1 Greece’s red lines blur and bend (Phillip Inman in The Guardian) Like a husband forgiven for countless infidelities, Greek leader Alexis Tsipras is back in Brussels with a wink and a smile and, yes, another kiss and make-up proposal. Only this time, it looks like the marriage is saved.
What his partners want is simple, if difficult to achieve without further sacrifices. They want to close a funding gap in this year’s budget that most analysts estimate at €2bn. It would appear that the leader of the leftist Syriza government has done enough to keep alive his country’s hope of staying inside the euro. The question for his supporters at home will be, has he ditched his principled stand against further austerity, and if he has, do they care?
Tackling the towering cost of the Greek pension system was once considered a no-go area. Already cut by his predecessors, Tsipras had ruled out shaving anymore from the bill. Likewise VAT was off the agenda. Now it seems he is prepared to compromise on both issues. On pensions, Athens appears to have conceded that the government’s coffers must be shielded from a wave of early retirements.
According to documents supplied by Tsipras’s finance minister, Yanis Varoufakis, there are 400,000 Greeks looking to retire this year who qualify for a state pension, most of them under the existing early retirement rules.
Greek economy minister George Stathakis has put forward an increase on tax surcharges that middle and high-income earners pay, together with an extra levy on companies with annual net income of more than €500,000 and a hike in corporation tax from 26% to 29%.
The troika of European Commission, ECB and IMF is now expected to pull out all the stops and wave through the last €7.2bn of funds due under the existing bailout programme. With that, Greece can limp on. But this remains an unhappy relationship.
2 Facebook worth more than Walmart on stock market (San Francisco Chronicle) Facebook is now bigger than Wal-Mart, at least when it comes to its value on the stock market. While the switch is mostly symbolic it signals investors’ insatiable appetite for successful tech stocks. Apple, Microsoft and Google top the list of the highest-valued companies in the US, and Facebook looks to be on its way to joining them.
A company’s market value is calculated by multiplying the number of shares of stock it has in circulation by the current price of one share. Facebook Inc. was valued at $238 billion on Tuesday. Wal-Mart Stores Inc. was valued at $234 billion.
Comparing the two companies’ financial results, though, shows just how much Wall Street is investing in growth and potential — Facebook — versus existing size and might — Wal-Mart. In the first three months of this year, Facebook’s total revenue of $3.54 billion amounted to just a little more than Wal-Mart’s total profit for its fiscal first quarter of $3.34 billion. But while Facebook saw revenue grow 42 percent in the same period, Wal-Mart’s declined slightly.
That said, none of the nine companies that follow Apple in the top 10 come even close to the mighty iPhone and Mac maker, whose market capitalization is about $735 billion.
3 Bumpy ride for Brazil’s bio-fuel business (Daniel Gallas on BBC) In the last three years, low petrol prices in Brazil have plunged Brazil’s bio-fuel business into a crisis. Brazil is known for having one of the world’s most advanced green transport programmes. It has the world’s largest fleet of flex-fuel cars. In the past decade, much of its economy embraced sugarcane-based ethanol as an energy source.
It is widely available in gas stations across the country. The majority of new cars are able to run on either petrol or sugarcane-based ethanol. But in recent years, as Brazil’s economy slowed down, ethanol was one of the hardest hit sectors. While oil prices were high globally, petrol was kept artificially cheap for consumers in Brazil by the state run oil company Petrobras.
Fossil fuels received incentives, as Brazil’s government moved to tackle another issue: inflation. Paulo Furquim de Azevedo, an Economics professor at Sao Paulo’s Insper business school, says Brazil’s government did not act deliberately to hurt its ethanol industry, but its economic policy ended up damaging the sector. “The government did whatever it could to decrease the price of gasoline, which is very important in its inflation index.”
This policy plunged the town of Sertaozinho into its worst crisis in 30 years. Three out of seven major biofuel plants went bankrupt and now once again the town’s producers are having to change tack. Top biofuel producers have started investing in food again. Building biofuel-based power plants is also in decline.
But perhaps local producers have more to look forward to in the coming months. Brazil has overhauled its economic policy again this year, and ethanol is once again a priority. The mandatory mix of ethanol in petrol has increased – from 25% to 27.5%, and the levy on fossil fuel has been reinstated. More importantly, subsidies to petrol have been terminated. Government incentives and Brazil’s weak currency are helping to keep ethanol more competitive than petrol. And ethanol sales are up again this year.