Author Archives: Lily Fleur

Dense Cities Plus Highly-Educated People = Economic Growth?

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Philadelphia Federal Reserve repors:  Most countries make sustained economic growth a principal policy objective. While many factors contribute to growth, economists believe that educating workers plays a critical role. Individuals invest in education because of the expected benefits to themselves or their children, such as higher earnings. But suchprivate investment can increase the productivity of others as well. For example, the collaborative effort of many educated workers in a common enterprise may lead to invention and innovation that sustains the growth of the enterprise. Some economists believe there is an important link between national economic growth and the concentration of more highly educated people in cities.  Economic Impact of Educated People in Cities

Densely Packed is Good

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UK Backs Down from Challenge EU Cap on Bankers’ Bonuses

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The European Court of Justice found that the rule the limits bankers bonuses to 100 percent of their salaries, or 200 percent if shareholders approve is valid.

Chancellor George Osborne said he had recognised the challenge was “now unlikely to succeed”.  The Treasury had argued that the cap would drive talent out of Europe and inflate basic pay, making it harder for banks to trim costs in lean years.

“I’m not going to spend taxpayers’ money on a legal challenge now unlikely to succeed,” Mr Osborne said.

But he added: “The fact remains these are badly designed rules that are pushing up bankers’ pay not reducing it. These rules may be legal but they are entirely self-defeating, so we need to find another way to end rewards for failure in our banks.”

The cap on the ratio is designed to reduce incentives for bankers to take excessive risks, but critics say it will push up basic pay and banks’ costs.

Mr Osborne also wrote a letter to Bank of England governor Mark Carney, in which he said that although the Treasury was abandoning its challenge, it “should not stop us from pursuing our objective of ensuring a system of remuneration that encourages responsibility instead of undermining it”.

“Ensuring that firms incentivise employees to behave in the right way is essential to restoring public trust in financial markets,” he added.

Mr Carney had himself voiced concerns about the EU measure, saying it had the “undesirable side-effect of limiting the scope for remuneration to be cut back”.

Bankers' Bonuses

Snap Elections in Japan

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Japan’s shrinking economy led Prime Minister Aboe to call for elections in December.  Most economists thought the economy would grow in the last quarter.

An increase in the consumption tax in April has been blamed for the slide.  Abe announed that he was postponing raising this tax again until 2017.

Some economists have noted that the Japanese are not spenders and it is difficult to nudge them to buy in any case. Most QE moves are an effort to help people consume more.

No One Has Ever Liked the Consumption Tax in Japan

 

Petrobras Arrests in Brazil

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Police have arrested 18 in investigation of corruption at Petrobras, he state-owned oil company.  A former direvctor and several members of a constrution company and engineering companies that did business with Petrobras were arrested.

They had made deals to inflate the cost of contracts and divert monies to poitical parties including the Worker’s Party of President Dilma Rousseff.

In the US there are investigations into some securities of Petrobras that are traded in New York

Arrests of Petrobras Officials

Ebola’s Economic Impact

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In a World Bank study of Liberia it stated that one half of the people employed before the Ebola outbreak are now unemployed.  However, the World Bank now estimates that the countries affected will suffer about $3 billion in trimed output instead of an original estimate of about $30 billion.

Ebola

Globalizing Again?

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A study conducted by two members of the Stern Business School’s faculty shows that globalization is back.  Taking data from countries representing 99% of the world’s GDP and 95% of the world’s population, it is clear that after a big post-crisis drop in 2008, global interconnectedness returned last year.

There are more cross-border connections benig made.  Trade, incluidng goods and services, information, people and capital.

The ten countries that globalized the most in 2013 were all emerging nations, most of them in Latin America and the Caribbean.

Trade negotiators are beginning to form coalitions of the willing instead of waiting for everyone to join in.

There is plenty of scope for further globalization.  Only Singapore, Hong Kong and Lusembourg are deeply interconnected now.

Episodes of deglobalization in the past have been difficult to reverse, The fact that globalization is progressing again after such a deep crisis is hopeful.

Globalizing Again

Xi Whiz and Obama on Climate Change

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What does the deal mean more energy in the US?  The end of coal which is so dirty. Gas will be used more frequently.  Fracking will have to be used and regulated. And the US will build more nuclear power plants.  They are clean.

Between January and June 2014, China installed 3.3GW of solar capacity. It also provided $23.5 billion in financing for solar ventures in 2013, more than all of Europe put together. Beijing has declared the use of coal will be banned in the city by 2020. These are hardly the actions of a country that sees the use of clean energy as a low priority. Many observers even say that protests emanating from air, soil and water pollution are one of the most direct threats to the supremacy of the CPC. Therefore, turning to renewable energy and cutting emissions might be a good way for the junta to stay in power.

How seriously China takes its commitment to clean power remains to be seen.  Their first priority is growth.

China and US Climate Change Deal

 

 

Can Tel Aviv Lure Israeli Companies Home for IPOs

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Yossi Beinart, CEO of the Tel Aviv Stock Exchange, wants to have more Isrraeli tech IPOs come to the eexchange.  At a recent meeting of Israeli biotech, IT and medical device developers he wore a suit to distinguish himself. He told the crowrd if they ever wanted an IPO to remember the guy in the suit.

Trading volumbe on the Tel Aviv Stock Exchange has declined 40 per cent in the past four years and IPOs went from 17 in 2010 to 4 this year.

While Israel has more startups per capita than any other country except the US, Entrepreneurs can make more money on a US IPO, but there are many small Israei companies that are too small and get gobbled up by Google  and Intel instead of going public.  Beinart wants to change this.  In the next few months he expects the Knesset to pass legislation that will make it easier for companies to list on the Israeli Exchange.  Israel StartUps Do IPOs at Home?

Palestinian Tech Industry Featured in Ramallah

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The Palestinian Information Technology Association is making a big contribution to the Palestinian economy.  Five percent of Palestine’s workforce produce 8% of its output.

IT specialist Ala Alaeddin says that the big jump in IT use was the risky move by John Chambers of Cisco to invest in Palestine.  IT may become the engine of the Palestinian economy. The goal is to combine media with IT and to help emerging NGOs. Some complain that the govvernment puts more money into telecommunications than IT.

Palestinian IT Business

Smuggling Costs Tunisia

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Smuggling has become a serious problem in Tunisia.  It is almost impossible to monitor Sahel, its surfae, the desert terrain, and the need for several countries to corrdinate.

Rising prices and the hgih cost of living drive Tunisians to buy smuggled televisions, food products, cigaretes and even gas.  The losses to the state are about $650 mllion, and to customs about $270 million.  The turnver of parallel trade is baout $970 million, or half the trade with Libya.

On the border, “knatreya” or smuggling lords live in palaces as they fiercely control their trade.  Stakeholders know what is going on, and express a willingness to control this traffic and yet nothing happens.  Why does no one act?  The equivalent of the entire Health Department’s annual budget is on the line.

Tunisian Borders