Global growth seen sluggish; Record loss for Italy’s biggest bank; A relentless widening of wealth disparity; Smartphones and bad parenting





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1 Global growth seen sluggish (Khaleej Times) Global growth is likely to remain sluggish as a slowdown in the developing world undercuts gains in Europe and the US, a leading international economic body has warned. The Organisation for Economic Cooperation and Development (OECD) said one-off factors like the harsh winter weather in North America and the US government shutdown mean “growth for the major advanced economies in the first half of 2014 will be somewhat slower than in the second half of 2013.”

Meanwhile, emerging economies, which now account for over half the world economy, “are experiencing a marked loss of momentum,” the OECD said. If that continues, the OECD warned it “is likely to mean that global growth remains only moderate in the near term.”  In its World Economic Outlook, the organisation forecasts global growth of 3.6 per cent this year, from an estimated 2.7 per cent in 2013. It says the recovery in the US “is relatively well established,” contrary to what it sees happening in the EU and Japan, where the OECD called for further monetary stimulus.

It estimated growth in the US would slow to 1.7 per cent in the first quarter from the previous three months on an annualised basis, down from 2.4 per cent in the fourth quarter when exceptionally bad weather weighed on activity. Turning to emerging market economies, the OECD said some were seeing a marked loss of momentum as capital outflows exposed vulnerabilities in some countries.

2 Record loss for Italy’s biggest bank (BBC) Italy’s biggest bank, UniCredit, has reported a record annual loss of 14bn euros and said it plans to cut 8,500 jobs. The bank, Italy’s biggest by assets, put aside 13.7bn euros to cover losses from bad loans in 2013. UniCredit is trying to take stock of its financial position before European regulators conduct an industry-wide health-check in the coming months.

The planned job cuts will see the bank lose about 6% of its workforce by 2018. UniCredit said it would not need a capital increase, and that it was confident it would get a clean bill of health when the European Central Bank reviews the finances of the eurozone’s 128 biggest banks. “I believe the group has turned the page,” said UniCredit’s chief executive, Federico Ghizzoni.

3 A relentless widening of wealth disparity (Eduardo Porter in The New York Times) What if inequality were to continue growing years or decades into the future? Say the richest 1 percent of the population amassed a quarter of the nation’s income, up from about a fifth today. What about half? To believe Thomas Piketty of the Paris School of Economics, this future is not just possible. It is likely.

In his bracing “Capital in the Twenty-First Century,” Professor Piketty provides a fresh and sweeping analysis of the world’s economic history that puts into question many of our core beliefs about the organization of market economies. His most startling news is that the belief that inequality will eventually stabilize and subside on its own, a long-held tenet of free market capitalism, is wrong. Rather, the economic forces concentrating more and more wealth into the hands of the fortunate few are almost sure to prevail for a very long time.

 “Political action can make this go in the other direction,” Professor Piketty said. But he also adds that history does not offer much hope that political action will, in fact, turn the tide: “Universal suffrage and democratic institutions have not been enough to make the system react.”

This is not solely an American phenomenon. Across many other developed nations, the distribution of economic rewards in the 21st century is taking on decidedly 19th-century features. Income from wealth usually grows faster than wages. As returns from capital are reinvested, inherited wealth will grow faster than the economy, concentrating more and more into the hands of few. This will go on until capital owners decide to consume most of their income and stop reinvesting as much.

If anything, future inequality in the US will be driven by two forces. A growing share of national income will go to the owners of capital. Of the remaining labor income, a growing share will also go to the top executives and highly compensated stars at the pinnacle of the earnings scale. Is there a politically feasible antidote? Professor Piketty notes that the standard recipe — education for all — is no match against the powerful forces driving inherited wealth ever higher.

4 Smart phones and bad parenting (Amy Graff in San Francisco Chronicle) A study published online in the journal Pediatrics finds that smart phones are making us bad parents. Researchers from the Boston Medical Center went undercover at 15 fast-food restaurants in the Boston area and surreptitiously observed 55 caregivers accompanied by one or more children. They took copious field notes and analyzed their findings to identify common trends around device use.

Forty of the parents were on their smartphones at some point while dining with their children. About one-third were engaged with a device throughout the entire meal. Researchers noticed that parents who were tapping away on their phones tended to ignore their children or they reacted harshly to their kids’ behavior. Some children seemed unfazed by the lack of parental attention, while others were clearly bothered. The engagement between children and those parents who were glued to their phones was especially negative.

In one situation, three boys loudly sang “Jingle Bells, Batman smells…” to get their father’s attention. In another, a mom never looked up from her phone while her daughter stole her brother’s chair and swung it around in the air. A mother pushed away a young boy’s hand as he repeatedly tried to lift her face up from looking at a tablet screen. Another mom kicked her child’s foot under the table when he tried to divert her attention from her phone.

Many studies have looked at the effects of unsafe smartphone use among drivers and pedestrians but few studies have analyzed the toll these devices have on parenting. “The conclusion I wouldn’t draw from the study, is that we need to completely remove these devices when we are with our children,” the study’s lead author Dr. Jenny Radesky said. “But it does raise the issue that we need to create boundaries for these devices when we are with our children.” (Time & ABC News)


About joesnewspicks

This blog captures interesting news items from around the world for those strained by information overload and yet need to stay updated on global events of significance. The news items displayed are not in order of merit. (The blog takes a weekly off — normally on Sundays — and does not appear when I am on vacation or busy.) I am a journalist for nearly three decades.
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