INTERNATIONAL WORKERS’ DAY NEWS FROM THE MIDDLE EAST.
BAHRAIN
The cabinet has extended congratulations to Bahrain's workers on the International Workers' Day, expressing its sincere thanks and appreciation to all workers who have contributed to the nation-building process and to progress in Bahrain.
The cabinet praised the efforts of workers and their trade unions in improving the work environment and preserving labour gains, calling on workers to keep up their endeavours to improve their performance and increase their productivity.
QATAR
Qatar Charity (QC) has launched a campaign to honour local workers for their role in helping build Qatar, under the title “Greetings to Workers”. The campaign aims to offer official recognition for the ongoing efforts of workers in the construction of vital infrastructure projects in Qatar, by collecting personal care items and distributing them as gifts on the occasion of International Workers’ Day on May 1.
The campaign targets 5,000 workers in Qatar, who will be presented with gifts that include a toothbrush, toothpaste, towel, comb, hand soap, shampoo, deodorant, socks, a cap and hand steriliser, helping contribute to the provision of a clean and healthy environment.
QC has urged individuals and companies to donate to the campaign until April 30 by either purchasing the campaign’s gift box from commercial complexes (Villaggio, Hyatt Plaza and Landmark), filling it with the appropriate items and returning the box to QC to distribute to the workers, or via their mobile phones by sending an SMS to 92133 to donate QR25, to 92632 to donate QR50, or to 92642 to donate QR100. The gifts will be distributed to the benefiting workers from May 1 to 3. “The campaign falls within QC’s local development department’s strategy, covering three dimensions: social, economic and cultural, keeping us up to date with the National Development Strategy 2011/2016, as part of Qatar National Vision 2030.
United Development Company (UDC), a leading Qatari shareholding company, has signed up as the gold sponsor of ‘Qatar Labors Rights Protection’ progress report book set to be released on May 1, which marks the celebration of International Workers’ Day. The book will be officially launched at a press conference on May 3 under the patronage of Qatar’s Prime Minister and Minister of Interior, Sheikh Abdullah Bin Nasser Bin Khalifa Al Thani and will comprise 350 pages of valuable and informative Arabic content which will be widely distributed locally and internationally to all concerned entities, said a statement.
Members of the National Bus and Rail Union (NBRU) have overwhelmingly voted to down tools for a two-hour march to the Dail on May 1, which is both International Workers' Day and the start of a bank holiday weekend. It is been hinted that this could be just the beginning of a long campaign stretching into the summer months and beyond. Bodies representing retailers in the capital last night warned that the proposed day of industrial action on May 1 against the Government proposal could have a negative impact upon the city's businesses ahead of the busy bank holiday weekend. Richard Guiney, CEO of Dublin Town, said recent research indicated that as many as "42pc of people" use the bus to reach the city centre to do shopping and spend an average of €63 each.
TURKEY
The Istanbul governor’s office controversially excludes Taksim Square from its list of places where it permits marches and demonstrations for May 1 celebrations, just weeks ahead of International Workers' Day, also known as Labour Day in some places. The move is likely to be challenged by labor groups, who have repeatedly demanded that demonstrations be allowed in Taksim. The public square is the most prominent square in Istanbul, and one that is symbolically important for workers. The European Court of Human Rights (ECtHR) had ruled that Taksim Square could not be closed to peaceful demonstrations.
Unite is organizing a workers’ day rally in order to ask the government to stop subsidizing jobs at McDonald’s and Wendy’s. The union questions why McDonald’s and Wendy’s need government subsidies to hire staff on what union says will be zero hour contracts. What is more worrisome is that the workers have had their hours cut when the subsidy ends. "Sometimes McDonald's tells… staff they will get at least 30 hours a week. But after six months, when the subsidy ends the workers go onto a zero hour contract just like everyone else. …It seems the only time workers can get guaranteed hours at McDonald's and Wendy's is when they are being subsidised by the state.”
It has been claimed that the zero hours regime is not a rostering mechanism but a tool to bully and abuse staff which shouldn’t exist in New Zealand.
That is the message of the workers’ day rallies that will be holding today.
On April 26, it was reported in the news that South Korean department stores were beefing up marketing efforts to attract Chinese tourists ahead of the International Workers' Day holiday. Retail industry insiders said stores were moving to accept the Alipay payment system and scrambling to lure big-spender VIP customers. Alipay is China's largest payment system and makes use of specialized apps to conduct transactions. It has some 800 million users with annual payment hitting some 450 trillion won (US$417 billion).
MALAYSIA
The Democratic Action Party, DAP, said on Thursday, April 23, that its state, divisional and youth members have pledged to take part in the May Day rally, despite arrests and charges over previous Pakatan Rakyat-led rallies earlier this year. Its national organising secretary Anthony Loke said despite the mass arrests and charges in court, DAP members will rally against the newly implemented goods and services tax (GST). “Although there were 54 people who got charged… for participating in the anti-GST rally, that won’t dampen our spirit to take part in the May 1 rally,” he told Malay Mail Online.
54 persons have been charged at the PJ Sessions Court for taking part in the protest at the Customs office in March. Loke said they will march from Jalan Sultan to the Maybank headquarters, and then will join others to march to Dataran Merdeka, and then towards Kuala Lumpur City Centre, KLCC. He said he expects a few thousand DAP members to show their support for the rally next Friday. “Malaysians need to rise and object to GST that is making our people suffer. In conjunction with Labour Day on May 1, let’s show the people’s power in rejecting GST, return the country’s economy to the right path and reinstate a quality life for the people,” he said.
INDIA
In order to celebrate "Worker"s Day" on 1st May a group of intellectuals and social workers have organized a meeting at Zanana Park, Kathua. The meeting was presided by a social thinker and worker Master Shiv Nandan and attended by a large number of representatives of different organizations. While speaking in the meeting, Master Shiv Nandan told that "May Day", the first day of the month of May is celebrated all over the world with utmost importance and the day is also known as the International Worker"s Day which has a historic significance.
Labour Minister Gopal Rai has said the Labour Department would launch a Labour Development Mission for the welfare of contract labourers on the International Workers’ Day on May 1.He asked all employers, including contractors, to upload the details of employees on their websites to ensure that minimum wages were paid to all categories of workers.
The National Union of Namibian Workers (NUNW) officially announced that the official celebration of May Day, also known as International Workers' Day, on May 1 would be celebrated at the Kuisebmond Stadium in Walvis Bay. President Hage Geingob is expected to be the keynote speaker.
During the week before the workers’ day, the NUNW will be holding its 6th ordinary congress.
Trade Union Congress of Namibia (TUCNA) will deliberate on workers' rights issues at this year's Workers' Day celebration in Lüderitz. The theme for the celebrations is: "Dynamic Workforce is a Must in These Trying Times". TUCNA, secretary general Mahongora Kavihuha, says there are still challenges to fundamental human rights such as the right to strike and the federation joined its colleagues across the globe to tackle this anomaly. Kavihuha says the association has interrogated the social dialogue regime in Namibia with a view of transforming it because they found out that it does not serve the purpose for the workers, employers or government. "As a result, we have carried out a comprehensive study with clear achievable recommendations," he says, adding that the federation is busy developing a bipartite position paper between the federation and Namibian Employers' Federation using the coalition study.
SWAZILAND
Trade unionists and democracy campaigners in Swaziland are on a collision course with the police and state security after they refused to seek formal permission to hold a May Day rally. The Trade Union Congress of Swaziland (TUCOSWA) has confirmed that commemorations of the workers' day will take place at the Salesian Sports Ground in Manzini, the commercial capital of Swaziland, on 1 May 2015. Vincent Ncongwane, TUCOSWA Secretary General, said his federation had informed the police of its decision to host the event. The Times of Swaziland, the only independent daily newspaper in the kingdom ruled by King Mswati III, the last absolute monarch in sub-Saharan Africa, reported him saying, 'We will not be seeking permission from the police to host the event, it is unlawful to be forced to seek permission and there is no statute in the labour laws that allows the police to demand us to seek permission from them to host Workers Day.' He added the fact that they had informed the police was sufficient and that they would not be seeking permission as police had instructed them to do in past years.
ZAMBIA
The theme for this year's workers’ day celebration in Zambia is 'Promoting national economic growth through job creation, free collective bargaining and respect of workers' rights'.
There have been sporadic calls for the boycott of workers’ day celebrations in that country. The Judiciary and Allied Workers Union (JAZWUZ) has joined the opposition United Party for National Development (UPND) in calling for a boycott of celebrations although it is unclear whether the calls will be heeded. JAZWUZ president Peter Mwale said that boycotting the event will make government aware that workers were unhappy about the wage freeze that has continued being in effect. Mwale said that they had not picked on the call by the UPND but had acted out of their own volition in calling for the boycott of May, 1 celebrations."The call for a boycott does not matter whether it has been called for by the UPND but I think we the labour movement should have led such calls because we have suffered for a long time," he said. "We have had a wage freeze and have not done enough to oppose it and if maybe we stay away from [workers’ day] the message will be taken seriously. "There has however been no backing call from the parent body the Zambia Congress of Trade Unions.
During a massive event with social movements and indigenous leaders in the town of Cangahua, in the outskirts of Quito, Ecuadorean President Rafael Correa promised he will raise a social security scheme designed for the informal sector workers. Speaking in front of 6,000 people, Correa called upon them to organize and march on May 1, the international workers day, in order to show the nation the government's popular support. The president's remarks come as the National Assembly (Parliament) is discussing reforms to the country's Labor Law which would modify the Social Security system to recognize homemakers' right to healthcare and jubilation, amongst other important changes.
Havana
Encouraged by the return to Cuba of the five anti-terrorists who were imprisoned for years in US jails and of the health professionals who fought Ebola in western Africa, nearly 60 thousand health workers will join the May Day march at Havana´s Revolution Square. The general secretary of the Health Workers Union, Doctor Santiago Badia said that the sector will be represented by over 300 thousand professionals in all activities throughout the island on May 1, International Workers Day. In Havana, the health workers will be led by the 33 professionals with the medical brigade that fought Ebola in Sierra Leone, Liberia and Guinea.
United States of America
On Friday, May 1 — International Workers’ Day — the cranes for loading cargo at the San Francisco and Oakland ports will be still. The April meetings of both the Executive Board and membership of the International Longshore and Warehouse Union Local 10 unanimously endorsed a call for “Union Action to Stop Police Killings of Black and Brown People.” A unanimously approved amendment called for the monthly union membership meeting to be held on the May 1 day shift and conclude with a march and a rally at Oakland City Hall, to demonstrate that the rampant killings by police are an urgent labor issue. The killing of young Michael Brown by Ferguson, Mo., police on Aug. 9 and the cellphone-videoed killing of Eric Garner by New York police on Staten Island galvanized a rainbow movement, led by Black and Brown youth.
According to the Madison Industrial Workers of the World: Our predecessors managed to organize, act and gain victories before the Wagner Act in 1935, and they had things much worse than we do, even being literally massacred at times. We need to honor their legacy by learning from them and continuing the fight today. This year’s May Day rally and march will begin at Brittingham Park along West Washington Avenue at 3:30 p.m. Friday, with a march to the Capitol, where the rally will continue. Let’s use this as an opportunity to renew the fight!
The Los Angeles County Federation of Labor is sponsoring a May Day rally at Dragon's Gate in Chinatown, calling for a $15 an hour wage, justice in communities of color, and no more delays for DACA/DAPA (Deferred Action for Childhood Arrivals and Deferred Action for Parents of Americans and Lawful Permanent Residents).
Canada
The sixth annual, labour-inspired MayWorks Windsor Festival gets under way Tuesday, April 28, with a Workers Day of Mourning.A MayWorks quilt, titled In Memory of Workers Killed or Injured on the Job, will be unveiled that day at Artcite Inc., 109 University Ave. W., in the Capitol Theatre complex, leading to a month of initiatives in May.May Day celebrations on Friday, May 1, will include an outdoor party at Lanspeary Park, a dance party at Milk Cafe, an installation at the downtown Windsor gallery, One Ten Park, and a workshop at Artspeak Gallery on Wyandotte Street East.An entire month of activities will follow, including art displays and music, with this year’s general theme of Our Windsor Stories. Several communities across Canada host MayWorks festivals to recognize the links between the labour movement and the arts.
The West Kootenay Labour Council invites all residents of the Castlegar area to join them in celebrating International Workers’ Day on Friday, May 1. Local union affiliates are sponsoring a free barbecue lunch between 11 a.m. and 2 p.m. at the Spirit Square in front of city hall.“Around the world, workers acknowledge May 1 as the day to celebrate gains made in working conditions, health and safety and wages and benefits,” said labour council president Gerry Schmon. “However, it is also a day to reflect on the growing inequalities in society, the erosion of public services that communities rely on and the gap in wages between men and women that need to be addressed,” he continued. “We celebrate the fact that when workers show solidarity in the face of oppression, we have the strength to make positive change. With increased attacks on democratic rights, our environment and our social networks, we need to solidify our commitment to protect the collective gains we made and protect our children’s futures.”
Costa Rica
Teachers’ unions will also cancel classes and take to the streets of San Jose… May 1st, on International Workers’ Day (Labor Day).
Some 100 busloads of public school teachers from across the country will cancel classes and converge on San Jose on Friday as part of a strike over a laundry list of issues which union leaders blame on “neoliberal” policies put in motion by the Solis administration. The demonstrators plan to march from Parque La Merced to the Legislative Assembly. In a press release last week, the Association of Secondary Teachers, APSE, said that the strike would be the “beginning of a struggle” against a number of grievances, including “the anguish felt by thousands of workers to see their jobs and salaries in danger;” […] “corruption, dirty business, impunity, tax evasion, loss of sovereignty, environmental damage, repression, privatization of basic services, loss of labor rights […] all as a result of the application of neoliberal policies.
Today is May 1, 2015. Since 1886, May 1 has been used to commemorate workers all-over the world. On this day in 1886, in America, the American Federation of Labor organized militant actions demanding the right of all workers to an eight-hour workday. Workers walked off their jobs and withheld their labor from being exploited. Later, some eight labor organizers were framed by law and accused for a bombing at a rally at Chicago’s Haymarket square.
Since then, May 1 of every day is being commemorated as the day of workers, the day when workers demand their right for good working conditions, for a better life and better families. Immigrant workers have also not being left out of the rallies.
Today is the International Workers’ day. In some countries, it is not an official holiday but in many African countries like Nigeria, today is an official work-free day. It is a day for workers to reflect on labor rights, democratic rights and all other rights due them within the economic system they have found themselves.
In some countries, rallies will be held with the support of the governments while in other countries, rallies might be held against official permits. In other countries, like in the United States of America, workers will celebrate this day quietly while still going about their tasks.
Whatever the case may be, it is worthy to mark this date in your calendar if you work for a living.
Over the days, I have collected selected news on the International Workers' Day celebration around the world in:
Price inefficiency or mispricing in the foreign exchange market in Nigeria is fueled by the existence of two markets for the same product: the official rates market and the black market. This is taking a toll on Nigerian economy.
The reasons for its continued existence include one or more of the following:Price inefficiency or mispricing in the foreign exchange market in Nigeria is fueled by the existence of two markets for the same product: the official rates market and the black market. This is taking a toll on Nigerian economy.
The reasons for its continued existence include one or more of the following:
It is being supported by stakeholders in the financial industry and politicians. As was mentioned in the first article, mispricing is a form of price discrimination and creates opportunities for monopolies or oligopolies to exist. Nigerian banks are attracted to such market opportunities and would rather make maximum profits unless the government steps in to curb the markets. The government does have the necessary powers because politicians who buy and sell foreign exchange in high volume use the mispricing premium to make huge amounts of money for their personal gain. So, a powerful lobby makes it possible for such an inefficient setup to exist. If arbitrageurs were allowed in the market, the price difference in the two markets for foreign exchange would disappear, thereby converging prices.
There is no risk involved in selling in the foreign exchange market. Both educated and non-educated people participate in the foreign exchange markets. Sources of foreign exchange are cheaply gotten from tourists and people coming from abroad. Nigerian import regulations state that non-residents can bring in the local currency, the Naira, up to the amount of N5,000 and foreign currencies of an unlimited amount, provided both are declared on arrival.
The black market premium is high. It is about 20 naira above the official rates when exchanging dollars for naira. When transactions run into the millions of dollars or pounds, the black markets are more attractive than the official rates market. Speculative losses that could be incurred by buyers and sellers in the market are made up for by the high market premium. That makes the market more riskless.
There is economies of scale. The value of transactions are very large and huge. When the quantity of transactions run into the millions and the premium or mispricing gap is high, then the market is tempting for banks and politicians not to participate.
Hence, no one expects the price differential in such a market to disappear because corruption and entrenched lobbies would fight with all they have to squash any legislature that is raised.
Now, back to the question that is the thrust of this blog article: would allowing ATM Naira-denominated debit cardholders to withdraw in foreign currencies from abroad and bring the amount into the currency encourage arbitrage and is it harmful to the economy?
Before the recent slash of the annual amount ATM Naira-denominated cardholders can withdraw from $150,000 to $50,000, it was business as usual. Foreign currency from abroad fueled the black market and was welcome in unrestricted amounts. But, Nigeria has been bedeviled by two evils: falling oil prices and a reduction in its output or income. The projected growth rate for Nigeria has been reduced by the IMF from 6.3% in 2014 to 4.75%. The economic front is not too sound. Foreign exchange reserves is a major concern of the Finance Ministry and the Central Bank of Nigeria in stabilizing the local currency, the Naira. Debt servicing is also another problem they have to deal with.
The naira is depreciating daily. Hence, foreign currency withdrawn from abroad is cheaper especially since there is a time lag between the withdrawal and when the banks settle card companies like MasterCard and Visa. Banks end up paying higher. The country is then losing important foreign reserves due to speculation.
Arbitrage is supposed to exist in this practice but the existence of a black market nullifies arbitrage. Foreign currency bought cheaper from abroad are sold at a higher premium than even the banks that buy at the official rate. This is then a slowly developing lucrative business. If this trend is not curtailed, it will create a market. It is very easy for a black market trader to make use of a network of nuclear and extended family members to procure maximal gains from the deficiencies of the market using a Naira-denominated card.
So, Nigeria is losing foreign exchange reserves at a sensitive point in its monetary history.
Curtailing these cardholders though is repressive. They are reacting to market forces created since the Naira was devalued in 2014 and has continued to depreciate as oil prices remain low.
The problem lies at the hands of the Ministry of Finance and the Central Bank of Nigeria. As I wrote earlier, arbitrageurs react to price differences like high pressure flows to areas of low pressure. The high premium created by mispricing in the foreign exchange market in Nigeria has created this trend and it cannot be stopped. It could only become more treacherous by official fiat by existing in the underground economy. Where conscious barriers to efficient functioning of the markets are created by government agencies that are supposed to ensure market inefficiencies are curtailed, there is nothing any stakeholder in the industry can do.
The black market has been a tool of the system to make quick money on the side while the books are made to look good. This practice has been going on for years. It cannot be stopped. Reducing the yearly amounts Naira-denominated cardholders are allowed to withdraw overseas will push the market into the underground.
By cutting usage, the CBN will have the opportunity to track regular users of these cards; maybe even label them saboteurs of the Nigerian economy. The effectiveness is what one is doubtful of. The banks are complaining because these cardholders are making much premium than they are; which should be worrisome. One expects that they also play to the market and make use of the opportunity proffered.
It seems that when pushed to the wall, the Ministry of Finance and the Central Bank of Nigeria set up barriers to trade that could create more problems in the future especially in the banking industry.
Previous post on arbitrage: An opportunity for price differentials to converge in financial markets
If an iPad was 10% cheaper in a neighboring state, would you not seize the market opportunity for instant profits? After accounting for costs involved in transportation and other ancillaries, you’d want to grab as much as you can at such cheap prices. Eventually, you’re not the only one. So, demand rises in that cheap iPad state and the price catches up with the rest of the World. That is what economists call arbitrage.
According to www.investopedia.com, arbitrage can be defined as:
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.
Arbitrage is synonymous with making a good buy. It exists due to inefficiencies in a market. Since that is the case, when an arbitrage opportunity is open, it does not last long before the market converges and it disappears.
In the market, prices are accessible in seconds.
Credit: Wikimedia Commons
Availability and access to digital information about markets, prices and supplies is at the fingertips. It is very difficult for the market to allow mispricing or price differences. It usually acts quickly upon pricing inefficiency, so that any opportunity for mispricing is eliminated in seconds.
Yet, some arbitrage does exist in the markets. Mispricing is one of the prerequisites for arbitrage to occur and the fact that prices are deliberately doctored not to converge as by government regulation or corruption. Cases of this arise often in developing economies. If there is a mispricing premium, lobby groups would be created to ensure the price difference is sustained in order to gain an economic advantage. An efficient market would not allow such pure cases of arbitrage to last. Any gain due to mispricing will have to be executed instantaneously by arbitrageurs who close up the gap.
Another prerequisite is for such arbitrage to exist at economies of scale. Given a price premium and trading in volumes that run into millions daily, it is not long before a shrewd company can take advantage of this inefficiency and create an oligopolistic market, if not a monopoly. That setup would be very difficult to dethrone when established. Such company would seek all it can to bar arbitrageurs from getting knowledge or doing business in that market.
In brief, arbitrage and arbitrageurs are good for the economy. They serve as a check against monopolists who would rather price discriminate in order to maximize prices. They ensure that prices converge or are harmonized in markets. They act like a natural law that moves market forces from areas of high prices to areas of low prices. Therefore, consumers and policy makers alike would welcome arbitrage and arbitrageurs.
Arbitrage exists mostly in markets that are speculative in nature, especially in foreign exchange and futures markets.
So, why am I concerned about arbitrage? I read this article on the mobile money Africa site that piqued my interest. The interesting lines are quoted below:
The Central Bank of Nigeria on Tuesday slashed the naira debit cardholders’ spending overseas from $150,000 to $50,000 per annum.
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The Managing Director and Chief Executive Officer, Union Bank Plc, Mr. Emeka Emuwa, had after the Bankers’ Committee meeting at the CBN office in Lagos on Thursday, said the amount spent by naira debit cardholders overseas was rising fast and the banks were beginning to notice some arbitra[g]e in the segment.
Nigerian foreign exchange market is composed of two components: the official market that sells and buys at the official CBN rate and the parallel or often called “black” market that sells and buys at rates fixed by markets outside the official sources but whose source of foreign exchange is suspiciously being fueled by sources in the official market.
Why are Nigerians disturbed by arbitrage? That piqued my interest. I did some research in that area.
It is the subject of the second article: Black market and official patronage nullifies arbitrage in Nigerian foreign exchange markets.
Germany’s Deutsche Bank Monday unveiled plans to cuts costs by €3.5bn (£2.5bn) and sell off its Postbank business. This comes days after announcing it will post profit in the first quarter of this year despite litigation costs of €1.5bn ($1.61bn). Deutsche Bank, you will recall, is Germany’s largest lender and the seventh largest in the world. As part of its cutting costs strategy, it will close up to 200 High Street branches by 2017 and leave or reduce its presence in some countries. Postbank will be sold through a stock market listing by 2016.
But investors are not happy with the announcement. Even if the measures would involve savings of €3.5bn euros annually by 2020 and will drive a return on tangible equity of at least 10% during same period hence increasing its profitability, investors showed their displeasure with this latest plan by the Chief Executives of Deutsche Bank. Shares fell by 4.6% to €30.13 hours after the announcement.
Deutsche Bank: Administrative Headquarters.
Credit: Wikimedia Commons
Tough regulations, weak markets and mounting legal bills from misconduct settlements are pressures forcing Deutsche Bank to take moves to axe unprofitable lines in order to boost earnings and make its balance sheets look trim. Days before, Deutsche Bank was fined $2.5bn by U.S and British authorities for obstructing regulators. Twenty-one people also face criminal charges.
Despite the fine, its Q1 revenue reflects a “strong performance across business and a favourable impact of foreign exchange movements,” the bank said in a statement. Revenue at the bank's asset management division was up 30% at €1.4bn, while revenue at the corporate banking arm rose 15% to €4.7bn. The $2.5bn fine by US and UK regulators related to Deutsche's attempts to manipulate the Libor and Euribor rates. At the end of March, the bank had €4.8bn set aside in litigation reserves.
Deutsche Bank’s strength lies in the trading interest-rates and credit products worldwide, for which it was recently ranked second by Bloomberg.
Postbank on the other hand has not proven as profitable as Deutsche Bank would have hoped. By 2016, it would sale off Postbank, shedding off about some 10, 000 employees from its global employee numbers of some 98,000. Stiffer regulatory requirements and expectation that regulators would require increasing capital requirements made it imperative that Postbank be shed.
Investors worry though that 2020 is too far a time to wait; that is five years from now. Analysts believe those set targets are achievable. Deutsche Bank needs restructuring. What was left unsaid was how many jobs will be lost in that exercise or which countries it will exit. Latest reports have it that the bank is more interested in emerging markets but would not leave off its strategy of being a global lender. Spending for digital technology though is expected to be about €1 billion. Asset and wealth management divisions will expand by 10% a year until 2020 and the number of relationship managers will increase by 15% in key markets.
The links below are some of the interesting materials I have been reading on the Project Syndicate page. I thought it would be lovely to share it with you.
When an economy is in a slump, i.e spending is already low, is it the right time for austerity measures? In this well written and interesting article full of historical anecdotes, Professor Skidelsky argues no, rather it would be a reason for the economy to resort to other measures, like a stimulus program. But, in contrast, another school believes that the confidence that an austerity will work and being boisterous about that assertion, which Paul Krugman calls the "confidence fairy", was as much important than the workability of policy.
Professor Skidelsky thinks otherwise. In brief, political rhetoric cannot make a bad policy work.
Gallup’s poll for 2014 showed that approximately 2.3 billion people, a third of the world’s population, perform at least one altruistic act per month. Some countries are notable in giving money to charity, about 91% in Myanmar, while others like the US outdo themselves in helping strangers and donating to charities. Nevertheless, not all altruism, or giving to help others, is altruistic. Even despite this, the author introduces us to an emerging movement, the Effect Altruism movement, whose aim is to give with the heart and the mind. Their happiness derives from helping others. Good read.
Contains the usual arguments for girls education: better society, more mature and adapted mothers, etc but further with the exhortation that the responsibility rests on you and I, all of us, to ensure that girls do not marry before 18, before they are ready for motherhood. As beneficiaries of our parents and societies wisdom, the two authors urges us all to give the girls of this generation and the next a chance to live to their potential.
How can the fact that the pre-2008 financial crisis was occasioned by positive global productivity growth, decline in inflation and a reduction in real (inflation adjusted) interest rates? Arvind Subramanian explains this three movements by stating that the answer lies not in aggregate demand but on the rise of emerging markets especially India and China. Positive productivity shocks from the emerging markets was followed by disinflationary pressures and also a savings glut that brought about a reduction in returns to capital. The savings glut, he explains, were a result of the productivity shocks being resource intensive and mercantilist in origin, while making already prudent Asians more prudent, and profitable companies more profitable.
If found guilty, Gazprom would be fined sums that could run up to 10 billion euros ($10.7 billion). But taking such an expedient decision takes time since Gazprom represents both economic and political concerns.
Russia is in the throes of an “economic war” with the West following its support of separatists fighting the government in Kiev, Ukraine. It has already been sanctioned for that. Gazprom’s revenue is significant to the Russian economy, not counting the politico-economic advantages of having an economic stranglehold on its little neighbors. The EU will not want to risk Putin hardening its stance on Ukraine; if Putin thinks escalating the fighting in Ukraine would be to his advantage, no doubt, he wouldn’t hesitate making such overtures.
Secondly, Gazprom’s gas monopoly is not easy to relinquish. If it made true its threat to stop supplying gas to Europe that move would create economic woes for European businesses. Gazprom will be strengthening that hold much further when it finally completes the South Stream, expectedly this year, and Turkish Stream pipeline projects. Those projects would decrease the cost of providing European gas and increase its margins in a region beset with uncertainty. It would give Gazprom a great jump over any potential rival such that it could not only fight back using prices, but using unilateral supply cuts and expansions.
Ms. Vestager, taking on formidable opponents.
Credit: Politico.eu
But diversify gas supplies Europe must. Ukraine is even taking steps towards that area. It has cut its dependence on Russian gas from 100% to 75% of gas imports. Last month, the EU endorsed the European Commission’s proposal to create an European energy union. Such an arrangement will an energy secured and integrated Europe, as well as be able to directly influence commercial agreements on gas supplies, including Gazprom contracts. This union, it is believed, will create risks for Gazprom, not only to make its contracts transparent, but to establish a unitary price for all European gas.
Russia will not stand by and see its positions compromised. The market is lucrative. If it loses Europe, it might lose its power to fix prices and have to face other markets where it has to play on unfamiliar terrain. Politics aside, Gazprom is faced with the ever present threat of competition from lower global gas prices from new shale fields in the US and liquefied-gas export projects in Qatar. The EU has encouraged its members to implement diversification programs. Ukraine is already doing so. Ukraine’s gas supply is now coming from diverse sources like Slovakia, Poland and Hungary through reverse flows. Pipeline capacity expansion in Slovakia has made it possible for Ukraine to increase gas import volumes. Reverse flows from Europe is also winning in price competition over Gazprom. In February 2015, it was reported to have exceeded the direct flow from Russia for the first time in terms of monthly volumes.
Last week, Ms. Vestager, filed formal charges against Google, accusing it of abusing its dominance in the market for online search in Europe. Gazprom’s case is her second battle within the space of two weeks. The success of this latest initiative could determine future supply and pricing of European gas. Failing to mention, and also, the future of a regional monopoly like Gazprom. The pawns of history are in favour of Gazprom. What moves does Ms. Vestager have?
Previous: EU antitrust vs Gazprom (1): What a monopoly in gas supply and energy entails
Gazprom’s monopoly position is worrisome to European Union member countries, especially to the six EU states that comprise Ukraine, Lithuania, Finland, Latvia, Estonia, Slovakia and Bulgaria. These have been dependent on Russian gas for their energy needs. That position might soon be threatened. This week, Ms. Margrethe Vestager, the EU antitrust chief reopened the case file on Gazprom that was established by her predecessor, Joaquin Almunia, in 2012. The EU antitrust regulators are charging Russian’s energy giant, Gazprom, with abusing its dominance in the natural gas market. The EU’s move is concerted with its effort of encouraging member states that are dependent on Russian gas to seek a diversification of gas supplies. The EU depends on Russia for about one-third of its gas supply.
Gazprom Building in focus.
Credit: Thawt Hawthje on Flickr
Harmful pricing that harms rivals are one of the contentious issues Ms. Vestager is leveling against the company. It has the liberty of raising or lowering prices at will in exercise of its market position without any transparent economic motives. Such practice gives Russia a political leverage against European nations who are against its anti-Ukrainian policies. A notable case in point is Ukraine whose gas supply was blocked towards the better half of last year.
Gazprom is also being accused of linking the price of gas to that of oil which has fallen to record lows. By forcing other nations to commit to its oil prices rather than market rates, it is strangling and further tightening its grip on European consumers.
These and many other issues leveled against Gazprom, which also includes furthering the geopolitical ambitions of President Vladimir Putin, the Russian President, will have to be proved.
Gazprom though is not unrelenting. It hopes to complete the South Stream gas pipeline that runs from Russia to Bulgaria under the Black Sea so that it can be able to supply gas to countries in Southern Europe while undercutting Ukraine. Also on the pipeline is a Turkish Stream pipeline project which is being created for the same purpose. According to Gazprom, it wants to change its current model of dealing directly with European consumers. It is also reported that it has its eyes open for Asian markets if the price is favorable.
Next: EU antitrust vs Gazprom (2): Politics always interferes with the economics of pricing
Raytheon (NYSE:RTN) has secured a $1.9 billion deal to acquire complementary network security company, Websense Inc (NASDAQ:WBSN), from private equity firm, Vista Equity Partners. Websense will be operated as a joint venture.
Digital attacks against devices and computers both for commercial and military purposes are increasing. Raytheon Corp., principally focused on the military and defense area hopes to become a gateway against any and all such attacks. By acquiring Websense, it is horizontally stamping its presence outside its traditional domain. Websense on the other hand has conventionally been a company focused on civilian and commercial security grade systems. Its products analyze corporate data for threats including for malicious emails, corrupted internet sites and breach of corporate firewalls.
It is believed in the corporate arena that this deal will accelerate Raytheon’s efforts to offer “defense-grade” cyber solutions to civil and commercial customers while generating growth rates and increasing profits that were accounted for by its military hardware markets.
David Wajsgras, the president of Raytheon’s intelligence, information and services business, is quoted as saying:
“Today’s enterprises are more vulnerable than ever due to the proliferation of cloud computing, mobile devices, and the Internet of things… ... Our goal is to provide an integrated defense.”
Connected devices in the cloud.
Credit: Perspecsys Photos
on Flickr.
In the “internet of things” devices like computers, smartphones, and sensors will be connected to each other in ways unimaginable before, without human-to-device or device-to-device interaction. A flaw in one area of the network can be exploited by cyber-spies and cyber-criminals. By partnering with Websense, Raytheon is bringing its expertise in the military arena to the civil and commercial field. The cyber-security security industry is huge. In 2014, it was reported that cyber-crime costs the global economy about $445 billion every year, with the damage to business from intellectual property thefts exceeding $160 billion. Losses connected to personal information, such as stolen credit card data, was put at up to $150 billion.
Raytheon though is not the only company gearing itself in the cyber security market. Last month its rival company, Blue Coat Systems Inc., was acquired by Bain Capital LLC of Boston for $2.4 billion. Blue Coat Systems is known for transacting government contracts. Raytheon is famed for the Tomahawk, Patriot, and Sidewinder guided- missile systems and is a major maker of radar and electronic warfare gear.
Straw is cheap, good for the environment and an excellent insulator. Straw has so many uses such as building carbon-negative buildings. So, why has straw not caught on as an alternative to concrete, bricks or timber?
I had an interview session with Mr. Finlay White, Manager, Business Development and Marketing, at ModCel™, one of the new and innovative companies in the United Kingdom that constructs buildings using prefabricated straw panels.
What market need did ModCell serve on inception?
Finlay White: ModCell initially started selling into the educational market - building additional classrooms, University buildings etc.
That could have been possible due to your affiliation with the University of Bath?
Finlay White: The panel was invented by an architect (Craig White) and a structural engineer (Tim Mander). It was first used at the University of the West of England, Bristol. It was identified that the straw bale panel would always be a victim of people’s perceptions i.e. 'It’s straw, surely it’s a fire risk’ or/and ‘Straw will rot’ or and/and ‘What about vermin?’ etc. So it was decided at an early stage to be a researched based company to satisfy the preconceptions around using straw. We approached Professor Pete Walker of the University of Bath to see how we could gain funding for research (our MD, Craig White, had worked with Pete Walker on previous occasions due to both being involved as lecturers in the built environment). UK Government matched funding options were identified and a joint submission to the UK DBERR (Department for Business, Enterprise and Regulatory Reform). We were successful with this research application. A number of other research options have since been identified, with a number of these additional funding streams have also been won (including matched funding from the DTi - Department for Trade and Industry, TSB - Technology Strategy Board, Innovate UK, European Commission) The vast majority of these have been with the University of Bath. Our relationship with them is excellent and the research has had very positive outcomes, including UK and European certification being won as an outcome of the research. So far over £4 million of matched funding research has occurred and three research programmes are currently taking place.
Balehaus at Bath - Built by ModCell using straw technology.Credit: ModCell.com
Did your customers voice concerns about the sustainability of straw-built houses?
Finlay White: We tend to answer this question before we're ask[ed] it. When talking to people we inform [them] that in the UK there is currently over 3,000,000 tonnes of unallocated straw bale surplus in the UK every year. By unallocated, we mean what is left over after the 9,000,000 tonnes that is grown each year has been used for other purposes e.g. animal bedding, ploughed back into the field etc. This 3,000,000 tonnes equates to roughly 500,000 average sized (90m2) 3 bedroom homes…. In the UK, the target for new homes is 240,000 a year (less than half this number is actually being built at the moment). So, there is more than enough of this ANNUAL co-product to cope with ALL UK building being built each year. Also the production of straw, or should I say of wheat/Barley etc, is actually what is left in the field after the crop of wheat/barley have been harvested. We are not replacing a food crop for a non-food crop. As the straw grows it also sequesters CO2 from the atmosphere. It retains the Carbon atom, through photosynthesis, and releases two oxygen atoms back into the atmosphere. A 1m3 of straw has 211kg of CO2 sequestered. We offer a ‘Carbon negative’ building system. A 3 x 3.2 m2 panel has 1400kg of CO2 sequestered in it.
I’m pretty sure that we offer one of the most sustainable building solutions in the world.
Your product is new, innovative, methinks. How has UK regulations affected your business?
Finlay White: The UK building regulations and European low carbon goals have influenced us greatly. The need to meet these regulations has helped us gain greater market acceptance. This is as a result of achieving the required certification of our panels to meet these codes. We have a daily task of overcoming peoples preconceived ideas about using straw in buildings i.e. “fire’, ‘decay' and ‘vermin’. The certification we have for our panels allows us to illustrate that the preconceptions are incorrect.
Do you cover markets outside the UK?
Finlay White: Not at this moment but we are looking to expand to other countries through licensing of our system or joint ventures. We are happy to speak to business[es] about this opportunity.
This innovative offsite-manufactured straw panels can be easily supplied, installed and buildings created with specifications that meet building regulations.
As a business or homeowner, you can visit the ModCell website and ask for a quote.
Nigeria, one of the foremost exporters of petrol, Brent crude, in particular, should be heaving a sigh of relief that the price of oil is rising slowly.
The conflict in Yemen has been attributed to this development. On thursday, tribal forces took control of a major southern oil terminal and airport.
What has been worrisome about the Nigerian reaction is the news coming from the Central Bank of Nigeria, (CBN).
First, it's pushing a hasty capitalization policy on the banks, especially on the strategically important banks in order to meet capital adequacy requirements. Many of the banks have been carrying out dividend reinvestment plans for this purpose.
Secondly, if foreign exchange reserves was the reason behind the CBN's reduction of the annual amount holders of naira denominated ATM cards are allowed to spend to buy goods from overseas,(from $150,000 to $50,000 per year), then there are possibilities that it could go back to the days before the boom when the price of Brent Crude was above $105 per barrel by instituting financially repressive regimes that not only hurts the economy, but the "common man" who will always respond to the dictates of the market.
Brent Crude risen beyond $60Credit: Investing.com Brent Oil Streaming Chart
Some online news reports state that the CBN is afraid of creating arbitrage opportunities that could leak away badly needed foreign exchange reserves.
The 2015 budget presented by the Finance Minister, Ngozi Okonjo-Iweala, was placed at a benchmark price of $52 per barrel. So, this Thursday's record rise to $64 per barrel of Brent Crude will surely cause some nerves to ease off a little.
Nigeria has a duty to commit themselves to eradicating a thriving black market in the country. That is what created the arbitrage in the first place. One believes that is quite a herculean task, given the fact that the banks posting megaprofits and politicians profit from the black market trade in foreign exchange.
Time is ticking away. It is unwise for the Finance Ministry and CBN to keep putting all their eggs in one basket. The economy has to diversify and get it done fast by encouraging other sectors of the country to be more innovative and productive.
Mattel Inc, (NASDAQ:MAT) the US producer of toys, notably the iconic Barbie doll, has reported a first quarter loss for 2015 due to a losing popularity of its toys. This is a sixth consecutive quarter sales drop from its overseas sales outlets. US sales showed an increase of 8% but overseas sales a decrease of 14%.
The loss though is a narrow gain over what was expected – 8 cents per share compared to 9 cents per share as was expected for the Fortune 500 company. This is better than expected.
At the end of business on Thursday, April 16, Mattel’s shares rose by 6.7% to $26.95 on moderate volume.
The waning popularity of Mattel’s toys and dolls is a sign of consumer shifting tastes. Substitutes for the toys include electronic toys, tablets and merchandise from popular films such as Disney's "Frozen", along with competition from rivals Hasbro and Denmark's Lego. To regain competitive advantage, Mattel is looking to improving its creativity, innovative capability and speed to market.
We are already benefitting from better decision-making, alignment and enhanced accountability. And we’ve begun to refocus our culture on creativity, innovation and improving our speed to market. While we still have a lot of work to do, we’re starting to see progress with our core brands like Barbie and Fisher-Price, and I am confident we are making the changes necessary to perform better in the future.
Christopher Sinclair is replacement for the former CEO, Bryan Stockton, who was fired in January.
Mattel has also been in talks with Quirky, a company that turns ideas to business based on crowd sourcing. While the Quirky partnership could help give Mattel a fresh take on toys and possibly yield a hit or two, these partnerships often account for only a small part of the large companies’ overall businesses.
Policy makers face a dilemma when making decisions about smuggling. Policies that reduce the number and the ability of smugglers to cross illegal migrants over the border have been shown to increase the possibility that exploitative smugglers, who wreck violence and sexually assault their prey, illegal migrants, will thrive better. Migrants, whether financially well-to-do or not, seek greener pastures, no matter the risks involved to lives and freedom. To discourage human trafficking and exploitation, policy makers have to choose between improving the welfare of smuggled migrants or diminish the availability of smuggling services.
To date, it has been confirmed that 900 illegal migrants who attempted crossing the Mediterranean from Libya to Italy drowned in the high seas. One report has it that the boat capsized when the passengers were excited at the approach of a rescue boat. This is not the only incident of passengers attempting to cross the Mediterranean losing their lives. Every year, thousands die trying to reach Europe by sea although some do succeed.
It has also been confirmed that on that boat, there was a religious confrontation. 15 Muslims have been arrested by the police for throwing about 12 Christians into the water.
10,000 lives lost to the Mediterranean this year from illegal migration. Credit: AfriqueInside.com
Why do many migrants chose to end their lives this way? Granted, the pull of wealth in developed countries can be irresistible, especially when you are a Somalian running away from a dictatorial regime or persecution; or a Nigerian fleeing from an impoverished system with no economic salvation in the horizon. Yet, many illegal migrants fail to realize that even if they make it to Italy or Greece without losing their lives, they might fall prey to unscrupulous exploitative smugglers who’d be ready to cross them for less than non-exploitative ones, and give up their freedom in order to fulfill a debt contract.
According to Italian law, illegal migrants found on the shores of Italian waters will be sent home. If they have already entered the country, they face detention and expulsion. Laws like these are no deterrent to determined migrants. Italy has had to ask for help from the European Union (EU) to stem the onslaught of these hordes. Last year a record 170,000 people fleeing poverty and conflict in Africa and the Middle East have made the perilous crossing to Italy. Since January this year, about 10,000 persons have been rescued from the Mediterranean Sea trying to cross illegally into Italy.
Italy is not the only country affected. USA, China, Greece, France, Germany and a host of other developed economies, including Canada, have devised various policies to curtail illegal migrants at their borders. When illegal migrants send remittances home, smuggling and exploitation thrives. Stories of quickly gotten wealth in African countries serves as a push. These businesses thrive on that success. But, behind the few success stories are those of sex slavery, exploitation, violence and criminality. How successful any policy against illegal migration will be depends on reducing the demand for smuggling services, whether exploitative or not.
Netflix Inc., a provider of on-demand internet streaming media has posted quarterly revenue of $1.47 billion. The income met forecast estimates but was disappointing when averaged against its shares. Analysts had expected a profit of 69 cents per share on revenue of $1.57 billion. The disappointing profit statement was attributed to foreign exchange losses due to the strength of the American dollar in the first quarter of 2015.
Netflix also, on Thursday, announced a subscriber base of 62 million users worldwide for the quarter ended March. The market reacted, creating a surge of its shares by 11.6 percent to $530.90 dollars in after-hours trading. A positive 4.9 million new customers were added this quarter (2.6 million new subscribers from outside the US) in its nearly 50 international markets that include the United States, Europe, Australia and New Zealand.
The favorable market reception of its report and increased subscriber base, according to Chief Executive Officer Reed Hastings, is attributed to the streaming of fresh original content including the third season of "House of Cards" and new series "Unbreakable Kimmy Schmidt" and "Bloodline".
Chart. Netflix shares to date.
In a related development, FBR analysts Barton Crockett and Howard Ma, estimate that based on its demographic survey of streaming media in the US, the share price of Netflix is expected to go up to the $900 dollars mark with an increase in subscriber base to 180 million, with 60 million from the US alone.
Netflix is also seeking shareholder approval for an increase in authorized shares. In its report, the company said it will recommend a stock split to its Board pending shareholder approval. The company also announced that it will soon be using the HTTPS protocol to authenticate and encrypt customer streams in a move that will enhance customer privacy and security online, and as a means to thwart man-in-the-middle attacks that hijack a huge chunk of internet traffic.
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With market share on its mind and possibly to cut operating costs, 900 million euros worth of costs on an annual basis to 2019, Nokia (NYSE:NOK) is in advanced talks to buy the French telecoms giant, Alcatel-Lucent (NYSE:ALU). In a press release by Nokia, the deal is worth $16.6 billion.
By merging with Alcatel-Lucent, which proposal has met public approval by the French government, an unlikely quarter in lieu of its history of frowning on foreign acquisitions, Nokia aims to have access to North American market, notably Alcatel-Lucent's partnership with Verizon (NYSE:VZ) and AT&T (NYSE:T). Also, combining their strengths will make Nokia the second biggest router company in the market, 35% of market share, after Swedish Ericsson (NASDAQ:ERIC). Cisco (NASDAQ:CSCO) which is in second place would find itself in stiff competition with Nokia.
Revenue shares in wireless networking.Credit: Marketrealist.com. See chart on site.
In a similar report, Nokia is said to be interested in selling its maps business, HERE, in order to focus on its core strength – wireless networking. According to a Zacks.com report, the proceeds from the sale of HERE division would be used to buy Alcatel-Lucent. The HERE unit is valued at approximately $2.1 billion.
Meanwhile, Nokia’s stock price has jumped relatively to that of its competitors, Ericsson and Cisco.
Nokia shares jumped this afternoon. Nokia blue, Ericsson red and Cisco green. Credit: Yahoo Finance. See chart on website.
