http://time.com/3988970/donald-trump-business/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29
Donald Trump’s 16 Biggest Business Failures and Successes
Jacob Koffler @JacobKoffler Aug. 7, 2015
Ventures that went belly-up and plenty that made it big
Donald Trump promised to “take the brand of the United States and make it great again” when he threw his hat into a crowded ring of 2016 GOP presidential candidates. Trump has since consistently cited his credentials as businessman, as well as his (disputed) $10 billion fortune, when asked how, exactly, he would “Make America Great Again.” But it’s not just Trump’s immigration comments that are landing him in hot water; even his business deals have come under scrutiny, most recently in the August 7 GOP debate. The candidate deflected questions about how he plans to run America’s economy when his own companies have filed for bankruptcy multiple times. Here’s a closer look at some of his biggest success and failures in business.
Not-so-Succesful
Trump Airlines
In 1988, Trump bought Eastern Air Shuttle, an airline service that ran hourly flights between Boston, NYC and DC for 27 years prior, for $365 million. He turned the airline, once a no frills operation, into a luxury experience, adding maple-wood veneer to the floor and gold-colored bathroom fixtures. The company never turned a profit and the high debt forced him to default on his loans. Ownership of the company was turned over to creditors. It ceased to exist in 1992.
Trump Vodka
Trump unveiled his own vodka line in 2006 paired with the characteristic slogan “Success Distilled.” Advertising for the product claimed that the vodka would “demand the same respect and inspire the same awe as the international legacy and brand of Donald Trump himself.” Trump had high hopes for his liquor brand, predicting that the T&T (Trump and Tonic) would become the most ordered drink in the country and stating on Larry King Live that he got into the vodka business to outdo “his friends” at Grey Goose. The company stopped production in 2011, reportedly due to a lack of interest.
Trump Casinos
Trump Entertainment Resorts, which is composed of three Trump-owned casinos, all in Atlantic City, filed for bankruptcy for the fourth time in 2014. Trump has distanced himself from the company, saying that besides the company having his name, he has “nothing to do with it,” despite the fact that he owned 28% of its stock.
Trump: The Game
Trump launched a Monopoly-like board game in 1989, which was discontinued a year later due to lack of interest. He tried his hand at game making once again in 2005, when he launched an updated version tied to The Apprentice. It was also discontinued.
Trump Magazine
Trump launched an eponymous magazine in 2007 that, in a press release announcing the publication’s arrival, was described as “[reflecting] the passions of its affluent readership by tapping into a rich cultural tapestry.” A year and a half after the launch, the magazine ceased publication.
Trump Steaks
Donald Trump was featured on the June 2007 cover of the Sharper Image catalogue hunched over a platter of meat to kick off his line of premium steaks that he dubbed the “world’s greatest.” The company has since been discontinued—maybe it had something to do with the Trump Steakhouse in Las Vegas being closed down in 2012 for 51 health code violations, including serving five-month old duck.
GoTrump.com
Trump launched this luxury travel search engine in 2006, only to shut it down a year later, despite being powered by booking giant Travelocity.
Trump University
In 2005, Trump opened the non-accredited, for-profit Trump University. In 2010, four students sued the university for “offering classes that amounted to extended ‘infomercials.’” Following the suit, the “university” changed its name to “The Trump Entrepreneur Initiative,” before ending operations one year later. In 2013, the New York Attorney General sued Trump and the “university” for $40 million for allegedly defrauding students.
Trump Mortgage
In 2006, Trump forayed further into the real estate industry, launching a mortgage company. The Donald had high hopes for the company, asking CNBC, “Who knows more about financing than me?” Trump Mortgage shut down within a year and a half, in part because Trump selected E.J. Ridings, a man who claimed to be a top executive at a prestigious investment bank but had actually only worked on Wall Street as a registered broker for six days, to run the company.
Successful
Grand Hyatt Hotel
Trump bought the former Commodore Hotel, which had fallen into relative disrepair, from Penn Central Railroad in 1974 and after six years of construction, the Grand Hyatt Hotel debuted. Smack dab in the heart of New York City, with the image of Grand Central reflected off its glass façade, the 34-story hotel is still booming business today.
Trump Tower
Trump broke ground on his now-famous 48-story Trump Tower in 1980. The luxury high-rise opened in 1983 and, with upscale restaurants and stores located in the mostly residential building, is still highly sought after real estate.
Wollman Rink
Trump renovated Wollman Rink in 1986 after contacting Mayor Ed Koch and offering to complete the renovation for $3 million. He finished the project on time and $750,000 under budget. Wollman Rink remains a Central Park fixture with more than 5 million annual visitors.
40 Wall Street
Trump purchased the building in 1995 for $1 million and renovated it for $35 million. Today, 40 Wall Street, one of the tallest office buildings in downtown New York, is worth over $500 million.
Trump Place
After years of negotiations, Trump finally broke ground on Trump Place, the gargantuan housing development along the Hudson River. The development includes 25 acres of open space and 5,700 apartments housed in 18 residential buildings.
The Apprentice
The Apprentice premiered on NBC in 2004 to great ratings. Trump served as not only the host but also the executive producer, raking in $1 million per episode. The show was successful enough that it inspired a spinoff, The Celebrity Apprentice.
Trump International Tower Chicago
Trump bought the former Chicago Sun-Times headquarters in 2005 for $73 million and converted it into the second tallest building in Chicago. It houses a hotel, condos, restaurants and shops, and was named Travel+Leisure’s best large city hotel in North America in 2010.
Wednesday, September 9, 2015
Tuesday, September 8, 2015
A Picture Changed The World In IST - New Delhi TV News
http://www.ndtv.com/opinion/spare-3-year-old-aylan-kurdi-the-platitudes-1215270
A Picture Changed The World In IST (Internet Standard Time)
Attention is the start of empathy. You really have to look at the world. Physical details matter, context matters. The meaning you make from those things is only as sound as your observation of them.
When photojournalist Nilufer Demir photographed a dead baby on a beach in Turkey, she could not have known that the images would rocket around the world and significantly impact global attitudes, both public and official, towards the Syrian refugee crisis. In one image, a tall Turkish official stands near the small body, making it look smaller still. In another, the officer is carrying him away in his arms. He was later quoted as saying that that body, light as a feather, was the heaviest burden he'd ever carried.
Speaking to Turkey's Dogan news agency, Mehmet Ciplak recounted how he prayed the little boy was still alive as he walked towards him and scooped him up from the water's edge (AFP PHOTO / DOGAN NEWS AGENCY)
But perhaps the most arresting image is a close-up of the baby, photographed from behind and low down. It captures the sweetness of babyhood-his rounded head, his plump little bottom, his tiny shoes. He could be any baby napping, except that he's lying in the surf.
That image of three-year-old Aylan Kurdi became the defining image of the Syrian refugee crisis in Internet Standard Time, which is to say, no time at all. It forced people to confront a statistical abstraction at a personal, emotional level. What does it mean to be a refugee, fleeing war and oppression for a precarious future? It means risking everything. It means heart-breaking, desperately unjust vulnerability. It means that dead babies wash up with the tide. Suddenly, the whole world empathized with a conflict that had long ago fallen off the front pages.
But, also in no time at all, those images were subjected to a kind of maudlin fakery that is somehow worse than frankly not giving a toss. They were manipulated in any number of ways. One illustrator represented an image in cartoon or graphic form; someone added angel wings to the boy's back and a rose to his hand; someone had a bunch of cartoon squids and whales sticking out of the waves, weeping over his body. Someone placed his body in the same attitude but sleeping safe in a bed.
These memes come, no doubt, from a good place. But it's a place of empty platitudes. They try to make palatable what is not palatable. They sanitize the scene, appealing to sentimentality rather than speechless pain, skipping the horror and going straight to "a better place". They vandalize the original image by not paying attention. Because that child was not holding black balloons, he was not flying up to heaven; he was face down in the surf, nostrils filled with wet sand, his body already decomposing.
Is that offensive? Yes. It should offend us that a child is dead. But we can only be truly offended if we are very clear on what it means to be dead, and we can only be very clear if we look at the reality with attention.
The world endlessly debates the ethics of shocking visuals. Those debates at least partly elide the fact that we would rather not be forced out of our comfort zones, would rather not be invited to examine our responsibility. I cannot see how shielding a viewer from disturbing truths is more important than drawing attention to those truths so that the world might be moved to act on them.
Aylan Kurdi's image in death was widely published and broadcast as media companies correctly determined that doing so served the larger good, and it did. The images galvanized global attention around the Syrian refugee crisis that has thus far largely been missing, and spurred many private citizens as well as governments to action. They might increase the world's investment in resolving the horror that is Syria. Germans have cheered and applauded Syrians in welcome; the UK has been shamed, including by its own citizens, into reconsidering how many refugees it can take; Hungary has gotten bad press for its hardline anti-refugee attitude.
And the images come out of the fact that Syrians can no longer wait to be noticed. They have stormed the barricades of the world's complacency, metaphorically and literally - as refugees and sufferers of conflict everywhere are trying to. The tragedy on the beach in Turkey is only one of innumerable tragedies that have taken place in that attempt.
And that's the other half of the arc of attention that these images command. The death of a child always seems particularly heartbreaking. But Aylan Kurdi wasn't just a baby: he was a Syrian person, one of millions of Syrian people, who bear the cost of a war not of their making, either by staying or by fleeing. All of those people are going through hell. The empathy we feel for Aylan Kurdi should extend to all of them: they are all innocents.
Images of tragedy and violence should offend only our sense of natural justice. We live in a country where words like "ass" and "bastard" are muted in television sitcoms to protect our sensibilities, while we walk blithely by hordes of destitute people suffering and dying on our own streets. There's something terribly wrong with what we choose to look at and what we find offensive. Our greatest failing is our inability to pay attention to reality.
(Mitali Saran is a freelance writer and columnist based in New Delhi.)
A Picture Changed The World In IST (Internet Standard Time)
Attention is the start of empathy. You really have to look at the world. Physical details matter, context matters. The meaning you make from those things is only as sound as your observation of them.
When photojournalist Nilufer Demir photographed a dead baby on a beach in Turkey, she could not have known that the images would rocket around the world and significantly impact global attitudes, both public and official, towards the Syrian refugee crisis. In one image, a tall Turkish official stands near the small body, making it look smaller still. In another, the officer is carrying him away in his arms. He was later quoted as saying that that body, light as a feather, was the heaviest burden he'd ever carried.
Speaking to Turkey's Dogan news agency, Mehmet Ciplak recounted how he prayed the little boy was still alive as he walked towards him and scooped him up from the water's edge (AFP PHOTO / DOGAN NEWS AGENCY)
But perhaps the most arresting image is a close-up of the baby, photographed from behind and low down. It captures the sweetness of babyhood-his rounded head, his plump little bottom, his tiny shoes. He could be any baby napping, except that he's lying in the surf.
That image of three-year-old Aylan Kurdi became the defining image of the Syrian refugee crisis in Internet Standard Time, which is to say, no time at all. It forced people to confront a statistical abstraction at a personal, emotional level. What does it mean to be a refugee, fleeing war and oppression for a precarious future? It means risking everything. It means heart-breaking, desperately unjust vulnerability. It means that dead babies wash up with the tide. Suddenly, the whole world empathized with a conflict that had long ago fallen off the front pages.
But, also in no time at all, those images were subjected to a kind of maudlin fakery that is somehow worse than frankly not giving a toss. They were manipulated in any number of ways. One illustrator represented an image in cartoon or graphic form; someone added angel wings to the boy's back and a rose to his hand; someone had a bunch of cartoon squids and whales sticking out of the waves, weeping over his body. Someone placed his body in the same attitude but sleeping safe in a bed.
These memes come, no doubt, from a good place. But it's a place of empty platitudes. They try to make palatable what is not palatable. They sanitize the scene, appealing to sentimentality rather than speechless pain, skipping the horror and going straight to "a better place". They vandalize the original image by not paying attention. Because that child was not holding black balloons, he was not flying up to heaven; he was face down in the surf, nostrils filled with wet sand, his body already decomposing.
Is that offensive? Yes. It should offend us that a child is dead. But we can only be truly offended if we are very clear on what it means to be dead, and we can only be very clear if we look at the reality with attention.
The world endlessly debates the ethics of shocking visuals. Those debates at least partly elide the fact that we would rather not be forced out of our comfort zones, would rather not be invited to examine our responsibility. I cannot see how shielding a viewer from disturbing truths is more important than drawing attention to those truths so that the world might be moved to act on them.
Aylan Kurdi's image in death was widely published and broadcast as media companies correctly determined that doing so served the larger good, and it did. The images galvanized global attention around the Syrian refugee crisis that has thus far largely been missing, and spurred many private citizens as well as governments to action. They might increase the world's investment in resolving the horror that is Syria. Germans have cheered and applauded Syrians in welcome; the UK has been shamed, including by its own citizens, into reconsidering how many refugees it can take; Hungary has gotten bad press for its hardline anti-refugee attitude.
And the images come out of the fact that Syrians can no longer wait to be noticed. They have stormed the barricades of the world's complacency, metaphorically and literally - as refugees and sufferers of conflict everywhere are trying to. The tragedy on the beach in Turkey is only one of innumerable tragedies that have taken place in that attempt.
And that's the other half of the arc of attention that these images command. The death of a child always seems particularly heartbreaking. But Aylan Kurdi wasn't just a baby: he was a Syrian person, one of millions of Syrian people, who bear the cost of a war not of their making, either by staying or by fleeing. All of those people are going through hell. The empathy we feel for Aylan Kurdi should extend to all of them: they are all innocents.
Images of tragedy and violence should offend only our sense of natural justice. We live in a country where words like "ass" and "bastard" are muted in television sitcoms to protect our sensibilities, while we walk blithely by hordes of destitute people suffering and dying on our own streets. There's something terribly wrong with what we choose to look at and what we find offensive. Our greatest failing is our inability to pay attention to reality.
(Mitali Saran is a freelance writer and columnist based in New Delhi.)
Monday, September 7, 2015
Why $40 oil is killing Iraq, Venezuela and others, but not Russia - REUTERS
http://blogs.reuters.com/great-debate/2015/08/28/why-40-oil-is-killing-iraq-venezuela-and-others-but-not-russia/?utm_source=Facebook
Why $40 oil is killing Iraq, Venezuela and others, but not Russia
By John Lloyd August 28, 2015
Russian President Vladimir Putin meets with journalists after submerging into the waters of the Black Sea inside a research bathyscaphe as part of an expedition in Sevastopol, Crimea, August 18, 2015. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin
Russian President Vladimir Putin meets with journalists after submerging into the waters of the Black Sea inside a research bathyscaphe in Sevastopol, Crimea, August 18, 2015. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin
It’s not the economy, stupid. At least it isn’t where hearts are warmed by the fiercer flame of nationalism, rather than rising living standards.
Oil prices as low as $40 a barrel are separating the oil haves from the oil have-nots. The oil producers happily rode a wave of high oil prices for years, buying popularity with increased state spending while excusing themselves from the hard pounding of legitimate economic reform. The oil-buyers — like India and Egypt — now enjoy prices as low as a third of those they paid as recently as two years ago and can cut fuel subsidies, saving spending or redirecting it to broader social uses.
As a result, most of the oil-producers are now in a troubling position. Venezuela’s President Nicolas Maduro faces parliamentary elections in December with falling popularity and a poll showing Venezuelans will vote for the opposition rather than his Socialist Party by a factor of two to one. Maduro lacks the charismatic populism of his predecessor, Hugo Chavez — a popularity based on the former president’s insistence that the high oil revenues were benefitting the poor (they did) and making the nation great, while sticking it to the Americans.
In Canada, now a major oil producer from Alberta’s tar sands, polls are jumping about nervously, as Conservative Prime Minister Stephen Harper seemed up in April, then down in July. Harper has been in power since 2006, so “regime fatigue” is judged to be a large factor in the public’s ambivalence toward him. The fall in the price of the commodity that accounts for a quarter of the country’s export revenue and nearly 10 percent of its GDP is not his fault — but it’s happened on his watch. This will only aggravate the fatigue. Elections are in October; a credible critique of Harper’s economic policy at a time of falling revenues could tip it for the opposition.
Nigerian President Muhammadu Buhari doesn’t have to face an election soon — he just won one. But like other leaders from oil-producing nations, he does have to cope with a price slump in the commodity, which comprises 80 percent of the government’s revenue. It has meant civil servants in most states are owed months of pay; capital projects have been frozen; and an already restive and divided country shows more signs of revolt.
The turmoil is felt by countries throughout the Middle East — by those desperately reliant on oil revenue (Iraq, Syria and Libya) and those with vast riches (Saudi Arabia).
And yet the Russian Federation, and Scotland buck this trend. Their leaders are the Teflon Kids of the oil slump: Hit by sliding prices but not public scorn.
The ruling party in the state’s’s regional parliament, the Scottish National Party, presented an economic program to the Scottish people before last year’s independence referendum (independence was voted down 55-45) promising higher social, infrastructural and education spending. And, perhaps most critically, better infrastructure based on an oil price above (as it had been) $100 a barrel. This should have doomed them in today’s court of public opinion, in a landscape dominated by cheap oil.
Yet the falling price hasn’t affected the result of either the Scottish or the UK parliamentary elections one whit. An independent Scotland would now be in an economic crisis. But the fall in the oil price has had less effect on the economy of the UK as a whole than the benefits from cheap oil — a fact that should make Scots relieved they live in the larger state. Yet since the election, and as the price has gone down further, the popularity of the SNP and its leader Nicola Sturgeon has gone up.
A similar phenomenon has occurred in Russia. Rising prices, falling employment, stagnant or reduced wages have had one political result above all others: an outpouring of support, amounting to veneration or even love, for President Vladimir Putin.
What unites Sturgeon and Putin? What makes them exempt from public scorn as oil prices slip and slide? They are ardent nationalists. Neither loses an opportunity to glorify their country.
Putin, in a visit to the Baltic fleet in the port of Baltiysk, depicted his country as again facing hostility from the West, again drawing on its own human reserves to repel the foreigners. (It is worth noting that Sturgeon’s predecessor in the SNP, Alex Salmond, is an admirer of “certain aspects” of the Russian president)
Sturgeon is less emphatic than Putin. But her party’s celebration last year, through a reenactment of the 1314 victory of a Scots army over an English one in the Battle of Bannockburn, shows that the SNP’s heart remains deeply anti-English. It keeps alive the popular myths and heroes of centuries’ old triumphs. During the referendum campaign, the then Labor leader Ed Miliband was forced to abandon speeches and walkabouts in Edinburgh, and the Scots Labor leader Jim Murphy was abused into silence in Glasgow. The SNP deplored those actions; but once released and encouraged, nationalism takes increasingly aggressive forms.
Putin and Sturgeon’s popularity is propelled by a force more powerful — at least to date — than the desire for better living standards. Especially in Russia, there is a pride in displaying courage and patriotism in the face of deprivation and aggression, seen as coming largely from the United States. In Scotland, the propaganda is more muted and the English enemy less clearly delineated, but nationalism needs a foe, and the English are it.
There is no question of which nationalism is more dangerous. An independent Scotland would reduce the UK’s authority, further weaken the EU and greatly damage the state itself. Russian nationalism on the other hand is a danger, perhaps a disaster, on a global scale, not least because its political success spawns imitators. For example, China, heading into harder times and taking the world with it, has a leader keen on promoting the “Chinese dream” — a stronger, more nationalistically inclined China.
Nationalism hasn’t gone out with the tide: it’s coming in waves.
Why $40 oil is killing Iraq, Venezuela and others, but not Russia
By John Lloyd August 28, 2015
Russian President Vladimir Putin meets with journalists after submerging into the waters of the Black Sea inside a research bathyscaphe as part of an expedition in Sevastopol, Crimea, August 18, 2015. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin
Russian President Vladimir Putin meets with journalists after submerging into the waters of the Black Sea inside a research bathyscaphe in Sevastopol, Crimea, August 18, 2015. REUTERS/Alexei Druzhinin/RIA Novosti/Kremlin
It’s not the economy, stupid. At least it isn’t where hearts are warmed by the fiercer flame of nationalism, rather than rising living standards.
Oil prices as low as $40 a barrel are separating the oil haves from the oil have-nots. The oil producers happily rode a wave of high oil prices for years, buying popularity with increased state spending while excusing themselves from the hard pounding of legitimate economic reform. The oil-buyers — like India and Egypt — now enjoy prices as low as a third of those they paid as recently as two years ago and can cut fuel subsidies, saving spending or redirecting it to broader social uses.
As a result, most of the oil-producers are now in a troubling position. Venezuela’s President Nicolas Maduro faces parliamentary elections in December with falling popularity and a poll showing Venezuelans will vote for the opposition rather than his Socialist Party by a factor of two to one. Maduro lacks the charismatic populism of his predecessor, Hugo Chavez — a popularity based on the former president’s insistence that the high oil revenues were benefitting the poor (they did) and making the nation great, while sticking it to the Americans.
In Canada, now a major oil producer from Alberta’s tar sands, polls are jumping about nervously, as Conservative Prime Minister Stephen Harper seemed up in April, then down in July. Harper has been in power since 2006, so “regime fatigue” is judged to be a large factor in the public’s ambivalence toward him. The fall in the price of the commodity that accounts for a quarter of the country’s export revenue and nearly 10 percent of its GDP is not his fault — but it’s happened on his watch. This will only aggravate the fatigue. Elections are in October; a credible critique of Harper’s economic policy at a time of falling revenues could tip it for the opposition.
Nigerian President Muhammadu Buhari doesn’t have to face an election soon — he just won one. But like other leaders from oil-producing nations, he does have to cope with a price slump in the commodity, which comprises 80 percent of the government’s revenue. It has meant civil servants in most states are owed months of pay; capital projects have been frozen; and an already restive and divided country shows more signs of revolt.
The turmoil is felt by countries throughout the Middle East — by those desperately reliant on oil revenue (Iraq, Syria and Libya) and those with vast riches (Saudi Arabia).
And yet the Russian Federation, and Scotland buck this trend. Their leaders are the Teflon Kids of the oil slump: Hit by sliding prices but not public scorn.
The ruling party in the state’s’s regional parliament, the Scottish National Party, presented an economic program to the Scottish people before last year’s independence referendum (independence was voted down 55-45) promising higher social, infrastructural and education spending. And, perhaps most critically, better infrastructure based on an oil price above (as it had been) $100 a barrel. This should have doomed them in today’s court of public opinion, in a landscape dominated by cheap oil.
Yet the falling price hasn’t affected the result of either the Scottish or the UK parliamentary elections one whit. An independent Scotland would now be in an economic crisis. But the fall in the oil price has had less effect on the economy of the UK as a whole than the benefits from cheap oil — a fact that should make Scots relieved they live in the larger state. Yet since the election, and as the price has gone down further, the popularity of the SNP and its leader Nicola Sturgeon has gone up.
A similar phenomenon has occurred in Russia. Rising prices, falling employment, stagnant or reduced wages have had one political result above all others: an outpouring of support, amounting to veneration or even love, for President Vladimir Putin.
What unites Sturgeon and Putin? What makes them exempt from public scorn as oil prices slip and slide? They are ardent nationalists. Neither loses an opportunity to glorify their country.
Putin, in a visit to the Baltic fleet in the port of Baltiysk, depicted his country as again facing hostility from the West, again drawing on its own human reserves to repel the foreigners. (It is worth noting that Sturgeon’s predecessor in the SNP, Alex Salmond, is an admirer of “certain aspects” of the Russian president)
Sturgeon is less emphatic than Putin. But her party’s celebration last year, through a reenactment of the 1314 victory of a Scots army over an English one in the Battle of Bannockburn, shows that the SNP’s heart remains deeply anti-English. It keeps alive the popular myths and heroes of centuries’ old triumphs. During the referendum campaign, the then Labor leader Ed Miliband was forced to abandon speeches and walkabouts in Edinburgh, and the Scots Labor leader Jim Murphy was abused into silence in Glasgow. The SNP deplored those actions; but once released and encouraged, nationalism takes increasingly aggressive forms.
Putin and Sturgeon’s popularity is propelled by a force more powerful — at least to date — than the desire for better living standards. Especially in Russia, there is a pride in displaying courage and patriotism in the face of deprivation and aggression, seen as coming largely from the United States. In Scotland, the propaganda is more muted and the English enemy less clearly delineated, but nationalism needs a foe, and the English are it.
There is no question of which nationalism is more dangerous. An independent Scotland would reduce the UK’s authority, further weaken the EU and greatly damage the state itself. Russian nationalism on the other hand is a danger, perhaps a disaster, on a global scale, not least because its political success spawns imitators. For example, China, heading into harder times and taking the world with it, has a leader keen on promoting the “Chinese dream” — a stronger, more nationalistically inclined China.
Nationalism hasn’t gone out with the tide: it’s coming in waves.
Sunday, September 6, 2015
1 Word Successful People Never Use at Work - Business Insider
http://time.com/4023113/word-successful-people-never-use-work/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29
1 Word Successful People Never Use at Work
Jacquelyn Smith / Business Insider @businessinsider Sept. 4, 2015
Words matter
“Think twice before you speak, because your words and influence will plant the seed of either success or failure in the mind of another.” —Napoleon Hill
Darlene Price, president of Well Said, Inc., and author of “Well Said! Presentations and Conversations That Get Results,” told Business Insider that words, poorly and unconsciously chosen, can indeed harm your credibility, relationships, and opportunities for advancement at work.
“Words matter,” she explained. “They are a key component of persuasive communication. Regardless of the audience, topic, or industry … a leader uses language to influence someone’s mind in order to achieve a certain result. That’s one reason they’re seen as leaders; their words compel people to follow.”
She said one word these people don’t use at work is “try.”
If your boss says to you, “I need your proposal by 10 a.m. tomorrow for the customer meeting,” and your reply is, “Okay. I’ll try to get it finished,” they probably won’t be thrilled.
“The word ‘try’ implies the possibility it may not get finished,” Price said. And no boss wants to hear this, as it presupposes possible failure.
It also tells them you’re not completely confident in your abilities to get something done, which isn’t the message you want to send at work.
Instead, she suggested trying: “Yes, I will get it finished” or “I will have it on your desk by 9 a.m.”
If it’s not an unreasonable request, there’s no reason you shouldn’t be able to get it done — and therefore no reason to use the word “try.”
But if for some reason you really can’t complete the assigned task, you’ll want to politely ask for an extended deadline and get figure out a way to complete the task by then.
This article originally appeared on Business Insider.
1 Word Successful People Never Use at Work
Jacquelyn Smith / Business Insider @businessinsider Sept. 4, 2015
Words matter
“Think twice before you speak, because your words and influence will plant the seed of either success or failure in the mind of another.” —Napoleon Hill
Darlene Price, president of Well Said, Inc., and author of “Well Said! Presentations and Conversations That Get Results,” told Business Insider that words, poorly and unconsciously chosen, can indeed harm your credibility, relationships, and opportunities for advancement at work.
“Words matter,” she explained. “They are a key component of persuasive communication. Regardless of the audience, topic, or industry … a leader uses language to influence someone’s mind in order to achieve a certain result. That’s one reason they’re seen as leaders; their words compel people to follow.”
She said one word these people don’t use at work is “try.”
If your boss says to you, “I need your proposal by 10 a.m. tomorrow for the customer meeting,” and your reply is, “Okay. I’ll try to get it finished,” they probably won’t be thrilled.
“The word ‘try’ implies the possibility it may not get finished,” Price said. And no boss wants to hear this, as it presupposes possible failure.
It also tells them you’re not completely confident in your abilities to get something done, which isn’t the message you want to send at work.
Instead, she suggested trying: “Yes, I will get it finished” or “I will have it on your desk by 9 a.m.”
If it’s not an unreasonable request, there’s no reason you shouldn’t be able to get it done — and therefore no reason to use the word “try.”
But if for some reason you really can’t complete the assigned task, you’ll want to politely ask for an extended deadline and get figure out a way to complete the task by then.
This article originally appeared on Business Insider.
Saturday, September 5, 2015
China risks an economic discontinuity - Financial Times
http://www.ft.com/intl/cms/s/0/cfe855be-5092-11e5-8642-453585f2cfcd.html#axzz3kXwXppp7
September 1, 2015 7:14 pm
China risks an economic discontinuity
Martin WolfMartin Wolf
Many believe the economy is already growing far more slowly than the government admits.
David Daokui Lee, an influential Chinese economist, has argued that: “The stock market sell-off is not the problem . . . the problem — not a huge one, but a problem nonetheless — is the Chinese economy itself.” I agree with both points, with one exception. The problem may prove huge.
Market turmoil is not irrelevant. It matters that Beijing has spent $200bn on a failed attempt to prop up the stock market and that foreign exchange reserves fell by $315bn in the year to July 2015. It matters, too, that a search for scapegoats is in train. These are indicators of capital flight and policymaker panic. They tell us about confidence — or the lack of it.
Nevertheless, economic performance is ultimately decisive. The important economic fact about China is its past achievements. Gross domestic product (at purchasing power parity) has risen from 3 per cent of US levels to some 25 per cent (see chart). GDP is an imperfect measure of the standard of living. But this transformation is no statistical artefact. It is visible on the ground.
The only “large”(bigger than city state) economies, without valuable natural resources, to achieve something like this since the second world war are Japan, Taiwan, South Korea and Vietnam. Yet, relative to US levels, China’s GDP per head is where South Korea’s was in the mid-1980s. South Korea’s real GDP per head has since nearly quadrupled in real terms, to reach almost 70 per cent of US levels. If China became as rich as Korea, its economy would be bigger than those of the US and Europe combined.
This is a case for long-run optimism. Against it is the caveat that “past performance is no guarantee of future performance”. Growth rates usually revert to the global mean. If China continued fast catch-up growth over the next generation it would be an extreme outlier .
In emerging economies growth tends to be marked by “discontinuities”. But what Chinese policymakers call the “new normal” is not itself such a discontinuity. They believe they have overseen a smooth slowdown from annual growth of 10 per cent to still-fast growth of 7 per cent. Is a far bigger slowdown possible? More important, would this be a temporary interruption, as in South Korea in the late 1990s crisis — or more permanent, as in Brazil in the 1980s or Japan in the 1990s?
There are at least three reasons why China’s growth might suffer a discontinuity: the current pattern is unsustainable; the debt overhang is large; and dealing with these challenges creates the risks of a sharp collapse in demand.
The most important fact about China’s current pattern of growth is its dependence on investment as a source of supply and demand (see charts). Since 2011 additional capital has been the sole source of extra output, with the contribution of growth of “total factor productivity” (measuring the change in output per unit of inputs) near zero. Moreover, the incremental capital output ratio, a measure of the contribution of investment to growth, has soared as returns on investment have tumbled.
The International Monetary Fund argues: “Without reforms, growth would gradually fall to around 5 per cent with steeply increasing debt.” But such a path would be unsustainable, not least because debts are already at such a high level. Thus “total social financing” — a broad credit measure — jumped from 120 per cent of GDP in 2008 to 193 per cent in 2014. The government can manage this overhang. But it must not let the build-up restart. The credit-dependent part of investment has to shrink.
The debt overhang is not the only reason why investment will wilt. Daniel Gros of the Brussels-based Centre for European Policy Studies shows that the ratio of capital to output in China is on an explosive path. Remarkably, it is already far higher than in the US. If the capital-output ratio is merely to stabilise at current levels, and the economy is to grow at about 6 per cent, the investment share in GDP needs to fall by about 10 per cent. If that were to happen suddenly, the impact on demand would cause a slump. An investment share of 35 per cent of GDP (merely back to where it was in the early 2000s) would be a desirable outcome of reforms. But moving there swiftly would take a huge bite out of today’s domestic demand.
Many believe the economy is already growing far more slowly than the government admits. But the weaker the prospective rate of growth and the more uncertain are returns, the more rational it becomes to postpone investment, further slowing the growth of the economy.
The core argument for a discontinuity is that it is hard to move smoothly from an unsustainable path. The risk is that the economy slows much faster than almost anybody now expects. The government needs to work out a way of responding that does not increase global or domestic disequilibria. The best approach would be to continue with reforms, while trying to put more spending power into the hands of consumers and investing more in public consumption and environmental improvements. Such a response would be fully in keeping with China’s needs.
A discontinuity in China’s economic growth is now more likely than for decades; such a discontinuity might not be brief; and the challenge facing policymakers is huge. They need to re-engineer a slowing economy without crashing.
Moreover, the challenge is not only, or even mainly, technical. A big question is whether a market-driven economy is compatible with the growing concentration of political power. The next stage for China’s economy is a conundrum. Its resolution will shape the world.
martin.wolf@ft.com
September 1, 2015 7:14 pm
China risks an economic discontinuity
Martin WolfMartin Wolf
Many believe the economy is already growing far more slowly than the government admits.
David Daokui Lee, an influential Chinese economist, has argued that: “The stock market sell-off is not the problem . . . the problem — not a huge one, but a problem nonetheless — is the Chinese economy itself.” I agree with both points, with one exception. The problem may prove huge.
Market turmoil is not irrelevant. It matters that Beijing has spent $200bn on a failed attempt to prop up the stock market and that foreign exchange reserves fell by $315bn in the year to July 2015. It matters, too, that a search for scapegoats is in train. These are indicators of capital flight and policymaker panic. They tell us about confidence — or the lack of it.
Nevertheless, economic performance is ultimately decisive. The important economic fact about China is its past achievements. Gross domestic product (at purchasing power parity) has risen from 3 per cent of US levels to some 25 per cent (see chart). GDP is an imperfect measure of the standard of living. But this transformation is no statistical artefact. It is visible on the ground.
The only “large”(bigger than city state) economies, without valuable natural resources, to achieve something like this since the second world war are Japan, Taiwan, South Korea and Vietnam. Yet, relative to US levels, China’s GDP per head is where South Korea’s was in the mid-1980s. South Korea’s real GDP per head has since nearly quadrupled in real terms, to reach almost 70 per cent of US levels. If China became as rich as Korea, its economy would be bigger than those of the US and Europe combined.
This is a case for long-run optimism. Against it is the caveat that “past performance is no guarantee of future performance”. Growth rates usually revert to the global mean. If China continued fast catch-up growth over the next generation it would be an extreme outlier .
In emerging economies growth tends to be marked by “discontinuities”. But what Chinese policymakers call the “new normal” is not itself such a discontinuity. They believe they have overseen a smooth slowdown from annual growth of 10 per cent to still-fast growth of 7 per cent. Is a far bigger slowdown possible? More important, would this be a temporary interruption, as in South Korea in the late 1990s crisis — or more permanent, as in Brazil in the 1980s or Japan in the 1990s?
There are at least three reasons why China’s growth might suffer a discontinuity: the current pattern is unsustainable; the debt overhang is large; and dealing with these challenges creates the risks of a sharp collapse in demand.
The most important fact about China’s current pattern of growth is its dependence on investment as a source of supply and demand (see charts). Since 2011 additional capital has been the sole source of extra output, with the contribution of growth of “total factor productivity” (measuring the change in output per unit of inputs) near zero. Moreover, the incremental capital output ratio, a measure of the contribution of investment to growth, has soared as returns on investment have tumbled.
The International Monetary Fund argues: “Without reforms, growth would gradually fall to around 5 per cent with steeply increasing debt.” But such a path would be unsustainable, not least because debts are already at such a high level. Thus “total social financing” — a broad credit measure — jumped from 120 per cent of GDP in 2008 to 193 per cent in 2014. The government can manage this overhang. But it must not let the build-up restart. The credit-dependent part of investment has to shrink.
The debt overhang is not the only reason why investment will wilt. Daniel Gros of the Brussels-based Centre for European Policy Studies shows that the ratio of capital to output in China is on an explosive path. Remarkably, it is already far higher than in the US. If the capital-output ratio is merely to stabilise at current levels, and the economy is to grow at about 6 per cent, the investment share in GDP needs to fall by about 10 per cent. If that were to happen suddenly, the impact on demand would cause a slump. An investment share of 35 per cent of GDP (merely back to where it was in the early 2000s) would be a desirable outcome of reforms. But moving there swiftly would take a huge bite out of today’s domestic demand.
Many believe the economy is already growing far more slowly than the government admits. But the weaker the prospective rate of growth and the more uncertain are returns, the more rational it becomes to postpone investment, further slowing the growth of the economy.
The core argument for a discontinuity is that it is hard to move smoothly from an unsustainable path. The risk is that the economy slows much faster than almost anybody now expects. The government needs to work out a way of responding that does not increase global or domestic disequilibria. The best approach would be to continue with reforms, while trying to put more spending power into the hands of consumers and investing more in public consumption and environmental improvements. Such a response would be fully in keeping with China’s needs.
A discontinuity in China’s economic growth is now more likely than for decades; such a discontinuity might not be brief; and the challenge facing policymakers is huge. They need to re-engineer a slowing economy without crashing.
Moreover, the challenge is not only, or even mainly, technical. A big question is whether a market-driven economy is compatible with the growing concentration of political power. The next stage for China’s economy is a conundrum. Its resolution will shape the world.
martin.wolf@ft.com
Friday, September 4, 2015
How long is the oil market cycle? - FINANCIAL TIMES
http://blogs.ft.com/nick-butler/2015/08/30/how-long-is-the-oil-market-cycle/
How long is the oil market cycle?
Nick Butler Author alerts
| Aug 30 10:00 | 94 comments | Share
Oil is now clearly a cyclical commodity that is in a period of over-supply. According to recent commentaries from the International Energy Agency, the excess of production over consumption was as much as 3m barrels a day in the second quarter of this year, which is why prices have fallen. The question for producers, consumers and investors is: how long will it be before the cycle turns back up?
The initial caveat, of course, is that the “normal” oil market could be overturned by political decisions at any time. The Saudis, instead of greedily trying to maximise their market share and imposing huge losses on others, could decide that the stability of the region, and of their own kingdom, would be better served by cutting production and settling for a new equilibrium. There is a chance of that, as I wrote a couple of weeks ago, and the Saudis are under huge pressure from other Opec members but there is a mood of rigid arrogance in Riyadh which suggests that the necessary climb down will not come easily. What follows assumes that King Salman bin Abdulaziz al-Saud and his son the deputy crown prince stick to their current policy.
What then drives the cycle ?
On the supply side, the prospect is of increased production for at least the next two years. Iran will slowly increase its output and exports over the next 12 months, as explained in an excellent briefing paper from CSIS – the US academic think-tank. That will add 400- 600,000 b/d to supply. Beyond that will come resources from new projects and the upgrading and refurbishment of some existing producing fields. BP and some of the US companies may be too timid to go into Iran at the moment but many others will not hold back. As sanctions fall away, Iran has an entirely rational interest in increasing output and exports. A very cautious estimate would be that 1m barrels a day could be added before the end of 2017.
Assume for the moment that Libya remains in chaos and that the security situation in Iraq continues to discourage major investment in new production in Kurdistan.
The next question is whether after another week of volatility – prices are settling below $50 with a clear downward trend over six months – low prices will force production cuts in the US or anywhere else. Production of shale (often known as tight oil) is flexible and output can be reduced relatively easily. The issue is whether the costs of fracking are covered at $40 or $45 a barrel. No one is quite sure, and so far the industry has responded to the price fall with impressive cost cutting. But that cannot be unlimited and a prudent guess would be to assume that US unconventional oil supply has peaked and will fall by perhaps 20 per cent over the next two years. Elsewhere, some production will be halted in the North Sea and other provinces where costs are high but in general operating costs are below $40, which means that output will be maintained.
What about the demand side of the equation? The International Energy Agency’s prediction in its latest note was that faster economic growth would start to reduce the excess supply in the second half of this year and through 2016. But its forecast was written before the Chinese downturn became obvious and now looks outdated. For most of the last decade China has been the engine of economic growth not just in Asia but also for major western countries such as Germany. In the oil market, China has been and was predicted to remain the main source of demand growth, with consumption in the US, Europe and Japan flat or declining. The Chinese economy has slowed, as long predicted by sharp observers such as Michael Pettis. The impact of the downturn on spending and investment will take time to work through. Instead of the anticipated demand increase of about 350,000 bd this year and next which the IEA had suggested, it seems prudent to assume that Chinese oil demand will be flat this year and will increase only modestly in 2016 and 2017.
You can vary the calculation using your own assumptions on each of these points but the inescapable conclusion is that, short of a political change of heart in Riyadh, the surplus of supply over demand will persist for at least the next two years or longer. Even when supply and demand are back in balance the market will have to cope with the volume of stocks that are being built up.
Therefore, the cycle will only turn when the postponement of new projects begins to have an impact on total supply. Many new projects have been postponed already, and many more will suffer the same fate over the next few months. The impact, however, will be gradual. Existing producing fields, once they are past their plateau production levels, decline only slowly. New projects capable of replacing those supplies typically take four to six years to come on stream. In other words it will be about five years before the cancellation of a project today will impact on the physical supply-and-demand balance.
It is impossible to be precise but on these fundamentals the cycle will take at least five years to turn and quite possibly longer. The news, good or bad depending on where you are sitting, is that low prices look set to stay.
How long is the oil market cycle?
Nick Butler Author alerts
| Aug 30 10:00 | 94 comments | Share
Oil is now clearly a cyclical commodity that is in a period of over-supply. According to recent commentaries from the International Energy Agency, the excess of production over consumption was as much as 3m barrels a day in the second quarter of this year, which is why prices have fallen. The question for producers, consumers and investors is: how long will it be before the cycle turns back up?
The initial caveat, of course, is that the “normal” oil market could be overturned by political decisions at any time. The Saudis, instead of greedily trying to maximise their market share and imposing huge losses on others, could decide that the stability of the region, and of their own kingdom, would be better served by cutting production and settling for a new equilibrium. There is a chance of that, as I wrote a couple of weeks ago, and the Saudis are under huge pressure from other Opec members but there is a mood of rigid arrogance in Riyadh which suggests that the necessary climb down will not come easily. What follows assumes that King Salman bin Abdulaziz al-Saud and his son the deputy crown prince stick to their current policy.
What then drives the cycle ?
On the supply side, the prospect is of increased production for at least the next two years. Iran will slowly increase its output and exports over the next 12 months, as explained in an excellent briefing paper from CSIS – the US academic think-tank. That will add 400- 600,000 b/d to supply. Beyond that will come resources from new projects and the upgrading and refurbishment of some existing producing fields. BP and some of the US companies may be too timid to go into Iran at the moment but many others will not hold back. As sanctions fall away, Iran has an entirely rational interest in increasing output and exports. A very cautious estimate would be that 1m barrels a day could be added before the end of 2017.
Assume for the moment that Libya remains in chaos and that the security situation in Iraq continues to discourage major investment in new production in Kurdistan.
The next question is whether after another week of volatility – prices are settling below $50 with a clear downward trend over six months – low prices will force production cuts in the US or anywhere else. Production of shale (often known as tight oil) is flexible and output can be reduced relatively easily. The issue is whether the costs of fracking are covered at $40 or $45 a barrel. No one is quite sure, and so far the industry has responded to the price fall with impressive cost cutting. But that cannot be unlimited and a prudent guess would be to assume that US unconventional oil supply has peaked and will fall by perhaps 20 per cent over the next two years. Elsewhere, some production will be halted in the North Sea and other provinces where costs are high but in general operating costs are below $40, which means that output will be maintained.
What about the demand side of the equation? The International Energy Agency’s prediction in its latest note was that faster economic growth would start to reduce the excess supply in the second half of this year and through 2016. But its forecast was written before the Chinese downturn became obvious and now looks outdated. For most of the last decade China has been the engine of economic growth not just in Asia but also for major western countries such as Germany. In the oil market, China has been and was predicted to remain the main source of demand growth, with consumption in the US, Europe and Japan flat or declining. The Chinese economy has slowed, as long predicted by sharp observers such as Michael Pettis. The impact of the downturn on spending and investment will take time to work through. Instead of the anticipated demand increase of about 350,000 bd this year and next which the IEA had suggested, it seems prudent to assume that Chinese oil demand will be flat this year and will increase only modestly in 2016 and 2017.
You can vary the calculation using your own assumptions on each of these points but the inescapable conclusion is that, short of a political change of heart in Riyadh, the surplus of supply over demand will persist for at least the next two years or longer. Even when supply and demand are back in balance the market will have to cope with the volume of stocks that are being built up.
Therefore, the cycle will only turn when the postponement of new projects begins to have an impact on total supply. Many new projects have been postponed already, and many more will suffer the same fate over the next few months. The impact, however, will be gradual. Existing producing fields, once they are past their plateau production levels, decline only slowly. New projects capable of replacing those supplies typically take four to six years to come on stream. In other words it will be about five years before the cancellation of a project today will impact on the physical supply-and-demand balance.
It is impossible to be precise but on these fundamentals the cycle will take at least five years to turn and quite possibly longer. The news, good or bad depending on where you are sitting, is that low prices look set to stay.
Thursday, September 3, 2015
World faces third deflationary wave - Financial Times
http://www.ft.com/intl/cms/s/0/11932fc0-4ca1-11e5-9b5d-89a026fda5c9.html?siteedition=intl#axzz3kXwXppp7
World faces third deflationary wave
Dominic Rossi
EM crisis means further fall in potential global output is unavoidable
A Chinese investor walks past an investment map showing suitable property markets for wealthy Chinese to invest in at the International Property Expo in Beijing on April 11, 2014. Wealthy Chinese will pour AUD$44 billion (US$39.4 billion) into Australian real estate over the next seven years, potentially pushing prices in one of the world's most expensive housing markets even higher. Chinese property investors have been on a international spending spree since the global financial crisis hit most of the world's economies.
The world economy is bearing the brunt of a third deflationary wave in less than a decade. The first was the US-led housing and financial crisis of 2008-9, the second wave was the eurozone crisis of 2011-12, and now a third, an emerging markets crisis.
This emerging markets crisis bears many of the hallmarks of previous episodes. All emerging market crises start in the foreign exchange markets before making their way through others: commodities, debt, equity and finally the real economy. This one is no different.
In the next few months we may reach a bottom in absolute price terms for emerging market securities, but past experience teaches us that it takes years of capital scarcity to restore capital and cost discipline after years of over investment. A new bull market in emerging markets is still some way off, and the 2002-7 period will be archived as a golden era.
The impact of this emerging market crisis on the developed world will be a little different this time. In 1997 it created a price shock that raised real income and real consumption levels in the developed world. Today an emerging crisis will create both a price and volume shock due to its greater relevance to world GDP and to global companies than in the past.
The net effect on developed nations will not be positive. Hopefully the Federal Open Market Committee will acknowledge these risks when it sits to deliberate monetary policy in September. We will see.
Whichever, the impact of this third deflationary wave has yet to reach the shores of Lake Michigan, irrespective of the tight labour markets in the US. Lower gasoline prices may now be being felt, but the fall in manufactured goods prices from Asia is still ahead of us. Tighter US monetary policy, and a strong dollar, would only intensify these oncoming deflationary forces.
The volume shock from the deflationary wave will become visible in trade data between developed and developing nations. The Financial Times recently noted that currency devaluations had failed to stimulate exports while limiting imports. In aggregate they had diminished world trade.
So it is critical that the US trade deficit now be allowed to expand and fill the aggregate demand gap that must arise from the fall in purchasing power from the developing world. Tighter US monetary policy will not help here either.
In sum, this third deflationary wave will mean that world GDP will continue to operate at a level below potential output. Downward pressure on prices will persist and a supply-side contraction in developing nations will be required before prices stabilise. A further fall in potential global output is now unavoidable. The adjustments to GDP forecasts are still ahead of us.
Those who hoped the secular opportunities of developing nations would insulate them from these woes will need to rethink
Consequently an economic landscape, formed of low nominal growth and low interest rates, will shape the developing world as it has shaped the developed world for some time. Those who hoped the secular opportunities of developing nations would insulate them from these woes will need to rethink.
Nor will a fresh round of competitive devaluations offer an escape route from these supply side adjustments. On the contrary, this would only intensify these price and volume shocks. A tightening of US monetary policy, and a stronger dollar, comes to the same thing. Either of these policy options would lower aggregate demand at a time it is already too low. Why make the adjustment unnecessarily painful?
At the beginning of this year I feared the secular stagnation hypothesis, but hoped as the year progressed it would be in full retreat, on the back of a US consumer recovery. In truth it has spread, capturing the developing world in its wake. This ice age of low nominal growth and interest rates looks more permanent than ever.
So the conundrum for investors continues. Negative real interest rates on bank deposits cannot be the road to prosperity, yet the promise of low nominal returns on traded securities looks risky.
My answer to this is to bet on innovation rather than hope policymakers get it right. Whatever you may read to the contrary, companies are investing and innovating. It is only by investing in innovation that we can escape this otherwise humdrum nominal world. The rest really is up to policymakers.
Dominic Rossi is global chief investment officer, equities, at Fidelity Worldwide Investment
World faces third deflationary wave
Dominic Rossi
EM crisis means further fall in potential global output is unavoidable
A Chinese investor walks past an investment map showing suitable property markets for wealthy Chinese to invest in at the International Property Expo in Beijing on April 11, 2014. Wealthy Chinese will pour AUD$44 billion (US$39.4 billion) into Australian real estate over the next seven years, potentially pushing prices in one of the world's most expensive housing markets even higher. Chinese property investors have been on a international spending spree since the global financial crisis hit most of the world's economies.
The world economy is bearing the brunt of a third deflationary wave in less than a decade. The first was the US-led housing and financial crisis of 2008-9, the second wave was the eurozone crisis of 2011-12, and now a third, an emerging markets crisis.
This emerging markets crisis bears many of the hallmarks of previous episodes. All emerging market crises start in the foreign exchange markets before making their way through others: commodities, debt, equity and finally the real economy. This one is no different.
In the next few months we may reach a bottom in absolute price terms for emerging market securities, but past experience teaches us that it takes years of capital scarcity to restore capital and cost discipline after years of over investment. A new bull market in emerging markets is still some way off, and the 2002-7 period will be archived as a golden era.
The impact of this emerging market crisis on the developed world will be a little different this time. In 1997 it created a price shock that raised real income and real consumption levels in the developed world. Today an emerging crisis will create both a price and volume shock due to its greater relevance to world GDP and to global companies than in the past.
The net effect on developed nations will not be positive. Hopefully the Federal Open Market Committee will acknowledge these risks when it sits to deliberate monetary policy in September. We will see.
Whichever, the impact of this third deflationary wave has yet to reach the shores of Lake Michigan, irrespective of the tight labour markets in the US. Lower gasoline prices may now be being felt, but the fall in manufactured goods prices from Asia is still ahead of us. Tighter US monetary policy, and a strong dollar, would only intensify these oncoming deflationary forces.
The volume shock from the deflationary wave will become visible in trade data between developed and developing nations. The Financial Times recently noted that currency devaluations had failed to stimulate exports while limiting imports. In aggregate they had diminished world trade.
So it is critical that the US trade deficit now be allowed to expand and fill the aggregate demand gap that must arise from the fall in purchasing power from the developing world. Tighter US monetary policy will not help here either.
In sum, this third deflationary wave will mean that world GDP will continue to operate at a level below potential output. Downward pressure on prices will persist and a supply-side contraction in developing nations will be required before prices stabilise. A further fall in potential global output is now unavoidable. The adjustments to GDP forecasts are still ahead of us.
Those who hoped the secular opportunities of developing nations would insulate them from these woes will need to rethink
Consequently an economic landscape, formed of low nominal growth and low interest rates, will shape the developing world as it has shaped the developed world for some time. Those who hoped the secular opportunities of developing nations would insulate them from these woes will need to rethink.
Nor will a fresh round of competitive devaluations offer an escape route from these supply side adjustments. On the contrary, this would only intensify these price and volume shocks. A tightening of US monetary policy, and a stronger dollar, comes to the same thing. Either of these policy options would lower aggregate demand at a time it is already too low. Why make the adjustment unnecessarily painful?
At the beginning of this year I feared the secular stagnation hypothesis, but hoped as the year progressed it would be in full retreat, on the back of a US consumer recovery. In truth it has spread, capturing the developing world in its wake. This ice age of low nominal growth and interest rates looks more permanent than ever.
So the conundrum for investors continues. Negative real interest rates on bank deposits cannot be the road to prosperity, yet the promise of low nominal returns on traded securities looks risky.
My answer to this is to bet on innovation rather than hope policymakers get it right. Whatever you may read to the contrary, companies are investing and innovating. It is only by investing in innovation that we can escape this otherwise humdrum nominal world. The rest really is up to policymakers.
Dominic Rossi is global chief investment officer, equities, at Fidelity Worldwide Investment
Wednesday, September 2, 2015
Global Shares Fall After China’s Weak PMI Data - Wall Street Journal
Global Shares Fall After China’s Weak PMI Data
U.S. stocks are poised to open more than 2% lower
By JOSIE COX
Updated Sept. 1, 2015 8:11 a.m. ET
Global stock markets tumbled Tuesday after weak manufacturing data in China fueled investors’ worries about the world’s second-largest economy.
Stock futures pointed to declines at the open in the U.S., and shares in Europe and Asia fell. The price of oil, which had rallied in recent days, slumped.
Futures contracts indicated a 1.9%, or 307-point, opening loss for the Dow Jones Industrial Average and a 1.9% fall for the S&P 500. Futures, however, don’t necessarily accurately reflect moves after the opening bell.
Commodities and stocks around the world have swung sharply in the weeks since China devalued the yuan, interpreted by some as a sign of Beijing’s concern about slowing growth. Financial markets had steadied over the past few sessions, but signs of turbulence returned Tuesday.
“International investors have become extremely concerned about the state of China’s real economy,” economists at UBS wrote in a note to clients, adding that some investors are fearful that the situation could still get worse.
The Stoxx Europe 600 was 2.2% lower just over halfway through the session. The Shanghai Composite fell nearly 5% before ending the day down 1.2%. Hong Kong’s Hang Seng Index fell 2.2% and Japan’s Nikkei lost 3.8%.
Stock indexes around the world suffered their biggest monthly losses in years in August. The Stoxx Europe 600 had its largest one-month percentage decline since August 2011. The Dow fell 6.6%, representing its biggest monthly percentage decline since May 2010. The Shanghai Composite fell 12.5%, notching its third straight month of declines.
But despite volatility having eased off in recent days, moves on Tuesday hinted that markets are still highly susceptible to shocks.
On Tuesday, China’s official manufacturing purchasing managers index for August fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0 implies a contraction.
Separately, the Caixin manufacturing purchasing managers index, a gauge of nationwide manufacturing activity, fell to more than a six-year low in August, according to Caixin Media Co. and research firm Markit.
“We believe that the clock is ticking towards further negative surprises,” Rabobank strategist Michael Every said about the data in a note to clients.
He said that policy responses from China aimed at encouraging stability had so far failed.
Chinese authorities have been trying to stabilize the domestic stock market since late June, cutting interest rates for the fifth time since November and pledging to support the market by buying stocks. More recently, Beijing has stepped up a crackdown on what they are labeling as securities violations.
Christine Lagarde, managing director for the International Monetary Fund, said Tuesday that the organization expects global economic growth to weaken and that Asia risks slowing further because of the recent volatility in financial markets.
“Asia as a region is still expected to lead global growth,” Ms. Lagarde said in a speech at the University of Indonesia. But even in Asia, the pace “is turning out a little bit slower expected—with the risk that it may even slow further given the recent spike in global risk aversion and in financial market volatility.”
The euro, which in recent months has tended to do well during times of market stress, was recently 0.2% higher against the U.S. dollar at $1.1245. The dollar was 0.9% lower against Japan’s yen at ¥120,13.
Brent crude, the global oil benchmark, fell 3.4% to $52.30 a barrel after oil prices surged over the previous three trading sessions. The U.S. oil benchmark was down 2.7% at $47.88. Gold rose around 0.8% to $1,141.00 a troy ounce.
Later this week, the European Central Bank is scheduled to hold its regular monetary policy meeting. Analysts expect President Mario Draghi to get questions about what recent market volatility could mean for Europe and the ECB’s bond-buying program.
On Friday, monthly U.S. nonfarm payroll figures could provide further hints on the timing of a U.S. interest rate rise.
Market turmoil has in recent weeks led some investors and analysts to push back their expectations for when the U.S. Federal Reserve will start to raise rates from rock-bottom levels.
Stephanie Lindeck, an economist at Julius Baer, wrote in a note to clients Tuesday, however, that she still thinks a move in 2015 is on the cards.
— Chao Deng in Hong Kong contributed to this article.
Corrections & Amplifications:
Last month, the Stoxx Europe 600 suffered its largest one-month percentage decline since August 2011. An earlier version of this article incorrectly said it was the largest one-month percentage decline since August 2010.
Write to Josie Cox at josie.cox@wsj.com
U.S. stocks are poised to open more than 2% lower
By JOSIE COX
Updated Sept. 1, 2015 8:11 a.m. ET
Global stock markets tumbled Tuesday after weak manufacturing data in China fueled investors’ worries about the world’s second-largest economy.
Stock futures pointed to declines at the open in the U.S., and shares in Europe and Asia fell. The price of oil, which had rallied in recent days, slumped.
Futures contracts indicated a 1.9%, or 307-point, opening loss for the Dow Jones Industrial Average and a 1.9% fall for the S&P 500. Futures, however, don’t necessarily accurately reflect moves after the opening bell.
Commodities and stocks around the world have swung sharply in the weeks since China devalued the yuan, interpreted by some as a sign of Beijing’s concern about slowing growth. Financial markets had steadied over the past few sessions, but signs of turbulence returned Tuesday.
“International investors have become extremely concerned about the state of China’s real economy,” economists at UBS wrote in a note to clients, adding that some investors are fearful that the situation could still get worse.
The Stoxx Europe 600 was 2.2% lower just over halfway through the session. The Shanghai Composite fell nearly 5% before ending the day down 1.2%. Hong Kong’s Hang Seng Index fell 2.2% and Japan’s Nikkei lost 3.8%.
Stock indexes around the world suffered their biggest monthly losses in years in August. The Stoxx Europe 600 had its largest one-month percentage decline since August 2011. The Dow fell 6.6%, representing its biggest monthly percentage decline since May 2010. The Shanghai Composite fell 12.5%, notching its third straight month of declines.
But despite volatility having eased off in recent days, moves on Tuesday hinted that markets are still highly susceptible to shocks.
On Tuesday, China’s official manufacturing purchasing managers index for August fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0 implies a contraction.
Separately, the Caixin manufacturing purchasing managers index, a gauge of nationwide manufacturing activity, fell to more than a six-year low in August, according to Caixin Media Co. and research firm Markit.
“We believe that the clock is ticking towards further negative surprises,” Rabobank strategist Michael Every said about the data in a note to clients.
He said that policy responses from China aimed at encouraging stability had so far failed.
Chinese authorities have been trying to stabilize the domestic stock market since late June, cutting interest rates for the fifth time since November and pledging to support the market by buying stocks. More recently, Beijing has stepped up a crackdown on what they are labeling as securities violations.
Christine Lagarde, managing director for the International Monetary Fund, said Tuesday that the organization expects global economic growth to weaken and that Asia risks slowing further because of the recent volatility in financial markets.
“Asia as a region is still expected to lead global growth,” Ms. Lagarde said in a speech at the University of Indonesia. But even in Asia, the pace “is turning out a little bit slower expected—with the risk that it may even slow further given the recent spike in global risk aversion and in financial market volatility.”
The euro, which in recent months has tended to do well during times of market stress, was recently 0.2% higher against the U.S. dollar at $1.1245. The dollar was 0.9% lower against Japan’s yen at ¥120,13.
Brent crude, the global oil benchmark, fell 3.4% to $52.30 a barrel after oil prices surged over the previous three trading sessions. The U.S. oil benchmark was down 2.7% at $47.88. Gold rose around 0.8% to $1,141.00 a troy ounce.
Later this week, the European Central Bank is scheduled to hold its regular monetary policy meeting. Analysts expect President Mario Draghi to get questions about what recent market volatility could mean for Europe and the ECB’s bond-buying program.
On Friday, monthly U.S. nonfarm payroll figures could provide further hints on the timing of a U.S. interest rate rise.
Market turmoil has in recent weeks led some investors and analysts to push back their expectations for when the U.S. Federal Reserve will start to raise rates from rock-bottom levels.
Stephanie Lindeck, an economist at Julius Baer, wrote in a note to clients Tuesday, however, that she still thinks a move in 2015 is on the cards.
— Chao Deng in Hong Kong contributed to this article.
Corrections & Amplifications:
Last month, the Stoxx Europe 600 suffered its largest one-month percentage decline since August 2011. An earlier version of this article incorrectly said it was the largest one-month percentage decline since August 2010.
Write to Josie Cox at josie.cox@wsj.com
Tuesday, September 1, 2015
Malaysia's masses protest against corruption - Economist
http://www.economist.com/news/asia/21662497-large-orderly-marches-keep-pressure-embattled-prime-minsiter-malaysias-masses-protest?cid1=cust/noenew/n/n/n/20150831n/owned/n/n/nwl/n/n/n/email
Malaysia's masses protest against corruption
Large but orderly marches keep the pressure on an embattled prime minister
Aug 30th 2015 | KUALA LUMPUR | Asia
TO LISTEN to the dire pronouncements from Malaysia's authorities, you might have expected a riot. But the big rally which took place in Kuala Lumpur this weekend, organised by Bersih—an electoral reform group angered by allegations of corruption in government—was a calm and joyful affair. Bersih (which means "clean" in Malay) reckoned that 200,000 marched to the capital's central square on Saturday afternoon to demand the resignation of the prime minister, Najib Razak; the police pegged the crowd at 30,000. Almost everyone wore Bersih's signature yellow T-shirts—despite the government's claim, at the eleventh hour, that they were illegal. One yellow-swathed campaigner waved a sunshine-yellow placard: "You can ban a T-shirt", it read, "but you can't ban an idea".
The rally began at 2pm on Saturday and continued overnight. Parents came with teenage and grown-up children (infants were discouraged). Supporters on Twitter quoted lines from "Les Misérables", and at least one rally chief tried to lead crowds in some of its tunes. A few campaigners sported bags that read "My prime minister embarrasses me"; one handy protester had carved a pint-sized model of Mr Najib from polystyrene, which perched on a swing inside a cage.
Beset by scandal, Malaysia’s prime minister cracks down on dissent
Mr Najib has been on the back foot since early July, when a report in the Wall Street Journal alleged that payments of nearly $700m had entered his bank accounts in 2013 (he denies wrongdoing, and says he has never used public money for personal gain). The government said the rally was illegal, and blocked the organisers' website. The state news agency quoted Mr Najib as saying that the protesters appeared "shallow and poor" in their patriotism for holding the rally so close to Malaysia's independence day, which falls on Monday. Students were warned that joining the protests might endanger their scholarships; the foreign ministry said it would identify Malaysians participating in assemblies held in solidarity abroad. One big worry was the promise made by a pro-government group to hold a counter-rally. Its leader had claimed to be planning training sessions for participants which would involve swords and long knives.
As it turned out, police presence was low-key, and its leadership pragmatic. The careful organisation of the protest doubtless helped. Having accepted that they would not be allowed to enter the capital's main square, organisers erected their own barriers at its entrance to keep protesters away from police lines. Where roads remained open to traffic—and initially only those closest to the square were closed—stewards parted the crowds for public buses, which chugged on incongruously. Law students with gas masks, who stood ready to advise any detained protesters, had little to do but observe.
Malaysia's economic and political malaise, in graphics
Assuming the protest concludes peacefully on Sunday night, Bersih's rally will mark a big step forward for civil society in Malaysia, where the culture of protest is still nascent. In the past similar demonstrations have been dispersed with water cannon, tear gas and arrests. This time the government's panicky and ultimately unenforced ban on Bersih T-shirts has served only to convince protesters that such edicts can in future be ignored. One shadow was the relative paucity of ethnic-Malays in a rally dominated by Malaysian Chinese. To some observers that confirmed worries—vigorously denied by the protest's organisers—that the country's politics is dividing more firmly along ethnic lines.
Few attendees expect the demonstration to bring immediate change. But the prime minister's opponents got a big boost on Sunday afternoon, when Mahathir Mohamad—an elder statesman who has for many months called for Mr Najib to step down, and who stopped briefly at the rally on Saturday—returned to make a supportive statement. Attention now shifts to a big international conference on corruption, which—quite by chance—is being held near Kuala Lumpur from September 2nd. It is still not clear whether the prime minister will attend.
Malaysia's masses protest against corruption
Large but orderly marches keep the pressure on an embattled prime minister
Aug 30th 2015 | KUALA LUMPUR | Asia
TO LISTEN to the dire pronouncements from Malaysia's authorities, you might have expected a riot. But the big rally which took place in Kuala Lumpur this weekend, organised by Bersih—an electoral reform group angered by allegations of corruption in government—was a calm and joyful affair. Bersih (which means "clean" in Malay) reckoned that 200,000 marched to the capital's central square on Saturday afternoon to demand the resignation of the prime minister, Najib Razak; the police pegged the crowd at 30,000. Almost everyone wore Bersih's signature yellow T-shirts—despite the government's claim, at the eleventh hour, that they were illegal. One yellow-swathed campaigner waved a sunshine-yellow placard: "You can ban a T-shirt", it read, "but you can't ban an idea".
The rally began at 2pm on Saturday and continued overnight. Parents came with teenage and grown-up children (infants were discouraged). Supporters on Twitter quoted lines from "Les Misérables", and at least one rally chief tried to lead crowds in some of its tunes. A few campaigners sported bags that read "My prime minister embarrasses me"; one handy protester had carved a pint-sized model of Mr Najib from polystyrene, which perched on a swing inside a cage.
Beset by scandal, Malaysia’s prime minister cracks down on dissent
Mr Najib has been on the back foot since early July, when a report in the Wall Street Journal alleged that payments of nearly $700m had entered his bank accounts in 2013 (he denies wrongdoing, and says he has never used public money for personal gain). The government said the rally was illegal, and blocked the organisers' website. The state news agency quoted Mr Najib as saying that the protesters appeared "shallow and poor" in their patriotism for holding the rally so close to Malaysia's independence day, which falls on Monday. Students were warned that joining the protests might endanger their scholarships; the foreign ministry said it would identify Malaysians participating in assemblies held in solidarity abroad. One big worry was the promise made by a pro-government group to hold a counter-rally. Its leader had claimed to be planning training sessions for participants which would involve swords and long knives.
As it turned out, police presence was low-key, and its leadership pragmatic. The careful organisation of the protest doubtless helped. Having accepted that they would not be allowed to enter the capital's main square, organisers erected their own barriers at its entrance to keep protesters away from police lines. Where roads remained open to traffic—and initially only those closest to the square were closed—stewards parted the crowds for public buses, which chugged on incongruously. Law students with gas masks, who stood ready to advise any detained protesters, had little to do but observe.
Malaysia's economic and political malaise, in graphics
Assuming the protest concludes peacefully on Sunday night, Bersih's rally will mark a big step forward for civil society in Malaysia, where the culture of protest is still nascent. In the past similar demonstrations have been dispersed with water cannon, tear gas and arrests. This time the government's panicky and ultimately unenforced ban on Bersih T-shirts has served only to convince protesters that such edicts can in future be ignored. One shadow was the relative paucity of ethnic-Malays in a rally dominated by Malaysian Chinese. To some observers that confirmed worries—vigorously denied by the protest's organisers—that the country's politics is dividing more firmly along ethnic lines.
Few attendees expect the demonstration to bring immediate change. But the prime minister's opponents got a big boost on Sunday afternoon, when Mahathir Mohamad—an elder statesman who has for many months called for Mr Najib to step down, and who stopped briefly at the rally on Saturday—returned to make a supportive statement. Attention now shifts to a big international conference on corruption, which—quite by chance—is being held near Kuala Lumpur from September 2nd. It is still not clear whether the prime minister will attend.
Monday, August 31, 2015
Apple Wants to Make the iPad More Work-friendly - TIME
http://time.com/3995873/apple-work-ipad/
Apple Wants to Make the iPad More Work-friendly
Victor Luckerson @VLuck Aug. 13, 2015
Company is working with developers to make workplace software
With consumers growing cool toward the iPad, Apple is turning to businesses to boost sales of the five-year-old device. The tech giant has partnered with more than 40 companies that make business software to develop a suite of interconnected enterprise apps, according to the Wall Street Journal. The apps include software for accounting, sales presentations and point-of-sale systems, among other tools. Apple and its partners are also holding seminars where they pitch business owners in different sectors on the usefulness of their products. Internally the initiative is called the “mobility partner program.”
After rapid sales growth initially, interest in the iPad has tapered off in recent years. Sales of the device have declined for six straight quarters and revenue from the iPad was down 24% in the nine months ending in June. Analysts expect the business sector to be a growth spot for tablets in the future, so it makes sense for Apple to compete with the likes of Microsoft, Google and Samsung in the space. The company made its intentions clear last year when it partnered with IBM to create a collection of apps and services targeting enterprise customers.
Apple Wants to Make the iPad More Work-friendly
Victor Luckerson @VLuck Aug. 13, 2015
Company is working with developers to make workplace software
With consumers growing cool toward the iPad, Apple is turning to businesses to boost sales of the five-year-old device. The tech giant has partnered with more than 40 companies that make business software to develop a suite of interconnected enterprise apps, according to the Wall Street Journal. The apps include software for accounting, sales presentations and point-of-sale systems, among other tools. Apple and its partners are also holding seminars where they pitch business owners in different sectors on the usefulness of their products. Internally the initiative is called the “mobility partner program.”
After rapid sales growth initially, interest in the iPad has tapered off in recent years. Sales of the device have declined for six straight quarters and revenue from the iPad was down 24% in the nine months ending in June. Analysts expect the business sector to be a growth spot for tablets in the future, so it makes sense for Apple to compete with the likes of Microsoft, Google and Samsung in the space. The company made its intentions clear last year when it partnered with IBM to create a collection of apps and services targeting enterprise customers.
Sunday, August 30, 2015
Pharma industry warns on threat to Greek drug supplies - Financial Times
http://www.ft.com/intl/cms/s/0/f981cd1e-1e6b-11e5-aa5a-398b2169cf79.html#axzz3eSZQamqC
June 29, 2015 7:00 pm
Pharma industry warns on threat to Greek drug supplies
Andrew Ward, Pharmaceuticals Correspondent
An employee informs customers in a pharmacy of the National Organization for Healthcare Services Provision (EOPYY) how to receive their prescribed medicines, in the centre of Athens, Greece, 08 June 2012. Reports state that on 06 June 2012 that EOPPY announced the disbursement of several expensive pharmaceuticals, particularly anti-cancer medications. The announcement came after heated reactions in recent days as a result of a shortage in the particular drugs, reportedly due to payment disputes. EPA/ALKIS KONSTANTINIDIS©EPA
Customers queue at an Athens pharmacy. Greece has already run up unpaid bills in excess of €1bn with drugmakers
Europe’s pharmaceuticals industry has warned that drug supplies to Greece could be jeopardised if the country leaves the euro, and called for urgent action from Brussels to help prevent shortages.
Greece has run up unpaid bills in excess of €1bn with drugmakers, and the industry wrote to the European Commission on Monday to raise alarm over strains on the country’s pharmaceuticals market.
“In the worst-case scenario of ‘Grexit’, we believe the integrity of the medicines supply chain may be in jeopardy, which would create a risk to public health,” wrote Richard Bergström, director-general of the European Federation of Pharmaceutical Industries and Associations.
His comments will reinforce fears of disruption to supplies of critical products such as medicines and oil if Greece fails to find a way out of its debt crisis.
Mr Bergström warned that the “technical breakdown in infrastructure supporting transactions, uncertainty on the validity of contracts, coupled with general social unrest” could imperil pharmaceuticals supplies in the event of euro exit.
Shortages could be exacerbated by an increased economic incentive for drugs to be exported from Greece, and sold at a higher price in neighbouring markets if the euro is replaced by a sharply depreciated drachma, Mr Bergström said.
Individual drug companies were working on measures to maintain supplies but competition laws made it hard for the industry to come up with a co-ordinated response, he added in his letter to Vytenis Andriukaitis, EU health commissioner, seen by the Financial Times.
Mr Bergström called for an urgent meeting with Mr Andriukaitis and other commissioners to discuss “concrete contingency plans”.
In depth
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
In addition to supply risks, drugmakers are also worried that falling prices in Greece could put downward pressure on pricing elsewhere in Europe because of the widely used system of “reference pricing”, under which drug prices in one country are often pegged to those in others.
Mr Bergström urged the commission to seek an agreement among European health ministers that EU members would not use Greece as a reference when setting prices.
Pharmaceuticals manufacturers and patients alike have been hit by sharp cuts in Greek healthcare spending during the country’s financial crisis.
Industry executives and healthcare analysts say the country suffers from an especially inefficient pharmaceuticals market hobbled by the vested interests of hundreds of wholesalers and powerful pharmacists.
This is reflected in among the lowest penetration of off-patent generic drugs in Europe because these interest groups have favoured more pricey branded medicines. The European Commission has been pressing Athens to tackle this problem as part of its economic reforms.
June 29, 2015 7:00 pm
Pharma industry warns on threat to Greek drug supplies
Andrew Ward, Pharmaceuticals Correspondent
An employee informs customers in a pharmacy of the National Organization for Healthcare Services Provision (EOPYY) how to receive their prescribed medicines, in the centre of Athens, Greece, 08 June 2012. Reports state that on 06 June 2012 that EOPPY announced the disbursement of several expensive pharmaceuticals, particularly anti-cancer medications. The announcement came after heated reactions in recent days as a result of a shortage in the particular drugs, reportedly due to payment disputes. EPA/ALKIS KONSTANTINIDIS©EPA
Customers queue at an Athens pharmacy. Greece has already run up unpaid bills in excess of €1bn with drugmakers
Europe’s pharmaceuticals industry has warned that drug supplies to Greece could be jeopardised if the country leaves the euro, and called for urgent action from Brussels to help prevent shortages.
Greece has run up unpaid bills in excess of €1bn with drugmakers, and the industry wrote to the European Commission on Monday to raise alarm over strains on the country’s pharmaceuticals market.
“In the worst-case scenario of ‘Grexit’, we believe the integrity of the medicines supply chain may be in jeopardy, which would create a risk to public health,” wrote Richard Bergström, director-general of the European Federation of Pharmaceutical Industries and Associations.
His comments will reinforce fears of disruption to supplies of critical products such as medicines and oil if Greece fails to find a way out of its debt crisis.
Mr Bergström warned that the “technical breakdown in infrastructure supporting transactions, uncertainty on the validity of contracts, coupled with general social unrest” could imperil pharmaceuticals supplies in the event of euro exit.
Shortages could be exacerbated by an increased economic incentive for drugs to be exported from Greece, and sold at a higher price in neighbouring markets if the euro is replaced by a sharply depreciated drachma, Mr Bergström said.
Individual drug companies were working on measures to maintain supplies but competition laws made it hard for the industry to come up with a co-ordinated response, he added in his letter to Vytenis Andriukaitis, EU health commissioner, seen by the Financial Times.
Mr Bergström called for an urgent meeting with Mr Andriukaitis and other commissioners to discuss “concrete contingency plans”.
In depth
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
In addition to supply risks, drugmakers are also worried that falling prices in Greece could put downward pressure on pricing elsewhere in Europe because of the widely used system of “reference pricing”, under which drug prices in one country are often pegged to those in others.
Mr Bergström urged the commission to seek an agreement among European health ministers that EU members would not use Greece as a reference when setting prices.
Pharmaceuticals manufacturers and patients alike have been hit by sharp cuts in Greek healthcare spending during the country’s financial crisis.
Industry executives and healthcare analysts say the country suffers from an especially inefficient pharmaceuticals market hobbled by the vested interests of hundreds of wholesalers and powerful pharmacists.
This is reflected in among the lowest penetration of off-patent generic drugs in Europe because these interest groups have favoured more pricey branded medicines. The European Commission has been pressing Athens to tackle this problem as part of its economic reforms.
Saturday, August 29, 2015
Greece Appoints Its First Female Prime Minister -TIME
http://time.com/4014419/greece-female-prime-minister/
Greece Appoints Its First Female Prime Minister
Elena Becatoros and Nicholas Paphitis / AP 2:15 AM ET
Vassiliki Thanou
Petros Giannakouris—AP
(ATHENS, Greece) — Greece’s first female prime minister, a top judge, was sworn in Thursday to head a caretaker government ahead of early elections next month in the bailout-dependent country.
Supreme Court head Vassiliki Thanou, 65, was appointed after radical left Prime Minister Alexis Tsipras resigned, seeking a stronger mandate to implement tough austerity measures demanded by Greece’s creditors in return for a third bailout worth 86 billion euro ($97 billion).
Her main task will be to hold the reins until a new government emerges from the vote expected on Sept. 20.
“But, given the circumstances … I believe that this government will also have to handle crucial matters,” Thanou said in her first public comments in office, singling out for mention Greece’s immigration crisis.
Since January, the financially struggling country has received more than 160,000 mainly Syrian refugees and economic migrants — a record number — who arrive in boats from Turkey before heading to wealthier European countries.
Tsipras was forced to step down last week, barely seven months into his four-year term, following a rebellion in his radical left Syriza party over his agreement to the new income cuts and tax hikes.
Syriza hardliners were furious that Tsipras signed the deal with even harsher terms than those he had vowed to abolish when he was elected in January. The deal was approved with support from pro-European opposition parties, who now accuse him of rushing to call elections before voters are hit by the full force of the new tax measures.
The 41-year-old outgoing prime minister has argued he was left with no choice but to accept European creditors’ demands, to save Greece from defaulting on its debts and being forced out of the euro currency it shares with another 18 European nations.
Thanou will appoint a Cabinet that will be sworn in on Friday, when the election date will be formally confirmed.
Greek President Procopis Pavlopoulos announced her appointment after parliament’s three largest parties failed to find willing coalition partners. The last to hold the mandate to form a government was former energy minister Panagiotis Lafazanis, who created the new Popular Unity party last week after splitting from Syriza.
Greece has relied on funds from two bailouts by other European countries and the International Monetary Fund totaling nearly 240 billion euros ($270 billion) since 2010. In return for the loans, successive governments imposed deeply resented spending cuts that slashed incomes by more than a third, deepened a dire recession and pushed unemployment well over 25 percent.
The second bailout expired earlier this year, and Tsipras insisted he could negotiate a better deal for his country. But the talks with creditors floundered and eventually collapsed in June, with Tsipras calling a referendum and urging Greeks to vote against creditor demands. They overwhelmingly did so, but the prime minister eventually signed up to even stricter demands in return for the third, three-year rescue loan agreement.
Despite his about-face on policies, Tsipras is expected to win the next election although it’s unclear whether he will secure enough parliamentary seats to govern alone. He has ruled out a coalition with any of the centrist opposition parties: center-right New Democracy, the socialist PASOK party or the small centrist To Potami party.
Unless other smaller parties manage to enter Parliament, that would leave his current coalition partner, the nationalist Independent Greeks — which, however, may struggle to cross the 3 percent parliamentary threshold.
Tsipras is not expected to form a government with the new Popular Unity party, the Nazi-inspired Golden Dawn, whose leader and lawmakers still face criminal charges, or the communist KKE party.
Greece Appoints Its First Female Prime Minister
Elena Becatoros and Nicholas Paphitis / AP 2:15 AM ET
Vassiliki Thanou
Petros Giannakouris—AP
(ATHENS, Greece) — Greece’s first female prime minister, a top judge, was sworn in Thursday to head a caretaker government ahead of early elections next month in the bailout-dependent country.
Supreme Court head Vassiliki Thanou, 65, was appointed after radical left Prime Minister Alexis Tsipras resigned, seeking a stronger mandate to implement tough austerity measures demanded by Greece’s creditors in return for a third bailout worth 86 billion euro ($97 billion).
Her main task will be to hold the reins until a new government emerges from the vote expected on Sept. 20.
“But, given the circumstances … I believe that this government will also have to handle crucial matters,” Thanou said in her first public comments in office, singling out for mention Greece’s immigration crisis.
Since January, the financially struggling country has received more than 160,000 mainly Syrian refugees and economic migrants — a record number — who arrive in boats from Turkey before heading to wealthier European countries.
Tsipras was forced to step down last week, barely seven months into his four-year term, following a rebellion in his radical left Syriza party over his agreement to the new income cuts and tax hikes.
Syriza hardliners were furious that Tsipras signed the deal with even harsher terms than those he had vowed to abolish when he was elected in January. The deal was approved with support from pro-European opposition parties, who now accuse him of rushing to call elections before voters are hit by the full force of the new tax measures.
The 41-year-old outgoing prime minister has argued he was left with no choice but to accept European creditors’ demands, to save Greece from defaulting on its debts and being forced out of the euro currency it shares with another 18 European nations.
Thanou will appoint a Cabinet that will be sworn in on Friday, when the election date will be formally confirmed.
Greek President Procopis Pavlopoulos announced her appointment after parliament’s three largest parties failed to find willing coalition partners. The last to hold the mandate to form a government was former energy minister Panagiotis Lafazanis, who created the new Popular Unity party last week after splitting from Syriza.
Greece has relied on funds from two bailouts by other European countries and the International Monetary Fund totaling nearly 240 billion euros ($270 billion) since 2010. In return for the loans, successive governments imposed deeply resented spending cuts that slashed incomes by more than a third, deepened a dire recession and pushed unemployment well over 25 percent.
The second bailout expired earlier this year, and Tsipras insisted he could negotiate a better deal for his country. But the talks with creditors floundered and eventually collapsed in June, with Tsipras calling a referendum and urging Greeks to vote against creditor demands. They overwhelmingly did so, but the prime minister eventually signed up to even stricter demands in return for the third, three-year rescue loan agreement.
Despite his about-face on policies, Tsipras is expected to win the next election although it’s unclear whether he will secure enough parliamentary seats to govern alone. He has ruled out a coalition with any of the centrist opposition parties: center-right New Democracy, the socialist PASOK party or the small centrist To Potami party.
Unless other smaller parties manage to enter Parliament, that would leave his current coalition partner, the nationalist Independent Greeks — which, however, may struggle to cross the 3 percent parliamentary threshold.
Tsipras is not expected to form a government with the new Popular Unity party, the Nazi-inspired Golden Dawn, whose leader and lawmakers still face criminal charges, or the communist KKE party.
Friday, August 28, 2015
China Falters, and the Global Economy Is Forced to Adapt - New York times
http://www.nytimes.com/2015/08/27/business/international/china-falters-and-the-global-economy-is-forced-to-adapt.html?emc=edit_th_20150827&nl=todaysheadlines&nlid=56381892&_r=0
China Falters, and the Global Economy Is Forced to Adapt
With deepening economic fears about China, multinational corporations and countries are having to respond to a new reality as a once sure bet becomes uncertain.
By KEITH BRADSHERAUG. 26, 2015
HONG KONG — The commodities giant BHP Billiton spent heavily for years, mining iron ore across Australia, digging for copper in Chile, and pumping oil off the coast of Trinidad. The company could be confident in its direction as commodities orders surged from its biggest and best customer, China.
Now, BHP is pulling back, faced with a slowing Chinese economy that will no longer be the same dominant force in commodities. Profit is falling and the company is cutting its investment spending budget by more than two-thirds.
China’s rapid growth over the last decade reshaped the world economy, creating a powerful driver of corporate strategies, financial markets and geopolitical decisions. China seemed to have a one-way trajectory, momentum that would provide a steady source of profit and capital.
As Markets Flail, China Investigates Large Brokerage FirmsAUG. 26, 2015
Waiting for customers at a Rolex store in the Causeway Bay section of Hong Kong. Spending on luxury goods in China contracted 1 percent last year, to about $18 billion.China’s Big Spenders Pull Back, as Stock Market ShuddersAUG. 26, 2015
Across China, millions of workers and thousands of companies are feeling the pain of the country’s slowing economy, as sales slip and incomes drop.China Turned to Risky Devaluation as Export Machine StalledAUG. 17, 2015
Diners at a table lifted by a crane to a height of about 100 feet, with a view of a residential construction site in Kunming, China.Devaluation Hints at China’s Rising Distress Over EconomyAUG. 12, 2015
But deepening economic fears about China, which culminated this week in a global market rout, are now forcing a broad rethinking of the conventional wisdom. Even as markets show signs of stabilizing, the resulting shock waves could be lasting, by exposing a new reality that China is no longer a sure bet.
China, while still a large and pervasive presence in the global economy, is now exporting uncertainty around the world with the potential for choppier growth and volatile swings. The tectonic shift is forcing a gut check in industries that have built their strategies and plotted their profits around China’s rise.
Industrial and commodity multinationals face the most pressing concerns, as they scramble to stem the profit slide from weaker consumption. Caterpillar cut back factory production, with sales of construction equipment in China dropping by half in the first six months of the year.
Smartphone makers, automobile manufacturers and retailers wonder about the staying power of Chinese buyers, even if it is not shaking their bottom line at this point. General Motors and Ford factories have been shipping fewer cars to Chinese dealerships this summer.
It is not just companies reassessing their assumptions. Russia had been turning to China to fill the financial gap left by low oil prices and Western sanctions. Venezuela, Nigeria and Ukraine have been heavily dependent on investments and low-cost loans from China.
The pain has been particularly acute for Brazil. The country is already faltering, as weaker Chinese imports of minerals and soybeans have jolted all of Latin America. The uncertainty over China could limit the maneuvering room for officials to address the sluggish Brazilian economy at a time when resentment is festering over proposed austerity measures.
The weakness in China is even compelling officials at the United States Federal Reserve to think more globally, as they consider raising interest rates. William C. Dudley, the president of the New York Fed, said on Wednesday that a September rate increase looked less likely than it did a few weeks ago.
“The entire world is focusing now on China, watching this crisis unfold,” Armando Monteiro Neto, Brazil’s minister of development and foreign trade, told reporters on Tuesday in Brasília. “Brazil is already feeling the effects of China’s deceleration. If the situation gets worse, the impact will get bigger.”
The trouble is, the true strength of the Chinese economy — and the policies the leadership will adopt to address any weaknesses — is becoming more difficult to discern.
China’s growth, which the government puts at 7 percent a year, is widely questioned. Large parts of the Chinese service sector, like restaurants and health care, continue to grow, supporting the broader economy. But the signs in industrial sectors, in which other countries and foreign companies have the greatest stake through trade, paint a bleaker picture.
Articles in this series explore how China's financial heft and economic clout influence the world.
PART I
China’s Global Ambitions, With Loans and Strings AttachedJULY 25, 2015
Adding to the worries are recent events like the deadly explosion of a hazardous chemicals warehouse in Tianjin, which has delayed shipments through one of China’s biggest ports. Labor protests, already rising, jumped sharply across coastal China last week over unpaid wages at struggling export factories.
The leadership, concerned with maintaining social stability, has been quick to act, making aggressive moves to prop up the stock market, inject money into the financial system, and generally stimulate the economy. But President Xi Jinping doesn’t have much experience managing a downturn, and some economists worry that the government is making knee-jerk decisions that will do more harm than good.
Many company executives and global economists say that forecasting China’s growth has become so hard that they are hedging their bets for the time being. “This is a complete black art right now,” said Tim Huxley, the chief executive of Wah Kwong Maritime Transport Holdings, a large Hong Kong shipping company. “I can’t make any long-term decisions based on what is happening today, and so I just keep our fleet running until we get a bit of direction.”
The problems have been building for months in areas like commodities and industrials where just modestly slowing growth in China has been having outsize effects.
For more than a decade, prices surged for iron ore, a main ingredient in making steel, as new skyscrapers, rail lines and other infrastructure were built across China. Last year, BHP Billiton shipped enough iron ore each day to China to fill the Empire State Building.
Now, the industry is retrenching in the face of China’s weaker prospects and diving commodity prices.
Vale, the Brazilian mining giant, is racing to unload assets. In Australia, Vale and its Japanese partner, the Sumitomo Corporation, sold a coal mine in July for just $1, after it had been valued at more than $600 million three years ago. In Argentina, Vale is trying to sell a potash mine in which it invested more than $2 billion.
The fallout in commodities has been especially painful for emerging markets that depend on sales of those resources.
With Brazil’s revenues declining sharply this year, President Dilma Rousseff’s government is coming under criticism over the country’s dependence on China, which surpassed the United States as the top trading partner in 2009. Brazil’s exports to China fell 23.6 percent, to $24.7 billion, in the first seven months of the year from the same period in 2014.
The World According to China
China’s enormous overseas spending has helped it displace the United States and Europe as the leading financial power in large parts of the developing world.
In an editorial on Tuesday, the newspaper O Estado de S. Paulo described Brazil’s relationship with China as “semi-colonial,” claiming that the country’s economy “depends in excess on Chinese prosperity.”
Ilan Goldfajn, chief economist at Itaú Unibanco, one of Brazil’s largest banks, said he was already forecasting the economy to contract about 2.3 percent this year, without factoring in the possibility of a hard landing in China. “China is the most important risk factor for Brazil,” Mr. Goldfajn said.
China was supposed to be the financial savior for Russia.
Last year, Russia signed a $400 billion natural gas deal with China. China would help finance a nearly 2,500-mile pipeline to ship fuel from Siberia. Russia trumpeted that it would eventually sell more natural gas to China than Germany, now its biggest customer.
But the prices that China is willing to pay for the gas are dropping so low that it may no longer be worthwhile to build a pipeline. The Russian energy giant Gazprom has cut its planned capital outlays this year for the first leg of the pipeline by half, Dozhd television reported.
“China is an unclear country for us, opaque,” said Aleksandr Abramov, a professor of finance at the Higher School of Economics in Moscow. “We don’t know what to expect,” he said, adding, “Clearly, the situation will worsen in Russia.”
Some of the latest pressures reflect a belated recognition by businesses and politicians that China had been slowing down.
Automobile manufacturers cut their shipments of new cars to dealers by 7 percent in July, compared with a year earlier. Retail sales had not suddenly tanked, said Cui Dongshu, the secretary-general of China’s Passenger Car Association, which represents manufacturers.
Rather, too many cars had been sent to dealers’ lots in previous months, he said. In other words, manufacturers were slow to see the economy’s deceleration and waited too long to throttle back their factories.
BUSINESS By JONAH M. KESSEL 4:59
To Understand Renminbi, Follow the Bacon
Continue reading the main storyVideo
To Understand Renminbi, Follow the Bacon
From market to table, pork can explain a lot about what’s going on with China’s turbulent currency markets. By JONAH M. KESSEL on Publish Date August 14, 2015. Photo by Adam Dean for The New York Times. Watch in Times Video »
“What manufacturers are doing is adjusting inventory levels to the ‘new normal,’ ” said Bill Russo, a former chief executive of Chrysler China, using a favorite phrase of President Xi Jinping of China in recent months to describe an economy that is expanding at a slower pace.
Similar adjustments are taking place around the globe.
For years, Germany has been well positioned to profit from Chinese growth because it specializes in machine tools and other factory equipment. Most important, China acted as a counterweight to the chronically slow-growing markets in Europe.
Now, major German exporters are seeing signs of pressure.
Trumpf says that sales of its signature product, machines that automakers use to cut sheet metal that sell for about 500,000 euros ($566,000) each, have continued to grow in China. But in May and June, sales of less-expensive cutting machines flattened and began to decline. At the bottom of Trumpf’s product line, sales have fallen sharply since November for machines often purchased by start-up companies.
How industries and economies ultimately fare will depend on how long the slowdown and how deep the economic woes.
Demand remains strong at Boeing for its 777-300ER and 787 jets, models that are capable of flights lasting 10 hours or longer, to Europe or North America. Long-haul international travel from mainland China soared nearly 30 percent in the first half of this year compared with the same period last year, Randy Tinseth, the vice president for marketing at Boeing’s commercial aircraft division, said during a visit to Beijing on Tuesday.
So far, it has been mixed for technology players. Timothy D. Cook, the Apple chief executive, said on Monday that business had stayed strong in China in July and August. But Meg Whitman, the chief executive of Hewlett-Packard, said in an earnings call last week that China’s consumer market for printers and computers was “pretty soft,” although demand from businesses was holding up better.
In the end, much of the China story will come down to whether the expectations meet the reality. Andrew Mackenzie, the chief executive of BHP, captured a broader corporate view on Tuesday when he spoke glowingly about China’s potential in the decade to come and predicted continued profitability. But he conceded that the country’s steel production would most likely “grow a little more slowly,” citing a forecast that works out to just 1.4 percent annually — a figure that sounds more like Europe than the formerly go-go economy of China.
A similar realization is taking place in various corners. “We had five fabulous years in China, of course, where we grew strong double-digit, and it has been gradually slowing down,” Frans van Houten, chief executive of Royal Philips, the Dutch conglomerate, said on July 27. “I think, going forward, we need to be much more modest on expectations with regard to China growth: That’s just being realistic.”
Reporting was contributed by Simon Romero from Brasília, Brazil; Jack Ewing from Athens; Andrew E. Kramer from Moscow; Paul Mozur from Hong Kong; and Vinod Sreeharsha from São Paulo.
China Falters, and the Global Economy Is Forced to Adapt
With deepening economic fears about China, multinational corporations and countries are having to respond to a new reality as a once sure bet becomes uncertain.
By KEITH BRADSHERAUG. 26, 2015
HONG KONG — The commodities giant BHP Billiton spent heavily for years, mining iron ore across Australia, digging for copper in Chile, and pumping oil off the coast of Trinidad. The company could be confident in its direction as commodities orders surged from its biggest and best customer, China.
Now, BHP is pulling back, faced with a slowing Chinese economy that will no longer be the same dominant force in commodities. Profit is falling and the company is cutting its investment spending budget by more than two-thirds.
China’s rapid growth over the last decade reshaped the world economy, creating a powerful driver of corporate strategies, financial markets and geopolitical decisions. China seemed to have a one-way trajectory, momentum that would provide a steady source of profit and capital.
As Markets Flail, China Investigates Large Brokerage FirmsAUG. 26, 2015
Waiting for customers at a Rolex store in the Causeway Bay section of Hong Kong. Spending on luxury goods in China contracted 1 percent last year, to about $18 billion.China’s Big Spenders Pull Back, as Stock Market ShuddersAUG. 26, 2015
Across China, millions of workers and thousands of companies are feeling the pain of the country’s slowing economy, as sales slip and incomes drop.China Turned to Risky Devaluation as Export Machine StalledAUG. 17, 2015
Diners at a table lifted by a crane to a height of about 100 feet, with a view of a residential construction site in Kunming, China.Devaluation Hints at China’s Rising Distress Over EconomyAUG. 12, 2015
But deepening economic fears about China, which culminated this week in a global market rout, are now forcing a broad rethinking of the conventional wisdom. Even as markets show signs of stabilizing, the resulting shock waves could be lasting, by exposing a new reality that China is no longer a sure bet.
China, while still a large and pervasive presence in the global economy, is now exporting uncertainty around the world with the potential for choppier growth and volatile swings. The tectonic shift is forcing a gut check in industries that have built their strategies and plotted their profits around China’s rise.
Industrial and commodity multinationals face the most pressing concerns, as they scramble to stem the profit slide from weaker consumption. Caterpillar cut back factory production, with sales of construction equipment in China dropping by half in the first six months of the year.
Smartphone makers, automobile manufacturers and retailers wonder about the staying power of Chinese buyers, even if it is not shaking their bottom line at this point. General Motors and Ford factories have been shipping fewer cars to Chinese dealerships this summer.
It is not just companies reassessing their assumptions. Russia had been turning to China to fill the financial gap left by low oil prices and Western sanctions. Venezuela, Nigeria and Ukraine have been heavily dependent on investments and low-cost loans from China.
The pain has been particularly acute for Brazil. The country is already faltering, as weaker Chinese imports of minerals and soybeans have jolted all of Latin America. The uncertainty over China could limit the maneuvering room for officials to address the sluggish Brazilian economy at a time when resentment is festering over proposed austerity measures.
The weakness in China is even compelling officials at the United States Federal Reserve to think more globally, as they consider raising interest rates. William C. Dudley, the president of the New York Fed, said on Wednesday that a September rate increase looked less likely than it did a few weeks ago.
“The entire world is focusing now on China, watching this crisis unfold,” Armando Monteiro Neto, Brazil’s minister of development and foreign trade, told reporters on Tuesday in Brasília. “Brazil is already feeling the effects of China’s deceleration. If the situation gets worse, the impact will get bigger.”
The trouble is, the true strength of the Chinese economy — and the policies the leadership will adopt to address any weaknesses — is becoming more difficult to discern.
China’s growth, which the government puts at 7 percent a year, is widely questioned. Large parts of the Chinese service sector, like restaurants and health care, continue to grow, supporting the broader economy. But the signs in industrial sectors, in which other countries and foreign companies have the greatest stake through trade, paint a bleaker picture.
Articles in this series explore how China's financial heft and economic clout influence the world.
PART I
China’s Global Ambitions, With Loans and Strings AttachedJULY 25, 2015
Adding to the worries are recent events like the deadly explosion of a hazardous chemicals warehouse in Tianjin, which has delayed shipments through one of China’s biggest ports. Labor protests, already rising, jumped sharply across coastal China last week over unpaid wages at struggling export factories.
The leadership, concerned with maintaining social stability, has been quick to act, making aggressive moves to prop up the stock market, inject money into the financial system, and generally stimulate the economy. But President Xi Jinping doesn’t have much experience managing a downturn, and some economists worry that the government is making knee-jerk decisions that will do more harm than good.
Many company executives and global economists say that forecasting China’s growth has become so hard that they are hedging their bets for the time being. “This is a complete black art right now,” said Tim Huxley, the chief executive of Wah Kwong Maritime Transport Holdings, a large Hong Kong shipping company. “I can’t make any long-term decisions based on what is happening today, and so I just keep our fleet running until we get a bit of direction.”
The problems have been building for months in areas like commodities and industrials where just modestly slowing growth in China has been having outsize effects.
For more than a decade, prices surged for iron ore, a main ingredient in making steel, as new skyscrapers, rail lines and other infrastructure were built across China. Last year, BHP Billiton shipped enough iron ore each day to China to fill the Empire State Building.
Now, the industry is retrenching in the face of China’s weaker prospects and diving commodity prices.
Vale, the Brazilian mining giant, is racing to unload assets. In Australia, Vale and its Japanese partner, the Sumitomo Corporation, sold a coal mine in July for just $1, after it had been valued at more than $600 million three years ago. In Argentina, Vale is trying to sell a potash mine in which it invested more than $2 billion.
The fallout in commodities has been especially painful for emerging markets that depend on sales of those resources.
With Brazil’s revenues declining sharply this year, President Dilma Rousseff’s government is coming under criticism over the country’s dependence on China, which surpassed the United States as the top trading partner in 2009. Brazil’s exports to China fell 23.6 percent, to $24.7 billion, in the first seven months of the year from the same period in 2014.
The World According to China
China’s enormous overseas spending has helped it displace the United States and Europe as the leading financial power in large parts of the developing world.
In an editorial on Tuesday, the newspaper O Estado de S. Paulo described Brazil’s relationship with China as “semi-colonial,” claiming that the country’s economy “depends in excess on Chinese prosperity.”
Ilan Goldfajn, chief economist at Itaú Unibanco, one of Brazil’s largest banks, said he was already forecasting the economy to contract about 2.3 percent this year, without factoring in the possibility of a hard landing in China. “China is the most important risk factor for Brazil,” Mr. Goldfajn said.
China was supposed to be the financial savior for Russia.
Last year, Russia signed a $400 billion natural gas deal with China. China would help finance a nearly 2,500-mile pipeline to ship fuel from Siberia. Russia trumpeted that it would eventually sell more natural gas to China than Germany, now its biggest customer.
But the prices that China is willing to pay for the gas are dropping so low that it may no longer be worthwhile to build a pipeline. The Russian energy giant Gazprom has cut its planned capital outlays this year for the first leg of the pipeline by half, Dozhd television reported.
“China is an unclear country for us, opaque,” said Aleksandr Abramov, a professor of finance at the Higher School of Economics in Moscow. “We don’t know what to expect,” he said, adding, “Clearly, the situation will worsen in Russia.”
Some of the latest pressures reflect a belated recognition by businesses and politicians that China had been slowing down.
Automobile manufacturers cut their shipments of new cars to dealers by 7 percent in July, compared with a year earlier. Retail sales had not suddenly tanked, said Cui Dongshu, the secretary-general of China’s Passenger Car Association, which represents manufacturers.
Rather, too many cars had been sent to dealers’ lots in previous months, he said. In other words, manufacturers were slow to see the economy’s deceleration and waited too long to throttle back their factories.
BUSINESS By JONAH M. KESSEL 4:59
To Understand Renminbi, Follow the Bacon
Continue reading the main storyVideo
To Understand Renminbi, Follow the Bacon
From market to table, pork can explain a lot about what’s going on with China’s turbulent currency markets. By JONAH M. KESSEL on Publish Date August 14, 2015. Photo by Adam Dean for The New York Times. Watch in Times Video »
“What manufacturers are doing is adjusting inventory levels to the ‘new normal,’ ” said Bill Russo, a former chief executive of Chrysler China, using a favorite phrase of President Xi Jinping of China in recent months to describe an economy that is expanding at a slower pace.
Similar adjustments are taking place around the globe.
For years, Germany has been well positioned to profit from Chinese growth because it specializes in machine tools and other factory equipment. Most important, China acted as a counterweight to the chronically slow-growing markets in Europe.
Now, major German exporters are seeing signs of pressure.
Trumpf says that sales of its signature product, machines that automakers use to cut sheet metal that sell for about 500,000 euros ($566,000) each, have continued to grow in China. But in May and June, sales of less-expensive cutting machines flattened and began to decline. At the bottom of Trumpf’s product line, sales have fallen sharply since November for machines often purchased by start-up companies.
How industries and economies ultimately fare will depend on how long the slowdown and how deep the economic woes.
Demand remains strong at Boeing for its 777-300ER and 787 jets, models that are capable of flights lasting 10 hours or longer, to Europe or North America. Long-haul international travel from mainland China soared nearly 30 percent in the first half of this year compared with the same period last year, Randy Tinseth, the vice president for marketing at Boeing’s commercial aircraft division, said during a visit to Beijing on Tuesday.
So far, it has been mixed for technology players. Timothy D. Cook, the Apple chief executive, said on Monday that business had stayed strong in China in July and August. But Meg Whitman, the chief executive of Hewlett-Packard, said in an earnings call last week that China’s consumer market for printers and computers was “pretty soft,” although demand from businesses was holding up better.
In the end, much of the China story will come down to whether the expectations meet the reality. Andrew Mackenzie, the chief executive of BHP, captured a broader corporate view on Tuesday when he spoke glowingly about China’s potential in the decade to come and predicted continued profitability. But he conceded that the country’s steel production would most likely “grow a little more slowly,” citing a forecast that works out to just 1.4 percent annually — a figure that sounds more like Europe than the formerly go-go economy of China.
A similar realization is taking place in various corners. “We had five fabulous years in China, of course, where we grew strong double-digit, and it has been gradually slowing down,” Frans van Houten, chief executive of Royal Philips, the Dutch conglomerate, said on July 27. “I think, going forward, we need to be much more modest on expectations with regard to China growth: That’s just being realistic.”
Reporting was contributed by Simon Romero from Brasília, Brazil; Jack Ewing from Athens; Andrew E. Kramer from Moscow; Paul Mozur from Hong Kong; and Vinod Sreeharsha from São Paulo.
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