1 Eurozone crisis set for repeat act (Larry Elliott in The Guardian) The eurozone is perhaps one crisis and one deep recession away from splintering. The more TV pictures of rioting on the streets of Athens or general strikes in Italy between now and the election, the better support for Nigel Farage’s UK Independence party will hold up.
Stronger support for Ukip will encourage the Conservatives to adopt a more Eurosceptic approach, hardening their stance on the concessions required for them to continue supporting Britain’s membership of the EU. Meanwhile, a permanently weak eurozone economy will push Britain’s trade balance into the red. The economic debate in the current parliament has been about sorting out the budget deficit; the debate in the next parliament will also be about sorting out the current account deficit.
Monetary union is a textbook case of the dangers of allowing politics to trump economics. Germany is a completely different economy to Greece. Portugal’s economy is not a bit like that of the Netherlands. Italy was able to remain competitive in the pre-euro days only by regular devaluations of the lira. To yoke all these countries together in a one-size-fits-all single currency was an act of supreme folly.
A fresh Greek crisis will have spillover effects. It will lead to a fresh recession and deepen deflation. Weak growth and falling prices are a toxic combination for highly indebted countries, because they raise the real value of debts while cutting national output.
The politics of this are simple. Voters no longer see Europe as the solution to Britain’s economic problems. They are glad Britain didn’t join the euro. Many are unconvinced that Britain should be in the EU at all. The longer the euro crisis goes on, the bigger Nigel Farage’s grin will get.
2 Gulf shares in sharp decline (Issac John in Khaleej Times) Dubai’s benchmark DFM Index retreated 7.6 per cent to 3,321.3 points on Sunday as across the GCC share markets recorded sharp declines after oil prices continued to tumble to five-year lows. The Dubai bourse, one of the world’s best performers by climbing 60 per cent this year, ended on Sunday at its lowest level so far in 2014 with the index closing 1.5 per cent lower than 2013’s finish.
It came under pressure with energy stocks declining 9.3 per cent and the real estate and banking sectors also falling. Over the past one week, close to Dh65 billion has been wiped off the market value of in the UAE with fund managers getting more cautious of further volatility ahead if oil prices continue to decline.
With the exception of Qatar and Bahrain, all markets in the Gulf are now below their 2013 close. Since September, the combined capitalisation of the seven markets dropped around $190 billion to stay at around $980 billion, according to the Arab Monetary Fund.
3 Why tech cos splurge on holiday parties (Wendy Lee in San Francisco Chronicle) Leave it to the tech industry to disrupt the holiday party. For Bay Area companies, events that in other industries might warrant a potluck or an open bar are treated as lavish celebrations that cost small fortunes. Analysts say holiday parties are key for retaining talented employees who are often courted by rival firms. Many tech staffers are already accustomed to perks — from free meals to dry cleaning — leaving companies feeling pressured to make the year-end bash particularly memorable.
Some spend hundreds of thousands of dollars on the festive events, splurging $100 to $150 per person on food and drink, according to people familiar with the matter. The holiday party “is like a cherry on a sundae,” said John Challenger, CEO of outplacement firm Challenger, Gray & Christmas. “Companies are hoping that people will say to themselves … ‘This is a great place to work. There’s no place like this.’”
The parties can be quite elaborate. Last year, Twitter paid the city of San Francisco $73,100 to rent City Hall for a holiday party. If food and drink cost $100 per person, which people familiar with such events estimate, the bill for the food and drink alone would have added up to $290,000. That doesn’t include entertainment, transportation, photography, decor or lighting (a vendor spent 3½ hours putting filters on the structure’s 212 lights to turn City Hall Twitter’s blue hue).
Nearly 90 percent of companies nationwide are hosting holiday or year-end parties this year, with roughly 1 in 5 businesses planning to spend more on their events, according to a survey across several industries by Challenger, Gray & Christmas. In 2011, only 68 percent of companies surveyed threw those parties, the firm said.
Wall Street used to compete with Silicon Valley when it comes to elaborate parties. Both wanted to project a fun image to talented, younger workers, Challenger said. But that changed after the nation’s financial crisis, he said. “Banks have become much more conservative about their holiday parties, reflecting again a much more somber, cautious culture,” Challenger said.