Category Archives: News

The Chinese stock meltdown that makes the Greece saga look trivial

Bloomberg reports: By any standard, the selloff in Chinese stocks over the past month has been epic. Here’s a look at the turmoil by numbers.

The Shanghai Stock Exchange Composite Index has lost 28 percent since its peak on June 12, the worst selloff in two decades. About $3.9 trillion in market valuation has evaporated, more than the total annual output of Germany — the world’s fourth-largest economy — and 16 times Greece’s gross domestic product. The benchmark is still up 82 percent in the past year, the most among the world’s major markets.

As shares tumbled, companies rushed to apply for trading suspension. More than 1,400 companies stopped trading on mainland exchanges, locking sellers out of 50 percent of the market. The China Securities Regulatory Commission also banned major shareholders, corporate executives, and directors from selling stakes in listed companies for six months. [Continue reading…]

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Greece seeks $59.2 billion bailout as Tsipras bows to demands

Bloomberg reports: In an 11th-hour bid to stay in the euro, the government of Greek Prime Minister Alexis Tsipras offered to meet most of the demands made by creditors in exchange for a bailout of 53.5 billion euros ($59.4 billion).

European and U.S. equity-index futures jumped on Friday after the proposal was submitted to creditor institutions late on Thursday. The package of spending cuts, pension savings and tax increases almost mirrored that from creditors on June 26, which was rejected by Greek voters in a July 5 referendum. It will face its first hurdle in the Greek Parliament on Friday.

Though Tsipras ceded ground, he insists long-term debt needs to be made more manageable to allow Greece to recover from a crisis that has erased a quarter of its economy. He has a growing support base that includes the U.S., European Union President Donald Tusk and the International Monetary Fund. [Continue reading…]

Alex Andreou writes: This is my initial reaction to the deal proposal by Greece: it is more austerity -harsh austerity at that – and many of the measures are recessionary. Distribution of the burden seems to me fairer than before. If the upside is access to a significant stimulus package (front-loaded), a smoothing of the measures (back-loaded) and substantial restructuring of debt, to make it definitively viable, it will probably be seen as worth it. It is certainly capable of being sold as worth it.

Essentially, everyone managing to keep their position/perks/income in the context of an economy which is in the middle of a death spiral, is meaningless. If the economy begins to recover, then things which were unbearable, become bearable. Austerity becomes a background noise, rather than a preoccupation and a progressive government will be able to offset the damage. It is a delicate balance.

Market confidence is a strange creature. There is a lot of money sloshing around at the moment, taken out of China which is in free-fall. Money which is bulging to be invested. All it takes is an intangible notion that Greece has hit the low point, for investment to return. Whether this package achieves that balance or not, will have to be assessed over time, as the detail of each measure becomes known and away from the adrenaline and hysteria of negotiation fever. [Continue reading…]

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Hacks of OPM databases compromised 22.1 million people, federal authorities say

The Washington Post reports: Two major breaches last year of U.S. government databases holding personnel records and security-clearance files exposed sensitive information about at least 22.1 million people, including not only federal employees and contractors but their families and friends, U.S. officials said Thursday.

The total vastly exceeds all previous estimates, and marks the most detailed accounting by the Office of Personnel Management of how many people were affected by cyber intrusions that U.S. officials have privately said were traced to the Chinese government.

But even beyond the rising number of apparent victims, U.S. officials said the breaches rank among the most potentially damaging cyber heists in U.S. government history because of the abundant detail in the files. Officials said hackers accessed not only personnel records of current and former employees but also extensive information about friends, relatives and others listed as references in applications for security clearances for some of the most sensitive jobs in government. [Continue reading…]

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In Ramadi, the ISIS settles in, fixing roads and restoring electricity

The Washington Post reports: Six weeks after routing Iraqi security forces from Ramadi, Islamic State militants have entrenched themselves in the city, repairing key infrastructure, managing local government and building up defenses to thwart any attacks.

Their efforts are likely to hamper government attempts to retake Ramadi, which lies about 80 miles west of Baghdad. Iraqi forces and allied militias have not yet mounted a promised offensive, and the delay, residents say, has allowed the Sunni jihadists to cement their role as overlords, supervising everything from local mosques and road repairs to fuel distribution.

The group, known for its brutality, has also long sought to portray itself as a genuine state capable of providing efficiently for its Muslim citizens. From Raqqa and Deir al-Zour in Syria to Mosul and now Ramadi in Iraq, its claim to legitimacy has rested in large part on its ability to run such a state, even as it shocks and alienates residents with punishments such as public beheadings.

When the group’s fighters entered the city, “they seized everyone’s weapons and killed opponents,” said Hisham al-Hashemi, an expert on the Islamic State and adviser to the Iraqi government. “But now there is daily life. There is food in the markets and electricity. It’s like normal.

“As long as the government operation is delayed, it will give [the militants] the opportunity to secure their positions” in Ramadi, he said. [Continue reading…]

Following a visit to the Pentagon by President Obama on Monday, the New York Times reported: The president offered no timetable for an Iraqi counterattack to reclaim Ramadi and did not announce any new steps to assist Iraqi troops in retaking the city, such as using American troops to call in airstrikes. But he insisted that the plans he announced last month were already bearing fruit. “More Sunni volunteers are coming forward,” Mr. Obama said. “Some are already being trained, and they can be a new force against ISIL.”

The assault force would be led by Iraq’s counterterrorism service and would include the Iraqi federal police and army soldiers. The effort is expected to number about 6,000 troops, according to an Iraqi war plan that has been significantly shaped by American advisers sent to Al Taqqadum, an Iraqi base east of Ramadi.

An Iraqi follow-on force of up to 5,000 tribal fighters along with Iraqi provincial police officers would be assigned to hold the city and nearby areas in Anbar Province if they were retaken from the Islamic State. [Continue reading…]

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After backing regime, Syrian minorities face peril

The Wall Street Journal reports: Ever since the Syrian revolution began in 2011, President Bashar al-Assad tried to cast it as a religious conflict with radical Sunni Islam in which he would wear the mantle of protector of the country’s numerous minorities.

The plan has worked to a great degree, with Mr. Assad’s own Alawite community as well as Shiites, Christians, Druse and, initially, even the Kurds, backing him against a predominantly Sunni rebellion that has become progressively more bloody and sectarian.

But now, as the regime is reeling under attack by the murderous Islamic State militants in the east and a rebel coalition that includes the al Qaeda affiliate Nusra Front in the north, these minorities face the growing danger of being wiped out alongside Mr. Assad.

“As bad as things have been in Syria, they could get a whole lot worse,” warned Ryan Crocker, former U.S. ambassador to Damascus and dean of the Bush School of Government at Texas A&M University. [Continue reading…]

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More than 4 million refugees have fled from Syria

The New York Times reports: The number of Syrians who have fled into neighboring countries to escape the civil war has reached more than four million, the United Nations said Thursday, and with the fighting dragging into its fifth year the number is still rising.

More than 24,000 people crossed into Turkey to escape fighting in northern Syria in June, pushing the number now sheltering in neighboring countries past four million, increasing the Syrian refugee population by one million in just 10 months, the United Nations refugee agency reported.

International aid agencies say the fighting has driven at least 7.6 million people who remain in the country from their homes.

“This is the biggest refugee population from a single conflict in a generation,” Antonio Guterres, the United Nations high commissioner for refugees, said in a statement. Mr. Guterres, once again, warned that international aid was not keeping pace with the scale of the crisis, and that many refugees were “sinking deeper into poverty.”

“Worsening conditions are driving growing numbers toward Europe and further afield,” Mr. Guterres said, “but the overwhelming majority remain in the region.”

The latest influx into Turkey raised the number of Syrian refugees there to 1.8 million, giving it the biggest refugee population in the world, the United Nations reported. As many as 1.2 million Syrians are now sheltering in Lebanon, more than 629,000 are in Jordan and close to quarter of a million have fled to Iraq.

The United Nations has appealed for $5.5 billion in aid in 2015 to deal with the humanitarian fallout of the Syria crisis. But by the end of June it had received less than a quarter of that amount, the refugee agency said. [Continue reading…]

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The U.S. must save Greece

Joseph E. Stiglitz writes: As the Greek saga continues, many have marveled at Germany’s chutzpah. It received, in real terms, one of the largest bailout and debt reduction in history and unconditional aid from the U.S. in the Marshall Plan. And yet it refuses even to discuss debt relief. Many, too, have marveled at how Germany has done so well in the propaganda game, selling an image of a long-failed state that refuses to go along with the minimal conditions demanded in return for generous aid.

The facts prove otherwise: From the mid-90’s to the beginning of the crisis, the Greek economy was growing at a faster rate than the EU average (3.9% vs 2.4%). The Greeks took austerity to heart, slashing expenditures and increasing taxes. They even achieved a primary surplus (that is, tax revenues exceeded expenditures excluding interest payments), and their fiscal position would have been truly impressive had they not gone into depression. Their depression — 25% decline in GDP and 25% unemployment, with youth unemployment twice that — is because they did what was demanded of them, not because of their failure to do so. It was the predictable and predicted response to the austerity.

The question now is: What’s next, assuming (as seems ever more likely) they are effectively thrown out of the euro? It’s likely that the European Central Bank will refuse to do its job—as the Central Bank for Greece, it should do what every central bank is supposed to do, act as a lender of last resort. And if it refuses to do that, Greece will have no option but to create a parallel currency. The ECB has already begun tightening the screws, making access to funds more and more difficult.

This is not the end of the world: Currencies come and go. The euro is just a 16-year-old experiment, poorly designed and engineered not to work—in a crisis money flows from the weak country’s banks to the strong, leading to divergence. GDP today is more than 17% below where it would have been had the relatively modest growth trajectory of Europe before the euro just continued. I believe the euro has much to do with this disappointing performance. [Continue reading…]

The New York Times reports: As Greece hurtles toward a Sunday deadline for either reaching a bailout deal or risking a hasty exit from the eurozone, the one certainty is that its economy is already on the brink of collapse.

Businesses and humanitarian organizations are warning that the social and commercial damage now evident could become deeper and longer lasting if Greece and its international creditors cannot finally come to terms on a new bailout package.

“Greece already has a humanitarian crisis, and we’ll have to prepare for a harder aftermath if a deal collapses,” Nikitas Kanakis, the president of the board of directors of the Athens chapter of Doctors of the World, a health care charity, said on Wednesday. “I’m not sure how proud we should feel about letting social destruction return within Europe.”

With banks closed and the government virtually out of money, Greece has become isolated from the international economy — a big problem for a country that relies on imports for 65 percent of its goods. [Continue reading…]

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Greece finally admits €2bn gas pipeline deal with Russia

The Telegraph reports: Greece has admitted for the first time it is planning a €2bn gas pipeline with Russia.

The move is likely to worry the US, which has stepped up its involvement in Greece’s debt talks with international creditors over fears the cash-strapped country could drop out of the single currency and come under the influence of its Cold War rival.

Panayotis Lafazanis, Greece’s energy minister, said the move would be a key part of the country’s “multi-faceted” foreign policy and would create 20,000 jobs, the Financial Times reported.

Figures released by Greece’s National Statistics Service on Thursday showed unemployment at 25.6pc in April. [Continue reading…]

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Explainer: What’s the turmoil in the Chinese stock market all about?

By Michele Geraci, University of Nottingham

The Chinese stock markets have experienced significant turmoil in recent weeks, with the Shanghai Composite Index – the country’s major reference – falling by 32% since June 12. But this fall was preceded by an equally sharp rise of 150% over the previous nine months. In the 20 years since I have been working in finance, I’ve never seen anything like this. So what is going on with the Chinese stock market?

There are several reasons for this unusual behaviour: firstly, when I teach stock market investment to my Chinese students, I always remind them that the Shanghai stock exchange should be thought of more as a casino, rather than as a proper stock market. In normal stock markets, share prices are – or, at least, should be – linked to the economic performance of the underlying companies. Not so in China, where the popularity of the stock market directly correlated with the fall in casino popularity.

Stocks and casinos

In China, given the low credibility of the financial statements published by listed companies, investors need to rely on other tools to predict share price performance. These tools include a heavy reliance on technical analysis and charts – a method that tends to predict future share price based purely on the company’s past performance, with no regards to its fundamentals. Even the name of the company is often neglected; all that matters is the historic price performance.

While this technique is also used in Western markets, my experience in China is that it is the predominant method for investment. Hence the disconnect between a share’s price movements and economic fundamentals.

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Internal documents show fossil fuel industry has been aware of climate change for decades

Elliott Negin writes: Rhode Island Sen. Sheldon Whitehouse created a stir recently when he speculated that fossil fuel companies may be violating federal racketeering law by colluding to defraud the public about the threat posed by carbon pollution.

Whitehouse likened their actions to those of the tobacco companies that conspired to manufacture doubt about the link between smoking and disease when they were all too aware of it. In 2006, a federal district court ruled that the tobacco industry’s deceptive campaign to maximize its profits by hoodwinking the public amounted to a racketeering enterprise.

Whitehouse may be among the first to suggest that the fossil fuel industry is flouting the Racketeer Influenced and Corrupt Organizations Act (RICO), but he’s not the first to point out the parallels between the tobacco industry’s fraudulent campaign and the fossil fuel industry’s efforts to quash government action on climate change. [Continue reading…]

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IBM announces major breakthrough: the world’s first 7-nanometer chips

The New York Times reports: IBM said on Thursday that it had made working versions of ultradense computer chips, with roughly four times the capacity of today’s most powerful chips.

The announcement, made on behalf of an international consortium led by IBM, the giant computer company, is part of an effort to manufacture the most advanced computer chips in New York’s Hudson Valley, where IBM is investing $3 billion in a private-public partnership with New York State, GlobalFoundries, Samsung and equipment vendors.

The development lifts a bit of the cloud that has fallen over the semiconductor industry, which has struggled to maintain its legendary pace of doubling transistor density every two years.

Intel, which for decades has been the industry leader, has faced technical challenges in recent years. Moreover, technologists have begun to question whether the longstanding pace of chip improvement, known as Moore’s Law, would continue past the current 14-nanometer generation of chips.

Each generation of chip technology is defined by the minimum size of fundamental components that switch current at nanosecond intervals. Today the industry is making the commercial transition from what the industry generally describes as 14-nanometer manufacturing to 10-nanometer manufacturing.

Each generation brings roughly a 50 percent reduction in the area required by a given amount of circuitry. IBM’s new chips, though still in a research phase, suggest that semiconductor technology will continue to shrink at least through 2018.

The company said on Thursday that it had working samples of chips with seven-nanometer transistors. It made the research advance by using silicon-germanium instead of pure silicon in key regions of the molecular-size switches.

The new material makes possible faster transistor switching and lower power requirements. The tiny size of these transistors suggests that further advances will require new materials and new manufacturing techniques.

As points of comparison to the size of the seven-nanometer transistors, a strand of DNA is about 2.5 nanometers in diameter and a red blood cell is roughly 7,500 nanometers in diameter. IBM said that would make it possible to build microprocessors with more than 20 billion transistors. [Continue reading…]

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Europe is blowing itself apart over Greece — and nobody seems able to stop it

Ambrose Evans-Pritchard writes: Like a tragedy from Euripides, the long struggle between Greece and Europe’s creditor powers is reaching a cataclysmic end that nobody planned, nobody seems able to escape, and that threatens to shatter the greater European order in the process.

Greek premier Alexis Tsipras never expected to win Sunday’s referendum on EMU bail-out terms, let alone to preside over a blazing national revolt against foreign control.

He called the snap vote with the expectation – and intention – of losing it. The plan was to put up a good fight, accept honourable defeat, and hand over the keys of the Maximos Mansion, leaving it to others to implement the June 25 “ultimatum” and suffer the opprobrium.

This ultimatum came as a shock to the Greek cabinet. They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands, recognizing that Syriza had failed to bring about a debtors’ cartel of southern EMU states and had seriously misjudged the mood across the eurozone.

Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.

Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc. [Continue reading…]

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Greece given until Sunday to settle debt crisis or face disaster

The New York Times reports: Frustrated European leaders gave Greece until Sunday to reach an agreement to save its collapsing economy from catastrophe after an emergency summit meeting here on Tuesday ended without the Athens government offering a substantive new proposal to resolve its debt crisis.

“The situation is really critical and unfortunately we can’t exclude the black scenarios of no agreement,” said Donald Tusk, the president of the European Council, warning that those possibilities included “the bankruptcy of Greece and the insolvency of its banking system” and great pain for the Greek people. Also looming ever larger was the prospect of Greece leaving the European currency union.

Mr. Tusk said that the government of Prime Minister Alexis Tsipras had until Thursday to deliver a new plan to Greece’s creditors.

“Until now I have avoided talking about deadlines,” Mr. Tusk, a former prime minister of Poland, told reporters after a day of fruitless meetings. “But tonight I have to say it loud and clear — the final deadline ends this week.” [Continue reading…]

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A secret to ISIS success: Shock troops who fight to the death

The Associated Press reports: Bearded and wearing bright blue bandanas, the Islamic State group’s “special forces” unit gathered around their commander just before they attacked the central Syrian town of al-Sukhna. “Victory or martyrdom,” they screamed, pledging their allegiance to God and vowing never to retreat.

The IS calls them “Inghemasiyoun,” Arabic for “those who immerse themselves.” The elite shock troops are possibly the deadliest weapon in the extremist group’s arsenal: Fanatical and disciplined, they infiltrate their targets, unleash mayhem and fight to the death, wearing explosives belts to blow themselves up among their opponents if they face defeat. They are credited with many of the group’s stunning battlefield successes — including the capture of al-Sukhna in May after the scene shown in an online video released by the group.

“They cause chaos and then their main ground offensive begins,” said Redur Khalil, spokesman of the U.S.-backed Kurdish People’s Protection Units, which have taken the lead in a string of military successes against the IS in Syria. [Continue reading…]

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U.S. only training 60 Syrian fighters, about 1 percent of goal

Reuters reports: The United States said on Tuesday it was falling far behind plans to build a Syrian opposition force to battle Islamic State, disclosing that just 60 fighters were in training after U.S. vetting thinned the number of recruits.

The U.S. military launched its program in May to train up to 5,400 fighters a year in what was seen as a test of President Barack Obama’s strategy of getting local partners to combat extremists and keep U.S. troops off the front lines.

The training program has been challenged from the start, with many candidates being declared ineligible and some even dropping out. Obama’s requirement that they target militants from Islamic State has sidelined huge segments of the Syrian opposition focused instead on battling Syrian government forces. [Continue reading…]

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A detailed look at Hacking Team’s emails about its repressive clients

The Intercept reports: Documents obtained by hackers from the Italian spyware manufacturer Hacking Team confirm that the company sells its powerful surveillance technology to countries with dubious human rights records.

Internal emails and financial records show that in the past five years, Hacking Team’s Remote Control System software — which can infect a target’s computer or phone from afar and steal files, read emails, take photos and record conversations — has been sold to government agencies in Ethiopia, Bahrain, Egypt, Kazakhstan, Morocco, Russia, Saudi Arabia, South Sudan, Azerbaijan and Turkey. An in-depth analysis of those documents by The Intercept shows Hacking Team’s leadership was, at turns, dismissive of concerns over human rights and privacy; exasperated at the bumbling and technical deficiency of some of its more controversial clients; and explicitly concerned about losing revenue if cut off from such clients.

Hacking Team has an unusually public profile for a purveyor of surreptitious technology, and it has drawn criticism because its malware has shown up on the computers of activists and journalists. Most of the countries identified in the leaked files have previously been connected to Hacking Team by human rights researchers working with computer forensics experts. The company has long denied any implication in human rights abuses, regularly pointing reporters to a policy on its website that says it only sells to governments, investigates allegations of human rights abuses and complies with international blacklists. [Continue reading…]

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In Syria, the weakness of ISIS and U.S. strategy on display

The Washington Post reports: The unexpected rout of Islamic State forces across a wide arc of territory in their northeastern Syria heartland has exposed vulnerabilities in the ranks of the militants — and also the limits of the U.S.-led strategy devised to confront them.

Islamic State fighters have been driven out of a third of their flagship province of Raqqa in recent weeks by a Kurdish-led force that has emerged as one of the most effective American partners in the war. The offensive, backed by U.S. airstrikes, has deprived the militants of control of their most important border crossing with Turkey and forced them onto the defensive in their self-proclaimed capital of Raqqa city, something that would have been unthinkable as recently as a month ago.

The advance has shifted the focus of the fight from Iraq to Syria for the first time in months. A blitz of 18 coalition airstrikes against Raqqa over the weekend took out bridges and roads used by the Islamic State to move supplies to battlefronts elsewhere. The air attack was one of the most intense in Syria, according to a Pentagon statement and activists in Raqqa.

On Monday, President Obama cited the recent gains in Syria as evidence of progress. “When we have an effective partner on the ground, ISIL can be pushed back,” he said in Washington after the Pentagon briefed him on the status of the war.

“ISIL’s strategic weaknesses are real,” he added, using an acronym for the Islamic State.

But the absence of reliable local forces to press the fight deeper into the Islamic State’s home turf has revealed the weakness of the U.S. strategy, analysts say. And rising tensions between Arabs in the area and their purported Kurdish liberators risk jeopardizing the gains.

The offensive is taking Kurdish forces far beyond traditionally Kurdish territory and into areas where Syrian Arabs are in the majority, drawing allegations from Syrians and also the Turkish government that the Kurds are taking advantage of the U.S.-led air war to carve out a Kurdish state.

The Syrian opposition has accused the Kurds of driving Arabs from their villages to consolidate their control. [Continue reading…]

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Egypt anti-terror bill speeds trials, tightens hand on media

The Associated Press reports: After a series of stunning militant attacks, Egypt’s government is pushing through a controversial new anti-terrorism draft bill that would set up special terrorism courts, shorten the appeals process, give police greater powers of arrest and imprison journalists who report information on attacks that differs from the official government line.

The draft raised concerns that officials are taking advantage of heightened public shock at last week’s audacious attacks to effectively enshrine into law the notorious special emergency laws which were in place for decades until they were lifted following the 2011 ouster of autocrat Hosni Mubarak. Rather than reviewing security policies since the attacks, officials have largely been focusing blame on the media for allegedly demoralizing troops and on the slowness of the courts.

The 55-article bill has not been officially made public but was leaked to the Egyptian press over the weekend. A judicial official who vetted the draft confirmed its contents to The Associated Press on Monday. The bill is currently in a review process, leaving it unclear when it will be issued or whether changes could be made. Since Egypt has not had a parliament for more than two years, laws are issued by the president, Abdel-Fattah el-Sissi, after going through the Cabinet. In the absence of parliament, any debate is largely through media or behind closed doors. [Continue reading…]

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