Five threats to American prosperity; Saudi Arabia plans solar power plants; Exit interviews lead to few changes

1 Five threats to American prosperity (Phillip Inman in The Guardian) Janet Yellen sits down with her colleagues on the Federal Reserve’s interest rate-setting committee this week. The combination of turbulent financial markets and an uncertain outlook for the global economy as China slows and Europe contemplates the possible fallout from a Brexit vote, calls for cool heads, and a wait and see approach.

Yellen’s worries can be divided into five main categories. First, the jobs market. The most recent jobs figures appeared to show that employers felt confident about the future. Unemployment benefit claims were low, indicating that redundancies were being shelved in the expectation of more work.

Second, US manufacturing: Looking back, it is possible to see that much of the growth in US manufacturing after 2011 was tied to the shale gas boom. The collapse in the oil price from the summer of 2014 signalled the end of the boom.

Third, China’s slowdown: There is a bigger worry when it comes to China than yo-yoing economic data – and that is the source of its growth. A record surge in credit in the first quarter came after an already worrying longer-term rise in borrowing, especially in the property sector. China will have to rely on domestic demand to secure Beijing’s goal of growth at between 6.5% and 7% for the year.

Fourth, currency wars: A rise in US interest rates would encourage international investors to buy US assets, and to do this they’d need to exchange their own currency for dollars, increasing the demand for and price of the US currency. A higher dollar would only increase the gap with the euro and the yen and force the Chinese to devalue the yuan, further loosening its ties to the dollar.

Five, Brexit: The Organisation for Economic Cooperation and Development recently asserted that a British departure from the EU posed as big a threat to the global economy as a “hard landing” in China. The Paris-based thinktank said Brexit would have significant costs not just for the UK and Europe, but for the rest of the world. Is this a world that could cope with the destabilising effects of higher borrowing costs in the US? It is to be hoped Yellen will judge it is not.

2 Saudi Arabia plans solar power plants (Gulf News) Saudi Arabia’s state electricity utility is seeking bids from international developers to build two solar-power plants in the kingdom’s northern region. The plants will each generate as much as 50 megawatts using photo-voltaic technology, which produces power directly for solar cells, according to a tender announcement that Saudi Electricity Co.

The tender is the first by Saudi Arabia to seek international partners to cooperate in building and operating renewable-energy facilities, according to the Middle East Solar Industry Association. The country is scaling back its ambitions for renewable energy and currently seeks to generate 9,500 megawatts by 2030 from sources such as solar and wind power.

Saudi Arabia is developing renewable energy to take advantage of its ample sunlight and to diversify energy supply amid rising demand. Yet renewable resources will only account for about 10 per cent of total power capacity compared with the previous target of about 50 per cent, Energy Minister Khalid Al Falih said last week during a presentation of the kingdom’s long-term strategy to overhaul the economy. The government is now counting on increased output of natural gas to help cut its reliance on crude oil.

3 Exit interviews lead to few changes (Dawn) According to a global survey of more than 200 executives in 35 countries, about 75pc said that their companies conduct exit interviews when employees leave.

Of those, about 71pc said that human resources departments handle the interviews, while about 19pc said that they’re handled by the employees’ supervisors. But when researchers asked respondents to name a specific change that resulted from feedback collected during the exit interviews, less than a third could.


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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