The Great Debate UK
It seems barely a week goes by without another shock report about the ever-widening gap between those at the top of the earnings distribution and the rest of us. The facts are by now well-established. Throughout the Western world, but most noticeably in Britain and America, the earnings of the top one or two percent are accelerating into the stratosphere, leaving the middle class a long way behind, and the working class completely out of sight. How can one explain this global phenomenon?
Academic economics seems to be taking a surprisingly long time to reach a definitive answer, but I suspect there will turn out to be two long term trends at work here.
First, globalisation has doubled or tripled the supply of unskilled and semi-skilled labour. As long as China remained locked in Maoist isolation and the Indian economy had to carry the full burden of the Licence Raj, their respective workforces were shut off from the global labour market. The fact that products could theoretically be manufactured far cheaper in those countries was unimportant, because in practice Western firms could never take advantage of their rock-bottom labour costs.
Now that they have opened up and it is possible to outsource manufacturing to China and the paperwork to India, there is less and less left for our workers and middle-managers to do – unless, of course, they are willing to work for more competitive (i.e. lower) wages.
-Kathleen Brooks is research director at forex.com. The opinions expressed are her own.-
The saying goes that you only really know who your friends are during times of crisis. Well European officials must have been beaming after two of the world’s largest economies promised to purchase the debt of the currency bloc’s most troubled nations. China came out first and pledged to “support Spain’s financial sector”, through participating in its upcoming debt auctions. Likewise, Japan pledged to purchase a quarter of the upcoming euro zone bond sale that will help fund the bailout of Ireland.
By Peter Thal Larsen and Neil Unmack
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
LONDON -- Forcing banks to bail out countries may have the ring of poetic justice. But Europe's idea of using a bank levy to capitalise a sovereign crisis fund is circular -- and dangerous.
– John Keilthy is Managing Partner of ReputationInc Ireland and is a former business journalist and director and chief operating officer of NCB Group. Andrew Hammond is a Director in ReputationInc’s London office and was formerly a UK Government Special Adviser. The opinions expressed are their own. –
In recent weeks, the focus for Ireland and indeed the world’s financial markets has been on devising a plan to remedy the country’s precarious banking and fiscal affairs.
(Photo: Pope Benedict XVI blesses a nativity scene at the Vatican December 15, 2010/Tony Gentile)
Pope Benedict voiced the Catholic Church's deep concern over "hostility and prejudice" against Christianity in Europe on Thursday, saying creeping secularism was just as bad as religious fanaticism. In the message for the Roman Catholic Church's World Day of Peace, marked on Jan. 1, he also reiterated recent condemnations of lack of religious freedom in countries in the Middle East where Christians are a minority, such as Iraq and Saudi Arabia.
He said Christians were the most persecuted religious group in the world and that it was "unacceptable" that in some places they had to risk their lives to practise their faith. But he reserved his strongest words for Europe, where the Church says it is under assault by some national governments and European institutions over issues such as gay marriage, abortion and the use of Christian religious symbols in public places.
The following is a guest contribution. Reuters is not responsible for the content and the views expressed are the authors’ alone. Ibrahim Kalin is senior advisor to Turkish Prime Minister Tayyip Erdogan. This article first appeared in Today's Zaman in Istanbul and is reprinted with its permission.
By Ibrahim Kalin
Has multiculturalism run its course in Europe? If one takes a picture of certain European countries today and freezes it, that would be the logical conclusion.
Joschka Fischer was never one to mince words when he was Germany's foreign minister in the late '90s and early noughts. So it is not overly surprising that he has painted a picture in a new post of a world with only two powers -- the United States and China -- and an ineffective and divided Europe on the sidelines.
More controversial, however, is his view that China will not only grow into the world's most important market over the coming years, but will determine what the world produces and consumes -- and that that will be green.
from The Great Debate:
How do you reconcile the traditions of many Muslim immigrants with the freedoms and values of 21st century Western Europe?
It's a question that has led to periodic outbursts of vigorous debate from France to Holland and Switzerland. In Germany, the discussion has been relatively subdued. Until now.
Europe's corporate treasurers can pop open the champagne. After much lobbying, they have won an exemption from new European Commission rules forcing over-the-counter derivative trades to be centrally cleared. But the decision could create a loophole that allows companies to take on big positions and pose a systemic threat.
The G20 group of leading nations last year agreed that all derivative trades should, where possible, be moved onto clearing houses. The thinking was that central clearing spreads risk, reducing the chance that the failure of a single large counterparty can drag down the financial system.
This week’s rehashing of European banking concerns – related variously to the Basel III impact on German banks, the ongoing morass re Anglo Irish Bank or any other scare story you want to exhume -- provided the latest excuse for a global markets wobble as September kicked off. Yet, with some justified head-scratching over what really was new to the world this week as opposed to last week, price moves showed little conviction. Most losses were quickly recouped and decibel level of the commentariat, still frantically competing to warn you of the next disaster, toned down.
The world’s major sovereigns and banks have big financial problems, no doubt, and Europe more than its fair share. The rescues of the Spring did not provide a silver bullet and genuine repair will likely take a painfully-long time. But we’ve also had a lot of time to adequately discount these risks and the marketplace at large is already positioned extremely cautiously. That's why the idea of sudden, blind panic on these long-running sagas seems just a little OTT – especially against a relatively stable, if bruised, economic backdrop. The bigger issue many investors are grappling with is the growing difficulty in making money in a hyper-cautious, low-growth environment. Ask Stanley Druckenmiller. If he threw in the towel because money-making conditions are just lousy, then you can be sure others see the same. Anecdotally at least, pressurised hedge funds – who faced rising redemptions through the summer – are ultra-cautious about open positions and seem quick to cut and run on even the slightest gain, long or short. (A bit like continually shouting 'bank!' on reaching £100 pounds on The Weakest Link!) Big institutional funds, meantime, are sufficiently uncertain about the market and economic direction that many are already keen to lock down for the remainder of the year and are hugging benchmarks to preserve whatever capital they have without resorting to zero-yielding cash or barely-more-attractive TBonds. U.S. midterms in November only add the caution. In short, it will take a pretty major positive or negative surprise to truly set these markets alight and there is every chance we won’t get a decisive one for some time. We already have historically high vol and caution – but relative steady, unspectacular conditions for all that. The smart money may simply be tempted to buy or sell any hysterical extremes. Is may even be possible that some are tempted to foster a long-absent patience gene?