Thursday's News Items.
8 August 2019. By John Ellis.
1. In 1989, one in five Americans over 75 were in debt. By 2016, almost half were. Baby boomers aged 65 and older are racking up far higher levels of debt than their parents, who were raised during the Great Depression, and a growing minority are finding themselves tipping over from desperate financial trouble into bankruptcy. The culprits are vanishing pensions, soaring healthcare costs and tens of thousands of dollars in unpaid student loans for themselves, their children and even their grandchildren.
2. The world’s land and water resources are being exploited at “unprecedented rates,” a new United Nations report warns, which combined with climate change is putting dire pressure on the ability of humanity to feed itself. The report, prepared by more than 100 experts from 52 countries and released in summary form in Geneva on Thursday, found that the window to address the threat is closing rapidly. A half-billion people already live in places turning into desert, and soil is being lost between 10 and 100 times faster than it is forming, according to the report.
3. Not since 2012, when thousands of Muscovites took to the streets to protest against Vladimir Putin’s return to the presidency, has Russia’s capital seen such a brutal crackdown on demonstrations as that witnessed during the past fortnight. But the continued defiance from the tens of thousands who have taken to the streets this summer has underlined the depth of the disaffection at a 20-year-long regime that has failed to deliver economic growth or rising living standards for much of the past five years. And the dearth of ideas inside his administration to reverse its sliding popularity.
4. Kashmir yesterday entered its third day of security lockdown even as Indian prime minister Narendra Modi promised that a “better tomorrow awaits” after his government ended the territory’s special autonomy and stepped up New Delhi’s control. All communication links within Kashmir and to the outside world remain cut, while schools and colleges have been suspended indefinitely.
5. Pakistan Prime Minister Imran Khan’s government yesterday announced a series of measures to oppose what it called “unilateral and illegal actions” by India. He also said Pakistan will review bilateral agreements, take the matter to the United Nations Security Council and ensure the army remains vigilant. New Delhi responded by saying its decision on Jammu and Kashmir was “entirely the internal affairs” of India. It urged Pakistan to review its actions so "that normal channels for diplomatic communications are preserved,” foreign ministry said in a statement Thursday.
6. Islamic State militants are strengthening their capability to carry out insurgent attacks in Iraq and Syria, according to a new report to Congress by the Pentagon’s Office of Inspector General that in part links Trump administration policy decisions to signs of a resurgence. The extremist group’s determination to make a comeback and the difficulties encountered by U.S.- backed Iraqi and Syrian forces in holding ground in remote areas have provided a fresh opening for the militants, the report states.
7. A senior Chinese official in charge of Hong Kong affairs warned that Beijing would intervene if the local government proved unable to contain the violent protests, the most explicit threat of intervention to date from the central government. At a meeting with Hong Kong representatives in the nearby city of Shenzhen on Wednesday, the official, Zhang Xiaoming, issued a dire assessment of the situation in the territory after more than two months of protests. He called the situation the most severe since China resumed sovereignty over Hong Kong in 1997.
8. Major Wall Street banks have given congressional committees investigating President Trump thousands of pages of documents related to Russians who may have had dealings with Mr. Trump, his family or his business, people familiar with the congressional probes said. Some banks are also giving documents related to Mr. Trump’s business, the Trump Organization, to New York state investigators, people familiar with the New York investigation said.
9. President Trump doesn’t always seem like a candidate focused on expanding his base of support. He may have done so anyway. The share of Americans who say they have a favorable view of him has increased significantly since the 2016 election. Over all, his personal favorability rating has increased by about 10 percentage points among registered voters since Election Day 2016, to 44 percent from 34 percent, according to Upshot estimates.
10. Deputy Premier Matteo Salvini increased pressure on Italy’s ruling coalition, reportedly giving Prime Minister Giuseppe Conte a Monday deadline to shake up the cabinet and indicating that if his partners in the Five Star Movement don’t yield to his demands he’ll dissolve the government.
11. Russia’s state-owned oil company Rosneft has become Venezuela’s last major petrol supplier, propping up President Nicolás Maduro’s regime and providing Moscow with leverage as the US intensifies economic pressure, according to people familiar with the shipping arrangement. Data seen by the Financial Times show that Rosneft supplied Venezuela’s entire imports of petrol in June. “The day Russia stops supplying gasoline, Venezuela grinds to a halt,” said a person familiar with the supply deal.
12. Saudi Arabia is determined to arrest a decline in oil prices, and officials phoned other oil producers to discuss possible policy responses. The kingdom won't tolerate a further slide from a seven-month low and is considering all options, an official said. OPEC+ is due to meet next in Abu Dhabi in the week of Sept. 9. Oil rose on the news after earlier dropping on higher U.S. crude stockpiles.
13. Stock markets enjoyed a tentative recovery today after better-than-expected Chinese export data and a steadying of the yuan restored some calm to global markets. European markets followed Asia higher in early trade, helped by data showing Chinese exports rose 3.3% in July from a year earlier, beating an expected decline of 2%. Chinese imports fell by less than forecast, despite the Sino-U.S. tariff struggle.
14. US government agencies from the Pentagon to NASA will be banned from buying Huawei equipment after the Trump administration implemented a congressional measure to crack down on Chinese companies seen as security threats. A rule issued by the administration bans Huawei, the Shenzhen-based telecoms company, and other Chinese groups from supplying the federal government.
15. China’s rare earth producers, who control the lion’s share of the world’s output of the elements, said they are ready to use their dominance of the industry as a weapon in the country’s year-long trade war with their customers in the United States. The industry “resolutely supports the nation’s counter measures against US import tariffs on Chinese products,” the Association of China Rare Earth Industry said in a statement yesterday citing the consensus from an August 5 meeting. “US consumers must shoulder the costs from US-imposed tariffs.”
16. Inflated bond ratings were one cause of the financial crisis. A decade later, there is evidence they persist. In the hottest parts of the booming bond market, S&P and its competitors are giving increasingly optimistic ratings as they fight for market share. All six main ratings firms have since 2012 changed some criteria for judging the riskiness of bonds in ways that were followed by jumps in market share, at least temporarily, a Wall Street Journal examination found. These firms compete with one another to rate the debt of borrowers, who pay for the ratings and have an incentive to pick rosier ones.
17. As a share of gross domestic product, corporate debt has climbed to a record. What’s all but vanished is the correlation between how much companies borrow and how much they invest. That long-standing relationship endured, albeit weakened, through the 1980s and ’90s as companies focused increasingly on driving shareholder value, says J.W. Mason, a fellow at the Roosevelt Institute in New York who’s been researching the topic. Now it’s gone, and Mason says the data suggest a different link. “If you can borrow on more favorable terms, you don’t necessarily invest more,” he says. “You might think this is an opportunity to give bigger payouts to shareholders. This is a big reason why monetary policy isn’t as effective as it used to be.”
18. Presidential candidate and senator Elizabeth Warren (D-MA) yesterday unveiled a plan to spend $85 billion to bring internet service to unserved and underserved areas, along with proposals to restore net neutrality and crack down on what she calls "sneaky maneuvers" by broadband providers to increase prices and decrease competition. "I will make sure every home in America has a fiber broadband connection at a price families can afford," Warren said in a statement. Warren also detailed several other proposals to invest in rural America.
19. The Federal Reserve has announced that it will create “FedNow,” a system that will allow real-time bank-to-bank payments, all day every day. The system the central bank runs now closes on the weekends and can take several days to settle payments. People who live paycheck to paycheck often need access to their money sooner than is possible in the current system. That’s one reason that Americans spend tens of billions every year on overdraft fees, payday lending, and check-cashing services. Real-time payments would help them avoid such expenses.
20. A new study shows playing just one season of college football can harm a player’s brain, even if they don’t receive a concussion. Doctors and players should take note of the findings, says Stephen Casper, a medical historian at Clarkson University in Potsdam, New York, who studies concussions but was not involved with the work. “It just adds to the mountains of evidence that people should be given very clear and transparent warnings about playing football.”
21. Have we found the true cause of diabetes, stroke and Alzheimer's? The diseases most people die of have been attributed to unhealthy lifestyles. But evidence now suggests bacteria are to blame, heralding a revolution in medicine.
22. Lex: "The New York Times wants to reach 10 million subscribers by 2025. It currently has 4.7 million. That goal is still reasonable. However, the profitability of the underlying business may be shakier than expected. Investors who pay 20 times forward ebitda are showing greater trust in the newspaper than some readers currently have."
--------
Quick Links: Lesley Wexner says Jeffrey Epstein "misappropriated" vast sums of money from him. Pemex bonds pique investors’ interest but doubts remain. Private equity comes in from the cold in Germany. Housing crisis grips Ireland. Nickel prices surge to 16-month high on Indonesia ban fears. Frederick Brennan and the weird, dark history of 8chan. How AT&T insiders were bribed to 'unlock' millions of phones. Facebook leaves flaw in WhatsApp unresolved for a year. New York City’s first self-driving shuttle service launched yesterday. Most people would rather lose their job to a robot than another human. Memo to my children: Many extreme early birds share genetic trait with family members.
Political Links: Muslim pilgrims descend on Mecca for haj, Saudis warn against politics. Israel hits Shia militias in hidden war with Iran. China's power struggle lies behind global market turmoil. More Hong Kong protests planned. Paul Krugman on how uncertainty, properly understood, can have serious adverse effects, especially on investment. Warren rising in California. Warren rising in Nevada (an early caucus state). Gov. Steve Bullock (D-MT): Trump reelection 'more likely with each passing minute.' How Google search actually works. A pardon for Blago?
--------