Monday, July 6, 2015

For the Greeks, there is nothing worth celebrating

5 Jul 2015

Jonathan Eyal
Europe Correspondent

With most of the ballots in their referendum now counted, it is clear that the people of Greece have rejected the terms of an international financial bailout, potentially putting the debt-crippled country on course to leave the Euro single currency zone and plunging the rest of Europe into one of its biggest political crisis in decades.

The 61 percent share of the votes secured by the "No" campaign has confounded opinion pollsters who predicted a much closer referendum result, and represents a significant personal victory for Prime Minister Alexis Tsipras, who called on his people not to accept the higher taxes and pension cuts demanded by Greece's creditors, which include the European Union and the International Monetary Fund.

The people of Greece also seemed to have accepted their prime minister's reassurance that the snub which they have now delivered to the rest of Europe won't result in the country's ejection from the continent's financial institutions, but merely provide Greece with a better bargaining chip and the chances of a better deal which will provide Greece with extra credits, while imposing no further economic hardships.

The Next Safety Net

Social Policy for a Digital Age

By Nicolas Colin and Bruno Palier

As advanced economies become more automated and digitized, almost all workers will be affected, but some more than others. Those who have what the economists Maarten Goos and Alan Manning call “lovely jobs” will do fine, creating and managing robots and various digital applications and adding lots of value in service sectors such as finance. Those who have what Goos and Manning call “lousy jobs,” however—in sectors such as manufacturing, retail, delivery, or routine office work—will fare less well, facing low pay, short contracts, precarious employment, and outright job loss. Economic inequality across society as a whole is likely to grow, along with demands for increased state expenditures on social services of various kinds—just as the resources to cover such expenditures are dropping because of lower tax contributions from a smaller work force.

These trends will create a crisis for modern welfare states, the finances of which will increasingly become unsustainable. But making the situation even worse will be the changing nature of employment. Twentieth-century social insurance systems were set up to address the risks met by people who worked in mass industrialized economies—ones in which there were generally plenty of jobs available for all kinds of workers. The basic assumption behind them was that almost all adults would be steadily employed, earning wages and paying taxes, and the government would step in to help take care of the unemployable—the young, the old, the sick and disabled, and so forth. Social insurance—provided by the state in Europe and by the market in the United States—was aimed at guaranteeing income security for those with stable jobs.

[CPF will be threatened mainly by the lack of steady income to save for a retirement. If retirement adequacy is an issue today, it will be more so tomorrow. And if housing affordability is an issue today, it will be more so tomorrow when there is insufficient contribution to the OA to fund home purchase.]

In twenty-first-century digital economies, however, employment is becoming less routine, less steady, and generally less well remunerated. Social policy will therefore have to cover the needs of not just those outside the labor market but even many inside it. Just as technological development is restructuring the economy, in other words, so the welfare state will need to be restructured as well, to adapt itself to the conditions of the day.

Can China beat deflation?

By Yu Yongding -

July 3

At a time of slowing economic growth and massive corporate debts, a deflationary spiral would be China’s worst nightmare. And the risk is mounting. The producer price index (PPI) has been in negative territory for 39 consecutive months, since February 2012. The growth of China’s consumer price index (CPI), although still positive, has also been falling steadily, from 6.5 per cent in July 2011 to 1.2 per cent in May. And if past experience is any indication, China’s CPI will turn negative very soon.

In China’s previous protracted bout of deflation, from 1998 to 2002, persistent declines in prices were the result of monetary and fiscal tightening that began in 1993, compounded by the lack of exit mechanisms for failed enterprises. After peaking at 24 per cent in 1994, inflation began to decline in 1995. But gross domestic product growth soon began deteriorating rapidly. In an effort to revive growth in a difficult global environment and buffer exports against the impact of the Asian financial crisis, the Chinese government loosened monetary and fiscal policy beginning in November 1997.

But it was too little too late. By 1998, when CPI inflation began to fall, producer prices had already been declining for eight months, and remained negative for a total of 51 months, with CPI growth beginning to recover after 39 months.

China rolls out emergency measures to prevent stock market crash

July 5

BEIJING/SHANGHAI - China's stock markets face a make-or-break week after officials rolled out an unprecedented series of steps at the weekend to prevent a full-blown stock market crash that would threaten the world's second-largest economy.

The government is anxiously awaiting the market opening on Monday to see if the new measures will halt a 30 percent plunge in the last three weeks, or if panicky investors who borrowed heavily to speculate on stocks will continue to sell.

In an extraordinary weekend of policy moves, brokerages and fund managers vowed to buy massive amounts of stocks, helped by China's state-backed margin finance company which in turn would be aided by a direct line of liquidity from the central bank.

China has also orchestrated a halt to new share issues, with dozens of firms scrapping their IPO plans in separate but similarly worded statements over the weekend, in a tactic authorities have used before to support markets.

"After the 28 companies suspended their IPOs, there will be no new IPOs in the near term," the China Securities Regulatory Commission (CSRC) said in a statement on Sunday night.

An online survey by fund distributor over the weekend, which polled over 100,000 individuals, said investors believed stock indexes would rise more than 5 percent on Monday. But many of those polled didn't think the bounce will last long.

"You're going to need the central bank to open the floodgates to take us back to 4,500 points in Shanghai," said an investment manager in Shanghai.

Facing the waves

Low-lying Maldives adapts to constantly changing environment

Jul 5, 2015, 6:00 am SGT

Nirmal Ghosh
Indochina Bureau Chief

"It's like the islands dance," a young official of the Maldives' Ministry of Environment and Energy told me in an interview.

In Male, the densely built-up capital where there are no stray dogs and cats, garbage has to be taken away by boat, and electricity is fueled by imported diesel - and if the desalination plant fails, the city of more than 100,000 runs out of drinking water in less than a week.

Satellite photographs going back a few decades have shown that the Indian Ocean islands of the Maldives - clinging to a string of mountain tops barely protruding from the surface - are shape shifters.

Products of coral, and coexisting with the surging sea, they change shape seasonally, and over the years.

Sinking isles

Friday, July 3, 2015

COE cycles of boom and bust

3 July 2015

Christopher Tan
Senior Transport Correspondent

Since its inception in 1990, the vehicle quota system has followed a 10-year peak-and-trough cycle, where the annual supply of certificates of entitlement (COEs) could vary from 20,000 to 100,000.

Even if this fluctuation does not impair the effectiveness of the COE system in controlling Singapore's vehicle population, it is highly disruptive. For consumers, the price swings cause discontent, and trigger wasteful outcomes such as cars barely three years old being scrapped.

This is because when COE supply is on an upswing, the price of a new car could fall below the residual value of one bought two years earlier.

Singaporeans have misplaced sense of entitlement, says SICC head Victor Mills

From "overfussiness" and complacency to an inability to accept criticism, many things about Singaporeans' attitudes to work irk Mr Victor Mills. The Northern Ireland-born Singapore citizen, 55, who took over as chief executive of the Singapore International Chamber of Commerce (SICC) last June, speaks his mind to Walter Sim.

JAN 26, 2015,