Reuters blog archive
By Andy Mukherjee
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The U.S. Federal Reserve is adding urgency to Indonesian President-elect Joko “Jokowi” Widodo’s first big test: Rethinking the country’s massive energy subsidies.
As in some other Asian countries, Indonesians pay an artificially low fixed price for fuel. The government funds the difference - currently about 5,000 rupiah (43 cents) per litre of gasoline and 6,000 rupiah for diesel.
Together with a smaller electricity subsidy, the handout is expected to cost the country $31 billion next year, according to a draft 2015 budget released last week. That’s equivalent to about 18 percent of total government spending. The subsidy leaves public finances vulnerable to fluctuations in the global oil price and the currency. And it enables households to spend more on imported consumer goods. The result is a yawning current account deficit: 4.3 percent of GDP in the second quarter. If U.S. interest rates rise next year, investors may baulk at financing the trade shortfall, just as they did in the summer of last year.
from Global Investing:
Is now the time to shift to equities vs. bonds? Goldman Sachs think so and traditional valuation measures such as the equity risk premium (chart) make bonds look expensive relative to equities when compared to the average over the last 20 years.
It isn't surprising that the performance of equities relative to bonds tends to be closely correlated with economic activity. However as the chart below shows this does break down from time to time, equities are currently still trailing bonds over a 12-month period while an ISM above 50 suggests equities should be winning.
from Russell Boyce:
After rioting in Xinjiang left 11 dead at the start of Ramadan the Chinese authorities stated that the insurgents who started the trouble had fled to Pakistan. Security forces quickly deployed in numbers to ensure that any further trouble was prevented or quickly quelled. Shanghai-based Carlos Barria travelled to Kashgar to shoot a story on the renovation of the old Kashgar centre, an example of China's modernising campaign in minority ethnic regions. A busy week for Aly Song, who is also Shanghai based, with taxi drivers on strike over rising fuel costs while Lang Lang had local fishermen preparing for typhoon Muifa to hit. In both pictures, the eye is cleverly drawn to the distance to show in one image, a line of striking taxi drivers, and in the other, rows of boats bracing for the imminent typhoon.
Ethnic Uighur men sit in front of a television screen at a square in Kashgar, Xinjiang province August 2, 2011. Chinese security forces blanketed central areas of Kashgar city in the western region of Xinjiang on Tuesday, days after deadly attacks that China blamed on Islamic militants highlighted ethnic tensions in the Muslim Uighur area. REUTERS/Carlos Barria
from Russell Boyce:
As India heads towards their Republic Day celebrations, Prime Minister Singh makes minor adjustments to his cabinet while outside on the streets people demonstrate over food and fuel price inflation and corruption. Adnan Abidi produces a great picture as a middle-aged demonstrator gets to feel the full force of a police water canon. In stark contrast, B Mathur gets a glimpse of the dress rehearsal of the full military parade planned to celebrate India's independence where the security forces are deployed in a somewhat different manner. Danish Siddiqui added to the file this week with a well seen picture to illustrate a government spending initiative with a man pulling a pipe across a building site, the shadow creating an eye like image that almost seems to wink at the viewer.
Police use water canons to disperse supporters of India's main opposition Bharatiya Janata Party (BJP) during a protest in New Delhi January 18, 2011. Thousands of the supporters on Tuesday in New Delhi held a protest against a recent hike in petrol prices and high inflation. REUTERS/Adnan Abidi
from Money on the markets:
It was a weak day of trade for energy counters which saw the BSE Oil & Gas Index topping the list of sectoral losers with a 1.7 percent fall.
Weighing on the sectoral index and the Sensex was Reliance Industries which fell 1.8 percent to 1052 rupees.
from India Insight:
The government raises petrol prices by 3.5 rupees/litre and decides to make them market-determined. Diesel gets costlier by 2 rupees/litre and cooking gas by 35 rupees a cylinder.
Reuters spoke to people in the streets of New Delhi to get their reaction.
PANKAJ (senior manufacturing analyst, GM motors)
ANUBHAV SRIVASTAVA (member, RTI foundation)
DISHITA (freelancer at an ad agency)
GAURAV (a student)
(Flip cam videos by Rohan Dua)
from India Insight:
For the first time in parliamentary history, the entire opposition led by the BJP walked out during the Finance Minister's budget speech.
The walkout was to protest against the hike in petrol prices.
The opposition is saying the government move adds to the burden of the people.
However, the united front put by the fractious opposition also hints at some pre-planning by the opposition leaders.
from The Great Debate:
President Obama may have a political Midas touch, but his decision to tighten fuel efficiency rules for cars was assailed from two directions.
Some critics charged that the rules would force car prices higher at the worst possible time -- dealing a possible lethal blow to the American auto industry and hurting struggling consumers at the same time. Others berated the president for preferring regulation over a simpler tax increase. The Corporate Average Fuel economy standards -- or CAFE -- are costly, inefficient and politically craven.
from Global News Journal:
For all the shouting and nose-to-nose confrontations, visitors to Havana's Parque Central might think they had walked into a brawl or counter-revolution ... but here in the park's Hot Corner, the topic almost always under discussion is baseball, Cuba's national obsession.
At night, Salah Abbas Hisham wakes up screaming. Sometimes, in the dark, he silently attacks the boy next to him in a tiny Baghdad orphanage where 33 boys sleep on cots or on the floor. Salah, who saw both his parents blown apart in a car bomb, can never be left alone at night.