1 Greece ‘No’ brings world markets back to wild days of 2008 (Nils Pratley in The Guardian) After the ‘No’ vote by Greeks, we’re back to the wild markets seen at the height of the banking crisis in 2008. Many fund managers, even last week, were expecting a strong yes vote in Greece. It’s hard to know how severely they will be shocked by the scale of the no victory. Share prices in London are bound to be affected – a 2% fall, or about 130 points off the FTSE 100 index, was Sunday night’s indication in futures markets.
Bond markets, however, will take centre stage. That is where Grexit worries will be keenest. If Greece could be on the way out of the single currency, will investors be less willing to hold the debt of other eurozone states carrying heavy debt loads? The sovereign debt of Spain, Italy, Portugal and Ireland will be closely watched for knock-on effects. Will there be contagion?
All eyes will turn to the European Central Bank. First, to see if it cuts off support for Greek banks. Second, to learn if it is prepared to intervene to protect the bonds of other eurozone stragglers. If bond markets are relatively calm, the ECB might then sit on its hands. If not, it could step into the bond markets as a buyer, sweeping up stock as part of its established quantitative easing programme.
If markets are still panicked at the end of the week, the governing council could meet to consider emergency measures. Above all, the ECB and the eurogroup wants Spain, Italy and Portugal to continue to be able to issue bonds in normal fashion, at affordable prices. Angela Merkel and other eurozone leaders have argued for months that the eurozone could cope with Greece’s departure. The bond market will judge the credibility of that boast.
The euro itself will almost certainly fall in value initially – but perhaps not heavily. Indeed, one school of thought says the single currency would be strengthened in the long run by the departure of its weakest member.
2 China stretches influence as US loses its way (Fareed Zakaria in Khaleej Times) As Daesh, Iran and Greece occupy the attention of the Western world, China marches forward, except now it is not just building its economy but also a new geopolitics in Asia.
Satellite photographs taken this week show that China has almost completed an airstrip on one of the many artificial islands it has created in the Spratly archipelago over the last year and a half. Its actions in the area are all intended to consolidate the country’s claims to 90 per cent of the South China Sea, through which $5 trillion in trade flows every year. (These claims are disputed by the Philippines, Vietnam, Malaysia, Brunei and Taiwan.)
President Xi Jinping has marked a break with his predecessors in openly embracing an activist foreign policy, speaking about the “Asia-Pacific Dream” and announcing ventures like the Asian Infrastructure investment Bank and the “Maritime Silk Road.” Behind this rhetoric is an avalanche of cash.
The scholar David Shambaugh points out that if you add up China’s promised investments in all of these regional ventures, the total is $1.41 trillion. The Marshall Plan, by comparison, cost $103 billion in today’s dollars. A senior Southeast Asian diplomat explained to me that China is using money and pressure to “suborn” countries in the region. He pointed out that aid is often carefully targeted, so that money to Malaysia, for example, is directed specifically to the state of Pahang, the political base of the prime minister.
Politicians in Singapore told me that Beijing has even begun to reach out to local Singaporeans of Chinese descent and to nudge the city-state’s foreign policy — which remains staunchly allied to the US — in a more pro-Chinese direction. And how do diplomats in Southeast Asia see the US? As distracted and largely absent.
What makes dealing with China’s growing influence in Asia especially tricky is that a good part of it is inevitable and could be benign. China is the largest trading partner of almost all Asian economies, even Australia. Its increased involvement in the region could be a win-win. But it also produces great anxieties about political domination. Countries here are looking to the US to deter China but yet engage it.
3 Robots on the march (Rory Cellan-Jones on BBC) You can walk from one end of Innorobo, Europe’s largest robotics event, to the other in five minutes – but in that time you will see more innovation packed into a small space than you will ever find in those gigantic shows.
The show’s focus has in the past been on industrial robotics, and there are plenty of advances on this front. I spotted a robotic arm delicately picking up individual chocolates and placing them in a box, air-quality robots that can wander a factory reporting back on pollution levels, and cupboards on castors picking a route through a crowd to deliver tools to workers at the other end of the hall.
But the star of the show was undoubtedly Pepper, the French-made humanoid robot companion and the most advanced domestic robot to go on sale to the general public. “Pepper won’t do the dishes” explains Magali Cubier of Aldebaran Robotics, “but if Pepper can see you are sad, then Pepper will propose a game to cheer you up.”
How does the robot know I’m sad? It is packed with sensors which can for instance detect a sad face or intonation in your voice, so this internet-connected device may decide now is not the moment to read out the news headlines. This robot is solely devoted to being your companion, sensitive to your every mood – it can even dance with you, though I’m not sure my moves impressed Pepper.
It is facial recognition technology that will enable robots to recognise us – and that’s just one of the controversial issues hanging over this fast growing industry. And then there’s the question of jobs. One firm here is showing off an autonomous forklift truck, effortlessly shifting pallets without the aid of a driver. The driver is the most expensive element of a forklift, so the product pays for itself within a year, according to Fabien Bardinet of Balyo, the company behind the autonomous driving technology.
Let’s not exaggerate the threat from the robots – they are still very bad at things we find easy, like climbing stairs or telling jokes. But over the next few years we could see them gradually filling more human roles, from sales assistants to child minders to taxi drivers. And we – the humans – will have to decide how far this robot revolution should go.