Canada is already in a recession, says Bank of America

TXSCanada is already in a recession, says Bank of America, and the loonie is set to get hammered

By John ShmuelMore from John Shmuel | @jshmuel

Bank of America Merrill Lynch has become the first bank to call for a Canadian recession this year.

Economist Emanuella Enenajor and her team now say that Canada’s economy will shrink by 0.6 per cent in the second quarter, following a 0.6 per cent contraction in the first. The definition of a recession is two consecutive quarters of contraction.

A recession sets up the Bank of Canada for another rate cut this year, said Enenajor, and she expects that the downturn will hammer the Canadian dollar — knocking it down to just under 77 cents U.S. by early 2016, the lowest level in more than a decade.

“The economy has surprised to the downside this year, and appears to have entered a recession in 1H 2015, even after policy easing in January,” she said in a note to clients.

Economists have been making a lot of bearish calls on the Canadian economy recently, following data showing that gross domestic product has shrunk for four-straight months — the first time that has happened since the 2008-09 recession.

The Bank of Canada’s rate announcement will be on July 15, and many economists have changed their forecasts to call for another 0.25 per cent cut to be announced then. Others have said the bank will wait till later this year, given the criticism it faced following a surprise cut from 1 per cent to 0.75 per cent in January.

In a closed-door speech over the weekend, bank governor Stephen Poloz compared that rate cut to life saving surgery, saying it was necessary to protect Canada from the damage done by a collapse in oil prices earlier this year. He compared any negative effects lower rates would have on household debt, already near a record level in Canada, to post-surgery side effects.

Enenajor said a rate cut to 0.50 per cent this year, combined with a recession, will have the biggest impact on Canada’s dollar. The loonie has already fallen 8 per cent year-to-date against the greenback.

“A BoC cut in October, lower oil prices in Q3 and underpriced risks of a September Fed hike are all positive USD/CAD,” she said. “We see USD/CAD rising to 1.30 in early 2016, and upside risks in 2015 given price action and the BoC’s explicit mention of C$ in May.”

Read more » Financial Post
See more » http://business.financialpost.com/investing/canada-is-already-in-a-recession-says-bank-of-america-and-the-loonie-is-set-to-get-hammered?__lsa=a5d7-2feb

Russia Opens Door To Greece As Sixth Member Of New BRICS World Bank: Russian Oil Makes Athens Europe’s Energy Hub!

Putin accepts invitation to visit Pakistan

Greek Prime Minister Alexis Tsipras on Monday held a telephone conversation with Russian Deputy Finance Minister Sergei Storchak. During the conversation, Storchak invited Greece to become the sixth member of the New Development Bank of BRICS countries, Greece’s Syriza party reported on its website. Storchak is a representative of the BRICS Bank which is now being established.

Read more » Political Vel Craft
See more » http://politicalvelcraft.org/2015/05/14/russia-opens-door-to-greece-as-sixth-member-of-new-brics-world-bank-russian-oil-makes-athens-europes-energy-hub/

IMF has made €2.5 billion profit out of Greece loans

Corporate Greed

By Jubilee Debt Campaign

Ahead of the payment of €462 million by Greece to the IMF on Thursday 9 April, figures released by the Jubilee Debt Campaign show that the IMF has made €2.5 billion of profit out of its loans to Greece since 2010. If Greece does repay the IMF in full this will rise to €4.3 billion by 2024.

Read more » Jubilee Debt
See more » http://jubileedebt.org.uk/news/imf-made-e2-5-billion-profit-greece-loans

Canada’s economy shrinks for fourth month, raising spectre of recession

economyBy Gordon Isfeld

OTTAWA — Canada’s economy began the second quarter of 2015 the same way it finished the previous three-month period, continuing to contract as the collapse of oil prices squeezed output in the energy sector and the hoped-for turnaround in manufacturing again failed to materialize.

That will be discouraging news for the Bank of Canada, which has been looking for signs of a rebound in this country and in the United States after a harsh winter start to the year — greatly aggravated by the plunge in crude and an uncertain global economy.

Statistics Canada said gross domestic product — the widest measure of goods and service produced the country — declined 0.1 per cent in April. That was the fourth straight monthly contraction in the economy. The last time output declined over that many months was between November 2008 and May 2009, at the tail end of the recession.

Most economists had forecast 0.1 per cent growth in April.

Canadian GDP shrinks four months in a row

Read more » Financial Post
See more » http://business.financialpost.com/news/economy/canadas-economy-shrinks-again-raising-spectre-of-recession

Warming ties between China and Russia are giving a big boost to Chinese imports of Russian oil

Photo credits: .(Reuters / Aly Song)

Photo credits: .(Reuters / Aly Song)

Russia, OPEC Jostle to Meet China Oil Demand

Glut of Crude Fuels Rivalry Between the Major Producers

By BRIAN SPEGELE

BEIJING—Warming ties between China and Russia are giving a big boost to Chinese imports of Russian oil, to the chagrin of OPEC nations jockeying for a slice of China’s market.

Faced with falling prices and lower demand from the U.S., oil-exporting nations are increasingly putting their hopes in China’s still-robust demand for crude. But Saudi Arabia and other big producers like Venezuela have seen such sales drop as Moscow’s isolation from the West over Ukraine prompts it to turn to Beijing.

Read more » The Wall Street Journal
See more » http://www.wsj.com/articles/russia-opec-jostle-to-meet-china-oil-demand-1421987738

Is Greece close to Grexit?

The Greek government is running out of time and money.

If it fails to come to a deal with eurozone partners to secure the final tranche of its bailout, there is a real chance it could default on its loans.

That could push the Greek government towards leaving the single currency, otherwise known as Grexit.

How bare are Greece’s coffers?

Without an urgent cash-for-fiscal reforms deal, the leftist Syriza government will run out of cash. And that deal needs to be agreed by the end of June, when Greece’s bailout deal with its eurozone creditors runs out.
Somehow, the money was scraped together to survive €1bn (£730m; $1.1bn) in debt payments to the International Monetary Fund in May, but Greece has already postponed June payments to the IMF and further hefty bills are due, to the IMF, European Central Bank and holders of short-term treasury bills.

The government in Athens has called on public sector bodies including hospitals to surrender any cash reserves they have.
The mayor of Greece’s second city, Thessaloniki, has already handed over millions.
Without at least part of the final €7.2bn slice of its giant EU-IMF bailout, Greece would almost certainly default on its debts.
Greeks see cash run out in undeclared default.

Can it stay afloat?

The message from Greece’s government is a resounding no. Quite simply it has too many debts to pay in too short a period.
At the start of June, Mr Tsipras’s government announced it would roll its four June payments to the IMF into one, giving it until the end of the month to find the necessary €1.5bn.
But it also needs to find another €2.2bn in June for public sector salaries, pensions and social security payments.

For a populist, left-wing party like Syriza, it would be unthinkable to pay its debts to creditors ahead of funding pensions for 2.6 million Greeks and some 600,000 civil servant salaries. It has already moved to re-employ 4,000 civil servants whom the previous government got rid of.
Greece’s last cash injection from its international creditors was in August, so the final €7.2bn instalment from its two EU-IMF bailouts, worth €240bn in total, is now seen as vital.
Even then Greece is likely to need a third bailout worth tens of billions. But if Greece’s reform package fails to satisfy its creditors, there will be no new cash.

Read more » BBC
See more » http://www.bbc.com/news/world-europe-32332221

Iceland Jailed Bankers and Rejected Austerity – and It’s Been a Success

Instead of imposing devastating austerity measures and bailing out its banks, Iceland let its banks go bust and focused on social welfare policies. It has now repaid 85 percent of U.K. claims, and the Icelandic finance minister announced recently that all will be settled by the end of the year.

By Roisin Davis / truthdig.com

When the global economic crisis hit in 2008, Iceland suffered terribly—perhaps more than any other country. The savings of 50,000 people were wiped out, plunging Icelanders into debt and placing 25 percent of its homeowners in mortgage default.

Now, less than a decade later, the nation’s economy is booming. And this year it will become the first culturally European country that faced collapse to beat its pre-crisis peak of economic output.

That’s because it took a different approach. Instead of imposing devastating austerity measures and bailing out its banks, Iceland let its banks go bust and focused on social welfare policies. In March, the International Monetary Fund announced that the country had achieved economic recovery “without compromising its welfare model” of universal health care and education.

Iceland allowed those responsible for the crisis—its bankers—to be prosecuted as criminals. Again, a sharp contrast to the United States and elsewhere in Europe, where CEOs escaped punishment.

“Why should we have a part of our society that is not being policed or without responsibility?” asked special prosecutor Olafur Hauksson in the wake of the collapse. “It is dangerous that someone is too big to investigate—it gives a sense there is a safe haven.”

Read more » Flim For Action
See more » http://www.filmsforaction.org/articles/iceland-jailed-bankers-and-rejected-austerity-and-its-been-a-success/

The world economy – Watch out

The Economist issues an ultimate warning of another Recession

It is only a matter of time before the next recession strikes. The rich world is not ready

THE struggle has been long and arduous. But gazing across the battered economies of the rich world it is time to declare that the fight against financial chaos and deflation is won. In 2015, the IMF says, for the first time since 2007 every advanced economy will expand. Rich-world growth should exceed 2% for the first time since 2010 and America’s central bank is likely to raise its rock-bottom interest rates.

However, the global economy still faces all manner of hazards, from the Greek debt saga to China’s shaky markets. Few economies have ever gone as long as a decade without tipping into recession—America’s started growing in 2009. Sod’s law decrees that, sooner or later, policymakers will face another downturn. The danger is that, having used up their arsenal, governments and central banks will not have the ammunition to fight the next recession. Paradoxically, reducing that risk requires a willingness to keep policy looser for longer today.

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‘No deal’ with Greece as talks in Brussels fail

The latest round of talks between Greek and EU officials in Brussels has failed to reach an agreement.

A European Commission spokesman said while that progress was made on Sunday, “significant gaps” remained.

Europe wants Greece to make spending cuts worth €2bn (£1.44bn), to secure a deal that will unlock bailout funds.

Greek deputy prime minister Yannis Dragasakis said that Athens was still ready to negotiate with its lenders.

He said Greek government proposals submitted on Sunday had fully covered the fiscal deficit as demanded.

However, Mr Dragasakis added that the EU and IMF still wanted Greece to cut pensions – something Athens has said it would never accept.

The cash-strapped nation is trying to agree a funding deal with the European Union and IMF before the end of June to avoid a default.

Eurozone finance ministers will discuss Greece when they meet on Thursday. The gathering is regarded as Greece’s last chance to strike a deal.

The Commission spokesman said: “President [Jean-Claude] Juncker remains convinced that with stronger reform efforts on the Greek side and political will on all sides, a solution can still be found before the end of the month.”

‘Losing patience’

The talks come as Germany ramps up pressure on Greece. Vice-chancellor Sigmar Gabriel said on Sunday that European nations were losing patience with Greece.

Germany wanted to keep Greece in the eurozone, but writing in Bild he warned that “not only is time running out, but so too is patience across Europe”.

Mr Sigmar is also economy minister and head of junior coalition partners the Social Democrats.

Read more » BBC
See more » http://www.bbc.com/news/business-33125801

China’s Xinjiang launches cargo train service to Moscow

URUMQI, June 10 (Xinhua) — Railway authorities in China’s far western Xinjiang region on Wednesday launched a cargo train service linking its regional capital of Urumqi with Moscow.

The one more cargo train service westward can help boost the development of the northwestern autonomous region, a “core area” of the Silk Road economic belt, said Liu Jianxin, vice governor of Xinjiang, at the launch ceremony.

Since March 2014, Xinjiang has opened cargo train service to Kazakhstan, Georgia, Iran, Turkey and also Chelyabinsk of Russia.

The first train, loaded with 1,300 tonnes of PVC, left Urumqi at 6:15 p.m. and is scheduled to reach Moscow more than 4,000 km away in about ten days. It will return with wood pulp from Russia.

Wang Hongxin, chairman of Xinjiang Zhongtai Chemical Co., Ltd., said the cargo service can help drive the company’s annual sales of PVC by 10 percent.

By the second half of the year, more than three cargo trains will run between Xinjiang and the destinations in Russia and also central and western Asia per week.

The trains can then transport 50 billion yuan (8.1 billion U.S. dollars) of cargo a year, Liu said.

Editor: yan

News courtesy: Xinhuanet
Read more » http://news.xinhuanet.com/english/2015-06/10/c_134315616.htm

MSCI review: Pakistan may rejoin emerging markets in 2016

By Kazim Alam

KARACHI: MSCI, a leading provider of international investment decision support tools, said on Wednesday it may reclassify the MSCI Pakistan Index from ‘Frontier Markets’ to ‘Emerging Markets’ next year.

“We will add the MSCI Pakistan Index to the review list for its potential reclassification to Emerging Markets as part of the 2016 Annual Market Classification Review,” MSCI said.

Global institutional investors use different MSCI indices — such as frontier, emerging, China and US markets – to create balanced portfolios aimed at generating maximum returns while keeping in view their overall risk appetite.

Read: Confidence boost: MSCI includes two Pakistani companies in frontier index

The decision may appear to be a routine reclassification of economies by MSCI, but it has the potential to dramatically change dynamics of the Pakistan equity market: MSCI Emerging Market Index is tracked by global funds worth about $1.7 trillion, according to Bloomberg data.

“Not only the size of passive fund flows will increase, many large Emerging Markets funds may return to Pakistan,” says Topline Securities investment analyst Muhammad Tahir Saeed about the possibility of the elevation of the MSCI Pakistan Index to Emerging Markets next year.

In its brief commentary on the decision, MSCI said most accessibility criteria of the Pakistani equity market meet the MSCI Emerging Markets standards, except for some potential issues with the stability of the institutional framework.

Read more » The Express Tribune
See more » http://tribune.com.pk/story/901134/msci-review-pakistan-may-rejoin-emerging-markets-in-2016/

PM Modi told China, Pakistan economic corridor unacceptable: Sushma Swaraj

New Delhi: Prime Minister Narendra Modi raised “very strongly” the issue of the China-Pakistan economic corridor during his visit to Beijing and told them that it is “unacceptable”, External Affairs Minister Sushma Swaraj said here on Sunday.

Answering queries at a press conference, she said the government had summoned the Chinese envoy over the $46 billion economic corridor that is to run through Pakistani Kashmir.

She said the Indian envoy in Beijing had also raised the issue. Chinese President Xi Jinping had announced the ambitious 3,000 km-long China-Pakistan Economic Corridor (CPEC) during his visit to Pakistan in April.

“Prime minster during his visit took up the issue very firmly and spoke very strongly that the CPEC going through PoK (Pakistan-occupied Kashmir) is unacceptable,” she said. – – IANS

News courtesy: Zee News
Read more » http://zeenews.india.com/news/india/pm-modi-told-china-pakistan-economic-corridor-unacceptable-sushma-swaraj_1605173.html

Across the aisle: Letter to the Prime Minister

I read that there are 85 lakh persons registered with the employment exchanges in Tamil Nadu. If we extrapolate that number for the whole country, don’t you agree that the situation is alarming?

Written by P Chidambaram

Dear Mr Prime Minister,

I am an average citizen. I belong to an average family, had an average education, live in an average town, hold an average job, and have average ambitions. I am aware that because I am the son of a school teacher, hold a bachelor’s degree (second class) and have a job, I may actually be above the average. It only shows how low the average is.

In the last week, my fellow citizens and I have been bombarded with editorials, columns, statements, interviews, blogs, tweets and what not, and I am quite confused. I thought your letter of May 26 that appeared in all newspapers would put things in perspective but, I am afraid, it left me more confused. So, please bear with me while I ask you a few questions.

Where are the Jobs?

My first question is, how is the economy doing? To me and my children, and to all families on our street, the most important concern is jobs. Will you please tell us the number of jobs that were created in the first year of your government? The numbers I have seen are a little over one lakh of jobs every quarter, so that makes a grand total of 4 to 5 lakh jobs in the whole year. I also read that there are 85 lakh persons registered with the employment exchanges in Tamil Nadu. If we extrapolate that number for the whole country, don’t you agree that the situation is alarming? So, please tell us the truth about jobs.

That takes me to the next question, who is creating the jobs? My neighbour who teaches economics in the local government college told me that no real new jobs can be created in farming. She thinks that only if more people start new businesses, and more large plants are built to produce power or steel or cars or mobile phones or anything, will there be more direct and indirect jobs. She said the key word is investment and encouraged me to ask you what were the amounts invested in the last year by the public sector enterprises and the private sector, what is the number of jobs they expect to add once the projects go into production, and when. By the way, why don’t we see advertisements of a bhumi puja or an inauguration of a big project costing a few thousand crore rupees as we used to do a few years ago?

Read more » Indian Express
– See more at: http://indianexpress.com/article/opinion/columns/across-the-aisle-letter-to-the-prime-minister/#sthash.Mp0i0WAo.dpuf

Canadian Economy Shrinks – GDP numbers even worse than expected

The 0.6 per cent slide is much worse than expected, the deepest since the months after the 2008 economic meltdown.

By: Andy Blatchford, The Canadian Press

OTTAWA—When Bank of Canada governor Stephen Poloz veered off script earlier this year to deliver a stunner that Canada’s first-quarter numbers would look “atrocious,” he wasn’t kidding.

The sharp collapse in oil prices, and the failure of other sectors to pick up the slack, helped push the economy into reverse over the first three months of the year, Statistics Canada said Friday.

The country’s real gross domestic product for the first quarter shrank by 0.6 per cent at an annualized rate. The number rang in below expectations, marking the first time the GDP growth rate slipped under zero since the fourth quarter of 2011.

It was also the deepest Canada’s real GDP plunged into negative territory in nearly six years, when it fell by 3.6 per cent during the recession-battered second quarter of 2009, Statistics Canada said.

Read more » The Star
See more » http://www.thestar.com/business/2015/05/29/canadas-economy-shrinks-in-first-quarter.html

India will clock 7.5 per cent growth in 2015-16, overtake China: IMF

Washington: India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of 7.5 per cent on the back of recent policy initiatives, pick-up in investments and lower oil prices, the International Monetary Fund (IMF) said on Tuesday.

“India’s growth is expected to strengthen from 7.2 per cent in 2014 to 7.5 per cent in 2015. Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices,” the IMF said in its latest World Economic Outlook.

Read more » IBNLive
See more » http://www.ibnlive.com/news/business/india-will-clock-7-5-per-cent-growth-in-2015-16-overtake-china-imf-981893.html

Sharif’s Growth Push Spurs Pakistan’s Biggest IPO in 8 Years

By 

Pakistan Prime Minister Nawaz Sharif’s push to build power plants, roads and rail links is prompting a local steelmaker to expand by selling shares in the nation’s biggest initial public offering in eight years.

Amreli Steels Ltd., the South Asian country’s biggest maker of steel bars used in construction, plans to raise as much as 4 billion rupees ($39 million) next month from the sale of 70 million new shares. The proceeds will help more than double its capacity to 450,000 tons from 200,000 tons, Amreli’s director Hadi Akberali said in an interview.

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PHL economy bounces to 6.9% in Q4, 2nd fastest growing Asian economy in 2014

By DANESSA O. RIVERA, GMA News

The Philippine output rebounded sharply in the fourth quarter last year, growing as the second fastest economy in Asia—next to China—for the whole of 2014.
This is on the back of the robust growth of the three productive sectors and the fulfillment of government’s promise to ramp up public spending, the country’s chief economist said.
The gross domestic product (GDP) in the fourth quarter expanded by 6.9 percent, bouncing from the disappointing 5.3 percent in the third quarter, National Statistician Lisa Grace S. Bersales announced in a briefing in Makati City Thursday.
The Philippines was the third fastest growing economy for the period, next to China’s 7.3 percent and Vietnam’s 7 percent.
Annual GDP rose 6.1 percent, slower than the 7.2 percent growth posted in 2013. As expected, the full-year output is below the 6.5 to 7.5 percent government target for the year.

News courtesy: GMA Network
Read More: http://www.gmanetwork.com/news/story/419524/economy/business/phl-economy-bounces-to-6-9-in-q4-2nd-fastest-growing-asian-economy-in-2014

Congressman Sherman and Senator Sanders Stand Together to Reintroduce “Too Big to Fail, Too Big to Exist Act”

May 6, 2015 – Press Release: WASHINGTON, DC – Congressman Brad Sherman (D-CA) and Senator Bernie Sanders (I-VT) will reintroduce the “Too Big to Fail, Too Big to Exist Act,” in the House and Senate respectively. Under the legislation, any institution that is too big to fail will be broken up and reorganized to avoid more government bailouts and future risk to the economy.

This legislation would require the Secretary of the Treasury to identify and break up institutions that are deemed too big to fail. This is the third time Congressman Sherman has introduced similar legislation in the House, and the third time Senator Sanders has introduced such legislation in the Senate. The only thing that has changed is the biggest banks have gotten even bigger – 38% bigger than 2008.

“Too big to fail should be too big to exist,” said Congressman Sherman who has advocated this position since 2009. “Never again should a financial institution be able to demand a federal bailout.  Today they can claim: ‘if we go down, the economy is going down with us.’ By breaking up these institutions long before they face a crisis, we ensure a healthy financial system where medium-sized institutions can compete in the free market.”

“These medium-sized and smaller banks will be more inclined to make loans to small- and medium-sized businesses – which are the backbone of our economy. The legislation is endorsed by the Independent Community Bankers of America (ICBA), which represents over 6,000 of our nation’s 6,589 banks.”

Sherman continued, “Every financial institution should compete for funds based on the soundness of its balance sheet, and no financial institution should be able to claim that there is a special federal safety net available to its investors because of the institution’s sheer size.”

“In my view, no single financial institution should have holdings so extensive that its failure could send the world economy into crisis,” Senator Sanders said. “At the very least, no institution, no CEO in America should be above the law.  If an institution is too big to fail, it is too big to exist.”

Richard Fisher, former President of the Federal Reserve Bank of Dallas, argued that when markets presume a systemically important institution has implicit government backing, access to capital is easier. A study by International Monetary Fund researchers showed a potential advantage of these firms as high as 80 basis points (.8%).[1] Building on that estimation, Bloomberg News calculates taxpayers could be creating a subsidy of $83 billion dollars annually, roughly equal to the bank’s annual profits.[2]

This legislation would require the Secretary of the Treasury to submit to Congress a list of all banks and other financial institutions that the Secretary believes have become too big to fail.  Those entities deemed too large would then be broken up in a managed process of reorganization, so a single failure would no longer cause a catastrophic effect on the United States or global economy without a taxpayer bailout.

“Too Big to Fail” refers to any entity that has grown so large that its failure would have a catastrophic effect on the stability of either the financial system or the United States economy without substantial government assistance.

News courtesy: Congressman Sherman
Read more » http://sherman.house.gov/media-center/press-releases/congressman-sherman-and-senator-sanders-stand-together-to-reintroduce

Even Small Businesses Are Jumping on the Robot Bandwagon

BY ELAINE POFELDT

bots aren’t just for corporate Goliaths — now even the little guy on Main Street is adopting them. The goal: to boost sales and productivity. But at what cost?

Take Sam Kraus, a Hungarian immigrant who founded what became Skyline Windows in 1921. In the early days, the tinsmith traveled around with a small cart to do his roofing and waterproofing work by hand.

Fast-forward to today, and the fourth-generation business based in New York City’s South Bronx has left the pushcart era far behind. Skyline, which has evolved into a custom window manufacturer and installer, now relies on robots to do some of its work. In the factory in Woodridge, New Jersey, where it makes its windows, Skyline uses a $150,000 computer-operated machine to automate tasks like cutting holes in the metal and two $20,000 robots to install its windows, which sometimes weigh 600 pounds.

“It allows us to be more efficient—and our plan is to buy more of these robots when we can,” said senior vice president Matt Kraus, whose profitable firm brings in about $70 million in annual revenue and employs about 350 people.

Kraus is one of many entrepreneurs who are discovering that robots can be a powerful tool for growing a small company—even one with its roots in an old-line business. In the manufacturing industry, a recent study by Boston Consulting Group found that by 2025 robots will do about 25 percent of all industrial tasks—and that inexpensive robots are becoming increasingly available to smaller companies. Robotics are also making it possible for more individuals to start businesses in industries where the need for a substantial labor force once posed a big barrier to entry.

“Automation is having a big impact,” said Martin Ford, author of “Rise of the Robots: Technology and the Threat of a Jobless Future,” due to be published May 5. “It’s both positive and negative.”

3-D printing is one example. Some tiny firms are already using 3-D printers to make prototypes and even manufacturing products on their own, Ford said. Others are sending their prototypes to China, where they make the products. That makes it easier for business owners to fatten their bottom line, but the flip side will be a decline in traditional jobs.

The future of jobs

“Businesses will need to hire no people or fewer people,” he said. “You can literally have one person start a manufacturing business.”

A decline in traditional jobs could lead to shrinking markets for small businesses, said Ford. “We need consumers out there who will buy what is created by the economy,” he said.

Courtesy: NBC News
Read more » http://www.nbcnews.com/tech/innovation/even-small-businesses-are-jumping-robot-bandwagon-n352186

Putin ratifies BRICS $100bn currency pool deal

Russian President Vladimir Putin has ratified a deal to establish a $100 billion foreign currency reserve pool for the BRICS group. The pool’s purpose is to protect national currencies from volatility in global markets.

The document was “to ratify the treaty on the establishment of a pool of foreign exchange reserves of the BRICS.”

On Wednesday the deal was ratified by Russia’s upper house of Parliament, the Federation Council. According to the deputy head of the Federal Council Committee for Budget and Financial Markets, Sergey Ivanov, the currency pool will primarily support the balance of payments of the BRICS member states.

“Realization of the agreement will also contribute to the effective protection of the national currencies against the volatility in the world currency markets,” Ivanov said.

The goal of the pool is so that BRICS member states can urgently replenish their liquidity from it in different proportions to resolve problems with their balance of payments.

China will make the biggest contribution to the pool – $41 billion. Russia, Brazil and India will donate $18 billion each, while South Africa’s investment will be $5 billion.

The fund is expected to be maintained by a managing council, a permanent committee and a coordinator who will be from the country of the current president.

In July Russia, Brazil, India, China and South Africa signed the document to a reserve currency pool worth over $100bn as well as $100bn BRICS Development Bank

BRICS represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP, a more accurate reading of the real economy. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.

News courtesy: http://rt.com/business/255141-putin-brics-pool-currency/

Pakistan’s economy – Fuel injection: Lower oil prices prove to be a boon

THOSE in search of a thriving stockmarket, a stable currency and low inflation would not normally pitch up in Pakistan. It is more readily thought of as a pit of instability than as a source of opportunity. Yet Pakistan is enjoying a rare period of optimism about its economy.

The IMF reckons that the economy will grow by 4.7% next year, the fastest rate in eight years. Consumer prices rose by 2.5% in the year to March, the smallest increase for more than a decade. Twice already this year the central bank has lowered its benchmark interest rate. Some indicators are pointing to an upturn in spending. Compared with a year earlier, cement sales, which are a guide to how much construction is taking place, rose by 5.5% from July to March. Car sales rose by 22% over the same period.

A fall of two-fifths in the oil price is a huge slice of luck for a country such as Pakistan. It relies on imported fuel oil for two-fifths of its power supply and is prone to periodic balance-of-payments crises (see chart). The country’s import bill can easily overwhelm the foreign-exchange earnings from textile exports and the remittances that Pakistanis working in the Middle East and Europe send home. In 2013-14 Pakistan’s net import bill for oil came to $12.6 billion, or around 5% of GDP. But if oil prices stay low, Pakistan could save a total of $12 billion in the next three years, says the IMF. The money could be spent on things with more local content and give the economy a lift.

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Britain ‘is experiencing same decline as Rome in 100BC’

Dr Jim Penman believes Britons no longer have the genetic temperament that sparked the Industrial Revolution

By , Science Editor

Britain is experiencing the same decline as Rome in 100BC, with the collapse of civilisation inevitable, a scientist has warned.

Dr Jim Penman, of the RMIT University in Melbourne, believes Britons no longer have the genetic temperament to advance because of decades of peace and a high standard of living.

He claims that the huge success of the Victorian era will not be repeated because people in the UK have lost the biological drive for innovation.

Instead, Britain is existing in a period similar to the decades before the fall of the Roman Republic where social tensions were rife, the gap between the rich and poor was increasing and extremism was growing.

And when added to a growing distaste for military action, which has seen huge cuts the armed forces, by the end of the century the UK will no longer have the power, or will, to protect itself against a serious invading force, he predicts.

“There are certainly parallels between 100BC in the Roman Republic where things are starting to get pretty dodgy,” he said.

“It was a time when democracy was moving towards despotism, and in Britain we now see that politics is becoming much more about individuals rather than political parties. It’s about personalities. The two party system has started to break down.

“We live in a golden age where there have been no major wars in Europe for three quarters of a century. But the economy is stagnating and we’re having fewer children.

Read more » The Telegraph
See more » http://www.telegraph.co.uk/news/science/science-news/11562374/Britain-is-experiencing-same-decline-as-Rome-in-100BC.html

Tax cuts for top earners fail because the theory is broken

by Ha-Joon Chang

Tax breaks for the wealthy were meant to trickle through society to benefit all. It didn’t work and inequality just got worse, says an economist

ADVOCATES of trickle-down economics argue that, when the rich get extra income, they invest it and create more jobs – and a higher income – for others. Those people, in turn, spend their extra money. Eventually the effect trickles down the whole system, making everyone better off, in absolute terms.

So, what seems like a moral outrage – giving more to people who already have more – is in theory a socially benign action.

The trouble is it hasn’t worked. In the past three decades, states with pro-rich policies have seen economic growth slow, except in countries like China and Vietnam that needed to jump-start socialist economies.

In the UK, upward income redistribution since 1980 has seen the share of the top 1 per cent rise from 5 per cent of national income to over 10 per cent. Yet the annual growth rate of income per person has fallen from 2.5 per cent between 1960 and 1980 to 1.8 per cent between 1980 and 2013.

One reason is that the rich have not kept their end of the bargain – they didn’t invest more; and inequality, linked to poorer health and societal damage, worsened. Investment as a share of GDP used to be 18 to 22 per cent in the 1960s and 1970s but since then has been 14 to 18 per cent, except for a few years at the end of the 1980s.

Moreover, concentration of income at the top has boosted the political influence of the super-rich, allowing them to push for policies that benefit themselves but create harm in the long run. For example, the UK financial sector successfully lobbied for “light-touch regulation”, which enabled it to earn a lot but led to the 2008 financial crisis.

It is well established that a less equal society has lower social mobility. When talented people from less privileged backgrounds cannot move up the social ladder, the economy’s long-term dynamism suffers. An increasing number of studies show that, above a certain level, higher inequality harms growth. Some are by the International Monetary Fund and Organization for Economic Cooperation and Development, which didn’t use to be concerned about inequality.

Despite these failings, some politicians still back measures that benefit the wealthy, often citing trickle-down economics. In the UK, the Conservatives cut taxes for the top earners while in government. They want to slash inheritance tax for wealthier estates and cut the numbers paying higher-rate tax. The UK Independence Party has a similar stance on higher-rate tax and wants zero inheritance tax.

The 35-year experiment with trickle down economics has failed for most people. Unfortunately, there is too much money and power at stake for its true beneficiaries to accept this reality and end this approach.

This article appeared in print under the headline “Defying gravity”

Ha-Joon Chang is an economist at the University of Cambridge. His latest book is Economics: The user’s guide (Pelican)

Courtesy: Newscientist
Read more » http://www.newscientist.com/article/mg22630182.500-tax-cuts-for-top-earners-fail-because-the-theory-is-broken.html?utm_source=NSNS&utm_medium=SOC&utm_campaign=hoot&cmpid=SOC%257CNSNS%257C2015-GLOBAL-hoot#.VTwzliFVhHw

Australia – Regional unemployment hits 12-year high

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The unemployment rate in regional Australia has risen to 7.3 per cent, a 12-year high, as job demand shifts increasingly to major cities with the winding down of the mining construction boom.

Regional Australia has not experienced unemployment rates this high since March 2003, with regional NSW recording the largest increase in jobless rates in the past three months, particularly in the Hunter Valley and Newcastle – big coal-producing regions.

Regional Australia Institute (RAI) says analysis of this week’s Bureau of Statistics quarterly employment data shows the unemployment rate in regional Australia, in non-seasonally adjusted terms, remains structurally higher than in capital cities.

Read more » The Age
See more » http://www.theage.com.au/federal-politics/political-news/regional-unemployment-hits-12year-high-20150424-1msjaq.html

Australians’ living standards face the greatest threat in a generation: report

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Australians’ living standards face the greatest threat in a generation, with no signs of strong wage growth, longer unpaid commuting times and a rise in workforce casualisation putting more pressure on middle- and lower-income households than they have faced in 20 years.

A new report from Per Capita, an independent think tank, also shows the split of national income between labour and capital is continuing to worsen in Australia, with wages’ share of national income dropping from 65.5 per cent at the turn of the century to 59.7 per cent in 2012.

It says this has occurred at the same time as the bulk of productivity improvements have come from labour rather than capital in recent years.

The report, “Paradise Lost? The race to maintain Australian living standards”, says Australians’ living standards are under threat due to slowing productivity, rising unemployment and slowing wages growth.

It warns Australians face an “inevitable correction” in their income and wages levels – with real wages set to fall markedly to reflect the country’s changed economic circumstances and lack of reform over the last decade – if nothing is done about it.

David Hetherington, Per Capita’s director, warned Australian governments they must re-start the reform process now to arrest the worrying trends, saying the benefit of the economic reforms of the 1980s and ’90s had run their course.

“Australia must either reform once again or face a dramatic downwards adjustment in wage levels and living standards,” Mr Hetherington said.

“To continue to lift labour productivity, we must lift our investment in hard infrastructure like transport and broadband, as well as soft infrastructure like skills and education.

Courtesy: The Age
Read more » http://www.theage.com.au/federal-politics/political-news/australians-living-standards-face-the-greatest-threat-in-a-generation-report-20150423-1mrppz.html

I am a cook in the US Senate but I still need food stamps to feed my children

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I work 70 hours a week doing two jobs but cannot make ends meet. Presidential hopefuls must make profitable federal contractors pay living wages

Every day, I serve food to some of the most powerful people on earth, including many of the senators who are running for president: I’m a cook for the federal contractor that runs the US Senate cafeteria. But today, they’ll have to get their meals from someone else’s hands, because I’m on strike.

I am walking off my job because I want the presidential hopefuls to know that I live in poverty. Many senators canvas the country giving speeches about creating “opportunity” for workers and helping our kids achieve the “American dream” – most don’t seem to notice or care that workers in their own building are struggling to survive.

I’m a single father and I only make $12 an hour; I had to take a second job at a grocery store to make ends meet. But even though I work seven days a week – putting in 70 hours between my two jobs – I can’t manage to pay the rent, buy school supplies for my kids or even put food on the table. I hate to admit it, but I have to use food stamps so that my kids don’t go to bed hungry.

I’ve done everything that politicians say you need to do to get ahead and stay ahead: I work hard and play by the rules; I even graduated from college and worked as a substitute teacher for five years. But I got laid-off and I now I’m stuck trying to make ends meet with dead-end service jobs.

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Smart Money to Follow China’s Massive Investment in Pakistan

This (China’s $46 billion investment in Pakistan) can not be purely politically driven. Beijing is commercial: CEO’s, not think tank intellectuals, travel with politicians. Barron’s Asia

Spurred by Chinese investment, the smart money is taking notice of Pakistan as an attractive investment destination. The investors are looking at the fact that Pakistani stocks have been outperforming both emerging and frontier markets for several years. The benchmark index of the Karachi Stock Exchange (KSE100) is up more than 20% in the last 12 months, according to NASDAQ.com.

Pakistani Shares in 2015: After a dismal March, MSCI Pakistan rebounded strongly this month, returning 9.1% so far. In April, the iShares MSCI Frontier 100 ETF (FM) rose 4.3%, the WisdomTree India Earnings Fund (EPI) dropped 1.2%, the iShares MSCI India ETF (INDA) fell 1.9%, according to Barron’s Asia.

KSE-100 Performance: In 2014, the KSE-100 Index gained 6,870 points thereby generating a handsome return of 27% (31% return in US$ terms), making Pakistan’s KSE world’s third best performing market. Total offerings in the year 2014 reached 9 as compared to 3 in the year 2013. After a gap of seven years, Rs 73 billion were raised through offerings in 2014 as compared to a meager Rs 4 billion raised in 2013. Foreign investors, that hold US$ 6.1 billion worth of Pakistani shares -which is 33% of the free-float (9% of market capitalization)-remained net buyers in 2014.

Read more » http://www.riazhaq.com/2015/04/smart-money-to-follow-chinas-massive.html

Investing with confidence: Chinese say their money is safe in Pakistan

By Shahram Haq

ISLAMABAD: Chinese businessmen have said investments they are putting in Pakistan are safe as both the countries enjoy excellent relations at government and public level.

“The global investments we make in any country depend on the nature of relationships between China and the particular country,” said Orient Evertrust Capital Group’s Chairman Jiang Xue Ming, while talking with The Express Tribune.

“Since Pakistan and China have excellent relationships, so we feel our investments in this country are completely safe,” he added.

A group of Chinese investors is currently in Islamabad as the Chinese president is arriving in Pakistan today (Monday) to sign some 50 different accords worth $46 billion, majority of which are energy based.

Read more » The Express Tribune
See more » http://tribune.com.pk/story/872766/investing-with-confidence-chinese-say-their-money-is-safe-in-pakistan/

China Readies $46 Billion for Pakistan Trade Route

Beijing plans to pour $46 billion into infrastructure projects, open new trade routes

By SAEED SHAH in Islamabad and JEREMY PAGE in Beijing

Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power.

The plan, known as the China Pakistan Economic Corridor, draws on a newly expansive Chinese foreign policy and pressing economic and security concerns at home for Mr. Xi, who is expected to arrive in Pakistan on Monday. Many details had yet to be announced publicly.

“This is going to be a game-changer for Pakistan,” said Ahsan Iqbal, Pakistan’s planning minister, who said his country could link China with markets in Central Asia and South Asia.

“If we become the bridge between these three engines of growth, we will be able to carve out a large economic bloc of about 3 billion living in this part of the world…nearly half the planet.”

Read more » THE WALL STREET JOURNAL
See more » http://www.wsj.com/articles/china-to-unveil-billions-of-dollars-in-pakistan-investment-1429214705?mod=e2fb

Toyota to move Corolla production from Canada to Mexico to cut costs

Toyota to move Corolla production to Mexico to cut costs

(Reuters) – Toyota Motor Corp 7203.T, the world’s biggest automaker, plans to move production of its Corolla compact cars to a new factory in Mexico from Canada to benefit from lower costs, the Globe and Mail reported, citing sources familiar with the situation.

Costs at Toyota’s assembly plants at Cambridge and Woodstock in Ontario are higher than at its U.S. factories and it makes sense to produce the more expensive vehicles in Canada, the newspaper quoted sources familiar with the matter as saying.

Sources told Reuters that Toyota will spend $1 billion to build a car factory in Mexico, which is expected to begin functioning from the summer of 2019, ending a self-imposed three-year freeze on new investments. Toyota also plans to announce a new car factory in Guangzhou, China, this week.

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Qatar prince ready to invest Rs 1 lakh crore in 10 smart cities

Has formed JV with Delhi businessman and held meeting with UP, AP CMs

By BS Reporter

The government may be inviting the Americans, Chinese and Japanese to invest in India, but just one person is ready to put in Rs 1 lakh crore over the next five years.

Enthused with the new government’s spirited approach towards new investment, a prince of Qatar, Hamad Bin Nasser A A Al-Thani, member of the ruling family, is looking at investing the sum in at least 10 smart cities.

The 51-year-old has already tied up with a 31-year-old Delhi-based businessman, Mitesh Sharma, for taking the investment forward through projects in real estate, sea ports and airports, besides smart cities. According to a person working for Hamad, the two recently registered a company, NRS Enterprise Pvt Ltd, in India through which the investment would be routed.

“Prime Minister Narendra Modi’s ambitious ‘smart cities’ project has caught the attention of the prince. The investment will be made over the next five years,” said the person.

The investment announcement came after the two partners met Uttar Pradesh chief minister Akhilesh Yadav on November 20 and his Andhra Pradesh counterpart, Chandrababu Naidu, on November 22.

The focus of this huge investment is on 10 smart-city projects in a first phase, besides power, solar energy, infrastructure development, health care and education. They are aiming for the first project to take off by February-March 2015.

The Union government has decided to support the development of 100 in the country. According to the high power expert committee (HPEC) on investment estimates in urban infrastructure has assessed a per capita investment cost of Rs 43,386 for a 20-year period. Their estimates cover water supply, sewerage, sanitation and transportation.

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Chinese president to visit Pakistan, hammer out $46-billion deal

By REUTERS | MATEEN HAIDER

ISLAMABAD: Chinese President Xi Jinping will launch energy and infrastructure projects worth $46 billion on a visit to Pakistan next week as China cements links with its old ally and generates opportunities for firms hit by slack growth at home.

Also being finalised is a long-discussed plan to sell Pakistan eight Chinese submarines. The deal, worth between $4 billion and $5 billion, according to media reports, may be among those signed on the trip.

Know more: Pakistan to buy eight submarines from China.

Xi will visit next Monday and Tuesday, Pakistan’s foreign office said.

“China treats us as a friend, an ally, a partner and above all an equal – not how the Americans and others do,” said Mushahid Hussain Syed, chairman of the parliament’s defence committee.

Pakistan and China often boast of being “iron brothers” and two-way trade grew to $10 billion last year from $4 billion in 2007, Pakistani data shows.

Xi’s trip is expected to focus on a Pakistan-China Economic Corridor, a planned $46-billion network of roads, railways and energy projects linking Pakistan’s deepwater Gwadar port on the Arabian Sea with China’s far-western Xinjiang region.

It would shorten the route for China’s energy imports, bypassing the Straits of Malacca between Malaysia and Indonesia, a bottleneck at risk of blockade in wartime.

If the submarine deal is signed, China may also offer Pakistan concessions on building a refuelling and mechanical station in Gwadar, a defence analyst said.

China’s own submarines could use the station to extend their range in the Indian Ocean.

“China is thinking in terms of a maritime silk road now, something to connect the Indian Ocean and Pacific Ocean,” said a Pakistani defence official, who declined to be identified.

For Pakistan, the corridor is a cheap way to develop its violence-plagued and poverty-stricken Balochistan province, home to Gwadar.

China has promised to invest about $34 billion in energy projects and nearly $12 billion in infrastructure.

Xi is also likely to raise fears that Muslim separatists from Xinjiang are linking up with Pakistani militants, and he could also push for closer efforts for a more stable Afghanistan.

Earlier, the Foreign Office (FO) on Thursday announced that Chinese President Xi Jinping will be visiting Pakistan from April 20 to April 21 on a two-day state visit.

“I can confirm that the Chinese president will be visiting Pakistan from April 20 to 21,” FO spokesperson Tasneem Aslam said during a weekly media briefing in Pakistan.

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Deaths in South Africa as mobs target foreigners

At least five killed in Durban since last week in violence that has left hundreds stranded, unable to return home.

Violence against immigrants in South Africa has killed at least five people since last week in one of the worst outbreak of violence against foreigners in years.

Hundreds of migrants mostly from other African countries had been forced out of their homes, authorities told the Associated Press news agency on Tuesday.

Khadija Patel, a South African journalist, told Al Jazeera there have been previous instances of violence against foreigners.

“Hundreds of foreign nationals were displaced in Isipingo [20km south of Durban] late last month, when a group of South Africans attacked foreigners living and working in the area. The victims of that continue to reside in a makeshift camp at a sports ground in Isipingo,” Patel said.

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