland from IMRG.
3 US passes $1.1trn spending bill (Straits Times) The US House of Representatives overwhelmingly approved a US$1.1 trillion spending bill for fiscal year 2014, capping a months-long negotiation that signals a truce in three years of fiscal battles plaguing Washington. The measure, which funds the federal government under the budget framework hammered out by Democrats and Republicans last month, passed 359-67, in a strong show of bipartisanship that belies the intense bickering that has marked recent debates and over how – and how much – to fund government.
It now heads to the Senate, where it is expected to pass this week before being signed into law by President Barack Obama. It also eliminates the threat of a government shutdown this month, similar to the one that paralysed Washington for 16 days in October when Congress failed to agree on a budget.
4 The entitlement generation (Elizabeth Farrelly in Sydney Morning Herald) The twenty-somethings are the entitlement generation. Reared to expect massive unearned success, they had parents who mainly just bolstered the kid’s self-esteem, schools dedicated to ensuring no child ever feels self-critical and sports competitions where every participant gets a gong. No church. Heaven forbid.
Life has taught these children that whatever they want, they should have. Whatever they do, or don’t do, they’ll be applauded. We have all conspired in this, and the dangerous but fascinating spectacle it makes. What’s to be done? Can regulation help? But they rely on the threat of punishment. And punishment has three purposes: retribution, reformation or prevention. Retribution is pointless. Reformation is usually unachievable and prevention effective only where the behaviour in question is under rational control.
In ancient times, well before Christ, philosophers were obsessed by such questions – what constitutes a good life and how to live it. The happiness industry, one of modern life’s saddest aspects, shows repeatedly that the ancients were right: in the end, goodness and happiness are one. They taught their children that self-indulgence is just fools’ gold. That the monkey brain must be mastered and transcended; that goodness must be fought for, and civilisation perpetually re-won. They knew masculinity, like beards, needs careful shaping.
We, instead, teach our children that the highest good is truth to self, pursuit of dreams, feeling fine, getting what you want. Any wonder that they binge drink and refuse to play nicely with others?